Liquidity Nightmare... Drowning In Cash

The Bank for International Settlements has warned that the current takeover boom across the world is being funded by ever greater levels of debt, storing up trouble should rising inflation lead to a sharp rise in interest rates. (June 12, 2007)

As if it weren't enough, the Dutch bank ABN fears a global housing crash, citing the soaring borrowing costs, which could spark a housing slump on a 'global scale'. To add to the infamy, early June The Bank for International Settlements - BIS - made the same comment about the corporate section, sending a dire warning: the current takeover boom across the world is being funded by ever greater levels of debt, storing up trouble should rising inflation lead to a sharp rise in interest rates. But that was nearly two weeks ago or so. Since then, on June 25 more precisely, BIS sent
another chilling reminder:

... years of loose monetary policy has fuelled a dangerous credit bubble, leaving the global economy more vulnerable to another 1930s-style slump than generally understood.

According to 'Implode-O-meter' 86 major U.S. lenders have gone under as of June 22, 2007. Until yesterday only middle and small size lenders were concerned, so many people wouldn't take the anti-bubble crows seriously. The collapse of a first B-I-G domino such as Bear Stearns left many speechless. Once again one could read more about this dramatic event on the Net than in the printed news. The first day after the fund's demise, the rumor of a bailout circulated like a wild fire. Should this option go ahead, it would be the largest since Long-Term Capital Management LP that received $3.5 billion from 14 lenders in 1998. Cynically speaking, inflation adjusted the Stearns' bailout is still a lot cheaper. Never mind, Wallstreeters continue to play their favorite musical chair game, turning a blind eye to the warnings concerning the hedge funds that have been labeled "unregulated businesses" which desperately need oversight. Last May 03, 2007, even the New York Federal Reserve warned that hedge funds pose a great risk.

Qui bono? Who benefits? ... Follow the money as usual: Piggybacking' roils credit industry, corruption running deep within lending industry. Sure, there will always be consumers trying to get a free ride but if freebies and kickbacks must be paid by the entire nation, then we have a serious problem and have to admit that President Andrew Jacskon was right when opposing and shutting down the 2nd National Bank in 1833. How About going back to the gold standard as congressman Ron Paul recommends?

Philosophical Insight:
Hope is a vain word. Unless followed by actions, hopes never come true. Hope is the ecstasy of the masses and this is why big changes all go through social disruptions. Daydreams and reality often - if not always - reveal a great disconnect capable of shattering everything. The "Axioms of Freedom" come down to "no force and no fraud". The primary nemesis is group thinking and pejoratively "herd mentality". Controlling the money supply means controlling these "herds". This is how societies have been working since ever, and this at every level you look at. From the stock market gamblers and brokers to the powerful lobbies and smaller communities. Here is a pertinent question: could you name one government program that has been successful? If you have any hesitation, please go back to the page one of this essay and reread it very slowly. Whatever your culture and the counrty you live in "group thinking" has nothing to offer but the same diatribes. The "group" requires everybody to agree constantly to survive. And this is collectivism in its most subtle form. This is the very nature of lobbying. Lobbies are punished, financed or rewarded depending on the issues. That is what power is all about and why (any kind of) war is a government program. This is nothing less than fights between "herds". Much of the misery in this world is deliberately man-made. Sure, free association is allowed but if we do not learn that the "group" has only a very limited power in itself, we'll never be able to work toward the betterment of society. This is something that the Founding Fathers of America had well understood. They drafted the U.S Constitution in that way, to make sure that the powers-that-be remain controllable.

 1  |  2