Jubilee Prosperity

Debt and Derivative Time Bombs

AIG stock: 103.75 to 1.25, -98%, +5000% to break even.

C stock: 78.31 to 3.05, -96%, +2500% to recover.

FNM stock: 89.38 to 30 cents, -99%, 10000% to get it back.

GM stock: 94.87 to 1.70, 98% meltdown of one of the largest global employers, +5000% to be made whole. Think it will happen?

All four and many more companies and government are insolvent, with liabilities far in excess of net capital called equity, or long-term ability to service total debt. Bankers won the battles and lost the war.

Bailouts of ailing enterprises did not make mortgages whole or put people back to work as promised by pay to play politicians.

With bailouts, budget and trade deficits, plus unfunded government liabilities, we are talking at least $100 Trillion, according to Dallas Federal Reserve President Richard Fisher in Storms on the Horizon, delivered 28 May 2008 at the Commonwealth Club of San Francisco, California.

http://www.dallasfed.org/news/speeches/fisher/2008/fs080528.cfm

A $100 Trillion debt tax on future generations would absorb the entire current US GDP for over 7 years, if GDP remained constant.

In fact, the GDP has been declining in real terms since 1984.

http://www.shadowstats.com/alternate_data

A trillion here, a trillion there, and pretty soon we’re talking titanic defaults, deficit pyramid money, much higher taxes, hyperinflation, stagflation or broken government promises with vastly reduced bailouts, medicare, retirement, social security or unemployment.

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This entry was posted on Monday, April 6th, 2009 at 12:28 am and is filed under Prosperity. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.