-- Posted Thursday, 18 December 2008 | Digg This Article
| Source: GoldSeek.com
I was sitting outside, looking up at the stars, and wondering how many planets circle those billions of twinkling lights, and of that number, how many actually have sentient beings so stupid that they, like the beings here in the biggest economy on the planet Earth, would allow such unfettered expansions of money and credit by a central bank (like the Federal Reserve) so that somebody could borrow that money and use it to buy the new government debt so that the government could spend the money to satisfy the gluttonous growth itself and its friends, all of which guarantees Collapse And Ruination (CAR).
And then I started thinking about how I either sat in a puddle or I have had an "accident", because I am definitely wet down there.
Fortunately, I was able to distract myself from that bit of unpleasantness by instead thinking about how all of this money comes from people taking out loans, and how that means that just because a lot of that money has now been lost in various investments, the original debt is all still there!
And there is a creditor demanding to be repaid, with louder and louder calls for repayment until that day when the collection agency finally decides to just write the whole damned thing off, having listened too many times to me answering the telephone saying, "Mogambo him no live here. Him go far away. Me no speakee English. Goo bye!" Click.
So there I was, sitting there, kind of wondering just how much money is involved, and daydreaming and distracted like that, I was blindsided by Martin Weiss at MoneyandMarkets.com who has apparently been thinking about this stuff already, which shows why he is a famous and rich market-savvy guy respected around the world, while I am just a creepy little jerk who will never amount to anything who has, hopefully, merely sat in something wet and has not, hopefully, actually done the wetting!
For another reason why he deserves such respect, Mr. Weiss has done some actual research, while I do no actual work of any kind, I am not even here most of the time! Hahaha!
Well, instead of pitying me for my inborn lack of ambition, and maybe giving me a few bucks to tide me over, he writes, "just last week, in a startling release that sent chills up the spines of economists worldwide, the Federal Reserve reported that, in the third quarter alone, American households have suffered $647 billion in real estate losses, $922 billion in stock market losses, $523 billion mutual funds losses, $128 billion private business losses, plus $653 billion losses in life insurance and pension fund reserves!"
This looked like one of those instances when I would need a calculator, and I groaned aloud, because if there is one thing that I hate, it is cold scrambled eggs, which is a total non sequitur except that it brings up another thing that I hate, which is work, which brings up working with a calculator, which is the thing that I, like I originally said, hate.
Anyway, my initial sojourn down that long, long list of "Things I Hate", ending with an anticipated tussle with a calculator, was all for nothing, as Mr. Weiss kindly provides us with the answer: "That's a $2.8 TRILLION wealth loss overall - four times more than the Treasury's entire $700-billion bailout program."
And since Mr. Weiss was too polite to mention it, $2.8 trillion is almost a quarter of GDP, which is a faltering $13 trillion a year!
So I am nervously thinking, "If $2.8 trillion has been lost, then how much of this lost money that came into existence when it was first borrowed from a bank, is still owed to a bank? Or the shadow banking system?" At this point, I realize that I am confused and no longer have any idea what I am talking about, which is, again, fortunate, in that Mr. Weiss goes on that I would have been wasting my time, and "Worse, over the past year, the loss is $7.1 trillion, or TEN times more than the bailout program." Yikes!
I can feel my brain being drained of blood as I am looking at $7.1 trillion in losses in a $13 trillion economy! My brain refuses to look at it, and now I realize that not only am I confused and scared, but I know why, and the reasons why will make gold soar in price, which I have, allowing me to relax in the face of such economic Armageddon, and instead think that maybe taking off work early and playing a little golf would be a good idea!
Whee! This investing stuff is easy!
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Editor's Note: Richard Daughty is general partner and COO for Smith Consultant Group, serving the financial and medical communities, and the editor of The Mogambo Guru economic newsletter - an avocational exercise to heap disrespect on those who desperately deserve it.
The Mogambo Guru is quoted frequently in Barron's, The Daily Reckoning and other fine publications. Click here to visit the Mogambo archive page.
-- Posted Thursday, 18 December 2008 | Digg This Article | Source: GoldSeek.com
