The Royal Bank of Scotland, Barclay Capital, and Fortis Bank have been predicting an imminent crash in the U.S. stock markets. Actually, RBS said it may take until September and may only see stock prices fall 25 percent. Over the weekend, Guido Lippens, the chairman of Fortis Bank, predicted a major financial collapse in the U.S. within a few weeks, including bankruptcies of 6,000 regional banks and many major companies (specifically naming Citigroup and General Motors).
When the Federal Reserve Open Market Committee met last Tuesday and Wednesday, it basically did nothing. Several analysts are taking this lack of action as a sign that the Federal Reserve has exhausted its clout to manipulate markets to the degree that it has done over most of the past year. To the extent this may be true, that could be a major sign that the U.S. may be on the brink of a huge financial crisis.
Even if the Federal Reserve still has a lot of financial and political options available, as I think they do, the Fed’s reputation has suffered major damage. As one example, the business media are now much less likely to pass along the Fed’s pronouncements without critical examination, and may even explain that such proclamations are not considered credible any longer.
The economic environment really scares me right now. Maybe there won’t be a major crisis in the next few weeks or months. But I just don’t see that the problems will be cured or go away.
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It will happen eventually, it’s simply another natural cycle. What goes up, must come down.
The question is what are we going to do to be ready for it and counter it? I don’t think there are too many people in this country anymore who are smart enough to realize what is going on and get off their fat asses to do something about it.
EDIT: they are too busy cashing their welfare check so they can buy more booze and get pregnant again in order to get a bigger welfare check. F***ING LAZY SLOBS.
Awesome essay I just read. It easily explains so many downfalls of US government and US economy. It is pretty sad that people can’t even learn from history.
What is happening is not because it was inevitable but because of decades of failed policy and judgement by the American people and politicians.
WOW just fucking WOW you are probablly from this post i know everything i need to about you, let me guess. “Oh no my money is worth less and ive been working my whole life to support all these minorities on welfare and now im gonna have to pay more because of these issues.” I used to think the same way before my grandfather who is a economics professor sat me down and showed me facts the unemployed part of america sitting around having kids so they continue getting there welfare cost you nothing, in fact the entire welfare and public assistance cash being spent is under 1% of taxes being taken in. most of the money being spent right now is going to military spending. I agree people who abuse the system need to be taken off of it but its needed for those who need help, my grandmother was on welfare for 5 years so she could feed my mother and the rest of her family while she went to school to become a nurse and then she worked the rest of her life. Our money is worthless because our president decided to get into a war we couldnt afford then just make more money to make up for it, well guess what happens when you just issue more money without some sort of backing DEFLATION followed by recession. Now lets say all those welfare recipients got off there “FAT ASSES” and went looking for jobs which in case you havnt noticed there arent any but if there were what would happen? you would have people who make good money im sure by your comments you think you fall in this category, well guess what now you have a bunch of other people looking for your job willing to take alot less and guess what youre out of a job cuz it cost less to train someone to work for minimum wage then to keep paying you well.
no im saying the spending is going to the military and then shoulda made another paragraph because i was pointing out that by his logic if everyone on welfare went out and got jobs there wouldnt be jobs for them and it would also decrease the pay scale for allmost all jobs if all of a sudden thousands of people decided to go out job hunting that are used to making minimum wage the higher paying jobs would drop.
slowtalon, you do realize you said increasing the money supply causes deflation right?
I hope that was a mistake.
The business cycle wouldn’t exist if we didn’t have the fractional reserve fiat money system. People act as if the business cycle is the only way an economy can work.
If something is broken, fix it. Don’t wait around for it to happen again. Go back to the gold standard. I wish people would understand that not being on a gold standard actually only benefits the banks and hurts the rest of the economy.
this is actually pretty scary. when things first started to go south, i was thinking oh great buy buy buy. and i moved a bunch of my 401K over to some riskier stuff. but it seems like there is no end in sight and it just keeps falling. i am tempted to start moving it over to bonds or something with a little less volatility until this stuff settles down. any input on that?
i think he meant “devaluation.”
And we tried the gold standard before. It made the rich much richer and the poor much poorer. Hell, maybe we should go on the oil standard. Back each dollar with a gallon of crude. At least it would get people to stop bitching about gas prices. :roll2:
And the gold standard didn’t make the rich richer!!!
They went off of it to artificially create more money than they had. So instead you had inflation as a result. And who suffers from inflation/ The citizens.
The gold standard is the best thing in the world for average citizens. Fiat money steals from the average joe.
Take some time to learn and analyze the differences between fiat money and the gold standard and you will see throughout history nations have prospered during times of gold standards and collapsed during times of fiat currency.
I have an MBA with a concentration in Economics & Finance. I have taken some time (and multiple courses) to learn about the difference. There is a reason that no country in the world today uses the gold standard any more. It’s obsolete and inflexible. The gold standard itself only works in times of prosperity. When it hits crisis level, countries are forced to abandon it.
There is only <5 trillion dollars worth of gold everywhere in the world. There are over $8 billion US dollars in circulation. What do you want to do, force the government to buy up all the gold in the world at inflated prices and drive prices up through the roof? Where exactly would they get the money to do that? Tell some of the people that the money they hold no longer exists? Not to mention that our entire economy could face hyperinflation if some other country randomly finds a ton of gold and starts mining it. There is not enough gold in the world to run the economy today.
Anything that cuts the supply of something gives benefits to those who hold more of it. Cutting the money supply raises the “price of money”, through interest rates, through the roof, thus making those who hold more money richer, and those who have to borrow it poorer. Basic economics 101. There’s a reason only the far right and hardcore supply-siders like the gold standard.
Think the housing market is bad now? Take a guess at how it would be with a gold standard and mortgages with 20% interest.
I’ll take my money based on Keynesian economics over the amount of gold in the hills any day, thanks though.
