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Subject: "MUST READ" Understanding the $500 Trillion Global Money Mess
Date: Sat, 24 Nov 2007 06:56:58 -0600
This article is long and well worth the time to read.
Understanding the $500 Trillion Global Money Mess
So, these crazy derivatives are over 13X bigger than the top nations of this world's debts? How on earth can this be? Derivatives are growing like a huge...bubble! Faster and faster. Contracts that are supposed to hedge these hell hounds and pirates have grown by nearly 50% in the last half a year? Wow. And they need protection for nearly $50 trillion in DEBT DEALS???? Wow. Say hello to the carry trade baby monster! Try picking it up and petting it! NO BANK HAS THE ABILITY TO GENERATE $50 TRILLION IN LOANS! And forget about any bank being able to bankroll $500 trillon in loans.
Except for mega-machines run by one of the holders of the world's largest FOREX reserves.
The entire hedging business which as grown out of two previous currency collapses, the Bretton Woods II collapse and the Plaza Accords collapse, have now utterly and totally and horrifically taken over the world's entire system for determining not only value but the very meaning of the word, 'money.' This DEBT which is over $500 trillion will destroy the value of all existing money if it is called upon to pay off losers in a global stock market, commodity market and asset market melt-down. And this, dear readers, is a repeat of the Great Depression with an ugly little twist: money during that became hard to get and more valuable. But thanks to Europe, the USA and Japan expanding their money making, this will cause a bizarre storm of great inflation on one half of the planet and great depression on the other half. Yin and yang leading to a collapse of world free trade systems.
http://elainemeinelsupkis.typepad.com/money_matters/2007/11/elaine-meine-17.html
Comments about the article.
I don't think this is going to be a 'second great depression'. It is panning out to be the ultimate disaster. There isn't going to be a 'third great depression' after this one. Goldman Sachs were bragging a week a go or so how they had shorted the multibillion dollars loans, they had issued to poor risks. Of course their stock price rose. However the problem is that those who took the risk of these bad loans are not in a position to pay Goldman Sachs anything, since they are going bankrupt. All these promises of safety that the derivative market promised, are just empty, nothing, nada, the stack of cards have just begun falling, and it is going to be the collapse of all financial activity that involves money, which mean there is not going to be governments, electric companies, internet providers, gas stations, water works, law enforcement, sewage treatment, hospitals (since they can't pay for people working there with something they find valueable). In the close future, you'd better stock up on physical things that are worth something in the context above, if you want to survive, the avalanche is coming. The system was built on trust, that if you insured against a risk on the derivatives market you would get paid when the going got tough, when that trust is gone it is just going to fall to pieces and all monetary activity will come to an abrupt standstill. Money is also based on trust....
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