Goldman's Jim O'Neill: "2008 All Over Again?"

Tyler Durden's picture

Remember when Jim O'Neill was openly taunting the "bears"? Yeah, those days are long gone. In his latest weekend letter the BRICster proceeds to do what so many have already been doing for weeks and months, namely compare the current precarious global economic situation to 2008: "Another ugly week passes, and it is still only August 20th. What a particularly brutal August this is turning out to be so far, even when compared to many challenging ones in recent and distant years. Although there are many substantive reasons why things are very different, many cannot resist the temptation to make comparisons with 2008. So, I thought I would discuss the comparison this weekend." And like a true Keynesian, O'Neill proceeds to do not just that but to provide his solution to all the world's problems: more G7 intervention. Because they keep getting it so right time after time after time...

2008 All Over Again?, by Jim O'Neill, Goldman Sachs

Another ugly week passes, and it is still only August 20th. What a particularly brutal August this is turning out to be so far, even when compared to many challenging ones in recent and distant years. Although there are many substantive reasons why things are very different, many cannot resist the temptation to make comparisons with 2008. So, I thought I would discuss the comparison this weekend.


After nearly recovering all of their previous week’s losses early this week, world equity markets crumbled from Wednesday onwards, with few signs of discrimination between countries. If anything, those markets with the greatest “global exposure” – such as Germany and Korea – saw the greatest weakness, which suggests concerns are now very much about a fresh major global slowdown and contagion from the weak economies to the stronger ones. The DAX has lost more than 20pct this month, turning an outperformer into an underperformer. It is also hard to decipher movements between so-called developed and emerging economies, with relative weakness spread across many. China has held up better than most, but given its earlier weakness, this could be argued is a bit clutching for straws.

The inability of equity markets to sustain their early attempts at recovering their steep losses since late July has many technicians suggesting that, not only is any bull market over, but this is the beginning of a fresh prolonged bear market. The move of the S&P below its 200-day moving average as well as the 50-day moving average now being below the 200-day moving average mark are cited by some as evidence of a major trend change.

On the bond markets, not withstanding the continued irony that one of the supposed causes of current economic angst is the sustainability of government finances, many markets reached levels not seen for decades in the earlier part of the week, with the UK, US and Germany sharing the continued role of safe havens. Interestingly, in the last two days, despite the renewed onset of equity weakness, these markets no longer rallied. Whether this is because the whole frenzied bond rally of the month to date was essentially short covering, or whether investors are starting to worry more seriously about the true credit worthiness of these governments is impossible to know. It might be neither. It could be that bond investors want to take a breather ahead of important possible policy initiatives, such as the Jackson Hole speech of Ben Bernanke this week. Or, it could simply be just a pause for some other reason.
On the foreign exchanges, the Yen continued to make new highs performing its rather odd role as a safe haven. It’s odd because Japanese government debt is more than double the Euro Area average and more than double the US, which in my view, makes it highly likely that there will be fresh FX intervention in Tokyo in coming days.

Interestingly, despite the “risk off” mentality, the Swiss Franc struggled to make renewed gains following efforts by the Swiss authorities to reverse at least some of its huge overvaluation. The Chinese Yuan reversed some of its previous strength, questioning many views that the authorities have recently deliberately adopted a stronger FX policy.

On commodity markets, not surprisingly, many experienced considerable weakness.

One clear continued winner from all the unfolding mess continues to be Gold. It almost seems in the minds of some that Gold is a winner either way, from the fears of a fresh 2008-like global recession or stronger monetary (and fiscal?) measures to avoid it.


Last weekend, I highlighted three important events coming up this past week. It was indeed those events that dominated the week.

The much anticipated Sarkozy-Merkel meeting came and went late Tuesday, with the apparent reality that they don’t want to offer any new quick fix to the immense challenges around European Monetary Union (EMU). I shall return to this below, but this was a major factor in renewed market weakness.

The meeting of the Swiss authorities Wednesday resulted in further aggressive actions by the SNB and kept open the notion that fresh dramatic policy measures might be used to weaken the Franc further, hence the inability of the Franc to play its usual “risk off” strengthening.

Thirdly, the much anticipated Philly Fed survey Thursday was beyond even the most depressed end of expectations, and its drop to -30.7 is consistent with an economy already in, or about to enter, recession. While the Philly Fed survey can be extremely volatile, it has also proven statistical qualities as a lead indicator. Many, probably including most at the Federal Reserve, had maintained a degree of belief that a modest 2 pct plus real GDP performance was likely in Q3 and Q4. And, until the Philly Fed release, the ongoing evidence was supportive of such views. Adding to these hopes were the release of better-than-expected Industrial Production and the continued gentle trending down in weekly job claims. But, the Philly Fed weakness raises the possibility of a darker path ahead. It is entirely possible that the weakness of the survey has been exaggerated by both the equity market weakness since late July, and also by the highly public and disappointing squabbling over the debt ceiling. But whether this is the case or not, it is also true that they survey might be accurate. As a result, it was no surprise to see the latest bout of US equity market weakness take hold after this release, as market participants priced in the risk of a further related sharp drop in the August manufacturing ISM survey to be released in early September. This now becomes a huge data release in the US.


As I said, it is difficult for us all to avoid 2008-2009 comparisons. So against the background of what happened last week, here are some of my reflections:

1.    At the time, as Chief Economist and Head of the Economics Department, we tried to focus even more closely on all the proprietary leading and coincident indicators we had developed over the years, as well as focusing on the policy options that were available. It would seem as though the same is pertinent now.

2.    In my view, the build up to the crisis of 2008-09 was different because, even though the apparent bursting of the credit bubble had already started in 2007 and gained momentum in 2008, none of us knew the consequences of major financial institutions failing. This included policymakers. In hindsight, we all have that – only too recent – experience to call on now.

3.    In the context of both of the above points, watching measures of financial stress as well as other reliable indicators is critical for following what’s happening.. These include the GS Financial Stress Index (GSI), the GS Financial Conditions Index (FCI), and the GS Global Lead Indicator (GLI), for example.

4.    So far, of the three, the GLI is pointing more darkly than the other two. Following the Philly Fed survey, the Advanced GLI for August shows a negative reading and suggests more global economic weakness ahead. Because of the speediness of the Fed’s response, US financial conditions have only tightened modestly this month, and as a result, OECD financial conditions have not tightened much at all. This suggests that, unless the power of an FCI has been completely broken, any economic weakness, including the degree warned by the GLI, will be temporary. The FSI has tightened notably in the past fortnight, but is nowhere close to what we witnessed in 2008.

5.    Many bears now say that the reason we managed to recover in 2009 is because there were many conventional monetary and fiscal options open to US, European and G20 policymakers. Now, they claim these are all exhausted.

6.    This is valid, but I am not in agreement. Many conventional monetary and fiscal tools were exhausted by 2008, but not all, and there are many policy initiatives still available. The Fed has already highlighted that they will do “more” and we will no doubt get a flavor of that from Ben Bernanke next week. The Swiss National Bank has demonstrated that it had further policy options this past week. The ECB has plenty of conventional policies it can offer, including reversing the two – arguably mistaken – interest rate hikes it undertook earlier this year.

7.    On the fiscal policy front, while the bond market vigilantes are demonstrating their power, the performance of non Euro Area troubled bond markets suggests that specific targeted fiscal initiatives may be supportable. In this regard, more targeted tax measures in some countries seem likely. In the US, steps to help hiring through payroll taxes seem possible. In the UK, a reversal of the top rate of income tax might be offered.

8.    The position of the so-called BRIC economies and markets. In 2008, the valuation of many equity markets, especially China and India, were much higher as we went into the market meltdown. This is not the case today, especially after the past fortnight, and especially for China. All markets are trading at quite modest undemanding multiples. As far as their economies are concerned, the biggest cyclical challenge facing most of the BRIC and other Growth Markets has been food- and energy-induced inflation. One of the few good aspects of the recent behavior of financial markets is that it virtually ensures that inflation is going to ease in many of these economies, and local policymakers will no longer have to tighten monetary policy. As I have written on many occasions, this decade, the combined additional GDP created by the eight Growth Market economies will be around $16 trillion, more than double that of the US and Europe put together. In this regard, I find myself thinking that the relative strength of the Growth Markets will be solidified even more because of recent events. This is a great opportunity for all those investors that have claimed they want to invest in them to do so.


Away from the specific policy measures adopted in 2008, we also saw some evidence of determined leadership, which was perhaps best represented by the emergence of the G20 in November 2008 and then its re-appearance in the Spring of 2009 and the collective determination to stand against recessionary forces.

Similar leadership is again necessary now. I would argue that this is especially true with respect to Europe. While I have misread the US cyclical developments since the Spring, I remain unruffled about the strength of China and the BRICs.    I have been concerned about the forces surrounding EMU throughout the past 15 months. It has been clear for months that markets no longer have confidence in its stability, and the vicious circle between sovereign debt and the European financial system has gotten much worse.

At the core of the European problem – which may be the only true global economic dilemma currently – is that the EMU as constructed doesn’t work. As I have written on endless occasions now this year, in hindsight, too many countries were allowed to join. There has been no mechanism for ensuring fiscal discipline; there has been no mechanism for encouraging productivity and competitiveness. The markets now realize this and are clearly scared about it. Many European policymakers appear to be in denial, although this doesn’t stop many from making lots of statements which isn’t helping.

Until a week ago, it was vaguely possible for German policymakers (as Germany was seen as the anchor for the region) to offer some kind of self righteous stance that all EMU member countries had to undertake policies to behave like Germany, and then the system would work just fine. Surely this past week must have laid this mistaken belief to rest? Two things happened of great importance. First, Q2 German GDP rose by just 0.1 pct, actually below the Euro Area average. Second, since August began, the German stock market has continued to fall by more than most. The DAX has gone from being an outperformer – a sort of developed market BRIC index if you will – to being a notable underperformer.

It is questionable whether or not the German economy is as weak as Q2 suggests, but the markets don’t think so. Moreover, not for the first time, the GDP breakdown suggests that there has not been any domestic consumption again. There cannot be a sustainable EMU if the biggest member never consumes, especially at a time when those that have consumed too much have to undertake significant corrective policies. This is now happening in Greece, Portugal, Spain and Italy. All countries in the world cannot export at the same time.

Despite their considerable complex internal political issues, German policymakers can’t afford to simply hope that the EMU problem will go away. It is going to require some stronger leadership, and something that Germany will support. It seems as though German (and at least in public, French) leadership is hoping for a fresh EU proposal for a new tougher fiscal mechanism to be announced in September, which then can be adopted by all member countries. This may be the foundation for a true common Euro-denominated bond, but without the tougher fiscal discipline, the Euro bond won’t happen, at least in the minds of many German leaders. Germany needs to start opining quickly as to what kind of EMU it wants and will support, rather than simply opining on the EMU that it won’t support.

Throughout my career, I have learnt that out of every crisis comes an opportunity. The same is true again now, but it requires leadership to bring the opportunity about. Worried by the lack of economic policy leadership, many market dislocations have occurred. If the leadership comes, the opportunities created by this crisis will be snapped up by investors.

In the meantime, luckily, we have plenty of football to watch this weekend.

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falak pema's picture

Oh the unprincipled poachers, their hands reeking with blood of innocents,  who now solemnly swear they be true game keepers... Oh, Zarathustra, thus you spoke.


slaughterer's picture

Taking into account the position where he speaks, I could have predicted the content and direction of this O'Neill report before it was posted here.   What is more, anyone who kept up-to-date with the market movements last week could have written it.  Tyler, put in a FLUFF meter, so we can all vote FLUFF for such articles in the future.  

dust to dust's picture

 Here, Here. I second the FLUFF meter. What would this post score? Minus something. I answered my own question.

WestVillageIdiot's picture

I usually have to go to work to take in that much bullshit about the current state of the economy.  Thank you very much, Mr. O'Neill.  I can take tomorrow off since you have satisfied my bullshit quota for the week. 

Oh regional Indian's picture

Falak, congratulations on the book:

I'll be getting mine. I've been wondering about Sidi.

On the topic at hand, of course it's 2008 all over again. Only amplified. it was discussed earlier somewhere: bridge busting sympathetic resonance. The first grain of sand slid on Obumber's birthday, ponder that for a bit. August 4th, what are the chances of that, eh?

Everything is still here, only in worse shape of course.

On the ground here in India, we are in the midst of a made for TV anti-curroption drive that has the nation hog-tied and be-dazzled in a let's get the fox to guard the hen-house exercise and the fundamentals are plummeting, costs soaring. The Indian IT iindustry is struggling, huge leading indicator of the health of the west, specifically Euro and Dollar and to an increasing (but lately plummeting) amount, the Yen.

India is being wound up for some sort of huge release at month's end, which is a loaded date all around it seems. Teh madness of crowds is being whipped up as I type. 24/7 TeeVee, SMS's flying, chest beating jingoism and sloganeering at full volume. Somethign wicked this way comes. 

So, if the tension I feel in the air here is any indicator, it is going to be a deafening rhyme.

Vivek (ORI)


WestVillageIdiot's picture

It sure does feel like 2008 again in many ways.  In one way it is different.  We have taken the interim of the past 3 years to strengthen our home balance sheet.  We knew that the fix was not permanent.  We made sure not to go on any buying sprees or to do anything too brazenly stupid.  Although we have spent more than we shoud, we didn't spend more than we make. 

I just wonder how many people pissed away the gift of the past 3 years.  My only wish is that this holds on a little longer.  We have our escape plan in place.  We just need time to implement it. 

falak pema's picture

These global Oligarchs are poker players who want to win back losses incurred in 2001/2008 and are prepared to hock country, and continent, all the bleeding world to win back in their mad 'won't lose' play. Pathetic, mad globalists.

Its every man for himself and that in itself is the death knell of civilzation. Won't end well. Who can fix it? 

falak pema's picture


Thanks your comments, always much appreciated, although we don't agree one hundred percent on all issues, which is normal.

BTW, Ori, I have been following this ground swell movement in India concerning this NEW Gandhi, who is running a crusade against corruption. Awesome guy! Hope it pays dividends. Indian bureaucracy and smug hypocrisy, apparently deep corruption,  is something that has to be witnessed to be fully understood, a bit like french bureaucratic uber-alles arrogance!

Look forward to hearing about your publication if/when it appears. As for my book its the first of a three novel saga, covering 1173-1300 period all the way from fall of Jerusalem to Marco pOlo's voyage.

To tell you the truth: the real satisfaction is in writing it. If it flies that's fine if it doesn't that's fine too. I enjoyed the wine when writing it!


Atomizer's picture

I have a sarcatic idea. Instead of spending billions on a high speed rail, we just buy fast cars

550i Autobahn


This will not go over with the 'serve and collect' union crew. Court municipalities revenues would back up quicker than Ben Bernanke plunging the toilet to justify QE3 . Court municipalities are going to send out there best to hoodwink sheep in believing crime is up and new budget bill needs to be passed. LOL



Captain Benny's picture

We do not need "leadership" at all, instead we need the civil and criminal laws to be followed and enforced.  No new programs or bailouts need be constructed or old systems tweaked, we just need the existing laws enforced.  Let the governments default, let the central banks fail, let the TBTF banks collapse in their death spiral.  All this preventing the otherwise inevitable outcome: hyper inflation.

It won't happen.  We know this.  No amount of "leadership" can solve the loss of confidence problem growing in western society.  The people are speaking with their asset allocations and they are saying that its time to let the system fail and let it fail hard.  The banking cartel is refusing to let the people's will be heard and are desperately fighting to stay alive.  They are the ones that control the currency and they are the ones that will hyper inflate in an attempt to save themselves.

The actions have already been set in motion.  We're just watching the slow drawn own process where only a few dominoes fall at a time... but each dominoe that falls can trigger two more and thus we see the acceleration.  Squared power "bitchez"!


PS: Sac/Tyler: Thanks for turning on the new moderation system again, really appreciate it.  Hope the new hardware works out!

Amish Hacker's picture

Yes, agreed that existing bankruptcy laws should be applied in this case, so that the TBTF banks could disappear in an orderly process. This would allow markets to arrive at true price discovery. But let's also apply the laws governing fraud and regulatory corruption. Major crimes were committed, brazenly, both before and after the housing crisis, yet no heads have rolled, no real reforms have been instituted. It's not just the balance sheets of the TBTF banks that have to be reset, it's our whole system of values and our collective sense of fairness.

Calls for "leadership" at this point are just an attempt to caste the role of Patsy, an open invitation for someone to take the blame for the global crisis, from the criminals who caused it. 

WestVillageIdiot's picture

At the heart of the mess of the 2011 mess is that term "too big to fail".  WTF?  For all the money printed up by The Fed in the past 3 years there is no reason to believe that they couldn't have shuttered every financial institution in the country.  Send the managers to prison.  Get the assets in solid hands.  Move on with the economy.

Too big to fail is as much bullshit as The War on Terror. 

tom a taxpayer's picture


Captain Benny and Amish Hacker and WVI - +1,000

"We do not need "leadership" at all, instead we need the civil and criminal laws to be followed and enforced." 

Because of the huge backlog of cases as well as the RICO violations in many cases, the prosecution and the courtroom should be modified to process the mass trials in style of the Maxiprocesso (Maxi Trials) of the Mafia in Sicily during the 1980s that resulted in hundreds of defendants convicted.

We need balls-to-the-walls prosecutions of Credit Rating Agencies, Countrywide, the mortgage industry, the appraisers,Freddie and Fannie, Citi and the big banksters, Goldman Sachs and other Wall Street banks, AIG, and federal co-conspirators at U.S. Treasury, SEC, OTS, Federal Reserve, especially FRBNY, and those members of Congress who aided and abetted the greatest financial crimes in U.S. history.

Justice demands long-overdue prosecutions of Countrywide, the ratings agencies, Goldman Sachs, Wall Street con artists and every one in between in these overlapping RICO criminal enterprises. We need 20 years-to-life hard time prison sentences for the hundreds convicted. We need RICO confiscations of the hundreds of billions in illegal "profits" from the criminal enterprises of the banks, mortgage industry, and Wall Street Mafia.

 The prosecutor who leads the charge will become a national hero. 

The rape  and pillage of pension funds, municipalities, widows, orphans, and taxpayers will not be checked, slowed down, or restrained unless there is Shock and Awe prosecution of the ringleaders and all their top capos. Right now the Too Big To Fail criminals think they are also Too Big To Jail. With the gross dereliction of State and Federal Attorney Generals failure to prosecute the ringleaders, is it any wonder that criminal activity is rampant on Wall Street and in Congress and the Federal government? 


golfrattt's picture

Christ, he could've condensed all that blathering to 3 paragraphs and gotten his point across...

WestVillageIdiot's picture

He could have consolidated it into one sentence.  "I am a piece of shit Goldman Sachs shill that will lie at will to try to get more fucking money for my masters."  That is a lot simpler and easy to understand.

vast-dom's picture

Jim you are a piece of shit. Your agenda is blatent and your report reeks of QE3 beggary. 

Go watch some football and get drunk on beer you fucking loser! Tomorrow is a fresh start to the same ol' same ol' until the motherfucker drops from under you and you get sucked into a giant smoldering crater.


slaughterer's picture

Do not diss Jim, the human being.  He is an eternal source of buckets of foie gras and properly aged Sauternes (i.e. Yquem).   Such commodities come in handy for some us from time to time. 

King_of_simpletons's picture

Stating the obvious, eh ? after the whole world knows it.

Gosh, I get the urge to hurl feces on these prophetic seers. 

MsCreant's picture

Semiotic reading of subtext:

I can haz bailout now pleeze? Not that I needz it, I'd takez it just so others who really needz it could get one and not lookz baaaad.

Deeper subtext:

I can haz bonus now pleeze?

Bring the Gold's picture

You, MsCreant, can haz lol now!

Instant Karma's picture

Didn't learn anything. Mohammad from PIMCO has a much richer and insightful piece I read earlier today. Basically, you have insolvent undercapitalized European banks holding debt of insolvent countries. One hell of a mess, bigger it seems than 2008s toxic debt problem. To fix this the EU will have to be reshaped and European banks nationalized. And throw in problems with Canada's banks as Tyler noted this week.

disabledvet's picture

Is this Muhammed "short treasuries now" El-erian? Or is it El Aryan? Hmmm. "Muahammed the Aryan speaks." Sounds like we've arrived at the cross purposes phase now. Throw in a hard core case of Pretzel Logic and we could be in for some serious too-ing and fro-ing. Like saying "don't worry boyz it's all uphill from here!" as our new found optimism.

WestVillageIdiot's picture

Instant Karma, do you think it is a time when the Euro will finally go down?  How the hell is it still at $1.44?  That just seems incredible to me when it seems their banking industry makes ours look like a child's toy.  And then you have the Swiss.  I remember seeing that their banking industry had assets that were 2,300% of their GDP.  How does that not blow up? 

Everybodys All American's picture

QE3 = Tax payer bailout for stupid investments.

jplotinus's picture

My candidate for the next tipping point-worthy Black Swan is the announcement, when it comes, of the outcome of the AG negotiations with the TBTF banks over mortgage fraud.

There is no viable solution to that problem. If the outcome falls too heavily against the banks, the financial system will implode. If, as is likely, the outcome is too lenient, allowing banks to have gotten away with massive fraud, the public's reaction may be severe. Too many people are threatened with foreclosure and too many people have invested in strategic default to allow a whitewash of bankster fraud to go unpunished.

Therefore, upheaval is on the cards, one way or another, as a result of mortgage fraud.


snowball777's picture

"the public's reaction may be severe"

What're they gonna do? Double "not pay"?!

Captain Benny's picture

No need for "newspeak" here.  Yes they're going to double-not pay by #1) Not paying taxes #2) Collecting benefits they never paid for to begin with.


So yes in "newspeak" that is "double not pay"

Sudden Debt's picture

All I know is that it will take at least 2 weeks before QE3 would be announced. If any.

Like the FED said: the FED doesn't care about the stockmarket. That's what they said a week ago and that means they'll let it crash.

And what they also want is the numbers of banks to go down. Mergers first, QE3 later.


WestVillageIdiot's picture

Allowing the whales to gobble up the plankton sure seems like the plan.  There will be about 6 banks left when this is all done. 

We will all be working on Jamie's Farm. 

DosZap's picture

SD @ 15:04,

The Fed doesn't care about the Market?.

C'mon  Bro.............they MUST keep it up, so they can continue to MILK US.

ISEEIT's picture

You rock Tyler.

oogs66's picture

so he only now gets that it is like 2008?  and of course, we need "policy" to save him? 

snowball777's picture

Even in abject defeat this imbecile is in complete denial. I nearly lost my coffee on him bringing up the SNB for fuck's sake.

Comedy gold, as always, Jimbo.

Caviar Emptor's picture

Every single comparison to past crises turned out to be wrong. Because each time things are different enough that there's a big surprise: "It's 1929! It's 1937! Jerk, it's 1980 all over again with a touch of 2002 and a smattering of 1974". 

MsCreant's picture

By 268 there was only five tenths percent silver in the denarius.

Fun fact from the Fall of the Roman Empire by Edward Gibbon.

WonderDawg's picture

I'm reading that book right now, just barely into it, but already the parallels to today are glaring.

Irish66's picture

We are the pages of history to be written. Here and now.

Caviar Emptor's picture

Many conventional monetary and fiscal tools were exhausted by 2008, but not all, and there are many policy initiatives still available. 

Translated: Fed will ride to the rescue, ad infinitum.

And this time they have stealth helicopters, they're way ahead of you. 

virgilcaine's picture

It,s a whole lot worse than 08, more levarege and a spreading default risk to Countries.

WestVillageIdiot's picture

Which is worse, a financial crisis or a monetary / sovereign crisis? 

Hmmmmm.  I think the financial "crisis" of 2008 will be child's play compared to this shit. 

MsCreant's picture

Tin hat alert:

I wonder if they studied the hell out of that (2008, the controlled demolition and the save) and they think they can do it bigger and better and still live through it AND get their quantitative sleazing somehow?

Who protested, what happened, what were they able to cover up that no one ever found out about?

See what I am saying here?

BeerGoggles's picture

So, this is a buy signal?

There are only people selling fear at the moment, decent traders are buying the lows.

WonderDawg's picture

Decent traders are waiting for the lows, you mean.

Ying-Yang's picture

(sarc)-Obamarama will announce his jobs solution Friday. Weeeeeeeeeeeeeeeeeeee

JEHR's picture

Instead of reading this drivel, read the two reports that tell what Goldman Sachs did to create the financial crisis--the FCIC report and the Levin/Coburn report.  There is one thing that Goldman Sachs execs are really masters at:  compartmentalizing everything that they do.  What a fantasy world they have created for themselves!!!


global's picture

Why is it that "bulls" continually talk about what can be done to get us through the next month/year/decade...until the next crisis hits?  Are they so myopic that they never contemplate if the economic trajectory they would like to put us on to solve the latest speedbump is actually sustainable and/or beneficial in the long run?

Does the concept of "too much debt" never enter their mind?  Or is it because they lack a certain part of critical thought that allows one to step outside model assumptions and question the whole system?

At least that is what I hope is their problem.  The alternative is that they know current asset valuations which give the financial elite the right to rule the world are false and premised on an ever growing pile of debt to be paid off by future generations, and simply choose to inflate in a huge way to maintain their privilaged perch while decimating the purchasing power of the poor who spend an ever larger part of their income just living hand to mouth.  That would be really sickening...and only really solvable by force.  FML...I'm a lover not a fighter

All that is necessary for evil to triumph is for good men to do nothing...except buy gold and wait.

disabledvet's picture

A s a bull here's what i would have said: "we've actually been in a recession for the past nine months...bit it looks like we're coming oit of it!"

zorba THE GREEK's picture

The European banks are on the verge of collapse and their leaders are arguing about how to rearrange the deck chairs.

Bernanke to the rescue or world financial collapse. Is it just me, or does the European crisis appear to be a Monty Python skit?

HyperLazy's picture

More akin to any given manic episode of "Fawlty Towers"...

kahunabear's picture

Does anyone have more faith in paper currencies now than in 2008? The stewards of confidence have failed and everything this idiot and TPTB propose just makes it worse. We won't be fooled again!