The party is over for the borrow-and-spend culture, for an economy based 72% on consumer spending, nothing will never be the same, Peter Schiff concludes. America's $53 trillion debt problem is very real. According to Michael Hudson, writing in the May 2006 issue of Harper’s Magazine, are Americans unwilling to face reality. In the meantime, Wall Street banks in $70bn staff payout, or 10% of US government bail-out package while admitting that the bailout won't work as of Oct 18, 2008. So much for the 'brightest college degrees club' managing the planet - indeed!
It’s clear that the government would like us to use the capital," Mr. Dimon said on a conference call with analysts on Wednesday. "If you are a bank that is filling a hole, you obviously can’t do that.
While Europe blames and curses America for the global creditcrunch, it is ironic that European banks have turned out to be deeper in debt than their US counterparts, contends Evans-Pritchard on 10/5/08. Europe put $2.3 trillion on the line to protect the continent's bank. So much for an EU treaty called The Stability Pact as they are staring into the abyss and wondering who's going to bail out the Euro next? Probably not the UK: the Bank Of England unveiled £500B rescue package early this month. On October 16, 2008, ECB went nuclear as EU leaders called for a 'civilized' capitalism. Cynically, World Bank President Mr. Zoellick confesses that the G-7 is not working. Indeed when debts are not kept under control, predictions and estimates are always wrong. Instead of getting back to the basics of ECON 101, Zoellick urged the creation of a new larger Group that would include China, Russia, Saudi Arabia and others to solve the world's economic problems. A New World Order!
Long time viewed as a financial Eden, Iceland too has gotten a taste of the 'kiss of death'. As the Icelandic krona is about to become history, Lawmakers have no other option left than contemplate an IMF bailout. To refresh your memory, the IMF is the same lender of the last resort whose advice plunged Mexico, Argentina, Russia ( which might go bust again) and lately Japan into financial turmoil. We can only wish Icelanders a lot of luck!
As a matter of fact, indebtedness knows no boundaries (classes and cultures): early this month even Pakistan went under and as a result, is being threatened with a currency crisis. Pakistani leaders still hope to be able to borrow $10B from the bankrupt UK and US. Ireland, long time considered a taxation heaven for European firms, is currently undergoing a massive adjustment due to the bust of its housing bubble. To make the matters worse, a columnist from the independent.uk asked if Switzerland could become the next Iceland... Thousands of miles away from Ireland, a bad omen suggests that Russia's Crash looks very similar to that of 1929, a Bloomberg columnist reported. Indeed, Russian equities this year have lost 67% so far. As you read this, the Indonesian President suspended the stock exchange indefinitely 'to prevent deeper panic' Delaying outcomes is absolutely senseless because at some point, we'll end up reaching an exponential threshold where conflicting interests and lies - will collide at once.
With a flawed diagnosis of the causes of the crisis, it is hardly surprising that many policymakers have failed to understand its progression. Today’s failure of confidence is based on three related issues: the solvency of banks, their ability to fund themselves in illiquid markets and the health of the real economy. economist.com
Although (credit induced) financial plagues dot Mankind's history, the financial media often presents debt crises (ie: business cycles) as being facts of life. However, this didn't prevent them from lauding the housing mania at every level they could, as if this time was different. Would they all be suffering from amnesia? Please do your homework and google 'The Bubble That Broke The World' and you will discover the dreaded similarities between the roaring 1920s and today's. .. Flawed diagnosis? are they stupid or do they have a plan?
It shouldn't be assumed that it is in the human nature to live as if there were no tomorrows, to the contrary. To take the appropriate rational measures, they first need to be able to access unbiased information to begin with. The rock bottom line will always remain the transparency of a system itself. Today many have realized that the opacity of the fog was hiding the mother of all black holes. Unfortunately, there aren't that many different ways to define words like 'S.C.A.M', 'P.L.U.N.D.E.R' and 'F.R.A.U.D' without running the risk of sounding redundant. This worldwide debt laundering will have to be paid with a hard landing. In order to do so, the Powers-That-Be (PTB) are readying themselves for the worse case scenarios, such as shutting World's Bourses, creating a single world currency, which has always been 'the end of the game', as Ron Paul warns. Of course, a one-world-currency will not stabilize anything at all; the Euro has not insulated the continent from external economic dangers, far to the contrary. Until two years ago or so, Eastern Europe was booming like never while heavy-weight economies like Spain, France and Germany were already crushed by their own deficits. Having one single currency will just make it easier for the PTB to create booms and busts where they see fit. It is a conspiracy... and if the word 'conspiracy' disturbs you, please consider the following quote write several centuries ago:
To preserve their [the people's] independence, we must not let our rulers load us with perpetual debt. We must make our selection between economy and liberty, or profusion and servitude - Thomas Jefferson
Ignorance In Action Is Terrifying
The most astonishing story this month in my view was the confession of a manager whose one-year-old fund returned 866% betting against the subprime collapse. While the origin of his wealth rests on unethical premises, he honestly accuses Harvard and Yale Cliques for their utterly deceiving behavior supporting the Aristocracy, which ended up making it easier for him to find idiots to take the other side of his trades. We can understand now why the S.E.C banned short selling, can't we? The only acceptable questions here should be: why did it take so long to take action... and why do such regulations exist in the first place, considering that debt-based economies are mere legalized casinos?
While the average consumer loses purchasing power daily, the rich consolidates and gets richer. This is, without a doubt, the biggest wealth transfer ever. It is very common to come across people who seriously think that the developing world is poor because of its corrupt leaders and a rampant lack of education, that the Western Powers have done everything they could to alleviate poverty. Really?! If so, how to explain that the wheels are coming off the global financial system? Yes, it's quite hard to get the message through among the public spectrum.
The 'Men At The Top' are geniuses. They have all mastered psychoanalysis: all They have is to do is to work along people's greed, phobias, laziness to think for themselves, gluttonous envy, superficial star system values, and fake altruistic claims... then seize opportunities created by the implementation of a century old economic fallacy, using societal inertia to rule as the absolute Masters.
Remorseful Paulson regrets 'mistakes': We're not proud of all the mistakes that were made by many different people, different parties, failures of our regulatory system, failures of market discipline that got us here... - 10/17/08, globeinvestor.com
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