The perfect storm -1

This week has seen the opening (much more to come in the next months) of the share market crash that was predicted with precision in this Autumn, and we had easily anticipated and predicted in our blog posts and the page “”; the novelty is that it has preciptated in just a handful of days, with the involvement of all the US financial system, the no.1 world insurer AIG, etc.

A detailed chronicle of Bernanke-Paulson decision making this week in:

Shock Forced Paulson’s Hand

This high concentration in space-time of the unavoidable redde rationem, has justified a 180°  change in the US economic policy that has no antecedent in history. Of course it is highly contradictory and just intervening on the effects of the credit crunch and recession: the entire bundle of US and Fed policies have lead to the financial-housing joint boom and bust, therefore to the deep nature of this financial meltdown.

This dramatic and fast fall of world financial markets has provoked, on a larger scale than in March, a new wave of Financial Socialism, and the paradox, the irony of History, is that the “lame duck” and hyper-free marketeer Bush was obliged to play such a role of Wall Street losses socialisation – with an evident feedback in favour of Obama’s chances to succeed at the White House in the very close Nov. 4 elections. Mc Cain is playing the role of dissent: he’s just offending the intelligence of the electorate, and increasing the drive in favour of Obama, with his little theatre à la Chicago.

In brief, we will analyse things in detail in the coming days, and this time all the media are focussing the crisis, telling the truth that was kept hidden until one week ago:

– yesterday the Bush adm. has saved Wall Street again, the n-th time in just one week, with the announcement of a huge project, more or less a federal fund targeted to buy the corrupted financial products that are only on sale, with no buyer;

– the n-1 intervention was a semi-statalisation of AIG, saved from bankruptcy with a federal loan of $ 85 bn; actuallu, an AIG default would have hit the world insurance industry, and created a dramatic social crisis in the US, where private pensions, health and social insurance are privately provided by this industry;

– in this sharp change of policy, the only bouc emissaire left was Lehman Brothers, with no serious reason, just chance: had it failed 1 week before or after, not Barclays but the US taxpayer would have rescued it.

Besides the US, all the big Central Banks have been injecting some hundred billions $ of liquidity every day.

Published in: on September 19, 2008 at 3:51 pm  Leave a Comment  
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