Monday, September 08, 2008

Hold onto your hat

What we are seeing now is the last breath of modern capitalism.

The old economic order came to an end on 9 August 2007 as what will become to be known as Debtonation Day.

It should have happened when the US economy was on life support in 2000/ 2001 after the dot-com bubble burst and it was well on its way to crashing. I should know, I lost my job back then. The house cleaning that should have taken place back then didn't come about.

The Bushites didn’t want that to happen on their watch and so they came up with a two-fold strategy. Firstly, in a rather ruthless Machiavellian/ Keynesian ploy they welcomed 911 with open arms and busted open the war-chest to feed the military-industrial complex with a fake 'war on terror' by invading Afghanistan and Iraq. Two countries who could not fight back. Immediately. Or until we should we say just about now?

In order to do this, the US has been spending money - which they have borrowed from everyone else - hand over fist in order to prop up the US economy since 09/11/2001.

Now, if the Chinese have been stupid, it is because they have over-supplied themselves with dollars, by buying into US debt, and recycling Dollars into the system that have become more and more worthless by the day? But that is a question because I don't for one minute presume that the Chinese are 'stupid'. In this case though, the US does seem quite happy because their debt is essentially deflating away and it undermines the Chinese who don’t have the same purchasing power that they thought they had in the US economy.

The problem is that the debt owed by the US is for all intents and purposes is un-repayable. They owe so so so much and the chickens from all their war spending hasn't even begun to come home to roost quite yet.

Even Zimbabwe’s economic mis-management pales in comparison to what the US has done to their own economy. Basically, the US is in a process of repudiating it's debt by throwing away the dollar, which is in a death spiral. It’s a classic pump-and-dump scam in which the debts are hyper-deflated-supposed-inflation away. Dollar deflation works only in debt terms. If I was an American, I would ask Bush and Cheney what currencies they are holding currently at the moment...

The second part to all of this, is that the Federal Reserve opened the credit floodgates. Greenspan poured the petrol onto the fire to prop up consumer spending which nearly tanked after 911 by lowering interest rates.

Remember one of Bush’s speeches just after 911? He basically said get on a plane and go to Disneyland or get in car and go shopping. The “sub-prime” scandal (which it is) was just one channel for some of this credit. There is a boatload of other credit instruments that have been unleashed since 2001 and US consumers are maxed-out on their elastic plastic.

What we have been witnessing since then is the slow-motion domino-like collapse of the whole system as it systematically unwinds. What we need to understand is that it is impossible for any one single person to even begin to understand the ramifications of what is happening right now.

The effects are hard to see because it is all happening in “slow-motion”, and it’s not like there is any singular spectacular event that would wake people up, but rather a chain of cumulative events that was set in motion that day and will continue until the last domino falls. There was a hint of the how a big a train smash this is in April when they stepped into to rescue Bear Stearns, reinforced by the bankruptcy of Fannie & Freddie this past weekend, but the biggest problem is that there is not one single person alive today who can comprehend the entire scope of what is going on.

Derivates are unwinding every day. Auction rate bonds are going to the wall. The whole house of cards is collapsing. It is massive and global.

There is just one simple point: There is not one single human being alive today who one is even capable of beginning to understand this mess that we are in currently, let alone getting us out of the shitstorm we are all about to face…

Raise interest rates or drop them? Inject more credit or let it tighten? Bailout the banks or let them crash? - Unless there is a global response this is going to drag down the world.

Get ready for a fractured world that won't deal with this other than through extreme violence.

Not one of the sodding central bankers, finance ministers, nobel laureate economists, or even Soros himself can truly admit to understanding what a frightfully huge economic mess this is.

It is massive and global.

There is no way we are going to get any kind of coordinated response by any one government or sole financial institution, or be rescued from the heavens above, because everyone(else) is trying to look after their own “economic self interest” right now.

There is no man on a white horse that is coming to rescue you.

I suggest you sort yourself out now.

Before it's too late.

'Cos none of us are OK Now.

PS. There is still one thing you can do though:

Revolt Now!

And I do mean revolt.

No comments: