I've always held that if you want capital punishment to be an effective deterent, you apply it to crimes involving the betrayal of public trust.

EvilleMike
Don't confuse my willingness to accommodate with your own need for me to obey.

So far all the talk has been about the housing bubble and the subprime fiasco (with its racist undertones). That's only the tip of the iceberg. There has been little talk about the vast amounts of derivatives floating underneath the waters, out of sight until some ship hits one.

One of the biggest icebergs in the financial system awaiting the banks to sail into is the credit card bubble. The US consumer has been living off debt, that is, on the cards as well as from the housing ATM, for several years now. The amount of consumer debt outstanding is staggering and there is no savings safety cushion, nor do the numbers add up for our "growing our way out" through increased productivity.

The credit card bubble has yet to burst. If and when it does, especially on top of the housing bubble, US consumers will collapse financially, taking the US economy with them. "Recession" probably won't capture what's in store at all adequately.

The big problem that is developing is the realization that the US economy has been based for some time on artificially created demand through easy credit and loose qualifications. As the credit crunch ratchets up, that demand stimulation will dry up and supply bottlenecks will quickly build, clogging the system. Retailers will cancel outstanding orders and desperately cut prices to unload excess inventory, but people won't have enough credit to continue gorging themselves on trinkets. Meanwhile, the Treasury and Fed will be dropping interest rates like crazy, but only the most credit worthy will be able to borrow. The smart money will see as an this opportunity to take advantage of increasing inflation in things of real value, like gold and other precious metals, energy and other vital resources and commodities, to make a bundle in the markets. they will also be able to pick off choice properties in the deflating real property market. Foreign money flowing into the US will exacerbate this, as those holding dollars trade them for US assets.

The result will be stagflation that will be very difficult to control, since the fiscal and monetary authorities will be caught between a rock and hard place, damned if they do and damned if they don't. It's going to take some time to work through this mess, and there are going to be a lot of pissed off peasants with pitchforks and politicians running for the hills. The wealthy will, of course, simply retire to their sylvan retreats and wait things out, as usual.

I suspect the situation will go further then anyone is yet willing to contemplate. The monetary system is as much a part of the bubble as the economy built on it.

Hoover refused to increase the money supply to bail out the banks, but it left Roosevelt the solid foundation of a strong currency. This time the money is quicksand.

Revolution Happens

In a financial version of Night of the Living Dead, debts forgiven by bankruptcy courts are springing back to life to haunt consumers. Fueling these miniature horror stories is an unlikely market in which seemingly extinguished debts are avidly bought and sold.

The case of Van Rathavongsa illustrates how canceled debts regain vitality. The Raleigh (N.C.) factory worker pulled himself out from beneath a mountain of bills by means of a bankruptcy proceeding that wrapped up in 2002.

One of the debts the judge canceled,or "discharged," was $9,523 Rathavongsa owed to Capital One Financial, the big credit-card company. But Capital One continued to report the factory worker's discharged debt to credit bureaus as a live balance, according to documents filed in U.S. Bankruptcy Court in Raleigh.

This kind of failure by creditors to update credit reports happens with some frequency, consumer lawyers and court-employed bankruptcy trustees say. And it can have consequences: In September, 2003, when Rathavongsa tried to close on a $274,650 mortgage for a new house, his would-be lender, Wachovia, said he would either have to pay Capital One or show proof from the credit-card company that the debt had been discharged. Despite several calls and a letter from his attorney, he says, Capital One never revised the credit report. To obtain the home loan, Rathavongsa eventually did what many consumers in this situation do. He gave in and paid Capital One $9,523 he no longer legally owed.

Prisoners of Debt

http://mauberly.blogspot.com/