Martin Armstrong update: In the hole & Phase 2 Debt Crisis

[Covertibility]

File this under Real World stranger than Fiction

Everyone's favorite prisonbird economist writes: Armstrong Economics: Entering Phase II of The Debt Crisis

Don't know how real this is, don't really care, but it makes for great story telling. (Don't care for zero hedge either, but its another goofy site to read.)

 

[Covertibility]

 

[Covertibility]

 

[DrPepper]

I realize that this letter is likely a hoax, but it was interesting. Like the author of the letter, I have been wondering how the US can possibly get out of the current financial predicament given the fact that our current national debt and unfunded future liabilities (social security, medicare, etc.) are literally unpayable.

I had not previously considered his conclusion that the only solution to the current financial crisis is a complete restructuring with a debt for equity swap. Short of default and war, I agree that his solution makes a lot of sense. I just wonder how a debt for equity swap would be structured? For example, what equity would we give to China in exchange for our financial debt to them? We do not own enough gold to pay off our debts. Would we give them millions of acres of national parks or government buildings? What assets does the US government own that could be swapped for our debt to foreign countries?

 

[rcaldwell]

Quote from DrPepper:

I realize that this letter is likely a hoax, but it was interesting. Like the author of the letter, I have been wondering how the US can possibly get out of the current financial predicament given the fact that our current national debt and unfunded future liabilities (social security, medicare, etc.) are literally unpayable.

I had not previously considered his conclusion that the only solution to the current financial crisis is a complete restructuring with a debt for equity swap. Short of default and war, I agree that his solution makes a lot of sense. I just wonder how a debt for equity swap would be structured? For example, what equity would we give to China in exchange for our financial debt to them? We do not own enough gold to pay off our debts. Would we give them millions of acres of national parks or government buildings? What assets does the US government own that could be swapped for our debt to foreign countries?

A huge shitstorm is heading this way as Susie soccermom tools around in her Lexus unaware.

 

[the1]

The US will do what Germany did before WWII -- hyperinflate the currency to pay down the debt and all the social liabilities it has will be cut, including the new health care plan coming down the pipe. Imagine hyperinflation and massive cuts in your social security checks. That's what is coming down the pipe shortly.

And even if you're not on the government's dime you'll still be stuck because even with an MBA these days you can't make more than 12 bucks an hour. A shit storm is brewing.

 

[psytrade]

Ya healthcare is the perfect excuse to raise taxes and subsidize the sector at the same time.

 

[gastropod]

Quote from DrPepper:

I realize that this letter is likely a hoax, but it was interesting. Like the author of the letter, I have been wondering how the US can possibly get out of the current financial predicament given the fact that our current national debt and unfunded future liabilities (social security, medicare, etc.) are literally unpayable.

I had not previously considered his conclusion that the only solution to the current financial crisis is a complete restructuring with a debt for equity swap. Short of default and war, I agree that his solution makes a lot of sense. I just wonder how a debt for equity swap would be structured? For example, what equity would we give to China in exchange for our financial debt to them? We do not own enough gold to pay off our debts. Would we give them millions of acres of national parks or government buildings? What assets does the US government own that could be swapped for our debt to foreign countries?

Yeah, the land and resources on them are "collateral" - but also that guy (assuming you are a guy) that you see shaving every morning...that person and EVERYTHING HE OWNS - including children (calling children property that is)...that is the collateral that will be handed over

BTW -I am only partly kidding!!! If you have a birth certificate - ask yourself, "Why was my birth certificate handed over to the IMF?" Answer - you are collateral on the national debt!

-gastropod

 

[morganist]

Quote from the1:

The US will do what Germany did before WWII -- hyperinflate the currency to pay down the debt and all the social liabilities it has will be cut, including the new health care plan coming down the pipe. Imagine hyperinflation and massive cuts in your social security checks. That's what is coming down the pipe shortly.

And even if you're not on the government's dime you'll still be stuck because even with an MBA these days you can't make more than 12 bucks an hour. A shit storm is brewing.

yes and very soon. the mortgage reset of 2010 is the next subprime.

 

[DrPepper]

Quote from morganist:

yes and very soon. the mortgage reset of 2010 is the next subprime.

If interest rates remain so low, won't most of those mortgages reset at a lower interest rate, making the monthly payments even lower? If so, how will that lead to another financial crises?