United States Heading towards a Depression?

There is always a possibility of the neocons doing something stupid in the last days of power. They are all very excited about the prospects of war with Iran. Look back at the latest AIPAC conference, where all politicians, including Obama, declared Iran a threat.

And, what "New Deal" are you talking about, if Obama wins? There is no excess capacity, and all Oil-producing countries are stretched to the limit.

Check Out http://en.wikipedia.org/wiki/Oil_megaprojects

These people have all the raw data in the world. And what are their conclusions?

New Oil Fields - In thousand barrels per day...
2008 - 5559
2009 - 4636
2010 - 5330
2011 - 3500
2012 - 3476
2013 - 1365

Remember, it takes atleast 5 years for a newly discovered Oil Field to start commercial production. So, any new discoveries in 2008 have been factored in for the year 2013. We are running out of new oil sources faster than anyone has anticipated...

I want to know more about the New Deal with Obama...

 

Pres. FDR brought in what he called "The New Deal" during the Depression. This was a follow up IIRC to Hoover's Square Deal.

Basically, in times of financial crisis, the state decides that it should start slapping regulation on and subsidizing losers. This destroys market pricing, stifles and hinders competitive gains, and the regulation limits the ability of companies and entrepreneurs to stage a comeback. Propaganda says that the New Deal did all of these amazing things for the country. Reality is, the country went into debt, confiscated everyone's gold (which was essentially declaring bankruptcy under a gold standard) and then had to go fight a war and come out as the world reserve currency in order to recover.

There are a lot of folks worried that Obama is going to be an uber socialist, pushing a New Deal-esque agenda, as the financial turmoil the next President will face is unavoidable. It doesn't work, but it does allow government to grow, which does allow government to exert more pressure on people's lives.

PS, I've been getting your PMs, I will catch up on correspondence this weekend.

 

It's a bloodbath!


11,018.88 -210.14 / -1.87%
Jul 11 11:26am ET †

 

Well, Fannie Mae and Freddie Mac are the children of FDR's new deal, how ironic that the fascist shift continues 70 years later, as they will probably be nationalized, which means that the government will now be in charge of mortgages.

Every day, one step closer to communism!

 

There is no such thing as a solvent or liquid bank / financial firm. It's oxymoronic to say there is a "solvent bank".

A lot of Freddie and Fannies bonds are held by China. Government may do something similar to the Chrysler bailout.

It's quite the wash out today, VIX is spiking. May see a short term bottom, then continue downwards. I hope LEH goes to 0, soon. It would complete my predicition of "2 major financial institutions failing this year".

 

The FED is failing upwards. Does that count?

 

The 1st housing bailout broke fannie and freddie. The 2nd will destrot the FHA. Bush is threatening to veto the bill written by Barney Frank. Pelosi is fighting to raise the cap on FHA loans to $730,000. All I can see is handing out loans on over priced houses is going to deepen the crisis.

 

I hate Barney Frank, he is a dumb, bumbling, fat ass. And a complete shill for banks.

 

Yeah, I was watching Congressional hearings yesterday. Barney Frank was going on and on about how "we have no choice but to save the banks" and Ron Paul offered to explain the alternatives and merits of free markets and the benefits gained from allowing the inevitable failure of failed companies.

Frank and his lackeys all laughed, Frank replies "We all know that's not going to happen" and gets back to the business of spending hundreds of billions.

I'm wondering though, where are they going to get this five trillion to save them? Of course they can make it up out of thin air, but then they'd literally be faced with food riots over $100 loafs of bread. I think things can go one way or the other quite quickly here at some point in the next few years.

 

A straight up government bailout of FNM and FRE is unlikely right now. If it were to happen it would most likely go down like the Chrysler bailout went.

I’m sure Bernanke and Paulson are going through their phonebooks trying to pool together money from big banks, private equity, central banks, sovereign wealth funds, and other masses of capital. They don’t need $5 trillion right now, not all of the mortgages are bad and will take time for some to get bad, and they have tricky accounting to give them time. I have heard several different estimations for what loses could be in the near term (~2-3 years). Ranging from $40 billion to $100 billion+.

It will be a very dilutive deal if it were to happen, screwing over shareholders and most likely take a bat to the head of holders of TruPS.

Bonds should be cool unless they really screw up.

I also watched that hearing, Frank pisses me off. Garrett asked some tough questions, brought up the Federal Reserve's Balace Sheet.

Update: Bernanke has now given FNM and FRE access to the discount window. . .

 

Democratic Senate Banking Committee Chairman Christopher Dodd said Fannie and Freddie have the option of a Fed bailout with access to the Fed's discount window.

Fannie and Freddie don't have enough capital to weather the worst housing slump since the Great Depression.
William Poole, the former St. Louis Federal Reserve president, said this week that Freddie is ``insolvent,'' meaning it owes more than its assets are worth.

http://www.bloomberg.com/apps/news?pid=20601087&sid=a_buu7sfFAIk&refer=home

The situation is really bad. The Northeast is going to see a 30+ percent correction over the next 24 years. Prices have only dropped 5% around here and we are already in a crisis.

 

Freddie and Fannie are the causalties of Housing Bailout I

FHA is being set up for a fall in Housing Bailout II -- Nancy Pelosi is increasing the FHA lending limit to $730,000 to attempt to bailout the bubble markets.

Prices are out of sync with fundementals and no matter how many trillions are spent prices are going down.

 

Indymac - another one bites the dust

The Fed can print all the money the want. But that's going to increase inflation and the price of oil and food. More people are going to be unable to make ends meet and fall behind on their mortgage. This creates a viscious circle intensified by government intervention.

The country needs a recession to sort out the bad investment.

 

Over the last 11 business days there was a run on Indymac deposits and more than $1.3 billion was withdrawn.

IndyMac is the third largest bank failure in US history. The bank failure will cost US taxpayers 10 billion dollars.

 

More people should know about this. Maybe Ron Paul still has a chance...