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The Stock Market

March 7, 2013 by  

(I began publishing my monthly newsletter, The Bob Livingston Letter™, in 1969. The following is an excerpt from the March 2000 issue. I was one of the first writers to warn of the coming crash in the housing markets and lay the blame on the steps of Fannie Mae and Freddie Mac. I forecast exactly where we stand today.)

The credit bubble is still growing — some day it will burst… Two biggies are Fannie Mae and Freddie Mac.  Combined they have $1.6 billion reserves to cover 1000 times that much debt that they created. Add to this the credit being created by Wall Street and major corporations like GE Credit, GMAC, Ford Motor Credit, etc. Just get this: While the Federal Reserve has increased its reserves by $70 billion in the last 21 months, the above have created credit in excess of $521 billion. Mind you, these artists call debt “assets.” Economists are so used to calling debt “assets” until they are oblivious to the underlying horror. Do not be misled into believing that only banks create credit.

These institutions outside of banks create credit in the system by issuing debt instruments in exchange for cash which they use to buy mortgages or other financial assets.

The Fed can affect the price of credit but not its availability. This massive debt is inflationary and it has of course spilled into the stock market and into a huge trade deficit. When this bubble is pierced, it could take decades to unwind.

Americans are drunk on consumption and the huge trade deficit is the result. When the party’s over, debts to foreigners will be measured in the trillions. How can we avoid a dollar crisis and a dollar collapse vs. foreign currencies, especially the Swiss Franc? Make no mistake about it, the U.S. dollar is tied directly in with this big bubble of speculation in the U.S.

Bob Livingston

is an ultra-conservative American and author of The Bob Livingston Letter™, founded in 1969. Bob has devoted much of his life to research and the quest for truth on a variety of subjects. Bob specializes in health issues such as nutritional supplements and alternatives to drugs, as well as issues of privacy (both personal and financial), asset protection and the preservation of freedom.

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  • GALT

    Really, Bob……because I don’t see a prediction of ANYTHING……and certainly
    not any indication of a coming “crash” in the housing markets……and while
    citing a “credit bubble”……..which has been the constant mantra for “gold bugs”,
    decade after decade………none of what actually caused the CRASH was visible
    in March of 2000………nor do you mention it.

    But thank you for confirming that neither governments nor central banks have
    any control over “financial capitalism, debt, credit, usury”, et cetera.
    and the
    cause of THIS CRASH, was the DEREGULATION of these
    “financial instruments”……which for some strange reason you fail to mention.

    So, what did you have to say concerning the repeal of Glass-Steagal and it’s
    replacement with Gram, Leach, Blighey……..were you in favor of de-regulation?

    Also, just to refresh your memory, if you were predicting a “crashing bubble”
    in the year 2000………..the bubble you would have noted should have been
    the DOT COM BUBBLE which popped in 2001.

    So much for hindsight being 20/20? ( This BTW is your “history”……….)

    “The winner’s write history……….temporarily!”

    Then they get “caught”…….so what kind of credibility do you imagine
    you have regarding the “history” of “anything”, when the “interpretation”
    of your own…… so obviously a “self serving rationalization”?

    Kinda makes things like “end the fed” a bit strained as a “plausible solution”,
    given that……..”The Fed can affect the price of credit but not its availability. ”

    One would expect that someone who understood causality, would recognize
    that “derivative financial instruments” and the “deregulation” that made
    them possible…….was the CAUSE of the crash. And since this problem
    has not been rectified……..a SANE person would be pushing for
    “immediate” re-regulation…… let’s see if we can get you to read
    and comprehend REALITY and ACTUAL HISTORY………AGAIN.

    Economics Unmasked
    Debt the First 5000 Years
    Power, Inc.
    Lords of Finance
    Extreme Money
    The Great Divergence

    “He who controls the present, controls the past. He who controls the past
    controls the future.”

    So Bob, was it good for you?

    • Warrior

      And how does the gubmint “incourage” one to sell a “stinking pile of poop”? Well, you just need some nice impervious wrapping paper and a pretty bow. Voila, I just created a “derivative”

      • GALT

        Well….looks like you posed a question, provided an answer to the question,
        and then claimed to have created something………

  • STEVE E.

    It is sad to say there are just two reasons why the U.S. is not yet a banana republic. The first reason is that the US dollar has not yet lost its world’s reserve currency status, which is helping to keep interest rates at record low levels. If the dollar, yen and euro were not involved in a currency war, the dollar’s intrinsic decline would become much more evident, causing domestic inflation to soar, and our bond market to immediately collapse.
    The other reason why we have not been declared a banana republic is because America is not located between the Tropics of Cancer and Capricorn

    • GALT

      Unfortunately, while the situation described does reflect certain elements as
      contributing factors to the current condition, there is no casual link between
      fluctuating currency values, the dollar as a reserve currency and the threat
      of collapse………( but it is excellent fodder for those who like to claim to
      have predicted things, hoping to sell future predictions.)

      Collapse will not happen………but things will NOT improve, until the idiocy of
      “austerity” is recognized for what it is……..for the same reasons, that it didn’t
      work in the initial attempted response to the crash of 1929.

      It is far easier to be a destroyer, than a builder, and to succeed by fraud,
      exploitation and theft, rather than effort and merit. Governments do not attract
      the latter, and once an economic system permits the sufficient wealth to
      become concentrated, the system is driven by consolidation which eliminates
      competition, rather than competition by innovation, which is stifled because
      there is no need for improvement……….those who fall into this trap and can
      not escape it, will watch as the system atrophies and grinds to a halt.

      This is what you are experiencing………and it will continue until the REALITY
      that both wealth and debt are an illusion, and that the function of governments
      and their respective economies, are to serve the needs of the people,
      which is not in FACT, what exists……….nor has it EVER existed becomes

      There is a lot of “historical rhetoric” devoted to these “claims”, but there is
      no evidence that any period of “prosperity” has been anything other than
      the result of a temporary confluence of serendipitous conditions, which
      “entropy” quickly dissipates and natural equilibrium is restored.

      The historical rhetoric is often referred to as “utopian”, and carries with it,
      it’s own perjorative connotation…… its very utterance……..which is ironic,
      because it is what is constantly “being sold” by anyone who is “selling
      anything”……the “idea” of “perfection” or the “ideal”, and it is what we
      are are “seeking”………..if this is impossible, why are there still so
      many buyers, and no shortage of sellers?

      One might consider, as a possible explanation, that of these two warnings,
      Caveat emptor! vs Caveat venditor! which one has received the most
      attention……….and depending on your comprehension of the question,
      which one should be the focus of “the government”, if you accept the
      premise that “governments” exist to serve the needs of the people.

      If this is not your understanding of the role of government, then it
      would seem that the documents which are the foundation of this nation,
      are in fact, just another example of convenient historical utopian rhetoric,
      which having served their purpose, became inconvenient, to the natural
      order of things?

      “He who controls the present, controls the past. He who controls the past,
      controls the future.”

  • ibcamn

    “POP”or more like”BOOM!”,what you mean the dollars not worth s#*t?!?!

    • GALT

      Pretty cool that you can still spend them then, huh?

      You know even Bob will sell you his advice in exchange for Federal Reserve Notes?

      What do you think that MEANS?


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