Saturday, March 17, 2007

The brink of bad times

"You can't believe how bad it's going to get before it gets any better."
Jim Rogers - commodities investment guru
David Seaton's News Links
My perspective is political, so I look at the coming disaster with that slant. I have the good fortune to know quite a few top Spanish financial folk who have been explaining all the details of the economic situation to me patiently... over and over for years, and although I really can't claim to understand any of this stuff, from my slant I have grabbed on to one or two "hinges" upon which the situation seems to turn... Again, from my particular, political, point of view.

In the article I've clipped below, Jim Rodgers, George Soros old partner says, "This is the end of the liquidity party". He also says, "We haven't had this kind of speculative buying in U.S. history." What does this mean politically?

The world has been swimming in money (liquidity) for years now and many "middle-middle-class" people (defined as people who live from their work and whose principal asset is their family home) have been living way beyond their means and have come to acquire the social attitudes of upper middle class people, (defined as those whose patrimony is deep and layered, with mature stock portfolios, multiple inheritances, land and the "taken with mother's milk" habit of managing all those things). Under this delusion these middle-middle-class" folk, once the "salt of the earth", have come to think of themselves as "players" and have identified with characters such as Bill Gates and Warren Buffet or even Donald (ugh!) Trump, as aspirational, fantasy figures.

So, not only is there going to be a lot actual hardship, but also terrible disillusionment... the end of a dream. Because to add insult to injury, the victims in this crash are going to have salt poured into their wounded self esteem, because the system is going to treat them with all the same compassion with which it treated the stranded black people of New Orleans.

There is this idea, taken from our Christian heritage, that suffering makes people better, even holy. It would be comforting to think that this economic wasteland of broken dreams would wake the victims up and make them more compassionate and raise their consciousness... (hum a few bars of "The International" here if you wish). That like in the days of the Great Depression there would be a surge of brotherhood, (Liberty, equality, fraternity?). Unfortunately suffering can also turn quite a few people into mean spirited sons of bitches. Mean spirited sons of bitches when organized are often called "fascists".

This coming crisis is the great, "to be or not to be", challenge for progressive politics. DS

Top investor sees U.S. property crash - Reuters

Abstract: Commodities investment guru Jim Rogers stepped into the U.S. subprime fray on Wednesday, predicting a real estate crash that would trigger defaults and spread contagion to emerging markets. "You can't believe how bad it's going to get before it gets any better," the prominent U.S. fund manager told Reuters by telephone from New York. "It's going to be a disaster for many people who don't have a clue about what happens when a real estate bubble pops. "It is going to be a huge mess," said Rogers, who has put his $15 million belle epoque mansion on Manhattan's Upper West Side on the market and is planning to move to Asia. Worries about losses in the U.S. mortgage market have sent stock prices falling in Asia and Europe, with shares in financial services companies falling the most. Some investors fear the problems of lenders who make subprime loans to people with weak credit histories are spreading to mainstream financial firms and will worsen the U.S. housing slowdown. "Real estate prices will go down 40-50 percent in bubble areas. There will be massive defaults. This time it'll be worse because we haven't had this kind of speculative buying in U.S. history," Rogers said. "When markets turn from bubble to reality, a lot of people get burned." The fund manager, who co-founded the Quantum Fund with billionaire investor George Soros in the 1970s and has focused on commodities since 1998, said the crisis would spread to emerging markets which he said now faced a prolonged bear run. "When you have a financial crisis, it reverberates in other financial markets, especially in those with speculative excess," he said. "Right now, there is huge speculative excess in emerging markets around the world. There will be a lot of money coming out of emerging markets.(...) The last stock market bubble to burst was the dot-com craze which sparked a crash from March 2000 to October 2002. When the last bubble burst in Japan, said Rogers, stock prices went down 85 percent despite the country's high savings rate and huge balance of payment surplus. "This is the end of the liquidity party," said Rogers. "Some emerging markets will go down 80 percent, some will go down 50 percent. Some will most probably collapse." READ IT ALL

1 comment:

Anonymous said...

I cannot share such a vision of desolation, sure when times get hard, so do hearts, but the economics of the situation could certainly be improved if certain government actions are taken, such as laws to allow broke people to remain at home and renegotiate mortgages, to go on a public information campaign and tell people what is going on, EXACTLY as it is without spin, they could clean up their own acts somewhat and listen to peoples issues now, rather than let todays issues linger on to fester.
Many of the issues that facists and the NASDAP championed were issues like anti-corruption, hunger and work, property and health, the nazi solution was to grab at the seedling idea of having a welfare state using the US as it example. This solution allowed them power to act as they did. Who would speak against Hitler's war against the USSR while he was feeding the hungry and giving work to the idle? Nobody, thats who, and why would they?

Todays so called 'social-democrats' are making the exact same mistakes as the parties that socialism and communism destroyed 90 years ago!
Blair is far less Labour as petty-bourgois-working class-well-wisher, now he relies on the Tories to get his bills past.

The great social mistake of our time is in forgeting the class lines that demarkate our economic lives, you point this out well, thank you. For those line still exist, and people will be shocked to see them again. I just hope that current moderate parties see this threat too before some new vibrant and more capable (but dangerous) force grasps at whatever chances might be presented if indeed the worst happens.

Perhaps your dark vision is true afterall. I cannot see the likes of Royale taking on and defeating true socialists with the bit between their teeth.