For western countries such as the UK, the first major problems of Peak Oil, assuming there are no oil shocks, will not be the shortage of oil but the economic crises that will occur. Argentina is a recent example of a country that suffered a serious economic crisis, and although Argentina and the UK are not identical, anyone interested in how economic crises can affect individual lives will be very interested in the following vivid description of life for an Argentinian following the economic collapse.
On Thursday, the German stock exchange fell dramatically as auto manufacturers announced substantial job cuts and austerity measures. According to media reports, Volkswagen plans to cut up to 25,000 temporary staff and contract workers. Management at the VW headquarters in Wolfsburg denied that decisions have already been made, but did confirm that a “crisis programme” is being worked on.
Uruknet: In Canto XVII of Dante's Inferno, we learn about the usurers' place in Hell. The canto contains this appropriate description: Behold the monster with the pointed tail / that passes mountains, breaks through wall and gate / and taints the whole world with his stinking trail. [...] He had features of an honest curate / outwardly so meek and mild; the rest / of him was serpentine and intricate. [...] Dangling down into the void, his bottom / quivered upwards with its forked hook / which, as in scorpions, was tipped with venom. The Guide said: "Now perforce must turn aside / Our way a little, even to that beast / Malevolent, that yonder coucheth him." (from: Ciaran Carson translation, Granta Books, 2002)
World share markets plunged again on Friday, as further signs emerged that the global economy is heading for a deep and protracted recession. The largest falls were in Asia, where major exporters are being hit by shrinking markets in the US and Europe.
Stock markets across the world cracked yesterday, forcing Wall Street to suspend trading on a key futures contract to stem panic-selling while Moscow shut for business altogether. Sharp losses in New York, London, Europe and the Far East raised the spectre that governments may be forced to impose emergency holidays to avert a meltdown across world stock markets.
• 50bn wiped off value of Britain's top 100 firms • Wave of panic selling after warnings about far eastAndrew Clark in New York, Phillip Inman, Chris Tryhorn and Kathryn Hopkins The Guardian, Saturday October 25 2008 Article historyFears of an economic slump to rival the recession of the early 1990s have wiped almost £50bn off the value of Britain's top 100 companies and sent stockmarkets around the world into a tailspin. Reuters: U.S. has plundered world wealth with dollar.
What can you buy in America for $1,000? A flat-screen television, perhaps. A weekend break in the sun. Or a three-bedroom suburban home with stripped wood floors and a garage in the country's motor capital. Prophesy News Watch: The Dangers of a Diminished America
Andrew Clark in New York The Guardian, Saturday October 25 2008 Article historyOne of the world's biggest hedge fund managers, Citadel, told clients last night that two of its main funds have lost 35% of their value this year after rumours swept the market about its financial position.
Times have been tough here for some time, and seem only to be getting worse. "The valley is already hurting," Colleen tells us. "It's really scary for the kids that are making minimum wage and driving 25 or 30 miles a day to work — paying for gas, for babysitters, housing. Hard to watch these kids. It's a struggle. It takes all they've got. They don't have luxuries. They live on $1500 a month - $500 for rent. How can you live on that? They have no health insurance. They can't afford it."
Asian and European leaders meeting in Beijing have called for a "comprehensive reform" of the global financial system. At a news conference at the close of the 40-member Asia-Europe Meeting (Asem) on Saturday, Wen Jiabao, the Chinese prime minister, said that greater regulation was needed to avoid another crisis.
The news on markets around the world is particularly dire this morning. Despite a late day rally in the U.S., markets in Asia and Europe are down as much as 9 and 10% and S&P Futures are 60 limit down. This is going to be a very ugly day with market breakers likely to be tested and the Dow breaking through 2002 lows easily at the open. The Independent: Downturn even worse than expected: UK moving 'towards' recession. Yahoo: Stocks dive belief global recession is at hand. Reuters: INSTANT VIEW: Stocks tank at market open. + Markets in tailspin. MarketWatch: Sell-off spans globe.
It's important to remember though that even with these losses, on top of previous losses, Congress still can't find time to make Wall Street bonuses an issue.
Indicators of a worsening social crisis in the US are mounting daily as the economic downturn takes an ever greater toll on jobs. Further layoffs were announced yesterday in the US and around the world. New data was also released showing escalating numbers of American families losing their homes through foreclosure, further driving down house prices.
Let's look at the Panics of 1873 and 2008. Preceding the Panic of 1873 was a boom in railroad building. Preceding the Panic of 2008 was a boom in housing. The Federal government had subsidized construction of such major railroads as the Union Pacific, Central Pacific, and Northern Pacific through land grants and low-interest loans, starting in 1862 and ending in 1869. In the recent housing boom, banks were urged to use their ample reserves to finance home purchases by subpar borrowers. WikiPedia: The Panic of 1873. NationMaster: The Panic of 1873 was a severe nationwide economic depression in the United States that lasted until 1877.
"I made a mistake in presuming that the self interest of organizations, specifically banks and others, was such that they were best capable of protecting their own shareholders and the equity in the firms," Greenspan said. Al Jazeera: Greenspan admits 'flaw' in ideology. The Guardian: Greenspan - I was wrong about the economy. Sort of.
Often referred to as a sub-prime mortgage collapse, this obfuscates the real reason. By associating tangible useless failed mortgages, at least something 'real' can be blamed for the carnage. The problem is, this is myth. The magnitude of this fiscal collapse happened because it was all based on hot air. Financial managers and banking executives were selling the ultimate con to the entire world, akin to the snake-oil salesmen from the 18th century but this time in suits and ties. And by October 2009 it was a quadrillion-dollar (that's $1,000 trillion) industry that few could understand. Propped up by false hope, America is now falling like a house of cards.
Stockmarkets across Asia have suffered fresh falls following yesterday's steep losses in the US and Europe, as the FTSE 100 fell through the 4000-point mark again and Sony issued a shock profit warning. Investors have been spooked by the prospect of a deep, prolonged global recession, with a string of large companies warning that their sales and profits will suffer as the downturn bites.
What we have before us now is a systematic redistribution from the prudent and the responsible to the imprudent and the irresponsible. Did you make your mortgage payments in full when they were due? Were you careful to avoid investing in incomprehensible derivatives whose failure might lead to your bankruptcy? Very good, sir: you are therefore entitled to relinquish substantial amounts of your wealth, either directly through ordinary taxation or indirectly through the “inflation tax” and the diffuse effects of “crowding out” in the loanable-funds market, where the government must soon borrow hundreds of billions of dollars more than expected a few months ago. The People's Voice on 09/28/08: U.S. reaches bailout deal in bid "to stem crisis": The Seektress: Those Who Voted Yes to the Bailout. Existentialist Cowboy: GOP Economics: 'When a Parasite Kills Its Host'. WSWS: Job cuts mount as global recession takes hold. MarketWatch: Weekly jobless claims rise 15,000 to 478,000. Global Research: The Financial Meltdown: This Time Is Different. Lew Rockwell: Warren Buffett, Government Propagandist.
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