Pictorial source: TELEGRAPHI guess the whole world knows we have problems and many millions across America the UK and Europe and Asia are feeling the effects of what they may have thought was set to be a "short-term" recession of manageable proportions and little likely to bring devastating impact to their lives because governments around the world are joining together to combat it, notably through the auspices of the G20 Summit in Washington which was held recently.
Personally, I think we are on the verge of an economic slump and governments should be taking different measures to counteract the personal effects which will be unavoidable to many millions unless they take direct and robust intervention to halt it.
I note there wasn't any real agreement at the summit, except to keep bailing out our banks and trying to open the doors to businesses and consumers to keep borrowing and of course spending in order to at least bring some relief to our economies in terms of maintaining product and jobs.
It appears to me that the results of this summit is not really going to make people 'confident' enough to continue the borrow and spend cycle, and nor is it going to remedy the plain fact that without taxpayers money, banks are completely bust.
I mean how can a bank lose all that money and still know more losses are to come, LOAN money to individuals and to businesses when their first duty must surely be to regain their own balance sheets back to respectable levels by covering the losses and building some profit?
I think with this in mind, which I view as plain common business sense, that world economies need a different kind of stimulus in order to avoid the dreaded 'slump' as opposed to short or long term recession, for by the time banks have stabilised their profits and balance sheets, many businesses will already have folded, many millions will have lost their jobs and many tens of thousands ( if not millions ), will have had their homes repossessed.
They talk about 'transparency', yet I don't think 'seeing we carry on making the same mistakes' is any good at all.
They talk about 'regulation', yet what is there to regulate when we're in a slump and no one has the resources to do business?
Personally, I think the stimulus is the problem, and the free market system is the culprit which caused that problem.
Let's face it, despite all the billions of Sterling, Dollar and Euro thrown at the problem, it is not working. Yet we have leaders like Brown and Bush telling us there will be no departure from the free economy despite that very same free economy has handed over untold millions of taxpayers money to "intervene". Are they honest then?
I envisage a need for a different stimulus which actually changes and puts our world to rights again and is transparently honest in delivering a controlled situation in what is after all an economic catastrophe.
Firstly, I would provide loans direct to businesses rather than through banks as a temporary measure whilst banks 'seek out and destroy those toxic assets'.
Secondly, Governments through global agreement should back those assets with government bonds and uphold the system by recapitalizing the IMF.
Again, direct government intervention is necessary and there is a great urgency for this but there is also an urgency to stop the horse trading in stocks and shares and foreign exchange by imposing limits to share trading and limits to the amounts exchanged as a temporary method to bring 'forced stability' to the markets whilst hunting down the toxic assets and re-aligning our money systems back into some assemblance of order where asset values and currencies are not plummeting into slump, bank profits are preserved and jobs are saved along with consumer confidence which is the only way to promote the demand back into our economies through conscious awareness of the needs of people and what to them a 'slump' will otherwise entail.
Personally, I think we are on the verge of an economic slump and governments should be taking different measures to counteract the personal effects which will be unavoidable to many millions unless they take direct and robust intervention to halt it.
I note there wasn't any real agreement at the summit, except to keep bailing out our banks and trying to open the doors to businesses and consumers to keep borrowing and of course spending in order to at least bring some relief to our economies in terms of maintaining product and jobs.
It appears to me that the results of this summit is not really going to make people 'confident' enough to continue the borrow and spend cycle, and nor is it going to remedy the plain fact that without taxpayers money, banks are completely bust.
I mean how can a bank lose all that money and still know more losses are to come, LOAN money to individuals and to businesses when their first duty must surely be to regain their own balance sheets back to respectable levels by covering the losses and building some profit?
I think with this in mind, which I view as plain common business sense, that world economies need a different kind of stimulus in order to avoid the dreaded 'slump' as opposed to short or long term recession, for by the time banks have stabilised their profits and balance sheets, many businesses will already have folded, many millions will have lost their jobs and many tens of thousands ( if not millions ), will have had their homes repossessed.
They talk about 'transparency', yet I don't think 'seeing we carry on making the same mistakes' is any good at all.
They talk about 'regulation', yet what is there to regulate when we're in a slump and no one has the resources to do business?
Personally, I think the stimulus is the problem, and the free market system is the culprit which caused that problem.
Let's face it, despite all the billions of Sterling, Dollar and Euro thrown at the problem, it is not working. Yet we have leaders like Brown and Bush telling us there will be no departure from the free economy despite that very same free economy has handed over untold millions of taxpayers money to "intervene". Are they honest then?
I envisage a need for a different stimulus which actually changes and puts our world to rights again and is transparently honest in delivering a controlled situation in what is after all an economic catastrophe.
Firstly, I would provide loans direct to businesses rather than through banks as a temporary measure whilst banks 'seek out and destroy those toxic assets'.
Secondly, Governments through global agreement should back those assets with government bonds and uphold the system by recapitalizing the IMF.
Again, direct government intervention is necessary and there is a great urgency for this but there is also an urgency to stop the horse trading in stocks and shares and foreign exchange by imposing limits to share trading and limits to the amounts exchanged as a temporary method to bring 'forced stability' to the markets whilst hunting down the toxic assets and re-aligning our money systems back into some assemblance of order where asset values and currencies are not plummeting into slump, bank profits are preserved and jobs are saved along with consumer confidence which is the only way to promote the demand back into our economies through conscious awareness of the needs of people and what to them a 'slump' will otherwise entail.
Meanwhile, we'll have ever worsening headlines such as these :-
REUTERS
NEW YORK, Nov 18 (Reuters) - U.S. stock index futures slid on Tuesday, signaling that Wall Street will extend a global equity rout fueled by fears that the extent of the global economic slump is worsening.
TELEGRAPH
Worst slump since Great Depression
Major industrialised economies will suffer the worst slump since the 1930s, according to new research from Deutsche Bank.
The warning underlines the fact that policymakers have failed to prevent the financial crisis from turning into a full-blown economic slump. It comes as world leaders agreed to hold a summit in New York billed as the “Bretton Woods meeting for the 21st century”.
Major industrialised economies will suffer the worst slump since the 1930s, according to new research from Deutsche Bank.
The warning underlines the fact that policymakers have failed to prevent the financial crisis from turning into a full-blown economic slump. It comes as world leaders agreed to hold a summit in New York billed as the “Bretton Woods meeting for the 21st century”.
BBC
"European and Asian markets have fallen sharply on fears that the world economy will enter a protracted slump.
The slide comes after the Dow Jones share index in New York fell to its lowest level in five years.
London's FTSE 100 index fell 1.6%, with mining shares hardest hit. French and German markets also lost ground.
In Asia, Japan's Nikkei index ended 6.8% lower and Hong Kong's main index fell more than 4%.
The FTSE 100 was down 63.13 points at 3,942.5 points after falling almost 5% on Wednesday. Germany's Dax index lost 3.4%, while France's Cac 40 shed 2.8%.
The only difference between now and the Great Depression is that central banks have released money into the system which keeps the stock market 'somewhat' happy.
But banks don't release that to individuals and businesses so what we'll likely have is a concentric circle where the economy is held up by elite investors and major corporate investors, all exchanging products at lower prices until there's no value in them.
I think it's what you could call a slippery slope or a downward spiral into economic hell.
"Unless they stimulate individuals and businesses to regain confidence in the real economy"
The slide comes after the Dow Jones share index in New York fell to its lowest level in five years.
London's FTSE 100 index fell 1.6%, with mining shares hardest hit. French and German markets also lost ground.
In Asia, Japan's Nikkei index ended 6.8% lower and Hong Kong's main index fell more than 4%.
The FTSE 100 was down 63.13 points at 3,942.5 points after falling almost 5% on Wednesday. Germany's Dax index lost 3.4%, while France's Cac 40 shed 2.8%.
The only difference between now and the Great Depression is that central banks have released money into the system which keeps the stock market 'somewhat' happy.
But banks don't release that to individuals and businesses so what we'll likely have is a concentric circle where the economy is held up by elite investors and major corporate investors, all exchanging products at lower prices until there's no value in them.
I think it's what you could call a slippery slope or a downward spiral into economic hell.
"Unless they stimulate individuals and businesses to regain confidence in the real economy"
2 comments:
Went shopping this past weekend at TARGET to buy some odds and ends I needed. Store was pretty busy. While at the check out though, I noticed everyone paying with debit cards or cash. In the 5 minutes I was in line, I did not see one purchase made by credit card. Granted, small sample size in the extreme, but it does parallel national stories along the same lines.
As the big national retail chains fail, we should see an upward surge in those Mom and Pop stores of long ago. That will help soften the blows were are going to take, I think.
Going cold turkey to get over our addiction to debt is going to hurt like mad, but it must be done.
There was a flurry of news an hour ago about a bipartisan deal for auto bailout loans, market rallied and the talking heads on CNBC got all excited. Now word is coming out that it was a false alarm and nothing is pending on that front. Seriously, there is wide spread opposition to a Detroit bailout from the average Joe's (our middle class). Odd how you do not here Honda, Nissan, or Toyota begging for help.
I was hesitant to put the above video on my site Gary as despite I have a fair bit on here which could lead a reader to think I agree with it all, like you, I probably have alternate views to much of it. However, the video speaks correctly about what is actually happening. The economic system is destroying our planet yet it's conventional wisdom to carry on with it into sheer madness which I feel will have strong repercussions at some point in time even if we don't see it.
All I know is the system we have cannot go on if people are enslaved by debt and held captive within an unchangeable political rut which relies only on it perpetuating the 'conventional wisdom' which got us here in the 21st century.
Perhaps if you listen to it, you might begin to feel like I do if you don't already, as what he describes I think is very sobering and the only antidote to it is to ignore it.
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