mark twain once said 'The past does not repeat itself, but it rhymes'. this is proven true with business cycles and simple adages as 'everything comes to an end.' empires rise and fall. if you haven't read the book 'Guns, germs and steel' by jared diamond, i highly suggest it.
it has always been the middle east that everyone fights for. the holy land, to religious people. the crusades, among numbers of other religious wars. but ever since the industrial revolution, it has been energy that people have fought for. but since the struggle to find stable energy (fossil fuels, natural gas) is a zero sum game, violence is inevitable.
cue corporate america's invasion in the middle east. george w bush and his administration duping the american public to secure more oil reserves in a chance to preserve america's dominant empire over the rest of the world. but bush fucked up--his brute force method of taking crude oil from the middle east has created a schism in the american public: conservatives who don't know jack shit and think that the old way is the right way and continue to be the right way, and everyone else who have lost faith in the government, lost faith in the direction of america, and is forward thinking enough to find change.
but will bush's decision to get the oil be worth it? we already have reserves in alaska, and while oil will run dry by 2050 (tentative guess) political leaders around the world are eyeing the last drops. maybe enough oil to sustain the US, but with a myriad of other factors can make the extra oil useless in the big picture.
ever since the housing crisis and the fed bail out of bear stearns, it is pretty evident that america has surpassed its peak (when i say america, i generally mean corporate america because that is essentially how america operates). corporate america is fueled by greed. the rich pigs on top are constantly finding new ways to dupe the average american person (american consumerism is 70% of america's gdp). infomercials, advertisements, etc. in this day and age, it is difficult to go through a day without these external pressures telling you how you are not, how you should be, how society wants you to be, etc. meaningless drivel, it all is (but that is another issue to be addressed).
the bear stearns fiasco screams controversy. pundits say that the fed bailout is a 'tax refund to bankers'. now bear stearns is in a situation that if another financial institution fails, they will have to bail them out. seriously though. bear stearns, the lamest of all of the financial institutions??
ok, now for some technical jargon biznatch motherfucker of how america fucked up.
the summer of 2003. the federal funds rate was at 1%, which means that money is easy to lend and borrow, and alan greenspan was trying to pump money into the american economy. at this time, the standard mortgage rate was 6%. people who were building houses and selling houses could make a heft 5% profit. but then, greenspan raised the funds rate all the way to 5.25% in 2006, and all ape shit busted loose on your grandmother's nuts. but why?
when the difference between the feds fund rate and the mortgage rate decreases, how do home sellers and mortgage lenders make money? increase turn over rate. so they built more and more houses to make up for the lost revenue due to the rising funds rate. but when the rate reached 5.25%, the mere .75% ended up becoming all of the transaction costs and no new money entered the housing market. with all of these empty houses and no buyers, the only place for the market to go is down.
this is the first problem that hit. but the related credit crunch and the financial instability of investment banks are happening right now.
this will continue later
andy
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