Just finished reading “Secrets of the Temple: How the Federal Reserve Runs the Country” by William Greider.
Excellent read.
Having grown up in the 80s and 90s I am currently unable to correlate the economic crisis of the real estate cycle today with those cycles that occured during Nixon/Carter.
This book has helped fill in many gaps and has provided unique parallels to our current real estate cycle.
Based upon my reading, I forsee a period of progressive credit tightening that has no emotion and is based purely on mathematical logic. Bottom Line: Millions of Americans, homebuilders and real estate investors are going to go bankrupt. Its for our nations own greater good that they do so in such a manner that preserves the structure of the existing economic system.
According to the author’s analysis the individuals who make the most profit during a period of interest rate hikes (recession) are the wealthiest 10% who control 86% of the assets and the banking industry.
Who (banks) will benefit most from raising interest rates?
Who (banks) owns the Fed?
Who benefits from a falling dollar (Gold Bugs)?
Who owns (Big Oil) most of the gold mining?
Who is the figurehead of the White House (Big Oil)?
Who ran up the spending to devalue the dollar (White House)?
Who (banks) handles the transaction fees as the dollar is valued or devalued?
I think the banks made far more in fees than they lose on defaults. Worse case scenario it was a wash. Best case they made a killing and the Chinese/Europeans picked up the mess.
So the politicians will do a dog and pony show for the media and the politicians will throw a bone to the american public, however in the end the Federal Reserve will make the decisions.
Although it is sad that the American public self-duped itself to believe that their “assets” were increasing in value as their dollar decreased globally it merely reflects that much of our population are financial “sharecroppers.”
Many of us here paid of debts, refused to believe the hysteria and prepared ourselves for these lean times coming. Although the wealthiest 10% need not worry, we can at least join them for a coffee at Starbuckswhen everyone is afraid of paying $8 US for a Venti Cappucino (It’s $3.55 now!). Although we will have thousands or tens of thousands in or checking accounts both us and the 10% will be earning 8-15% interest in the years to come as the rest struggle to manage their “payment.” Today I have no car payments, no debts, a good living, own all my furniture, have a stream of positive cash flow, reserve allocation and a rent that is $12K annualy cheaper than owning after tax benefits.
To all those who educated themselves. . .congratulations and enjoy your success/survival you earned it.
