I was trying to find out if lenders were really forced to make loans to bad risks.
So I Googled "Mandatory loans to unqualified borrowers". One of the first results caught my attention - U.S. Debt Default, Dollar Collapse Altogether Likely - an article written by somebody I've never heard of on a website I've never heard of. Nevertheless, it's interesting enough that I want to digest it further.James West writes:
The prospect of the United States defaulting on its debt is not just likely. It's inevitable, and imminent.Ok. So here come my first questions.
The regulatory black holes into which sanity and reason disappear on a daily basis are soon to collapse under the mass of their sheer size. The circle jerk going on among G7 governments has to end – the steady advance of gold, even in the face of a managed price, exposes the real value of the U.S. dollar, as opposed to its apparent value expressed in the dollar index.
What are G7 governments?
From Wikipedia: "The Group of Eight (G8, and formerly the (G6) or Group of Six) is a forum for governments of eight nations of the northern hemisphere: Canada, France, Germany, Italy, Japan, Russia, the United Kingdom, and the United States; ... The G8 can refer to the member states or to the annual summit meeting of the G8 heads of government. The former term G6 is now frequently applied to the six most populous countries within the European Union."
Seems like I can remember the first one of these. It was kinda like "I'd like to buy the world a Coke...." And the reason they get along so well now is because they don't do anything.
Who manages the price of gold?
According to Wikipedia: "The usual benchmark for the price of gold is known as the London Gold Fixing, a twice-daily (telephone) meeting of representatives from five bullion-trading firms. Furthermore, there is active gold trading based on the intra-day spot price, derived from gold-trading markets around the world as they open and close throughout the day.
Today, like all investments and commodities, the price of gold is ultimately driven by supply and demand. Unlike most other commodities, the hoarding and disposal plays a much bigger role in affecting the price, because most of the gold ever mined still exists and is potentially able to come on to the market for the right price.
Given the huge quantity of stored gold, compared to the annual production, the price of gold is mainly affected by changes in sentiment, rather than changes in annual production. " (There's more good stuff here, but that would lead me into another wormhole....)
What is the dollar index? (See this )
Wikipedia: "The US Dollar Index (USDX) is a measure of the value of the United States Dollar relative to a basket of of foreign currencies. It is a weighted geometric mean of the dollar's value compared to the euro (EUR), Japanese yen (JPY), Pound sterling (GBP), Canadian dollar (CAD), Swedish krona (SEK) and Swiss franc (CHF).
It was started in March 1973, soon after the dismantling of the Bretton Woods system. At that time, the value of the Dollar Index was 100.000 and has since traded as high as the mid-160s but also into the low 70s. As of October 2008, the USDX was trading in the mid-80s. On March 6, 2008, the index touched 72.89, the lowest since its inception in 1973. It continued downward and reached 70.698 on March 16.
The index is updated 24 hours a day, 7 days a week. It is listed on ICE Futures Exchange US (e.g., New York Board of Trade [NYBOT])."
I'm gonna have to break this down into another post - called James West Article Part II
