A Financial System Built to Fail: 2008 vs 2012
Remember the financial crisis? Remember September 2008? Remember Hank Paulson, Tim Geithner and Ben Bernanke? Remember George W. Bush and Nancy Pelosi? Remember how they all told us that this was a once in a lifetime event – a once-in-a-century calamity – and that after the crisis' immediate dangers were addressed, the underlying causes would be tackled – immediately? It's been more than three years, and we never cleaned up the mess. Now we are seeing the consequences. But how close are we from having a crisis like 2008 happen again? The truth is, none of us know how things are going to play out, and how the massive explosion in debt over the past 40 years is going to work itself out. However, anyone who thinks or wants to believe that things are "OK," or that policymakers and bankers have things "under control," should take a look back to 2008 – as we have – and watch some of the speeches made by George W. Bush, Hank Paulson, Ben Bernanke, and members of Congress like Chris Dodd, Barney Frank and Nancy Pelosi for a reality check. During that time, Congress' failure to act cost the Dow a record 778 points in one day. We were told that "we had to act" – and though the president and his staff believed in the free market, this was not the time for principle. The crisis proved beyond a shadow of a doubt that the Emperor had no clothes…and it is our contention that he is still butt naked! Indeed, our addiction to debt, stifled in the private market of mortgage-backed securities and collateralized debt obligations, was rolled over onto the public balance sheet. The government picked up its spending where the private sector dropped it off. No meaningful reforms were made, and three years later, we are not only on government life support with zero interest rates, but under general anesthesia. We are motionless, and in suspense… waiting… but for what? To help us find an answer, we bring on Karl Denninger of Market-Ticker. We will go back in time with him and revisit some of these issues, and ask the question "what has really changed, and what can we expect from a system built from faulty assumptions and broken promises?"
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