Tag: "debt"
The Great Global Debt Prison
Forwarded to me by a friend. Food for thought.
The Great Global Debt Prison
By Giordano Bruno
Neithercorp Press – 2/4/2011
Tense and terrible times inevitably summon an odd coupling of two very different and difficult human conditions; honesty, and brutality. Certain painful truths are revealed, and often, a palpable fury erupts. Being that times today are particularly tense, and on the verge of being spectacularly terrible, perhaps we should embrace both conditions in a constructive manner, and become brutally honest with ourselves. This begins by admitting to that which most ails us. It begins by admitting how far we have fallen…
Our economy, our culture, our entire world, is built upon debt. No one ever asked us if that’s how we wanted it, it is simply how the system was designed when we came into it. Many of us have lived our entire lives under the assumption that debt is a necessary function of daily commerce and a valuable driver of successful society. Most households in America operate at a steep loss, trapped in constantly building cycles of liability and interest. There are even widely held schools of economic thought that are centered completely on the production and utilization of nothing but debt. Only recently have many people begun to ask themselves what the tangible benefits are (if any) in being dependent on debt based finance.
View PostTwo excellent articles…
Oops! Fixed the links….
and
A Meditation on the Tea Party Movement
Read and learn. Both worth the time.
View PostThe “C” word is back – contagion
Not since the early days of the sub-prime mortgage crisis have we heard the word “contagion” bantered about so much. We were assured then that it would be “contained.” It wasn’t This won’t be either.
ECB May Have to Turn To Nuclear Option
Last time it was 18 months between the initiation of the sub-prime and the financial crisis. I don’t think we’ll have that long this time.
These are financial weapons of mass destruction
From JS Mineset. The CDS”s must fail in mass because those entities that wrote them are bankrupt and cannot perform. The entities making these massive bets on Greek debt are in for a surprise if they think they are protected.
Jim Sinclair’s Commentary
Breach of contract is what you would sue for when an OTC derivative fails to perform.
If Greece fails the credit default swaps on Greek debt would fail in mass.
Citi sues Morgan Stanley over CDS, claims $245 million
(Reuters) – Citigroup Inc (C.N) sued Morgan Stanley (MS.N) on Friday for breach of contract, saying the Wall Street firm owed it $245.4 million for protection it bought on a loan.
Citibank bought a credit default swap (CDS) from Morgan Stanley & Co International in 2006 on a $366 million revolving credit facility it provided to an issuer of collateralized debt obligations (CDO), according to the complaint filed in U.S. District Court in Manhattan.
The swap obliged Morgan Stanley to pay Citibank the money as a result of a payment default on the credit facility to the CDO, known as Capmark VI, it said in the complaint.
Liquidating the CDO collateral did not cover the entire amount, and Citibank said it exercised its right under the CDS to have Morgan Stanley make up for the shortfall, but it refused, according to the complaint.
Citibank paid Morgan Stanley about $750,000 for the CDS, according to the complaint.
Morgan Stanley could not immediately be reached for comment.
Bond market debacle coming 2010
The U.S. has to fund 40% more bond sales than it did in 2009. Yet who is going to buy all of them? This article by Eric Sprott is a vital to understanding that we are continuing to be lied to by our government and the bankers. Look at the numbers regarding who bought government debt in 2009. The catch all category “Household Sector” increased its purchases by 3500% from what they did in 2008. Up from $15 billion in 2008 to $528 billion in 2009.
Do we really think the private sector scooped up half a trillion more in bonds during the “great recession” while at the same time propelling the stock market to new recovery highs? Not.
There is some funny accounting going on here, and the buyer of last resort – the Federal Reserve – is likely to be behind these purchases – through agencies that do their bidding and the ever increasing smoke and mirrors that the financial system has become.
This comes home to roost in 2010. The QE program is supposed to end in March. Not a chance. If QE were to end, who would buy the government bonds? There isn’t enough demand out there, and it is showing in the steady rise of interest rates over the last 30 days.
The currency crisis will manifest itself in the bond market. If it continues to fall (rates rise) then look out. Our economy cannot absorb higher rates, more debt and a failed US treasury auction (debt default). Yet all are on the table for next year.
Are you ready?
Agenda – Grinding America Down (5 star!)
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