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Morgan Stanley Says Governments Will Default, Only Question Is How
Presented without commentary, as we have pretty much said this about a hundred times prior.
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Time to Move the Decimal Point
One way: In a period of about one week to accomplish, ALL Current Dollars would be called in to be replaced with a New Dollar. The Current Dollars would not be acceptable after the date announced for the New Dollar to be put to use. The Decimal Point would be moved a notch, basically making a Dollar similar to the type of Valuation used in Japan [and many other countries]. Japan's Currency Unit, the YEN, has carried a value near our Penny. In countries like this the tern "Millionaire" doesn't carry the same meaning it has carried in the US...but that can, and will, change.
The one item, for sure, that will remain Unchanged in any recalculating of Funds that will come with this "Changeover" will be Mortgage Debt. IOW, that $200K mortgage you have today will still be $200K in the New system. People who had been getting a pay-check for $500 will see their pay-check read $5,000....we will get used to going shopping or to a restaurant and seeing our bills similar to what any American tourist has seen, for one example, when vacationing in Mexico. Mexico too uses the "$" symbol, and though your restaurant check was only Five Bucks, = to 5 USD, it took a while to get used to seeing $45.80 on your tab and be able to pay it with a 5 USdollar bill.
This will settle the mortgage problem, since while the mortgage stayed fixed to the "old"/current dollar, it would then be payable with the "New" dollar. This will allow that whole mess to be swept under the rug. It's also a bone tossed to the Public and make it easier for the crooks to avoid further public outcry for them to be dealt with
As for Debt to other countries every $1,000 in Face Value will be Paid with $1,000 Face Value...the thing that will change is the "FACE"
Maybe calories will be the new currency...
new currency=elbow grease=food=bullets to keep it
Comparing the USA with Spain, Greece, France, etc. is comparing Apples and soccerballs.
The USA issues its own currency and its debt is demoninated in the currency it prints, ergo, they will never default. why is that so hard for people to understand?
The federal government is most assuredly populated with moronic socialists that are attempting to coopt and control too much of the private economy for the benefit of their uneducated, underskilled, "victimized", unproductive socialist constituents, and that has negative implications. But "default" is not one of them.
By the way, did you know that total system credit (public + private) has been contracting for 1-1/2 years now?
inflation though is a de facto form of default
>>By the way, did you know that total system credit (public + private) has been contracting for 1-1/2 years now?
Doesn't matter. The old "We owe it to ourselves" argument never made any sense. There are creditors and there are debtors. The anti-profit business "U.S. Government" can print all the shares (dollars) it wants. They immediately turn it over to: bankers, state governments, bondholders, and ... the rest is trivial.
By the same logic, I can put IOUs in my home safe, and then, when it's time for retirement, hand them out and get food, gas, shelter, medicine, etc. It's the same logic as "Dumb and Dumber".
Starting in 2010, the U.S. exchanged non-negotiable Treasury bonds in the Social "Security" "lockbox" for credits in seniors' bank accounts. "The avalanche has already started. It is too late for the pebbles to vote."
Individuals have saved $330 billion in the last year. Corporations, about the same. States, minus $30 billion. Feds, about $2,700 billion - half of that off the books. Let's see: that comes to about $2,,070 billion increase. Foreclosed/defaulted bank loans are large, but not enough to turn that negative. Credit has net increased, because the U.S. Government is now serving the function that used to be served by AIG: the bigger sucker.
I was in (the former) Yugoslavia in 1992. I entered an abandoned house which had been looted of everything of value such as furniture. There were high denomination Yugoslav Dinar notes scattered all over the floor, some in denominations of 10,000 Dinar. The various looters hadn’t ever bothered to haul them off. I picked some up and showed them to the local people who just giggled.
I think it’s safe to say that any bonds payable in those same Yugoslav Dinars had been defaulted on in real terms by the Yugoslav government which at that time had shrunken basically down to Serbia.
Real world experience tells me that owning a printing press is no protection against default in real terms.
Plan B From Outer Space:
1) Orphan existing bonds. They toyed with this idea a few years ago, when they stopped on the 30year. There is also some talk that they would extend all short term notes out into the future, indefinitely, which is the same thing really
2) create a new currency and set the terms for converting old cash, and the exchange rate. That would mop up the cash problem which is held mostly in foreign hands, and is so full of cocaine and meth that you could get high just sniffing it. (the AMERO is a nice plan, since Mexico is a failed state, and we helped it fail)
3) default on bond holders, (SCOTUS is a vestige of corporate US rights) use the moeny to prop up the stock market. (This is what happened in Argentina, the original banana republic. In their crisis the foreign bond holders (many were Italian widows and orphans had to take a 50% haircut, while some moneyed interests from outside the country came in and bought up the Merval where obscene (d-cup J-Hole size profits were made) I can see that happening too.
4) and or all of the above. or destruction of the Fed and the political class in Washington. Populist revolt, and America as a swap meet, (see Meg Whitman, former CEO of ebay, running for governor of California, but thats just the beginning for the party of Goldman Sachs)
An egoic call to arms by the toothless dog...in my opinion my comments are valid and yours...not so much.
Often I think, this emotional divide is by far the worst. ZH is a place of sanity. In world full of Pollyanna's, ZH gives the truth a chance. Prior to the intermesh, we were mass fed a diet of lies, rationalizations, and misconceptions. Distractions. Often you must distract the sheepdogs in order to slaughter a few sheep. This has gone on for a long time. So the problem wasn't whether we agree or not, we do, but if and when the sheep were going to take notice of the predators in their midst. And quit telling us sheepdogs we were full of shit.
That day has finally arrived. The two trillion bailout and spendulus represented the thievery bubble imploding. All that's left to steal now is your pension plans. Coming next. What's an old sheepdog to do? Expatriate. Let those sheep become gyros. They deserve it.
I have a simple solution for this problem : confiscate all cash and savings acccounts in the US and pay your debt back to Chinese, Japanese, Germans and all other countries that "supported" US hedonism.
Problem solved. :=))))
Mr. Trader, we all talked it over on the other site and came to an agreement. We pooled our money, I even sold some SLW. We're putting a contract on you, just in case.
Gold confiscation anyone?
Subpoena records of all of the gold dealers since the last five years or so, you know, all of the mail order and internet orders. Might be mail fraud you know, we need to check it all out. Really, it is in the "health care" bill at, what?, $600?
- Ned
Come and get. They'll change your name to "Point Blank", posthumously.
I am not advocating it. I am just saying, they did it before, why not again? Only the next time, maybe they grab the silver and the guns too.
By the way - tough talk is cheap. Especially when armed tacticle squads are coming through your front door.
Good article, from a Euro MS source.
What is different this time is the magnitude, the scope and the many actors involved. Chaos theory would suggest a fractal event that collapses the entire structure. We saw a bit of this in 08-09. Even gold was not immune. The difference is the added weight of sov debt with little room to maneuver. Stay tuned!
Hey, where is ole JB? Although, I am sure if gold ever goes down more than 1 cent one of these days we will magically see his return.
Everything would be groovy if JB was here.
Now now, don't be hating poor JB. He has enough hate to spread around for all of us. I'm sure ole JB will show up the next time Gold takes a little dump.
BTW has it ever occurred to anyone that if there can be shills for BP and shills for Israel that there might just be anti Gold shills humming for the FED, JPM and the other PM dealers/manipulators?
If JB is a paid anti-gold shill, Bernake is getting ripped off.
That's my point, JB is good contrary indicator. Leo on stocks, too, but one of us is assigned to watch him for shift in opinion ;-O
- Ned
Just like a company, world governments are finding that in the late game of debt-backed, central bank run deficit financing that it is all about cash flow. Robbed Peter to pay Paul over and over. Now the balance sheets look like holy hell and credit is drying up. The system is saturated with debt. The result is unhealthy movement of zombie capital within the system - blowing bubbels and soon to be captured and vaporized as cash flow screeches to halt. I would wager this process started in earnest back in the 80's. Anyone who has operated a business knows that survival at this stage is a bitch. It takes alot of dancing to keep things afloat. Good decisions take a back seat to cash flow. And, it takes smaller and smaller bumps in the road to cause pain. At some point, cash flow stops just long enough - and WHAM, it is game over.
Buy rice; it's cheap and keeps for a long, long time. Posse up. Long gold, guns, garden, and gas.
I suspect that Morgan Stanley is first and foremost for MS. I suggest that most tips and information that the unwashed masses get from MS will be tilted in favor of MS. Not to discount the message, but what is MS attempting to do with the message?? Will the next message be that stocks are the safe place for the commoner? Is MS another form or squid?
CHEEKY---- good to see you.
http://www.youtube.com/watch?v=FyW3M-UTIWM
I guess they want to crash it all before "Inside Job" comes out in October.
Well I hope it actually does get out in wide spread release so everyone can see it.
Perhaps they won't bail out MS again.
(again)
I was surprised that this MS story was on Bloomberg...second from the top when I checked BB around noon.
The only indicator you really need
http://i34.tinypic.com/wb31p4.jpg
According the the Morgan Stanley guy, the global collapse is underway. It's a fashionable trend. The world is going to go belly up or reboot in some way shape or form. So what happens when everybody collapses? So what happens when the Euro zone does a swan dive and the USA follows right behind (or vice versa)? Do the stalwarts run to Zimbabwe or Argentina for cover? Will Arizona invade Mexico?
Mr. Soros is not returning my calls so I thought I'd ask you folks.
Human sacrifice! Dogs and cats living together! Mass hysteria!
After which, for a short period of time, precious metals will be used as currency. Soon thereafter, the ruling class will substitute exchange notes for metals, and the merry-go-round starts up again with new music, and a new batch of riders who are too stupid to understand monetary policy.
Maybe they'll feed 'em Soylent Green, who knows...I think humanity's fooked, and democracy can never work longer than a couple hundred years. Hope the coming Dark Ages are shorter than I expect them to be.
David Stockman
Thanks for such a great post and the review, I am totally impressed! Keep stuff like this coming!...
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