[Update Tuesday 930am, Bail-out rejected Wall Street Crashes 750 points]
Pat yourself on the back. You've just become a historical footnote.
Are you feeling "financially distressed"? Well, if not you should be. You should be either "distressed" or "panicked". Distress is what you feel after a speculative bubble implodes but panic is what you experience when what you though was the bottom turns out to be a ledge over a chasm. I'm reluctant to look down.
Neville Bennett of the National Business Review has done us the kind service of comparing financial "panics". Yes, it's a "panic". Of all panics from 1847 to 1929, Bennett asserts that 2008 is most similar to 1929 because of the relentless train of morbid news and annihilation of landmark institutions such as Lehman Brothers and Merrill Lynch.
In other words, recollect yourself and prepare dusty anecdotes for future grandchildren, you've just passed through the most volatile week (Monday 22) of the most turbulent year since 1929.
This week is the week after the week before and there's no guarantee of a solution.
The proposed $700billion intervention, called a bail-out by some, a buy-in by others, is the biggest US Government action since the Depression. It goes to Congress vote on Monday. There are rumours fizzing around on the details and some are addressed at this link "Myth vs Fact". [Update 940pm, here is the 110pg discussion draft]
I don't know what to think, it's bewildering, more so if you also recall the baby-boomers are coming up to retirement age en masse and we, their children, are meant to be creating wealth at a level to sustain their long-assumed retirement incomes. This time around our "depression" will be on Facebook.
Familiarise yourself with past panics, crashes, and financial imbroglios:
Panic of 1873.
Panic of 1893.
Panic of 1907.
Crash of 1929.
Now might be a good time to look your finances in the eye and reorganise.
Pat yourself on the back. You've just become a historical footnote.
Are you feeling "financially distressed"? Well, if not you should be. You should be either "distressed" or "panicked". Distress is what you feel after a speculative bubble implodes but panic is what you experience when what you though was the bottom turns out to be a ledge over a chasm. I'm reluctant to look down.
Neville Bennett of the National Business Review has done us the kind service of comparing financial "panics". Yes, it's a "panic". Of all panics from 1847 to 1929, Bennett asserts that 2008 is most similar to 1929 because of the relentless train of morbid news and annihilation of landmark institutions such as Lehman Brothers and Merrill Lynch.
In other words, recollect yourself and prepare dusty anecdotes for future grandchildren, you've just passed through the most volatile week (Monday 22) of the most turbulent year since 1929.
This week is the week after the week before and there's no guarantee of a solution.
The proposed $700billion intervention, called a bail-out by some, a buy-in by others, is the biggest US Government action since the Depression. It goes to Congress vote on Monday. There are rumours fizzing around on the details and some are addressed at this link "Myth vs Fact". [Update 940pm, here is the 110pg discussion draft]
I don't know what to think, it's bewildering, more so if you also recall the baby-boomers are coming up to retirement age en masse and we, their children, are meant to be creating wealth at a level to sustain their long-assumed retirement incomes. This time around our "depression" will be on Facebook.
Familiarise yourself with past panics, crashes, and financial imbroglios:
Panic of 1873.
Panic of 1893.
Panic of 1907.
Crash of 1929.
Now might be a good time to look your finances in the eye and reorganise.
Austrian Economics has predicted exactly what has happened ever since the entire world moved to fiat currency.
ReplyDeleteThe Mises Institute has compiled a list of articles detailing all aspects of the situation.
Also:
ReplyDelete"Myth: The taxpayer is not adequately protected" and "Myth: The taxpayer does not benefit from Treasury bailouts" are not myths.
This bailout is going to cause massive inflation and is not going to solve the problem. Inflation hurts those on low and fixed incomes the worst, i.e. most of the population.
The bailouts are buying illiquid assets, i.e. bad mortgages. They're illiquid because no one will buy them and therefore not worth anything. There is not going to be any profit from this, only disaster.
The problem has been that the Federal Reserve (and all Reserve Banks world-wide) have been able to inflate the currency with impunity. The only way to maintain the system functioning there has to be more and more inflation, with increasingly loose lending policy in order to expand lending. Eventually they get down to the people who can't even service their loans. In this case they used the housing bubble in order to rationalise these bad loans, with the false faith that housing prices will always increase and therefore cover the loan and interest if things went bad. The housing bubble burst and the house of cards is tumbling down. Pumping cash into this disaster is only going to delay the inevitable, while making the problem worse by perpetuating the practices that got us all here.
We are going to all suffer badly no matter what. Government intervention in the market can lengthen the pain though.
Thanks for that list of articles. I always enjoy the strict course of Austrian School. Hands up who bought gold 18 months ago?
ReplyDeleteHmmm... now I wonder if a few asteroids containing gold and silver were found, would it stimulate a manned spaceflight rush to the new New World?