The Crash is past. Comes now Inflation.

[Warpy]

(as posted in Editorials by Demeter)

http://discuss.epluribusmedia.net/node/961

Seems to me a lot of people don’t realize the worst financial crash since 1929 has already occurred. I suppose they are waiting for a big explosive fireball and a lot of noise like in a Hollywood movie, or for the nightly news on their wide-screen televisions to show pictures of desperate bankers and brokers splattered on the sidewalks in front of 60-story temples of finance.

This diary is my humble little attempt to let these people know that the crash has already happened. It began in August. I guess they didn’t notice, but a number of financial markets have already collapsed. First, of course, there was the derivatives based on sub-prime mortgages. That seems to be about where the common consciousness stops. But before U.S. Secretary Treasury Hank Paulson and Federal Reserve Chairman Ben Bernanke (a.k.a., Captain Carnage) even lifted a finger to try and sort out the sub-prime mortgage mess, they first had to deal with the collapse of the market for Structured Investment Vehicles. Since these two crises began last summer many other financial markets have also collapsed: corporate junk bonds, asset-backed commercial paper, municipal bonds. This last was saved just last week by New York State Insurance Commissioner Dinallo basically forcing Moodys, S&P and Fitch to give AAA ratings to the monolines insurers. All these markets have pretty much ceased functioning, with not even the banks that created some of this stuff willing to buy their own product. Financial institutions have also been disappearing, especially a number of hedge funds, the most recent being this past week: Peloton, a London-based hedge fund specializing in asset-backed bonds.

(much, much more at the site, a great read)

[havocmom]

1. Neocon thinking: if an economy collapses but media didn't report reality,

there is plausible deny-ability and no bad think happened.

Stop looking at all those homeless former factory workers, IT workers, bankers and mortgage processors.... Think how well things are going in India.

And I fear they want to keep the troops in Iraq until the last one dies. They don't want vets to take care of and they sure as hell do not want trained fighting troops back stateside with no jobs to come home to.

[spag68]

2. The crash

IMHO the bottom of this crash, has yet to be reached. Maybe by this time next year things will pick up. Housing on the other hand may be in the dumper, especially in some parts of Cal., Nev., Fla., and certainly the rust belt. If by some strange reason you have some spare cash, and the ability to pay a mortgage, now or soon is the time to get that condo in Fla. Mortgage rates are low and are going lower,my guess is 4.75 to 5% on a 30. If there is a real depression we are all lost anyway, so get and enjoy it while you can. In the meanwhile get ready for 4or 5$ a gal. gas and 1600$ gold. Oh yeah, if we can get the Dems. in office next year and the bush corporate criminals in jail, we might just get through this.

[eridani]

3. The whole thing is worth reading, but the following quote is especially apt--

This presents us with two problems. First, this financial system is not worth saving, because the financial system itself is the cause of the problems. We need to radically alter it, not save it in its present form. For over thirty years, as the U.S. deregulated its banking and financial systems, hedge funds and other “players” that wanted to speculate or arbitrage were able to raise tens of billions of dollars in days, while companies and entrepreneurs working in new technologies, such as bio-engineered fuels, struggled to find a few million.Speculation and arbitrage have become the focus of the U.S. financial system rather than supplying credit to the real economy. As a result, the future has been starved of investment.

[GeorgeGist]

4. Great things came out of the ...

last Great Depression but then, unfortunately, American Inc. resurrected itself by claiming the profits of a World at War without any need of pursuing Peace.

[namsdubmo]

5. i wouldnt assume it's over

because that would genaerally mean the risk in the stock market is past

[Warpy]

6. Of course it's not over

That was the whole point of the article. What we're going to see now is runaway inflation because the financial thieves have starved our infrastructure to the point we're utterly dependent on the rest of the world to produce the goods and many of the services we need.

With nothing holding it up, the stock market will retreat to a more rational level, meaning deflation. With all the loans going sour and no new ones being written, the housing market will deflate to a more normal level. We're in for a double whammy here and it's just getting started.

Another GOP administration will kill us. I think most people are dimly realizing they don't know what they hell they're doing. I just hope they realize it will take a long time to get over what they've done.

[namsdubmo]

7. the title of the thread is 'the crash is past'

that's what i was responding to

[Warpy]

8. The crash refers to the crash of the exotic high finance market

and he's right that the emperor was seen to be naked in August.

However, it takes time for a crash that starts at the very top to work its way down to the rest of us.

It will.

[namsdubmo]

11. that's how the tech crashed worked

it went in waves

Dot Com-> Telcos - > telco equipment -> general computer hardware -> software -> general stock market blue chip
3/00..........7/00.............12/00.......................02/01......................02/01.................03/01

[Angela Shelley]

9. Thanks for the very informative link!

[Warpy]

10. Kudos should go to Demeter

She is the one who found this story. I just cross posted it.