--- Carl Remick <carlremick at gmail.com> wrote:
"(1)consumer debt fueled by house-equity loans
and (2) collapsing real estate values -- augur inescapable woe for the nation's economy."
I don't suppose there are any numbers to support that oft-repeated claim -- say, total amount of new equity lines last year as a percent of total sales of goods and services?
BobW
> On 11/6/07, Doug Henwood <dhenwood at panix.com> wrote:
> >
> > On Nov 6, 2007, at 1:21 PM, Carl Remick wrote:
> >
> > > Citi and Merrill Lynch as the epicenter of
> perhaps the greatest
> > > capital crisis the US has ever seen
> >
> > Oh please. Do you realize how many competitors
> there are for such a
> > title? You have any idea what kind of speculative
> crap the USA pumped
> > out in the last 30 years of the 19th century? In
> the 1920s? How
> > different is this from the junk bonds and S&Ls of
> the 1980s?
> > Securities fraud and financial crises are even
> more American than
> > tarte aux pommes.
>
> I readily concede that. Among the reasons that
> Dickens was so sour on
> the US in the 1840s was that it was a nation of
> slobs (as I recently
> noted in quoting his American Notes), slaveholders
> and deadbeats.
> European investors apparently lost a lot of money is
> US flimflams like
> the United States Bank of Pennsylvania, which went
> bankrupt in 1841
> from speculating in the cotton market. Dickens
> mentions seeing this
> bankrupt institution in during his visit to Philly:
> " Looking out of
> my chamber-window, before going to bed, I saw, on
> the opposite side of
> the way, a handsome building of white marble, which
> had a mournful
> ghost-like aspect, dreary to behold. I attributed
> this to the sombre
> influence of the night, and on rising in the morning
> looked out again,
> expecting to see its steps and portico thronged with
> groups of people
> passing in and out. The door was still tight shut,
> however; the same
> cold cheerless air prevailed .... I hastened to
> inquire its name and
> purpose, and then my surprise vanished. It was the
> Tomb of many
> fortunes; the Great Catacomb of investment; the
> memorable United
> States Bank."
>
> And of course there is no need to dwell non the
> devilishly clever
> market-riggers of the 1920s or the evil genius of
> Wall Street's
> securitizing "rocket scientists" over the past
> generation.
>
> The prudent point you would surely make is that US
> capitalism has
> *survived and flourished* despite all the financial
> escapades of many
> generations. But -- to utter those most fateful
> words -- I think
> This Time It Is Different. I think Wall Street has
> finally outsmarted
> itself in a terminally risky way through financial
> engineering,
> creating derivatives whose risk and value are
> impossible to calculate.
> And I think it's far more worrisome that the US
> carries a huge
> external debt than it did in the 19th century. Back
> then the US was a
> young rapidly industrializing resource-rich nation
> that could afford
> high levels debt and corruption. Now we have a
> massively expensive
> but incompetent military establishment, rotted-out
> heavy industries,
> decaying national infrastruction and a half-assed
> service economy.
>
> Yes, the system has endured awesome challenges over
> the last 30 and
> more years -- the OPEC oil shock, US hyperinfaltion,
> the LBO mania,
> the S&L crisis, the mini-stock-market collapse of
> '87, the LTCM
> fiasco, the telecom and dotcom bubbles, etc.
>
> But despite that resilience, there is reason to
> believe This Time Will
> Be Different. The dollar for the first time faces
> serious competition
> as the world's reserve currency. The nation's worst
> financial
> vulnerabilities -- (1) consumer debt fueled by
> house-equity loans and
> (2) collapsing real estate values -- augur
> inescapable woe for he
> nation's economy. And due to Iraq, Afghanistan,
> Pakistan, etc., the
> hegemonic US bestrides the narrow world as the most
> colossal
> laughingstock ever seen.
>
> For all these reasons and more, I believe This Time
> Is Different.
>
> Carl
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