[Armageddon]

$this->bbcode_second_pass_quote('dunewalker', '')$this->bbcode_second_pass_quote('Sixstrings', ' ')
I'm just as doomer as the next guy, but I want to remain rational and aware of history. And history teaches us Americans don't die en masse for lack of basic sustenance.

[the48thronin]

$this->bbcode_second_pass_quote('dunewalker', '
')
There never before have been more than 300 million Americans totally dependent upon a ready-to-collapse JIT delivery infrastructure, virtually none of whom have any background of producing their own food, unlike previous generations in the crisis periods you mentioned. <snip>

[Sixstrings]

dunewalker wrote:
$this->bbcode_second_pass_quote('', 'T')here never before have been more than 300 million Americans totally dependent upon a ready-to-collapse JIT delivery infrastructure, virtually none of whom have any background of producing their own food

[Petrodollar]

SeaHorse's post brings up a very important issue that has not recieved nearly enough scrutiny: Why didn't the Tresaury Dept puchase any of the troubled/"toxic" mortgage assets as originally planned - in an effort to clean-up the balance sheets of the banks - which must be understaken if trust/interbank lending is to be restored - and thereby allowing credit to flow again? I have never heard a satisfactory answer given by Paulson re this issue. (His statements inferring that it would be "too complicated" or would "take too much time" really doesn't cut it.)

First, let's revisit the prime reason for the TARP program:

http://en.wikipedia.org/wiki/Troubled_A ... ef_Program

(excerpt from the Tresaury Dept itself)

$this->bbcode_second_pass_quote('', 'A')ccording to a speech made by Neel Kashkari,[8] the fund will be split into the following administrative units:

1. Mortgage-backed securities purchase program: This team is identifying which troubled assets to purchase, from whom to buy them and which purchase mechanism will best meet our policy objectives. Here, we are designing the detailed auction protocols and will work with vendors to implement the program.

2. Whole loan purchase program: Regional banks are particularly clogged with whole residential mortgage loans. This team is working with bank regulators to identify which types of loans to purchase first, how to value them, and which purchase mechanism will best meet our policy objectives.

3. Insurance program: We are establishing a program to insure troubled assets. We have several innovative ideas on how to structure this program, including how to insure mortgage-backed securities as well as whole loans. At the same time, we recognize that there are likely other good ideas out there that we could benefit from. Accordingly, on Friday we submitted to the Federal Register a public Request for Comment to solicit the best ideas on structuring options. We are requiring responses within fourteen days so we can consider them quickly, and begin designing the program.

[Cog]

I haven't seen this mentioned in the press anywhere since no one seems to worry about federal deficits. But with the recession, layoffs, and stock market plunge won't federal tax revenues be way down next year? Unemployed people don't pay payroll taxes and businesses are doing a lot less transactions, and people with stocks who sold at a loss can write those off their taxes.

It just occured to me that whatever revenue that the federal government was expecting from us all, is going to be down quite a lot.

[vision-master]

$this->bbcode_second_pass_quote('', 'U')nemployed people don't pay payroll taxes and businesses are doing a lot less transactions, and people with stocks who sold at a loss can write those off their taxes.

[RedStateGreen]

$this->bbcode_second_pass_quote('Cog', 'I') haven't seen this mentioned in the press anywhere since no one seems to worry about federal deficits. But with the recession, layoffs, and stock market plunge won't federal tax revenues be way down next year? Unemployed people don't pay payroll taxes and businesses are doing a lot less transactions, and people with stocks who sold at a loss can write those off their taxes.

It just occured to me that whatever revenue that the federal government was expecting from us all, is going to be down quite a lot.

[yesplease]

$this->bbcode_second_pass_quote('RedStateGreen', 'H')opefully cut some spending programs, but I wouldn't want to be in the position of figuring out what to cut.

[seahorse2]

Petro Dollar,

First, glad to see you still posting. Second, I think you are dead on about the reason why Paulson backed away from using TARP to buy bad assets. Your reasoning is in line with this hedge fund guy, who said he sees all US banks being nationalized in 2009.

$this->bbcode_second_pass_quote('seahorse', 'I') would like everyone to watch this CNBC economic "round table". I don't know who this hedge fund guy is, but even though his fund is up 40% this year, he is an ubber doomer and even says he sees "dead people." He apparently disagrees with Marc Faber, and believes that bonds will be the place to be for the next 18 months, not after that.

CNBC

$this->bbcode_second_pass_quote('', 'I')t's not preferable, but all major U.S. financial companies will eventually be under government control because the alternative is so much worse, Hugh Hendry, chief investment officer at hedge fund Eclectica Asset Management, said Friday.

"All financials will be owned by the U.S. government in a year," Hendry said. "I bet you."

Nationalizations take dramatic losses from the private sector and places them on the larger balance sheet of the public sector, he said.

"It's not good," but society is vulnerable and society is going to have to intervene, Hendry said.

Because the taxpayers are forced to foot the bill for bailout out the banks, shareholders shouldn't be compensated, Hendry added.

"Actually the shareholders of Citigroup have looked the other way for more than a decade" while management took excessive risk, he said.

Shareholders should take nothing away if it is nationalized, because the taxpayer will be "paying this for a long, long time," he added.

[Daphne64]

$this->bbcode_second_pass_quote('seahorse', 'U')nfortunately, just like the third class on the sinking Titanic, we here are all locked down in the bowels of this sinking ship by the first class. All we can do is listen to the cold waters of deflation filling the floors below us trumpeting our demise, listen to Bernanke scream he needs more money to plug the holes, and listen to the footsteps of the rich running above deck for the safety of treasury lifeboats that pay negative yields, which means, they don't float very well. They certainly won't be enough to keep anyone holding them dry from the cold waters of deflation setting in.

[Pops]

Just talked to a good friend and former employee in Central CA. He is 68, with a single desk ad agency who billed an average of $40k/mo last year (@ 15% commission) but billed $8k last month.

He is trying to sell whatever toys he has and is certain he will be tits-up in 60 days.

[IgnoranceIsBliss]

$this->bbcode_second_pass_quote('Pops', 'J')ust talked to a good friend and former employee in Central CA. He is 68, with a single desk ad agency who billed an average of $40k/mo last year (@ 15% commission) but billed $8k last month.
He is trying to sell whatever toys he has and is certain he will be ***-up in 60 days.

[jdmartin]

Interesting thread so far. I agree with parts of both sides of the coin. I'm kind of with SixString in that I think a lot of people will learn to get by with less. I could be wrong, and if I am that's a scary thought. On the other hand Americans are ill-prepared for any kind of long-term hardships, myself included.

What I think is manifesting itself is 30+ years of shipping American jobs overseas and the race to the bottom for a worker's wage. The only reason Americans (and then Western Europe/Japan) were able to live as well as they did since end of WW2 was the fact that everyone else was living austerely. There's simply not enough resources for everyone to live like we live in the West. For 30+ years we (I speak as an American) have been attempting to protect that standard of living through various ponzi schemes and endless mortgaging of future wages. Well, the gig is up. Now it's time to pay the piper. So either the Chinese have to go back to the rice fields or we have to learn to live with a lot less of everything - toys, square footage, gasoline, etc. Something tells me the Chinese aren't going back to the rice fields voluntarily, so now it will remain to be seen what society can succeed at the expense of others. Or we may all succeed, only much more poorly, until the next resource wall.

I've always believed, since I first conceived there was a such thing as peak oil, and researched it, that we'd go into a constant downward ratcheting spiral. Things will go up and up, then a massive dropoff spike downward, we'll bottom out, things will start going back up only not as far as they were before, bottom out again even further than before, and so on. Oil depletion, increasing numbers of people on the planet, and increased wealth disparity pretty much guarantee this scenario. My only hope is that it doesn't have to turn too violent in the process.

[AlexdeLarge]

$this->bbcode_second_pass_quote('', 't')here is going to be a period of euphoria when Obama is sworn into office

[seahorse2]

$this->bbcode_second_pass_quote('', 'I')'m kind of with SixString in that I think a lot of people will learn to get by with less.

[Pops]

$this->bbcode_second_pass_quote('IgnoranceIsBliss', 'Y')eah, and is his state going to have any money to pay his unemployment?

[seahorse2]

The banks are in trouble.

Bank of America laying off another 30k employees

[Armageddon]

It's a very simple problem. The US has borrowed itself into a false sense of wealth. People who have borrowed money to buy a house and a nice SUV think they are wealthy. They are going to find out real quick that isn't wealth. The US does't produce anything anymore, they only consume. We are a service economy that only consumes. We rely on Asian countries to make our crap and we borrow money to buy it. It's a recipe for disaster. It's unsustainable.

[Eli]

Yes Armageddon and the consumption was only made possible through an alchemy of high finance and a shadow banking industry.

The shadow banking system created a 60 trillion dollar market of worthless paper designed to prevent the very event we are now experiencing.

[Cid_Yama]

It's pretty easy to see the point where morality went out the window and it began to verge on criminal activity. When they ran out of people who actually qualified for the loans but had pent up demand for the securitized instruments, that was the point where it should have stopped. Instead, they created ARMs and began making loans certain to fail, then bundled them with better loans and sliced them into tranches to <b>hide</b> the garbage loans.

Since they weren't holding the 'certain to fail' mortgages, the lenders suffered no risk. Other than perhaps fraud charges for selling a bill of goods. But, since they made sure through the bundling process that it was near impossible to trace who owned the mortgage and that no one person owned the whole mortgage, the possibility of litigation was reduced.