The Next Credit Bubble Is Now

**CountryBoy** · 08-28-2009, 01:49 PM

http://www.cnbc.com/id/32585369/

The Fed is cleaning up the old mortgage securities in the market—mostly old residential mortgage loans backed by Fannie Mae and Freddie Mac. But it will soon be on the hook for new ones, too, as troubled commercial mortgages are expected to fail en masse in a crash. The institution has already received $2.3 billion in requests to buy commercial mortgages. Indeed, investors are so eager to dump their commercial mortgage-backed securities on the Fed that they have spurred an outcry against Standard & Poor's, which has said it may tighten its ratings requirements to keep the more problematic loans out of government hands. Put simply, the holders of such securities don't want anything to stand in the way of getting on the federal gravy train.

Both types of assets are creating a shadow boom in unworthy debt, based on the same excessive leverage and questionable financial judgment of the last credit bubble. Plus the Fed is making some of the same mistakes as banks did in 2005-07. The banks forgot they were in the "moving" business-of underwriting mortgage-backed securities—and got into the "storage" business of keeping those securities on their books. That's where the Fed is now. It has not yet articulated an exit strategy to dump up to $800 billion of mortgages from its balance sheet.

And if you thought U.S. banks holding all those sketchy mortgages was a bad idea, wait until you see what happens when the center of our country's money supply is saddled with bad debt. The Fed could bail out the banks; no one can bail the Fed out.

CB

**mick504** · 08-28-2009, 11:46 PM

No, but they just call "Uncle China" and hope to sell some bonds, and TBills.

**Show-me** · 08-29-2009, 01:20 AM

Uncle China is in the news more and more. Uncle China is expected to carry 15% to 20% of Apples global iPhone sales next year. Now who is the biggest player in the world? Not US! We don't have the manufacturing base anymore, they do.

**nnuut** · 08-29-2009, 01:46 AM

Originally Posted by Show-me

Uncle China is in the news more and more. Uncle China is expected to carry 15% to 20% of Apples global iPhone sales next year. Now who is the biggest player in the world? Not US! We don't have the manufacturing base anymore, they do.

Wow! How did that happen?

**Boghie** · 08-29-2009, 01:55 AM

China???

Their GDP is 1/4th of America's.
Their Per-Capita GDP is tiny.

Our only concern is that they may stop investing in America. But, why should they. Soon enough some tyrant will take over and nationalize or tax everything. Businessmen in China invest outside of China.

But, they don't have the assets to keep 'investing' in American government debt.

**Handballer** · 08-29-2009, 02:18 AM

Originally Posted by Show-me

Uncle China is in the news more and more. Uncle China is expected to carry 15% to 20% of Apples global iPhone sales next year. Now who is the biggest player in the world? Not US! We don't have the manufacturing base anymore, they do.

I got to read the news more often. I thought Japan was the biggest. Or was it Hong Kong earlier? Just hope we don't start importing thier stuffs. Maybe a few vehicles like this would be ok.

**James48843** · 08-29-2009, 03:53 AM

Originally Posted by Handballer

I got to read the news more often. I thought Japan was the biggest. Or was it Hong Kong earlier? Just hope we don't start importing thier stuffs. Maybe a few vehicles like this would be ok.

Balance of trade with China:

**James48843** · 08-29-2009, 03:55 AM

Balance of Trade with Mexico:

**James48843** · 08-29-2009, 04:02 AM

The trade deficit with China now accounts for almost 2% of all U.S. gross domestic product. Add to that number, the trade deficit for oil imports, and you see a major problem:

One simply cannot continue to borrow money from the Chinese,
to pay for Middle-Eastern oil, and cheap Chinese goods, and cheap Mexican goods,
and think that America can continue as an economic powerhouse.

We've GOT to change our buying habits.

Buy American.

American cars.

American fuel. (E85).

American-made tires.

American made goods.

http://www.madeinusa.org/

What will YOU do to support American made goods?

http://www.unionlabel.org/?zone=/uni...33&postID=1517

**Show-me** · 08-29-2009, 11:32 AM

Originally Posted by James48843

Balance of Trade with Mexico:

NAFTA is good for investors & bad for jobs

NAFTA is really less about trade than it is about investment. Its principal goal is to protect US companies and investors operating in Mexico. The text of the agreement is contained in two volumes covering more than 1,100 pages. The text is mind-numbingly dull. Large portions of it are written in the type of obscure legal terms found on the back of an insurance policy. Buried in the fine print are provisions that will give away American jobs and radically reduce the sovereignty of the US.

Ultimately, NAFTA is not a trade agreement but an investment agreement. NAFTA’s principal goal is to protect the investment of US companies that build factories in Mexico. This is accomplished by reducing the risk of nationalization, by permitting the return of profits to US businesses, and by allowing unlimited access to the American markets for goods produced in Mexico. Source: Save Your Job, Save Our Country, by Ross Perot, p. i & 11 Jan 1, 1993