Monday, August 27, 2007

News from financial ground zero:

Being like the only builder in LA county that has a job at the moment, I must post a little information. . .

You people have no idea what's going on here. We're a inch away from real financial disaster. In a number of neighborhood here the foreclosure rates are no running 1 house in 20--that's right--and there is simply panicked selling but no buying. When one stops to consider the amount of paper wealth that has simply vanished in the last 3 months, well, one becomes desperate to move to Hawaii or someplace like that.

I'm certain that home values here will slide 30 to 40 percent. Certain.

But that's not the end of it all. The credit crunch that just ran through the world and is far from over has a peculiar cause. It ISN'T the sub prime market defaults. These haven't even hit the books yet. The defaults that are coming so far are from builders, with houses they can't move, and from developers in general. The sub prime will hit the market soon(november) and all hell will break loose.

No, the simple cause is that someone somewhere called bullshit on the A ratings of the garbage bond ratings that have floated this whole market. That's all. They didn't buy 'em. And that was the end of that. People panicked, tried to sell what they had, but there just wasn't anybody dumb enough to buy that crap anymore. Finally, in the greater fools game, we ran out of fools.

Or almost, there's still the fed.

Actually, the fed knows exactly what it's doing. It's just waffling on the repercussions of what's going to happen and is nervous about the fallout of it's next move.

That move, of course, is a bailout.

A bailout is the absolute worst thing that could happen to the average financially responsible American citizen. The bailout will and can only come in the form of a expansion of the monetary supply, with the result of high inflation and the immediate devaluation of the dollar(which has already slid 30 percent in the last two years). And of course, none of this will help the economy for the average person, as recession is where we're headed, we're looking at real loss of jobs, economy, high prices, high inflation--far worse than just what an honest crash will cause.

But that's been the point all along--it's just the trick needed to shed cooperate debt, especially debt in dollars-- ie, pension obligations, wages to current US workers, etc. It also solves the social security and Medicaid issue. These won't go bankrupt. You'll just receive your payments at vastly devalued rate while the government receives taxes at the current rate of taxation and inflationary pressure in the real value of present dollars.

So screwed we are.

It's 12 o'clock, do you know where your 401k is?

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