Tons of money was made and I saw many many people get involved in the market. One of my fathers cooks at the restaurant actually purchased a home in Aug of 2006 for the incredible top ticking bubblicious price of $507,000.00!!! His income? $2,100.00 per month. That's how out of control it got in California and it was all around me. So back to the news clip on that cool winter day in Australia (our summer is their winter, duh!) I recall this analyst talk about "mortgage backed securities" and how the "secondary market" would freeze up. Once I heard these terms in conjunction with subprime I raced to the computer and learned what the hell these things were. This was the beginning of my financial awakening.
Think about these key concepts:
(1) All money is LOANED into existence
(2) Debt assumes that the future will be larger than the present
(3) It is debt that forces us to scramble around in the attempt to collect “money” to pay back what we borrowed
(4) We can only find money in this system so long as someone else borrows as money is created when people borrow
(5) When people stop borrowing no money is created thereby causing defaults and threatening to destroy the system as others can no longer repay what they borrowed
(6) Borrowing requires the system to grow forever and forever
(7) the world is finite with limited resources making it impossible to grow forever
(8) peak oil will limit the worlds growth
(9) exponential growth is incompatible with a finite planet
From there I learned about the bond markets, stock markets, commodities, currencies and basic economics. At this point law school became a means to an end as first year grades placed me below the median. What really mattered was my real education that I was learning on my own. Oddly enough I got better grades the less I studied. What the fuck right? The second year of law school consisted of class, clerking for some insane attorney, working at the library and my own "special education." By the summer of 2008 we all know what happened: crude hit $147 a barrel, regional banks started to fail and then bigger banks began to fail and that’s when some banks became to big to fail. By the fall of 2008 all the recklessness, greed and fraud came home to roost with a stock market collapsing from 14,000 points 8,000 points, then to fall to a whopping 6,600. The collapse in the financial markets had finally arrived.
And it only took a little more than a year after the worries first began. At this time I was a third year in law school, law firms were cutting staff like crazy, and job losses totaled up to 700,000 per month. People were losing jobs in real estate, construction, finance, trucking, and in manufacturing. Some of these job losses were necessary (too many real estate brokers) while others were victims of the close to 10% drop in real GDP. The correction was here and was doing its damage. The most important and healthy thing the correction did was push down real estate prices. While most people with skin in the game think this is a crazy statement, the reality is that real estate became too expensive. Too many scarce resources were being diverted towards the service of mortgage debt when it easily could have been directed elsewhere. This correction is taking place right now with millions of Americans that have stopped paying ridiculous mortgage debt in exchange for rent that is a third less of their original note. The true recovery factor in this country is because of all the money that is no longer going towards mortgage debt and is being spent in the economy.
But of course, the authorities, the powers that be, made the story take a different direction. They decided to load the country up on debt, and lots of it to the point where we are now pushing $14.3 trillion. Just imagine that in September of 2008 we were below $10 trillion. The big banks were kept alive and they are back to business as usual, fucking the average joe. I believe a friend of mine may have been a bit late on her Citicard (citi bank) and they increased her interest rate from 8% to 29.99%. And this is the bank we bailed out with taxpayer money?? And yes these banks continue to rob John Q. Public with their prop trading desks and their use of high frequency trading whereby they front run their clients accounts by microseconds, taking pennies away from pension funds one micro second at a time. Some of these banks have record trading quarters from time to time! Wow, such talent! Such a great contribution to the quality of life for the human race. Please. These people are modern day pirates with nice suits on but hearts and souls of black shit.
I talk to many people everywhere I go. Whether in court room, the store when buying smokes, the bar, on the street, at the coffee shop. In 2009 I would tell people “you hear about the job losses last month?” and they would respond with “things will get better.” That in fact was the response I received the majority of the time. Fast forward to 2011 and when I bring up the economy, even though the stock market has roared back and the job losses have been plugged for the time being, people respond with “things are all fucked up.” More and more people are beginning to realize that the employment numbers are goosed or that inflation is cooked to the downside. Most importantly, people are beginning to realize that paper money is essentially worthless. I follow what people say in the comments section of the major media websites such as CNN, CNBC, FOX, MSN, and YAHOO news. Whereas before people were getting into their usual left-right battles about “how it was Clinton’s fault” or “no it was Reagan and Bush’s fault” today I’m seeing a lot more comments to the effect that “both parties are fucked up.” When/if people lose faith in the current system which is rotten to the core, only then can we have a true correction. And not only that, but when people learn that our current system of debt money is basically one big fraud, perhaps we may even see the rejection of this monetary system.
Why even have debt? What purpose does it serve other than to destroy the earth and ourselves at a much quicker rate? The simple reality is that if people didn’t have debt they wouldn’t be in such a scramble to “hustle” in order to pay off this debt. It is debt that comprises the massive hamster wheel that the entire world is running on. Could you imagine a world without debt? Or a massive jubilee announced across the entire world? That would be amazing wouldn’t it?
Just last night I was watching Greek TV and the news were saying how 3 people committed suicide in the last 5 days because of their debt woes. Mind you Greece is a small country so they actually report things like this. Even on American websites and forums I hear graduates talking about wanting to kill themselves because of the huge debt burdens they carry. Even those who are employed but have large student loans are still scrambling, working, hustling like mad, many of them working extra jobs, just to pay down that debt. This imaginary entity, this debt, was created when Bank A (lender) credited Bank B’s (law school’s bank) account with X amount of dollars created from thin air. In turn, borrower student signed a promissory note (with bank A) promising to pay what he borrowed (that was created out of thin air) PLUS interest. What a fucking fabulous system we have created! Banks used to loan out deposits but now loan out AGAINST their deposits, hence the term fractional reserve banking. This fraction reserve banking system, which works so long as the economy continues to grow, basically requires that the economy MUST grow. Every year, every month, the “economy” must grow. We MUST eat more, shit more, drive more, buy more, text more, everything more more more. Because if we don’t grow then the system implodes onto itself into a nightmarish deflationary collapse. So as this system requires the world to grow, it puts us all on the hamster wheel, ensuring that we do what we can to make sure we pay off our debt, but in turn making sure the economy grows.
It basically comes down to this: the entire world economy is based off of a fucking equation. Yes you heard that right, our lives, our well beings, our futures, are based off of an equation. And the equation posits that the world must grow, must consume more, must waste more, more trash, more crap, more stress, more fat. The growth junkies are so captured by this equation that many commentators were seeing the Japanese disaster as a “opportunity” for GROWTH! Please notice and recognize the use of the word “growth” in news articles as it is the basis for everything for the equation.
Our money system requires that the world grows, that eventually we pave the entire planet seven times over, just to satisfy the equation. Nearly everyone lusts after the power of money, yet very few understand or even know what it is. Yet the awakening grows each day as the powers that be expose the secret of what our money truly is, how it is nothing. When Bernanke and the rest of the crooks at the Federal Reserve crank up the printing presses creating trillions in the process, smart people see that there is no true value in something that can be created out of nothing. Look a little deeper, and you will learn how destructive this “nothing” can be. Yes, all money is loaned out of existence. Bernanke creates money as he “loans” it to the federal government in exchange for treasury bonds, or the US taxpayers promise to repay something that was created out of nothing.
Again, think about these key concepts:
(1) All money is LOANED into existence
(2) Debt assumes that the future will be larger than the present
(3) It is debt that forces us to scramble around in the attempt to collect “money” to pay back what we borrowed
(4) We can only find money in this system so long as someone else borrows as money is created when people borrow
(5) When people stop borrowing no money is created thereby causing defaults and threatening to destroy the system as others can no longer repay what they borrowed
(6) Borrowing requires the system to grow forever and forever
(7) the world is finite with limited resources making it impossible to grow forever
(8) peak oil will limit the worlds growth
(9) exponential growth is incompatible with a finite planet
Right now the system is desperate for growth, desperate for new money to be introduced into the system. With businesses strapped and households already overburdened with debt, only the government can borrow to spend into the economy. There is also one more class of persons that can borrow right now, and that is the student borrower. Once confidence in the student loan con disappears, that bubble will burst as well. Don’t get caught in this trap ladies and gentlemen as it is especially vicious. At the present time there is no escape from the clutches of the student loan as it cannot be discharged in bankruptcy. As of now, it MUST be repaid. Therefore, don't let the "equation" get to you because according to the worshipers of the "equation" people NEED to borrow. Uncle Ponzi NEEDS YOU!
In conclusion, it is imperative that people learn about our money system and how flawed it is. We cannot rely on a system that requires perpetual growth as the humanity has its ups and downs. Right now, people are slowly beginning to realize what a con the entire system is. To further your education in this abstract and complicated area, please go to Chrismartenson.com and watch the "crash course" which is a great presentation discussing the "system" in much greater detail. It's free and is probably the most informative presentation I have ever seen. Get on the ball people because we may not have much time left before the real turmoil begins.
That’s all for now
Subprime
