This is a badly researched article.
Numbers dont lie;
the entire Real estate market in the USA is worth roughly 20 Trillion dollars in 2007, as referneced by Atttached Fed data. Real Estate markets have dropped about 40% since this report, so we can figure somewhere in the 14 Trillion range today.
http://www.stlouisfed.org/news/speeches/2007/10_09_07.html
we need to put numbers into perspective;
U.S. annual gross domestic product is about $15 trillion
U.S. money supply is also about $15 trillion
Current proposed U.S. federal budget is $3 trillion
U.S. government’s maximum legal debt is $9 trillion
U.S. mutual fund companies manage about $12 trillion
World’s GDPs for all nations is approximately $50 trillion
Unfunded Social Security and Medicare benefits $50 trillion to $65 trillion ( debt)
Total value of the world’s real estate is estimated at about $75 trillion ( asset)
Total value of world’s stock and bond markets is more than $100 trillion
BIS valuation of world’s derivatives back in 2002 was about $100 trillion
BIS 2007 valuation of the world’s derivatives is now a whopping $516 trillion ( Debt)
It is estimated today there is over 900 trillion in derivatives, banks have so far refused to open their books and allow audit of their holdings ( debts). 900 trillion of international banking credit based on less than 100 trillion of real assets. ( 2009 valuations). The markets have dropped roughly 40-50%. Derivatives have not been adjusted. This difference is why banks are bleeding, there are hundreds of trillions in worthless paper held by international banks.
BIS : Bank of International Settlement. What Banks did was create derivatives to sell each other out of thin air. This is what caused financial collapse. In 1934 congress passed the glass steagal act to prevent banks from issuing and rating their own credit, as this caused credit bubble that led to the great depression. In 1999, congress and clinton repealed the act, allowing banks to once again create their own credit instead of relying on regulated federal and european bank system.
Banks placed Taxpayers as insurance pool ( AIG ) to underwrite the derivatives. AIG paid off the losses (so far) at 100%, allowing banks to recieve full value of losses even though markets have dropped 30-50%.
Corruption in international banking is what brought the current crisis around, and only because taxpayers were placed as underwriters by Clinton and congress in 1999. Everyone was so focused on impeachment for sex they forgot to watch the banking lobby. Easy credit fueled speculation in real estate and stocks, just as in the 1920′s, it was massive credit bubbles created by international Banks, in 1920′s and in the first decade of the 21st century.
Deregulating Banks in 1999 allowed them to run amok, issue their own credit and then rate their own credit, once again. This is what caused todays banking crisis.
Badly researched article.
