You Have Been Lied To And Refused To Wake Up

Tuesday, June 16, 2015
By Paul Martin

by Karl Denninger

Here it comes folks.

For the last seven years I have been warning people, replete with example after example, about the fact that literally nothing was fixed after 2008. 2008 was a replay of the same scam that blew up in 2000, albeit on a larger scale.

Let’s put some scale on this. The Internet bubble was a tiny piece of the overall economy, perhaps 2% or so. It was marked by abject fraud on a grand scale; the IPOing firms during the “go-go” years of 1997-1999 had collectively claimed some 100x global GDP in their filings as “projected” sales over the next decade or so.

This, of course, could not happen as the economy of the globe was a tiny fraction of the projected sales yet it was both sold to you and bought by you, largely with issued (deficit) credit.

When the truth appeared nearly all of those firms either failed or were cut to ribbons. Yes, there were some survivors, Amazon being one of the noted ones. But that some survived served as cold comfort when 98% of your portfolio was destroyed.

In 2008 we did the same thing with housing. I remind you that Residential Investment (housing) last quarter was $585 billion on an annualized basis out of $17,655 billion in GDP, or about 3%. In 2007 it was $749 billion out of $14,233, or 5.3%.

It has contracted by about 44% since that time, which of course implies that it was over-represented by (at least) that same 44%.

How was it over-represented?

The Rest…HERE

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