We have only seen the leading edge of the economic collapse

[JCMach1]

Seriously, someone talk me down-


Derivatives:
First, within the 600trillion-1.2 quadrillion OTC derivatives market their is a black hole. Even if it only amount to 10% of the conservative market estimate that is 60 trillion dollars. :(

Stimulus:
Along with all the bailouts and stimulus we will have shelled-out (one way or another) 5-7 trillion dollars (note a lot of that is Fed. Res. stuff, but it still counts). Most realistic economists are thinking we may need as much as the equivalent of 10-20% of GDP. That would put a total somewhere close to 20trillion. In other words, we have only done 1/4 of what we need to do to get the economy started again.

The team: Obama's team... shit these people are in large part responsible for the problem. Paulson explicitly shielded the banks from scrutiny because in essence the transactions they were involved with were not so different from what Madoff was up to. We should have used the same approach with them. Frozen all their assets and sent in the lawyers and accountants to prepare the prosecutions. Ruben? Summers? Geithner? What part of fox in henhouse do people not understand? Now ... Not blaming Obama here, but time to think out of the box and find economic gurus who can do the same. That should include people who have enough vision to imagine a post-capitalist future.

The big devaluation: one of the only ways to get out of the 'mess' is to print money... a process the Fed has continued in earnest since 2000. The difference is that now it is a world-wide policy. Most countries are basically giving money away to throw at the crisis. What does this mean in the long term? Imagine a world where the dollar (and all other major currencies) are worth half their former value. Oh, and did I fail to mention, your salary level would stay about the same in addition to the rest of the world. Essentially, this would be the death knell for the middle class around the world. Of course the big devaluation will lead to the massive inflation once there is a 'real' recovery causing additional misery and fall-out. We are already seeing some signs of this. Have you noticed how prices don't seem to be keeping pace with economic retreat? Cheap money is keeping inflationary pressures artificially high when prices should be dropping like a rock.

This is what will happen if we continue to follow the current capitalist end-game unless the people are willing reject the bankrupt system itself.

I am not saying that socialism is the answer... far from it. However, we need to think quickly what a post-capitalist, post-consumer society will look like before it is too late.

[leftstreet]

1. Globally leveling the playing field

Cheap labor in every Plutocrat's pot!

[JCMach1]

2. that's the current end-game...

:(

It's in-motion

[obiwan]

14. Leveling the playing field, my ass!

In a very real sense, we are leveling the whole planet, financially speaking.

It will be interesting, at the very least, to see how civilization rides this one out.

[CrispyQ]

24. We are consuming our eco-system for the profit of a few & to the detriment of us all. -nt

[Double T]

3. Millions to billions to trillions to quadrillions................

it will never be enough; who the hell can pay for this self made disaster. The same bastards that created this mess are still running the show; business as usual will not solve the problem. The economic and financial tsunami is on the way and it will suddenly arrive taking out damn near everything.

[leftstreet]

5. No, wait. They're puttin out the fires!

Er...uh, what?

[Double T]

19. Looks more like feeding and fanning the flames; soon to be Tank of America.

[JCMach1]

6. The plan is in-place and the currency devaluation essentially started

[Subdivisions]

4. Ummm...

Duh.

[JCMach1]

7. that's not talking me down...

:(

[Subdivisions]

8. No, but I did send your post to the Greatest Page. =) n/t

[IMPERIUM V]

9. Why do we need to "think quickly"? We've got all the time in world.

[JCMach1]

10. Hmmm... because the 'other' solution is going-on around us while I type this

:scared:

[ConsAreLiars]

11. Some variant of socialism, putting the means of production under the control of of the people who

do the work, and removing the parasites who suck their life's blood, is the only possible solution. A system in which 10% of everything produced is taken away from the greater society and put into the accounts of most selfish and greedy few percent, and then sucked further up by the top few fractions of a percent and their trust bunny offspring. Repeat, repeat, repeat.... How long can that last?

Some small scale localist communitarianism is a pleasant fantasy, but you don't get the kind of high tech that makes survival at this population density possible out of small independent collectives. Going hunter-gatherer isn't an option, unless Finance Capitalism is able to continue until it reaches it's logical conclusion and only the parasites remain, with no hosts, and eating tree bark or each other is their last best chance for survival.

[AdHocSolver]

12. The bailout money is not being used to help the economy, but rather to prop up the Ponzi schemes.

The only course of action to save the U.S. economy (and therefore the world economy) is to bring jobs back to America. When we stop importing everything we consume by going into debt, then we will begin the process of healing the U.S. economy. The U.S. wealth and power was based on the U.S. being a manufacturing powerhouse. The U.S. was a creditor nation and most of the goods purchased in the U.S. were made by other Americans.

The corporations have offshored so much of manufacturing and services so that we have accumulated a huge debt that can never be repaid. Consumption in the U.S. is supported by a massively increasing debt. The economy in the U.S. is no longer a source of energy, but a "black hole" sucking our economic substance (primarily) to Asia. Collapse of the "real" economy is inevitable.

What is the real economy. The real economy involves the creation of real wealth, and it is based on the manufacturing and servicing of physical, tangible objects. The debt instruments, such as subprime mortgages, are NOT wealth. The rapid collapse of house prices should be enough evidence that no real wealth was created.

We once had a system that promoted economic stability that was put in place primarily by the New Deal. It is called regulated capitalism. The government set up and enforced rules much like the umpire or referee enforcing the rules in a ball game. It keeps the game honest and assures that any team that plays by the rules has a chance to win. The umpire or referee determines if any rules are broken, and can impose penalties on any team that breaks the rules.

After all of the exposed swindles in the financial markets, you would think that anyone with even a modicum of intelligence would understand that the stock market is NOT the "real" economy, but merely a giant casino where wealthy people can run Ponzi schemes, and middle class people can gamble away their retirement funds.

[woodwrite]

15. There oughta be a "best thread" recognition, here

The original poster got it going on, alright,... but this thread is the crux of the entire matter... The "third-worldization" of the US is what's underway, and the wrong people are being allowed to make the decisions.

[JCMach1]

17. Not just that- Paulson is also using the law to coverup the criminal activity

[earth mom]

20. Best post on this thread!

:thumbsup:

[Divine Discontent]

13. I understand what you're saying

the thing is 'honest capitalism', is it possible? I wanna believe it's possible, but the people in the gov't that are supposed to stop the swindlers get bought out by them, so that's why socialism looks good in many regards. I am for the gov't taking over the oil industry, so they can direct it to push for renewables.

[Enthusiast]

16. The fascist answer has always been war.

The United States and the world desperately needed a progressive U.S. administration in the year 2,000. This is what we reaped when we allowed the SCOTUS to determine the outcome of an election. We merrily continued on the Ronald Reagan path to ruin.

[Ani Yun Wiya]

18. Monetize the global population.

NOT the "financial system".

Let the banksters earn a small fee for keeping track of every individuals transactions.

I do have a comprehensive concept for a solution to this global financial "crisis", but am still in the process of writing it up.

edited for typos
edited for typos
edited for typos

[HamdenRice]

21. I could easily talk you down with facts and figures, but most of DU prefers the fun of panic

1. I think your numbers for the overall bailout are off. The Fed "facility" is about $2 trillion. That money is not being given away, but loaned in the form of purchases of commercial paper and currency swaps, and although they have been pretty opaque about what they are doing (they don't want to create panic selling against any particular company), if the commercial paper facility is buying normal commercial paper, many billions have already been paid back. That's because a lot of commercial paper is "30 day paper," and the program started over 30 days ago. It's more like a revolving pool of money the Fed uses to buy paper that comes due in 30, 60 or 90 days, which pays the Fed a small profit, and which it then reinvests back in more paper. These are investments, not expenditures. When the money market recovers, the Fed will phase out this facility, which last I read was around $1 trillion.

Another $1 trillion facility of the Fed was a reciprocal currency exchange or swaps. That means that the Fed is cooperating with the European Central Bank, the Bank of England, the Bank of Japan, China's State Institution for Foreign Exchange and China's Central Bank and undoubtedly the central banks of smaller countries that are under lots of stress to come up with dollars, while the Fed also needs to come up with Euros, Pounds and other currencies. They are basically lending each other money, with the Fed pledging up to $1 trillion. I believe the Fed excluded Iceland (I could be wrong, but vaguely recall reading that) so the exposure, while potentially serious, probably hasn't caused losses to the Fed, because none of the central banks has failed

2. Derivatives are not a big deal. I realize it's a big number and people like to run around screaming about it, but most people don't understand what derivatives are anyway. I could explain why that big number isn't a big deal, but no one would believe it anyway. It's much more fun to scream about the big number.

3. So far the government is not "printing money" -- at least not much, and not yet. Because the financial markets are so scared, much of the $70 trillion or so in global savings is fleeing to the most absolutely safe investments on the planet. Whether justified or not, most of that money thinks that US Treasury debt is the safest investment, so money is pouring into the Treasury in the form of demand for T-bills. The demand is so high, that investors are accepting effectively zero interest on loans to Uncle Sam. Therefore there is no reason for Uncle Sam to print money. The world is giving Uncle Sam as much free money as he could possibly want or use.

This means that the US government is in an excellent position to make the kinds of investments that Obama is proposing. For example, if upgrading our highways gives us a net gain of say 5% savings in efficiency or saved broken axles on cars and trucks, or whatever, then Uncle Sam actually makes money by borrowing from the world at 0% and earning 5%.

[JCMach1]

23. Yet, we the gov. witholds M1 money supply numbers

since the beginning of the Bush administration...

[.... callchet ....]

22. Massive progressive tax increase on the over $250k earners.

Why does nobody get this. That is where the money went over the last 30 years. Here and the rest of the world. The upward flow of money has to start paying for its free ride. Any stimulus without a massive tax increase just puts the money back in the hands of the reason for the collapse. Give the money back to the people that use it to live.