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I have been eagerly awaiting this week’s financial news for several years now. Usually the gloomy predictions have come with hard liquor in one hand and hand-rolled herbs in the other, but today I am vindicated.
We stand on the brink of another Great Depression, and thanks to some partisan whining, pissing, and moaning by the Republicans, and some spineless, leaderless, half-assed politicking by the Democrats, we are now ready to sink into something more: a global depression.
For all of their genius and financial wizardry, the fat cats on Wall Street and the armchair economists that have been calling for more globalization, less regulation, more ABSOLUTE FREE TRADE, are about to be proven the ultimate fools.
Because we have now so intertwined our markets, so thoroughly inter-connected the global financial system for the good of 8 old white men in smoking jackets, we will all go down together.
Arriverderci, my friends. We had a good run while it lasted. But even the dimmest philosopher could have seen this one coming: when you build a global financial castle on sand, one day it will come crashing down, and crush everyone therein. When you build an economy on shuffling paper, credit swapping, and intrinsically worthless paper money, it will one day collapse.
I tried to keep my mouth shut about this for as long as I could, and for the moment I’ll try not to gloat as much as possible, because it’s not fun to be right in this case. America has had it good. Very good. But now people are going to suffer. This credit crisis, this 777 point meltdown, mark my words, is only the beginning.
The last time that we had a Depression in this country the only way to come out of it was to mobilize the entire country and enter the most destructive war that our planet has ever seen.
In order to distract the masses from the price of bread and the price of gas, the geniuses who brought us this calamity will more than likely start another World War, which really isn’t that far off to begin with. I have never actually lost sleep over terrorism until the massive bombing in Pakistan last week, which nearly killed their newly elected, US-friendly President.
The central front in the war on terror is, and always was Pakistan: for all our fretting about an Iranian A-bomb and some sexual prudes with box-cutters, we have been blind to the fact that the only Islamic nation with the bomb has been teetering on the brink of chaos for some time. With our recent incursions into their country, I predict that it is only a matter of time before the other shoe finally falls.
We are all about to become witness to the sad fact that those who do not learn from history are doomed to repeat it.
Unfortunately - we are facing crisis. However, your assessment doesn't accurately capture why.
Nice thoughts, but off-base. For one, the 777 point drop was only the 17th largest percentage drop in the Dow's history. Add that to the fact that the Dow itself is a horrible indicator of the actual market's condition.
The largest difference between now and the great Depression (which wasn't the largest depression in US history, either)? The global economy doesn't stand to gain if we fail. And another world war? Hardly.
"In order to distract the masses from the price of bread and the price of gas, the geniuses who brought us this calamity will more than likely start another World War"
And while you're at it, you'd better get out your foil hat, Tim. Because someone who would believe the above statement surely believes that the government is controling people with mind-rays from GPS satellites.
Get a grip.
Governments don't intentionally get into wars just to distract people from their problems. Bad economic times make people fearful. Then they elect bad leaders who promise them safety, security, national power, etc. Then these bad leaders get countries into wars.
And, by the way, the US didn't start the world wars. Other countries started them and the US (eventually) got involved. I'm not saying there won't be a war, just that there isn't some conspiracy to intentionally start them to 'distract' the citizenry.
It's hard enough to stay informed and elect sensible leaders without people like you spouting conspiracy theories like this.
Tim,
We are not doomed. The gloom and doom messaging is coming from those who wanted to ram this flawed bailout package down our throats without the necessary oversight, regulation and mechanisms to ensure we do not repeat this again.
The Wall Street crowd is doing its best to manufacture urgency in acting on this issue by trading the market down. Markets go up and down. And when a sensible resolution helped along with the benefit of rational thought gets done, the markets will rebound and gain back all of the losses and move forward.
The solution to the problem will require (1) that the Fed buy back all of the bad loans from US banks ONLY, and place them in to an RTC-like status as was done with the S&L crisis in the 80s. The loans would then be evaluated for their ability to be worked out, written down, renegotiated, etc. This will give us the true picture of actual loan losses. Then the government needs to do what the banks should have done to begin with - work with their borrowers to get them in to payment terms they can afford. Once these loans are in performing status again, they can be resold back to the source institutions for servicing. Then the foreclosures will decline, people can keep their homes, home values will increase, and credit will be available again, as long as they follow up with number (2) the establishment of sane lending guidelines to ensure this does not happen again. Remember that the bad loans were not bad because of low rates, rather they were bad because the investment bankers offered terrible loan products with lending guidelines that were too lenient. This greed led to fraud and poor lending practices.
This is far from a precursor to a depression. The government can fix this. But only if reason can prevail over manufactured alarmism created by those whose greed would be curtailed by a sensible bailout plan. The American people will demand nothing less this time, and I have faith that our legislators will get the message that this has to be done the right way.
I hate to say it Tim, but I agree with you. I think that this is only the beginning. Credit was what got this country into the first great depression and it is the cause of this financial crisis now. The similarities are there at the core of it all.
I think it's scary, and I think that your predictions are just as probable as the predictions that it will all be okay. Also, I know that it takes guts to share your opinion like this time after time, so thanks.
So what if we have another Great Depression? So what if the absolute worst case scenario occurs and we have a global thermonuclear war (likelihood of this being nearly at zero)?
Life goes on.
Ben, it seems strange that you've chosen a scenario which would wipe all life off of the planet to illustrate your point that life goes on.
Global thermonuclear war wouldn't kill off all life. Just most surface life. =P
That's true. Surface life is important to the American economy, though, so maybe Tim is onto something.
My point is that no matter what state the economy's in, life continues as it always has. The 25-30% unemployment rate during the Great Depression is frequently emphasized over the 70-75% employment rate during the same period. Yeah, times were tough and a lot of families had a real rough period, but the Depression wasn't the Apocalypse.
And neither is the present crisis.
Not only will it take a lot of government "fixes" to, umm, solve (not sure if that's the right choice of words) this crisis. But it will take a change of mindset of the American public...
...ie. when does that new googleplex v2.0 widescreen come out. Can I get a new Ford truck without paying for 3 months? Can I get that second snap-together house in the suburbs on this wicked loan?
the list goes on...
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