Tuesday, 20 January 2009

The Economic Collapse - Where are we at?

I have spent quite a lot of time lately trying to get my head around the Economic crisis - sort the wheat from the political chaff as it were.

Finally today I feel like I have a bit of a handle on it.

I had the opportunity to meet David Cameron back on October 10th at an event in his constituency and I asked him - 'Do you believe that the Govt's response - i.e. the bank bailout V1 will work and what would you propose to do if it doesn't'. 

He answered that he was highly confident it would work and then really fluffed the second part but gave everyone the clear impression that the ramifications of it not working were too horrible to contemplate and that he hadn't really got an answer if it didn't work. In answering the question he also revealing said, whilst talking about some of the detail - 'I think I just about understand it' - not sure if this was him practicising defering superior knowledge to George Osborne or if he really struggles to grasp the economic issues.

Of course the Govt plan didn't work.

Watching this video today here, where George Soros is interviewed at MIT on October 28th it becomes clear that Brown did half follow the solution that Soros outlined by re-capitalising the banks but screwed up by not changing the capital ratio requirements - to enable them to start lending again.

So, if you accept Soros's ideas then that's why we are where we are now...

So, again if Soros is correct by changing the rules, as the FSA has done this week, banks should start lending again..

But. Soros talks about the Superbubble - a 25 year plus period where markets have become heavily overinflated mainly due to an incorrect belief in market fundamentalism (the belief that markets have a natural ability to self-correct) whereas in fact markets don't...


He blames Paulson for letting Lehman go bust - that caused the meltdown apparently.

He say re-capitalise, change capital requirements, prevent collapse of housing - ensure that people's mortgages represent at least 80% of market value - else they will walk away creating more collapse etc etc.

But what I think it misses is a big part of the cause which is the deliberate restraining of their currency by the Chinese. My friend who works with the security services started babbling about this about 3 or 4 years ago and I didn’t really understand what he was saying at the time but now I understand that effectively the Chinese have, by restraining the strength of their currency against the dollar, taken the means of production from the West – simply by making it financially not-viable for us to make almost anything . They have turned our addiction to cheap  goods against us by allowing us to impoverish ourselves (in their favour) and completely dismantle our economic means of production (manufacturing etc, etc).

We are looking for a Houdini manouver.


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