Back on topic, did anyone notice the front page NYTimes article today about "credit default swaps"? I think there may be other terms for them, but it looks like these represent a segment of the economy many times larger than subprime mortgages, and this enormous segment is about to come undone.

Arcan Market Is Next to Face Big Credit Test

"Credit default swaps form a large but obscure market that will be put to its first big test as a looming economic downturn strains companies’ finances. Like a homeowner’s policy that insures against a flood or fire, these instruments are intended to cover losses to banks and bondholders when companies fail to pay their debts.

The market for these securities is enormous. Since 2000, it has ballooned from $900 billion to more than $45.5 trillion — roughly twice the size of the entire United States stock market.

No one knows how troubled the credit swaps market is, because, like the now-distressed market for subprime mortgage securities, it is unregulated. But because swaps have proliferated so rapidly, experts say that a hiccup in this market could set off a chain reaction of losses at financial institutions, making it even harder for borrowers to get loans that grease economic activity."

I've never seen things so bad; trillions in worthless loans; everyone with their heads in the sand. Its one thing for a government to be way deep in debt with no way to repay and quite another to have a significant number of citizens to be in the same boat. A government can tax and print money and sell its citizens into slavery to world bankers. A citizen can only declare bankruptcy. It's the analogy of owing the bank a million and having a problem and another guy owing a billion and the bank having a problem.

The problem is that if you owe the bank and they don't want to renegotiate the contract, they have the right to their day in court no matter what the government does to avoid it. Imagine millions of people thrown out of their homes and those homes left vacant, boarded up and looted, thus reduced in value to that of a vacant lot. The banks are left in a very bad position. They have their collateral, but now they must sell it quickly and reclaim only a small fraction on the amount leant. Many of these homes will sit on the market and in many cases become occupied with squatters. Banks will face lawsuits from municipalities and private citizens over the blight. In the end, the local municipalities will probably end up owning a lot of these properties for non payment of taxes or other reasons. I expect many auctions where people with cash can pick up lots of real estate for cheap.

In a convoluted way, the above will probably strengthen the dollar. After all, the real estate will depreciate greatly and be sold to those with the cash on hand. The asset (real estate) goes down in value which makes the currency used to buy it, go up in value. That's what happened during the Great Depression; defaulters where thrown in the street and those with cash bought the homes.

One difference with this situation is that a lot of these loans have changed hands so many times, thrown together with others into a big pot, stirred and sold again, that it can be very difficult for the lien holder to make any claims on the property. This happened recently with Deutsche Bank, who was unable to produce enough documentation in court to prove that they actually owned the loans. The borrowers walked away scot free. Courts have the right to demand original documentation and it seems that many of these lenders don't have it.

dohboi,
I don't have a clue, but here's a Ticker thread on the subject:

http://www.tickerforum.org/cgi-ticker/a ... post=29499

The motive is complete control and domination. The people running the show are not human in the same way we are. That's why we cannot relate to them and their motives.

mmasters said:



We appear to have four power bases in the country. The Excutive Branch of the Government (led at the present by a bunch of lunatics), the military, the FED and Corporate America. Congress has been ushered off to the side lines to hire hookers and draw huge pensions.

If such weapons as you propose do exist, it is likely we will see a huge clash between the four in the near future. It looks like the PTB is now fractured, and they are beginning to war between themselves! This is happening as they begin feuding over the carcass of the once, late great America. If true, the weapons you have mentioned, would surely be used.

Reminds me of those d*mn yankee carpetbaggers!

Pretty close but these four power bases you've mentioned have all been usurped by a handful of families that are really pulling the strings. It's a faction of these families that are now battling among themselves for the lead ruling position. It's can be hard to accept that all the world is a stage and the officials in control of these power bases are simply actors and pawns. Once you see things in this manner however things gain a LOT more clarity.

I think the Fed is intent on bringing the problems in the US to the boil ahead of the rest of the world. If they can do that, then as Europe has to drop rates, for instance, the US will be in a position to enjoy relative strength. I'm looking for the dollar to gain strength as this crap rolls out in the world wide fashion it is destined to. That is the way that, bankrupt or not, the PTB in the US plan to maintain control throughout the unwinding of the oil story, which they think will last 30 years. There is more to it, like how they deliberately set up a sovereign wealth trap, but it all plays to the same picture.

Unlike some, I don't think they will succeed. I've talked about it elsewhere so I'm a little tired of saying it again and others are probably tired of hearing it, but I think the Russians are going to ruin it for the American Empire.

mmasters said:



Could it be: Soros, Rothchilds, Warburgs, Morgans, Rockefellows we are seeing as going onto the extinction list. Anyone else come to mind?



I’ve met enough of them to know they are generally sociopaths. It is trained into them from early childhood.

Graph and full article here

So if my rate resets in March and I miss the march (reset) payment. How long until it shows up in some publically published report?

ie how long until the markets learn of and then respond to a default on a loan?

Bernanke doesn't have much room left for cutting rates. I think that fact will soon start to dawn on the financial herd.

Right, Heineken,
He has a Scylla and Charybdis (sp?) moment here. And liquidity does nothing for solvency. Some banks are gonna tank, probably some big ones, so say the financial seers.

Okay, now what? Does Bernanke buy stocks and junk bonds/derivatives to prop the markets directly? Or let the banks go swirling down the toilet bowl? The FDIC is gearing up for 50 to 150 bank failures this year, they say officially, but rumor has it that the number is more like 300.

I wonder how far the FED can go. I've read that there are limits to how much good money the FED can throw after bad, and that they may be at or near that limit.

According to this, we will see dramatic collapse before Nov. elections.

http://www.intelligencer.ca/ArticleDisp ... x?e=918803

quote;
The most frightening forecast so far comes from the Global Europe Anticipation Bulletin (GEAB), available for 200 euros - about $300 - for 16 issues annually. Its prediction is quite specific.

Where my warnings never spelled out an exact date, this think tank has it pegged precisely. Here are its very words:

"The end of the third quarter of 2008 (thus late September, a mere seven months from now) will be marked by a new tipping point in the unfolding of the global systemic crisis.

"At that time indeed, the cumulated impact of the various sequences of the crisis will reach its maximum strength and affect decisively the very heart of the systems concerned, on the front line of which (is) the United States, epicentre of the current crisis.

"In the United States, this new tipping point will translate into - get this - a collapse of the real economy, (the) final socio-economic stage of the serial bursting of the housing and financial bubbles and of the pursuance of the U.S. dollar fall. The collapse of U.S. real economy means the virtual freeze of the American economic machinery: private and public bankruptcies in large numbers, companies and public services closing down."


Time for Ben Dover Bernanke to work every magic trick he can muster. Meanwhile, where do we individuals look for protection from the fallout? This is worldwide. Is there such a thing as economic Kevlar?

I don't think there is much of protection on an individual level. If we don't handle this situation as a society, the fate of the individual will be much like a lottery. Independent of individual 'preparations'. The only true 'preparations' can only be undertaken by societies. Sorry all cowboys and survivalists.

I guess it's almost time to start to herd the lemmings into the containment camps. It keeps getting worse from here.