As the economic crisis worsens will we see more violence?
musicismylife78
Posts: 6,116
We all know about the traders on wall street who in 1929 jumped out of windows and off roofs. And we know about the shantytowns.
Whats interesting about this economic crisis, or depression is how these actions havent shown themselves.
As the crisis worsens, which as far as I can tell is exactly what is going to happen, will society start to endure more and more violence?
Its interesting to note, the heads of some countries and of the WTO has suggested that this is exactly what will occur in the upcoming months, that riots will break out and their will be urban unrest.
Whats interesting about this economic crisis, or depression is how these actions havent shown themselves.
As the crisis worsens, which as far as I can tell is exactly what is going to happen, will society start to endure more and more violence?
Its interesting to note, the heads of some countries and of the WTO has suggested that this is exactly what will occur in the upcoming months, that riots will break out and their will be urban unrest.
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i forgot, in a moth or two things will return to normal. People can begin to start buying cars and all that stuff again like normal...silly me
Where I'm not ugly and you're lookin' at me
i'm still expecting a second leg down.
we've been swimming around 8000 dow for months now,
treading water in a sea of easy credit.
But the winds are starting to change.
I've said repeatedly for over a year that at some point we are going to see spiked interest rates as the real economy gasps and struggles under the weight of a flood of US treasury securities.
Bloomberg: President Barack Obama, calling current deficit spending “unsustainable,” warned of skyrocketing interest rates for consumers if the U.S. continues to finance government by borrowing from other countries.
Pendulums swing, and any one imbalance will surely beget a nearly equal countermove.
Treasury securities were piled in to head long by every "long only" institution, along with hedge funds, sovereign nation funds, pensions, and multi national corporations. This massive bubble has to unwind at somepoint, and the outcome is simply to drive up the rates on all government issued debt.
I'm not sure Obama (or ANYONE) can do ANYTHING to stop that from happening.
Jlew, do you have any ideas?
If the US Government does somehow manage to stop a real "second leg" down in the form of a deflationary recession, what it may end up creating by accident (or sinister design?) could be worse. I'm not even sure the modern lexicon has a name for what this new type of high-interest environment would be called. Perhaps "stagflation" is the closest we have got, but even that is inconsistent because it involves wage-price spirals.
But we are talking about a situation (previously never really having occured before) where the "faith and credit" of the nation involved are perceived to be so trustworthy and great that we are actually managing in the shortrun to get away with massive debasement of the currency.
Ordinarily this would lead to a hyperinflationary situation (and here we must distinguish between the root cause of hyperinflation -- massive nearterm monetary debasement, and the actual "event" of hyperinflation which revolves around mass-psychology affecting the price-wage equation).
However, since our perceived credit as a nation is so high (either by virtue or by force) we have so far managed to quell any broad scale psychological paranoia about the "soundness" of the currency, and therefore have avoided a hyperinflationary currency run. Not only that but along with generaly slowed economic (particularly consumer) conditions, we have managed to avoid any form of "inflation", or increased prices.
This poses an interesting situation, because without any raise in consumer prices, and generally level wage conditions, we still would maintain high unemployment, and due to pure market forces (or as pure of a market as is left to be had in this rigged, fucked world) the rate on US treasury securities would go up dramatically and cause a further interest rate shock to our system.
In the late 70's and in to the 80's, Paul Volcker had the LUXURY of being able to "raise rates to fight off inflation". Yet, here we see a totally different scenario, where by way of brute force of the market (a correction of imbalance, too many people overbought on treasuries) rates appear ready to simply "rebound" and pose to act less like a "savior" and more like added weight to the pile.
Where does that leave us?
Jlew? Anyone?
I'm way out on a limb here, i sense...
If I opened it now would you not understand?
no. it wont be months...probably years. the point is that we wont see people jumping from windows and rioting in the streets like you seem to suggest. IMO, we will be in a recession for the next 12-18 months. by 2011 or 12 we will be back on the road to recovery and unemployment will be back down in single digits.
the only way around the scenario you mention is for economic activity to rebound so the government can actual start making money again to pay down debt. we are not out of the woods by any means, but we'll see.
The risk I took was calculated, but man, am I bad at math - The Mincing Mockingbird
right.
and my primary worry is,
with an already burdened and sagging economy,
will an automatic and seemingly unavoidable rise in interest rates -- forced by the market's hand, if you will --
will such an event crush any "rebound" or recovery before it even begins?
The bond market will shift the second investors sense ANY significant change in the risk environment. As soon as the big players feel safe pulling funds out of the "piggy bank" (treasury bonds) and throwing them back in to the larger capital markets -- read: as soon as a recovery starts! -- the bond market necessarily takes a tumble.
How does such a sharp and swift change in rate conditions affect an already weak "recovery" environment?
I fear there simply will be no way to avoid this scenario.
Add to that the fallout from a commercial real estate sector collapses, and particularly the ugly synergistic combined negative energies of a tumultuous real estate market AND increased capital costs (rising rates) together, and you have a potentially brutal situation on your hands.
PS - and don't forget your Catch 22 scenario: your hope of a government making money and paying down it's debt has another unintended result: a reduction of the MONEY SUPPLY. The last thing the government probably wants to do right now is start CONSTRICTING the available credit in the market. Damned fractional reserve fiat system! Doh!
If I opened it now would you not understand?