Friday, September 3, 2010

Bonus Friday Post: Overdose - The Next Financial Crisis

An excellent 46 minute video produced in Sweden explaining the development of the housing bubble from the ashes of the dotcom burst and terrorist attacks in 2001, the 2008 financial crisis and the evolving stimulus bubble.

I highly encourage everyone to watch it. 2010 is to 2008 as 1931 was to 1929. If you know your history, the market's recovered over 60% after the 1929 crash (which was induced by a massive credit bubble). Events are playing out as they did back then. There was another big crash later in the thirties and the stock market ended down 89% from the October 1929 highs.

"When we tell people there is going to be a bailout bubble, and they see the equity markets up 50 to 60%, they don't wanna believe it's another bubble. They want to step right back to that table and throw their dice and try to win their hand at the wheel of fortune that wall street is spinning. So people still don't want to believe that the worse is yet to come. It's easy to think of these predictions as much too gloomy. But that's exactly what people said the last time when these experts predicted the 2008 financial crisis."

Watch the first five minutes... you will watch it all.



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  1. 16:16: "but when interest rates returned to normal levels in two thousand and six, the spell was broken"

    This point on the timeline seems rather important, yet neither Schiff, nor Celente, nor Walker get to comment on _why_ the rates returned to normal, _who_ did it, and _how_ this move was either stupid or evil. Knowing this we would be better prepared for the future. I am not comfortable with the silence around an event that, according to the makers of the film, led to a bubble burst of such proportions.

    This silence makes them yet another explanatory video (there are dozens of them already), not a one that has a solution to offer. Interesting to watch, but a waste of time in the end.

  2. I always enjoy a little fiction in my day. Especially if it has high production value! Thanks for the video!

  3. The solution is simple and it is mentioned in the video by Peter Schiff when he says, if you don't want bubbles, quit blowing them up.
    How convincing was Obama when he said that the trouble had passed? The trouble was simply delayed, just like more booze delays the eventual DT's for an alcholic. You can not cure a problem of too much debt by creating more debt. The problem just becomes larger and the coming day of reckoning (purging of the debt) will be that much more brutal for average people.

  4. > day of reckoning (purging of the debt) will be that much more brutal

    In Rome debts were being cancelled a couple of times - to the people's joy (and creditors' dismay). How exactly is purging of the debt bad for the indebted?

  5. Interesting comments. Thanks for watching the clip and offering your thoughts.

    To Comment (first reply above): perhaps the 'solution' is in recognizing the bubble exists. Thus you can position yourself to take advantage of it... both as it blows and when it bursts.

  6. "How exactly is purging of the debt bad for the indebted?"
    Who said that?
    The purging of the debt = depression and this will be especially hard on average people and the poor. The more debt we pile on, the nastier the eventual downturn.