Friday, October 03, 2008

Will The "Shadow Banking System" Collapse The Real Banking System...? BUSTED...!!!

Evaluating Toxic Assets – And Where Do We Go Next, by Paul Davidson
NEW Oct. 27,, Media's Missing Intelligent Economists...
NEW Oct. 13, The Entire Global Market Law System Is Broken___Throwing Good Money After Bad Law Makes No Sense…!
NEW Oct. 12, Is The World Mature Enough To Handle “Free Money Print” Governments…?, by L.A.Gillespie
NEW Oct. 11, A Crash Course In Economics, by Chris Martenson
NEW Oct. 10, Let's Take The Higher Road, by L.A.Gillespie
New Oct. 9, Alert: Nouriel Roubini: The world is at severe risk of a global systemic financial meltdown and a severe global depression.
New Oct. 8, Revisiting my February paper “The Risk of a Systemic Financial Meltdown: The 12 Steps to Financial Disaster”…And Some New Policy Recommendations to Avoid the Meltdown, by Nouriel Roubini
New Oct. 7, Radical Policy Steps Necessary to Avoid a Systemic Meltdown: Interview with the Council on Foreign Relations, by Nouriel Roubini
New Oct. 6, The Fed keeps on wasting time while the mother of all bank runs is underway, by Nouriel Roubini
Financial Crisis: Worst Yet To Come; Audio file, 1hr. 10min.

Answer___Economic in-efficiency. Here's my latest projection. Due to the fact the "Shadow Banking System" equals the size of the real banking system, and it's collapsing world-wide fast, the collapse will be exponential in true speed and damage, due to its true size, and the pressure it will put on real economies. This mess seems to be expanding far faster than I and other economists had any idea, just how fast isn't exact science, but looks bad, real bad. Automobile industry?___Down! How bad is it going to get?___Worse than we can even imagine, due to absolute political stupidity. More efficient cars?___Un-economical, plus political ineptitude. Just read Roubini's newest projections: Oct. 3, Financial and Corporate System is in Cardiac Arrest: The Risk of the Mother of All Bank Runs, by Nouriel Roubini It's rather complex, but really describes the global mess. He predicted this some three years ago, as did I some five years ago. I also predicted the 1997 crash, but at the time thought it would be severe enough to take out the entire system___It wasn't, but this one certainly looks big enough to take down the entire global system, as most all nation's are having banks and corporations fail, or on the verge of failing. Ireland already nationalized its entire nation's finances. England is on the verge. Both Russia and China's stock markets have lost 50% plus value. The only way out for the remaining nations, in the end, is absolute nationalization of the entire financial systems, until we can truly rebuild the new regulatory systems needed. Just realize, we can rebuild them, no matter how bad it gets. It's just the "political time" it will take___That's the real problem and question, as politicians haven't yet realized how severe our problem truly is...

We await the awakening of the politicians of all nations. How bad it'll have to get to wake them is anyone's guess...

Here's Roubini's quote from my macromouse post:
"The suggested policy actions are extreme and radical but the times and conditions in financial markets and the corporate sector are also extreme. Thus, to avoid another Great Depression radical and unorthodox policy action needs to be taken now both in the US and in other advanced economies as the credit crisis and liquidity crisis is now becoming virulent even in Europe and other advanced economies. This credit crisis is both a crisis of confidence and illiquidity and a crisis of credit and solvency. But while the insolvent institutions should go bust we have now reached a point where many financial institutions and now non financial firms may become insolvent because of pure illiquidity; and this would lead to an extremely severe economic contraction similar to an economic depression rather than a mild recession. At this point the US, the advanced economies (and now likely even some emerging market economies) will experience an ugly recession and an ugly financial and banking crisis regardless of what we do from now on. What radical policy action can only do is preventing what will now be an ugly and nasty two-year recession and financial crisis from turning into a systemic meltdown and a decade long economic depression. The financial and economic conditions are extreme; thus extreme policy action is needed now to save the global economy from an ugly depression."

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