BOOM!!!! Financial Meltdown!

[NW2013]

There are some economists disagreeing with that, calling it not a recession but a full-on collapse of outdated institutions. Most of the economic systems and beliefs were constructed for the industrial age, a much larger abundant world of factories and production. That world still exists but not in most western countries.

As for the people making the decisions knowing about economics, I think Boris is giving them altogether too much credit. Because, if that's true, then this situation can only have arisen from a series of deliberate acts. If we remove my tin foil hat and take it that this was not orchestrated, which must be more likely, then the idea that the decision makers know about economics falls out the window because they allowed this to happen and just about every measure implemented so far to repair it has failed.

Great point. It's not just institutions that are outdated but also the idea of their being full (or close to full) employment in developed western economies. With increased technology and efficiency in manufacturing and office environments it isn't very likely and unemployment will get worse over time.

Also agree with the point about economists. None but one or two voiced any concerns about the sub-prime/securitisation problems which precipitated the current recession we have. Being an economist is like being a weather forecaster. You can make a prediction based on previous events but it's unlikely to be accurate, especially over long periods.

[Guts]

There's nothing really new here. After prosperity comes recession and after recession comes prosperity. However the cycle is so long that people don't learn from the previous time.

That doesn't seem to be the case anymore as recessions keep coming almost every year now, not every couple of decades.

[Guts]

None but one or two voiced any concerns about the sub-prime/securitisation problems which precipitated the current recession we have. Being an economist is like being a weather forecaster. You can make a prediction based on previous events but it's unlikely to be accurate, especially over long periods.

That's because many of those economists work straight for the Wall Street and made tons of money by supporting the ideas that drove the whole world in the s*it. Those economists and the Wall Street guys weren't the ones suffering from recession, they kept their billions of dollars.

[Guts]

Exactly, I'm not an expert in this department, in fact I know nothing about economics, but I know the people who are making the decisions do ,so I don't make any comments about it as I'm just as illinformed as everyone else.

Your logic fails somewhat, Boris. Those "ignorant" people, voters, select the people who get to decide about our global economics. You think the ministers and members of the parliament are the people most capable to do the job they're selected in? Of course not, they are the most popular, that's how politics in a democracy work. It's no different to a public vote, except that public vote is more accurate since politicians often (always) promise one thing and do the excact opposite when elected.

[Dogg Thang]

There is also that many decision makers weren't economists or, if they were, weren't very good ones. Here in Ireland, for example, when the bubble completely burst and the country was on the verge of collapse, a video shot around YouTube from the early 2000s of a budget press conference. A journalist asked the minister for finance if he had any worries about what many economists were predicting at the time - that the bubble was a lie, it was unsustainable and that the budgets were making no allowances for the eventual collapse and, if anything, would bring it on. The minister for finance basically just waved it away and said that it was crazy and would never happen. Some economists saw it coming. With hindsight it could be seen that the predictions down to the individual words were spot-on and yet the Irish government, whether through idiocy (likely), pressure from banks (also likely), pressure from Europe (almost certainly), actively ignored those economists.

[Guts]

Don't forget the most important thing, endless human greed (most certainly).

[charlesr]

http://www.alternet.org/newsandviews/article/551168/10_of_the_biggest_corporate_tax_cheats_in_america/

['Press Start']

What price the new democracy? Goldman Sachs conquers Europe
While ordinary people fret about austerity and jobs, the eurozone's corridors of power have been undergoing a remarkable transformation

http://www.independent.co.uk/news/business/analysis-and-features/what-price-the-new-democracy-goldman-sachs-conquers-europe-6264091.html

So back to the question of was the global financial situation purposely done to manoeuvre people into power for the next phase?? Is it healthy to have such power in multiple countries linked to one powerful financial institution? Do Goldman Sachs hold any sway over the above men?

When there is a fire there is an ignition source. So who was present at the ignition source of this crisis.....Goldman Sachs.

It's sizeable profits made during the initial subprime mortgage crisis led the New York Times to proclaim that Goldman Sachs is without peer in the world of finance.^[21] The firm's viability was later called into question as the crisis intensified in September 2008.

[averybluemonkey]

Politicians with real world experience in a relevant field?! It must be a conspiracy! The Independant are right, it's clearly a bad idea to have a 'technocrat' with knowledge of the banking industry who wasn't duly elected. They should be like us and have a proper politician as their PM who has never worked a single day outside of politics in his life and has no detailed understanding of the real world because democracy is more important than getting things sorted properly.

['Press Start']

Yes and these guys will sort their respective countries out without giving a 'piece of the pie' to Goldman Sachs I'm sure.......

The Independent are just riding off this story as a French paper was the first to present this to the public.

So nothing sinister about 8 men of extreme power from 8 countries being closely linked to one of the worlds biggest banking/financial institutions that contributed to the very situation we are in?

[averybluemonkey]

Hardly closely linked, a mixture of past and present business ties. And no I don't find it surprising that one of the largest, most powerful organisations has it's hand in politics. What I do know for a fact is that, unless you or I work in the city and have inside information about the parties involved, we don't know a thing. And I am just as unlikely to believe scumbag, profiteering journos who are there to do nothing but sell a specific world view that appeals to their target demographic as I am a company CEO.

There's another thing too, these people will have been approached for many of these positions because they are considered world experts in their field. To reach that position you have to have been senior in a major bank or trading firm, there aren't too many of those around. Maybe it's dodgy, maybe it's coincidence.

['Press Start']

Quotes from 2 Guardian stories regarding a leaked document from the German Foreign office:-

(1)The six-page memo, by the German foreign office, argues that Europe’s economic powerhouses should be able to intervene in how beleaguered eurozone countries are run. The confidential blueprint sets out Germany’s plan to tackle the eurozone debt crisis by creating a “stability union” that will be “immediately followed by moves “on the way towards a political union”.It will prompt fears that Germany’s euro crisis plans could result in a European super-state with spending and tax plans set in Brussels. (2)The six-page German foreign ministry paper sets out plans for the creation of a European Monetary Fund with a transfer of sovereignty away from member states. The fund will have the power to take ailing countries into receivership and run their economies. Even more controversially, the document, entitled The future of the EU: required integration policy improvements for the creation of a Stability Union, declares that the treaty changes are a first stage “in which the EU will develop into a political union”. “The debate on the way towards a political union must begin as soon as the course toward stability union is charted,” it concludes.

The above quote was made by copying text from the two separate stories and joining them together. To fit my world view of course!
http://www.telegraph.co.uk/news/worl...on-the-EU.html

http://www.telegraph.co.uk/news/worldnews/europe/eu/8898213/German-memo-shows-secret-slide-towards-a-super-state.html

Not sure it safe to ask a shark where is safest to swim but his comment just after 2:36 RE Goldman Sachs made me smile.

Arguments have been put forth so I guess we sit back and watch to see what happens in the coming months. 'Unnaturally' I really hope you guys are right.

[charlesr]

Mary is the proprietor of a bar in Dublin.

She realizes that virtually all of her customers are unemployed alcoholics and, as such, can no longer afford to patronize her bar.

To solve this problem, she comes up with a new marketing plan that allows her customers to drink now, but pay later. She keeps track of the drinks consumed on a ledger (thereby granting the customers loans).

Word gets around about Mary's "drink now, pay later" marketing strategy and, as a result, increasing numbers of customers flood into Mary's bar.

Soon she has the largest sales volume of any bar in Dublin.

By providing her customers freedom from immediate payment demands, Mary gets no resistance when, at regular intervals, she substantially increases her prices for wine and beer, the most consumed beverages.

Consequently, Mary's gross sales volume increases massively.

A young and dynamic vice-president at the local bank recognizes that these customer debts constitute valuable future assets and increases Mary's borrowing limit. He sees no reason for any undue concern, since he has the debts of the unemployed alcoholics as collateral.

At the bank's corporate headquarters, expert traders figure a way to make huge commissions, and transform these customer loans into DRINKBONDS, ALKIBONDS and PUKEBONDS.

These securities are then bundled and traded on international security markets.
Naive investors don't really understand that the securities being sold to them as AAA secured bonds
are really the debts of unemployed alcoholics.

Nevertheless, the bond prices continuously climb, and the securities soon become the hottest-selling items for some of the nation's leading brokerage houses.

One day, even though the bond prices are still climbing, a risk manager at the original local bank decides that the time has come to demand payment on the debts incurred by the drinkers at Mary's bar. He so informs Mary.

Mary then demands payment from her alcoholic patrons, but being unemployed alcoholics they cannot pay back their drinking debts. Since, Mary cannot fulfill her loan obligations she is forced into bankruptcy. The bar closes and the eleven employees lose their jobs.

Overnight, DRINKBONDS, ALKIBONDS and PUKEBONDS drop in price by 90%.
The collapsed bond asset value destroys the banks liquidity and prevents it from issuing new loans,
thus freezing credit and economic activity in the community.

The suppliers of Mary's bar had granted her generous payment extensions and had invested
their firms' pension funds in the various BOND securities.

They find they are now faced with having to write off her bad debt and with losing over 90% of the presumed value of the bonds. Her wine supplier also claims bankruptcy, closing the doors on a family business that had endured for three generations, her beer supplier is taken over by a competitor, who immediately closes the local plant and lays off 150 workers.

Fortunately though, the bank, the brokerage houses and their respective executives are saved and bailed out by a multi-billion euro no-strings attached cash infusion from their cronies in Government.
The funds required for this bailout are obtained by new taxes levied on employed, middle-cl-ass, non-drinkers who have never been in Mary's bar.

['Press Start']

I won't reply with quote as it's quite long but the above is a brilliant. Did you come up with that?

[charlesr]

No, just one of those emails that floats about.

I read it over the phone to my dad - it sounds really funny when you hear the words. Especially "unemployed alcoholics"....