Is U.S. About To Lose It's Foothold As #1 World Economic Power Over Sub-Prime Lending Crisis? (Will US Banks Be Forced To Merge With "World Bank"?)

To those of you checking in for the first time...my name is Zuma Dogg. And if you wonder why you should care about my opinion on the following story -- I posted a warning that the sub-prime lending bubble was about to burst, triggering a recession -- THREE MONTHS BEFORE IT HIT THE NEWS HEADLINES. Original Story (see date)

HERE'S AN UPDATE TO THE STORY POSTED SIX MONTHS AGO (FURTHER PREDICTION)

The US banks are going to have to surrender/merge to the International Monetary Fund (World Bank) next year, right after the elections.

Next year, one by one, the US banks are going to start to fall like dominoes. First Citibank, then Bank of America, and so on -- because of the sub-prime lending crisis.

Why? These banks' liabilities will have to be written-off and absorbed by a bigger bank. The World Bank is the only one big enough that I can think of.

First, there will he a big stock sell-off; then a merger as stockholders are forced to "give it up" to the I.M.F. (International Monetary Fund).

SUB PRIME DEFAULTS ARE NOT OVER, YET!

When property values "devaluate", more and more people will default (simply walk away) from their sub-prime loans. If you are paying back a loan for what was originally a $400,000 piece of property -- now only worth $200,000 -- some people will simply walk away from the loan and default.

THEN, the banks are stick with the properties people walk away from. And the bank's equity (property value) doesn't cover the liability of defaulted loan (See "negative amortization".)

In February/March of 2008, the Federal Bank will have to RAISE interest rates -- to help raise the value of the US dollar -- but it will be too late. (And if they CUT rates, it will only make it worse/devalue US dollar even further).

And here's why the Fed will have to RAISE rates, when consumer confindence and spending will be so low: THE OVERSEA BILLIONAIRES, LIKE THE OIL MOGULS IN THE MIDEAST DON'T LIKE SITTING ON THE US DOLLAR AS IT BECOMES LESS AND LESS VALUABLE. That will cause them to switch to Euros and other currencies.

So with low consumer confidence (due to subprime concerns); a terrible holiday retail season on the way, then raising the interest rate to help bring up the value of the dollar -- will cause consumers to cut-back even more (out of fear), causing a recession...followed by hyper-inflation, that will cause further consumer spending cut-backs, which will trigger a depression.

Then Greenspan will have to step in as Chairman of the I.M.F. (Oh, didn't you hear?)

If you project it all out...it appears as though for the first time ever, the US may lose it's number one ranking as the number one economic force in the world and may become beholden to the new global economic leaders.

Might not be very comfortable, economically, the next sixty to a hundred years on this side of the pond.

TIME FRAME: 18 months

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