Hypothetical - the economy goes bust

[Buddy]

What everyone needs to understand is that what is going on is a Financial 9/11...

The people orchestrating this don't live in caves, they live in mansions and penthouses.

Once you understand that the money is leant into existence and is used by the people who create the money out of thin air to buy physical asset's, all of those things that never quite made sense, starts making much more sense.

Just like the Great Depression 1, the Greater Depression 2 has been carefully engineered and is being executed right now...

Speaking of 9/11, with a slightly different slant on things...........
You know, there is an old bearded guy sitting in a cave somewhere near the Pakistan/Afganistan border, who is absolutely killing himself with laughter. That is between when he says to his lieutenents "Why did I send all those lovely muslim boys, sons, brothers to fight this friggin war? Look what these dickheads have done all by themselves".
So maybe some good will come out of this mess. Maybe those dickheads in the Whitehouse will realise how expensive (in economic terms, because they dont give a stuff about the human cost) their expeditionary fishing trips into far away countries is. I mean really, what's the point? And maybe the other mob will lighten up decide they dont need to spread their crazy suicide bombers all over the place.

One can only live in hope.
Yes, I know :topic but this constant use of the term "financial 9/11" draws me to make this observation.

 

[Kimosabi]

Speaking of 9/11, with a slightly different slant on things...........
You know, there is an old bearded guy sitting in a cave somewhere near the Pakistan/Afganistan border, who is absolutely killing himself with laughter. That is between when he says to his lieutenents "Why did I send all those lovely muslim boys, sons, brothers to fight this friggin war? Look what these dickheads have done all by themselves".
So maybe some good will come out of this mess. Maybe those dickheads in the Whitehouse will realise how expensive (in economic terms, because they dont give a stuff about the human cost) their expeditionary fishing trips into far away countries is. I mean really, what's the point? And maybe the other mob will lighten up decide they dont need to spread their crazy suicide bombers all over the place.

One can only live in hope.
Yes, I know :topic but this constant use of the term "financial 9/11" draws me to make this observation.

Buddy,

You may want to go have another look at 9/11.

There is a growing body of evidence that Bearded Men in caves didn't do 9/11, but the dickheads you refer to in the Whitehouse and their cronies in the Banking System...

Do your own research, draw your own conclusions. You may be disturbed by what you find...

 

[Buddy]

Buddy,

You may want to go have another look at 9/11.

There is a growing body of evidence that Bearded Men in caves didn't do 9/11, but the dickheads you refer to in the Whitehouse and their cronies in the Banking System...

Do your own research, draw your own conclusions. You may be disturbed by what you find...

Yeah, yeah! I heard all that stuff. But I dont want to get into that argument. My fault for going :topic That'll teach me. But i'll bet you London to a brick that the bearded guy is still having a good chuckle.

 

[algis]

A reminder that now that levels of credit injected into the world economy have slowed, we will see a greater ownership of the ecomony by those that lend the money at interest. You guessed it, this will occur through foreclosures.

The reason this situation occurs is because the available pool of 'money' in the economy has stopped growing due to the reduction of inflows of new credit. If the magnitude of 'money' that is returned to lenders to service interest rates if higher than the amount of new credit brought into the economy, then those who loan the money own more of the economy.

I still have trouble seeing truth in the conspiracy theories that this credit crunch is planned by the central banks. They do end up ultimately owning more, but the overall state of the globe is reduced, no? The assets that are usurped are degraded? Witness Detroit. Or the USA in its entirety. Lots of foreclosures, so ultimately the banks end up owning more, but country is decimated. The benefits could only be in the long term assuming rebuilding occurs.

 

[Jikx]

I still have trouble seeing truth in the conspiracy theories that this credit crunch is planned by the central banks. They do end up ultimately owning more, but the overall state of the globe is reduced, no? The assets that are usurped are degraded? Witness Detroit. Or the USA in its entirety. Lots of foreclosures, so ultimately the banks end up owning more, but country is decimated. The benefits could only be in the long term assuming rebuilding occurs.

Well, you have to ask yourself this - would all those "foreclosed" properties even be built if it wasn't for the excessive lending from the beginning? So they end up owning properties which they paid for themselves, with no-one wanting to buy it off them, and no-one wanting to rent off them. No, I highly doubt the conspiracies but quite obviously no-one wins. And exactly what does the reserve bank do with all this property anyway?

On another note, I find this entire market crash very fascinating. I cannot believe how bad this has gotten since I started this thread over a year ago. Back then, we all could smell something was wrong but it appears we all just sat on our hands hoping we could get out before it exploded!

I mean, I sold out of a lot of my stocks almost 2 years ago now. BHP was $28, Rio was $85, and I was cursing myself to hell when I saw these stocks almost double. And here we are now, where suddenly I see these stocks (and more!) drop like a rock below even what I sold them for all those years ago. It's interesting, and it's scary!

 

[lakemac]

For those following my comments on bank trust comes this excellent article.
Brings together the cost of borrowing (between banks) and credit issues.

http://mises.org/story/3146

 

[lakemac]

Ok for those claiming cultural issues will save the day, I point you in the direction of a once fabled Asian country called Japan.

As I have said before for those old enough to remember we were all told in the 1980's to learn Japanese as they were taking over the world.

And yes there were those (as some posters here have claimed about China) that Japan was unstoppable. Well that was the theory, at least until the Bank of Japan (BoJ) decided otherwise.

Go back to USA in the "roaring twenties" circa 1920-1929. Same thing.

For the doubters - full credit for doubting what I am saying. However go and do some indepth research and build your own world model. If you can explain events for the last 400 years then you will probably come out with the same model I ended up with. I never thought history and economics would be this fascinating. I only wish they taught like this at school - wow!

People don't be fooled by the momentum of an economy. Both Japan and the USA had that in there respective times. Both stopped in the space of 12 months as the credit/goodwill/trust evaporated or was actively destroyed.
Any one care to cite any references, theories and or models, that can convincingly persuade me otherwise. You will need that 400 year history lesson as well.

What do the banks do with these "impared" assets? Two things:
1. remortgage them (think of land as a fisherman's bait/hook).
2. economic control (then see point 1).

You have to remember how do banks make money and exert control.
The only true money is interest. Loans = credit = goodwill = trust = thin air... which is not real. Interest is paid by people working - doing real jobs - nailing house frames together, serving you a meal, fixing your car, digging iron ore out of a mine. Banks lend you thin air in order to get you to pay them interest.

Control is exerted by owning land which gives you the ability to influence government which extends your ability to collect interest. Why do you think the big US banks in the early 20th Century lobbied Congress to pass the Federal Reserve Act (cf its passage in the dying hours of the last session of Congress in 1913 - even Woodrow Wilson, the then President, questioned the veracity of what he was signing into law - pity he was such a wimp .

 

[Kimosabi]

The Bankers 9/11
10-8-8

The US - now world - financial crisis has given nations a golden opportunity, but will they seize it, asks Eric Walberg

This Wall Street bailout - yes, bailout, not "rescue" - is yet another boondoggle by the neocons, pulled out of bankers' back pockets, and being enacted in an atmosphere of panic orchestrated and spread around the world to make sure it got passed ASAP. A bankers' 9/11: implode a few bank towers to make sure the system as a whole survives.

As the dust settles, it is clear that nothing much about our casino capitalism is about to change at all. But what is to be expected from the likes of United States President George W Bush? Joseph Stiglitz comments, "This 'cure' is another one of these rearrangements: by stripping out the bad assets from the banks and paying fair market value for them, the value of the banks will soar." It is a ruse based on the "trickle-down economics" made famous by president Ronald Reagan. Throw enough money at Wall Street and a few drops are sure to hit Joe Public.

Legislation that shows a corner is being turned, a new leaf turned over, would require addressing issues such as the wars in Iraq and Afghanistan, the monstrous military budget, the even bigger trade deficit, the massive tax cuts to the rich over the past 28 years, the very debt-based system of money creation - none of which got the time of day as legislators prepare to end their final working session this year. But then even a Barack Obama would not be able to extricate himself from the spider's web that is the US political system today, as his hearty support for the bill and support of President George W Bush show. Funny how Federal Reserve Chairman Ben Bernanke, accompanied by Secretary of the Treasury Henry Paulson, seemed to pull the $700 billion 450-page Emergency Economic Stabilisation Act out of his hat like a magician.

Was this plan in the wings, just waiting for its chance in the spotlight? And does it make sense to let the fox work out a plan to save the chickens as they come home to roost? Isn't it more likely that he will ensure the long life of his progeny first, always keeping in mind that enough chickens must be kept alive to reproduce and feed the foxes? To use another metaphor, does it make sense to put the pilot who hit the iceberg in charge of the lifeboats?

Adam Smith writes in The Wealth of Nations: "The proposal of any new law or regulation of commerce which comes from this order [profit takers], ought always to be listened to with great precaution, and ought never to be adopted till after having been long and carefully examined, not only with the most scrupulous, but most suspicious attention. It comes from an order of men, whose interest is never exactly the same with that of the public, who have generally an interest to deceive and even to oppress the public, and who accordingly have, upon many occasions, both deceived and oppressed it."

Instead, it was railroaded through Congress and the Senate in a mood of hysteria, irresponsibly orchestrated by the very foxes who created the problem. The plan is intended to infuse the financial system with cash to "thaw" frozen credit markets (as if it is a natural process) and prevent a deep recession. So where have the $600 billions in tax cuts over the past eight years gone? Isn't printing more dollars like pouring water through a sieve? And is yet another $150 billion in tax breaks over the next 10 years really the answer?

The programme will send the federal deficit through the roof, even as it approaches record levels. The Treasury will have to borrow the money, requiring a bill increasing the government's legal debt limit by - surprise - $700 billion, to $11.3 trillion.

In the early 1990s, Sweden fought off a similar meltdown, also brought on by deregulation, which involved giving the government good as well as bad assets, and it survived. There is also "the Buffett model": Warren Buffet put money into Goldman Sachs, getting preferred shares and warrants, i.e., both protection when prices slide and participation when they stabilise. This would have worked better as a way to save the banks and protect taxpayers, even if it didn't address the underlying problems.

Two bright spots: insurance for deposit accounts was increased from $100,000 to $250,000 and pay for senior executives at firms participating in the programme was capped. CEO salaries have skyrocketed in the past two decades; for instance, Lehman Brothers' Richard Fuld received $466 million from 1993-2008 and a whopping $62 million "golden parachute" exit pay on resigning last month, as his firm chalked up a $6 billion loss and declared bankruptcy. Executive "pay" does not include the de rigueur hefty stock options and perks. Treasury may now ban excessive salaries and bonuses, as well as these golden parachutes for executives at firms that receive direct infusions of federal cash. Companies that sell assets in government auctions will lose tax deductions if salaries for their top executives exceed $500,000 a year, and outgoing managers who take severance packages triple their annual salaries will be required to pay a 20 per cent excise tax.

There are still those who have the chutzpah to protest against attempts to cap these salaries. "The bailout is about saving the economy, while executive pay is a separate, and complex, issue," says corporate governance expert at the University of Delaware Charles Elson. "It is not appropriate for government to be setting the salaries of executives," said Scott Talbott, senior vice-president for government affairs at the Financial Services Roundtable, a trade lobbyist. But not even the foxes are listening to such whining anymore. Paul Hodgson of the Corporate Library cuts through this cant: "This financial crisis is a direct result of the compensation practices at these Wall Street firms."

That Hodgson is spot-on is revealed by the intrigues of Joseph Cassano, head of AIG's London Financial Production office from 1987-2007. He used this obscure operation as a base to amass a fortune, specialising in such suspect "plain vanilla" products as "interest rate swaps" and "collateral debt obligations" (CDOs), and even dreamed up "credit default swap insurance" for these CDOs. There was never any intention of paying out any "insurance" claims - it was simply an old fashion pyramid scheme which netted Cassano personally hundreds of millions. He resigned last year as AIG went into the red, in part dragged down by his operations, and refuses to speak to the media. Multiply this by a few tens of thousands and it begins to add up.

However, there were lots of the usual pork barrel treats added to sweeten the bill and ensure its passage, including a 39-cent tax break for an Oregon firm that makes children's wooden arrows, tax breaks for Alaska fishermen and Samoan businessmen, $128 million for race-car track manufacturers, tax breaks to small television and film producers and for the production - none of which has anything to do with the crisis.

Senator John McCain's attempts to tar Senator Barack Obama for merely consulting with the former chief executive of Fannie Mae - a contention hotly denied by the Obama campaign - backfired when it was revealed that Freddie Mac was paying McCain's campaign manager, Rick Davis, $15,000 a month until two months ago - a total of $2.5 million since 2000, betting on McCain to be the Republican nominee. McCain previously insisted that Davis had had no involvement with the mortgage company for the past several years.

 

[Kimosabi]

The $700 billion boondoggle has been passed, with a virtual carte blanche for the Treasury secretary and the Federal Reserve chairman, the foxes, to pay their canid friends whatever they want - for their mistakes. The original proposal gave the secretary unlimited power to spend the $700 billion, not just on mortgages, but on any "financial instrument" he liked. This was tightened somewhat, with two boards, including an "independent" congressional panel, an "independent" inspector general (shades of Gogol) and an oversight board staffed by the treasury and housing secretaries and the Federal Reserve chairman. Yes, oversight by the foxes and a Congress beholden to lobbyists. This will be sure to do the trick.

Absolutely no mention was made of the more than $500 billion which the Iraq war has cost in the past five years, the $600 billion in tax cuts since Bush came to power, the $650 billion military budget, or the $850 billion trade deficit. Cumulative borrowing from abroad during the six years of the Bush administration amounts to $5 trillion. The $700 billion figure begins to pale in comparison to this profligacy and mismanagement.

In these final months of his presidency, Bush has pulled another weasel out of his hat, pushing through a policy that rewards his criminal friends and avoids any need to reverse his disastrous foreign and domestic policies. Yet commentators feel sorry for him, calling it a hollow victory. He is finally being forced to eat some crow, they say, made to preside over the biggest government intervention in decades, largely abandoned by his fellow Republicans in the House. His CEO friends will find their wings clipped and their golden parachutes taken away. And, if the plan has lost money after five years, his successor must submit a plan to Congress for recouping those losses from the financial industry, perhaps through new fees or a tax on securities transactions.

The ultimate irony here is that the Titanic took the lives of the rich as well as the poor. At least in those days, there was a sense of honour which allowed the innocent women and children to escape. Imagine the Titanic today: as the ship sinks, all are scrambling without any sense of shame for the lifeboats, abandoning any attempt to patch the huge holes - which could easily be done given the will - resulting in one and all being swallowed by the abyss.

A real rescue plan

The financial bailout is not a plan that fundamentally alters the relationship between government and business, as is being touted. It will not solve the underlying crisis that the US finds itself in. It will fundamentally alter the relationship between the US and the world, but more because of the panic it precipitated and the accumulated effects of the other disastrous policies of the Bush era - the wars, the deficits in trade and the budget. Therein lies the golden lining. The neocon con is over. The public outrage should be mobilised to push for a real solution. What would a sober plan look like?

- For starters, it would require the government to renationalise Freddie Mac and Fannie Mae, paying the current market value for the bad assets, not a penny more, and taking all loans, both good and bad. Why should the government only take over the culprits' bad loans? After all, the management of these once-upon-a-time government agencies - intended to help the poor purchase homes - having filled its pockets, has left behind a mess. But many of these bad debts are made up of such fraudulent "investments" as CDOs, and are now so convoluted, they could well be worth nothing. The foxes insist that when the market rebounds, the government will magically be able to sell the bad loans at a profit. This sounds suspiciously like the strategy in the early 1990s during the Savings & Loan scandal, which rewarded the culprits and cost the taxpayer $350 billion. Caveat emptor.

- The Glass-Steagall Act, passed in the wake of the stock market crash of 1929, and designed to separate banking from securities activities, should be immediately reinstated. It was repealed by Congress in 1999 (guess who lobbied for its repeal?), allowing banks to make fast money from risky investments in securities and derivatives, and led to the subprime scandal earlier this year. The entire swamp of "financial services" should be drained and strictly controlled in future.

- As part of a clean-up of the financial sector, the failed and failing banks should be put under direct government control, their records opened to independent investigators. Culprits should be prosecuted and lose their ill-gotten gains (in as much as they are accessible, considering the ubiquitous offshore banking system). Salaries of CEOs and management would be adjusted in line with government salaries.

- There should be a moratorium on housing foreclosures. Instead of handing $700 billion over to the banks, the government should use it to pay off all delinquent mortgages. This is the proposal of the Yale School of Management's Jonathan Koppell and William Goetzmann. Mortgage rates should be capped, and lenders should take part of the beating by agreeing to renegotiate mortgage values in light of the falling values.

- Taxes should be increased - returned to their pre-Reagan progressive rates - rather than decreased. The negative savings rate in the US is the elephant in the room, with few people producing real goods, and virtually everyone living on credit. US citizens must own up to their flight from reality.

- The deindustrialisation of America must be stopped. If the country produces only arms and dubious pieces of paper, there is no way it will be able to pull itself out of the hole it has dug.

- The poison that is euphemistically called the international financial system must be radically reformed. The G8 (sorry, G7) should be mobilised to enact legislation ending offshore banking - used to launder money and keep illegal earnings out of the hands of investigators. British Prime Minister Gordon Brown has called for a new global financial regulatory system and he should be given an immediate "yes".

- Speculation on "floating" currencies, which rakes in billions every day for speculators, must end. For 30 years, even mainstream economists such as James Tobin have been urging the taxation of earnings made from speculation on currency fluctuations, the so-called Tobin tax, with the goal of reducing this practice and the instability it causes. In effect, it allows speculators like George Soros to rob the broad citizenry of the world. Tobin's idea is to tax the Soroses and give the proceeds to third world development. Better yet, exchange rates could be fixed and adjusted in an orderly fashion to prevent such speculation and the undermining of economies it leads to.

- Most important, the US government must be forced to abandon its reckless policy of war and militarism, and reign in its profligate spending, issues which so far have been entirely absent from the debate.

To those that howl that all this amounts to socialism, so be it. Remember Northern Rock, the British building society that suffered a run on it last year and was nationalised? With more and British banks needing rescues these days, public confidence has become so fragile that Northern Rock is now seen as the best place for savings because its deposits are fully guaranteed by the government. Socialism works. There Is No Alternative - TINA - as former prime minister Margaret Thatcher loved to spout about capitalism. While private pension funds fold, Social Security plods on. By going too far in filling their pockets, banks have proved the bankruptcy of the entire system.

Some of this sense has "trickled down" into the revised plan. The FBI has opened 26 investigations into fraud by the failing giants, though as with the investigation of the Enron collapse in 2003 there is little likelihood that - leaving aside sudden mysterious death - any culprits will suffer more than a handslap. Finance Services Committee Chairman Barney Frank said he plans to rewrite housing finance laws, broaden executive pay limits to more corporations and pursue new regulations to rein in excessive risk-taking on Wall Street.

Such rearguard actions are mere crumbs. What is most shocking of all in this latest Bush-induced crisis is that the neocons created a worldwide panic to railroad through a bailout which leaves the criminals in control of the world's financial system and their rules of play intact.

http://www.rense.com/general83/bankers.htm

 

[cordelia]

watch this video (link below) to find out all about the banks.....It will make perfect sense of what is happening now......It looks a bit like a religious promo at the beginning..but it's not......it was a bad choice of intro IMO......you can always skip part 1 ..the stuff about 9/11 is too hard to ignore...perservere..it's very enlightening...

http://video.google.com/googleplayer.swf?docId=5547481422995115331&hl=en&autoplay=1

 

[cordelia]

Don't believe what you read in the newspapers.......The media is nothing more than a conduit for misinformation, designed to influence public sentiment in such a way as to benefit the hidden agendas of those who own it.....It's the perfect tool for mass indoctrination......

People often make reference to the "herd mentality"...unfortunately it's really hard to see the herd...when you are part of it......The media makes sure you don't see the herd........Even the journalists, TV reporters don't see how they are being used...They are none the wiser........Just like mushrooms...kept in the dark and fed BS.......

The true weapons of our society are words and images.....both of which are controlled by the media.....Think about what you know? where did that knowledge come from? How many people read books anymore? Most obtain their beliefs from the TV or newspaper......

The Internet is the perfect mass communication tool.....People even buy shares on advice they receive in chat rooms...as unbelievable as it seems....The Internet is a lawless environment where people can say anything they like.....and who are these people?

This crash is like no other because of the mass communication .....IMO.....You cannot escape the bad news......You would have to turn off your TV, switch off your mobile, not use the Internet and not speak to anyone.....In fact, the only way to avoid the constant barrage of bad news is to cease interacting with anyone at all...

Even my mother, who has absolutely no idea about finance, was telling me about interbank lending rates......

 

[lakemac]

cordelia - but did she understand why they are important?

If she did she is probably a lot wiser than most of us here...

 

[cordelia]

lakemac...yes she did..that's the interesting part.....when a Nana starts getting concerned about Interbanking lending rates maybe it's time to start buying....

 

[lakemac]

People - I just sat thru that video (all 300MB / 2hrs) worth of it.
First time I had watched it.

As I have already said to Cordelia privately - oh my oh my oh my.

Do yourselves a favour and watch it. The first 10 minutes are a bit off-putting but keep going, it is really really really worth it.

I am just totally blown away

Thank you Cordelia for providing the link

 

[Ageo]

Well while im waiting for it to d/l i viewed an interesting article im sure you have read lakemac. Made very interesting reading, thanks for the site btw as it has plenty of good info

Economic Depressions: Their Cause and Cure
http://mises.org/story/3127

 

[baja]

watch this video (link below) to find out all about the banks.....It will make perfect sense of what is happening now......It looks a bit like a religious promo at the beginning..but it's not......it was a bad choice of intro IMO......you can always skip part 1 ..the stuff about 9/11 is too hard to ignore...perservere..it's very enlightening...

http://video.google.com/googleplayer.swf?docId=5547481422995115331&hl=en&autoplay=1

I just watched this, thank you for the link.

Blown away. Most of it regarding current events just solidifies my position on things. Still, it leaves me at a loss at the end, somewhat powerless. What can you do? Keep spreading the word, getting everyone informed I guess?

 

[Kimosabi]

I just watched this, thank you for the link.

Blown away. Most of it regarding current events just solidifies my position on things. Still, it leaves me at a loss at the end, somewhat powerless. What can you do? Keep spreading the word, getting everyone informed I guess?

The solution is to STOP participating in their system and to educate EVERYONE.

These psychos only get their power from our ignorance and participation.

Practical things to do include:

Grow an Organic Vege Garden with some fruit trees/herbs etc = Food Freedom

Learn about Herbs, Natural Healing/Nutrition etc = Health Freedom

Learn about HHO/Water Fuel Cells etc = Energy Freedom

Learn how to reclaim your personal and property soveriengty thus extracting ourselves from their Man-made Admiralty/Commercial laws = Legal Freedom

Stop watching their Television, reading their Newspapers/Magazines etc = Mental Freedom

If we can all attain Food, Health, Energy, Legal and Mental Freedom, the psycho's loose all of their power.

Welcome to the Rabbit Hole, the question is, do you want the Red or the Blue Pill....

Another Great Video to watch is Esoteric Agenda ==> http://video.google.com.au/videoplay?docid=-6030443037963555139

There are a tonne of similar videos to watch here ==> http://www.kokomotion.com/TWH/docs/expanded.html

 

[Ageo]

The solution is to STOP participating in their system and to educate EVERYONE.

These psychos only get their power from our ignorance and participation.

Practical things to do include:

Grow an Organic Vege Garden with some fruit trees/herbs etc = Food Freedom

Learn about Herbs, Natural Healing/Nutrition etc = Health Freedom

Learn about HHO/Water Fuel Cells etc = Energy Freedom

Learn how to reclaim your personal and property soveriengty thus extracting ourselves from their Man-made Admiralty/Commercial laws = Legal Freedom

Stop watching their Television, reading their Newspapers/Magazines etc = Mental Freedom

If we can all attain Food, Health, Energy, Legal and Mental Freedom, the psycho's loose all of their power.

Welcome to the Rabbit Hole, the question is, do you want the Red or the Blue Pill....

Interesting you mention that, the 2nd amendment that the 4 fathers wrote i believe was to repel something similar to this, to be free in each state. Now imagine if these people behind all these acts actually had a brutal leader in charge? with unlimited amounts of money and power what would stop 1 to rule the country if not world? i remember a key common element dictators had....... they all disarmed their citizens which basically meant (no way to fight back and overthrow the dictatorship). I know its off topic but i thought it was relevant to the video. The 4 fathers knew that if something like this were to happen again that citizens would have the right to bear arms.

But back on topic and more importantly how can we profit massively from all this information

 

[ozambersand]

Thanks for the link Ageo, this part was interesting.....

Economic Depressions: Their Cause and Cure
Daily Article by Murray N. Rothbard | Posted on 10/2/2008
[This essay was originally published as a minibook by the Constitutional Alliance of Lansing, Michigan, 1969.]

Mises, then, pinpoints the blame for the cycle on inflationary bank credit expansion propelled by the intervention of government and its central bank. What does Mises say should be done, say by government, once the depression arrives? What is the governmental role in the cure of depression? In the first place, government must cease inflating as soon as possible. It is true that this will, inevitably, bring the inflationary boom abruptly to an end, and commence the inevitable recession or depression. But the longer the government waits for this, the worse the necessary readjustments will have to be. The sooner the depression-readjustment is gotten over with, the better. This means, also, that the government must never try to prop up unsound business situations; it must never bail out or lend money to business firms in trouble. Doing this will simply prolong the agony and convert a sharp and quick depression phase into a lingering and chronic disease. The government must never try to prop up wage rates or prices of producers' goods; doing so will prolong and delay indefinitely the completion of the depression-adjustment process; it will cause indefinite and prolonged depression and mass unemployment in the vital capital goods industries. The government must not try to inflate again, in order to get out of the depression. For even if this reinflation succeeds, it will only sow greater trouble later on. The government must do nothing to encourage consumption, and it must not increase its own expenditures, for this will further increase the social consumption/investment ratio. In fact, cutting the government budget will improve the ratio. What the economy needs is not more consumption spending but more saving, in order to validate some of the excessive investments of the boom.

It looks like the exact opposite of what Mises recommends will happen....... so expect a long drawn out recession.
One answer to the above post was spelled out by Lakemac in the third post in this thread:

3rd-June-2007, 04:20 PM #3
lakemac
Turn your non-real assets into gold, get rid of all credit, then wait for the crash to fully take effect (can be up to 3 years) then buy real assets - particularly property (by that I mean a house on a block of land not a unit).

 

[moXJO]

I noticed in the link provided by cordelia ( I think it was Zeitgeist) about the two british SAS members caught shooting civilians while being dressed as Arabs. Bits and pieces to prolong the war I suppose. Hope our boys are not being instructed to do the same.

AUSTRALIAN special forces troops in Afghanistan have accidentally killed a district governor and two of his bodyguards in a botched raid that will pose a further setback to the battle against the Taliban insurgency.

http://www.smh.com.au/news/world/aussie-troops-kill-three/2008/09/18/1221331074591.html