Monday, May 17, 2010

Financial Crises Getting Worse Worldwide

The pace and severity of financial crises has taken an ominous turn for the worse. Over the past 30 years, a crisis has occurred, on average, every three years. Yet, now, only 18 months after the meltdown of late 2008, Europe’s sovereign debt crisis has hit with full force. With one crisis seemingly begetting another, and the fuse between crises now getting shorter and shorter, the world economy is on a very treacherous course.

Each crisis has its poster child – from Thailand, to dot-com, to subprime. But they all have one thing in common – easy money. The “Greenspan put” – the notion that central banks would be quick and aggressive in backstopping financial market disruptions – was the short-term anesthetic that repeatedly set the stage for the next crisis.

In the aftermath of the Asian financial crisis of the late 1990s, ├╝ber monetary accommodation fed the equity bubble. Once that bubble burst in 2000, another dose of extraordinary monetary ease set the stage for massive property and credit bubbles. The aftershocks of that post-bubble carnage have now brought Europe to the brink.

Sadly, central banks are doing it again – policy rates near the zero bound in nominal terms and negative in real terms. And in the parlance of the Federal Reserve, this destabilizing condition is likely to persist for an “extended” period. As day follows night, this is a recipe for the next crisis. Whether that crisis is spawned by another asset bubble, a credit binge, or CPI inflation is impossible to say. But any – or all – of these options are conceivable in yet another undisciplined post-crisis climate.
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16 comments:

  1. We are heading for the Crisis to end all Crises. The Katla Iceland volcano also just had an earthquake reading which many times is a sign its ready to blow.

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  2. What about an earthquake in california? Would be more devastating than anywhere else.

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  3. Everything is fine.

    .chill

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  4. Got to love the comedy from the MSM side:

    The DOW went up a whole $6 today ... and ... drumroll the MSM headline ....

    "Rally pushes stocks higher"

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  5. While California is 2 pen strokes away from absolute bankruptcy and multi-million dollar long established businesses are leaving by the bushel basket; an ultra rare 1962 Ferrari changes hands for $36 MILLION DOLLARS at Cali auction-there`s no problem folks, no problem at all!

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  6. It cannot be saved. Our debt cannot be paid off it is simply too much money to ever pay off and as soon as the interest rates rise the interest on the debt will be too much to pay out of the general fund. It is just a matter of time until we have an economic disaster of biblical proportions. This could be worse then the great depression and will likely be more violent and disruptive. People will die, lives will be destroyed all because our politicians decided to use tax revenues to buy votes from special interest groups. Do not make the mistake of thinking another bubble or a partial recovery indicates everything is better. The underlying causes are still there and will not simply go away. This year, next year, the year after, sooner or later the economy will collapse. Our government is injecting massive amounts of money into the economy in an attempt to defer or stop the collapse but all they are doing is kicking the can down the road. Each kick of the can costs a trillion dollars borrowed from our future. What happens when we cannot afford to kick the can anymore. This is going to happen, there is no easy way out of this mess. There is less time then you think.

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  7. "1962 Ferrari changes hands for $36 MILLION DOLLARS at Cali auction"

    Why not? That is a REAL asset unlike Greedscam-Bernanke bucks. Make it 63 million. Does it matter?

    America is DEAD. Land of Nothing and serial nobodies.

    Enjoy the Die Off.

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  8. In the not too distant future the shift knob on that Ferrari will cost 100 billion dollars so 36 million for the whole car right now is a steal.

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  9. I think time is running short and it really could happen this summer. What concerns me is all of these race proplems are coming up at the same time. Did anyone see Anderson Cooper tonight? Sickening!

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  10. No, most of us here pass on the MSM talking heads and scripted liars. We like real news, rationally thought out.

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  11. Try not to panic people.. It's scary yes.. But panicking will only kill you. The will bring the NWO so what.. What we have now is a unattainable dream as well.. Democracy is always sought after but never really attained.. Let's just not let the system make us panic if we do we are not able to think straight or deal with it properly.. This stuff can make us crazy if we are not careful.

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  12. anderson cooper whos that?

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  13. It's getting better , not worse. Look at the markets!!!

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  14. What we have is a dead cat bounce. Typically a falling economy goies through a series of bubbles. IF the stock market comes back it will be a bubble not a recovery. That bubble will burst and we will once again be facing disaster. Until the underlying problems are fixed the economy cannot fully recover. There is no magic, no quick fix. Once interest rates rise, and they will, the interest on the national debt will be too much for us to continue to pay it and we will default. Exactly what we do then is anyones guess. But there are no good options. The "best" option is to inflate our currency and pay our debts with printed money that is worthless. The downside of that is it destroys almost everyone. No matter what the piper must be paid. There is less time then you think...

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  15. As of this writing,

    - "Meltup" has 263,000+ YouTube views

    - "Cute Dog Rides Turtle" is about to hit 721,000 views.

    That's about as bad as it can get.

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