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News Link • Government Debt & Financing

“The Sequel”: How 2011 Is A Repeat of 2008—Only Bigger, Longer, and Uncut by Bailouts

I might have missed it, but I don’t think anyone has noticed this simple truism: The structural causes that led to the Global Financial Crisis of 2008 are identical to the structural causes that are leading us to another systemic financial crisis in 2011. You saw this one already? The only difference is the kind of debt at the core of the looming crisis: Mortgage-backed securities in 2008, as opposed to European sovereign debt in 2011. And of course, the debt hole in 2011 is bigger than in 2008—a lot bigger. That’s why I am confident in predicting we are about to have another Global Financial Crisis—I’m calling it The Sequel: Same movie, same players, same story. Only this time around—like all good sequels—the financial crisis we are about to experience is going to be bigger, longer, and uncut by bailouts. By the way, that is the key difference between 2008 and 2011: We’re not going to have a Hollywood Ending this time around. The governments of Europe and the United States, as well as their respective central banks, do not have any weapons to fight off this 2011 financial crisis, as they did in 2008, for the simple reason that they used them all up—they’re out of bullets, both monetarily and politically. So when The Sequel hits the big screen, there won’t be a Big Daddy Government deus ex machina to come save the day in the third act twist. When The Sequel hits, we’re on our own. Let’s discuss the structural similarities between the original and The Sequel: In both 2008 and now 2011, you had unpayable debts at the center of a fragile financial system. In 2008, it was mortgage backed securities and collateralized debt obligations—the so-called “toxic assets”. I think we all know that story pretty well. In 2011, we have European sovereign debt. And just like the toxic assets of 2008, the Euro-bonds might have been rated AAA, but they certainly aren’t blue-chip—they are more like brown-chip: That deep brown color peculiar to fast-sinking dog-turds.

1 Comments in Response to

Comment by David Jackson
Entered on:

    Sure we will. The ---holes who own and run "hollywood" will do just fine, as they always do and have. I just wish they'd take their money and run, sooner rather than later, so the rest of us could get back to the business of busting our asses to provide them with even more wealth and power. ( I know they understand that the more we human cattle work and play the more money they can steal from us; this is also why the "bottom" won't actually drop out, anytime soon.)

   I' m not sure how much money these ------- think is enough; what takes so long is that they are so greedy that they can't screw us one at a time, they have to rape the whole harem. Such is "globalization".

    Just to remind everyone, Standard & Poor's doesn't mean diddly. They are self-aggrandizing, impotent idiots (no disrespect to those who aren't responsible for their inability to function as adults). The whole world will be a better place when it tells S&P to take a flying ----!


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