Great Depression risk may force U.S. Gov to buy assets

Great Depression risk may force U.S. Gov to buy assets

www.reuters.com

NEW YORK (Reuters) - Fear that a hobbled banking sector may set off another Great Depression could force the U.S. government and Federal Reserve to take the unprecedented step of buying a broad range of assets, including stocks, according to one of the most bearish market analysts.

That extreme scenario, which would aim to stave off deflation and stabilize the economy, is evolving as the base case for Bernard Connolly, global strategist at Banque AIG in London.

(visit the link for the full news article)

Eesh...So basically the government may have to buy up EVERYTHING to avoid utter financial destruction. I wonder if we'll be seeing laws amended or enacted in the coming months to make the fed elidgable to start buying up stocks?

www.reuters.com
(visit the link for the full news article)

reply to post by DimensionalDetective


When reading what you referenced I could not help but think this is more to the possibility of this happening then what was said. First off buying stocks is not like buy commodities, like the gold the government bought back in the 1920s or so. So I think if the government does decide to buy stocks, it will be done with the inside knowledge of the most powerful stock traders. Meaning, it will just be yet another was for the richest, most powerful people to get more of the tax dollars from the poor people and make them richer.

So, do they SEE it coming and start pushing thruogh laws now to be able to purchase up stocks?

If so, will they tell us '' its coming, prepare ''

or simply let us hang out to dry

reply to post by Agit8dChop


Well, if you want to compare it to the way the government cornered the gold market in the early part of last century they will let us hang out to dry. I just don't think that can be done with stocks they way they did with gold. I just also think the only people it is really going to help are the rich powerful traders that have large stock portfolios in big companies. And that alone would seem to be enough to get the laws pushed through in this day and age.

Something that people do not know is that in 1971 Nixon replace our gold for Oil as the backing for the World’s Reserve Currency.

That's when the dollar became the favorite currency in the world for 30 years OPEC made the dollar valuable.

Now the dollar crisis is to be felt as the Oil rich nations will dump it for the Euro.

The AAA garbage, the unplayable debts, the stupid foreign policies top with the hyper inflated banking and financial crisis will be our undoing.

Is nothing the government can do to save our economy, buying into it is just putting more debt on the American citizens to bail out the financial sector that is after all nothing but rotten greedy corporations.

Our economy is going into inflation and our own government is going to inflated more when the deceiving stimulus checks goes to the citizens, watch as the prices grow unbearable during the time the checks will go out.

reply to post by marg6043


Well said Marge. First of all, the Government doesn't have any money. Only what they can collect in taxes (which is already too much) and what they can print (which brings on horrific inflation). Monetizing Debt is a recipe for disaster. Case study Weimar Republic and Yugoslavia early 90's.

For that matter, the Gov't has 10 trillion worth of its own problem. So now they're gonna add how much to that? Meanwhile War's and Deficits running rampant.

Originally posted by marg6043
Something that people do not know is that in 1971 Nixon replace our gold for Oil as the backing for the World’s Reserve Currency.

Marg
I am aware that the gold backing of the dollar was removed but I know of no refrence for replaceing it with oil.

By the end of the 1960s, the U.S. faced the stark choice of eliminating their trade deficits or revaluing the Dollar downwards against Gold to reflect the actual situation. President Nixon decided to do neither. Instead, he repudiated the international obligation of the U.S. to redeem its Dollar in Gold just as President Roosevelt had repudiated the domestic obligation in 1933. On August 15, 1971, Mr Nixon closed the "Gold Window". The last link between Gold and the Dollar was gone. The result was inevitable. In February 1973, the world's currencies "floated". By the end of 1974, Gold had soared from $35 to $195 an ounce.

sorce

RedGolem, oil has been traded in US dollars since gold-backing was removed based on an agreement between the US and Saudi Arabia. Countries must keep dollars for the purpose of buying oil. In essence this arrangement makes the dollar 'backed by oil'.

The Fed made its bed, and I doubt they'll have any trouble sleeping in it. The rest of us however...

reply to post by Bangin


ok so not backed by but the commodity of oil traded in. All right got it.
So when they switch to the Euro we will be seeing a big crash.

reply to post by RedGolem


That's EXACTLY the first thing I thought of. Since OPEC just announced they may drop the dollar in favor of the now much stronger Euro, we are totally screwed. This is like a bad dream that just keeps getting worse and you can't wake up from it.

not so sure about the switching to euros' , it would be likely a basket of currency's but i gotta wonder

if all the talk of switching is just politico's in the Middle east trying to ease their citizens anger of the high inflation which maintaining a dollar peg causes. High oil prices and increasing oil demand are giving the oil men riches beyoned our dreams. Check out the growth in Dubai and other cities in the last 10 years.

Gov't buying back stocks and other assets will dramatically increase gov't debt and potentially drive up long term intrest rates, not sure how realistic the situation is , or what level this would help , but i have posted in other threads that inflation or deflation will be determined by gov'ts and politico's. like the article says if we don't avoid a depression (i.e if we have one) then cash will be the only thing worth holding. That means a deflation and in these circumstances cash is king. Should the gov't buy back stocks and the like GOLD and SILVER will go to the MOON.

This sounds like a radical swing toward Socialism to me. I am not particularly allergic to socialist theory, but in practice it always seem to be the thin veil for fascism. Not to mention the fact that I simply can't imagine private industry giving up so much control to the government, unless they had a very nasty trick up their sleeve. Something like perhaps, leaving the American people holding a bubble that is about to burst.

I have been saying for some time now that our economic system is terminally flawed. It is supported by debt, not value, and eventually that bubble will burst. Is American industry about to do one of those, "here, hold this," acts as the rest of the world calls American debt due?

Do Not Watch This Video...

well new york times had an op-ed piece by howard millstein that calls for
privatizing profits, socializing losses but not in such straight forward terms

www.nytimes.com...

with some takes on it


maxedoutmama.blogspot.com...

www.marketoracle.eu...

Everyone here does realize that if the government goes out and buys up all of that stock, that they therefore own all of the businesses that they hold a 51% or greater share in, right? If this is so, I can see this as a plan intentionally set into motion by the Powers That Be, so that they might be able to take a more drastic step in gaining control of the corporations that they most want.

Sounds fishy to me. One to watch indeed. Good find!!

TheBorg

That's it, i'm buying one year worth of food and guns. Those will be needed soon enough. I mean it was bad enough in the 30s with 80% of the country into farms... now with no farms, everything running on oil, huge population of illegal immigrants, gangs and a violent society... well it will be hell once the riot for food starts.

Originally posted by TheBorg
Everyone here does realize that if the government goes out and buys up all of that stock, that they therefore own all of the businesses that they hold a 51% or greater share in, right?
TheBorg

My initial thought here was, "But don't we own the government? Or at least represent the responsibility of our national debt?" So I decided to do a little research real quick..

It turns out that, according to this article (the title of which pretty much describes my google query) The US government itself does own the (slim) majority of our national debt, via medicare, social security and other tax holdings.

(That money is ours though still right? More research would be needed on that, probably involving some legal stuff, and more wading through .gov info-masses.)

The remainder however (roughly 25%) belongs to these foreign countries. In light of the current topic, this would seem to be the bad news, not to mention a redundant reminder, and recurring theme in regards to our economy lately.

Let's just make sure the rest of the world owns ALL of our companies eh?

reply to post by DimensionalDetective


FED is NOT GOV!
the FED is owned by private share holders ( the names are secret )
- is is actually a private corporation. The depressions are used for this exact purpose- to buy assets at a low price and doing this to extend power of the elites.

I posted some eassy - to - understand videos here:

www.belowtopsecret.com...'

reply to post by RedGolem


I am sorry I could not come back to you faster to answer you question, but I see that Bangin did a great job.

We know that right now oil moves the world.

Originally posted by DimensionalDetective
NEW YORK (Reuters) - Fear that a hobbled banking sector may set off another Great Depression could force the U.S. government and Federal Reserve to take the unprecedented step of buying a broad range of assets, including stocks, according to one of the most bearish market analysts.

This makes lots of sense

Stocks are not assets in the true sense, if the market crashes stocks are basically worthless. An asset is something that produces income, otherwise it is a liability. So what stocks, what assets? This could really get corrupted.

Invest in Bush Oil wells, Rumsfeld Corp., etc....

The term "assets" has been diluted to match the shady practices of todays market.

The government consumes, they produce nothing, nor do they know how to run a business that is why they raise and collect taxes to cover their overhead.

Can you image the US government having to compete in the real world? They would fail. They get money from every direction now and they are still failing, very sad.



[edit on 14-2-2008 by Realtruth]