Wednesday, September 09, 2009

Simple Truths

Too Big To Fail:
HISTORY: The US Government (USG) coined this phrase to apply to US based, multinational financial institutions whom upon failure, would trigger a systematic collapse of society as we know it. In addition, the USG was also sending a strong message to the rest of the world that America is "too big to fail".
IMPLICATIONS: The rest of the world will bail out the US since they cannot afford the alternative.

Convert Debt to Equity:
HISTORY: Rather than the USG "loan" money to "too big to fail" multinationals, it purchased equity (normally preferred shares) in target companies. When the auto companies went bankrupt, the USG wiped out the debt holders, drove the share price to zero, but converted the value of the company to "new equity shares" which it doled out to its political supporters.
IMPLICATIONS: Therefore "debts" whether they be financial or poltical are paid off in equity. China holds $2 Trillion in US treasuries and federal reserve notes. Since we cannot pay them off and will not risk a default, the USG will give Alaska to China.

Who Gets the "First Mover Advantage":
HISTORY: Demographics in developed countries show that there are more and more older citizens and less and less younger citizens as a percentage.
IMPLICATIONS: There will be less and less younger people wanting to buy my stocks, bonds, real estate and other things therefore my nest egg will shrink due to simple supply and demand. So older people (the majority) will vote in politicians who take from the young to give to the old.
IMPLICATIONS 2: In order for the young people to stop getting squeezed by older people there will be a systematic process by which older people are removed from existence and their assets transferred to those who weren't going to buy them in the first place. This process is referred to as "healthcare reform".

1 comment:

  1. We're going to be forced to give Alaska to China? Can we get them to agree to take Sarah Palin with it?!

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