Monday, June 12, 2006

"The New World Order Angels of Death"

A reader sent me this article. Because I watched Underworld this weekend (horrible, unless, perhaps, you are a teenage male) I think I was well-primed to appreciate the analogy of the Fed as being made up of 'financial-lifeblood-sucking vampires'.

Some choice quotes:
Ben is damned if he does and damned if he doesn’t – raise interests that is. If he raises interest rates to quell any signs of inflation or to strengthen the dollar against foreign currencies, he risks putting the economy into a recession.

Rising interest rates will destroy the bond market, and with the bond market the real estate market will follow. Real estate has been the backbone of the economy. If it goes the economy will go with it.

If Ben lowers interest rates, he runs the risk of inflationary pressures getting too far out of hand, causing the dollar to weaken even further, which then may cause the recent foreign bank diversification out of dollars to pick of speed.

Real estate has been the ultimate victim of the vampires of structured finance. Every drop of liquidity has been bled from the host – no more remains. You cannot get blood from a stone; no matter how hard you try.

There is no longer a readily available supply of victims to feed all the creatures thus created – the vampires of the New World Order. Housing provided a large host for quite some time, a feeding bank if you will, but its days are numbered and falling by the wayside.

Whereto will the creatures turn – for the sustenance, they need to survive? They have already gorged on all possible victims – nothing remains alive with the needed lifeblood within. Structured finance has built an economy of paper houses built upon paper promises – promises that cannot and will not be kept.

It has provided a false degree of confidence and misplaced optimism in a speculative boom in the credit and debt markets that have inflated asset prices to absurd levels. As interest rates rise – debt becomes harder and harder to service. Suddenly assets must be liquidated at much lower prices then their recent high-water marks.

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