At the request of Russia, China, and Bill Gross (the Warren Buffet of Bond Investing)...
... the government has taken over housing via the GSEs.
More from Bloomberg.
Ramifications:
1) Add another Five Trillion dollars to the U.S. National Debt. No private money is willing to make up for the Six Trillion dollar wealth wipeout the housing market has experienced thus far.
2) Get ready for the monetization of all of that debt, which could lead to Hyperinflation (the weakening of the currency by oversupply).
3) If you have a mortgage that is handled through the newly nationalized GSEs, say hello to your new landlord... FedGov.
What did that nutty Communist Manifesto say?
... Centralization of lending in the hands of the State through a national bank with State capital and exclusive monopoly...
... We already saw above that the first step in the workers' revolution is the elevation of the proletariat to the ruling class, the fight to win democracy (remember that the United States is a Constitutional Republic, and NOT a democracy - Ed.) .
The proletariat will use its political rule to gradually tear all capital away from the bourgeoisie, to centralize all instruments of production under the control of the state, that is, the proletariat -- organized as the ruling class -- and to proliferate the mass of forces of production as quickly as possible.
Naturally, that can happen first of all only by means of despotic interventions in property rights and in the circumstances of production of the citizens, therefore, through measures that seem economic insufficient and untenable, that nevertheless will in the course of the movement grow beyond themselves and are unavoidable as a means to turn over the whole manner of production.
Well, looks like the experiment of private financing of the All-American home has come to a close.
What else will the government take over before its all over with?
Only time will tell.
Welcome to the U.S.S.A.
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12 comments:
I wouldn't mind it so much(the alternative would be probably an immediate collapse of the world financial system - which is comming soon anyway).
But what really ticks me off is Hank paulsons stupid manipulations. Silver at 12$.....ridiculous ridiculous...equity markets rallying....dollar biggest rally against the euro EVER....USA is already bankrupt and is adding another 5trillion$ debt. And the dollar is going through the roof.......stupid bankers of course are believing the manipulations. that's what they are paid to do. and like good sheep they behave.
But all manipulations will come to a bitter bitter end someday.
I think next could be the big three, wachovia, merrill lynch, lehmanbrothers, washington mutual.
rip usa......
Lehman... on the ropes definitely. Washington mutual not to far after that...
Just look at it this way.. the powers that be are giving us a gift.
I plan on taking full advantage of this shift by going half and half...
Half cash and half precious metals.
(By the way, this is just my personal plan... please see your financial adviser before you make powermoves...)
Toku.
Yeah that's good for you.....
Problem is that I have no cash for investing left....I don't really worry about my physical coins, but I worry a lot about my leveraged minifuture..EUR/USD, silver, gold, oil, agriculture.......slaughter slaughter slaughter daymn :/
YY,
Here's an irony of ironies... you might want to just liquidate your holdings and buy and hold U.S. dollars(?!)
Shocking I know, but we'll be having a Deflationary (Strengthening of the currency based on a limited supply of money and credit) storm that will boost the dollar... until FEDGOV starts the presses in earnest and hyperinflation reigns supreme.
As for me, I'm all the way out. Just stacking cash and buying G&S...
Right now it looks indeed like Deflation. But to me it is just major major market manipulation. the ECB and others are propping up the dollar index. commodity cartel is suppressing the price of precious metals, food, oil. I expect deflation in real estate, stock market, bond market. and inflation in commodities(except industrial commodities).
If we are talking about monetary deflation, then credit seems to definitly be tightening. But like you said UNTIL they run the printing presses. And with the bail out of F+F and many more to come soon, they will have to run the printing presses very soon. Or what do you think?
Your strategy seems very good, especially in these times of total market manipulation(especially silver)
Forgive me for interrupting the finance debate by posting an off-topic comment; but this just in from the warmonger front. I have been busy with school and haven’t had the chance to report regularly on the Warmongers. However, I can’t say I’m surprised since McCain believes in 100 years of war.
Oh yeah and before I forget......Obama's true weakness and evidence of Russia's irritation.
-DKSanctuary-
yupp McSame/Palin should make for an "interesting" time. what is suprising that Bush is so quiet, I really expected him to start another war until his term is over, and then he can establish martial law. Well, they still have time.
and sure we forgive you ;) a good investor needs to know everything about the world, especially about wars
DK,
Not a problem bro. Politics, Economics and Finance are the biggest cloisterf^&k you will ever find!
I caught a little bit of that interview. Methinks that Mrs. Palin is a little wet behind the ears.
Cause we really don't want war with the Russians. It's not in our best interests to do so.
Anon,
The damage has largely been done, and George W has served his purpose. The executive orders and the warmongering have already been unleashed on the world.
As much bad as he has done, I've never taken a personal dislike for him (like some on the left have done) simply because I recognize him for the puppet he really is.
My take... the economy will hold on (barely) until after the inauguration of the new President.
After that... all bets are off, cause we ain't seen NOTHING yet!
YY,
I'm thinking that conditions will be deflationary until the printing presses roll in earnest, which might begin sometime next year if the FDIC, Lehman Brothers, the Big Three Automakers, the Monoline insurers (MBIA and AMBAC), and God knows who else shows up, hat in hand, looking for a bail out.
(By the way, unlike some people, when I use the terms Inflation and Deflation, I always refer to it in a monetary sense, i.e. the strength or weakness of the currency. I believe that the Money Supply is the independent variable in the Money Supply/Price equation, and that Price is the dependent variable that always feeds off of the supply of money and credit; or to put it in another way, the strength or weakness of the currency.)
My thinking is... intermediate term (now until June 2009): Deflation. Long term (Mid 2009 and beyond): Inflation on a massive scale.
I'm done with the Stock Market (unless I short the crap out of it, but my time and money are better served picking up commodity plays). I don't like the bond markets because the long term fundamentals stink to high heaven, and so I'm all about buying as much Gold, Silver, and Oil investments as my devalued dollars will allow.
Cash is going to be king during our Deflationary phase; but the Precious Metals will rule them all Long Term.
Thanks for your reply Toku.
As far as I know, USA doesn't have deflation right now, I mean a few small banks gone bankrupt, and the real estate market is going down, but the FED keeps pumping money in. There is definitely a significant tightening of consumer credit, but in my opinion no deflation.
Also even if we would have a deflationary period, it doesn't necessarily mean, that ALL prices are going down. The price of real estate, stocks, should be going down. but people will panic and put their money in gold(and maybe to a lesser degree in oil, food). so price of gold should be going up even when there is deflation. unless the gold cartel manages it somehow to keep it down.
Also if there truly will be a deflationary period, then it we are talking about destruction of credit, which means that financial institutions will go bankrupt. So holding cash can get you in trouble,......
What doesn't make sense to me is that you are saying that FDIC will have to be bailed out NEXT year(in the inflationary phase). But this year is a deflationary phase? If this year is a truly deflationary phase, then it means that lots of banks will go bankrupt which means that the FDIC doesn't have the funds for it. So either the FDIC has to be bailed out DURING the "deflationary" phase(which pretty much doesn't make it a deflationary phase) OR people will lose their money(if the FDIC doesnt have any money left). Which makes holding cash not a good option. Unless you hold it in a safe deposit box or something.
YY
YY,
Good point on the FDIC bailout...
I guess I am being optimistic when I say next year for FDIC going hat in hand to the treasury to ask for more money.
But... it could be a lot sooner than that. Looks like Lehman Brothers is on the ropes as we speak...
but eventually, when the bank collapses begin in earnest (whenever that will be), be sure to add the FDIC to the list of government entities that need saving.
And besides, a few hundred dollars in a secure and well hidden home-safe (next to your secret stash of gold and silver coinage) would make a swell emergency fund until the hyperinflationary period arrives...
Agreed, it is good to have some papermoney(but not the digital "money" on the insolvent banking system). if the economy collapses, you need some cash until bartering with gold and silver becomes common place.
PS: seems like we have an interesting monday so far. what's going to happen with merrill lynch+AIG ? and their troubled friends. Is the FED soon bankrupt too when they bail out everyone? I heard it is possible that even central banks can become bankrupt.
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