Sunday, Jan 18, 2015

Britain was only only 2 hours away from social collapse

This is money: ALISTAIR DARLING INTERVIEW: Britain was two hours away from total social collapse - Former Chancellor on the crisis that erupted FIVE years ago this week

This is an old article from September 2013. But the events of the last week with the SNB show that the financial system is far from mended and one could argue that for all those that argue that house prices will keep going up in a straight line there is a equally good argument that we are going to have a major financial crash that reverses this line. There must be very strong reasons why for the first time in recent history the SNB or any central bank changed a policy that it was committed too, knowing full well it would destroy many of their exporting companies.

Posted by britishblue @ 11:49 AM (2109 views)
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1. bidin'matime said...

I've been reading Ha-Joon Chang's 'Economic: The User's Guide', and have just today reached the bit where he quotes from the events leading up to the crash of 2008:

Alan Greenspan, then Fed Chairman, assured members of the US Congress in June 2005 that 'a bubble in home prices for the nation as a whole does not appear likely'.Joe Cassano, CFO of AIG, said in the fall of 2008: 'It is hard for us, without being flippant, to even see a scenario within any kind of realm of reason that would see us losing one dollar in any of the [credit default swap] transactions'; his company went bust six months later...



In October 2005, Ben Bernanke, then chairman of the Council of Economic Advisors to the President (later to become the Chairman of the Fed between 2006 and 2014) stated in his Congressional testimony that the 25% increase in home prices in the US in the previous two years 'largely reflect strong economic fundamentals'

The bubble burst in 2007/2008, taking AIG and Northern Rock and various others with it.

The point being that the 'experts' will find reasons - very convincing reasons - why something that appears to the rest of us to be unsustainable is in fact sustainable ... until something unexpected and unforeseeable happens that provides the catalyst for the unsustainable situation to collapse ... and then they will tell us that because it was unexpected and unforeseeable, they can't be blamed for the chaos that ensues (and that those of us who said it couldn't last, just got lucky...).

I've said many times that it will be a Sterling crisis that brings house prices crashing down - I don't know how or when, but with players like the SNB throwing fire-crackers into the crowd, it could happen before anyone sees it coming.

When the world is run by one financial authority, controlling all the currencies of the world, then they will be able to steal all of our money simply by printing more - but until then, individual central banks have to keep looking over their shoulders at what the rest are doing - and with at least one major player prepared to let their currency rise (instead of joining the race to the bottom), there's hope for us yet...

Sunday, January 18, 2015 08:37PM Report Comment
 

2. reticent said...

I haven't heard of that one. Sounds interesting. I really rated "23 things they don't tell you about capitalism".

Darling's version of events never seems to consider the possibility that they could have just let the banks fail. They never admit that they couldn't get over their post-Thatcherite aversion to nationalisation.

As many in the US said, you don't have to bail out wall st in order to bail out main st because you can just bail out main st directly.

If Darling et al had any stones, they'd have set up a state bank to fill in for those parts of the financial system that couldn't survive a full-blown crash. The contraction would have been sharper (because we'd have pissed away half our outsize banking sector) but the recovery would have been much more tangible and equitable, the deficit would be significantly smaller by now, the economy would be rebalanced away from finance and right about now, we'd be discussing the privatisation of the 6 year-old state bank to plug the national debt.

Instead we got QE, ZIRP and FLS in the hopes of buying time for a zombie financial sector that was only ever really leeching off the productive economy in the first place.

As for your prediction of a sterling crisis, I guess that's always been a major risk for London property and it's never looked more likely than now.

Monday, January 19, 2015 06:10PM Report Comment
 

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