Mike, those defaults are not surprising given the source = dot.bomb and telecosmic-sized failures. It's the same as the over-margined investors have been taking a bashing over the past two years as the speculative excess of irrational exuberance is squeezed out of the global economy.
My worry, starting way back in 1997, which I used to debate with J F Quinnelly in SI, was that when the crunch inevitably came, it might turn into a self-sustaining collapse in a domino theory of the stock markets in which a flood of margin calls would cause huge price drops which would precipitate more margin calls which would cause huge price drops which would cause more margin calls which would cause further price drops and so on down through the layers, dragging in over-borrowed corporations which would collapse as their share values ceased to sustain their debt levels and the total loss of confidence would cause a complete implosion beyond the event horizon of debt gravitational fields which would reduce the world to a black hole in a singularity, where darkness and doom would exist in another world making the global depression of the 1930s and Hitler's Holocaust look like a family picnic. [To put the darkest light on it].
I decided, way back then, that it would not happen because my idol, giver of life and maintainer of civilisation and reason, Alan Green$pan, would print a big stack of money and lower interest rates and do it in a timely way and save the world, by using financial relativity theory to dilate time, stretch the measuring stick [the $] by changing the Gravitational Constant so that the debt event horizon shrank down to a less threatening level. He did!
A dollar debt now has a smaller gravitational field. So we all walk a little lighter and the inflationary expansion of the financial and economic cosmos can continue happily in Middle Earth for another 10 billion years.
And it has come to pass.
Now, only those countries, companies and individuals who had really gone beyond the pale in their the avaricious relationship with debt are being dragged into the maw. Uncle Al has rapidly reduced the implosion so only the worst are going down.
It's not surprising that debt defaults are at levels comparable to those of 1991 [which wasn't really all that dramatic and was the beginning of the world's biggest bull run] given the irrational exuberance in the dot.gones, tech.wreck and other financial speculation. But two years on, we are stable and a LOT of cleaning up has been done. Yes, there is a lot more to do, but so far, so good.
Mqurice |
