FIRE SALE PRICES COMING UP, FOLKS AND WHO ARE THE BUYERS HERE?

In 2008, Nouriel Roubini saw 12 steps in the then gathering storm he called the “meltdown of the American economy” which would lead to a 'fire sale' of working and middle class assets.
First, your money is stolen through usurious debt, then your money is used to buy the foreclosed properties you once 'owned'.
Properties that that money was going to pay off.

ROUBINI'S TWELVE STEPS TO HELL

Step one was what every economist on the planet was aware of: the worst housing recession in U.S. History.

"House prices," Roubini said two years ago, "will fall by 20% to 30% from their peak, which will wipe out between $4 000 and $6 000 billion in household wealth. Ten million households will end up with negative equity and with a huge incentive to either burn down the house and claim insurance — which is happening — or just put the house keys in the post and depart for greener fields. Many more homebuilders will be bankrupted, he maintained."

"I don't see (subprime mortgage market troubles) imposing a serious problem. I think it's going to be largely contained." - U.S. Treasury Secretary Henry Paulson, April 20 2007.

Step two would be further losses, beyond the $250- to $300-billion now estimated, for sub-prime mortgages. About 60% of all mortgage origination between 2005 and 2007 had “reckless or toxic features”, argued Roubini.

Goldman Sachs estimates mortgage losses at $400 billion. But if home prices fell by more than 20%, losses would be bigger. That would further impair the banks’ ability to offer credit.

Step three would be big losses on unsecured consumer debt: credit cards, auto loans, student loans and so forth. The crunch would then spread from mortgages to consumer credit, he added.

Step four would be the downgrading of the monoline insurers, which do not deserve the AAA rating on which their business depends. A further $150 billion write down of asset-backed securities would then ensue, and in fact are now ensuing.

SO FAR, SO BAD, BUT WHAT'S NEXT?

Step five would be the meltdown of the commercial property market, while step six would be bankruptcy of a large regional or national bank.

"Step seven would be big losses on reckless leveraged buy-outs," Roubini said. Hundreds of billions of dollars of such loans were then and still now stuck on the balance sheets of financial institutions.

Step eight would be a wave of corporate defaults. Roubini noted that, on average, U.S. companies were in decent shape in 2008, but a “fat tail” of companies had low profitability and heavy debt. Such defaults would spread losses in “credit default swaps”, which insure such debt. The losses could be $250 billion. Some insurers might go bankrupt.

(What actually happens is that the corporate defaults are split into “decent shape” companies and low-profit ones. The decent shape companies are sold off, leaving the rest in a so-called 'insured' but actual credit default situation that in real terms has to end in bankruptcy.)

Step nine would be a meltdown in the “shadow financial system”.

"Dealing with the distress of hedge funds, special investment vehicles and so forth will be made more difficult by the fact that they will have no direct access to lending from central banks."

Step 10 would be a further collapse in stock prices. Failures of hedge funds, margin calls and shorting could lead to cascading falls in prices.

Step 11 would be a drying-up of liquidity in a range of financial markets, including interbank and money markets. Behind this would be a jump in concerns about solvency.

Step 12 would be “a vicious circle of losses, capital reduction, credit contraction, forced liquidation and fire sales of assets at below fundamental prices”

WHO IS BUYING AT THESE 'FIRE SALE' PRICES? WHO IS HOLDING BILLIONS OF TAXPAYER 'BAILOUT' DOLLARS?