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The ground shifting beneath my feet
Posted by clioandme • 10/09/08 • Subscribe to this Discussion [RSS] • Report This Topic
Topics: change, Economy, history, markets
Frozen credit markets. Collapsing banks. Government takeovers. All of this worldwide. Is the incredible economic news leaving anyone else here feeling like the ground is shifting beneath their feet? The last and only other time I have experienced this sensation was in 1989, but then it was positive.
Here's my post on the subject: "1989 and 2008," markstoneman.wordpress.com/2008/10/09/1989-and-2008/
User Comments
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yup, yup, yup - I find myself more horrified than ever about the world we'll leave to our kids. In a way I feel like the roaring 20's have just come to an end. The decadent ballrooms are emptying - but "the crash" hasn't quite happened yet. It's looming, like an invading horde massing on the border, but it's full weight has not been brought to bear.-
It feels a little worse than the great depression to me, I think it is more reminiscent of Weimar Germany (I know Stoneman will be able to shed more light on that comparison) what with the huge debts and the added cost of never ending war and a kleptocratic elite, I know next to nothing about international finance but it seems to me we are on the way to hyper inflation. -
All I know is that there's a whole lot we don't know, and the sensation is unsettling. This is probably the most salient similarity to earlier times.
Hyperinflation? I'm no economist, but that doesn't seem to be the issue, at least not for the major economic powers of the world. -
I thought if you kept printing money with no solid assets backing up that money that was the way to hyper inflation. I believe this is what the federal reserve is doing. Isn't that how hyper inflation happens? Is this not what happened in Zimbabwe?
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I think we're borrowing that money. Strange as it seems, the US government still has pretty good credit, which has to do with the alternatives.
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when you keep wanting more more more sooner or later there is going to be none none none -
We've not yet hit bottom on this. AIG is just one of the many surples lines insurance companies who wrote policies well above their tolerable risk thereshold. Many more risk writing companies will fall under within the next two years...
Back to main street - we've a generation of kids in schools right now who have no basic knowledge of the banking or credit systems that run our countries. Students do not know how to balance a checkbook, let alone invest cautiously or save for the future in anyway.-
If I look at headlines from other countries, we have definitely not hit rock bottom. Besides lacking basic financial literacy as individuals, we've got a global banking system that national governments are desperately trying to master. It's a big catchup game all around, though as Tiffany points out below, some people are going to be hit a lot harder than others. This could happen in industrial countries, and it will certainly happen in developing countries.
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Ultimately this is a good thing for the future. After WWII we discovered that we could just borrow and print and leave the tab for someone else to pick up later. And each generation decided to continue the trend, borrowing against their children's lives.
Finally the problem has no more special funds to bring over and hide it on the books. Finally we have no option but to face the problem and fix it.
Does it kinda suck for us for the next few years? Yep. No doubt.
But just like Increasing gas prices, it's the best thing that could happen for my children and I'm all about what's best for my children.-
Dane: I'm with you. We have darker days ahead of us but my 6 year old will have a better life because of it. -
That's all well and good in the theoretical sense, but from your kids' perspective it won't matter much how much better the world looks in twenty years if they starve to death in three. Probably the razing of a lot of what's been going on for the past several decades will be good for the country and the world in the long run, but we can't assume that it's going to be good for our kids specifically...no way to know which of them are going to be among the hungry, the homeless, the people dying of curable diseases... -
Dane, I'm not sure what you are talking about that will be good for the future, since we really don't know what is happening. And as Tiffany points out, a shorter view is also necessary.
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I'm going with the assumption that the kids will not sarve to death. That is a critical assumption to being better off.
Things that could be better:
intelligent oversite
constraints on deficit spending
people learning to live within their means
reduction in the amount of fluff people put in their basic needs column
increased interest in politics and community by general population
higher accountability -
I agree with Dane in as much as "enough is enough" with the trends we were setting...only trouble is I still don't see that ending. Isn't the money from the bailouts borrowed and our future generations will have to pay it back? At least to a certain extent?
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Depends on what we pay for the assets and how much we can unload 'em for further on down the road. But that extra $150 billion in tax cuts is a bill for the next generation.
To some extent, deficit spending will be unavoidable and even desirable in the short term, or else GDP will take a dive and the recession will deepen. But that doesn't mean we should spend recklessly. Investments for the future that also stimulate the economy right now are going to be necessary.
I don't think tax cuts for the wealthiest Americans falls under that rubric, unless incentives are involved, but that's another debate (www.blogcatalog.com/politics/discuss/entry/obama-v-mccain-taxes).
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whose gonna bail me out? -
So how do these events stack up against other major events in your own lifetimes? For me this is the biggest thing since the collapse of communism in Eastern Europe and Russia. 9/11 and the US response to it seem to pale in comparison.
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9/11 is still tops for me. Then the fall of communism, then this. The difference is we haven't seen the end of this "event" yet, so the potential is there to be greater when all is said and done. Plus, you could make the case that 9/11 was localized in as much as it was a U.S. event while this is global. 9/11 just had more immediate shock value. You could point back and say "I was doing xxxxx when the news broke" - you can't reallly do that with this as much. You can just say you watched your 401k go -5%, -10%, -15%, -20%, and then your bank went under etc., etc.....hopefully that makes sense.
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Kdawg, I agree with that. I agree with the events, as listed, in the same way, too. Those events were more openly tangible and had one solid outcome at one point in time, where this crisis is eroding and incremental. -
It makes sense, Kdawg. I know what I was doing on 9/11. It was a global media event, but more local in other ways. We really don't know what's going on now, but the nationalization and partial nationalization of huge financial firms already indicates tectonic shifts. The fact that central banks (including China) could cooperate on interest rates yesterday is also telling.
I'm asking myself if this situation will also force Europe to go for more political integration, or if this will be just another situation where it does not rise to the occasion, kind of like it flailed about during the Balkan wars. And I'm thinking that relations with Russia are going to have to include the new situation. Perhaps each side will see the benefit of cooperation instead of confrontation.
Sometimes major changes cannot be pinpointed to one date, location, and group of people, though I suppose we could use Monday last week as an initial date, and then Monday this week for another. (What is it with Mondays?) -
I don't think you can say 911 was a "local" event we are all living with the consequences of that day every time we fill our car.
I think the way the US reacted made it a global event. -
True, but how far-reaching in comparison to what's going on now? Or are we going to get some ugly feedback between the two also?
Regarding my first question, did 9/11 change the basic way most people live? -
I think 911 has effected the way we live tremendously, Not just with increased food prices and other financial consequences of a sky high fuel price but also with the slow and steady erosion of personal liberty. I think the long term consequences of 911 will linger on for decades, the US has lost a lot of respect and good will in the world and I think it will be a long time until they can build that back up.
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Yes, you have a point there.
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"he slow and steady erosion of personal liberty. I think the long term consequences of 911 will linger on for decades, the US has lost a lot of respect and good will in the world and I think it will be a long time until they can build that back up."
But how many of those things are actually the result of 9/11 versus the result of people with a long-term agenda taking advantage of 9/11? -
@ MadamX
Well yeah obviously a lot of people are making a lot of money out of all this misery. It's these people we should all be looking at during this crisis and during the next crisis they engineer, cui bono? -
Another possible difference with 9/11: How much looked different in September and October of 2001? To compare it to the current situation, one would need a better sense of the view from that time, without the knowledge we have now of human rights abuses and the erosion of civil liberties. I know I had fears about where our reaction might lead us. But I did not think things were inevitably headed in such a direction.
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Aningenious, I'm not just talking about the moneymakers. Does anyone really believe that the Patriot Act was just an idea that cropped up out of nowhere after 9/11 and was drafted practically overnight? I'm much more inclined to think the framework for that was just lying around waiting for the right opportunity.
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Dunno about that specific document, but Cheney's own ideas about the role of the executive were fully formed.
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Of course I agree with you totally Madame X, the project for the new American century document spells all that out well before it actually happened.
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This discussion reminded me of a clip someone sent me recently:
uk.youtube.com/watch?v=3AX9_aNnhKc
Hmmmmm....she says stroking her beard. This is going to be interesting.
I am glad you feel the shift, Mark. Have you checked out www.theshiftmovie.com as yet?-
Well, you're on about different topics, as you know, but changing economic conditions will do doubt change these relationships as well. Here's hoping the West can do more than gaze at its own navel during the coming bad economic times.
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