GEC 1

The Great Economic Crisis We shall argue forever about when it occured. Some say we're clear of it, and there's all smooth sailing ahead. When did the GEC happen? Let me quote Spengler from Asia Times July 14 2009: ...Equity markets collapsed and never came back. In nominal dollars, the technology-centered NASDAQ index stands at one-third of its February 2000 peak. In the future, the case will be made that the GEC started in 2000, not 2007-2008. The GEC started, but the public attention was sidetracked by 2001 and the Iraq debacle. In these pages, I have often said that the decline of our society began 30 years or more ago. It began when we no longer created wealth and welfare, but settled on maximizing wealth. The GEC began when things began to break down in 2000. The build-up to the GEC had its high point in 1999 when Senator Phil; Gramm and his Republican cohorts exempted derivatives from any oversight and regulation. We knew of the problems with derivatives from the early 1990s. To exempt them from regulation was not only arrogance, it was insane arrogance. When you reach insane arrogance, expect the downturn soon. Now a case could be made that the GEC began in sketchy form in the early 1990s: the Savings and Loan bailouts, and the derivative problems being a dress rehearsal for what was to follow. People are fond of saying Capitalism has cycles of boom and bust. Just like animal populations: cycles of highs and lows. Sometimes, however, there comes a great die-off. Sometimes the lows are just too low. A system of boom and bust that lacks a homeostatic system that controls the depth of misery in the downside will eventually destroy itself, and it is my belief that that is what we are watching: the gathering clouds, another "bloom" of the GEC exposing itself, the Indian Summer of an unexpected and unusual leader...