"The Big Short" . . . .

[errolanderson]

Obama entry . . . U.S. debt $9 trillion
Obama exit . . . U.S. debt $20 trillion

The next UI.S. recession may be one-for-the-ages.

[biglentil]

US reached 1 trillion in debt on Oct 22,1981. It took 205 years for the nation to achieve that. The debt is impossible to pay back because every new dollar the fed creates is another dollar of debt with interest owing.

[TOM4CWB]

biglentil,

QE $ are created out of thin air... to backfill currency destruction. I suggest that the US Fed... has no intention of paying themselves back... or paying interest... as the QE$ was created at 0 percent interest. Japan, US, EU, and China all did QE currency...it is backed by the nations who created the QE$... to keep the global economy and banks floating.

[farmaholic]

[URL="http://money.cnn.com/news/specials/storysupplement/bankbailout/"]http://money.cnn.com/news/specials/storysupplement/bankbailout/[/URL]


Who owns the banks?

Whose policy was it to loan subprime?

Whose policy was it to use such a high fractional reserve ratio?

Whose money bailed them out?

[errolanderson]

Who went to jail?

[farmaholic]

Wasn't it only one man... Kareem Serageldin? Two and a half years.

I had to google it because I would have never remembered the name otherwise.....

[cottonpicken]

If people stop receiving interest payments on the bonds that's default and the currency gets smoked.

If teachers policemen and nurses stop getting paid it will be chaos.

If they jack taxes they hammer GDP

The situation is so bad they MONETIZED the debt!

We are not getting out of this. The thought some political leader has some magical solution is laughable at best.

The path of least resistance is control print

[farmaholic]

If there is no accountability(private or government) then this shit is beyond me.

So then in the end it just doesn't matter...
If I "managed" my business like the US banks their's or the government manages the country, would I still be in business? How can it be the Piper never gets paid or at least not by the original terms? What will it look like after the day of reckoning? But somehow I don't think there will be one.

[errolanderson]

But what will stop this from happening again?

It starts at the top; The U.S. Federal Reserve

[crusher]

I watched "Wolf of Wall Street" instead. Pretty long movie. I bailed before the end, was afraid it wasn't going to end well.

No easy solution to this mess, just try not to dwell on it and appreciate what lot you have. Keep diversifying and eventually it will work out.....so they say.

[tweety]

But what will stop this from happening again?

It starts at the top; The U.S. Federal Reserve

Errol, i am sure by far most respect yours and cottons view on many financial things as you both eat breathe and sleep it. So i'm going to ask you guys to speculate if you could be so kind and adventurous,

What's going to happen in the next 3 years?

[Oliver88]

Rand Paul is promoting a campaign that is pushing "Audit The Fed".

[errolanderson]

tweety . . . 2016 - 2018 may be the epic centre for financial markets. Commodity markets have already melt down. Stock markets must be able to stand on their own without the support of central bank policy.

U.S. Fed policies have lost their impact. QE has lost its sizzle to support equity buying. The Fed is attempting to hike rates at a time the U.S. economy is contracting. This could be be a total mis-fire.

U.S. decision makers don't seen to understand that global markets are far bigger than the U.S. economy. Low oil prices were no problem to the U.S. two weeks . ago . . . now they are.

The equity bubble is now threatening to pop. The stock rally stateside has been artificially engineered via corporate stock buybacks and QE (IMO).

There is a global cold war or currency war intensifying between central bankers. This outcome will not be good.

China economy is a problem and getting worse

There is risk of another credit crisis that could freeze money flow between lenders. The LIBOR and SIBOR rates are starting to rise. This means that banks want more return to lend between themselves.

The U.S. cannot tolerate their high dollar. The U.S. service sector is the last man standing (IMO) Manufacturing now in significant recession.

Anyone heard of Greece??

How this shakes out over the next three years will be a fascinating test on economics. All I know for sure is that true economics also rule over central bank manipulation.

[biglentil]

There are so many ways that this could play out over the next decade. No one really knows how it will play out, they are lying if they say they do.

Senario 1 - QE unleashed, oil prices recover quickly to mid $80's just like 2009, can kicked down the road crisis adverted once again. Great job central planners hip hip horray! Buy the f@$king dip and "Flip That House" is once again all the rage.

Senario 2 - China reveals its alternative reserve currency the gold backed Yuan this spring endorsed by the BRICS nations and AAIB. Almost overnight the USD tanks hard and fast while investors and central banks pile in. USA considers it an act of war... and enters an unbreakable depression that eventually reduces the standard of living to that of a fractured third world country.

Senario 3 - MF Global was the canary in the coal mine. Dozens of large investment firms holding massive naked short positions fold up like cheap umbrellas. This spooks investors and the longs. They almost unanimously request settlement in the physical commodity. Unfortunately for them the ratio of paper to the underlying commodity available for delivery is a 1000 to 1. They are offered shares of paper etfs like GLD and SLV instead but they aren't impressed. The physical price completely disconnects from the published futures price. The 600 trillion dollar derivatives bubble has imploded and futures prices are irrelevant. Consumers on the street notice the price of everyday staples spiralling higher and higher daily. People trip over themselves to spend like no tomorrow before the next imminent price increase or worse the sold out sign. Cash has become a hot potato and government price controls don't help. Store shelves are bare as the store owner cannot afford to restock at a loss. To make matters worse farmers are hoarding grain to try and protect themselves from skyrocketing inputs. No matter how much the media and government try to reassure the public it doesn't work. The damage is done the trust in the value of the dollar is gone and not coming back. It may be 100 years or more before anyone trusts a paper promise again.

It could be any one of these senarios or a combination of many more. No one has a crystal ball. The safest starting position is to diversify, grow a garden, keep livestock, have a backup wood stove, catch a fish, hold some pm's including lead. Buy hopper bins on aeration instead of stocks, store fertilizer, keep seed, and own a homestead. Some may call that a prepping lifestyle I call that real wealth.

[farming101]

Biglentil, I think #1 possibility is only a matter of time. How
long it will work is questionable.

Don't see #2 happening with any success.

#3 is going to happen, but not nearly to the extent it needs to.
If this were allowed to play out it would get rid of a lot of play money type debt
that everyone is wringing their hands about.
Derivitives-Don't the guys that buy these things ever read the little words
in the contract? Warning, you can loose your total investment
Really, in many cases if the one demanding payment finds it impossible
to collect they have a write down or a melt down and poof! they
are gone and so is the debt.
Bankruptcies must be allowed to run their course. If not, no
one will ever know how much in debt the world really is.