According to Marc Faber the next financial crisis is on the horizon. It all stems from the decades of mal-investment. More recently the problem began when the Federal Reserve lowered interest rates to artificially low levels which encouraged bad investment. The low interest rates led to speculation in housing which created the most recent bubble. The burst led to the current recession.
However, the government is doing the same thing that caused the recession to solve the current problems. The Federal Reserve has lowered interest rates to near zero and politicians have created additional incentives for people to continue to purchase, such as giving new home buyers eight-thousand dollars, and giving car buyers cash for used cars which will be destroyed (yes the government is allowing perfectly good used cars to be destroyed as well as helping organized crime thrive by creating a black market for these cars!).
Instead of creating artificial demand and encouraging consumption, the Fed should dramatically increase interest rates which create incentive to save and politicians should discontinue the silly schemes and allow home prices to fall to their intrinsic values and also allow inefficient companies to fail.
With rates so low there will be another bubble created elsewhere in the economy, yet the media and politicians continue to congratulate Barack Obama and Ben Bernanke and the other thugs they surround themselves with for a job well done, as if they are responsible for solving the problems in the economy. The crisis has just begun. It is not over. There is surely more to come.
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i feel ya. i'm not sure about a black market for these "clunkers" but i feel ya.
ReplyDeleteGermany had the same cash-for-clunkers program in their country. Issues arose when auto dealers would sell the cars and car parts on the international market, when the cars should have been destroyed. Sometimes these transactions included selling the cars to organized criminal networks.
ReplyDeletehttp://www.time.com/time/world/article/0,8599,1915250,00.html
http://online.wsj.com/article/SB10001424052970204683204574358370173626800.html
Alright sonny. you got me. touche'
ReplyDeletehow very foolish is any program which entails destroying something perfectly useful to someone else. how very foolish! such was the case in the past (pres roosevelt) wherein began the destruction of thousands and thousands of tons of wheat and excess foodstuffs (in the name of keeping a balance somewhere?) and all this destruction in this land, this cornucopia of plenty, whilst in some part of the globe, millions are starving? where is the logic? where is the sense? and it is premeditated destruction. ah, but there is a precedent nearby! stalin and mao did the same, systematically starving to death millions of their minions in a scheme of wholesale murder. destroying vehicles ala cash for clunkers does not involve foodstuff per se but the model is the same. and it does invole destruction of something that can be used elsewhere. the new car business received a temporary uplift, but the used car business has yet to show the effect, as well as the salvage business and other areas. further, in a time of financial uncertainty, people who could have gotten on a bit longer with the used car, gave it up for a new car and the financial woes which go with it. we shall see if the repossession business also is enhanced a few months hence. thank you, capitalist jerk, for the opportunity to vent.
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