The Debts of the Spenders: Wall St Meltdown Song

Sung to the tune of Billy Joel's "We Didn't Start the Fire".

http://www.youtube.com/watch?v=dE-LDfroa1w

The Debts of the World: Jim Rogers Interview

Old Jim made his money on the currency and commodity markets. He's also been spot on for many of his calls. (Unfortunately he's not the greatest market timer in the world and relies more on fundamentals than technicals). Here is an old interview from earlier this summer, preserved for posterity.

http://www.youtube.com/watch?v=zhLPNdjyjyg

The Debts of the Spenders: Credit Default Swaps Explained

In a credit default swap, two parties enter a private contract in which the buyer of protection agrees to pay the seller premiums over a set period of time; the seller pays only if a particular credit crisis occurs, like a default. These instruments can be sold, on either end of the contract, by the insurer or the insured.

Problem: No one knows who the ultimate guarantor of these contracts is.

https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhEwjWP-9voc0F8qpU9GCJkOuiDbjgB434xBYU6aVb4UXHw1kmD00qIcIG8N5r6SbqQvehvpgYQ2ak-KlMvHAMJ9SqRwVS7r112lkT_1pHG21NhF8HHKu2gUvJfS799eXbqeig04XJ7k_M/s1600-h/cds-market2.png

The Debts of the Spenders: Stage 2 of the Mortgage Collapse

Option ARMs - you know, those exotic loan payment schedules that enticed so many Americans into borrowing? Yup - a lot of them come due in 2010 and 2011. Conveniently, that is also when many Baby Boomers become eligible for Social Security...

http://www.doctorhousingbubble.com/stage-two-of-the-mortgage-collapse-500-billion-in-pay-option-arms-meet-the-piper-in-2008-with-60-percent-being-in-california/

The Debts of the Spenders: FDIC's Failed Bank List

In 2007, only 3 banks failed. During the height of the credit boom (2005-2006) , no banks failed.

2008's toll so far: 9 and counting.

http://www.fdic.gov/bank/individual/failed/banklist.html

The Debts of the Spenders: Detroit Seeks Gov Bailout

This news is hardly surprising. The Big 3 (GM, Ford, and Chrysler) have been suffering for ages. Legacy costs stemming from unfunded liabilities to union workers, high oil prices, and faulty designs have all contributed to hem the growth of the domestic vehicle industry.

Now, executives from the 3 companies are taking a page from the banking sector in seeking federal government assistance in the form of low interest loans. They claim that their bankruptcy would result in a chain reaction of closures in auto parts suppliers as well as downwind effects in the credit markets. Why? The $45T credit default swap market would take a severe beating if GM or FORD went bankrupt.

This however is unlikely. While the banks are deemed "too big" to fail, the automakers aren't. Foreign competition in the form of Toyota, Honda, and Nissan have bit deeply into Detroit's market share. And while the CDS market might take a hit, it will continue to trudge along.

More cynically, none of the Big 3 are represented at the helm of any regulatory agencies. In contrast, Wall Street can count on the likes of such star studded alumni as Rubin (Clinton's Treasury Secretary), Paulson (current Treasury Secretary), and Fuld (current NY FRB director).

http://www.dailykos.com/storyonly/2008/8/22/13197/7208/841/572757

The Debts of the World: Investing Chart

I think we've all been here before:

https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEj4RugQsR1fbu2ZRaUkkXHMRIlR_nAsBJpJODc3txItOR3OKkDJYeTWwOhwKhFsMXyGr18hQfK05Qa6rpT_bRaJt38R_lyEvLREC1U86TshwG_ZHfPitu9LzVOUI1qrPogYTkMpGGteTRk6/s1600-h/Picture+9.png