Chile Forum

An economic collapse or another 9 1 1 or a combination of the two would easily result in martial law including the suspension of the "sham" presidential election.

Everything is in place as Charles said suspension of habeas corpus, Posse Comitatus, the signed off and ready to go executive orders permitting total control over law enforcement, the economy, movement of persons, etc.

Of course, everything's in place; but it's not yet in effect.

May it never be.

yea, there are no tanks on the corner because they are all in iraq.

Bear sterns was bailed out by the fed and JPmorgan. That was a round abouts way of hiding a major U.S. investment bank bailout. Which one is next?

I think it is fairly safe to assume the economy is now out of control. The fed is simply running around trying to put out fires, in the hopes no one will see the smoke and run from the building. We are starting to pass the point where it is getting too late to run from the building.

Kinda sux being in the position of "I told ya so".

But there is only so much you can do to expand the consciousness and influence the free will of others.

This night club in Chile is offering to exchange your dollars for 25% more than the banks.

http://blogs.usatoday.com/ondeadline/20 ... an-ni.html

admin wrote:This night club in Chile is offering to exchange your dollars for 25% more than the banks. . . .

Hardly my style -- I like the rate but not venue. So I'll remember the good old Yankee proverb, "goods not wanted are dear at any price."

Call it denial, but I still believe that the dollar will recover somewhat, and for some time: this is but a foretaste, I think, comparable to what sterling suffered in the 1960s and '70s. The real collapse for America is some years in the offing.

Na I do not believe this is the very end for the States in any way. In fact, I am more interested in where the bottom is at so I can buy some stock. I think we are a long ways away from that at this point, but worth a nibble to be sure.

A couple interesting bits of info I have come across recently was they believe that something like 20% of all renters are in rentals in some state of foreclosure and thus in danger of being evicted (no one is really sure). 40% of all foreclosures in the United States are now prime, near prime, or government guaranteed mortgages ( i.e. super prime ). There goes the credit rating on massive part of the population that use to have good credit and assets. Bear sterns unwinding was tied in part to commercial mortgages and credit card debt going bad.

If I was going to go buy stock right now, it would be in technology related to open source software and perhaps real estate. Old business partner of mine that was a stock broker and specialist in small business finance always said stick to what you know.

Open source software service provider companies have proven in down turns to do really well as companies cut back their IT budgets. In fact the whole open source movement is just giddy right now with anticipation of a boom. You can't compete with free software, but it still needs to be maintained. Companies like Red Hat, Novel, and perhaps IBM will do well as they will have pricing power. I might also throw some money at any company making cheap good laptops or hand helds in the sub $500 range NOT running windows. Asus is doing good. People want small, disposable, and rugged little laptops. The days of the desktop replacement are coming to an end. The difference between a $800 laptop and a sub $500 laptop is the windows licenses. I think we will see a lot more windowless laptops and hand held.

Microsoft can talk their game about total cost of ownership, but my little shop saved an easy $40,000 last year by running linux and open source software. How do you like those apples Bill? It takes me less than a day to train a new staff member in using Linux, that has never touched anything but windows. Typically more like one to two hours, and a day for them to be fully up to speed and comfortable. Windows vista just guaranteed my investment in Linux is sound, because I as yet to see a piece of hardware run windows vista correctly. I suspect there is not a computer on the plant that can do it because of the design flaws in the OS. I would also throw some money at the Mac. The mac is back, and will be the preferred choice for graphics designers over linux for some time to come.

Real estate, I think I would wait a year or two, but it will come back and hopefully in a far more regulated fashion. I expect everyone to be so gun shy about it as an investment that the housing glut will be sucked up before anyone realizes it and their will be a mini bubble before a building boom sets in to fill the demand. Perhaps a sort of real estate market dead cat bounce in the States (super slow motion bounce). I am crossing my fingers on this one as my family has a condo in Las Vegas (the most foreclosures in any market in America) we need to get rid of sooner rather than later. That sucker went from an offer two years ago of $250,000 by developer down to 130,000 which is more or less its mortgage value, and now in this market to move it fast I figure it would have to be priced at 100,000 - 110,000 to even get anyone to look at it. Good thing is Vegas is fast moving market and tends to be fairly recession proof. It will only take a year or so for that market to recover in the middle of a recession because of the casinos industry. The other real estate markets might be nursing their wounds for years and years to come.

Is all the bad news priced in to the market? Don't forget the news that they don't know. It is the news that they don't know that I am trying to gage. That is, has the market overreacted and over sold to a point where there are now good deals, or do we still not know what we don't know.

I ultimately have hopes for the States, just not putting all my eggs in that rocky basket. Chile is my ultimate hedge against that market and politics. It sure makes Chile look a whole lot more stable all the way around. The States is purely for speculation at this point.

I hope you're right, Charles. I've four hundred years of blood, sweat, tears, love, and hope invested in the United States. My deepest delight is stirred by the land and its people. But they have gone so far from what they were and should be that I think that, short of a miracle, nothing will now save the country from itself. Chile, despite its continued distance from real participatory democracy and ordered liberty, offers the hope of a brighter future as the Chilean people move toward a sense of self-determination, self-help, and help to others outside the regulated discipline of an overly centralized and unreasonably dominant government; or so it appears to one acquainted with the land, the people, their history, and their character since long, long ago.

here is some gloom and doom view that might give you a few more pesos:
http://seekingalpha.com/article/68638-s ... -confirmed

considering the news today, the peso seems to be holding fairly steady. The big questions right now are about how many more banks are going to go insolvent, and how much liquidity is the fed going to pump in to the market in an attempt to keep it afloat.

Brief comments followed by WSJ Article:

1) Cutting interest doesn't help economy if banks aren't lending at any rate, but it sure helps kill the currency;
2) Looks like Japan a decade ago, at least in monetary terms;
3) More regulation isn't the answer, in fact it's part of the problem. Govt guarantees allow banks to take stupid risks because they profit on the upside & get bailed out on the downside;
4) While the present economy isn't favorable (recessions generally aren't), I think doom & gloom and especially dire warnings of a police state are rather over-wrought...and nothing new, looking back at other downturns.

The Buck Stops Where?
March 17, 2008
In the credit market panic that began in August, we have now reached the point of maximum danger: A global run on the dollar that could become a rout. As the Federal Reserve's Open Market Committee prepares to meet tomorrow, this should be its major concern.

Yet the conventional wisdom -- on Wall Street and in Washington -- continues to be precisely the opposite. In this view, the Fed is "behind the curve" and needs to cut interest rates even faster and further than it has. Never mind that this is precisely the path the Fed has followed since August, yet the crisis has grown worse and now bids to tank the larger economy. Does it make sense to do more of what isn't working?

* * *
The Fed's main achievement so far has been to stir a global lack of confidence in the greenback. By every available indicator, investors are fleeing the dollar for other currencies and such traditional safe havens as gold and commodities. Oil has surged to $110 a barrel, up from under $70 as recently as September. Gold is above $1,000 an ounce, up from $700 in September, and food prices are soaring across the board. The euro has hit record heights against the buck, and for the first time the dollar has fallen below the level of the Swiss franc.

Speculators are adding to this commodity boom, betting that the Fed has thrown price stability to the wind in order to ease U.S. housing and credit woes. The problem is that dollar weakness is making both of these problems worse. The flight from the dollar has made U.S.-based investments less attractive, at a time when the U.S. financial system urgently needs to raise capital. And the commodity boom is translating into higher food and energy prices that are robbing American consumers of discretionary income. In the name of avoiding a recession, reckless monetary policy has made one more likely.

Meanwhile, and disconcertingly, we keep hearing new explanations for the virtues of dollar weakness. One of the most popular is that the increase in commodity prices has nothing to do with the dollar but is merely a change in "relative prices" -- commodities compared to other goods -- caused by surging global demand.

No doubt strong world growth explains part of the commodity price rise this decade. But the dollar price of oil has surged by some 60% since September, even as U.S. growth has slowed sharply. If the dollar had merely retained its value against the euro, oil would be in the neighborhood of $70 a barrel. Dollar weakness explains a large part of the oil price surge.

We are also told that the U.S. is merely importing inflation from the rest of the world, such as China. Import prices have surged nearly 14% in the last year, but that is mainly recycling the inflation that the Federal Reserve has inspired. Like other countries that have linked their monetary policies to the U.S., China has been importing inflation due to dollar weakness. Its official price level has tripled in a year, and it is now letting the yuan rise more rapidly against the dollar to slow that domestic inflation.

Kuwait has already dropped its dollar peg to stem its inflation, and other Persian Gulf countries may follow suit. These are all signs that the world is losing confidence in the Fed's commitment to price stability.

Another excuse is that a weak dollar is useful because it helps to boost exports, and thus reduces the U.S. trade deficit. Exports have certainly been strong, but exports in goods are being more than offset by the rising cost of oil imports. In January, the U.S. trade gap actually widened thanks to oil imports. In any case, rising exports won't comfort Americans whose standard of living falls due to rising import prices.

Then there is the "just deserts" school, which claims that dollar weakness is the inevitable result of America living beyond its means for so long. This road-to-perdition view is especially popular in Europe and the U.S. media. To believe it, however, you have to conclude that the world was willing to ignore the U.S. trade deficit for decades only to awaken in horror now.

The truth is that, as ever, the fate of the dollar is in our own hands. Inflation is always a monetary phenomenon, determined by the supply and demand for a currency. The supply of dollars is controlled by a monopoly known as the Federal Reserve, and at any moment the Fed can produce more or fewer dollars. The Fed can also influence the demand for dollars by maintaining a commitment to price stability, or it can reduce that global demand by squandering its anti-inflation credibility the way it is now. Once squandered, it is difficult to regain -- as we learned the hard way in the 1970s and 1980s.

The Bush Administration is also not helping confidence in the dollar. While President Bush is doing well to fight protectionism and higher taxes, his Administration continues to give the impression that it quietly favors a weak dollar. Yes, the official Treasury mantra is that it prefers a "strong dollar." But that mantra was the same when the dollar was strong and oil was $20 a barrel in the 1990s as it is now when oil is $110 and the dollar is weaker than at any time since the 1970s.

Last week Mr. Bush dared to wander from this script and told the Nightly Business Report that a strong dollar "helps deal with inflation" and rued its weakness against the euro. He was quickly reeled in by his advisers, and in his Friday speech at the New York Economic Club Mr. Bush reverted to the boilerplate language that investors now interpret as favoring a weak currency.

* * *
Which brings us to tomorrow's Fed meeting. The markets are expecting another cut of 50-75 points in the benchmark fed funds rate, and if recent history is a guide will immediately price into futures another 50-point cut down the road. The stock market may rally, until it once again decides that easier money can't remedy what is fundamentally a problem of bank solvency. That problem can only be resolved by financial institutions and regulators coming to grips with the losses, raising more capital to cushion the blow, and closing or selling those banks that can never recover. That will require a more aggressive, and pre-emptive, regulatory role for the Fed -- and that we would applaud.

What the U.S. and world economy don't need is a Fed that continues to insist that inflation expectations are "well-anchored" when everyone else knows they aren't. The Fed needs to restore its monetary credibility, or today's panic could become tomorrow's crash.

Just an observation about this topic in the forum and how little has been said on it over the last few days with the whole mess unfolding min by min and hour by hour.

It is kind of funny that we have been discussing this so vigorously for so many months, and now that the sky really is falling we are all in a kind 'so tell me something new' mode. The last people to figure it out are on wall street, followed by the white house it seems.



and don't forget the big guy


Beer thread anyone?

We are just sitting here saying the mantra, "I have no control," then OUCH, then "I have no control" OUCH, "I have no control" OUCH.

The question I have is, Did they really not know? I doubt it. I know the Big Guy is not the brightest bulb, but don't ya think maybe once, or twice, Greenspan, or maybe a third-grade teacher from Cleveland might have pick up the phone and said, "Hey Big guy, not to overstep the bounds of my expertise, but I think the economy might be in a bit of a pickle."

I think they knew, just as they knew the sub-prime ordeal was going to blow up. But then, that's just me.

Vicki

Vicki, the problem's far beyond the so-called "subprime crisis", far more basic; always has been. And anyone who wasn't deluded enough to be a thorough-going Keynesian could have foreseen this problem (barring correctional changes, which few self-seeking politicians would have had enough spine to press for) as long ago as the early 1960s, when a self-seeking president pressed for increase of the money supply beyond the rate of real economic growth.

We reap what we sow.