Why 2011 is much worse than 2008

Mark Twain was wrong. History really does repeat.

Looking at the financial headlines over the past week, it is 2008 all over again, only this time with names of people, places and financial institutions that are harder for most of us to pronounce. See Is the Market Set for a Replay of 2008?

It’s the same disease only in a different (and far bigger) patient.

Substitute the wording of Moody’s Friday night ratings warning on Italy with Citigroup /quotes/zigman/5065548/quotes/nls/c C +3.01% and it could be August 2008.

Swap money market funds and municipal bonds with adjustable rate preferred stock and variable rate notes and it is the fall of 2007.

And replace BNP Paribas SA and its San Francisco-based unit, Bank of the West, with Lehman Brothers and Neuberger Berman and it’s September 2008.

Whether it is global leaders, foreign financial institution executives, rating agency professionals or investors, they are all reading from the same 2008 playbook.

Leaders want time; bankers want capital; the agencies want calm; and investors just want out.

We have once again reached the point where everyone knows that the problem is solvency, not liquidity. And in an interconnected, interdependent, global financial/sovereign complex — or what I now simply call the “interplex” — where everything is somehow a derivative of something else (and vice versa), it is just a matter of your degree of impact....

As in 2008, though, the more global leaders attempt to delay the consequences in an effort to stem the tide one institution at a time, the more they raise the risk of outright contagion. Time is no substitute for capital. And as we saw in 2008, markets wait for no one. Worse, particularly this go-around, we have now learned that a global leader’s word is only as strong as the willingness of her voters to follow....

And therein lies the real problem to this 2008 Redux. At the risk of over-simplicity, 2008 was a national banking crisis with international implications. The burden was principally shared among U.S. financial institutions (their creditors and shareholders) and U.S. taxpayers. And while historians will forever debate the outcome, a very small group of national leaders made decisions based on what they believed was in the best interest of their country.

In contrast, 2011 is a developed-nation sovereign debt crisis with pronounced global implications; and the complexity of the burden-sharing decision-making process is far greater than anything we have witnessed in our lifetime.

Losses will be shared across sovereign borders, public and private sector boundaries, national and supra-national divisions and social strata. And that is just at a primary level. As this week’s headlines reveal, investors are just beginning to grasp the enormity of the second derivative impacts (for example, money funds and municipal bonds). And I’d offer that those are just the most obvious. Wait until people start to wonder what all that “cash” on corporate balance sheets really is (and might I suggest where it is) or how Tier 1 Capital is impacted by deteriorating sovereign debt ratings.

Welcome to the interplex.

Why 2011 is much worse than 2008

Thought this was an interesting commentary observing some profound parallels between the current growing financial problems (tempted the use the term 'time bomb' but might be construed as fear mongering) and the 2008 crisis. We can only wait and see what eventuates and with less stimulus moneys and free bailouts, what impact this may have on the markets, and the 'interplex' as this author calls it.

Yep, to put it another way, if the collapse starts it is to big to stop this time. The US and the European union have used up all the funds they had over the last three years to basically keep the banks and governments from failing, but the debt still exists, and now they can no longer even afford the payments.

The thing that is so scary is ninety eight percent of the population has no idea what is about to happen.

At least we aren't in the middle of a manure flinging contest like we were in 2008.
Oops..I meant election year.

Originally posted by surrealist

Mark Twain was wrong. History really does repeat.

And while historians will forever debate the outcome, a very small group of national leaders made decisions based on what they believed was in the best interest of their country.

That article is pretty close to the mark,however the sentance I've highlighted is a insult to anyone with half a brain.Since when have leaders acted in our interest ???

As for Mark Twain, he needs to eat hat, yes history repeats.This is where the world was at just prior to WWII.Read the signs! Obama's brown shirt's,fascist policing,starving people,and gold about to be confiscated.Have a nice day

Thanks for posting OP.

edit on 22-6-2011 by 13th Zodiac because: (no reason given)

What i don't like about the 2010s and the later 2000s is that everything seems to be the same and rehashing the same stuff(Film like Super 8 which is a tribute to Spielberg films), plus three wars(Libya, Iraq, Afghanistan) causing lot of downfall lately

reply to post by Paulioetc15

And that in truth is.what Mr Twain actually said. He said it didn't repeat, but it did rhyme. And it has been and will continue to do so until we replace the line of history makers we have had.

Yes, Another Crisis is Coming,,, and It Will Be MUCH Worse

I'm citing this on here as it is an article on Zerohedge from Graham Summers who has his sales pitch at the end, thus imo doesn't deserve a thread of its own. Regardless, it makes for interesting reading and there are points he raises there that I think are quite valid and complements the OP.

So I post this link FYI.