For those of you that don't pay attention to the world of finance ...
September 11, 2007, 2:01 am
This may seem boring, but do give this a quick read through.
executive summary: dollar fucked. money is complicated shit like microsoft operating system. bugs. very bad.
You might have heard of the subprime problem. The problem isn't that a few poor people have been defaulting on the their loans.
The problem is that these loans have been cut up into little packets ("tranches") and bought and sold by investors all over the world in order to distribute and minimize this risk. Then very complicated trading techniques involving derivates and options have been devised that allow massive hedge funds and investment banks to make profits if the price of these packets goes up or down. They make money in both directions. They aren't trading the loans, they aren't trading the packets of loans, they are trading abstract contracts on what the value/rate/risk of those packets are, what they will be at some future time or how much their value moved.
Because this algorithmic trading has been so effective and profitable (truly making money out of nothing) they borrowed ("leveraged") as much money as they could and found more and more obscure ways to place bets and profit on this weird abstraction of money.
Its not that there are 200 billion dollars of bad loans, its that there are trillions and trillions of dollars of derivatives based on those loans, and now NOBODY knows exactly what is connected to what. Hedge funds have a notorious lack of transperency. The effects have cascaded throughout the entire financial planet because all the investment banks are involved and all the greedy traders leveraged the shit as high as it would go (because credit was cheap).
In periods of heavy volatility weird things have been happening that NOBODY can predict or understand. Nobody can tell what the impact on the market will be.
Money ceased to exist as a solid measure of value a long time ago (like in the 1920s when they took it off the Gold standard and replaced it essentially with Government debt). But some of us still need to buy vegetables with those little shells and pieces of shiny metal.
Speaking of which, the dollar is slowly tanking. Its happening because they are simply pumping more money into the system because they have to. The talk now is that they (Bush, Cheney, the Fed, the Illuminati and Bin Laden himself) are deliberately allowing it to tank at which point they will offer the American people a disastrous escape plan:
The Amero. For the unified North American Union : US, Canada, Mexico.
(total disclaimer : the halturnershow site has nasty comments about "jew bankers". white power idiots link to him. I post this only for your amusement. I don't really believe him and certainly don't like him.)
update: The coins were made by an artist as a joke.
But the Amero story has legs and an element of truth to it. That's why they let the Mexican trucks in, that's why they don't want to build a wall against Mexico. Mexico will always be part of the US, so why not make it formal ? Personally I'm all for it. I think. I like Mexicans. The Canadians are not happy.
US debt is measured in dollars. The real threat is not that the Chinese will tank the dollar. No way would they do that, they would be the one to lose—they own US debt.
The US would tank the dollar itself to get out of its debt obligation. Weimar Germany did the same thing to its currency in order to get out of paying reparations for WWI.
The dollar is likely to hit 0.50 euro cents to the dollar. Its at 0.72 now.
If you have any savings and you are worried : Buy euros or buy ETFs or mutual funds that track euros or GOLD. ETFs and funds are easier to move in and out of faster than trying to buy actual currency.
Alternatively you could just rack up more credit card debt and then laugh as your debt gets smaller.
disclaimer: I'm just a stupid musician who reads too much, and lives very frugally at slightly above the official poverty level. Mankind needs to get over money, lust and greed and get ready for the real stuff.
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tin man tinmanmusic.com:
September 28th, 2007 at 14:09
True- whats more crazy with the dollar vs. euro thing it that after the US spent all the money on that war to get closer to Caspian oil, the EU decided to let Romania, Bulgaria, and eventually Turkey in, so their pipe is getting there first.
