Friday Beaver - They're Back!

Back from their winter hiatus and just in time for springs' arrival.

The economy or lack there of...

It was a simple and evil plan started many many years ago. Saddle someone with debt and you own them. Digging through history we find that a mortgage was only for 5 to 7 years back before the great depression era. It slowly crept up to the 30 year level and now there's even plans for a 40 year mortgage. We've even watched car loans go from 3 to 4 years to 5 or 6 and more. The asset becomes worthless long before the debt is paid off leaving the borrower no choice but to do the process all over at least with cars. Housing became a problem with an overinflated bubble that burst leaving people with more debt than house. And to finance that great ponzi scheme we had mortgage backed securities and sub prime loans sold the world over. We saw what happened when the bubble burst.

But why is the stock market so high you might ask? Part of the reason is that the Federal Reserve is pumping money in to the tune of first $85 billion and lately $65 billion a month. You could call it funny money because it never existed but this situation isn't funny. China for the most part has been holding up the world economy for the last several years but it too has reached it's breaking point. They built entire cities that now stand empty because there's no demand. They tried in 30 short years to move from an agrarian economy to an industrial one with little success as demand has slowed.

So we now stand in a great game of "bugger your neighbor" where one country asks for a bail out from another that doesn't have the money either but non the less cranks up the presses to create an even bigger burden. Eventually however this ponzi scheme of debt must end and that's usually when the lender gives up, forgives the debt and writes it off.

We've witnessed this plan first on an individual level then with companies (recall Bane Capital and their vulture techniques?) followed by cities (Detroit) and finally with entire countries (Greece Cyprus Spain etc etc.). In the process a select few have become very wealthy while the rest of us suffered. What did that select few produce? Absolutely nothing. A robbery if you ask me. But somehow they'd like you to take the blame for what they did.

A note on bank fails: During the 1930s 9000 banks failed, at present count we're at around 450. Updates later...