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Quote Originally Posted by pacfan View Post

Would, by any chance, an acknowledgement and a citation from a poor fisherman mean anything to you?
It means more than any praise from the arrogant Bush or Bernanke.

I've been inundated with emails from the SEC and the British equivalent telling me exactly what I can and can't say in public, public forums etc. Both organisations are expecting a massive public backlash against the financial industry after this crisis (KLGFSRP willing) settles down and bankers will make lawyers and estate agents look popular when people see what we've wrought. But it turns out I now know exactly what I can say re. investments. I can definitely tell you not to invest in something, so right now I'd say not to invest in any kind of paper or equities, stocks etc. There's going to be an unpleasant recession and they're kryptonite to stock markets. We could easily see Dow 7000 this time next year. Long term if you've taken a haircut on your stocks over the past year hang onto them as in three or four years they'll return to their previous value.

We're not out of the woods yet though. There's lots of things could go wrong. There could easily be another Iceland before the end of the year. The new Iceland could even be England. There's massive banking debt everywhere and Britain is basically a massive bank. A third of the UK economy is financial services and all the dodgy/risky stuff got booted out of the US by Clinton and moved to London (which is why I'm not working in the States anymore.) An example. Banks used to work on a 10:1 debt to assets ration. If you walked into the bank and deposited £1. They'd keep the pound in the safe and lend ten pounds out on the strength of it. That was considered a safe capital reserve. Barclays bank, Britain's biggest, has a 57:1 ratio and owns over three trillion pounds' worth of things called Credit Default Swaps, which are insurance on various kinds of securities, including the very kind of securities that are causing the current crisis. To put that in perspective UK GDP is less than thst. And nobody outside the bank knows how much they owe because there's no oversight or regulation of the global CDS market. And the global CDS market is worth $60 trillion. To put that in perspective the US stock market is worth about $11 trillion.


And a bank like that somewhere going bust and taking a country down with it like Iceland already (hopefully not the US or things will get really bad) is just one of the problems we might see in the next year or so.

And we've also got the possibility of hundreds of hedge funds going bust and triggering CDS carnage on the world, lots of big insurance companies in trouble, the ongoing process of asset selling by banks to deleverage that's forcing all asset prices down (which makes their :1 all the more worthless) and could turninto a cascade, and of course house prices still falling which would make all those bad securities even more worthless.

Governments are going to have to start a lot of spending on public works to stimulate the economy too or a nasty multiyear recession (which we're guaranteed) will turn into a deacade-long slump. There's no point in the KLGFSRP being successful as a slumping real economy will just make the banks go bust all over again and then this cunting crisis would last years on and off. I've had enough already.

This is precisely why I'm trying to learn how to grow vegetables, I believe that I have enough land to grow enough food for me and the missus to live off of for quite some time. At the rate I'm going currently though, 10 tomatoes a year will be hard to ration. I don't see why you wouldn't want people to invest now, not in short term things, but investing for the long term (more than 10 years). From what I understand (keep in mind I'm a simpleton) the issue is that there is not enough capital in the system. I would think that in addition to the government's contribution, that long term investment in the financial sector should be encouraged. I am very leary of government control of America's financial sector, even though the intention right now is to sell it back to the public, a new administration is coming soon and everything could change. Let capitalism bail itself out, if the government needs to be involved, they could offer a tax incentive program for those willing to invest in these ailing companies, I know more than a few millionaires that would jump at the opportunity to shelter more funds.
They let capitalism bail itself out in 1929 and it caused the Great Depression. Capitalism isn't capable of bailing itself out without government involvement, QED. If the governments hadn't got involved at all there'd already have been over a million people laid off and millions more to come and a ten year plus Depression to face. Hopefully the banks can be weaned off government support in the future but I wouldn't hold my breath on that one. We may yet see total government ownership of the global financial system.