Friday, August 10

Fear = haha!

World shares fall on credit fears
World share prices continue to slide in a second day of big losses, amid fears of a global credit crunch... (BBC)
August 10 2007
OK, so what is this? Unlimited growth, unlimited borrowing is not logical or feasible - just a phantom, a warped philosophy and estranged mindset.
Adams was wrong - dead wrong ... as was Darwin. Species do not survive because they are just posing to be the fittest, species thrive when they take care of the balance in their immediate environment.

So on what kind of spaceship is the US cruising? Will they now run out of fuel?
As far as I understand, every US citizen is burdened with a debt of about $20,000 due to the enormous squandering of the government abroad and within ...
Bridges fall and miners die because there is no money to invest into the future, only money for quick fixes. Yes, and instead of investing feasibly, the US government spends 1.3 billion Dollars a month to uphold a lost war. Pathetic!
Imagine how this money could have been used in other ways ... that taxpayers money!
Anyhow, the latest crunch on Wall Street, and all the other financial institutions world wide, only reflect the tip of the iceberg - yet to melt ...

1 comment:

lindsaylobe said...

Hi Zee
Good points you make.

This is an area I have some interest, here are some additionl thoughts.

The latest meltdown was originally confined to the sub-prime mortgages market( the market created primarily in the USA for mortgages to buy houses, without any documentation or measures taken to ascertain if recipients can afford the repayments.)

Current defaults exceeded 10%; triggering current panic. Previously large parcels of these sub prime mortgages were bundled and sold off to banks and Institutions as high rated securities with superior yields all over the world.
We even had the spectacle of small local councils in Australia, buying into these funds.

So this is essentially is a financial crisis or sorts, the real economies I think aren’t in that bad of shape.

The financial crisis has arisen as the market for these securities has collapsed as no one can put a value on them. Banks are refusing to settle between themselves and hence you have a financial liquidity crisis which has spilled over into concern reflecting about 7% wiped off world stock markets.

The ongoing culprit as you say has been the growth in easy credit(a reflection of the sub prime market)and the staggering increase in cumulative government and private debt.

Future generations will be saddled with this!!

In the meantime your Federal Reserve, the European Central Bank and other central banks around the world have had to pump in extra liquidity — billions of dollars — into the system to smooth over the tightening of credit by Baks nad finacial instituons.

The downside to this central bankers injection of funds is it will cause a spike in inflation.

But the situation can easily be fixed: stop the easy credit and bring back government spending to eliminate the deficit. Its disappointing Democratic hopefuls aren’t putting up this case and acknowledging the seriousness’ of continuing to build up mountains of debt. The longer it lingers, the greater the legacy for our youth, to be saddled with that enormous debt.

At the moment it dosn't appear to be problem as the deficit is being funded largely by Asia simply buying US treasuries.

Best wishes