When do you expect the Global Economic Collapse to happen? | |
Anonymous Coward User ID: 3037462 United States 10/13/2011 02:40 PM Report Abusive Post Report Copyright Violation | |
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Mr. Eious (OP) User ID: 3225580 United Kingdom 10/13/2011 02:43 PM Report Abusive Post Report Copyright Violation | It wont happen overnight, it will just keep getting worse over a long period of time Quoting: Anonymous Coward 3037462 It wont happen overnight, it will just keep getting worse over a long period of time Quoting: Anonymous Coward 3037462 Oh no, but it will happen quiet soon. I'll give you a hint - within the next 18 months. |
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Mr. Eious (OP) User ID: 3225580 United Kingdom 10/13/2011 02:47 PM Report Abusive Post Report Copyright Violation | |
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Anonymous Coward User ID: 1315838 United States 10/13/2011 03:15 PM Report Abusive Post Report Copyright Violation | Understand that the dollar is the defacto “Reserve currency – Petrodollar” that the world uses to transact business. As that dollar becomes more encumbered with "leverage" it's ability to be a store of value has less conviction and faith. The "only" value that a fiat paper currency can retain "is" that conviction and faith. So, let's look at the reason all faith will be lost in the that currency at some point in the future. Since the creation of the FED in 1913 the currency (Dollar) value has been controlled through inflation/deflation. In 1944 the U.S. Dollar through the Brenton Woods agreement was granted “exclusive reserve currency status”.(that status meant that any country wanting to buy oil, food or commodities would have to buy dollars “first” and then they could go into the world market to make their purchase “on” the world market (with those reserve currency notes) also it meant that "If" any country lost faith or trust (through debasement or any other reason) in that currency they could go to "any" central bank in the world and trade that paper currency for physical Gold of equal value. (Good as Gold) In 1971 Nixon suspended Brenton Woods and took us off the Gold Standard telling other nations that they could not "now" exchange the dollar for Gold as previously promised. Here is the key to it's downfall: The U.S. dollar (debt) from 1971 through around 1995 was able to be removed from a balance sheet with little implication through accounting techniques claiming (debt) as a loss and could be written off and that was the end of it. Now here (around 1995) comes Blythe Masters from JP morgan and she creates what is called a "Credit Default Swap" This is essentially an insurance policy on a default to pay back a debt or loan. So, lets say for shins and giggles Greece is lent 1 trillion dollars by another country. They promise to pay that money back at a set interest rate over time. The CDO (Credit Default Swap) enables financial institutions to purchase a put (Default insurance or a bet against the underlying asset (loaned debt) never being paid back). This would be OK if only "ONE PUT" was taken out against the chance of that debt not being paid back. The problem "of the whole planet situation right now" is that this debt can be "leveraged" by 100 "PUTS" or in laymens terms (for each dollar that was lent to Greece there are $100 betting against "each" one of the dollars lent, that it will default and not be paid back) So, now you have 100 Trillion Dollars leveraged against the default of a 1 Trillion dollar loan. So, now Greece cannot payback the loan (debt) triggering the CDS and now everyone that bought a "PUT" want's to get paid on their bet. The next problem is that those financial institutions that sold those "PUTS" are only required to have a 6% reserve (Money held in escrow to pay claims) So, in reality those institutions only have .06 cents per dollar to pay those claims and not the “whole” dollar "required or needed" to pay those claims. This is why all of these bailouts are created so "NO ONE" is allowed to fail) "Triggering" these Credit Default Swaps. The original debt is maintained through interest payments from "newly created" debt (bailouts) because the money to pay them (Claims) does not exist.........Yet. So, you say why can't they just unwind them. Answer, is that you can't because everyone that purchased these "PUTS" – “CDO’s” wants’ to get paid because they are classified as an asset on "their" balance sheets. There are 1.5 Quadrillion of "known" CDS's and CDO's that have been sold. The un-known amount is still a secret. That’s 1 million 500 Thousand Trillion…………… |
Anonymous Coward User ID: 1315838 United States 10/13/2011 03:16 PM Report Abusive Post Report Copyright Violation | Understand that the dollar is the defacto “Reserve currency – Petrodollar” that the world uses to transact business. As that dollar becomes more encumbered with "leverage" it's ability to be a store of value has less conviction and faith. The "only" value that a fiat paper currency can retain "is" that conviction and faith. Quoting: Anonymous Coward 1315838 So, let's look at the reason all faith will be lost in the that currency at some point in the future. Since the creation of the FED in 1913 the currency (Dollar) value has been controlled through inflation/deflation. In 1944 the U.S. Dollar through the Brenton Woods agreement was granted “exclusive reserve currency status”.(that status meant that any country wanting to buy oil, food or commodities would have to buy dollars “first” and then they could go into the world market to make their purchase “on” the world market (with those reserve currency notes) also it meant that "If" any country lost faith or trust (through debasement or any other reason) in that currency they could go to "any" central bank in the world and trade that paper currency for physical Gold of equal value. (Good as Gold) In 1971 Nixon suspended Brenton Woods and took us off the Gold Standard telling other nations that they could not "now" exchange the dollar for Gold as previously promised. Here is the key to it's downfall: The U.S. dollar (debt) from 1971 through around 1995 was able to be removed from a balance sheet with little implication through accounting techniques claiming (debt) as a loss and could be written off and that was the end of it. Now here (around 1995) comes Blythe Masters from JP morgan and she creates what is called a "Credit Default Swap" This is essentially an insurance policy on a default to pay back a debt or loan. So, lets say for shins and giggles Greece is lent 1 trillion dollars by another country. They promise to pay that money back at a set interest rate over time. The CDO (Credit Default Swap) enables financial institutions to purchase a put (Default insurance or a bet against the underlying asset (loaned debt) never being paid back). This would be OK if only "ONE PUT" was taken out against the chance of that debt not being paid back. The problem "of the whole planet situation right now" is that this debt can be "leveraged" by 100 "PUTS" or in laymens terms (for each dollar that was lent to Greece there are $100 betting against "each" one of the dollars lent, that it will default and not be paid back) So, now you have 100 Trillion Dollars leveraged against the default of a 1 Trillion dollar loan. So, now Greece cannot payback the loan (debt) triggering the CDS and now everyone that bought a "PUT" want's to get paid on their bet. The next problem is that those financial institutions that sold those "PUTS" are only required to have a 6% reserve (Money held in escrow to pay claims) So, in reality those institutions only have .06 cents per dollar to pay those claims and not the “whole” dollar "required or needed" to pay those claims. This is why all of these bailouts are created so "NO ONE" is allowed to fail) "Triggering" these Credit Default Swaps. The original debt is maintained through interest payments from "newly created" debt (bailouts) because the money to pay them (Claims) does not exist.........Yet. So, you say why can't they just unwind them. Answer, is that you can't because everyone that purchased these "PUTS" – “CDO’s” wants’ to get paid because they are classified as an asset on "their" balance sheets. There are 1.5 Quadrillion of "known" CDS's and CDO's that have been sold. The un-known amount is still a secret. That’s 1 million 500 Thousand Trillion…………… Sorry It's 1500 trillion dollars |
Anonymous Coward User ID: 3201743 Turkey 10/13/2011 03:17 PM Report Abusive Post Report Copyright Violation | |