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flacorps

Gaze With Me Into The Credit Crystal Ball

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Just so nobody panics: high gas prices beget low gas prices.

 

Wells do not get turned on and off like spigots ... they tail off, and at some point it's uneconomic to keep them in repair because the oil produced is not worth the cost of the fix.

 

That being said, when production isn't satisfying demand very well, people go out and drill because a new well can make you a lot of money. They'll drill in places they wouldn't have tried to go before (like deep water, and very cold places). They'll find the oil and they'll sell it for a crazy profit. Then they'll drill some more to try to do it again.

 

Soon enough they've created a brand new oversupply, but as long as they're still making a buck the wells keep pumping ... and the price at the pump goes down nearly as much as it went up.

 

Deer population on an island will follow the same pattern ... boom and bust as the food supply and the deer to eat it wobble past the point of equilibrium in opposite directions. And humans did it disastrously by cutting down all the trees on Easter Island.

 

There's plenty of petroleum though. It's abiogenic/abiologic ... the stuff of the cosmos, not dead plants & animals.

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When I was a child, a (troy) ounce of gold cost $35.

Now it's around $1000. Or, in 1968 valuations, you

might say that the US dollar is "worth" about 3 or 4

cents.

 

Back then, a really nice car cost about 3 grand, and

houses in a "rich" suburb were pushing 50 grand.

It's not just about gold, it's a general re-evaluation

of almost everything (except computers.)

 

Sooner or later, the US is going to face facts and take

action to devalue the dollar. That's my view into the

crystal ball.

 

ER

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Sooner or later, the US is going to face facts and take

action to devalue the dollar. That's my view into the

crystal ball.

 

This makes no sense. By your own anecdotal admissions, the dollar has been devalued substantially since the time of your childhood. In the real world, it has been also.

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Inflation is a tax on being too slothful or stupid to make your money go to work.

 

It's Jesus's story of the talents, only nobody needs to take the moron's single buried talent away from him, they just gradually make it worthless through inflation.

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If our money was locked to gold, silver, oil, or whatever else that might be available to keep fiat money somewhere close to reality land, we wouldn’t have this problem.

 

A fixed money supply in a world with non existent trade barriers would be a disaster. The gold standard worked fairly well when our trade with other countries was limited to a handful of steam ships and there were no FOREX or commodities exchanges.

Today all it would do is allow any foreign government with means and motive to take effective control of our currency through speculative attacks without any effective means to combat it. The great depression was likely worsened by an inflexible monetary supply.

 

 

....and there won't be any increase in exports to save us because this inflation is increasing the cost to produce.

 

The inflation in raw materials (fuel, metals etc) is a worldwide problem, most of these items are priced on an open market. Bangladesh isn't getting any secret discount on copper and oil.

 

 

 

And this is just what you get when your money isn’t locked to any standard at all with a group of “economists†that try to decide how best to improve growth, and prevent down turns at all costs.

 

Well, now we are seeing some of the cost…..

 

If our money was locked to gold, silver, oil, or whatever else that might be available to keep fiat money somewhere close to reality land, we wouldn’t have this problem. We wouldn’t have had most of the wars this county has been in either. They just couldn’t afford it without printing monopoly money.

 

If the gold standard was a good idea why did every 1st world country move away from it? Locking your currency to a commidity like gold means you have a limited money supply which severly limits growth potencial. In a global economy it would be completely disasterious to the US. Since we import more than we export, what would happen after we exported all of our currency by buying imports from other countries.

 

For an economy deflation is a lot worse than inflation (at a controlled rate), which is what would happen if we moved onto a gold standard.

 

 

 

 

 

In a global economy it would be completely disasterious to the US. Since we import more than we export, what would happen after we exported all of our currency by buying imports from other countries.

 

Exactly right. It worked when most countries were self-sufficient and did relatively little trade. Today we'd have to have parity between imports and exports in order to maintain the monetary supply. Excess export would flood the monetary supply with incoming cash, excess import would starve it.

Without the ability to manipulate the money supply when necessary (and the fed really overdoes it) we'd be looking at far harsher methods to balancing our currency.

 

How dare you guys try to make sense and offer factual, rational explanations. What's the matter with you. Next you'll be telling me the black helicopters aren't projecting death rays into my brain. Thank God for tin foil hats! :angry:

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If you really want to get a wake-up-call, Look into who Truly Owns what we call the. " Federal Reserve System"

Oh the conspiracies never end............................ :angry:

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If you really want to get a wake-up-call, Look into who Truly Owns what we call the. " Federal Reserve System"

Oh the conspiracies never end............................ :rolleyes:

 

It went through in 1913 and it's still around. If it had failed to get established it would have been a conspiracy.

 

Now it's just an ongoing problem for the republic. But perhaps there are worse problems that its absence would bring...

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If you really want to get a wake-up-call, Look into who Truly Owns what we call the. " Federal Reserve System"

Oh the conspiracies never end............................ :grin:

 

 

 

I'm investing in tinfoil hat futures!

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This month (March 2008) is the peak month for subprime mortgage resets. From here on out, the number of resets goes down.

 

Where do you find this statistic?

Better yet do you have a location that breaks that down by state? And then by county in each state?

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When I was a child, a (troy) ounce of gold cost $35.

Now it's around $1000. Or, in 1968 valuations, you

might say that the US dollar is "worth" about 3 or 4

cents.

 

 

Well when *I* was a tender youth, gold was about $900 an ounce, and that was 1980. Since then gold -- even as of right now -- has lost 58% of its value in real terms (ie, compared with the price of other stuff in general).

 

Gold is a commodity whose price and value goes up and down according to supply and demand, just as with coffee beans.

Edited by Kevin20

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This month (March 2008) is the peak month for subprime mortgage resets. From here on out, the number of resets goes down.

 

Where do you find this statistic?

Better yet do you have a location that breaks that down by state? And then by county in each state?

 

Shoot, I see so much stuff and it comes at me so fast ... I'm not sure where I'd find that graph.

 

As for graphs with further breakdowns ... that stuff will be along just as soon as the Google successor predicted by Tim Berners-Lee arrives on the scene. :clapping:

 

Here are three ... none of them look exactly like what I recently saw. It's quite possible nobody has a real handle on the exact time-frames involved.

 

http://arandomwalktowealth.blogspot.com/20...eset-graph.html

Edited by flacorps

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Gold is a commodity whose price and value goes up and down according to supply and demand, just as with coffee beans.

 

And unlike coffee beans, there's very little attrition ... some thin layers of it get thrown away on obsolete circuit boards, a bit of it goes into graves with the deceased, and we launch some into space ... but other than that it's around forever, even though it doesn't get replaced as quickly as coffee beans. And the mining is an environmental nightmare (cyanide anyone?).

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This month (March 2008) is the peak month for subprime mortgage resets. From here on out, the number of resets goes down.

 

Where do you find this statistic?

Better yet do you have a location that breaks that down by state? And then by county in each state?

Also, can the mortgage market be broken

down by sex?

 

Seems to me, single moms are in trouble

more often.

 

ER

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<SNIP VERY LONG QUOTED MESSAGE>

 

Nice writeup.

 

Hey, next time, don't quote such a long message just to add one single line of comment.

That is just plain dumb! Have respect for everyone on this forum, read and follow the

posting rules.

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Sooner or later, the US is going to face facts and take

action to devalue the dollar. That's my view into the

crystal ball.

 

This makes no sense. By your own anecdotal admissions, the dollar has been devalued substantially since the time of your childhood. In the real world, it has been also.

Specifically, I want to go back to a system where

Cokes and coffees cost a dime, houses fifty grand.

If the US dollar is really only worth a dime, it's time

to admit facts. (We're already near the point where

the copper is worth more than the pennies.)

 

I think even the subprime debts could be paid off

for ten cents on the dollar, so all our troubles would

be over. The foreign dollar speculators would lose

their shirts, no tears here.

 

ER

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And the people older than you want to go back to a time when houses were five grand and cars cost five hundred dollars. Value is all relative.

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And the people older than you want to go back to a time when houses were five grand and cars cost five hundred dollars. Value is all relative.

"Didn't need no welfare state, everybody pulled

his weight ... " - Archie Banker

 

ER

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And the people older than you want to go back to a time when houses were five grand and cars cost five hundred dollars. Value is all relative.

"Didn't need no welfare state, everybody pulled

his weight ... " - Archie Banker

 

ER

 

"Didn’t need no welfare state, Everybody pulled his weight. Gee our old LaSalle ran great. Those were the days."

 

Sung by Jean Stapleton (Edith) and Carroll O'Connor (Archibald "Archie" Bunker).

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Big Sur town of Gorda, about 35 miles north of Cambria. This is in California. And this is where gas hit $5.40 a gallon.

 

Here is a story on the place: http://www.sanluisobispo.com/183/story/304197.html

 

Don't have a choice really. mountains on one side, the ocean on other side and a 2-lane divided highway that is very twisty. You run out of gas there trying to find cheaper gas and its your life on the line. Even down in Southern California near Mt Palomar, the Unocal stations have 100 octane racing fuel at $7.99/gallon and there is no shortage of crotch rockets and performance cars waiting in line to fill up on that stuff. Simple economics, they can charge more because people either have no choice or can afford to pay it.

 

The golden gate bridge is going to be $6 to cross each day, with another surcharge during commute hours. People complain, but has that done anything to get people out of their cars? Nope. Same as it ever was.

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I think even the subprime debts could be paid off

for ten cents on the dollar, so all our troubles would

be over. The foreign dollar speculators would lose

their shirts, no tears here.

 

In short that's what's happening to foreigners who own dollar-denominated debt ... they're getting paid back

in devalued dollars. Perhaps to the point where they're not just earning crappy interest but actually losing principal ... which would be why the bonds aren't salable at any price.

 

Now foreigners will also notice that our real estate has depreciated not only in our own currency, but relative to their currency. So you can expect to see stories of foreigners from someplace buying up our real estate just as Japan did in the '80s. Perhaps it will be China or India, if relations are good enough that their investments are politically acceptable. Some will be buying commercial, others will be buying pieds a terre in Miami, New York and LA.

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....those businesses are hoarding cash (at the expense of employment, R&D, advertising and marketing, adding productive capacity, perhaps even maintenance).

 

I have more to add to this thread, but does anyone see a potential tie-in between recession, high fuel prices, and the recent maintenance scandals at several major airlines?

We're going to need a new version of the old RTC, only it's hard to see how it's going to be workable because the old RTC sold shopping centers ... of which there were relatively few compared to houses ... and for which the costs of foreclosing were a small percentage of the value of the property. Now with houses having gone bust ... the task is simply Augean.

 

The FDIC just seized the biggest bank to date this year. It was in Bentonville, Arkansas, and it had a lot of exposure to Utah, Idaho and Wyoming as well as Arkansas. The name was ANB Financial National Association. It was $2 billion or so ... the other banks that went belly up didn't even approach $100 million in total.

 

I think what the federal government could do is have an entity that would buy package of defaulted residential real estate (foreclosed homes) from banks that take over failed institutions, and then that entity would auction or otherwise sell the homes over time in the open market, doing so in an orderly and unhurried fashion so as not to unnecessarily depress home values in any particular locality.

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If you really want to get a wake-up-call, Look into who Truly Owns what we call the. " Federal Reserve System"

Oh the conspiracies never end............................ :angry:

 

I thought that Bruce Willis recovered it in Die Hard With Vengeance?

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So what do you suggest cc borrowers do to minimize self damage during these crazy times??

 

I do not own a home, nor am I looking to. Dh and I are doing splendidly for now but if what you predict is true, what is the best course of action to take to ensure our credit remains stable and moving upward??

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