The expert that I cited was J.M. Keynes in 1930. A truly wonderful book about wing Republican shady dealings and the real estate bubble and its consequences is
Messer-Kruse, Timothy. 2004. Banksters, Bosses, and Smart Money: A Social History of the Great Toledo Bank Crash of 1931 (Columbus: University of Ohio Press). On Mon, Nov 26, 2007 at 05:02:01PM -0800, Leigh Meyers wrote: > On Nov 26, 2007 3:40 PM, Michael Perelman <[EMAIL PROTECTED]> wrote: > > "I fancy that the great New York (banking) institutions have more skeletons > > in their > > cupboards than anyone yet knows about for certain, and that their concealed > > anxieties > > cramp their action more than is admitted." > > > > > > "It's hard to describe what constitutes the bulk of the stuff moving > through the world's financial markets for the simple reason that it > was purposely-designed to be so abstruse and provisional that traders > would be too intimidated to ask what it represents..." > > > > Clusterfuck Nation > > by Jim Kunstler > > Comment on current events by the author of > The Long Emergency (Atlantic Monthly Press, 2005) > > www.kunstler.com (November 26 2007) > > Either / Or? > > The great debate among those of us on the Economy Deathwatch > seems to be whether the debacle we observe around us will resolve as a > crash or a slow-motion financial train wreck. It seems to me that at > every layer of the system, we're susceptible to both -- in tradable > paper, institutional legitimacy, individual solvency, productive > activity, real employment, "consumer" behavior, and energy resources. > Some things are crashing as I write. > > The dollar is losing about a cent every three weeks against > other currencies. A penny doesn't seem like much, but keep that pace > up for another year and the world's "reserve currency" becomes the > world's reserve toilet paper. Oil prices are poised to enter the > triple-digit realm, the psychological effect of which may be jarring > to 200 million not-so-happy motorists. The value of > chipboard-and-vinyl houses is tanking beyond question. > > Of course, the government's consumer price inflation figures and > employment numbers are dismissed broadly as lacking credence. But > anybody who has bought a bag of onions and a jar of jam lately knows > that things are way up in the supermarket aisles, and so many illegal > Mexican migrants were employed in the Sunbelt housing boom, that their > absence in the bust won't register on any chart. > > It's hard to describe what constitutes the bulk of the stuff > moving through the world's financial markets for the simple reason > that it was purposely-designed to be so abstruse and provisional that > traders would be too intimidated to ask what it represents -- and the > growing terrified suspicion is that it's mostly worthless. By this I > refer to the global freak show of derivatives, concocted "plays" on > hypothetical "positions," credit default swaps, arbitrages in imagined > "differentials," nifty equations, hedges, promises, algorithms > executed by robots, and "off-book" wishes chartered in the Cayman > Islands. Probably all of them, in one way or another, are just scams, > since they are unaffiliated with productive activity. > > At a more fundamental level, these mutant "investments" were > derived from a very tangible trade in loans and mortgages made to > flesh-and-blood chumps, but even those are only the last in a long > spiral of serial "bubbles," or market frenzies based on unreal > expectations. And this leads into the very real realm of poor choices, > fiscal and fiduciary irresponsibility, deliberately deceptive policy, > criminal malfeasance, and the broad abandonment of standards in > acceptable behavior by people in authority. A lot of observers > attribute this to the Gordon Gecko ethos -- the discovery back in the > 1980s that "greed is good," which was meant to trump a previous ethos > that life is tragic. > > Anyway, the trade in mutant investment entities appears to be > collapsing now as their worthlessness in market terms (as opposed to > theoretical terms) becomes manifest. > > In full: http://www.kunstler.com/index.html -- Michael Perelman Economics Department California State University Chico, CA 95929 Tel. 530-898-5321 E-Mail michael at ecst.csuchico.edu michaelperelman.wordpress.com
