America's current financial crisis.. what to make of it?

What to make of it?? MONEY! Buy low, sell high!

We are seeing the effects every day all around us. Businesses, including national ones, are folding almost every day. Restaurant chains folding because people do not have the money to eat out as much. Car dealers (including the largest GM dealer in the US) because they have too many gas guzzlers they can’t sell with gas prices so high. When those larger businesses fold, small businesses fold around them like ad agencies and small lunch restaurants. Note: all of this is outside the failures in the financial sector.

Unemployment is way up. Retail sales are way down and predicted to be very bad for the major holiday shopping season.

The travel industry and tourism industry are really hurting, because people forwent their summer vacations. Hotel prices are currently at 1995 levels or lower.

It is likely to get worse before it gets better.

We’re going bankrupt. And the bailout poured more gasoline on the fire. If you really wanna know how money works, read modern money mechanics or see Zeitgeist: Addendum.

It will probably get worse before it gets better. However, I also firmly believe that it will get better. How long will it take? Who knows?

And at what cost?

As John Adams wrote to Thomas Jefferson in 1787,” All the perplexities, confusions, and distress in America, arise, not from defects in their Constitution or Confederation, not from a want of honor or virtue, so much as from downright ignorance of the nature of coin, credit, and circulation.”

I will simply offer you this as a metaphor.

@magnus, there’s an interesting paradox at play, though w/r/t “Z: A.” The Venus Project guy says that the “profit” ideology has to fail of it’s own accord for us to embrace a “technology” ideology. So there’s sort of some positive momentum in this crisis if you could trust that we’re not being led down the path of consolidation of money, power & technology in the hands of the few at the expense of the many.

30 years ago, Reagan initiated policies that encouraged people to borrow more than they could pay back. These same policies opened up business to create more and more speculative financial procedures. Eventually, it became a house of cards, and when people finally realized that houses were way over-valued, and started defaulting, the insurance that companies like Lehman and Merril-Lynch and AIG provided to insure against defaults could no longer cover the obligations. At that point, the house of cards started crumbling.

Now, we have the opposite of unwarranted optimism. We have unwarranted defeatism. Our industry and our homes and our physical and economic infrastructure are all worth pretty close to what they were worth before, but for that unwarranted optimism. We have an enormously strong and complex economy. We can work our way out of this abyss. But in the future, we will have to be much more risk averse. I thank my lucky stars that I’ve always been risk averse, and never used borrowed money to invest with.

Here’s an interesting take from a more global perspective

But the risk of a dollar collapse is one for the distant future. Right now the world faces the opposite problem. There is a wild scramble for dollars as a $10 trillion pyramid of global lending based on dollar balance sheets “delevers” with a vengeance.

This is a “short squeeze” on those who have used the dollar for a vast global carry trade. International banks are facing margin calls on their dollar leverage. It is why the Fed is having to provide $1.25 trillion in dollar liquidity for the entire global system, according to estimates by Brad Setser from the Center for Geoeconomic Studies.

The crisis engulfing Europe, Asia and emerging markets, makes life easier for Washington. The United States is becoming a safe-haven again.

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@kevbo – GA for the positive spin

Yea kevbo. This is just the beginning, the monetary system will fail in a matter of years not decades, and there’s our chance.

Nothing, just wait? And put your money in some dubai bank or something

Buy food…while you have purchasing power. Gold is no even a safe bet at this point at least what they call Comex Gold. Which is basically just a paper that says you can turn it in for gold.

Problem is, we have only about 10% of the gold to cash out to all holders of Comex Gold. At least that is what I have read recently. SOme people are calling for a major failure still. THey warn to be ready.

Sure I believe it can get better as well…but I think it will get worse before it gets better.