Second Wave of Financial Crisis?

Please read my latest entry and post your comments here:

http://pensionpulse.blogspot.com/2010/04/second-wave-of-financial-crisis.html

Thank you,

Leo Kolivakis

Comments

[Rogerwilco]

The Fed isn't powerless, and they will do whatever is needed to keep rates low and let Geithner fund the government. Look at July-Oct '08 to see what they can do when they want to move money from equities and commodities to bonds. A plan to sell up to $1T of treasury debt directly to MMFs was announced back in February.

[Kreditanstalt]

Leo, it does sound as if yourself and Mr. Krugman both want the cheap money party to continue, for fear of mass unemployment?

The entire Ponzi borrow-short-lend-long system is one of forever borrowing and rolling it over as a way of funding business.  The economy has come to be absolutely addicted to this elixir of cheap borrowing.  Rather than actually SAVE and accumulate capital of their own, business borrows - continuously.

Many jobs in G-8 economies now are, I submit, not jobs at all.  Rather, they are more like government-subsidized make-work projects, or social welfare payments.  How can we even be sure which jobs can be economically rationalized and which are Potemkin facades?  Many capital investments ~ and that's what jobs are ~  would vanish in a puff of wind were cheap money removed. 

But for the long-term benefit of all, it HAS TO BE DONE.

[hbjork1]

+10

[TaggartGalt]

+1 

I think Leo agrees in principle, but does not want the-great-unwind to happen during his lifetime.

[CEOoftheSOFA]

I have to agree. The presidents that took steps to strengthen the currency (Washington, Grant, Harding, Eisenhower), fostered long term economic growth, at the expense of short term gain.  The presidents that followed soft money policies (Jackson, Lincoln, Wilson, FDR, W) sacrificed long term prosperity for short term gain.  We can recover from recessions.  What we can't recover from is the repeated, continuing damage to the economy that we are now inflicting.

[SWRichmond]

The presidents that followed soft money policies (Jackson, Lincoln, Wilson, FDR, W...

Lincoln: War

Wilson: War

FDR: War

W: Endless MIC-Enriching War

I'm shocked, SHOCKED I tell you, to learn that presidents use inflation to pay for war!

[ZackAttack]

+10.

Back in 2002, we had a recession and a mild credit contraction.

Until they started trying to fix it.

[Republicae]

It appears that few seem to either consider, much less understand the actual way that government stimulus efforts tend to negatively impact productivity in the long term. While there is a flurry of apparent economic activity following the injection of such artificial stimuli, the fact of the matter is that it is nothing more than a monetary panacea that creates an illusionary superstructure without an actual economic foundation. What is being created is yet another misallocation due to monetary policy and government intervention into the markets. What the government is promoting as a remedy is nothing more than the very same Keynesian tactics that produced the problems in the first place. Government solutions tend to become problems which require more solutions which become problems which, in turn require more solutions. 

[alien-IQ]

Financial crisis? What financial crisis?

[zebra]

bear's financial crisis.

[Sudden Debt]

I just heard it to about this "credit thing crisis"

WHY DOESN'T ANYBODY TELL ME ANYTHING ABOUT THESE THINGS!!