re: Nationalization, regulation and economic reality

Jeremy — Sat, 14 Mar 2009 05:49:50 GMT

If only the Americans would allow all their loser banks to fail.. there are plenty of prudent, disciplined and responsible US banking interests who have kept their powder dry waiting for such opportunity. Unfortunately market efficiency has been denied and the very idiots responsible for this mess are making off like bandits with taxpayer bailouts!

Ideally they should also admit that they absolutely suck at building giant ugly cars that nobody wants anymore. Chrysler for example... they don't even have any new model lines, essentially a dinosaur of a bygone era and a total basket case way before the credit crunch.

The auto industry bailouts are totally irrelevant anyway, American auto workers will all be unemployed and driving Chinese manufactured vehicles within 20 years IMHO.

A serious measure of belt tightening is required by the US consumer, and ultimately nothing short of that will save the US from its inevitable fate. Many comparisons could be made with the Roman Empire when they became smeared too thin. Further US military aggression over oil rights will accelerate this effect.

The US produces 5% of the worlds oil yet they manage to consume 25% of it! If you could wave a magic wand and have all American cars instantly become hybrids, with half the petrol consumption, their piggy appetite for consumption would still require an ADDITIONAL 5-7 million barrels per day within 7 years.

In an 'own money' credit market where a financier can only lend on own capital (with 100% risk exposure on bad debt) an uneducated 25 year old earning $USD35,000 per annum would never be extended financing on a $75,000 car with no deposit - as common sense would dictate that a portfolio of such loans would be a losing proposition with a massive default rate on severely depreciating securities. Yet this is exactly the 'end goal' of the current stimulus/bailout plan Obama is implementing.

It would seem highly unlikely that such debt fueled domestic gluttony will be supported by the world bond markets ad infinitum. This will be massively accelerated should it turn out (as I believe it has already) that behind OPECs smoke and mirrors, we have already reached peak oil production.

So my biggest question is, when will the US Dollar crash??