• Steve H. Hanke
    05/04/2016 - 08:00
    Authored by Steve H. Hanke of The Johns Hopkins University. Follow him on Twitter @Steve_Hanke. A few weeks ago, the Monetary Authority of Singapore (MAS) sprang a surprise. It announced that a...

Guest Post: Waiting For Lehman

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Tue, 10/25/2011 - 12:47 | 1808782 Taint Boil
Taint Boil's picture

I got a feeling the "deer in the head lights" pic is coming soon

Tue, 10/25/2011 - 12:51 | 1808812 slaughterer
slaughterer's picture

The author is forgetting how tremendously profitable the "Lehmann event 2008" was for some in the market.  When IB and HF trading desks need a boost (as in now), the market will produce its next Lehmann.

Tue, 10/25/2011 - 12:56 | 1808843 spiral_eyes
spiral_eyes's picture

Yawn.

The coming "Lehman" event will be a loss of confidence in US Treasury debt causing the biggest bubble in history to end in the biggest crash in history. I don't know what events will lead up to this, but I know its coming.

http://azizonomics.com/2011/10/23/gold-in-2012-the-coming-bond-crash/

Tue, 10/25/2011 - 13:07 | 1808927 Ahmeexnal
Ahmeexnal's picture

Wrong.

The biggest bubble is the population bubble.

 

http://www.marketwatch.com/story/an-apocalyptic-end-to-worlds-biggest-bu...

Tue, 10/25/2011 - 13:25 | 1808972 spiral_eyes
spiral_eyes's picture

Oh yes — of course — and we need a global government to carry out mass forced sterilizations, forcibly reduce the population, keep the lower classes servile (some guy with a tinfoil hat said fluoride helps), and clear savage humans out of vast swathes of the planet (re-wilding).

Sound familiar? 

Don't spew that Al Gore, Maurice Strong, George Monbiot bullshit please. The world can support vastly more people with the right infrastructure (food, energy, water, manufacturing). If we get a massive population crash, I blame bad central planning and resource/capital misallocation (war spending, crony capitalism, etc)

Tue, 10/25/2011 - 13:52 | 1809129 Fate
Fate's picture

Your grandchildren will appreciate your sentiments as they sit down to their 1,000th meal of tree bark soup.

Tue, 10/25/2011 - 14:03 | 1809189 spiral_eyes
spiral_eyes's picture

Malthusianism (via Ehrlich) has made precisely how many correct predictions about human history? Zero. 

Whereas those who have believed human ingenuity can win out have been consistently right.

Obviously humans are drastically changing our environment. What most environmentalists forget is that humanity is not separate from nature, but a product of nature, of billions of years of evolution. Earth has been through giant extinctions before, and if humanity is nature's change agent then so-be-it. But 'til I see real hard evidence of a coming population crash — not just the warblings of peak oil devotees — I will believe that humanity will continue to successfully bend Earth to its desires. 

Tue, 10/25/2011 - 14:10 | 1809220 malikai
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On a long enough timeframe...

Tue, 10/25/2011 - 14:41 | 1809361 Fate
Fate's picture

Human ingenuity has so far failed the bulk of the current human population.  Ask, say, India.  Populations crashes have occurred since the beginning of civilization.  Ever heard of Easter Island?  The Maya?   

So "humanity is not separate from nature," yet "humanity will continue to successfully bend Earth to its desires."  This is called magical thinking -- in your case, tinged with Western uber-optimism and Judeo-Christian man-vs-nature traditionalism. 

Time to venture outside the box.

 

Tue, 10/25/2011 - 15:44 | 1809634 spiral_eyes
spiral_eyes's picture

Human ingenuity is the reason why the bulk of the current human population today is alive. Antibiotics, the germ theory of disease, the green/oil revolution, etc.

Humanity is a part of nature. One part of an organism (Gaia, as Lovelock thought it) can domineer the other parts. That should be completely obvious. 

The biggest "box" is the box that says resources on Earth necessarily set an upper-bound to population close to current population. Malthus did the exact same thing when the population is less than a tenth of what it is today. 

Populationists need to consider that their "THE POPULATION IS TOO HIGH" response/delusion may in fact be an evolutionary impulse. Humans may naturally want to reduce global population to open the ecosystem for their own descendants carrying their genetic material. 

Wed, 10/26/2011 - 08:22 | 1811750 BigJim
BigJim's picture

I have noticed that people calling for a reduction in the numbers of humanity rarely offer up their own families for culling.

Tue, 10/25/2011 - 21:39 | 1810748 vic and blood
vic and blood's picture

Well said, Fate.

Tue, 10/25/2011 - 15:18 | 1809494 centerline
centerline's picture

You already answered your own question in a way.  It is social complexity.  Maximum social complexity that is, based on our current ability to exist together in our current, collective state of instinct / intellect.

Happened before on smaller scales and with lesser complexity.

Tue, 10/25/2011 - 18:16 | 1810194 steve from virginia
steve from virginia's picture

 

Malthus only has to be right once ...

Tue, 10/25/2011 - 21:59 | 1810737 Element
Element's picture

Steve, you're smarter than that (usually). The fossil record shows very clearly that you don't need to be a Malthusian to know that ALL animals go extinct, at some point.

Just like on a long enough timeline ... we all kark.

For every birth there is a corresponding death, that's what life does, and life apparently likes it when organisms over bred and go extinct.

At these population levels, we are all along for the ride.

The very suggestion that we can change the outcome is delusional at this point. Malthusian sentiment shits me mostly because they always wag their finger, and say, "Time is running out", as if we could change the trajectory much.

Sorry, all that green policy options crap is a drop in the ocean.

We are along for the ride, always have been, so making the most of the oportunities seems the most sensible approach, rather than ideologically retarding what our biology is set to do, to breed and develop this world to our NET benefit. The tamed and domesticated agricultural English landscape looks pretty good to me, and it seems to me they managed that transition pretty well.

That is what we are doing to the rest of the planet, and it will continue, and millions of obscure critters, that no one knows or cares about, will go extinct. Some people need to come to terms with that totally natural process. The self-appointed eco-warriors and dip-shit University experts are ever inclined to treat us as an ignorant and dangerous introduced pest, rather than the dominant planetary predatory omnivore that we clearly are, and which the environment itself created, as the greatest part of its natural process.

 

I'm not going to act all sorry for being here, or for doing what humans do.

Tue, 10/25/2011 - 22:06 | 1810688 Element
Element's picture

What most environmentalists forget is that humanity is not separate from nature, but a product of nature, of billions of years of evolution.

 

Totally agree, humans and our tech culture development is 100% natural. We use natural materials, brain power and intellect, and observed physical properties, and lever natural forces/energy to survive and thrive.

We're damned good at it, way ahead of every other organism, and millions of people worked hard for millenia to win this state of ease.

We are the greatest anything this planet ever produced.

We need conserving ... those smarmy greenie turds tried for years to make us all feel 'artificial' and 'foreign' on our very own world! ... to alienate us, and make us feel like we must be locked out of the natural world, via making state(ist) parks that you needed a permit to enter, because a dirty human might degrade its pristine Giah sacredness.

Well fuck all that.

This is my home. Humans are optimised to live on THIS planet and nowhere else, because we actually belong here.

We in fact earned the right to exist and breed and thrive. And I don't know about you, but the manicured English meadow and a Tropical fruit orchard in Australia looks a whole lot more inviting to me than anything 'green' and 'eco-ish' that existed there prior.

Show me an ecologically crucial fruit bat that can put a Hubble telescope in space and observe a gravitational lens, then maybe I'll take seriously the idea that they should be conserved at all costs.

And if we breed-up and mismanage we will pay for it, and adjust, ... and so will everything else because this is our place, and we aren't going away. And if the other parts can't adjust then they have not earned the right to exist.

C'est la vie ... we don't make the rules ... the greenies can go to Mars and freeze and starve and hypoxiate, if they feel so strongly about humans not being100% a vital and natural part of this 'environment', and this 'ecology'. 

They can play in that intellectual swamp of ecology all they want, and brey like phoney-asses, because the basic facts of what we are, and where we belong, and the basic trajectory we are on, won't alter.

Tue, 10/25/2011 - 13:19 | 1808973 redpill
redpill's picture

Wrong.

The biggest bubble is the bubble in bubbles!

Eventually everything will be a bubble, you see.  When that happens we have a bubble bubble, and when THAT bubble pops....  Oh mama!

Tue, 10/25/2011 - 13:54 | 1809134 gwar5
gwar5's picture

I read that piece, interesting article. Population is something to think about, but the author (Farrel) is a lefty establishment shill, and he gives credit for his inspiration for that article from another confirmed NWO type shill.

Rather than admit socialism has failed and once again been thoroughly discredited, they hide behind Neo-Malthusianism. What they are really saying (absurdly) is that Socialism would still work if they could just find a way to get rid of all those bread-eating poor people so they don't have to share.

 

 

 

 

 

 


 

 

Tue, 10/25/2011 - 14:04 | 1809195 Hot Apple Pie
Hot Apple Pie's picture

would still work if they could just find a way to get rid of all those bread-eating poor people so they don't have to share.

I thought that was the official platform of the Libertarian Party?

Tue, 10/25/2011 - 13:22 | 1808996 gwar5
gwar5's picture

That's the mother of all bubbles and agree with you. USD WRC goes down, sooner than later. As the smaller bubbles pop along the road to perdition they will be monetized into the Greek-like giant UST bond bubble. Will just take a little Bernanke prick to pop it. No pun intended.

Beware bankers using fear and uncerainty around elections to do mischief like last time.

 

Tue, 10/25/2011 - 12:56 | 1808845 LongSoupLine
LongSoupLine's picture

I got a feeling the "deer in the head lights" pic is coming soon

 

and/or Donkey Kong...

Tue, 10/25/2011 - 13:34 | 1809011 redpill
redpill's picture

 

Gonzolo is thinking too small, too financial.

The next Lehman event is something much more fundamental.  It is going to be something truly disruptive and paralyze everyone.

In my opinion that event is going to be the fall of a major western government, probably in Europe.  And I don't mean voted out of office, I mean complete revolution.  It will spawn chaos the likes of which has not been seen the modern political era.  Sympathetic movements will spring up around the western world, and liberty will hang in the balance, a gun to her head.  The free world, for the first time in many generations, will stop and fundamentally question her way.  Suddenly "free democratic" governments will be more concerned about suppressing internal violence than stabilizing banks or global financial markets, and things will get very ugly.

Prepare accordingly.

 

Tue, 10/25/2011 - 13:58 | 1809163 3x2
3x2's picture

More to the point, the above piece would be classed as optomism. That alone should set off alarms everywhere.

 

The only problem I have with it [the piece] is that it doesn't examine the possibility that there comes a point where we run out of "carbon rods" and the reaction gets out of control.

Tue, 10/25/2011 - 14:05 | 1809197 spiral_eyes
spiral_eyes's picture

Gonzalo's pieces shows an uncharacteristic optimism that central planning can realise its goals. In this instance (and most instances) it just begets a load of unintended consequences.

They'll keep bailing out everything 'til they hit a black swan, and the system will quickly degenerate into "too fucked to bail".

Tue, 10/25/2011 - 14:36 | 1809337 3x2
3x2's picture

Central planning - well it worked so well in the USSR didn't it?  The problem I see is that, post running out of carbon rods, we won't see a new era of market driven "capitalism" we will see a new era of 5 year plans and your loot being taken by the collective. Watch for the UN jumping in with their "we have the answer to your nightmare" speech. At that point your wealth is gone - ya just haven't seen it yet.

 

Tue, 10/25/2011 - 14:44 | 1809369 Nothing To See Here
Nothing To See Here's picture

Perhaps it's too "optimistic" of him to believe that the central planners can realize their goals, but he may have a point in the idea that they can make it last longer than we think or can afford. The USSR lasted 80 years, and I am in no mood to live 80 years of this Merkozy show.

Tue, 10/25/2011 - 15:28 | 1809537 3x2
3x2's picture

The assumption tends to be that someone, somewhere, knowns what they are doing. That they have a plan that doesn't involve running around like headless chickens until the blood runs out.

 

Tue, 10/25/2011 - 14:45 | 1809373 duo
duo's picture

The WWI analogy was spot on.  How does he think a crisis can be contained when all the kings and prime ministers of Europe couldn't stop the mobilizations and declarations of war in July/August 1914.  The alliances of 1914 are the CDOs and derivatives of today.  An orderly unwind is impossible.

Tue, 10/25/2011 - 18:30 | 1810234 steve from virginia
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The governments in Europe in the summer of 1914 didn't want to stop war. They all wanted war, they all thought they would win before Christmas, because they had better technology (they thought) than the other countries.

Each European country believed it had the answer or rather, its own particular answer. Britain had its dreadnaughts, France had its 'elan', Germany had its artillery and the Russians, their rapid mobilization. It turned out that all the countries had the exact same advantages but nobody could figure this out for themselves in advance.

WWI had very little strategy involved, it was the first machine v. human war,  and the clear winner was the machine. All the pre-machine institutions were thrown over as failures. The consequences we are all living with now, supremacy of the machines.

Sir Edward Grey remarked before the hostilities began: ""The lights are going out all over Europe: we shall not see them lit again in our lifetime." He was wrong, the lights have never been lit we are monsters groping along in the darkness ...

Tue, 10/25/2011 - 13:59 | 1809166 buyingsterling
buyingsterling's picture

If he's right about them doing anything to forestall a crash, they'll start passing out freshly printed cash to the population before they allow a real revolution.

Tue, 10/25/2011 - 14:07 | 1809203 redpill
redpill's picture

That's been tried before.  Doesn't end well.

Tue, 10/25/2011 - 14:12 | 1809233 3x2
3x2's picture

Ahh ... I just love the smell of freshly minted cash in the morning. The only answer on the financial battlefield. Of course each new munition devalues the rest.

 

Tue, 10/25/2011 - 14:14 | 1809236 3x2
3x2's picture

Ahhrrg ... double click

Tue, 10/25/2011 - 14:25 | 1809290 mind_imminst
mind_imminst's picture

BINGO! You nailed it. The longer this goes on the more they (central bankers) will print. They WILL hand out money to people on the street before they allow any defaults or systemic economic tremors.

Tue, 10/25/2011 - 16:59 | 1809972 3x2
3x2's picture

Dangerous game printing excess money. The debts disappear quickly enough but pot noodles are $150 a pop and nobody trusts you next time around.

 

Tue, 10/25/2011 - 15:24 | 1809514 Bwahaha WAGFDSMB
Bwahaha WAGFDSMB's picture

Food stamps for everyone.

Tue, 10/25/2011 - 14:46 | 1809365 FinHits
FinHits's picture

Japan-style zombies slugging along in a deflationary world. Goverment policies being QE-money printing and 0.25% interest rate along the whole curve. The competitive edge is supposed to be stagflating slow-motion FX-race to the infinite bottom.

Sounds like a water torture or an over-ambitious French art house movie.

Tue, 10/25/2011 - 12:59 | 1808860 zeroman
zeroman's picture

Tyler;

 

This has been my point for some time.  When the rules of the game can be continually changed to assure that one never loses (but also never wins), the charade can never end. FASB 157 was the biggest. Now, we have mortgages that are underwater to tremendous degree which will be able to refi. Next, will be who knows what.  

Europe will cause great dips for buying opportunities along the way.  One thing is certain. Assets and commodiites will rise in price over time as well as physical assets like land and yes houses too. We are seeing prices actually rise in south florida.

A lehman event has to be unfornseen for it to become a lehman event.  No one would have expected that allowing lehman to fail would have caused the chain of events that did occur; at least those in charge believed it wouldn't.  So, the same will be true in the future. There will have to be a miscalculation of some kind.  With paranoia running at high levels, nothing will be taken for granted for a while.

Tue, 10/25/2011 - 13:14 | 1808953 NEOSERF
NEOSERF's picture

And mine as well, it has been clear for some time that there are now no rules for any country...the Paulson sky is falling meeting set a new standard in allowing leaders to circumvent the law in the name of saving humanity.  They will not allow any bankruptcy (ala Dexia) without immediately jumping in with statements about backstops being in place.  This all works until the German people (yes them again) rise up and rebel against the fact that their hard earned taxdollars are going to go endlessly into worthless and non-collateral backed enterprises in the name of saving profligage cousins...this is where it ends I think..with the people.  I would also say that if Europe falters in being able to backstop, that like WWII, the US eventually jumps in and backstops for them and then sells it to us once again as "saving the world"...it will end up being a forestalling event because the credit rating agencies will quickly mark everyone down and ongoing austerity will kill any growth and we will find ourselves in the same spot 6 months later...the event will be unforseen and will seem like all the other headlines until traders grasp that they FINALLY will be seeing losses, and the avalanche will begin..

Tue, 10/25/2011 - 12:59 | 1808867 AbelCatalyst
AbelCatalyst's picture

I have not heard much about the Swiss currency peg / buying boatloads of Euro's.  I wonder how long they can continue to peg their currency by buying EUOs?  If Germany was to return to the Mark (which is reasonably possible) then the Swiss will crash and burn.  Can you imagine how many Euro's they've stockpiled to hold the EUO at this level? My guess is fairly soon either the Swiss or the Germans will throw in the towel and all hell will break loose...  I can't imagine it would take too much longer, but I've been amazed it has gone on this long!  

Tue, 10/25/2011 - 13:57 | 1809126 Ghordius
Ghordius's picture

there is a lot of wishful thinking about a breakout of the EUR

ok, let's discuss this incredibly unlikely event - what would happen?

the way the peoples of the EuroZone understand it, every bloody 100 Euro note/account/liability consists in x% of x currency at the rate at begin of the currency union - like every EUR has a bit of every currency in it - nothing that banks could not handle, thanks to the mighty computer system they have

now, I understand there are many countries where this scenario would get mother screaming fits - but again, we are discussing the EuroZone, which seems for many here to be further away than the moon

the Swiss seem that after a couple of hundred billions EUR more convinced everybody that the CHF is not "to be used as a safe haven by too much money" - and I have talked with some Swiss entrepreneurs who tell me that their accounting systems and reporting is anyway now on both CHF and EUR basis, and in most cases they are fully hedged

you are amazed how long this EuroCabaret is going on? they want to drag it to 2013!

now, what would you think if the governor of California or the PM of Scotland would now in earnest talk about having a separate currency? So that they can have a comparative advantage and handle their debt better?

Tue, 10/25/2011 - 13:07 | 1808926 doomz78
doomz78's picture

So to sum up the article.:  They will not let banks fail, they will print money to bail them out which is bad for the average 99% but good for some of us who invest in Gold, Silver, Oil, Agriculture. 

Tue, 10/25/2011 - 12:47 | 1808783 thetruth
thetruth's picture

I vote fart

Tue, 10/25/2011 - 12:54 | 1808827 idea_hamster
idea_hamster's picture

That'd be o'siriq in Uzbek -- just so you know when you hear it.

Tue, 10/25/2011 - 12:47 | 1808786 rocker
rocker's picture

So Many Options

Tue, 10/25/2011 - 12:48 | 1808791 Libertarians fo...
Libertarians for Prosperity's picture

 

 

I've said it repeatedly.  It never happens when everyone is waiting for it. 

 

Tue, 10/25/2011 - 13:04 | 1808903 HD
HD's picture

You know nothing - the McRib has returned!

Tue, 10/25/2011 - 13:09 | 1808936 jdelano
jdelano's picture

Just had one.   mmm.  McRib.

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