Recession? Depression? GLOBAL WIPEOUT?

[PoliticalCitizen]

What started as questionalbe sub-prime mortgage policy became trouble with US mortgage-backed commercial papers which led to a US liquidity shortage then led to bankruptcy / nationalization of US investment banks which grew into a world-wide financial crysis, complete with lack of liquidity and multiple bank nationalizations.

As a result oil prices dropped, invstors started a massive sell-off, consumer confidence evaporated. World credit market seized solid even as governments in unprecedented coordinated actions slashed interest rates and injected federal cash into the system.

Most major indexes have lost close to 50% of their peak values or more and show no sign of rebounding. The governments' tinkering with the market has led to further lack of confidence from investors and upset the market behaviour to the point where reaction is sometimes opposite to the usual.

At first even the word "Recession" sounded far-fetched. Now the possibility of "Depression" appears to become unavoidable. Some say that what we're witnessing surpasses the Great Depression by orders of magnitude.

As we are headed to what appears to be a GLOBAL WIPEOUT - do you believe the world will be the same when we come out of it? Will stricter regulations be enough? Will countries choose to have their banks nationalized or semi-nationalized? Will maybe some countries choose a different social organization to avoid being financially and economically destroyed in the future?

Could this be the end of Capitalism as we know it?

[kengs333]

End of Capitalism? Noooo....

Humans are greedy, and so long as we have a social system that allows for the acceptability of greediness, Capitalism will always find a way to work.

[PoliticalCitizen]

End of Capitalism? Noooo....

Humans are greedy, and so long as we have a social system that allows for the acceptability of greediness, Capitalism will always find a way to work.

Well apparently the switch to Socialism is not that easy - nationalizing private banks can lead to the whole country being bankrupt (see Iceland).

[Topaz]

Jim Cramer was on "the view" today and he said that this is probably going to last about 5 years and so if you need money for buying a house, education for your teen that is about to enter college, etc. take the money out from the stocks. The banks are insured for citizens account up to 250,000.00, here in Canada its 100,000. I also think it may a good idea to have some money outside of the banks just has a safety reasons and hopefully you may not need it.

[PoliticalCitizen]

Jim Cramer was on "the view" today and he said that this is probably going to last about 5 years and so if you need money for buying a house, education for your teen that is about to enter college, etc. take the money out from the stocks. The banks are insured for citizens account up to 250,000.00, here in Canada its 100,000. I also think it may a good idea to have some money outside of the banks just has a safety reasons and hopefully you may not need it.

The good thing that is that if you still have a job you should be able to buy more with the same money - deflation comes with depression.

[eyeball]

If you lose your job and house you can always join the mobs that will be growing in front of legislatures everywhere. The best thing for depression is to get your anger out rather than bottle it up inside.

OTOH you could just build a shack on a beach somewhere and try living of the fat of the land. Its not like anyone will be able to afford to stop you, they'll be too busy dealing with the mobs. Besides, I think some court just ruled that homeless people now have the right to camp on public lands or the state doesn't have the authority to say otherwise or something to that affect.

Unfortunately an economic collapse will prove to be even harder on the environment as people who can will likely return to things like hunting, fishing and cutting down trees for fuel and shelter. In lieu of a house with a loo more people will be crapping wherever they happen to live which will cause more disease. Its pretty easy to predict how this collapse will manifest itself in places like Africa, many large and small animals will likely be pushed into extinction due to the bush-meat trade and if this collapse lasts 5 years I expect huge numbers of people in the third world will simply starve to death or resort to warfare in their desperation.

I think it would be better if everything and everyone just rapidly crashed into a big heap right across the board all at once so everyone was in the same boat at the same time. I think a slow motion collapse will only result in more pain for more people especially if governments become paralyzed or just let the chips fall where they may. A slower pace of collapse might make things easier for authorities to contain in the short term but that will only last so long. As the economy gets smaller people will get meaner. Community and family breakdown will occur with an increase in substance use, crime and civil unrest.

Unfortunately our global economy doesn't come with a reset button but in theory we should be able to clear people's accounts and get a fresh start but with better accountability, rules and above all confidence next time around. We need something more tangible to base our currency and equity on because confidence really is the problem. If the last few weeks have shown us anything its how tenuous our confidence is - its clearly based more on our imagination and misperception than anything. Even if our economy was based on the premise that every form of currency in the world represented a piece of gold or silver stashed away somewhere we'd soon realize how meaningless this really is in a world bereft of natural capital. You can't eat gold after all once everything else is used up. I don't think its a coincidence that our human economic crisis is happening at the same time that much of our planet's environment is also in a crisis.

I think the key to avoiding a lot of problems will simply be to keep people housed and working. What we really need though is a New and Improved Deal within a capitalistic system using a currency that is based on natural capital - something real as opposed to something...shiny and pretty. Governments should be able to take over the mortages that are failing and employ mortagees to restore things like salmon streams, soil productivity, forests - in essense the natural capital that so much of our economy is in reality based on.

The so called green-shift that we just killed was really just skimming the surface of how far our thinking needs to shift. The fact we did kill it indicates we'll probably have to learn our lesson the hard way. One way or another though this crisis will probably be the end of the world as we know it. OTOH the sun will still continue to set in the west and the stars will shine down just as prettily and as indifferently as they always have. Good night and good luck.

Edited October 17, 2008 by eyeball

[Oleg Bach]

It was all of you that embraced money as god - suddenly YOU have lost confidence in Mammon? Looks good on you - There is only one way out..that is to continue to believe in the monitary system - a steady course of positive thinking is all that will work - ONCE you toss up your arms and surrender to reality - to the reality that no one ever had real money - and that you must continue to believe in yourself and the system....at this rate all that is taking place is a lucrative type of havoc for a select few who know money means nothing - and THEY are the ones who will prosper.

Interesting that the term HAVOC was a Norse war cry. Once the Vikings had secured a village and taken the woman and children captive - the commander would yell out HAVOC - which means gather up the valuables and load up the boat - This is what is happening globally - there are raiders that are reaping havoc...so don't worry about it - let the greedy bastards eat their fill - and we will survive - You must believe in a higher power - higher than money - panic will bring poverty.