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Interesting article on our money system as Ponzi Scheme PDF Print E-mail
Written by Wang Zen   
Friday, 12 October 2007

 Here's an excerpt:

"Panic struck on Wall Street, as the Dow Jones Industrial Average plunged a thousand points between July and August, and commentators warned of a 1929-style crash. To prevent that dire result, the U.S. Federal Reserve, along with the central banks of Europe, Canada, Australia and Japan, extended a 315 billion dollar lifeline to troubled banks and investment firms. The hemorrhage stopped, the markets turned around, and investors breathed a sigh of relief. All was well again in Stepfordville. Or was it? And if it was, at what cost? Three hundred billion dollars is about a third of the total paid by U.S. taxpayers in personal income taxes annually. A mere $188 billion would have been enough to repair all of the 74,000 U.S. bridges known to be defective, preventing another disaster like that in Minneapolis in July. But the central banks' $300 billion was poured instead into the black hole of rescuing the very banks and hedge funds blamed for the "liquidity" crisis (the dried up well of investment money), encouraging loan sharks and speculators in their profligate ways."


I think it's a pretty good primer on the reasoning behind what happened with the sub-prime crisis, and how the "solution" was not really a solution at all, but a band-aid for the banks. It basically sent a lot of cheap money into the system, throwing the dollar off a cliff.  

Frankly, homeownership is not for everyone. A house is not an investment, it's also not an asset. It's a place to live. It is an item that you have to send money into in order to maintain it. If you think it's an asset, stop making payments and see who actually owns your house. If you can't make maintain your house, then do the alternative: rent. Let someone else maintain it.

I think a second house can be an investment, though, and has advantages because you typically use leverage (loans) in order to purchase one. But for the people who bought a home with these outlandish loan instruments such as ARMs are finding out that it wasn't an investment - it was a gamble. So they default because the housing bubble has burst and ARMs reset, making their houses cheaper than their loans, which then threw the lenders into the toilet, the real owners or the houses. 

It's a circle of deceit, I tell ya'!  

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