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23 September 2008
Are you ready for the great crash of 2008?
It's nice to see proof of the old adage that things change but stay the same. On Friday of last week the American government put forward a multi-million dollar rescue package to try and save Wall Street and by Monday the wheels appeared to have fallen off it. Back on Friday the 25th October 1929 a consortium of heavyweight bankers tried to save the falling market by spending millions to buy shares at above their market values. At least that held the market for all of four days until the 29th when things went seriously pear shaped.

The other thing that stayed the same was the main cause of both crashes which was a surfeit of easy credit. Whether it was allowing people to buy shares with ninety percent credit or allowing them to finance a lifestyle with a credit card and cheap mortgages, the end result is the same. A bubble is created and sooner or later it will burst.

As for the mugs who got a class above themselves and are now going to lose their homes, those of us who never entered into the financial merry-go-round in the first place can now sit back and enjoy the show.

The house lights are going down and the main feature is about to begin!



I think that they're running with plan b - print Trillions of monopoly money and go for the Weimar Republic style crash, which is the ultimate in pain and suffering for the poor.

The common consensus is that the foreign investors should have taken the losses after Fannie Mae went down.

Now, I can see little room to save the US from hyperinflation spreading the pain and suffering of the housing crash into the general economy.

Ben Bernake and Greenspan are disgraceful, as they were well aware of what they were doing, and that the poor would be homeless and begging for food.

So what gives? If a mere Uni student can see this, it must be assumed that the FED has taken this course deliberately to achieve it's objections, which infers it knows the dollar has to collapse, and is actively progressing such a collapse.

Is this the only EXIT strategy of the $9 Trillion debt that the US is in?
The actions of the FED are polar opposites of the ECB, and so it's fair to infer the FED policy is to crash the dollar.

Which raises the two questions of why and how will they do it?

23 September 2008 at 13:04  

Anonymous-- I agree, its disgraceful, and I hope that the Dodd proposal starts to bring the Paulson gang to heel.

Why they're doing it is anyone's guess, though increasing the strain on the euro-zone to remove a rival, depending on the Chinese and Indians to take the hit and not shift their reserves, or putting pressure on oil to justify crazy wars--because oil will hit the roof if the dollar collpses--all spring to mind.

Really, though, why does there have to be a reason? These people are self-interested, short term thugs and have been since they were inserted into the office they now hold. I know that Exile will have a different view (and I respect it) but I never took much pleasure from a determined attempt to end the American republic and assert its overt, public control by a mad coalition of bankers and militarists.

Surely also spending $1 trillion would wipe out any Obama spending should he be elected in November? He's getting to a point in polls where the Bradley effect of disguised racism depressing poll figures at the ballot box won't matter, though at the moment an electoral tie seems likely. Have the GOP locking an anti-McCain, anti-Obama cage into the executive office?

23 September 2008 at 18:31  

I don't think that they get run the presses like that because the dollar is still the world's reserve currency. That will only hold so long as the Asians keep on buying T-bills - run the presses and that's the end. On the other hand, as Martin says, these guys really are quite mad.

By the way, Martin, I haven't written about the Bradley Effect yet, but I will do. The Catholics seem to be deserting the Dems in the same way as they are deserting Labour. This notion that the liberal middle class has that we are all post-modernist now is going to bite Obama in the bum.

23 September 2008 at 21:00  

Yep, I think you're right Exile. There is some hope on the part of the Democrats at Salon.com that economic uncertainty and populism will put the abortion issue away, but the thing is, it plays on the conscience.

Exile, did you see that a huge mob of Indian workers laid off today stormed the company offices and killed the man who sacked them? There's a reaction building in which people are talking about disinvesting in India, but which Indian nationalists could quite easily use to switch away from the dollar link. I also wonder if China hasn't been quietly building up commodity reserves and coordinating asian currencies except the yen--maybe with Russian help? Just a thought.

I've been given a talking to by some of the anti-religious modern left on my blog this weekend for not being a progressive anti-religionist.

Your observation is the sort of thing that is understood in places like Ireland and Virginia, by those 'workerists' who actually get elected, is absolutely lost on the secularist crowd. See Mary Honeyball's piece on Sarah Palin if you want evidence--they haven't a clue and they think that they are better than people they want on their knees cleaning the corridor rather than on their knees in church.

By the way, I spoke too soon. Obama's back down to two or three points in the polls, which isn't enough. There's a lot of lingering suspicion out there. It even affects people who should know better. My brother asked me why Obama's so low on the radar at the minute earlier, and the first thing I thought to say was 'well, it's ramadan, he's tired'....

23 September 2008 at 23:55  

Here's that India link. It reads like the mob scene from Germinal-- pushing workers with no safety net too far and expecting no response is a very bad idea--but look at the comments

23 September 2008 at 23:59  

Brilliant post Exile, you are so correct and Warren Buffett's intervention makes the stage complete, when do they start jumping out the windows?????.....

Do you recon congress and the senate will go for it????, HEARTENED to hear a rebellion at the very least....MONEY down the drain people the free market only works if you have the BALLS to let it be a free market!!

24 September 2008 at 15:24  

Yes indeed, both Odyssey and Exile are right. I think what we now need to get the largest possible momentum behind a strategy pointing in the right direction is a Sixty Per Cent Now campaign, referring to the minumum necessary top rate of tax.

28 September 2008 at 20:40  

When the British car industry was flushed down the pan, and our motorbike industry, and our ship building industry along with our aircraft industry, I grimaced and understood the global economy and free market principles.
I still don't except that the French have ever produced a car that could be described as quality, reliable yes, but build quality or innovation.....nowhere near.
I understand why after the war we GAVE the yanks the jet engine and Whittle got nowt, but this "Financial crisis" the "credit crunch" is the politics of fear on fucking steroids.
OK all the banks roll over, do they think money wont transact??? and that out of the ashes, new money lenders, new businesses made out of the debris of the past would not appear. Look at Berlin 1946 they soon rebuilt and we had bombed them back to the stoneage.

All that these interventions will achieve is to PROLONG the agony and quite possibly bring down the bank of england in the process.

28 September 2008 at 21:23  

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