Quote Originally Posted by Kirkland Laing View Post
Quote Originally Posted by pacfan View Post
Whoever wins will be inheriting one of the worst problems the US has had in a long, long time. The Iraq quagmire and the worsening economy - feel sorry for the guy. If I were them, I wouldn't be so eager take it... but then, that's how politicians are everywhere, always harboring unsatiable ambition... let 'em have it and eat 'em too.

Seriously, untangling the Iraq web will be the most difficult... but walking away from it will not be the solution as it involves the pride and credibility of the Americans and the well-being of another nation. So here, I'm going with McCain...but as miles said, the man looks pretty old, so the question is will he be able to stand the rigors of the office during these exceptionally tough times? Hmmm...

The economy is another. It was clearly a case of gross mismanagement of the financial sector which up to now, nobody has been held responsible for... (Strange how the western credit agencies scrutinize banks of small countries like ours with a microscope and show absolutely no mercy in giving out their ratings, to utter dissappointment of our banks...but...giving out A+ ratings on their own that were about to go bankrupt. That just not right.) The US will definitely be feeling the effects the crisis for some years to come. At the best, a mild to moderate recession will drag along in the coming years. At the worst...maybe Kirkland Laing can answer that.

My Infallibility tells me that there's a lot more bad news to come. What we're currently facing is always described as a credit crisis but that's bs, it's actually a solvency crisis. The Fed can produce (and are doing) untold billions of new dollars with the click of a mouse so there's no shortage of credit, the financial system is swimming in the stuff. The problem is that no banks want to lend each other money (short-term interbank loans being the oil that lubricates the economy) because they don't know if the other bank will end up insolvent and unable to pay them back. So the system is gummed up right now and everybody is sitting on their hands waiting to see where the bodies are buried before business can get back to normal again (the reason I have 1500 posts since this thing started. )

When the media finally start calling this a solvency crisis we should be getting a rough idea of how bad things are. Probably pretty bad though. Subprime we know about but prime loans (you're going to start hearing a lot about Alt-A loans, mezzanine tranches etc.) are going to start causing problems soon. The banks have trillions of mortgage-backed debt securities that were issued when house prices were much higher. Now that house prices are falling the value of a lot of those securities is falling too. Banks that looked solvent with (say) $200 billion of mortgage-backed securities in the safe are hit by falling house prices and those securities fall to maybe 50-70% of their original value, so all of a sudden they're insolvent ( like Bear Stearns). And house prices will continue to fall for at least another year, so banks that appear to be solvent now are going to go bust as house prices continue to fall.
Kirkland never disappoint us, does he? This is as bad as it can be...

Keep your cool, folks.