Global Economic Meltdown

[Flatty]

I am sure we are all aware what has been happening in the world recently with the credit crunch, massive corporate bailouts, and all other manner of financial catastrophes. I found this interesting article in the Rolling Stone Magazine that gives a much clearer picture of why these things happen. The old adage, "If it sounds too good to be true, it probably is," should be mentioned here.

http://www.rollingstone.com/politics/story/29127316/the_great_american_bubble_machine/1

There is a short video as well for those of you with ADD. :D

http://www.rollingstone.com/politics/story/28816321/inside_the_great_american_bubble_machine#

Just something for you guys to think about, hoping it might make you more aware of how these things work & more aware of where your pension is being invested so that you don't get caught out.

[Askari]

Ja.........apply lube.

[rainy]

And what exactly is surprising in all this?

[Askari]

That the masses think banks are there to store their money and to invest it 'n stuff. That the economic system is fair and based on supply demand and all that. That there isnt global manipulation of everything in place designed to keep a few elite rich. Not rich like I live in Sandton and drive an Aston rich. Like super rich. Not like Bill Gates rich. I mean like owning the United States rich.

[rainy]

It is one of the foundations of capitalism to keep a select few rich and the rest poor. That's how the system works. Don't get me wrong, it is highly interesting to get a bit more insight on the mechanisms of the system, but nothing in there really surprises me. As in 'oh my goodness, I never thought this was possible' surprising. And if they hadn't deceived the masses about the true purpose of it all, these bubbles would have burst a lot sooner - or would never actually have been inflated.

[w1z4rd]

The worlds not ganna melt down, all that needs to happen is the world needs to learn to mix capitalism with socialism. Like the Swedes have done. That way you reduce the gap between the rich and the poor and equalize the society out better.

[senorblinky]

I read economic and i went into "meh" mode.

It's a recession when your neighbour loses his job.
It's a depression when you lose yours.

Well, i still have my job, my health and Skari is having kids! Life is good chaps.

[Stool]

yeah lets get some cheer in this thread :D

[Thumponius]

Let's close the gap so that we all suck equally and just clock watch and not put in any effort or show initiative and the entire globe can go into 'meh' mode. There won't even be any wars because our neighbours will suck just as badly as us.

If they had only managed to wipe out the ruling class, communism would have been perfect because everyone except the ruling class was on a single crappy sucky level.

Cheery thoughts for a Monday.

:meh:

[senorblinky]

Looks like somebody has a case of the Mondays!




((Can i get shot for saying something like that? Stool, bring your paintball gun, I deserve one between the eyes))

[Thumponius]

I would retort but :meh:

[TG]

I'm already in meh mode.

[Flatty]

Wizard, Socialism will never work - not while 95% of the world's wealth rests in the hands of less than 1% of its population.

[senorblinky]

Socialism works if it's done right, like the southern part of india which is a democratically elected socialistic state.

Socialism won't work if you put people in charge of it though. Maybe programmed robots. Or Animals... no... wait... not animals...

[w1z4rd]

Wizard, Socialism will never work - not while 95% of the world's wealth rests in the hands of less than 1% of its population.

Yup, but the Swedes got it the most right so far. I dont believe in just capitalism or just socialism, but a mixture of the both.

[Stool]

i like flowers and stuff

[WingNut]

Found this on the NH forums and thought it was a pretty cool analogy:


An Easily Understandable Explanation of Derivative Markets

Heidi is the proprietor of a bar in Detroit. She realizes that virtually all of her customers are unemployed alcoholics and, as such, can no longer afford to patronize her bar. To solve this problem, she comes up with new marketing plan that allows her customers to drink now, but pay later.

She keeps track of the drinks consumed on a ledger (thereby granting the customers loans).

Word gets around about Heidi's "drink now, pay later" marketing strategy and, as a result, increasing numbers of customers flood into Heidi's bar. Soon she has the largest sales volume for any bar in Detroit.

By providing her customers' freedom from immediate payment demands, Heidi gets no resistance when, at regular intervals, she substantially increases her prices for wine and beer, the most consumed beverages. Consequently, Heidi's gross sales volume increases massively.

A young and dynamic vice-president at the local bank recognizes that these customer debts constitute valuable future assets and increases Heidi's borrowing limit. He sees no reason for any undue concern, since he has the debts of the unemployed alcoholics as collateral.

At the bank's corporate headquarters, expert traders transform these customer loans into DRINKBONDS, ALKIBONDS and PUKEBONDS. These securities are then bundled and traded on international security markets. Naive investors don't really understand that the securities being sold to them as AAA secured bonds are really the debts of unemployed alcoholics.

Nevertheless, the bond prices continuously climb, and the securities soon become the hottest-selling items for some of the nation's leading brokerage houses.

One day, even though the bond prices are still climbing, a risk manager at the original local bank decides that the time has come to demand payment on the debts incurred by the drinkers at Heidi's bar. He so informs Heidi.

Heidi then demands payment from her alcoholic patrons, but being unemployed alcoholics they cannot pay back their drinking debts. Since, Heidi cannot fulfill her loan obligations she is forced into bankruptcy. The bar closes and the eleven employees lose their jobs.

Overnight, DRINKBONDS, ALKIBONDS and PUKEBONDS drop in price by 90%. The collapsed bond asset value destroys the banks liquijdity and prevents it from issuing new loans, thus freezing credit and economic activity in the community.

The suppliers of Heidi's bar had granted her generous payment extensions and had invested their firms' pension funds in the various BOND securities. They find they are now faced with having to write off her bad debt and with losing over 90% of the presumed value of the bonds. Her wine supplier also claims bankruptcy, closing the doors on a family business that had endured for three generations, her beer supplier is taken over by a competitor, who immediately closes the local plant and lays off 150 workers.

Fortunately though, the bank, the brokerage houses and their respective executives are saved and bailed out by a multi-billion dollar no-strings attached cash infusion from the Government. The funds required for this bailout are obtained by new taxes levied on employed, middle-class, non-drinkers.

Now, do you understand?

[Stool]

Quote of the recession so far:

"THIS IS WORSE THAN A DIVORCE. I'VE LOST HALF MY MONEY AND STILL HAVE MY WIFE."

[Darnit696]

I mean like owning the United States rich.

I would hazard a guess that the object is not being U.S rich but Global rich. World domination ftw. :|

[senorblinky]

@ Winger - Kinda makes you mad, doesn't it?

Cause effectively, they are dramatising it, but if you look at the nuts and bolts of the thing, it's very true.
Also remember though, that the banks et al serve a far wider range than Heidi ad her suppliers. But then again, if the bail-out had gone to the root of the cause, IE pay the drinker debts (by the non-drinkers, lol, uncool), the drinkers would pay heidi, heidi would pay the bank and suppliers and the bond prices would still be intact, and now just generating more money off of it.

But i'm not an economist, i'm sure what they did is better than my suggestion.

[Thumponius]

Unless you're Heidi..

[senorblinky]

There is another Heidi that didn't have any economic issues to talk about, just a little black book she should've kept secret longer :p

[Thumponius]

Yeah but interest dropped off after withdrawal.

[Flatty]

The Goldman Sachs story is a microcosmic example of the nefarious things that people are doing to line their pockets at the expense of the masses. What really is scary is that there is a system that protects some of these people with one hand, making scapegoats of others with the other hand. The duplicity in this system is a sad reminder that justice does not prevail.

I am sure many of you are aware that the Federal Reserve Bank of the United States of America (Americans refer to it as The Fed) is exempt from most forms of government audit, and even when such audits are carried out the results are delayed to such an extent that when they are produced their relevance to the current economic situation is completely irrelevant. Any discussion regarding the allocation of Fed funds is sidetracked to such an extent that when (if) any results are made public people are beyond caring. Basically The Fed does what it wants, how it wants, and when it wants. Here we have an organization that is responsible for issuing the currency, and determining the prime lending rate of one of the most powerful nations in the world, operating completely independently of the government of the people which it serves. For all intents and purposes The Fed is a private institution.

The current system of central banking is prevalent in most countries around the world. Each nation's central bank determines the prime lending rate, and regulates the currency in circulation. The central bank of central banks is the Bank of International Settlements (BIS). The BIS was founded by a group of rather industrious individuals representing various investors in 1930. The reasons given for its founding are that it was a vessel for receipt and distribution of reparations from World War I. Excuse my scepticism, but didn't World War I end in 1919? The BIS determines global lending rates, and was directly responsible for the most recent credit crunch when they upped the BIS ratio from 6% to 8%. The BIS ratio gives the ratio between risk-bearing capital and risk-weighted assets. Basically they put the squeeze on all the central banks around the world, who in turn put the squeeze on the banks in their respective nations, who then put the squeeze on their people.

This sounds like quite a good thing, having a global regulating body for the world's financial systems, and on the surface it is. When one looks at the bigger picture, and the current move towards the establishment of a global currency, things start to get interesting. The US Dollar is widely accepted as the currency of reserve for many nations. Due to the instability in global financial systems, many nations are starting to question the wisdom of using the US Dollar as their reserve currency, which is understandable.

For a global currency to work properly, it must be just that, global. You cannot have rogue nations operating outside the system. How will trading partners deal with these rogue nations if they are not in the system? Obviously they will find other ways of compensation which fall under the radar of your global regulating body. This defeats the purpose. A global currency will put control of all the world's finances under one roof. When the BIS says jump, all the central banks will say, "How high?"

Prior to the invasion of Iraq, and Afghanistan, these countries did not have a central bank that was accountable to the BIS. They do now.

If you look at the list of central banks posted on the BIS' website (http://www.bis.org/cbanks.htm) you find a dead link to the Central Bank of the Islamic Republic of Iran, and no link at all to the Democratic People's Republic of North Korea. The link to Iran's Central Bank has been dead ever since I first tried it. There has been a lot of media coverage pertaining to these two nations lately, I wonder why?

I don't even want to use the "C" word here, it will detract from the glaringly obvious facts.

Baron Nathan Mayer Rothschild said,

"I care not what puppet is placed on the throne of England to rule the Empire, ...
The man that controls Britain's money supply controls the British Empire.
And I control the money supply."

Socialism? Yeah, and I am a Muppet.

[Flatty]

AND this is where we all stick our heads in the sand & hope the storm blows over our delicate little bottoms:

Myanmar (Burma) seems to have skipped the radar a teensy weensy little bit - http://www.bis.org/cbanks.htm. Nothing...

Mmmm..

Computer games are evil - they detract our attentions from the atrocities happening in the world.

http://news.yahoo.com/s/ap/20090811/ap_on_re_as/as_myanmar_opposition_leader

[rainy]

Something everyone should watch:

http://www.imdb.com/title/tt1016268/