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In Trying to Stop the Inevitable Deleveraging Process, the Government is Only Making It Worse
George Washington Blog
Tuesday, October 28, 2008
The financial system is undergoing a period of deleveraging that cannot be stopped. For example:
- Barrons is running an editorial entitled “The Crash Must Come: Intervention can’t stop the business cycle”.
- The Economist writes, “Once started, the process [of deleveraging] is hard to stop.”
- The Financial Times quotes the Bank of Tokyo-Mitsubishi in saying, “There seems little what the authorities can do to reverse the process of deleveraging that is taking place with financial institutions all contracting their balance sheets at the same time”.
- Satyajit Das writes:
Ultimately, “all the king’s horses and king’s men” cannot prevent the de-leveraging of the financial system under way.
***
Like a giant forest fire the de-leveraging process cannot be extinguished. Thoughtful actions can create firebreaks that limit preventable damage to the economy and the international financial system until the fire burns itself out.
The process of deleveraging cannot be stopped, but the government is trying to stop it anyway. Instead of allowing an orderly deleveraging process, the government is actually trying to prop up the leverage.
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For example, instead of requiring banks to deleverage, the government is reducing their cash reserve requirements so they can increase their leverage to loan money they don’t have through fractional reserve banking. See also this.
And – even after Greenspan confessed that derivatives were dangerous (and see this) – the government refuses to rescind them or take any other real actions to contain the nuclear fallout from such “weapons of mass destruction“. Instead, the government is trying to prop up the derivatives market by various means.
By trying to put out the raging deleveraging forest fire, the government is actually fanning its flames and making it more dangerous. And even in those areas where the government appeared to put out the fire, there are hot coals just beneath the surface that are already erupting back into flame (as just one example, inter-bank lending rates are back up).
As with other aspects of the government’s actions, the attempt to stop the inevitable deleveraging process is only making matters worse.
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8 Responses to “In Trying to Stop the Inevitable Deleveraging Process, the Government is Only Making It Worse”
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October 28th, 2008 at 2:47 pm
At least I have something that for the moment is putting some extra money in my pocket for the coming storm. Click on my name above if you’re interested.
October 28th, 2008 at 4:47 pm
The sooner your scumbag rat cunt of a nation is wiped from the face of the earth the better. The reason America is not mentioned in the bible is because it is satans home and he blocked god from knowing about it so that he could start world war three and come into power. God is not as powerful as you think. If he was then satan would not be having his say on this planet right now. The sooner your devil nation is obliterated the better. Your nation is a fucking disgrace, it’s people diseased, a fucking leper colony. Just fucking die already will you you pricks FUCKING DIE.
October 28th, 2008 at 5:25 pm
“Retarded fucking Americans” man your a messed up guy, don’t you understand that the new world order is using America so it gets the blame for every thing. and your suckered right in. Americas Founding fathers wrote an amazing document but America was taken in 1913 away from americans and given back to international bankers.
Don’t blame America blame the Monitory system, they are the true puppet masters.
Long live Liberty!
From Australia
October 28th, 2008 at 9:51 pm
“God is not as powerful as you think.”
IMO, gravitons may rotate as slowly as one cycle every 50,000 years or so, this being their fundamental quantum wave frequency or eigenstate, if you will. Half-way through their cycle it seems to me they actually become a repulsive force.
Do you believe in miracles, Billy?
October 29th, 2008 at 1:27 am
Josh, sure, the founding father wrote an amazing document, for themselves. America wasn’t take away from americans, america was taken away from the native americans. The America we know today was founded on genocide, as thse Australia (where the genocide continues, thanks to “travaillist” PM Rupp) we know today was.
October 29th, 2008 at 6:47 am
Game over man. Best hold on to your butts baby cuz its gonna get real interesting in the next 90 days. All this stock market talk is to keep us from seeing whats right in front of our face. Look around Mama, dont you see it? Pay attention to the billionaires and the 100-900 millionaires. Now what is the common denominator of all these megawealthy? What is Buffet doing? He built a Doomsday vault. What’s Cheney doing? He built a 6-story underground fortress for him and his family. How about the government in general? Google continuity of government. The concentration camps have been built. The guards are there NOW. People have been seeing 100s of thousands of coffins near railway depots. And now the top brass is telling us point blank that something is coming down in January. Something BIG. All you people who read this to make fun of the paranoid survivalists, better ask yourself: “what are the signs of the times?”. You still have a month or two to get your family prepared baby. Better go on over to survivalistseeds.com and get 12 years worth of food for pennies on the pound. Or maybe us tin-foil hat wearing wacko’s are all deluded. I hope so mama, I hope so.
October 29th, 2008 at 7:23 am
As a befuddled American I have no idea what’s going on except that it is bad. So it needs to be fixed. I can’t believe they didn’t see this coming unless they are real idiots in which case we need to get rid of them. Otherwise it was intentional.
Who is responsible for this? The people in power. But that would be Republicans and Democrats. What can we do? We can find out from the state the official list of candidates and vote for anybody but them. We can write-in ALL different candidates! And if they are the only ones on the ballot then don’t vote for the incumbent.
Barack Obama NO. John McCain NO. Ralph Nader YES. Chuck Baldwin YES. Bob Barr YES. Cynthia McKinney YES. You have choices! If you don’t then boycott the election!
October 29th, 2008 at 6:40 pm
“God is not as powerful as you think.”
The thing is, when these hypothetical “rotating” gravitons have reversed, such that they are acting like anti-gravity force carriers, they would be something like 25,000 light-years away from whatever emitted them. At that point they’ll be so spread out, in accordance with the inverse-square flux rule, that they’ll generally not have an obvious effect on whatever they encounter.