Re: (OPE-L) "Imminent First World Debt Crisis"

From: Michael Eldred (artefact@T-ONLINE.DE)
Date: Thu Sep 11 2003 - 04:48:43 EDT


Cologne 11-Sep-2003
second annoreturning of eleven-sep-oh-one

Sounds like the catastrophile yearnings of those who (feel that they)
have been hard done by -- the resentment-structure of Nietzsche's
"Zukurzgekommenen". Under the mask of "objective analysis", of course.

_-_-_-_-_-_-_-  artefact text and translation _-_-_-_-_-_-_-_-_-_
_-_-_-_-_-_-_-_-_-_-_-_- made by art  _-_-_-_-_-_-_-_-_-_-_-_-_-_
http://www.webcom.com/artefact/ _-_-_-_-artefact@t-online.de _-_
_-_-_-_-_-_-_-_-_-_-_-_-_-_-_-_-_-_-_-_-_ Dr Michael Eldred -_-_-
_-_-_-_-_-_-_-_-_-_-_-_-_-_-_-_-_-_-_-_-_-_-_-_-_-_-_-_-_-_-_-_-_


glevy@PRATT.EDU schrieb Tue, 9 Sep 2003 09:02:23 -0400:

> > http://www.neweconomics.org/gen/
> IMMINENT FIRST WORLD DEBT CRISIS WORSE THAN 'THIRD WORLD'
>
> ECONOMY REACHING 'TIPPING POINT' - MIDDLE CLASS CONSUMERS
> WILL CARRY THE CAN FOR FINANCIAL COLLAPSE
>
> A new annual report on the global economy published by nef
> today, Monday September 1st, predicts that a giant credit bubble,
> created
> by globalisation's decades of 'easy money', has now reached
> a "tipping point" - a point that has historically triggered financial
> crises.
>
> Ground-breaking new analysis in the report - titled Real World
> Economic
> Outlook - shows that Japan's financial crisis was triggered in 1990
> when
> the total stock of financial assets began to outstrip GDP by nine
> times.
>
> Two of the world's richest countries, the US and UK have followed
> Japan's
> example, inflating the credit bubble and the accumulation of financial
>
> assets through de-regulation and reckless lending and borrowing. This
> bubble has been fuelled further by the decisions of Central Bank
> governors
> and their boards to lower interest rates to historically low levels.
>
> Jubilee research at nef, the team that spearheaded global awareness of
> a
> third world debt crisis, are releasing provocative new research into
> the
> first world's huge debts. This shows that credit and other paper
> 'promises
> to pay' now exceed  levels of real income (GDP) by ten times.
>
> Recent stock market falls, drastic though they have been, have barely
> dented the credit superstructure. When this credit bubble bursts, the
> report concludes, it will be middle class consumers in both the US and
> UK
> that will bear the brunt of the financial crash.
>
> Ann Pettifor, editor of the annual report, the Real World Economic
> Outlook, said:
>
> "Gullible consumers, acting as heroically as Atlas once did, are
> holding
> up the US and UK economies by dutifully borrowing and spending. But
> take-home pay is falling in the UK, and unemployment is up in the US,
> so
> consumers will soon buckle under the strain of single- handedly
> propping up
> these economies. As we live in a deflationary era, the burden of debt
> will
> be much more painful than it was say, during the aftermath of the
> Lawson
> boom."
>
> "When tipping point is reached, consumers buckle and the credit bubble
>
> bursts, it is the middle-class debtors who will bear the full brunt of
> a
> debt-deflationary financial crisis. Sadly, they will suffer much more
> pain
> than a minority who have resisted the siren calls of lenders and
> instead
> watched as their assets have been inflated by the actions of central
> bankers - enriching the already rich."
>
> The report notes that the decades since 1970s have been characterized
> by a
> near-total abrogation by central bankers and politicians of any
> control
> over the growth of credit.  As a result the total stock of financial
> assets has mushroomed. At the same time, these central bankers and
> politicians have clamped down on wages and consumer price
> inflation.
>
> Ms Pettifor added: "Central bankers and finance ministers have
> engineered
> the Anglo-American economies so that we now have a combination of
> consumer
> price deflation and asset price inflation . The rich can't believe
> their
> luck. This is their dream economy as  labour and commodity costs fall,
> but
> property, stocks and bond assets rise. But for farmers, manufacturers,
>
> retailers and employees, these economies are turning into a
> nightmare".
>
> Romilly Greenhill, senior economist at nef added: "While Japan has
> managed
> to keep interest rates very low through a financial crisis - the same
> will
> not be possible here and in the US. The British and American
> governments
> are building up substantial foreign and domestic debts - and in order
> to
> continue attracting finance to fund these debts, will have to raise
> interest rates. There are already signs in the US bond markets of this
>
> happening.. .A rise in interest rates would, in our view, tip the
> credit
> bubble over the edge and cause it to burst."
>
> The report warns that in a deflationary environment the real value of
> debts rise, and against a backdrop of rising unemployment in the US
> and
> falling real wages in the UK, will fast become unpayable for many.
> While
> house prices remain artificially high both in the US and UK, there are
>
> ominous signs that these assets too could fall in value. Falling asset
>
> prices combined with spiralling debts would impact most severely on
> middle
> class borrowers in the UK where total household debt is now 120 per
> cent
> of disposable income
>
> When the "tipping point" comes, likely to be triggered by higher
> interest
> rates in the UK and US  -  then it will be those same obliging middle
> income borrowers and spenders that will be made to bear the burden of
> the
> ensuing debt crisis.
>
> "Debtors tend to forget that assets do not pay off debts. Debts are
> paid
> off out of take-home pay, and in the UK take-home pay is falling in
> real
> terms", said Ms Pettifor.
>
> Steve Diamond
> School of Law
> Santa Clara University
>
> Office:  408-554-4813
> steved@s...
> sdiamond@s...
> >
> --- End forwarded message ---


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