as of yesterday, america is no longer a nation of states, but rather, a nation hedge fund.
or more precisely, the world’s single largest real estate company, with an initial portfolio of US$700 billion.
while tree hugging hippies are busy throwing rotten eggs ( most probably organic) at wall street, condemning the “bail out” of the very fat cats that caused this mess,….
and while rightwing neocon-nazis throw tree hugging hippies at egg on their face wall street denouncing the “nationalisation” of the country,….
the powers that be have managed to create something that would never ever have otherwise been possible.
america is now the proud owner of its very own real estate sovereign wealthy fund.
the worlds largest.
and its actually no different from other SWF’s out there,…
while the middle east’s SWF’s capitalised on cheap slave(ish) labour and no infrastructure investment, thereby keeping their oil production costs low relative to current market prices,….
and while singapore capitalised on the insanely long slave(ish) working hours of their citizens,……
america has managed to capitalise on its most abundant resource:
land,… in one of the largest and safest economies in the world.
sure,… if you’re a trader, or if your retirement fund just took a massive hit then you would be right to argue that point,….
but, as sordid and as historic as this little episode might be in america’s economic history, there is still nowhere else on earth people would rather put their money,… which explains why everyone and their grandmothers is piling into US treasuries and why the dollar is getting stronger at what would seem to be the shakiest period since the great depression of ‘29.
the government now, effectively owns US$700 billion of real estate. how much of the country that is i cant say, but i’m betting that is a bit more than a couple of mouldy retirement condos in florida.
the point to remember is that while wall street is in a rush to dump these “toxic” mortgage backed securities, and while foreclosures may be at a record high,…. a large majority of homeowners are still paying their bills and have yet to default.
so the government is actually getting a pretty good deal. they’re getting a whole boat load of property in the form of securities which is essentially the same thing, and they have the ability to renegotiate the terms. which means that dude A who might be about to lose his house, will probably get his mortgage term extended, thereby making it easier for him to not default.
when things look good for dude A, things will look even better for the government’s portfolio.
should they have bailed out wall street?
shouldnt they have helped out main street instead?
its not for me to argue, and its kind of pointless right now.
besides, wall street couldnt have done what it did without the willingness of main street, but thats an argument of another time.
this is what i find interesting, and if i havent bored you to death already,…
heres something that no one is talking about right now:
had everything gone according to plan, this subprime thing wouldnt have happened.
had everything in the rearview mirror happened infront of us,…. this whole subprime thing wouldnt have happened.
but something changed.
had everything remained more or less constant, predatory lending aside, the homeowners would have been able to meet their mortgage payments.
one basic fundamental component to the worlds whole economy, changed which i believe sparked this whole thing.
oil.
even the most moronic person who cant keep track of his dollars and cents, will have an idea of how much he can pay a month. no matter how bad with money you are, you have an idea of a) how much your rent is and b) how much extra if any you have left over.
and when it comes to the point that buying is cheaper than renting, even at the new rate in a few years time, then you know buying will always make more sense.
so they did.
but while america was busy enjoying her new plumbing, the whole world decided to have a series of panic attacks, one of which was and still is over india and china getting it on too often and producing too many people.
what alot of people didnt add into their calculation was the possible volatility of gas prices.
and when gas prices go up, you have a choice to make:
skip a mortgage payment so you can pay for gas and go to work so you can get paid and then pay your mortgage?
or pay your mortgage, not have enough gas to go to work and maybe get fired, in which case you cant pay your mortgage and will get kicked out?
its a nobrainer.
so payments got late, and later and later as the gas price went higher and higher, until you get to where we are today, with banks having over invested while thinking they were geniusseses. and when it all went blrrrrp they looked at their guys and ask ” how come we didnt see this? arent we meant to be the smartest guys on the street?”
” wait, if we’re the smartest and we fuckered up, then what about those guys? or them? or them?”
hence your crisis of confidence.
anyway, the point of this is:
assuming the government knows that gas is one of the reasons they got into this mess.
then surely whoever the next president will be, their administration will be just as oil-centric as this one.
actually, with the government now holding US$700 bill that could double over time, if they could just keep the oil prices down,….
i would argue that whoever gets in come november, will make george bush look like a tree hugging hippie.
you see, if oil has now become even more important as a result of this rescue package:
then there is no way in hell obama will pull troops out of iraq at even the slightest risk of sectarian fighting which would stop iraq’s 2 million barrels a day flowing out.
in addition, many many more troops will head to afghanistan to secure it once and for all as the final piece in the big central asian pipeline.
offshore drilling? done and doner.
alasakan reserve drilling? certainly done.
hmmm,…
alaska,….
palin,….
conspiracy theorey buffs!
on your marks,….
get set,…
GO!
