Nouriel Roubini: The Dollar’s Demise

[achilles28]

Quote from Cutten:

What's the betting achilles28 has:

i) a bank account
ii) a credit card
iii) an overdraft
iv) all of the above

Yeah, let's get rid of banks and bankers. I hope you have lots of goats to barter with.

Here ya go, Forest. Nice and easy:

Anyone who doubts me, just do the Math.

Total US Subprime Value: 2 Trillion.
http://www.msnbc.msn.com/id/17584725

Total Bailout Money Committed: 13 Trillion.
http://www.bloomberg.com/apps/news?...id=armOzfkwtCA4

Difference: 11 TRILLION PAID TO ??????


We've been screwed. It's time for everyone to Man Up and face Reality.

 

[fearless9]

Quote from Cutten:

Out of interest, has anyone (RGE included) ever explained how a US deficit vs a surplus in China/Asia is an "imbalance"?

For a start the only place big enough for the Asians to invest dollars a few years ago was US bonds.
You could argue that this investment opened the door for greenspan to lower interest rates which lead to a real estate boom.

And so US had it both ways.
Cheap goods and low interest rates .... how could you possibly stuff that up.

regards
f9

 

[ByLoSellHi]

Achilles, Geithner just announced that derivatives such as CDSs should be transacted on a public exchange, just as equities and commodities are, in the future.

http://www.bloomberg.com/apps/news?pid=newsarchive&sid=alaMtgFAIQoc

The Treasury Department & SEC have stated transparency and reducing the kind of systemic, hidden risk that almost took out the entire financial system (and still might?) as their reason to set up a public, visible exchange.

There is a pushback from trading desks about this.

I think this partially supports your claims (the private party contracts and 30x-50x leverage, or more, actually, and the fact that many of the firms being propped up are probably at least partly being propped up so as to make good on the bets they took - such AIG), but it also detracts from the 'bankers in total control' claim, too - assuming they do start regulating these contracts on public exchanges, exclusively.

 

[ElCubano]

Quote from achilles28:

You're assuming Bankers actually want the United States in good health. Or the entire Global Economy, for that matter.

Unfortunately, the facts don't bear that out, however "rational" and conventional that assumption is.

Facts on the ground are 13 Trillion in base money printed to-date. Thats a startling figure as most wealth destroyed was market equity not tied to banking - meaning it wasn't loaned out 30 times by fractional money creation. The offsetting 13 Trillion designed to reflate the economy will get leveraged out exponentially more than the original wealth destroyed, once banks resume lending. This will be very inflationary and destructive to private wealth.

Second, the entire US subprime market is valued at no more than 2 Trillion Dollars:
"An estimated $1.3 trillion in subprime mortgages are currently outstanding. That’s nearly as large as the entire California economy."
http://www.msnbc.msn.com/id/17584725


That means the US Government could have bought OUTRIGHT the ENTIRE US MARKET for Subprime products for 2 Trillion dollars! P-R-O-B-L-E-M....S-O-L-V-E-D!!!

Yet, Geitner, Paulson and Bernacke have printed and committed OVER 13 TRILLION DOLLARS, to-date!!!!
http://www.bloomberg.com/apps/news?pid=20601087&sid=armOzfkwtCA4


Anyone care to do the math on that one?? Lets see......13 Trillion minus 2 Trillion, equals.....?????


For some perspective, the entire US residential market for outstanding, unpaid mortgages is 10 Trillion dollars. http://en.wikipedia.org/wiki/Subprime_mortgage_crisis#cite_note-22

EVEN IF every single homeowner in the United States was distressed and hamstrung Banks with heavy losses (in reality, its only some 20% of that.....), the US Government can buy ALL residential mortgages for 3 Trillion LESS THAN WHATS ALREADY BEEN SPENT!!!

Get the picture yet?!??

Since the Government can end this entire debacle for a meager 3 Trillion (conservative) why has it spent 10 TRILLION MORE than need be??

Answer : Derivatives.

Banks, funds, insurers and investment houses leveraged long their positions through derivative writing on assets that didn't perform. This compounded losses some 30 to 50 times on the underlying. This is where our money is going. Interesting still - nowhere in media has it been reported TO WHOM these vast sums of derivative losses are being paid, as they are channeled into "insolvent" banks, ferried out the back door, then vanish into the night! Never to be seen (or heard from) again!!

The salient point here is derivative losses are bullshit. Its like 100 strangers that buy fire insurance on your house. And when it does burn down (gee, conflict of interest, perhaps?!), 100 people collect 50 MILLION on a single house that wasn't worth 500 Thousand!

Derivatives can be regulated - at the bear minimum - at 1-to-1 on the underlying. For every CDS contract sold, the buyer must have insurable interest or an equivalent amount of the underlying in their possession.

Either that, or nullify all Credit Default Swaps, have sellers return premium to buyers, and thats it.

Thats all that had to happen - a 2-page Financial Regulation bill you could handily wipe your ass with - and this ENTIRE CRASH, RECESSION AND "CREDIT FREEZE" WOULD BE OVER IN A PEN STROKE.

How many 1000-page Bills have been passed to "Save the Economy"?! How many Trillions have been printed to "Save the Banks"?! How much power was ripped from the People and handed to Banking Juggernauts that precipitated this derivatized implosion, to begin with?!

Perhaps it isn't clear to you yet. The mental conditioning amongst the Sheep for their Butchers is very strong:

America was drug into an alley, beaten to a pulp, raped for everything she had, then hauled off to some cockroach-infested basement and held for ransom by the very same people you claim have our best interest at heart:

THE BANKERS.




Just do the Math. Anyone who doubts me, just do the Math.

Total US Subprime Value: 2 Trillion.
http://www.msnbc.msn.com/id/17584725

Total Bailout Money Committed: 13 Trillion.
http://www.bloomberg.com/apps/news?pid=20601087&sid=armOzfkwtCA4

Difference: 11 TRILLION PAID TO ??????


We've been screwed. It's time for everyone to Man Up and face Reality.

wow...thanks for the post.

 

[makloda]

Quote from Cutten:

Out of interest, has anyone (RGE included) ever explained how a US deficit vs a surplus in China/Asia is an "imbalance"?

I'd rather be interested in an explanation how it is NOT an imbalance.

 

[achilles28]

Quote from ByLoSellHi:

Achilles, Geithner just announced that derivatives such as CDSs should be transacted on a public exchange, just as equities and commodities are, in the future.

The only thing that matters is the size of subprime (2< Trillion) compared to the bailout (>13 Trillion).

That proves the entire thing is a rubber-stamped fraud, engineered by Wallstreet and blessed by Government.

Derivatives is just another sphere of fraudulent laundering - whence no action taken by Government - proves massive complicity to loot the treasury.

Believing Paulson or Bernacke who plead ignorance is about the same as believing Greenspan who feigned "no idea" markets might bubble after 0% rates. And Santa Claus is real because Daddy told me so!!

Centralized exchanges for derivatives is an interesting idea, but so what?!

Everything that could have been done to stop, fix and deal with this mess once-and-for-all was swept aside by Government and you're pointing to something that *might* happen as proof positive there's no collusion or massive fraud between Washington and Wallstreet (AS IF, there wasn't any before that!)?!

I mean, c'mon dude. You're smarter than that.

And if they ever get a derivative exchange off the ground, it'll be filled with all kinds of loopholes that won't even TOUCH the family jewels. I'd bet the House on that.

Here, Dick Durbin put it on a silver platter for you. All the devout and faithful to Big Government can do mental gymnastics explaining the obvious away (not that this stands by itself!):

Senator Admits That Bankers Own Capitol Hill
http://www.businessinsider.com/senator-admits-that-bankers-own-capitol-hill-2009-5

 

[achilles28]

Quote from ElCubano:

wow...thanks for the post.

Apparently, the sheep are so brainwashed simple arithmetic eludes them:

13 Trillion - 2 Trillion = 11 Trillion (when only 2 Trillion was necessary to fix the problem?!).

Scary. Really fucking scary.

 

[piezoe]

Quote from Brendan R:

the demise of the dollar is total nonsense as everyone would go down with it and there is no hedge against it, not even gold.

What would replace the USD? Euros, GBP, JPY? The resulting depression of a dollar destruction game would mean the end of the world as we know it. Back to the age of stone. The world is based on international trade. If the dollar goes, so does world trade, so do all the developped/developping economies. Goodbye cars, refrigerators, friendly neighbours,... This would mean war. Hopefully nonsense.

I guess Roubini is facing the challenge of facetious actors. Making sure he stays in the limelight by upping the ante. Well, at some stage, you make a complete fool of yourself. Roubini, you risk becoming catalogued as the sub 1% scenario forecaster, i.e. forecasting events that stand less than 1% chances of occurring in the next 10 years.

FYI, I believe the dollar will strenghten as the second wave of deflationary pressure is about to hit. As a consequence, I expect wealth destruction effects to overpower any quantitative easing effect. It's not only the pool of dollars that is in circulation that matters, it's also the velocity at which it circulates. Velocity has been decreasing, I believe attempts at reflation are doomed.

You are wrong, of course, but only in the long run. You will be right in the short and intermediate term. However, it won't be long before we see interest rates on treasuries rise, and double digit "real inflation" return. We were already at 12% inflation in early 2009, and we will be back there and higher very soon, in spite of the depressed economy. Have you done any grocery shopping lately?

 

[Trader KGB]

Quote from piezoe:

We were already at 12% inflation in early 2009

Link?

 

[piezoe]

Quote from ByLoSellHi:

Achilles, Geithner just announced that derivatives such as CDSs should be transacted on a public exchange, just as equities and commodities are, in the future.

http://www.bloomberg.com/apps/news?pid=newsarchive&sid=alaMtgFAIQoc

The Treasury Department & SEC have stated transparency and reducing the kind of systemic, hidden risk that almost took out the entire financial system (and still might?) as their reason to set up a public, visible exchange.

There is a pushback from trading desks about this.

I think this partially supports your claims (the private party contracts and 30x-50x leverage, or more, actually, and the fact that many of the firms being propped up are probably at least partly being propped up so as to make good on the bets they took - such AIG), but it also detracts from the 'bankers in total control' claim, too - assuming they do start regulating these contracts on public exchanges, exclusively.

The current plan is to trade standardized (whatever that is) CDS's via a regulated exchange, but custom CDS's will be exempt. good luck with that!