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View Full Version : Lost Principles



mick silver
27th November 2008, 14:36
As the economic crisis continues to unfold, recently a sense of uncertainty has begun to pervade the market. Even dyed-in-the-wool risk takers admit that they don't know what to think anymore. Inflation, deflation, recession or depression - there are so many vagaries that it appears to be anyone's guess what will happen next.

Despite the current, volatile environment, though, our expert team at Casey Research maintain their core prediction: that a highly inflationary cycle is not far off. While we, along with several external experts, continuously review our assumptions and conclusions and encourage dissenting opinions and analysis to avoid biased conclusions, so far we keep returning to our views about what's coming. That said, the hardest thing to predict is not what will happen, but when.

The way I see it, the swift, far-reaching and mostly ill-conceived reactions from most of the world's governments under the leadership of two apprentice sorcerers (Bernanke and Paulson) have until now resulted in a widespread run for an exit to nowhere, a deep credit freeze, and total and indiscriminate mistrust in the market and all of its players.

The fact remains that in the last year, many principles that have long been rooted in the success of capitalism have been thrown out of the window.

First, market players discovered that the longest-lasting asset bubble in recent history was made possible by poor regulations (as opposed to lack thereof), greed, and the misunderstood and misrepresented risks of credit derivatives.
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Second, we found out the real meaning of "too big to fail." If a business is large enough and has enough clout, it doesn't matter how poorly managed it has been, it will be bailed out at the expense of taxpayers (us) and investors (us again).
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Third, we found that the rating systems the financial markets had been relying on have been misleading investors and failing to identify some of the riskiest asset classes. As a result, investors and all other economic agents are left with no means of evaluating risk as they conduct business, hence the credit freeze and rush to cash.
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Fourth, to add to the confusion, the U.S. Fed and Treasury, followed by many other central banks, have been altering the rules of the game by the minute (buying toxic waste at face value, bailing out certain financial institutions but not others, becoming shareholders of several behemoths in the banking and insurance industry, and trumping all accepted rules of creditors' and stakeholders' priority, prohibiting the shorting of certain classes of assets on a moment's notice).
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Last but not least, the U.S. presidency, weakened by almost eight years of mismanagement, has continued to show total lack of leadership. It has empowered a couple of technocrats to run the country's finances without leadership until a new administration gets in and, hopefully quickly, figures out what to do. To make matters worse, the EU has shown its ugliest face and demonstrated a fact we all truly knew but didn't want to recognize until recently -- that economic unity and coordination is easy in good times but almost impossible when the going gets tough.

http://www.321gold.com/editorials/casey/casey112708.html

cugir321
27th November 2008, 19:25
Won't it be nice when hyper-inflation hits and the gov starts inceasing interest rates to control it. Anybody want to pay 56% interest on their late visa bill. For money you spent 3 years ago.