What are you learning from this economic crisis?

Discussion in 'Et Cetera, Et Cetera' started by Drifterwood, Sep 25, 2008.

  1. Drifterwood

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    What conclusions are you drawing? I have a few.

    "Banks" who operate outside the good practice of the fractional-reserve banking model need to be regulated.

    Politicians and regulators need to understand and be transparent about the underlyng risks of our financial and economic models.

    High leveraged debt is not a substitute for a social housing programme.

    Houses are not a market for 80% of people and their homes.

    Politicians over react when they are looking stupid. I say this because in real terms, I don't believe that the amount needed to be written off in our housing markets should have such a profound effect on our overall economy, and therefore I would let the market sort itself out. The bank that I use for example, could swallow the bail out amount and still remain well within good practice liquidity ratios.

    Oh, and finally, McCain looked like a rabbit caught in headlights.
     
  2. Principessa

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    The only way I will ever own a home in this country is to marry either JasonDawgXXX or MidLifeBear. :12: :frown1::mad:
     
  3. crescendo69

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    We're all going to die!

    (Sorry, economics all cornfusing to me).
     
  4. marleyisalegend

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    Economic crisis, what economic crisis? Some people forget that for some of us our entire lives have been an economic crisis. I imagine this is only surprising to the upper-middle class who's starting to see what it's like to live off Ramen Noodles, white rice, and honey. For some people it's a scary new phenomenon to have to budget gas money and food money, some of us have been doing that since day one anyway.
     
  5. B_spotted_duck

    B_spotted_duck New Member

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    A good line!

    Run rabbit run! I hear he ditched Letterman saying "I have to go back to Washington and save the economy" but then showed up on CBS for an interview with Katie Couric... Letterman learned he had been dumped for Couric and went to a live feed of McCain getting his face made up for the Couric interview (which was happening at the moment Leterman was being taped).
     
  6. TurkeyWithaSunburn

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    That you can be a scam artist as long as you call yourself CEO.

    That Republicans _REALLY_ don't believe in a free market, otherwise all this bailout talk wouldn't be happening especially with "conservatives" in charge. Let the companies fail should be the conservative mantra.

    That there are idiots who want to change the accounting rules. Banks have to book value a home for what they could sell it for right NOW. :duh: makes sense to me! Some want to change it so that they can book it "for the long term value". (Courtesy of Faux, I mean Fox, news report)

    That people in leadership are scared shitless, afraid that the Chinese and other countries will dump US Treasury bonds, but scared to actually create a balanced budget.

    That cronyism is alive and well! Paulson doesn't want any modifications to his plan. He came from Wall Street and his friends are CEOs
    -Uhm Rep. Barney Frank and others (Sen. John McCain) have called for a cap on CEO pay. Well duh I would hope so. I mean for the companies to continue to pay multimillion dollar salaries to CEOs who have bankrupted or run their company into the ground is ludicrous.
    -$400,000 is an adequate salary for a CEO. That's the limit Frank is proposing. That's also the same as the President makes (in case you didn't know)
    -That socialism is alive and well. Even in the good ole USA! Talk about taking an equity stake in the companies is the only way that I could ever think about support for a bail out. If the company survives and does well then some of that profit will be to the US treasury (aka taxpayers).

    That most people have no clue that the Federal Reserve is a Private organization in charge of the money supply. Don't believe me? Well who can be on the board? Who elects board members? Who can be a member?BANKS!

    That housing is seriously OVERvalued. Even before the current bubble. I saw some news article a while back that if the Mortgage Interest Tax Deduction were done away with housing prices would drop 10% to as much as 30%. That is even BEFORE this current bubble happened.

    That's what I learned so far :biggrin:

    Best quote so far from the whole debacle:
    "Just because God created the world in seven days doesn't mean we have to pass this bill in seven days," said Rep. Joe Barton, R-Texas. (Courtesy of a USA Today article)
     
    #6 TurkeyWithaSunburn, Sep 25, 2008
    Last edited: Sep 25, 2008
  7. Drifterwood

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    Hi Marley. I have lived off $80 a week BTW. Do you feel more let down by politicians who have not controlled this mess, or do you feel that it is business as usual from the "ruling class"?
     
  8. marleyisalegend

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    Business as usual. Capitol Hill caring more about Wall Street than Main Street (to borrow a line from Barack) is nothing new. Big corporations often get favor, it shouldn't be surprising. I think what happened is the average American didn't realize that they've been voting for people involved in backroom deals and lobbying until the pot boiled over though it had been simmering at the brim for decades. Now that this is all coming to light they're shocked and appauled that their holy leaders have been shitting on them all along.

    I don't expect any more from politicians than I'd expect from Satan himself. If one does something that benefits me I'd consider it an exception, not a standard. The complexity of law and US government makes it terribly easy and tempting to "go for self." How does it go? Absolute power corrupts absolutely?

    Glad BTW to see Biden's pro-gay voting record.
     
  9. Principessa

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    Yes, to both unfortunately. :frown1:

    I agree.
     
  10. jason_els

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    That the Austrians have been right all along and I know more about economics than most people.
     
  11. TurkeyWithaSunburn

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    Jason, elaborate about the Austrians please, I'm curious.
     
  12. marleyisalegend

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    For the love of God DON'T ask him to elaborate, it won't be pretty. You've been warned.
     
  13. midlifebear

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    Well, so far I've learned that George W. Bush hasn't a fucking clue about the situation. His analogy is that it's a 'house of uh, . . . well, . . . you know, uh . . . cards." And that the financial sky is NOT going to fall like bunch of dominoes before the election. I've also learned that McCain will use the impending doom as an excuse to put off debating Obama. And I also know that I alerted my employees in my business in Nevada last November 07 that I would have to close down shop and let them all go.

    I know there is an economic crisis, but using it as a stunt to avoid stating your beliefs on how to correct the problem is pathetic. McCain's afraid of doing or saying the wrong thing and then being ferreted out as a stupid fool by a political opponent with a keener intelligence and better education.
     
  14. marleyisalegend

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    ^And did you see Katie Couric's discussion with Palin about the economy (among other things)? Embarrassing. The repubs know they can NOT afford to say anything so they're avoiding any situation where they have to, you know, answer questions and stuff, ESPECIALLY about the economy.

    I'd vote for them forever if they'd come out and be honest.

    Mccain (without a filter) - "Fuck the poor, I say let the rich get richer."
     
  15. D_Selmus_Swallow

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    The truth.
     
  16. jason_els

    jason_els <img border="0" src="/images/badges/gold_member.gi

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    Note: I wrote this over a year ago and posted it at City-Data. Few believed me:

    The Current Situation


    What has happened is that many home owners saw the value of their homes double, then treble, then quadruple (in some areas), and then took out second mortgages or home equity loans. Some owners used that money to upgrade to a more expensive home, others spent the money on improving their homes, but quite a few just used the money to buy bling.

    In two years the baby boomers will begin retiring and likely downsize their homes. Property taxes have soared in the very areas that saw the biggest growth rates through the latest housing boom and most retirees can't afford or do not want to pay the ever-increasing property tax rates on their homes. These retirees will look for condos or small homes in retiree-friendly states but who will buy the homes they need to sell?

    There are far fewer GenX/GenY buyers than there will be boomer sellers. Further, over half the household wealth in the country still belongs in boomer hands. Yes they may be able to help out their kids to buy a house, but they also have the government whacking their wealth with capital gains, estate, and gift transfer taxes. They won't be able to give their kids much of a help. There won't be much, if any, tax relief either. As the boomers retire they're going to come calling for all those IOUs in the (laughably named) Social Security trust fund and all those Medicare benefits.

    The middle class in the United States is shrinking as the wealth divide increases. The past 30 years have seen high-paying manufacturing jobs go abroad and now many professional service jobs, particularly in IT, going abroad as well. Employment may be high, but job earnings aren't keeping pace with true inflation and certainly not with the soaring housing values. In short, the relatively young middle class now cannot afford a house comparable to one they grew-up in. Even with two incomes they're reaching for any kind of mortgage they can get for the house they think they should be able to afford. This doesn't bother most buyers though because not only will the government give them tax breaks for buying a home and the Federal Reserve has dropped interest rates to nearly zero, but the buyers have grown-up in an environment where housing prices have only gone up. To them, a house is a safe investment. There will always be someone who wants to buy their house for at least what they paid.

    To stimulate investment following 9/11, the Federal Reserve dropped interest rates to nearly nothing and began flooding the US economy with cash to keep it afloat. They did this by making interest rates drop to next to nothing, making money as cheap as possible to get. Nobody was making money in those assets whose value is measured against interest rates (think of bonds and savings accounts). An investor getting 2% in their savings account wouldn't be making enough in interest to pay for the gas to get to the bank! So money had to go somewhere. 9/11 saw a stock dip but soon money began pouring into the stock market because it literally had nowhere else to go short of under the mattress. That flood of liquidity did very well for the stock market; the proverbial rising tide that lifted all boats. As the stock market recovered, something else happened. Many people, post 9/11, wanted to get out of cities and those who decided to stay in cities decided to buy. After a major disaster, and in subsequent unstable times, people tend to hunker down; gathering their family, increasing the size of the family, and securing assets. This mentality, combined with the low interest rates, the willing Mae sister lenders, and the increased cash people had, made them look for a, "safe," asset. That asset was real estate.

    People who had houses saw the value of their house increase. If they had an older mortgage, they refinanced to a lower rate. Buyers just entering the market felt they had to act now to get in on the real estate boom. Many saw the increase in the value of their homes and decided to make their homes more valuable still by adding-on or remodeling. Others bought second homes. Now when that happened, plenty of people saw their, "net worth," soar. Suddenly people were worth far more money than they ever were because the cheap Fed money helped them buy an asset whose value kept going up and up and, at least on paper, people were worth more since they owned more. So what did people do?

    They spent it! They bought bling, they bought second houses, they even sold their previous house and bought even more expensive McMansions! So long as interest rates were low, they could afford payments on a nicer house. It was a good investment, in their eyes, because the newer, more expensive house kept going up in value too. And they started using their home equity credit for vacations and luxury items like expensive cars, boats, and designer clothes. Prices of things seemed to be rising a bit but given the feeling of newfound prosperity, it didn't matter much.

    Things, you may notice, which don't appreciate in value.

    What did it matter? The stock market was doing great, housing values were going up, and people were feeling positive about the economy. The matter is that the wonderful flood of Fed money which people loved when it was a bunch of tasty waves on their favorite surfing beach, eventually turns into a tsunami of money. Once the stock and housing markets were saturated, there was only one place left for the money to go. Where it has always gone after stocks and real estate markets become saturated in a mass inflationary cycle: commodities. Oil, cotton, nickel, copper, aluminum, and yes, the quintessential orange juice and pork bellies. Saavy investors saw that stocks were overpriced, housing was overpriced, what was left? The long, long, neglected commodity markets. Money poured into commodities and, as a result, the prices of commodities soared too. Most people saw curious stories about the penny and the nickel now being worth more than their face value but they didn't worry about it. Why does it matter? Well, to make OR consume things, you need commodities. Even if the US is now primarily a financial service economy, we still need cars and orange juice and bacon and cotton. When the costs of those materials rise, the manufacturers pass those costs on to you, the consumer. This is what most people consider to be inflation and of course it isn't.

    The inflation started waay back when the Fed started dumping money onto the US people to keep the economy going. They started printing as much money as possible, getting other countries to lend us the money to do it (hence the soaring budget deficit).

    First we get all that new, cheap money. Yaay! We can afford nice stuff!

    Second we buy stuff with it. Real estate and stocks! Since nearly everyone is feeding at the cheap money trough, the rising tide kicks in and everything seems to go up! Yaay! We can afford even nicer stuff!

    Third, all that money we're spending ends-up in the pockets of manufacturers and financeers who like to buy that which is undervalued. They want to buy assets when they're cheap, not when they're hot. As they have always before, that money went into commodities. Manufacturing costs increase, prices rise, wage earners want raises, pensioners want increases in benefits, and the government has to raise money (via taxes) since it too has pay for what it buys and things aren't getting any cheaper. But now interest rates are higher. Prices are going up, adjustable rate mortgages are going up, only this time there is no source of nearly free money. Like drug addicts seeking a fix, our dealer has raised prices after we got hooked and we have to scrape to afford our McMansions and BMWs. Worse, those assets we borrowed against, the houses, are either in static value or declining. Many people are paying mortgages on a house that now costs less than they paid. Certainly the housing boom didn't hit everywhere and some places may be seeing an upswing, but those markets are relatively small compared to the general trend and so won't have much effect on the market as a whole.

    This time we have a demographic and economic crisis helping the housing crash along. Some banks got risky but others were more sober. Those are the banks that will make money on the way up AND the way down. Remember, Trading Places? Remember Mortimer and Randolph Duke explaining commodities to Billy Ray? "The good part is that no matter whether our clients make money or lose money, Duke & Duke get the commissions."
     
  17. jason_els

    jason_els <img border="0" src="/images/badges/gold_member.gi

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    Guess who's getting Duked now?

    Hint: It ain't the important banks. No, they invested in the smaller riskier banks so that they'd be there to make the money but be able to be protected when the risky banks collapsed.

    Now.... you may wonder..... what happens next? Well, talk to your grandparents and elderly relatives. Ask them what happened in '29 and what was happening then with their real estate boom. Our crash likely won't be nearly so spectacular. We now have plunge protection teams scurrying like crazy to support the markets and a much more intricate world economy. Rather than end in a bang, it may likely end like a balloon deflating. Quickly but steadily deflating across the board. History tells us that the stock market tanks as people sell assets to cover their housing payments and increased cost of living, then the real estate market falters. It doesn't all drop in one day. 1929 didn't happen all at once. The market was very volatile with little clarity for some time. There was an informal plunge protection team in place but it was composed of men of robber baron wealth trying to prop-up the markets. Today we don't need the Morgans and the Rockefellers to do that, we have the government. The marginal lenders start to sink, defaults increase, but there are also surges of confidence as those who've made a lot of money try to keep the market going. Some reports say everything is great, others say it's all doom.

    Stop for a second and consider a fact of human nature. The majority never see a crash coming when it happens. If they had, there wouldn't have been a crash in the first place. To have a crash you have to have a large number of people, a lot of experts, saying that everything's great and there's no reason to worry. A crash means that a vast number of people got caught with their pants down. People whom, until the day before, would swear on their children that there were no problems, there were not going to be any problems, and they've backed that opinion with their money. They believe they've outsmarted economic markets. They believe we're smarter, more technological, have better supports. It doesn't matter. The mantra is always the same, "This time it's different."

    As real estate and the stock markets begin to deflate, the commodities continue to go up. Rather than paper, people who still have money to invest will want to own tangible goods, not paper. They will move money to super-cap stocks like Coca-Cola, GE, Walmart, etc. They will buy utility stocks. They will buy blue chip stocks in countries that traditionally have a great economy when the US does not (like Austria). Not all those companies will necessarily survive unscathed, but at least some of them declare dividends and while the value of the company may tank at least your cash is bringing in something when most people are losing money. Smart money are already moving to foreign real estate and blue chip assets, riding the world-wide real estate boom that the US started but the downside of which has yet to effect far away places. They're moving money to precious metals too because they know that when all the money we've flooded the world with comes back to the US, the value of the dollar will plummet and precious metals serve as a way to hold the value of the money you have.

    What's the best you can do? Well, first, try to own as much of your primary home as possible. We all need a place to live. Don't see it as an investment, see it as a necessity. If you have to move or need to sell to make ends meet, then sell your house now and rent for a while. Take the money you've saved and put it in blue chips that pay dividends, put it in TIPS, and if you have the cast iron stomach for commodities (i.e. you don't mind seeing your investments rise or drop up to 25% in a day), then put at least 10-25% in precious metals-based securities. You may lose some money, but you won't lose as much as most people and, most importantly, you should weather things well until everything restabilizes.
     
  18. jason_els

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    China

    China is, or was, the largest buyer of our debt (Japan is second). We sell them a bond, they give us money for the bond, we promise to pay them back the money they've leant to us plus interest. Just like a bank loan.

    We're selling them IOUs. So long as they, or anyone else, buys them, then it's as good as US dollars in the bank. Their bank. Not ours. We spend the money they give us.

    Why do they want US dollars? Well, the Chinese can't really pay for anything with their currency. Their currency isn't what is called, hard currency. Sure it's useful for purchasing things within China, but unlike nearly every other currency, China doesn't allow their currency to fluctuate in value based upon open market trading. As a result, their currency doesn't represent the value of their economy.

    China's economy is very hot and, as a result, the value of their currency should be very high but it isn't because the Chinese government sets the exchange rate. If it was very high, things from China would suddenly become more expensive to everyone else in the world who buys goods from China. China's economy would cool down rapidly and trade would become easier to balance. As it is now, the United States is at a disadvantage because our currency floats while China's doesn't. That means US goods sold in China artificially cost more than they should and Chinese goods sold in the US aritifically cost less than they should.

    Now that China has stopped buying US bonds, we have to find a buyer for those bonds. How can we do that? Well we can ask other countries to buy them, but if the dollar's value keeps going down, then there's no point in buying them. Oh sure other countries will still buy a few bonds because they need to, but they won't buy nearly as many as we need to keep our government fed. The other way we can entice buyers is to raise the interest rate being paid on the bonds so we give the bond owners more money when the bond becomes due.

    How much do we have to raise the interest rate? As pointed out, likely 2 percentage points. China's massive buying of our bonds has offset the market value of the bonds.

    Why does that matter? The interest rate we pay on those bonds is linked to the interest rates the Federal Reserve sets. That means that all those people out there with mortgages should see their adjustable rate mortgages rise by 2 percentage points. That's a BIG deal. It also means that money here in the US becomes more expensive for everyone to borrow. Credit card interest rates go up too. The effect is that our economy slows, nearly guaranteeing a recession.

    The good news is that as the value of the dollar drops, US goods become less expensive abroad... except in China because, as before, they don't let their currency float. This is offset though by the fact that goods the US imports from everywhere else become more expensive.

    In the larger scheme of things it also means that the rest of the world will see China's action and be tempted to follow suit.

    • The more countries decrease or cease buying our bonds, then the higher we have to raise interest rates to make them attractive again.
    • To pay for running our government we have to attract foreign money.
    • To pay for attracting foreign money we have to pay them more than they leant us.
    • To pay more than they leant us, we have to raise the interest we pay to them.
    • The more we raise interest rates, the slower the economy becomes because investment money becomes more expensive.
    • The more money becomes more expensive, the more Americans pay in interest rates, particularly on mortgages, loans, and credit cards.
    • The more Americans pay out of their pockets, the less they can spend and so the American economy drops even further.
    • The more the American economy drops, the less valuable our money becomes and that makes it more difficult to attract foreign money.
    • Go back to step 1.
     
  19. jason_els

    jason_els <img border="0" src="/images/badges/gold_member.gi

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    Questions & Answers

    1) Do foreign countries holding our debt have the right to cash it in at any time?
    If you mean can they go back to the Treasury and demand back the full face value of the financial instruments they have purchased, then no. As with any other bond, the US is not obligated to pay back the bond until it expires. If you buy a 10 year bond then the US does not have to pay back the money you paid for it until those 10 years are over. The holder of the bond, let's assume the original purchaser, can however, sell the bond to someone else at any time. The original (or any subsequent) purchaser can sell the bond for more or less than what was originally paid for it. Whomever ends-up with the bond at the end of its life is who gets the original investment back from the Treasury.​
    2) Are these debt instruments called Treasuries, Bonds, or Securities? Are these terms interchangeable, and if not, what's the difference?
    For this, I defer to Wikipedia which actually has a very good answer. Per the same:

    Quote:
    Treasury securities are government bonds issued by the United States Department of the Treasury through the Bureau of the Public Debt. They are the debt financing instruments of the U.S. Federal government, and are often referred to simply as Treasuries. There are four types of treasury securities: Treasury bills, Treasury notes, Treasury bonds, and Savings bonds. All of the Treasury securities (besides savings bonds) are very liquid and are heavily traded on the secondary market. -Wikipedia
    Further down in that same link, is a good explanation of the difference between the various types of Treasuries. The one everyone pays attention to is the 10-year T-notes because they're the ones which are linked to mortgage interest rates.

    Because mortgages are tied to the 10-year bond, there is considerable pressure on the Federal Reserve not to raise interest rates to make the 10-year bond more attractive to investors. Should they raise interest rates? Traditional economic theory would say, 'yes of course.' Political economic theory would say, 'do you want to send even more marginal mortgage borrowers with variable interest rate loans into default and ruin the financial institutions who leant the money?' To finance our debt, the 10-year T-bill is essential. If we don't support it and make its return more attractive than shorter term securities, then fewer and fewer nations will want to buy the bonds. This is why we're damned if interest rates go up and damned if they don't.​
    3) My understanding is that the Federal Reserve will buy higher interest bonds sold on the bond market and issue lower interest bonds in their stead when bonds are dumped on the bond market. They issue higher interest bonds when the bond market falters, as well as issue new bonds to cover the government's debt. Is this correct?
    Essentially yes, but remember that all they're doing is robbing Peter to pay Paul. This is very much a juggling act. To raise something up they have to let something drop down and to prevent that something from dropping down too far they have to raise it back up, but at the expense of something else; usually what they just resupported before. As before, when they offer higher interest rates to support faltering bonds, it translates into higher interest rates for the American consumers and higher interest payments we have to fund in tax revenue.​
    4) I saw where you had posted the US was now 66 trillion dollars in debt. Where did this figure come from?
    That figure comes from a report issued in 2003 by Wharton professor Kent Smetters and Jagadeesh Gokhale, the economist at the Cleveland Federal Reserve Bank:

    Quote:
    Their report, Fiscal and Generational Imbalances: New Budget Measures for New Priorities, estimates that the &#8220;fiscal imbalance&#8221; &#8211; existing debt plus future projected deficits &#8211; is an enormous $45.47 trillion, expressed in 2003 dollars. That dwarfs the $3.8 trillion debt that the government officially reports. If steps are not taken immediately to correct the imbalance, it will rise to $53.96 trillion by 2008, the report says. -Fiscal and generational imbalances: new budget measures for new budget priorities
    Essentially what they're talking about is not only all the debt we've issued, but all the unfunded obligations- programs the government has pledged to fund in the future including Social Security and Medicaid/Medicare- which the government does not now include in its figures.

    If you were an accountant at a private accounting firm or a public corporation, you'd be stripped of your license and thrown in jail for practicing accounting the way the government does. Being the government, they can do what they want. The Comptroller General of the United States, David Walker, agrees. Mr. Walker has taken his show on the road to try and get the United States to wake-up.

    I highly urge everyone reading this to take a few minutes to view the following link. If you think I'm a crackpot then listen to the Comptroller General of the United States. As he's not elected, he can get away with saying what he does. -CBS Interview with David Walker
    5) How much of this debt iis held by foreign countries, and where can I find a breakdown of how much each of these countries holds?
    Your friends at the U.S. Treasury are happy to oblige. See Major Foreign Holders of Treasury Securities, as published by the Department of the Treasury.​
    6) I understand (kind of) that dollars are the medium of exchange on the New York and London Oil Bourses. Are these the only commodities markets that deal only in US dollars?
    If you are asking, is oil the only commodity only sold in U.S. dollars then the answer is (for now) yes.​
    7) How would the Federal Reserve react to massive (trillions) of dollars in bonds being dumped on the bond market with no buyers?
    In theory, they'd have to spike interest rates, which is pretty much what they did during the 70s and early 80s to counter stagflation. The higher the return on an investment is, the more money will flow toward that investment. It's the only weapon the Federal Reserve has short of buying back all the bonds to keep the price stable but that would ruin the member banks of the Federal Reserve and the US along with it.

    Interesting point. Who are the member banks of the Federal Reserve? As a private organization, the Federal Reserve is composed of private banks. Here they are:

    • Rothschild Banks of London and Berlin
    • Lazard Brothers Bank of Paris
    • Israel Moses Sieff Banks of Italy
    • Warburg Bank of Hamburg and Amsterdam
    • Lehman Brothers Bank of New York
    • Kuhn Loeb Bank of New York
    • Chase Manhattan Bank of New York [Now JP Morgan Chase]
    • Goldman Sachs Bank of New York

    These are the banks that run the US monetary system. (Source: 'T' Minus Ten by Ed Steer for Le Metropole Cafe.)

    If that list makes you wonder then you'll be thrilled to know that even they aren't the true powers behind the throne. The Federal Reserve and its sister bodies in all other foreign nations have to answer to the capo di tutti capi of reserve banks and that's the Bank of International Settlements (BIS)out of Basel, Switzerland. Our Federal Reserve Chairman, Ben Bernanke, serves on the board of directors of the BIS. The BIS is another product of the aftermath of World War I and it is no odd conincidence that its establishment coincides with the establishment of the Federal Reserve here in the US. If you want to see who are the public directors and managers of the BIS, just look here. They have nothing to hide, perhaps because they have nothing to fear.

    If you'd like a more detailed view, check out The Bank for International Settlements: Evolution and Evaluation by James C. Baker.

    The BIS was formed with funding by the central banks of six nations, Belgium, France, Germany, Italy, Japan, and the United Kingdom. In addition, three private international banks from the United States also assisted in financing the establishment of the BIS."

    Quote:
    Each nation's central bank subscribed to 16,000 shares. The U.S. central bank, the Federal Reserve, did not join the BIS, but the three U.S. banks that participated got 16,000 shares each. Thus, U.S. representation at the BIS was three times that of any other nation. Who were these private banks? Not surprisingly, they were J.P. Morgan & Company [Now known as JP Morgan Chase], First National Bank of New York [Now known as Citigroup]and First National Bank of Chicago [was Bank One but was bought out in 2004 by JP Morgan Chase]. -ibid.
     
  20. jason_els

    jason_els <img border="0" src="/images/badges/gold_member.gi

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    8) I understand that the stock markets here in the US would suspend trading if they became too unstable, in order to provide a 'cooling off' period to keep them from falling through the floor. What other techniques are available to the Plunge Protection Teams (PPT)? Are there Plunge Protection Teams in place for the Bond Market as well?
    We don't know. Officially the PPT doesn't exist and there was no official acknowledgement of it until President Clinton's former aide, George Stephanopoulos accidentally spilled the beans on David Letterman's TV show. The most I can suggest to check Wikipedia's references for the latest theories.​
     
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