This page has been archived and commenting is disabled.
The Financial Crisis Was Entirely Foreseeable
I noted in April:
Whenever there is a disaster, those responsible claim it was “unforeseeable” so as to escape blame.
For example:
- It happened with 9/11
- It happened with the Japanese nuclear accident
The big boys gamble with our lives and our livelihoods, because they make a killing by taking huge risks and cutting costs. And when things inevitably go South, they aren’t held responsible (other than a slap on the wrist), and may even be bailed out by the government.
But surely the financial crisis was different. After all, Wall Street executives and politicians say that the financial crisis wasn’t foreseeable. And see this.
Actually, it might have been slightly foreseeable for a little while before the financial crisis.
WE’VE KNOWN FOR THOUSANDS OF YEARS
We’ve known for literally thousands of years that debts need to be periodically written down, or the entire economy will collapse. And see this.
We’ve known for 1,900 years that rampant inequality destroys societies.
We’ve known for thousands of years that debasing currencies leads to economic collapse.
We’ve known for hundreds of years that the failure to punish financial fraud destroys economies.
We’ve known for hundreds of years that monopolies and the political influence which accompanies too much power in too few hands is dangerous for free markets.
We’ve known for hundreds of years that trust is vital for a healthy economy.
We’ve known since the 1930s Great Depression that separating depository banking from speculative investment banking is key to economic stability. See this, this, this and this.
We’ve known since 1988 that quantitative easing doesn’t work to rescue an ailing economy.
We’ve known since 1993 that derivatives such as credit default swaps – if not reined in – could take down the economy. And see this.
We’ve known since 1998 that crony capitalism destroys even the strongest economies, and that economies that are capitalist in name only need major reforms to create accountability and competitive markets.
We’ve known since 2007 or earlier that lax oversight of hedge funds could blow up the economy.
And we knew before the 2008 financial crash and subsequent bailouts that:
- The easy credit policy of the Fed and other central banks, the failure to regulate the shadow banking system, and “the use of gimmicks and palliatives” by central banks hurt the economy
- Anything other than (1) letting asset prices fall to their true market value, (2) increasing savings rates, and (3) forcing companies to write off bad debts “will only make things worse”
- Bailouts of big banks harm the economy
- The Fed and other central banks were simply transferring risk from private banks to governments, which could lead to a sovereign debt crisis
Given the insane levels of debt, rampant inequality, currency debasement, failure to punish financial fraud, growth of the too big to fails, repeal of Glass-Steagall, refusal to rein in derivatives, crony capitalism and other shenanigans … the financial crisis was entirely foreseeable.
- advertisements -
the financial crisis was entirely forseeable to those who concocted it as they knew its sales pitch, at inception, on the heady path up to celestial nirvana, those glory 'never known better' years, was the exact opposite to its true nature. Anybody who has seen "Elmer GAntry" sell freedom to the free world and chastise those who represented the evil empire knew that Elmer, ultimate smooth talker, had a hidden agenda. Doing God's work against the devil would generate its own special rewards; to the carriers of the cross, not to the plebes...Thats what legends are made of and we always print the legend not the truth when we run the shooting match; until it comes back to bite you. Bitchez...truth is such a pain. It tolerates no special privileges to any regime and brings memory resurgence even to those who want to drown in the heady vapours of their own pure General Custer type legend.
Hindsight may be 20/20, but it never keeps the horse in the barn. A little foresight would have helped avoid this mess. A wise man knows the end of all things. We can conclude that there is no wisdom in the decision makers on Wall St. or in Washington, D. C. If there was, they couldn't claim ignorance of the consequences of their actions.
http://georgesblogforum.wordpress.com/2011/11/02/the-daily-climb-2/
All true but so what? This shit is how it's always been (we've known since chattering monkeys started using real language that the main goal of those in power is to stay in power) so what are you suggesting as an alternative?
that the next guy in the block doesn't rip out your guts and lets them hang on a line to dry in the sun. Not to you nor to you sons etc.
I Just bought some physical this morning at Scota Bank in Ottawa. They said they did not have much left but eventually rounded up 50 ounces. They also did want me to pull out $ 15,000 U.S. because they said they were short on American Currencty too. Is this the begining? I was polite but firm and I got both the cash and the gold but it was clear they would have preferred if I bought certificates.....
yep be your own banker. its the only way.......
http://www.ronpaul.com/2011-12-10/ron-paul-highlights-at-the-abc-news-yahoo-iowa-gop-debate/
paul knocked the cover off the ball last night..............
Agree, with this caveat: for every Lieberman, there's a McCain. For every Axelrod, there's an Obama. The Shabbatz Goyim are as evil as their Tribal masters. Worse, in fact: at least the Jews look after their own. The Shabbatz Goyim betray their own.
There is a big difference between a neocon whose father was an Admiral and whose total loyalty is to the military industrial complex and supporters of Israel. Sure, Israel has a large loyal following in the USA but so does Saudi Arabia through the oilmen. Blaming it on the Jews is the simple minded way to think about it and that is why they are used as escape goats time and time again. I would argue that most senior executives in the Finance business are not Jewish. I'm not saying that you shouldn't disagree with the USA foreign policy which obviously favors Isreal (which I for one don't). But, one must also consider how well it favors the oil Kingdoms (you know -- the ones who really hate us!) to balance that out. The ironic thing is that, the oil Kingdoms need an enemy to justify their existence. Israel and the USA play that role perfectly ... and don't think its not by design. Its been our policy with the House of Saud for decades and it is all about control of the oil and the petrol dollar.
We ALL! know that rampant corruption thru the leadership.. will destroy any honest or well intentioned effort to bring about stability! http://www.zerohedge.com/news/hank-paulson-tipped-goldman-led-plunge-protection-team-about-fannie-bankruptcy-7-weeks-advance
We ALL Know it's a Big Fucking Club and we ain't in it! http://www.youtube.com/watch?v=i5dBZDSSky0
We ALL Know why with ALL the Trillions handed out to Wall Street.. why NONE! of those monies have been invested into the infrastructure of America!
Our Country has been stolen.. and no one wants to lift a finger to stop it.. because living the lie may be a better quality of life.. it may be?
People would rather suffer in a known way.. than risk suffering or maybe gaining a better quality of life!
Lazy, Chickens have been bred out of the stock that settled this Country.. America has been Neutered Mentally! More Fluoride(s) and Political Correctness from the Talmud Crew Please!
Lets save the World while America drowns in stupidity!
Lets improve the quality of life around the World because of a perceived better return.. verse invest in ourselves for less of a perceived return!
Lets save the Children in Africa while Cities in America have a Higher Black Child Mortality Rates that Countries in Africa! http://www.wsws.org/articles/2008/oct2008/mort-o18.shtml / http://www.fairwarning.org/2011/10/baffling-experts-infant-mortality-stays-high-among-african-americans/
Saving the World and Speaking Politely to each other in America is NOT! going to better the Quality of Life for the Majority of Americans! Until Americans FORCE Government to put AMERICANS FIRST! We the People will continue to suffer.
The Banks have Bought the Federal Government..
The Jews have bought the Federal Government..
and because I point out the Facts.. if doesnt make me anything, regardless of the spin provided by the Talmud Crew!
WAKE! UP!!
pretty soon chabad will light the national menorah on the white house lawn..........enough said......
.http://www.youtube.com/watch?v=Oxs0BMwrSHo
here is an example of 2009.......
isn't that sweet......
One thing I don't like about this take on the bubble is the victim mentality. I mean, sure TPTB understood what they were doing, but it took millions of stupid, ignorant and/or greedy people for the scam to work. Those people deserve some of the blame. From the liberals who supported the CRA to both parties who supported the Graham-Leach-Bliley Act to everyone who just loves cheap 30 year mortgages from FNM, FRE and the FHA. Everyone wanted EZ money!
Countrywide and the other sub-prime shitty mortgage shops weren't subject to CRA.
Get a clue.
http://nybw.businessweek.com/investing/insights/blog/archives/2008/09/co...
GWB pulled every lever on the economic train to full throttle except of course for oil.
After all the peons are expendable. /s
Thank god GW's writing style improves. Finally, an essay that is managable in length with embedded references.
You left out the biggie, that it does not matter what regulations exist if they are not enforced.
True, dat ...
They still don't see it.
The Financial Crisis Was Entirely Foreseeable and carefully planned out a long time ago.
Andrew Mellon advised President Hoover that shock treatment is the only solution eight decades ago:
"Liquidate labor, liquidate stocks, liquidate the farmers, liquidate real estate....That will purge the rottenness out of the system. High costs of living and high living will come down. People will work harder, live a more moral life."
Amazing advice from the multi-millionaire who had been U.S. Treasury Secretary throughout the period leading up to the Wall Street Crash and the Great Depression and was largely responsible for it.
You'll notice Mellon didn't say liquidate the big banks or the big oil companies or the mafia cartels.
But even with all terrible poverty, misery and hopelessness afflicting tens of millions it is, of course, only one side of The Great Depression in America, the side we always hear about.
To a select handful of American families, the Great Depression is not a disaster at all but just another business opportunity. The Rockefellers, the Bushes, the Harrimans, the Duponts, the Mellons, the Morgans, the Carnegies, the Dulles brothers, the Dillons, the Warburgs and the rest of the ruling class and their most trusted and obedient minions still send their children to exclusive private schools. They still live in fabulous mansions, waited on hand and foot by armies of servants. They are still driven by their chauffeurs in spectacular automobiles. They still stay in extraordinarily expensive hotels. They still throw more away on an evening's diversion than many Americans earn through years of labor.
In others words, life goes on for them as it always has: at someone else's expense.
Not this time. The Ruling Class has been unable to disarm us. This time they will pay. And I don't mean in money.
I saw the credit bubble for what it was in 2003 and I don't have a phd in Economics. TPTB had to know what they were doing.
Good call. As we all know it is the vector of the call, and partially the timing. As long as you can be patient and sit back while the collapse takes place, you can make some $$.
If things totally collapse, what is to say that one's gains will not go "poof", such as the claw backs of wire transfers during the MF Global debacle?
That last can of Spam might have more value than a brief case full of Benny Bux if things REALLY go south.
*Update:
"but the worst news is that Rich Handler will demand a 1 year clawback from the departees, in the form of bonus refunds for both cash and stuck. While this has been isolated to Jefferies for the time being (which has other liquidity concerns of its own, most of which are quite well known), we are certain that now that this practice has a "case study" other banks, especially of the B-grade variety, will implement comparable clawback strategies."
Therefore, abso-f*****g-lutely NOTHING is safe. NOTHING.
You can't play when you see macro events because it is impossible to time. I stood on the RE sidelines and made nothing. I knew it was going to collapse but saw it go on much longer than I imagined. I am glad I didn't short it because I would have been way too early. So, like you said, better to stay in cash for years and years until the fundamentals kick back in so you can recognize a good buy.