Illiquid Assets

[wundermaus]

Run time: 08:44 https://www.youtube.com/watch?v=Ano6xlk12-g   Posted on YouTube: February 17, 2009 By YouTube Member: Views on YouTube: 0   Posted on DU: February 17, 2009 By DU Member: wundermaus Views on DU: 854

 
"Illiquid Assets" are not an act of the markets, nor are they an accident. They are in fact created by GOVERNMENT INTERFERENCE in the marketplace.

In 10 minutes you'll "get it" - why the government - not the markets - has led to the credit freeze. Why the market cannot clear. And why it is in fact explicitly the things that the government has done and is doing that has led us to have a "credit crunch", where assets that normally would trade won't.

[Taverner]

1. And exactly why the only way we can solve it is by a Government solution

[freemarketer6]

2. Excellent video. And so true.

dd

[florida08]

3. but he's not addressing the derivatives

TO AID THEIR AILING COMMERCIAL banks, central banks in Europe have relied on huge currency swaps, borrowing nearly $400 billion from the U.S. Federal Reserve. But as European commercial banks and European currencies deteriorate, repaying all that money to the Fed is becoming ever more difficult. I don't see how they can easily be repaid," warns Gerald O'Driscoll, senior fellow with the Cato Institute and formerly with Citigroup and the Dallas Fed.

http://online.barrons.com/article/SB123336877483535797.html

They're losing value everyday and this ponzi scheme is collapsing on itself taking the mainstreet with it. It's a 62 trillion liability

[truedelphi]

4. Sorry, but overall derivative losses stand at between 150 Trillion to 550 Trillion

And O'Driscoll saying that he doesn't see how they can be paid is exactly right. Our economy only generate 13 Trillion dollars wohrt of an economy during good times - so to pay out 550 Trillion d9ollars would involve our great great great great grandkids paying back the loans.

We keep printing up money as though doing so has no effect on anything other than to loosen the noose around our necks. But the nine to fifteen trillion bucks that our government has already extended to our economy via loans from China and the printing presses working overtime - eventually this will cause inflation. When we reach a point wherein bread is 12 bucks a loaf,then we will see that we should have avoided doing this. But by then it will be too late.

[florida08]

5. haven't seen the stats on the potential losses

but that's probably right. The 62 trillion I referenced was the original investment amount. I know..I worry about hyper inflation too but when there are no jobs and no consumer spending deflation will occur once stores can't layoff anyone else. In some way it might be good for the economy to reset as prices are just ridiculous for homes and cars. We're already seeing oil prop up it's profits with $35/barrel and $2/gallon. Then the dollar's value will drop like a stone. Wall Street is PO'ed because Main Street is now getting help instead of them. I think all the investment banks should suffer with their own losses. Let the retail banks merge if they so choose. There are some good banks that did it right. The percentage of Main Street that is to blame for buying too much house is so low they could have been purchased many times over..so I am with the president for rescuing jobs and mortgages. Banks should be done on terms of merit and how much risk they put their customers in..insure the deposits but hang the credit default swaps.

[paulkienitz]

6. so what's the alternative to inflation?

As far as I can see, a period of high inflation is about the only escape hatch we've got.

[florida08]

8. I know it seems that way

to me too but keep in mind consumer spending is about 70% of our economy. Consumers have locked their wallets and have begun saving again so if they start inflating it will only make matters worse. Helping people to stay in their homes is a start along with job stimulus for the millions already on and off unemployment. The trade deficit should be addressed as well. We need to start exporting products again and not paper. I know there's been talk of foreign countries dumping our dollar and that worries me the most..but I don't think they can right now. Oil is still sold in dollars for the most part. If you notice on the chart inflation has been held down so far. Once people get confidence back that there are real answers being injected they'll start spending again AND if they can keep Rush Limbaugh's mouth shut.
http://inflationdata.com/inflation/Inflation_Rate/CurrentInflation.asp

and: Europe: Not As Lucky As U.S. 2/17/2009 The United States enjoys funding its ever-increasing debt in its own currency as the dollar, for better or worse, remains the world’s reserve currency. Because the euro and the pound sterling do not enjoy this status, the smaller economies under the European Union's stability pact are having trouble attracting investors for government debt. The only answer is to offer higher yields in order to attract investors.

[trthnd4jstc]

7. I think that he is right about the Government having helped to freeze the credit markets

Anyone involved in Policy, please watch this clip?