meg
TanDL, your Y2K v. ’08 Financial Crisis comparison is like apples v. oranges. Here’s why.
A. Y2K = a MATH problem
B. 2008 Fin. Crisis = a SOLVENCY problem
Y2K was fixed by replacing code.
How has the solvency problem been fixed?
4-5 years later? How much better is our solvency picture? So then, I ask what is coming around the corner. Could it be? Another bigger financial crisis, bigger than 2008? yes.
See, the 2008 financial crash was NOT a liquidity crisis. Yes, we’ve been told that it was. The Fed and the govt. have been using their liquidity ‘solutions’ (QEs and stimuluses and such) which have been making the US solvency problem Way worse. They’re playing from the 1930’s Great Depression playbook – problem is, the 1930s GD WAS a liquidity problem and US banks WERE clean and solvent. In this one here… this 2008 Great Depression… our banks were Dirty & Insolvent. They were holding crap. They did not have enough good collateral to pay their bills IOW. The banks needed to be closed — orderly, of course, but they need to be shut down and the stockholders needed to take the hit from the risk they held. Instead. Insolvent banks got lots more liquidity – money, purchases of their crap collateral by the Fed, Zero interest borrowing, etc.
You can strap on your rosy shades, if you want. No one’s stopping anyone from hoping and praying, extending and pretending. In fact, there’s nothing your govt. (both parties and their surrogates) would like more than have you think a Pollyanna normalish economy is right around the corner in a few more years with a breath and a prayer and all good hopes that all cylinders fire miraculously.
In your article there’s a telling phrase. Speaking about adding jobs someone says, ‘it is certainly possible if the economy starts “clicking on all cylinders.”‘
Now, isn’t “all cylinders” what Ben Bernanke, Geitner, and Obama and his Citigroup/JPM Wall Street entourage have been desperately trying to whip-start for these last 4 years? Even as they make US insolvency grow and worsen?
As for me, there’s no gloom in sleeping easier cuz I search around, digging and learning and getting a better idea of what’s likely to be around the corner for me, and my kids, and my small extended tribe of peeps. Esp. important for me, is getting a general sense how many folks still have fingers stuffed into their ears in disbelief. Their inerta is part of the equation, and can be somewhat modeled.
And, I agree! There’s nothing like late summer sunshine. :)