Wednesday, April 30, 2014

How It Will All End

Please take the time to read this important essay by Paul Singer:

After decades of advancements in human knowledge and purported innovations in the global financial system, why did 2008 turn into the worst financial crisis since the Great Depression? The answer is that the system was unsound, largely due to excessive leverage and the complexity of financial instruments. In the 80-plus years since the 1929 crash and the subsequent Depression, there clearly have been a large number of geopolitical and financial events, yet none of them caused financial collapse until 2008. Of course, we understand that a combination of public and private errors and misconceptions led to the financial crisis, but it was the unfettered use of leverage that made the episode pass over the line into systemic collapse.

We do not think policymakers have learned anything much from the financial crisis, but that fact can truly be demonstrated only as time passes. In our view, monetary policy extremism has papered over (no pun intended) the lack of fundamental reforms that would enable the Developed World to grow faster and more sustainably with financial institutions that are solid and robust enough to withstand the next periods of economic and financial stress. We believe the world’s financial institutions are still essentially dependent on governments, but the Developed World governments themselves are hopelessly insolvent. The insolvency may not be manifested in a market reaction tomorrow or even next year, but the numbers are obvious and compelling, not conjectural or  fanciful.

Mr. Singer is one of the wealthiest persons in the world (No. 1161 according to Forbes @ He therefore may know what he is talking about.

By the way, his answer to how it will all end is "badly, we guess".

Obama ad-Dajjal and his minions, Congress, and the entire financial system have refused to deal with the bases for these problems. Some things can be put off for political expediency nearly forever, but this particular mess is not one of them. When this dinosaur-sized turd finally hits the fan, it will destroy both the fan and everything else in sight.

No comments:

Post a Comment