The US has been building commercial properties since the early 90s somewhere along the lines of 5 times the rate of population growth and up until today Capmark has been lending out money to about 2/3 of all building projects in the US. As you understand, this is a huge event.
The next big thing after this is of course all the derivates based on these loans like “Mortgage Backed Securities” etc. The derivatives bubble is currently about 20-30 times the global GDB depending on who you ask. Yes, in the Quadrillions. It’s such a huge number its almost impossible to grasp. This is one of the many reasons this blog is called “Economic Collapse”. We will need an Economic Paradigm Shift to get out of this one. The system we have now based on dept, fiat currency and Fractional Reserve Banking is proving not to work. Likely we will see an interesting line of events shaping from today and for the rest of the year. By early november the main stream news will probably start talking like they did one year ago when Lehman Brothers went bust. Hold on to your hats, folks, there is a storm coming. Interesting time to be alive…
If the Obama Administration decides that Capmark is too big to fail and bails this institution out, the Quantitative Easing program of the Federal Reserve has to gain momentum. This will further the downfall of the US Dollar, which will mean gold goes further up.
The FDIC stands for ”Federal Deposit Insurance Corporation” and is the United States government corporation in charge of deposit insurance. If you have your money in the bank and your bank fail, the FDIC insures that you get your money back. There are equivalents to the FDIC in almost all countries at least in the western world.
“The Federal Deposit Insurance Corp. proposed asking banks to prepay three years of premiums to replenish reserves dented by a rash of bank failures that the agency said will cost $100 billion through 2013. The insurance fund will run a deficit as of tomorrow after 120 banks failed in the past two years, the agency said today.”
- Bloomberg.com
Topics: What is money? Why is gold a smart investment?
I often get asked by non-economist friends and acquittances to explain the current economic crisis. I love those conversations because it helps me to keep my language free from the economic lingo with the complex acronyms that really helps nobody to understand what is going on around us. So, I thought I’d write articles that tries to encapsulate typical conversations I often get into in social settings. Almost always the conversation begins around the topic of how to invest in a smart way when the economy is as turbulent as it is. Since I’m a guy of the Austrian School of Economics, I think gold should be in everyones portfolio and this is often what makes people interested in what I have to say since it is not that common yet for people to advocate physical gold in your own possession. That is likely to change soon though since more and more people are moving into gold. So imagine a conversation something like this: Read the rest of this entry »
Listen carefully to the last statement… Also consider the “depends on you perspective” statement. This is key: Jim Sinclair calls it MOPE: Management of Perspective Economics…
“…Severe climate change, food shortages, and the possibility of a pandemic are taking their place beside the ever-present possibility of military conflict. The collapse of the financial system will not be the only crisis that confronts humanity in the near future.
We are moving from one era into the next. Change is never easy and significant change is significantly more difficult. The bankers’ credit was responsible for much of what happened in the last three hundred years. It is impossible to imagine what life will be like in its absence.
As you’ve probably already seen, this video went viral yesterday. What strikes me as most interesting is his choice of words paraphrasing the Boston tea party: “We are thinking about having a Chicago Tea Pary in July” and dumping “derivative securities in lake Michigan”! Even if this is on a humor note, it still is an interesting example of what might happen if the US Dollar continues on its road to hyperinflation.
Chaos theory, Hegelian dialectics and the world economic crisis. The article concludes:
“One of the properties of chaos and organisation theory is that we can’t possibly know what the new system might be. It is frequently the opposite of the previous one. In Hegelian terms, this is the dialectic nature of growth and development, where the current stage in the spiral of development is replaced at a higher stage with its dialectically opposite. The next stage completely negates the previous one, while completely resolving all of its problems. Later, the new system reaches a crisis once again, and it seemingly reverts to its previous stage of development, however at a new, higher level.
In this sense, it is very likely that the collapse of the dollar will be most likely replaced by a new and better system. However, according to the Hegelian dialectic approach, gold — the antithesis of paper money — may once again return as global money, since gold has been sufficiently displaced as money since 1971. It may well be that gold is the money of our future.”
Johnny Mellgren is a Swedish entrepreneur with a keen interest in macro economics and macro politics. This is his web site where he blogs about the economic collapse of our time, what to do about it and the economic future we create together. Contact Johnny Mellgren.
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I provide advice on investment portfolios for private and corporate clients. I also hold lectures in the history of money and the current economic collapse and how to protect your wealth in a time of transition.
