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Stalins Organ

The end of capitalism as we know it?

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You see, all these houses don't disappear, and people living in these houses are not freed of their dept.

Well, they are freed of it, in a sense, because they've been foreclosed on or shortly will be. The government will be buying up bad debt.

No. See above. The foreclosed house will be dumped at market value.

No, but they're corrupt, and they're liars.

It's worth might rebound, several years in the future, well past the timeframe that a bank would hold on to a foreclosure. Again, the mortages the government would buy up are ones that have gone bad. Not only that, but the government won't be buying up mortgages directly, but mortgage derivatives. There's no direct connection to the associated property. In many cases, the property associated with the mortgage derivative has already been foreclosed and dumped, but the derivative lingers on in a bundle of bad debt. The claim that the government will work with the mortgages it buys up is a lie. That won't be possible except in very few instances.

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"That won't be possible except in very few instances."

Yes, for fellow lawmakers, friends, relatives, and lobbyists.

It is corruption at the core - Free Markets can't exist because the engine is controlled by liars and thieves, and the overseers are sleeping with them.

----

Notice today the news that the Senate/House is LIMITING email getting to them from constituents, supposedly because it was bringing down their servers - which it probably was - so, a glimmer of hope exists that SOMEBODY is listening; the email admins at least.

But, instead of fixing it they decided to deny constituent access.

Wonderful.

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Well, we've moved on from Bail Out Wall Street to... Bail Out The World!

And he ain't kidding, either. It's in there.

Does the non-US owned assets include all the bundled derivatives that were sold to offshore investment groups? If the risks of the bundles were knowingly misrepresented, then the lawsuits and resulting payouts will take up the value of the bailout anyway. :eek:

How much of the toxicity has been exported?

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Doesn't matter. Go back and read it again.

What it allows is bad foreign debt (of whatever origin) to be transferred to a US bank, and then sold to the Fed.

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What happens in the US if an asset is sold and the receipts don't cover the debt? Eg $200k is owed on a house, it sells for $150k - what happens to the remaining $50k?

Does it remain on the asset, or is it jsut a loss to the creditor?

In these parts debts are not on assets - they are on people with the assets as security - so you personally owe teh debt, and if sale of hte security doesn't cover it then you remain liable for the remainder.

So mailing the keys to the bank to becoem debt free is not an option.

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What happens in the US if an asset is sold and the receipts don't cover the debt? Eg $200k is owed on a house, it sells for $150k - what happens to the remaining $50k?

Does it remain on the asset, or is it jsut a loss to the creditor?

Depends on the type of loan, and the local laws. Anyone that walks away from a mortgage will suffer massive damage to their credit rating, so they will usually declare bankruptcy at the same time since bankruptcy is no worse. The creditor then has to get in line with the other creditors, but will probably lose out.

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Larry you have to read the bill. It's very clear. The Bank of Shanghai can transfer all of its toxic assets to the Bank of Shanghai of Los Angeles which can then sell them the next day to the Treasury. I had a provision to say if it wasn't owned by an American entity even a subsidiary, but at least an entity in the US, the Treasury can't buy it. It was rejected.

The bill is very clear. Assets now held in China and London can be sold to US entities on Monday and then sold to the Treasury on Tuesday. Paulson has made it clear he will recommend a veto of any bill that contained a clear provision that said if Americans did not own the asset on September 20th that it can't be sold to the Treasury.

Hundreds of billions of dollars are going to bail out foreign investors. They know it, they demanded it and the bill has been carefully written to make sure that can happen.

Just to clarify - the Bank of Shanghei et al can't sell ALL of their "toxic assets" to its US branch and get bailed out - they can only sell their US-based "toxic assets".

Without this there would be no recovery - it would be the same as declaring the US bankrupt as it would be deliberately defaulting on it's debt.

It's not corruption - it's a fact of life when you have sold domestic debt overseas.

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So the foreign owners of the debt carry the can. Fair enough. What damage does this do to the reputation of the US banking system o'seas? Where does this leave the idea of an American banking system servicing the world economy? And if it cannot, where is the US going to earn foreign credits?

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Just to clarify - the Bank of Shanghei et al can't sell ALL of their "toxic assets" to its US branch and get bailed out - they can only sell their US-based "toxic assets".

Given that these are the same people who came up with "structured investment vehicles", I'm sure they'll think of something.

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Costard it leaves the US effectively bankrupt, since, at the very least the US will have to pay penlaty interest on any further debt it sells.....or at he worst no-one will accept it's debt anymore....

Lars I don't think it's the durn'd furiners who came up with the idea.......

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Stalin's Organist - I was wondering why the US dollar hasn't taken a bigger hit.

I understand that the US economy is still the biggest by far, and that the resource base it has (in people and skills, if nothing else) is second to none, but the way things are headed, most of the growth in the US economy over the next five or so years - if any - is going to go to those payouts. That means the US populace will be working harder for no net gain in wealth. Yurk - not the sort of thing I'd want to be telling my citizens (not while I was busy trying to protect the one's who scammed that wealth in the first place, anyway.)

The idea that the US can just walk away from this train wreck is no doubt an attractive one to many inside the US - I can't see China, for one, being happy to carry the can. Not when disasters like this cost millions of lives and almost the only opportunity the Chinese had of growing their wealth. On the other hand, I can't see other countries around the world being terribly happy at the prospect of a ground level political upheaval in China right now: most of them know their history, and understand the costs involved. That recognised, they are prepared to pressure the US for a structured bailout - and the US cannot go isolationist without losing a very large part of it's power (namely, the rights to the global currency).

The need for reform is obvious - but the idea that we can trust anyone in business or politics went the way of the dodo about ten years ago. Not having used their judgement with regards to trustworthiness in that time, people in power are finding it very difficult to exercise it now. What do you know? - altruism does exist for a good reason: it gives us a society worth working for.

oh preacher boy....

Lars, many thanks for your contributions

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The damn terrorists won after all?

Buh..but I was a good little consumer! I was!

Damn...

Not the terrorists, no.

The stupid rich and their ignorant, sociopathic, incompetent children won this round. The good little consumer was held down by the press while the polis removed our trousers and lubed us up. :eek:

To be fair, we're not terribly bright slaves.

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Costard as I understand it (and I'm definitely a lay person!!) the US is mortgaging itself to pay for current consumption - ie it's borrowing to pay for day-to-day living.

It can do this mainly because of the petro-dollar - as long as oil is (mainly) paid for in US$'s then the US$ will retain value and be in demand.

But there are vast sums of US money held by foreign Govt's - I seem to recall a year or 2 ago there was some discussion about the implications of China having US$ 1 trillion in CASH......

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Costard as I understand it (and I'm definitely a lay person!!) the US is mortgaging itself to pay for current consumption - ie it's borrowing to pay for day-to-day living.

It can do this mainly because of the petro-dollar - as long as oil is (mainly) paid for in US$'s then the US$ will retain value and be in demand.

But there are vast sums of US money held by foreign Govt's - I seem to recall a year or 2 ago there was some discussion about the implications of China having US$ 1 trillion in CASH......

Basically correct, but China doesn't have $1 trillion in cash, they have $1 trillion in US T-bills and other instruments. They can't dump it, as they'd be shooting themselves in the foot.

As for the big change to petro-EU, go look at what's happening. The EU is cratering quicker than the US.

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Lars, if the US treasury is paying 5% for the T-bills and the economy is showing negative growth for an extended period, where does the money come from? (heh, 2% is looking attractive now)

Taxation isn't really an option - trying to squeeze blood from a turnip and all that - but printing more money is. A lower US dollar would help US exports (if the necessary infrastructure spending has taken place), but the cost of imports would rise. How self sufficient is the US economy?

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How self sufficient is the US economy?

Not very. We've moved more and more of our industrial production off-shore (cheaper labor, you know). It would be interesting to know what percentage of our steel and other common metals are being produced domestically, for instance. For the last two or three years I have been viewing with alarm the growing percentage of finished goods in my local stores that have "MADE IN CHINA" stamped on them. Don't think for a moment I am opposed to importing goods from China or any place else. But I don't like seeing US-made goods vanishing at this rate.

Michael

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The stupid rich and their ignorant, sociopathic, incompetent children won this round. The good little consumer was held down by the press while the polis removed our trousers and lubed us up. :eek:

They gave you lube??? I feel like I got it dry and rough. :(

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Not very. We've moved more and more of our industrial production off-shore (cheaper labor, you know). It would be interesting to know what percentage of our steel and other common metals are being produced domestically, for instance. For the last two or three years I have been viewing with alarm the growing percentage of finished goods in my local stores that have "MADE IN CHINA" stamped on them. Don't think for a moment I am opposed to importing goods from China or any place else. But I don't like seeing US-made goods vanishing at this rate.

Michael

Deindustrialization isn't necessarily a bad thing considering that the Singularity will happen sometime this century. And then finally robotic beings will rule the world. Are you just unhappy that it's been a constant 30 million people employed in manufacturing since 1970?

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Lars, if the US treasury is paying 5% for the T-bills and the economy is showing negative growth for an extended period, where does the money come from? (heh, 2% is looking attractive now)

Taxation isn't really an option - trying to squeeze blood from a turnip and all that - but printing more money is. A lower US dollar would help US exports (if the necessary infrastructure spending has taken place), but the cost of imports would rise. How self sufficient is the US economy?

Actually, fairly self sufficient. Depends on what you mean by it.

If you must have a color tv, vcr, and a ipod to live, well, things are going to suck.

If you prefer good stuff to eat on your table, no sweat.

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Not very. We've moved more and more of our industrial production off-shore (cheaper labor, you know). It would be interesting to know what percentage of our steel and other common metals are being produced domestically, for instance. For the last two or three years I have been viewing with alarm the growing percentage of finished goods in my local stores that have "MADE IN CHINA" stamped on them. Don't think for a moment I am opposed to importing goods from China or any place else. But I don't like seeing US-made goods vanishing at this rate.

Michael

A lot of manufacturing is coming back home due to high shipping cost.

And China is really killing themselves with all the bad products they've been putting out lately. No point in importing cheap toys if they're tainted with lead.

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