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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.
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.
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!
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.
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?
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.
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...