• The U.S. Economy just isn't learning - It's sickening!

    I watched President Bush last night do his Address to the Nation regarding the credit crisis.

    In that speech he's trying to sell the American public on why they should spend $700 billion on fixing the credit market.

    The thing that I found appalling was that President Bush mentioned that among other things, this will help people buy new cars, send their kids to college, small businesses will get more loans, and more.. This bailout will help the taxpayer take on even more debt!!

    I'm stunned when I hear them say that.

    The thought is.. the American population can't even service their own debts as far as mortgages go.. now they're supposed to be able to take on more debt.

    Isn't the idea to deleverage and pay off your debts? Not go into more debt?

    The government's taking on the populations bad mortgages to the tune of $700 billion. Many of these mortgages are for houses that are empty and not being paid for. Many of these houses were probably purchased by speculators. The speculator drops his houses, declares bankruptcy, and the American people have to pay the bill.

    Fundamentally I disagree with the $700 bailout on so many levels, I don't know where to begin.

    President Bush indicated that if the Federal government didn't do something the American economy would crash. So... let it crash. This all about letting the free enterprise system do its work. If companies have made big mistakes, let them fail big time.

    America is so addicted to credit that they don't want to let the economy crash. They would rather keep their credit addiction at this high cost then to let things progress in a natural way. This is the equivalent of a drug addict needing that next heroin fix lest he have to go through the pain of withdrawal.

    I don't think anybody is going to die if they can't get more credit. They may have to stay at home for the next few years, and pay down their debts. Wouldn't that be a good idea?

    Instead of Ronald Regan's "Mr Gorbachev, bring down this wall" speech, we should say, "Mr Bush, Bring down this debt!!"

    This $700 Billion "rescue" is going to be the worst thing for the American Public in my opinion. Bottom line, I think that the credit addicted nation should go to credit rehab, go through their withdrawals, and start to feel better as a nation. Take the proper amount of time, and pay down some of your debts. After a few years, your economy will be strong again.

    But for now American people, your credit addiction is killing your nations economy!

    Just my opinion.

    Questions this article talks about:
    Why isn't the U.S. government learning about the credit crisis?
    Why is the $700 billion bailout a wrong idea?
    Does the U.S. government need debt settlement and credit repair?


 
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2 Comments
On Jun 11, 2009, Kara Sherma Said:
Yes it is true...U.S was once considered as a world super power now it is going under economical crisis... recession is taking all over...bank are bankrupt. The Title you have used is absolutely perfect "The U.S. Economy just isn't learning - It's sickening!"
Great post will help a lot of people to understand...how to deal with it.
On Sep 25, 2008, David Gowing Said:
The non-linear derivative market is deliberately mis-priced from the academic world down, allowing near -arbitrage profits to those big enough to write (short position) puts and calls. Empirical evidence is overwhelming here: in the last 25 years plus of options sales, My paper 'Sharing risk is equivalent to trading risk under risk neutral pricing and no-arbitrage assumptions' is published in the Chicago Quantitative Alliance proceedings of April 14, 2004 in Los Vegas Nevada. The academic world is trying to suppress this paper. The academic world suppressed Louis Bachelier's paper using Geometric Brownian Motion to price linear stock market assets in 1898, for 70 years! Einstein's paper in 1905 on relativity borrowed half it's math from Bachlier's paper unreferenced. Later Einstein was quoted as saying 'genius is the ability to hide ones references'.
The Chicago Board of Exchange stopped giving financial data on options to academics in 1996, and sent a threatening letter to all academics who had already received data, stating if the academic shared this data with any other academic(s) the CBOE would sue them.
The only surprise is it took > 10 years for the house of lies to start crumbling.
Problem is they began believing their own lies and when mis-pricing CDS they must have forgotten the fact they where not hedging systematic risk (macro events like war and printing too much money = inflation). This was most certainly deliberate from the top, i.e. the world bank and the Federal Reserve (and the 12 fed. reserve banks) which are > 90% foreign owned. Not American owned! No monetary policy, no sovereignty period.
After the Sept 11, 2001 sale of CAT bonds did not take off, as they where mis-priced (over priced). The re-insurance market swallowed up this new trillion dollar market, as insurance methodology is sharing risk and sharing risk is the only accurate way of measuring systematic risk. Why do you think Warren Buffett centers his empire on an insurance company?

Reply to this comment By David Gowing P.Eng. on 2008-09-25 16:54:03
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