IMHO:
This is not a banking crisis.
This is a currency crisis masquerading as a banking crisis.
If dollars were gold based (as pre 1933) any doubt whether all these bail outs would happen?
No chance.
It happens now because its all printed up funny money.
I think we are about to have the worst inflation any of us has ever experienced.
The dollar will be replaced as a reserve currency.
Its really too bad no one in this administration gets it. It does not have to happen, but it will because these very mistaken people are in control. Bernanke, and Geithner.
And now, Obama, because it is happening on his watch... and he is enabling it.
From a Merkel interview in the financial times:
She is robustly unapologetic when discussing the origin of the global financial meltdown. The fault, she says, ultimately lies with misguided efforts in the US, both by the government and the Federal Reserve, to re-start artificially the economy after September 11 by pumping ever-cheaper money into the financial system. “We must look at the causes of this crisis. It happened because we were living beyond our means. After the Asian crisis [of 1997] and after 9/11, governments encouraged risk-taking in order to boost growth. We cannot repeat this mistake. We must anchor growth on firmer ground.”
She is sceptical about calls for bigger public deficits and looser monetary policies – the very things that tipped the world economy into the abyss in the first place – as the way out of the crisis.
“The crisis did not take place because we were spending too little but because we were spending too much to create growth that was not sustainable. It isn’t just that the banks took over too many risks. Governments allowed them to do so by neglecting to set the necessary [financial market] rules and, for instance in the US, by increasing the money supply too much.”
Hence Ms Merkel’s oft-repeated insistence that governments, as they fight the crisis, must also start to think about their “exit strategies” – a return to fiscal discipline, a dismantling of protectionist measures, and mopping up of excess liquidity.
‘We are coming together to make joint decisions, not to compete against each other’
Merkel on working with US
The debate about the possible inflationary side-effects of measures taken to tackle the crisis “is something I am taking very seriously”, she said. “As head of the German government, I am most concerned by the debate in Germany, where people are worried about accumulating debt, and about the possible inflationary consequences.”
Markets, she added, “expect to see a return to sustainable fiscal policies after the crisis”. Asked about the failure of a government bond auction in the UK this week, she stopped for a long pause, and chose her words with great care: “It shows states cannot borrow forever,” she said.
ft.com |
