Jesse's Mom (Promoted from Comments)My mother, a noted bankruptcy lawyer said, "This isn't so darn complicated as our leaders would have us believe."
There's serious shit going on out there that needs addressing. This bailout needs to be tough and punitive for the "big boys." They had a grand time fleecing us all, they must pay. And Paulson (to whom Bush wants to give a blank check) surely should have seen it coming.
Hemingway reportedly said when asked how his bankruptcy happened, "Well, gradually, and then suddenly."
Do not forget: One week ago today, on October 15, McCain told us the economy was "sound." Sure, now....
PS. I was a bankruptcy lawyer for 25 years. This isn't so darn complicated as our leaders would have us believe.
She's got that right.
- Knock the top 15-30% off home mortgages.
- Give Bankruptcy Judges power to handle mortgages
- Don't give CEOs a break or a way out. If they run, jail them.
- The Government buys the distressed notes/lands, sets fair prices, and either
- lets current principle owners stay in their homes, or sells secondary homes. Either way, a market price gets set, and not by the crooks who fleeced everyone already.
We did this once already, during the S&L bailout. This is a larger, deeper round.
To the people who ask, WHY must this be done.
It must be done because CHINA & JAPAN (and Germany and Europe) hold our paper. If we do not act, they will stop loaning us $2 billion, that's BILLION dollars with a "B" per day, and the United States will -- because of who our Federal Reserve Chairman is -- try and print enough bad money, to try and make up the difference.
That is called hyper-inflation. As if you had a pocket of $100 bills, and it couldn't buy a loaf of bread. And by this afternoon, literally, a pocket of $1,000 bills couldn't buy a loaf of bread. ANY cash, paper money, anyone gets their hands on, they RUN, actually physically RUN to the nearest store, to spend it on something, anything, right now, because an hour later, it will be worth 25-50% less.
There is at least one country in the world right this very moment -- can't remember the name -- in the grip of a hyper-inflation.
Should China or Japan -- but it's really China -- stop loaning us money, we will simply be fucked without lube. The Great Depression will look like six year olds playing tea. When Russia when through a full devaluation of the Ruble, it took them (I believe) close to ten years before they started to return towards normal.
Just as one example as how bad life got in Russia, their were sex tours set up to Russia from all over the world (including from the United States) for whatever your kink is. Underage was nothing. The one I remember is Professor sex. People flew in to Moscow on special tours in order to have sex with Ph.D's. These educated women, these women with doctorates in their late 20s, provided for their entire extended families and turning tricks with C students who got off on doing it to Professors. Because $50 USD was worth more than $10,000 rubles. (And if I'm off a bit in my precise numbers, I'm making a point, not trying to be precise. What I'm saying, happened in Russia. It has happened in many other places when the money has gone ka-Zam. It could happen here also. As it did in the South after the Civil War.)
Do I think it will get that bad? Am I encouraging panic?
No. And no. Although as we've said at GNB many times, you bet your ass I believe everyone should store six months to a year of food -- and yes, this is a class thing; poor and working class can not afford this I regret to say -- and medicines, several water purifiers, and about 100-200 other critical items (eyeglasses.) Plus a jump kit for each family member. Plus a jump kit in your car for each family member and spares, you betcha.
Do I think worst case (or almost worst case; other cases are even uglier) is likely? No. I do not. Really I don't. Do I think it is a possibility? Yes.
I don't think it will happen. China would have to, in the vernacular, piss on its own boot.
China's central bank -- every central bank in the world -- owns LOTS of dollars. The reserve clearing currency of the world is the United States dollar. Said differently, it is the Dollar in which all international debts, loans, and transactions, ESPECIALLY OIL TRANSACTIONS, are cleared. And everyone needs energy.
Every central bank in the world owns BILLIONS of dollars, good old U.S. of A. greenbacks, specifically in order to clear loans with other central banks, and even more importantly, in order to clear its OIL AND NATURAL GAS accounts, which with very rare and not important exceptions, are denominated exclusively in the U.S. Dollar.
Therefore... if ANYONE, including China, which owns a massive amount of dollars, were to make a move on the dollar, they'd be pissing on their own boot. Said differently, if China were to fuck over the United States, which it could, simply be refusing to loan us more money. If it did, it would be hurting its OWN dollars at the same time it hurt the U.S. dollars.
However, if China did make a move on the U.S. dollar supply, all of a sudden the U.S. would need lots and lots of money, real.damn.quick. But because we suddenly needed money, and no one is lending it to us easily, the interest rate we'd have to pay to get it would go through the roof. (When a thing is scare, it costs more. Economics 101.) And as the interest rate the US Government pays on money it borrows is, by definition, the LOWEST interest rate around, then every other interest rate in the US would skyrocket. (Every interest rate in the world is tied to the Fed Discount Rate.)
Skyrocketing interest rates... businesses can't borrow money. They can't buy stuff they need. No operating capital. Layoffs happen. People are out of work. Depression.
Why wouldn't China do this? Looks like a great way to take out the U.S., a serious rivel for control of the world's remaining energy supplies, and the only remaining super-power. If they take us out, China takes over the world.
Because China hold TRILLIONS of dollars in their central bank. They keep lending us money. We loan then dollars, at the rate of $2 billion a day. If China makes a move on the dollar, China would be in effect, destroying all of the money they've loaned us, that is, their own economy -- and the rest of the worlds -- right along with ours. Furthermore, China needs not only their own economy, but that of the rest of the world in order to export goods.
Under what circumstances WOULD China stops loaning us money? How could it get SO bad China would wreck everything, bring the whole world down?
- If we become unreliable, not paying back what we owe, skimming off the money for the benefit of the rich defaulting on the rest. Oops.
- If we become a genuine military threat. Then they just fuck our economy and take the hit. Their rural economy can handle the hit better than our technological/oil economy. Plus too bad if 100-200 million starve there. Here... not so good.
- If we threaten to destroy the market to the point it is too dangerous for them to have their money in dollars.
And I notice I haven't even talked about the dangers of China's own 9-10% inflation. Which it can NOT sustain. Which may result, er, is likely to result, er, WILL result in its stopping loaning the United States billions of dollars daily, sometime in the next one to five years, with all of the above consequences. Hopefully not all at once. A slow landing, not a sudden crash. But China will have at least a recession, if not a depression, lasting five to fifteen years as it completes its transition from a rural to an industrial (and perhaps even a technological society.) If China does have a depression, so will the United States and the world.
Be that as it may...
This is why the U.S. MUST make the market safe now.
China and Japan have sent clear and unmistakable signals that we WILL fix this problem. Now. They are not stupid. No one commits global suicide. Yet at some point, retrenchment inside the Middle Kingdom must look better than allowing the foolish Americans to continue burning through the wealth of the world.
Therefore, we return to what I have said before.
- Call your Senators. Tell them to HOLD THE LINE.
- Or work as slaves literally the rest of your lives.
- Your children and grandchildren as well.
Yep... there are other ways this could be done.
Make the amount MUCH less for now. Revisit it after the election.
The point is simply to reassure the Street help is coming. All the help does not have to arrive now. The Street simply needs to know it will get there.
Anything short of Holding the Line is too much. The REPUBLICANS blew this. They don't get a voice.
Make the call.