The losses the banks are having are caused by the inability to sell homes in foreclosure. The general assumption by the common sense crowd is that the bank can sell the home when in foreclosure. In general situations, that's absolutely correct.
However, when property is overvalued and the loans on the account exceed the amount of the property, nobody is going to buy the property at cost. The banks, who hold the mortgages, are going to have to write off the home. This is where the common sense crowd gets confused and angry.
In the so called common sense world, nobody is going to let a home go into foreclosure without selling it. However, the twin problems over overvalued property and the lack of funding from other lenders is causing the banks to have to eat the losses. The common sense reality is beginning to shake apart, and the common sense people are getting angry. I can see their frustration in the comments on my blog and on my youtube.
Realty is changing quickly for the common sense crowd. They are not adjusting fast enough to the facts, which causes them to lash out in vulgar and immature ways. It's kinda sad when you think about it. They'll pay the price for their common sense views when the cleaner comes to their bank accounts and jobs. And the whole time, they will curse people who tried to warn them.
That's why I'm not trying to warn them. I don't want the beating or the blame.
It's really simple: Banks are collapsing. The money supply is contracting at nine times as fast as the losses are declared. I'm seeing, in the media and the blogs, they are predicting a 45 trillion dollar total loss. No economy can take that type of loss without a collapse.
Gold, it's going to fall. Food, going to go up. What you do today is most likely not what you are going to be doing in 5 years. We are going to have a smaller lifestyle. You can adjust now, get your solar power installed, remove yourself from the grid, take your money out of the system, plant a huge garden, get to know local vendors, stay away from credit.
The change that is coming is as large as the great depression or the civil war. People are going to suffer for the excesses of the last 40 years. And there is nothing in our past that has prepared us to deal with it. This is why the common sense crowd is going to get their collective butts kicked by this financial crisis.
Enough ranting for now.
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check out www.66stage.com and go to documenataries.
Thanks John,
really appreciate your insights,if i get down to long beach the least i can do is buy you a beverage or two& a meal.
i have alot of money in my savings account here in the Us,and bought gold at 790 oz as well,what advise can you point me in the direction to?I have worked very hard and been very frugal and want to buy land and build? yen?...Oil? I would love to buy some land in Big Sur area and build a house myself.gas?..Wheat?..Fertiliser? short the euro/ short the pound? go long on the dollar?
note I am not the rude anonyomous that "honours " himself with childish insults.
Thanks for your time john,I want to read and educate myself and would soo appreciate any books you can point me towards.
Thomas Jefferson was concise in his early warning to the American nation, "If the American people ever allow private banks to control the issuance of their currency, first by inflation and then by deflation, the banks and corporations that will grow up around them will deprive the people of all their property until their children will wake up homeless on the continent their fathers conquered."
Thanks John
John,
Really appreciate your comments and agree that the banks are bankrupt. However, you really need to read the fed article that I tell you how to link to on your previous comment. It is quite long but worth a careful read. It tells you in detail exactly how this thing will play out. The banks are not going to fail because they will simply will not acknowledge the loss and simply carry it on the books and no one and I mean no one including the US Government will make them do it. They will simply carry it on the books like Japan did for years and years and we will have stagnated growth or a deep recession for years and years just like Japan did in the 90's. Because even if they do carry the losses off their balance sheet they will still know they are there and we will have one of the longest liquidity lock ups in our history. Exactly like what happened during the depression. Now will we have 30% unemployment and a depression, who know. One thing for sure is that the fed rate will eventually go to zero and inflation will fall off to nothing because we will have very reduced demand. Remember this fact, the banks and government are in bed together now worse than ever. They will tell us exactly what they want. The problem right now is the banks don't trust each other. That is the real problem. However, when little one fails they will circle the wagons and bail it out. Case in point Countrywide. They are not openly saying it but the government and Uncle Sam are rescuing them. Also, read the article about how the government can in certain circumstances simply assume the debt of these banks and how if they drop the treasure rate to zero they can simply roll the debt over and ignore it. Like I said, it is a very eye opening and very interesting read that everyone should read that is interesting in the present situation.
John,
Looked at the website, how can I post the Clinton Cronicles on
66stage.com. Looks like gold is falling!
Oil fell today to $88. Just on fears of a recession. Imagine the price when the recession takes hold. The first step towards deflation; as demand falls so does the price of all goods. Gold will be last to fall once everyone realizes the sky is not falling and the economy will muddle along. Once fear subsides, gold will fall and everyone will adapt to anemic growth and recession with no end in sight. Big loser will be stocks and hedge funds which the FED will not rescue since they have their hands full keeping the banking system afloat. Ultimate biggest loser will be states and city municipalities that will lose most of their pension funds when these hedge funds fail. Long term result will be higher local and state taxes for everyone.
Interesting comment.
The idea that gold will NOT go up is counterintuitive, and not what most analysts are saying. Curiously, if the price of gold falls, there already seem to be explanations at the ready. Perhaps that is what a bear market is all about.
Charles Longfellow
www.tradingwellandliving.blogspot.com
Going solar is very expensive.
I don't think this is a good call.
Installing a 1kW solar system will cost 25 years of electricity at the current rate.
Getting off the grid just for the sake of it doesn't make sense.
Now if the government starts to restrict your use of electricity then that is a different story.
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