Post by unlawflcombatnt on May 5, 2010 21:33:19 GMT -6
Karl Denninger does an excellent job of pointing out a lot of the parallels between today and 1931, especially about the false optimism that was pushed by the Government and the media.
That optimism was just as wrong then as it is today.
Tue, May 4, 2010
by Karl Denninger
Does Anyone Remember 1931?
Of course not.
"In 1930 there were all sorts of statements about how it was "all under control" and "prosperity was returning." Some examples of the 1929 and 1930 idiocy:
Then there was this little "event" in 1931.
Creditanstalt.
A bank in Austria. A big one, in fact.
It swallowed a debt-ridden rival during the depths of the original crash (sound familiar? Greece gets IMF money but there's no realistic way they can pay anyway) and failed in the spring of 1931.
The panic spread to Germany, and bank runs began (sound familiar?- Greece gets a supposed bailout, but the CDS and bond markets for everyone else over there that are levered too highly continue to blow out?)
Bernanke claims to be a student of The Depression.
But like Hoover and our Fed of the day, during the original iteration of the credit collapse both The Fed and Administration refused to force de-leveraging and the recognition of losses; indeed, they did the opposite - they put in place programs to intentionally lie about asset quality and financial institution health.
Now the latent insolvency that was already present has come to the forefront in Europe, exactly as I expected it would - that the second wave would not start here, in The United States.
I have said this, in fact, for nearly 2 years - when there was plenty of time to not make this mistake.
But just like in 1930, protecting the rich and powerful who screwed the nation out of its wealth and jobs was more important to the politicians and policy-makers than serving the people of the country and holding those who caused the crisis to account.
Now we are on the edge of realization of the same risks and outcomes that we had in the 1930s."
That optimism was just as wrong then as it is today.
Tue, May 4, 2010
by Karl Denninger
Does Anyone Remember 1931?
Of course not.
"In 1930 there were all sorts of statements about how it was "all under control" and "prosperity was returning." Some examples of the 1929 and 1930 idiocy:
Then there was this little "event" in 1931.
Creditanstalt.
A bank in Austria. A big one, in fact.
It swallowed a debt-ridden rival during the depths of the original crash (sound familiar? Greece gets IMF money but there's no realistic way they can pay anyway) and failed in the spring of 1931.
The panic spread to Germany, and bank runs began (sound familiar?- Greece gets a supposed bailout, but the CDS and bond markets for everyone else over there that are levered too highly continue to blow out?)
Bernanke claims to be a student of The Depression.
But like Hoover and our Fed of the day, during the original iteration of the credit collapse both The Fed and Administration refused to force de-leveraging and the recognition of losses; indeed, they did the opposite - they put in place programs to intentionally lie about asset quality and financial institution health.
Now the latent insolvency that was already present has come to the forefront in Europe, exactly as I expected it would - that the second wave would not start here, in The United States.
I have said this, in fact, for nearly 2 years - when there was plenty of time to not make this mistake.
But just like in 1930, protecting the rich and powerful who screwed the nation out of its wealth and jobs was more important to the politicians and policy-makers than serving the people of the country and holding those who caused the crisis to account.
Now we are on the edge of realization of the same risks and outcomes that we had in the 1930s."