The Global Financial System is Falling Apart and the World Economy is Slowing Down

Oh dear reader! This morning, we are practically panting…

The world economy is slowing down. The global financial system is falling apart.

The whole situation is a mess…a disaster for investors…a catastrophe for homeowners…a Waterloo for the financial industry. But it is God’s gift to us.

What fun it is to read the paper! So much nonsense! So many clowns! Such drivel…such claptrap…everything is working out just as we expected.

We had to put down our copy of the Financial Times this morning. We were afraid of internal hemorrhage. Besides, our eyes were watering so much we could barely see…

First…there is Ben Bernanke on the cover, looking rather serious, as he appeared before the U.S. Congress yesterday. The poor man was expected to explain what was going on. What could he say, but that the economy was beset by “numerous difficulties?” He had to play the politician, in other words – the cunning dumbbell…avoiding at all costs saying anything useful or true. Of course, it is true enough to say that the economy faces troubles, but that description of it hides so many absurdities…and so many errors…and so many vanities and hallucinations.

Why didn’t he just come right out and explain that Americans have been living beyond their means…and now they’re being forced to cut back? That’s what yesterday’s retail sales figures showed – that consumer weren’t spending so much. What’s surprising about that? Nothing at all…we’ve been talking about it for months…even years.

But the news struck economists and financial reporters like a UFO sighting – they didn’t know what to make of it.

There’s also a photo of a long line in front of IndyMac’s door – waiting to get their money back. Mr. Bernanke might have also explained what was happening in the financial industry. Wall Street banks…Fannie Mae…Freddie Mac…IndyMac…Bear Stearns and the whole lot…made their money by peddling debt to people who already had too much. What did you think…that they could do that forever?

The headman at the Fed would have done us all a service, in our opinion, if he leveled with the nation.

“Look,” he might have said, “the prosperity we have enjoyed for the last few years has been largely an illusion; it was based on debt, leverage, and speculation. We all know you can’t get rich by spending more than you earn. And you can create real prosperity by borrowing money and spending it on consumer items. We’re now paying the price for those mistakes. Let’s just get it over with.”

Those words may or may not have been on call for him. He might have doodled something like that on the back of an envelope on the way to Capitol Hill. Maybe they came to him in a dream.

But when he got in front of the microphone, he realized that the truth is the last thing anyone wants to hear. He wisely avoided it, sticking with the stock phrases and standard wording of economic obfuscation.

Meanwhile, down the street, the U.S. president shifted from soporific twaddle to breathtaking imbecility.

“To the extent that we find weaknesses [in the financial system] we’ll move,” said the president of all the Americans, George W. Bush.

Mr. Bush has a weakness himself – for movement. He has presided over the most fidgety administration since Franklin Roosevelt. Not content to sit still, he spent more, borrowed more, and stirred up more dust than any previous administration. Now, he proposes a vast new expansion of the war against Free Enterprise.

Bailing out Bear Stearns, providing tax refund checks, and nationalizing Fannie and Freddie “signal a weakening of the administration’s ideological commitment to free-market principles,” says the Financial Times.

At this moment, we had to put down the paper. Where has the FT been? This administration has no commitment to any principles, as near as we can see. All it took was a terrorist attack in New York, and it threw over its entire conservative foreign policy in favor of reckless interventionism. And now we have a crisis in the financial industry. Of course, the big lenders, spenders and speculators are only getting what they deserve. Still, the Bush Administration is mounting an invasion.

We predict that it will have roughly the same results. Sweden, of all places, faced a major financial meltdown in 1991. The government hastened to intervene with a bailout. The cost – if translated to an American-scale economy – was more than $1 trillion. Mr. Bush’s intervention will cost that much – we predict. Or more.

Bill Bonner
for Markets and Money

Bill Bonner

Bill Bonner

Since founding Agora Inc. in 1979, Bill Bonner has found success and garnered camaraderie in numerous communities and industries. A man of many talents, his entrepreneurial savvy, unique writings, philanthropic undertakings, and preservationist activities have all been recognized and awarded by some of America’s most respected authorities. Along with Addison Wiggin, his friend and colleague, Bill has written two New York Times best-selling books, Financial Reckoning Day and Empire of Debt. Both works have been critically acclaimed internationally. With political journalist Lila Rajiva, he wrote his third New York Times best-selling book, Mobs, Messiahs and Markets, which offers concrete advice on how to avoid the public spectacle of modern finance. Since 1999, Bill has been a daily contributor and the driving force behind Markets and Money.
Bill Bonner

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1 Comment on "The Global Financial System is Falling Apart and the World Economy is Slowing Down"

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Harley G. Davidison
This is going to happen the USA will no longer be a super power and money wise it will fall. Just like Rome did so many years ago all this information can be forund in the KING JAMES BIBLE IN REVELATION CHAPTER 6 thru 21. Its going to fall hard and then the ANTI CHRIST will come on the set out of the rvised roman empire and every one will want him to lead this is about to happen are you ready do you know Jesus Christ as your personal savior. it real easy repent and confess your sins to… Read more »
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