Credit crunch is intentional

[ar81]

I save money, then I buy.
Loans are acceptable when you do not have enough money, and interests is the price you pay for liquidity, to afford the good you want.
And it should be reserved to goods that represent an investment.

Unfortunately it was extended to short term consumption.
If short term payment exceeds 10% of your income, you could be in trouble.
If total short term debt exceeds 1 month of income, you are in trouble.

Low rates encourage debt. Creates false inflation that later becomes deflation. So it is creating a false illusion of welfare.

[Brutha]

Maybe in the sense of branding in the marketplace, but I don't believe that statement in general.

Because of free speech we have a marketplace of ideas.

I don't think a group of people conspiring together is far-fetched at all. Heck, when I used to shoplift as a teenager, I teamed up with another guy

Two people conspiring together is one thing.
Here you need a groups of houndreds of people.

In general this is not only about going away from fear. On the other hand whether a source is focused on fear should matter a bit when you select sources.
In the time when murders went down in the US the amount of murders that got reported in TV went up. Every report of a murder was still as truthful as before.
On the other hand certain reporters made the decision to focus on different information.
If you want to live in a world where people don't focus on the negativesm, it matters.

But lets go back to the truth of the story. As human we have a innate (either culturally, but probably also genetically) tendency to want to have someone we can blame for the bad that happens in the world.
That drive gives people "intuitive" satisfaction when they find somebody to blame.

If the complaint consists of saying that the private elements of the Fed create the mess by changing the amount of money in circulation, you need a majority of people in the FOMC to do that task.
The majority consists of 6-7 votes (at the moment 6 because the democrats blocked Bush in appointing people to the BOG for the), while only five votes come from privates and only one of those five votes comes from the New York Fed.
Keep also in mind that not every banker profited. The Lehman brother guys took quite a hit from the crisis.
The theory only really works if the people in the Federal Reserve Banks understood the world much better than those Lehman bankers.

[Dan.Linehan]

Every dollar of American debt results in nine times that amount reflected in bank assets.

[Steve Pavlina]

Originally Posted by Brutha

The Lehman brother guys took quite a hit from the crisis.

LOL... was that an intentional pun, Brutha?

[Dan.Linehan]

Lehman Brother assets were found to be practically worthless today. Something like eight cents on the dollar.

Originally Posted by Steve Pavlina

LOL... was that an intentional pun, Brutha?

Lucky he doesn't live in India.

[Brutha]

LOL... was that an intentional pun, Brutha?

It wasn't intentional, but still those Lehman guys don't really enjoy the crisis.

[Acting Like Godot]

The credit crunch was intentional. It was all Steve's intention. Everything in his subjective reality was created by him, including Lehman Brothers.

[Steve Pavlina]

Originally Posted by Acting Like Godot

The credit crunch was intentional. It was all Steve's intention. Everything in his subjective reality was created by him, including Lehman Brothers.

Nice try, but this is your reality we're in. I'm just a figment.

[carenkh]

I have to admit to not totally understanding (or following) what's going on... but I do know when I'm hearing how to "cut back" and "tighten our belts" on every outlet, I feel really, really angry. What? Cut back? Me? Why should *I* be living "frugal lifestyle tips" because of some f***-ups by corporate machines?

I don't know why, but I know THAT approach is wrong. I feel it in my gut.

[Steve Pavlina]

Originally Posted by carenkh

I have to admit to not totally understanding (or following) what's going on... but I do know when I'm hearing how to "cut back" and "tighten our belts" on every outlet, I feel really, really angry. What? Cut back? Me? Why should *I* be living "frugal lifestyle tips" because of some f***-ups by corporate machines?

I don't know why, but I know THAT approach is wrong. I feel it in my gut.

I agree. I'm taking advantage of this time to expand my business. It's actually easier to expand boldly while so many other people are fearful.

The state of the econony is irrelevant. Instead of focusing on trying to get more money, I just focus on trying to deliver more value, and that immediately gives me something to do.

[beautyscientist]

A bit off topic, but as an outsider, how exactly does it work that the President is suddenly subordinate to the Treasury Secretary?

[escapee]

To say that the entire crisis is "intentional" is truly an understatement,
listen to the following to find out more.

http://www.netcastdaily.com/broadcas...008-1011-2.mp3

From Financial Sense Newshour with Jim Puplava

There is no more credibility in the system.....

[ThoughtAddict]

Originally Posted by beautyscientist

A bit off topic, but as an outsider, how exactly does it work that the President is suddenly subordinate to the Treasury Secretary?

He isn't, but Congressional approval to the Secretary of the Treasury rather than the Executive branch as a whole would tie the President's hands, as would considerations of tradition and not wanting to politicize (at personal expense, probably) the remedies.

[Bruce Achterberg]

You guys watch/read/hear about far too much news.

My reaction to the credit crunch if you asked me about it would be "what credit crunch?" Or maybe, "what's a credit crunch? Sounds processed and not raw."

(You all sounded a bit serious. I thought I'd lighten the mood.)

[escapee]

"what's a credit crunch? Sounds processed and not raw."

Here you go ...

YouTube - Stop Looking at the DOW ... Look at the Credit Markets

and this

The Oil Drum: Canada | The Resurgence of Risk – A Primer on the Developing Credit Crunch

Would anyone enlighten me how the (Credit based/fractional reserve ) system will continue to function as it is now ??

[Dan.Linehan]

Originally Posted by Bruce Achterberg

You guys watch/read/hear about far too much news.

My reaction to the credit crunch if you asked me about it would be "what credit crunch?" Or maybe, "what's a credit crunch? Sounds processed and not raw."

(You all sounded a bit serious. I thought I'd lighten the mood.)

It's pretty serious Bruce. Not just the credit crunch, but lots of factors in America right now.

[seeker5]

Originally Posted by Dan.Linehan

It's pretty serious Bruce. Not just the credit crunch, but lots of factors in America right now.

Indeed. I have young friends who've bought a house, only to see it go down in value by a third. I have other friends who have had a good job they really like in a good stable company, and they've started to see layoffs and thus they feel their job is in jeopardy for the first time. I have other friends who've reported they couldn't find jobs, and their friends couldn't find jobs, so they're back in school. I have other friends who've saved up a lot of money and invested it in the stock market while they go to school, and they are seeing the value of the money go way down. I know other people who routinely invest their money in starting up new companies, and because of what's going on, they are sitting on their money instead of investing into new companies. It's not just the news, the current state of the U.S. economy is affecting a lot of people I know.

Though for myself, the economy isn't really affecting me. I don't own a house, I don't want a job unless it's one I love, I have a negligible amount of money in the stock market, and I don't need much to live off. So this economic mess isn't affecting me personally, and I'm not bothered by it. However, I do know it is affecting a lot of people I know.

[escapee]

It's pretty serious

Yes it's very serious, we are going to see a freeze on international trade if the credit market does not turn "better".

Almost every large international trade and shipment of goods require a letter of credit (LC) from the bank of the purchaser to the bank of the seller to facilitate the transaction. Right now, many of the letter of credits are simply rejected by various banks due to lack of trust. ( Eg: China Bank rejected US Bank or vice versa).

Something (miraculous ) has to happen next week that will unfreeze the global credit market or we're going to see more carnage on both the wall street and main street.

[jimbos123456]

Mr. Pavlina the following analysts predicted this was going to happen years in advance: Jim Sinclair, Doug Casey, Bob Moriarty , Jason Hommel, Jim Willie, Adam Hamilton, Sol Paha, Bill Bonner, John Mauldin, and many more. I think those would be good authors to read to understand whats going on, if you haven't already checked out their stuff. They don't write about spiritual stuff directly like personal development, but it's spiritual info in it's own way. They all tried to warn people this was going to happen years ago, but most did not listen. I started getting ready for this 5 years ago, and I feel a lot safer having found their information in 2003. I was still in high school at the time, but my intuition said those men were telling the truth and they were! Many of their predictions are starting to come true, and they aren't even psychic like Erin!


No offense to the people that think conspiracies are all fake, but I don't think there is anything wrong in believing in a conspiracy. What is wrong with looking at the evidence and deciding for yourself instead of just dismissing all the data? If millions of people think that Jesus could walk on water I don't think it's a far fetched idea that a bunch of bankers are engaged in a conspiracy. In fact conspiracies can and often do effect political, economic, and spiritual trends for humanities future.

I have to admit to not totally understanding (or following) what's going on... but I do know when I'm hearing how to "cut back" and "tighten our belts" on every outlet, I feel really, really angry. What? Cut back? Me? Why should *I* be living "frugal lifestyle tips" because of some f***-ups by corporate machines?

I don't know why, but I know THAT approach is wrong. I feel it in my gut.

No need to fear or be mad friend there are many investment assets that do well during crises like this. If you study hard and look for them with your intuition you can find them!

[Pequod]

I think Steve has a great point in his OP about the Fed. It's the banks who decide the amount of money in US society and they regulate themselves. That puts the door wide open for manipulation.

There is also another cause of this crisis. The USA consumes WAY more than it produces. The trade deficit of the US is $50 billion a month! This is a deficit of $165 a month per person. For example: on behalf of the Pavlina family the US government overspends almost $8000 a year! And this is going on for many years. This is a unsustainable situation.

This overspending is financed through government bonds and these are bought primarily by East-Asian countries (A few years ago I jokingly remarked that the war in Iraq is financed by China). These countries have a trade-surplus and they invested that money in the USA. The problem is that the USA has to pay interest, and some day these countries will want their money back.

An example: the reason that Fannie Mea and Freddy Mac had to be rescued is that these banks owed the Chinese government $400 billion. The US government couldn't let the Chines loose such an enormous sum.

I think this crisis will be shaking up the foundations of the economic equilibrium in the world. The current situation is unsustainable, and there has to come a new equilibrium that is sustainable. This will mean that the wealth of the average US citizen will get a serious blow as the consumption of the USA will have to be significantly downsized.

[mercuryrising]

Originally Posted by Steve Pavlina

That's one problem I'm working on. I came up with a creative solution this afternoon, but I need to test it in my own life first before I can try to teach it to anyone else. I'm not sure if it will work, but I suspect it will. It's going to take a bit of courage to do this though, so I need to wait until I'm in the right "moment of insanity" before I dive in. I'll be sure to blog about it down the road.

This is the best answer I've come up with so far. The link is to the Zeitgiest Addendum thread.

[Brutha]

A bit off topic, but as an outsider, how exactly does it work that the President is suddenly subordinate to the Treasury Secretary?

Bush did enough awful things to not be able to lead in this crisis because of his public perception.