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[News Source]The Global Economy is at the Point of Maximum Danger (MUST READ!)

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posted on Jul, 21 2008 @ 02:49 PM
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It feels like the summer of 1931. The world's two biggest financial institutions have had a heart attack. The global currency system is breaking down. The policy doctrines that got us into this mess are bankrupt. No world leader seems able to discern the problem, let alone forge a solution.

The International Monetary Fund has abdicated into schizophrenia. It has upgraded its 2008 world forecast from 3.7pc to 4.1pc growth, whilst warning of a "chance of a global recession". Plainly, the IMF cannot or will not offer any useful insights.

Its "mean-reversion" model misses the entire point of this crisis, which is that central banks have pushed debt to fatal levels by holding interest too low for a generation, and now the chickens have come home to roost. True "mean-reversion" would imply debt deflation on such a scale that would, if abrupt, threaten democracy.

The risk is that these same central banks will commit a fresh error, this time overreacting to the oil spike. The European Central Bank has raised rates, warning of a 1970s wage-price spiral. Fixated on the rear-view mirror, it is not looking through the windscreen.

READ IT NOW

[edit on 21-7-2008 by TheWayISeeIt]

[edit on 21-7-2008 by TheWayISeeIt] NOTE: All edits are in an effort to get the link to work.
[edit on 21-7-2008 by TheWayISeeIt]

[edit on 21-7-2008 by TheWayISeeIt]




posted on Jul, 21 2008 @ 02:52 PM
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Please visit the link for the full article. This is a concise staright-forward assesment of the global economy and the hazards we all face. There is so much happening right now, stock market, Fannie/Freddie bail out, Indy Mac, etc. that I am struggling with just being current with U.S. instability so I found this was of great value in getting a perspective on what's happening on a global scale.

If anyone can find a glass half-full here, please let me have drink!



posted on Jul, 21 2008 @ 03:08 PM
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Link no worky! Do you have a good link to use?



posted on Jul, 21 2008 @ 03:11 PM
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reply to post by TruthWithin
 
Sorry, am on it. Will edit it in the first post now.



posted on Jul, 21 2008 @ 03:20 PM
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I got the link here.

Great find! I have actually read this article and this nails the problem right on the head. The US has continued to produce infinite amounts of fiat money, or money by decree for too long now. There is no real capital any more, and the second that foreign markets catch a whiff of this they will run for the hills leaving the US economy to die. This in turn will bring down the other markets and you have a global catastrophe.

I also found a great article in the Asia Times discussing something similar.


Page 1 of 4 Debt capitalism self-destructs By Henry C K Liu In a period of less than a year, what had been described by US authorities as a temporary financial problem related to the bursting the housing bubble has turned into a fully fledged crisis at the very core of free-market capitalism. A handful of analysts have been warning for years that the wholesale deregulation of financial markets and the wrong-headed privatization of the public sector during the past two decades would threaten the viability of free-market capitalism. Yet ideological neoliberal fixation remain firmly imbedded in US ruling circles, fertilized by irresistible campaign contributions from profiteers on Wall Street, methodically purging regulatory agencies of all who tried to maintain a sense of financial reality. This ideology of "market knows best" has allowed the nation to slip into an unsustainable joyride on massive debt giddily assumed by all market participants, ranging from supposedly conservative banks, investment banks and other non-bank financial institutions, to industrial corporations, government sponsored enterprises (GSEs) and individuals. The once-dynamic US economy has turned itself into a system in which it is difficult to find any institution, company or individual not over their head in speculative debt. Undercapitalized capitalism, also known as debt capitalism, has been the engine of growth for the US debt bubble in the last two decades. This debt capitalism cancer is caused by a failure of central banking.


What shocks me is how the Fed and Paulson seem to be naive to this, putting trillion dollar band aids on things that crashed in the first place because of that same strategy.

'Twill be a bumpy ride!!



posted on Jul, 21 2008 @ 03:28 PM
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reply to post by TruthWithin
 
Thanks for the link, I sent you a U2U asking if you can explain to me how I post it properly, I'm still learning the ropes.

Anyway, on topic, yes it is certainly frightening and I personally don't see how we get out of it. I'm also v. concerned about bank failures as 53 bn in the FDIC to cover bailouts doesn't sound like v. much, 1-3% of money on deposit that is supposedly 'insured'.

Per the article in the Asian Times, I'm not quite sure how the 'neoliberals' are responsible for the policy of "market knows best", as I'm pretty sure that's a plank in both Libertarian and Republican platforms and one they have been using to beat the economy into the positon it is today.


[edit on 21-7-2008 by TheWayISeeIt]



posted on Jul, 21 2008 @ 03:55 PM
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I remember sitting down with my wife early last year. I had just finished my MBA and I was going over our finances. I told her that things were going to be tough for us for a few years because I wouldn't get a high paying job right away with the degree. I complained about how the educational insitutions had raised their rates an enormous amount over the 4 year timeframe in which I achieved my BS and MBA. I said that there was something there. They were debt happy and more than happy to place that debt on new graduates. We now owe close to $70k in student loans alone.

Okay, on to the topic. I then told her, that if this is true in other industries, that we were in trouble. Not we as in her and I but we as in the world. I then said, if my preliminary research is even close that come 2008 or early 2009 we were going to see a major financial crisis.

Just the other day when we were watching the news about the market she brought up, "I thought the world was supposed to end in 2008." I said "no, I didn't say that. I said that we were going to be in a financial crisis that could potentially overshadow tenfold the Great Depression."

She remembered then what I had said and just sighed. We are feeling it right now. I keep hearing that we have already reached the peak. I fear that it is not the case with each bailout made by the U.S. government with created money. All they are doing is feeding fuel to this already blazing fire.

It's not only going to be a bit bumpy, I fear we are going to hit some 20' wide potholes along the way.



posted on Jul, 21 2008 @ 04:04 PM
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Originally posted by TheWayISeeIt
Please visit the link for the full article. This is a concise staright-forward assesment of the global economy and the hazards we all face. There is so much happening right now, stock market, Fannie/Freddie bail out, Indy Mac, etc. that I am struggling with just being current with U.S. instability so I found this was of great value in getting a perspective on what's happening on a global scale.

If anyone can find a glass half-full here, please let me have drink!


It's like the Stockbrokers jargon... they know that they are broke, but just cannot say it. All signs and indications show the same picture....We are hitting the Rocks....Recession is sure coming, only the Big Boys at Wall st know when to officially announce it to the Sheepheads, which will be too late. If you have investments with these brokers, better to get it out, before they swipe it out.



posted on Jul, 21 2008 @ 04:28 PM
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reply to post by dariousg
 

So no glass at all, not even an empty one? You know we are in serious trouble when NO ONE can come on this thread and dispute that article and its dire assesment of where we are at.

My next question, esp. to you dariousg, is what should we be doing to protect our money? Get out of the stock market entirely with losses? Move into gold now, or is it too late? Is there a currency play that is sound with the dollar this low? And what about banks? Do you, or anyone else, think that there could be a real run on majors i.e. B of A, etc?



posted on Jul, 21 2008 @ 04:43 PM
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reply to post by TheWayISeeIt
 


Here is the real issue. If this crisis is as bad as I think it could be, there is no way for people, especially Americans, to imagine what it would entail.

There are 2 schools right now.

Those that look at the GDP at a growth of .1% and say HEY it is growing! There is no recession.

Those that understand that governments can't continue to produce money out of thin air without suffering the consequences.


The question will be what sort of tricks do the Fed and Government have up their sleeve to postpone the inevitable.

Well - for starters, they are playing the "companies beat Wall Street expectations" game.


CHARLOTTE, N.C. (AP) -- Bank of America Corp. has become the latest in a string of big banks whose second-quarter earnings, while hurting from the impact of the credit crisis, still managed to beat Wall Street expectations.

The nation's second-largest bank by assets said Monday its profit fell 41 percent as losses in its struggling mortgage operations were offset by business in other parts of the company. But it easily beat Wall Street estimates, and its stock rose $1.07, or 3.9 percent, to close at $28.56.


So Wall Street sets low expectations and the company beats those expectations. Positive news! Right?

Wrong.

Read the fine print!

Bank of America's profits dropped 41%! Nearly in half! So there is clearly an attempt to "polish a turd".

Is this "good" news?


Also, people do not understand the impact of Fannie and Freddie yet. It is a 5.2 TRILLION liability just waiting to slap the US in the face. We haven't begun to experience the fall out yet.

And the Fed's response? Make more money out of thin air to keep these reckless institutions afloat!

Can you tell what "school" I belong to?



posted on Jul, 21 2008 @ 04:50 PM
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Originally posted by TheWayISeeIt
reply to post by dariousg
 

what should we be doing to protect our money? Get out of the stock market entirely with losses? Move into gold now, or is it too late? Is there a currency play that is sound with the dollar this low? And what about banks? Do you, or anyone else, think that there could be a real run on majors i.e. B of A, etc?


If your investments are with stockbrokers, get it out pronto, Gold is too expensive. The best investment right now is to do some real earth-digging and plant crops....cash-crops, invest with a farmer, Food will be King, Real Food, not Plastic Food !!!

[edit on 21-7-2008 by ruse45]



posted on Jul, 21 2008 @ 05:01 PM
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You seem to have a firm grasp on all of this, Truth; and I'm enrolled in the same school. What do you suggest as defensive measures? I am honestly w/o a plan, which is not my nature, but am so overwhelmed by the sheer scope of what is happening that I am rendered inert...

Ruse - I'm not quite sure how you invest in a farmer outside of commodity trading and that market is so specualative and bullish now that it almost seems too late, and inflated, to get in.



posted on Jul, 21 2008 @ 05:35 PM
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Originally posted by TruthWithin
I got the link here.

There is no real capital any more, and the second that foreign markets catch a whiff of this they will run for the hills leaving the US economy to die. This in turn will bring down the other markets and you have a global catastrophe.


So the rest of the world is going to guarantee their own decline by selling dollars? I don't think so. Even in that case one of the few things that retains any value will be stocks. They will eventually be priced using whatever new currency is introduced. Precious metals will be confiscated at a less than fair price. Only choice is to believe, as optimism is the only true reality and it always has been.



posted on Jul, 21 2008 @ 06:07 PM
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Originally posted by TheWayISeeIt
You seem to have a firm grasp on all of this, Truth; and I'm enrolled in the same school. What do you suggest as defensive measures? I am honestly w/o a plan, which is not my nature, but am so overwhelmed by the sheer scope of what is happening that I am rendered inert...


I am not sure! I could tell you to buy gold, because that seems to be fairly stable. I think your best bet is to keep your eyes open, watch your money, hope for the best and prepare for the worst.




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