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Monday, September 15, 2008

Total Meltdown

With Lehman Brothers filing for bankrupcy today and Merrill Lynch being acquired by Bank of America the U.S. has lost three of the big five investment banks in the past year. Organisations that survived the Great Depression have fallen victims to the Great Recession. The consequences of the Lehman failure will mark a key point in the transition of the "credit crisis" from a financial services phenomenon into a broad based economic downturn not unlike that seen in the 1930's. Uncertainty and volatility will now become the trademarks of the end of this decade. Allow me to quote a little from the article linked above:

it’s unlikely to be a slow-motion train wreck this time. With Lehman in liquidation, and Washington Mutual and AIG on the brink, the credit market would likely shut down entirely and interbank lending would cease. In his newsletter yesterday, Nouriel Roubini wrote: “What we are facing now is the beginning of the unravelling and collapse of the entire shadow financial system

This is not contrarian, gold bug, doomsday press (as it largely was when this blog started) this is mainstream journalism in mainstream media.

By 2010, so says this blogger, a mood of pervasive pessimism will have decended across the US and the World akin. The breakdown in the World order from the undermining of global economic stability will quickly flow from the economic to the social and political spheres. Economies such as China, built on the monetary expansion of the 90's and 00's will slow and faulter. Their implied covenants of personal feedom exchanged for prosperity will be invalidated. Their populations will become restless.

This will play out just as the 1930's did. The story will be old, the names and faces will be new.

The 2010's are unlikely to be a happy decade.
at

2 comments:

  1. Anonymous10:50 pm

    Let me say from the outset that the previous Great Depression & the current Greatest Depression, have different origins.
    And, due to these different origins, the likely outcomes, will also be different.
    Some Financial institutions have gone already, many more will go and that is only the start.
    Unlike the previous Great Depression, WE are now between a rock and a really hard place. There are NO apparent solutions, which will not tear the guts out of civilisation, as the system collapses.
    Whether we arrived at this situation, by accident or design, we are never likely to know, although events suggest design seems probable.
    Design or not, this is a once in history event and whilst the final outcomes can not be absolutely clear, it is clear that the effects will be negative, for most of the global population.
    How did we get here?
    Take a really good look at what happened after the previous Great Depression and in particular, why the period 1945 to 2005 was the greatest Global economic BOOM in history.
    We are now on the other side of that boom and the same Supply & Demand basics that led to the Boom, are now leading us irrevocably into the Greatest Depression, in history.
    Had corrective decisions been made earlier, then it may have been possible to reduce some of these effects, regrettably, that did not happen.
    Finally, the lesser evil is chosen, leverage in Global financial markets goes into reverse and we all hold our collective breath.
    We are now in the first quarter of the greatest “Game” in human history.
    The outcome of this “game” will not just show the way for the next decade, it will dictate history for the rest of this century and beyond.
    Good luck & watch the Debt!
    perceptionsnow

    ReplyDelete
  2. Anonymous2:28 am

    I am gonna read each one of your post starting in 2004. It's great, really good.

    ReplyDelete