When your bubble is bursting what do you do?

You make a bigger superbubble to contain the burst. That’s what.

The 1 year old credit crunch.
(Yes it was officially 1 year old as of a few days ago. It must be true, the BBC said so!)

I wouldn’t elevate myself to the status of a recognised economist, and my opinion on economics has been called naieve before and yes, nobody would invite me onto the corporate media to say things like ‘the market is rising becasue of xyz’ when the market is actually rising, and when the market falls to be invited back on to say ‘this was bound to happen becasue of pqr’. You know the score.

But I do a fair bit of reading about it and I’m personally happy with my handle on it. There isn’t anything magical about looking at economics, nor my view of it. It’s just exploitation to maximise what you can potentially squeeze out of someone. That is, that I call ‘innocent’ economics. But it’s time to say bye bye wee boy as we move on up to the mother of modern economics, the significant bit, involving speculators and global manipulators of the market. It is this which forms the super bubble that enveloped the standard bubble of mini-scams of the past.

At the time the credit was beginning to crunch, I denounced it as a scam. If it was genuine, my proposed simple solution would have cured it in a matter of weeks – that of mortgague default negotiation. Tell banks and building societies to restructure their customers loans so they would keep their houses. It was really that simple. However, no such restructuring took place.

Another indication of the scam was the MSM saying it lobbox like there is no cheap/available credit left anymore. The BBC says the credit crunch is “Defined as a severe shortage of money or credit” Clearly, whoever dreamed up that bit of tripe, doesn’t really know the first thing about money and economics, yet the MSM kept repeating it verbatum. No MSM outlet has ever properly explained why, if cheap credit no longer existed (LOL) did interest rates drop?

UK (Bank of England base rates):
Aug 08  5.00 %
Jul 08  5.00 %
Jun 08  5.00 %
May 08  5.00 %
Apr 08  5.00 %
Mar 08  5.25 %
Feb 08  5.25 %
Jan 08  5.50 %
Dec 07  5.50 %
Nov 07  5.75 %
Oct 07  5.75 %
Sep 07  5.75 %
Aug 07  5.75 %
  (The credit crunch is born)
source: http://www.housepricecrash.co.uk/graphs-base-rate-uk.php

And what of our friends in the US???

So, cheap credit no longer exists becasue the interest rate dropped. Marvellous, isn’ tit? Surely we will look back on this period of history and describe it as a golden age. A golden age of MSM garbage.

But in actual reality, it’s doubtful that allowing people a little grace to repay the loans on their house would have solved the problem. Becuase despite the media lies, the housing loans market was pretty much irrelevant. It is a bit fishy when the BBC says “After a two year period between 2004 and 2006 when US interest rates rose from 1% to 5.35%, the US housing market begins to suffer, with prices falling and a rise in homeowners defaulting on their mortgages.” Or maybe it isn’t fishy and it’s just that the BBC jouno who wrote that statement didn’t seem to think this relevent “The median household income was $46,326 in 2005, a gain – above inflation – of 1.1 percent from 2004.

Hummm… another spanner in the works.

The crunch came about becasue the phoney highly intertwined bets and packages wrapped around mortgages, oil and the predicted price of candy floss at Whitley Bay. This multilayered intertwinded wrapping far outsripped the value of the underlying asset.

It’s not unreasonable then to suggest, that someone with the power to change an indicator value, and someone who realises which way the bets are stacked in relation to the value of things like mortguage packages or candy floss, could make an absolute fortune if he were able to manipulate the value an underlying asset. This is essentially insider trading. Conventional insider trading is pretty much regulated and checked for (unless it related to the value of United Airlines stock of the value of the pound sterlling on 9-11 and 7-7 respectively). But derivative trading ISN’T regulated.

So, bump up the interest rate, watch the value of sub-prime mortguage packages go down as fears of non repayment manefest, and boom, you’re laughing all the way to the bank.

Perception is one hell of a strong force in the gambling pits of the LSE and Wall St., so make a small number of people lose their homes, get your buddies in the MSM to say it’s a catastrophe and that the world is gonna end and you’ve generated the necessary fear to collapse the sub-prime value.

Lobbox? Well why did it take almost a year for Bush to sign a “housing(repayment relief law“? Why did the US and UK govt not regulate the derivatives trade? Why did the cost of credit fall for the duration of the credit crunch? Why is the BBC wrong about people less able to afford to pay for their homes when the median value of household income rose? Why did the UK Govt bail out a private bank that gambled and lost. And more importantly where has all the money been lost to?

Yes it is fake money, but in a fake system, it acts as real money.

To end with, the BBC isn’t totally crap, just maybe 99% crap. Here’s a part of the 1% that isn’t… Credit crunch: The blame game


3 Responses to “When your bubble is bursting what do you do?”

  1. 1 Free Speech August 14, 2008 at 1:43 am

    How did reason come into the world? As is fitting, in an irrational manner, by accident. One will have to guess at it as at a riddle.FriedrichWilhelmNietzscheFriedrich Wilhelm Nietzsche, The Dawn, 1881

  2. 2 Pakistani ISI August 14, 2008 at 10:05 pm

    How much more grievous are the consequences of anger than the causes of it.MarcusAureliusMarcus Aurelius

  3. 3 lwtc247 August 19, 2008 at 9:21 am

    Re: Comments above.
    They were manually set free from the Spam filter.

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