Skip to comments.It Is 1931. We Are Austria. If The Fed Doesn't Save Us Here Comes Another Great Depression...
Posted on 11/09/2011 3:27:31 PM PST by blam
DELONG: It Is 1931. We Are Austria. If The Fed Doesn't Save Us Here Comes Another Great Depression...
Nov. 9, 2011, 5:21 PM
How does Berkeley professor Brad Delong feel about what's going on in Europe?
He's freaking out:
Time to Spread Foam on the Runway: The Federal Reserve Needs to Act Now to Firewall Off the Eurocrisis
I have been complaining for some time now that Reinhart and Rogoff think that the time is always 1931 and that we are always Austria--that the great fiscal crisis is about to erupt and send us lurching down toward Great Depression II.
Well, right now guess what?
The time is 1931, and we are Austria.
The Federal Reserve needs to buy up every single European bond owned by every single American financial institution for cash before the increase in eurorisk leads American finance to tighten credit again and send us down into the double dip. The Federal Reserve Needs to do so now.
Professor Delong cites professor Paul Krugman, who is also freaking out:
This is the way the euro ends.
Not with a bang but with bunga-bunga.
Seriously, with Italian 10-years now well above 7 percent, were now in territory where all the vicious circles get into gear and European leaders seem like deer caught in the headlights. And as Martin Wolf says today, the unthinkable a euro breakup has become all too thinkable:
A eurozone built on one-sided deflationary adjustment will fail. That seems certain. If the leaders of the eurozone insist on that policy, they will have to accept the result.
Every even halfway plausible route to euro salvation now depends on a radical change in policy by the European Central Bank. Yet as John Quiggin says in todays Times
(Excerpt) Read more at businessinsider.com ...
When in doubt - print more money!
But I don't even speak Austrian.
“Federal Reserve needs to buy up every single European bond owned by every single American financial institution”
Maybe you speak Australian? :)
It’s going DOWN boys. 7 percent already? The Euro is DOOMED.
The Italian debt crisis is blowing up.
First, the scoreboard:
Dow: -389.3 pts, -3.2%
S&P 500: -46.8 pts, -3.7%
NASDAQ: -105.8 pts, -3.9%
how’s your chinese?
Not satire. I'll translate it for you. It really means:
The Federal Reserve needs to relieve the banks of the risks they took, and transfer that risk to the American taxpayer.
That one quote in the article is absolutely brilliant, I must admit.
This is the way the Euro ends.
Not with a bang, but with bunga-bunga.
Plenty of money for a small purchase like that, I am sure/s
In 1931 Austria was a brilliant brain and a beating heart of a body which had been drawn and quartered.
I call B@llsh#t on this.
Even worse 1931 Austria had been FORBIDDEN to join itself to the only state which could save it.
It is not 1931.
There we are not a tad bit like Austria.
The Fed is not going to save us.
The establishment is a believer in internationalism and of the EUrtopian Dream. They will try to prop it up with as many billions or trillions as they can print.
Today Jefferson County Alabama determined that bankruptcy was the only possible way forward. Un mentioned were the creditors. Who will not be paid?
A bank failure precipitating the calamity seems less likely than the failure of an insolvent state. It will just happen. One day we will wake up to learn that the state is insolvent and failed to pay some creditor the day before and has no cash for other imminent payments. Also, ordinary trade creditors already with nonpayments 90 days old are totally screwed and three declare immediate bankruptcy because they are insolvent as a result of the state’s nonpayments.
Then banks holding state bonds will fail. the dominos will all begin to hit the table
After the way the EUrtopians celebrated the Greek debt “haircut” (THEFT) who in their sane mind would buy any EU bonds??
Right. The US taxpayer will be putting the entire EUro zone on welfare. The US taxpayers are the worlds biggest chumps, and the world knows it.
Sadly, there is only one thing that can solve our problems and it isn’t pretty - the complete collapse of the welfare state. The American public such as it exists today will never vote their transfer payments and benefits away. The Republican party won’t really advocate curtailing entitlements because they know it will be too unpopular and they’ll lose badly. Our problems will likely only be fixed through a complete economic collapse and the hope that what wins power afterward are conservatives. We will have to amend the constitution as well to write out all possibility of the federal government getting back in the entitlement and social welfare business. The collapse is coming, there is no doubt considering the path we are on - the only question is how long and what takes over after the fact. We can only hope for the best as these types of things often end badly.
This would be bailing out American banks for bad economic choices.Where do I sign up for my bailout? I’ve had people default on me, where was the Fed when I needed them?
Just say " 'Ello, Mate!" a lot.
Wow. It looks like it may hit the fan tomorrow when Italy tries to sell new bonds.
You’ve got to worry about what the Fed will do when Goldman Sachs and Morgan Stanley give them their new orders with unprecedented desperation.
On the brighter side, maybe a new Cain accuser will come forward and all this silly little financial stuff will just be pushed to the background.
And put another shrimp on the barbie ...
klaus barbie, if you got one.
Some people here need new eyeglasses.
Austrian — ie, “Sound of Music”, Hapsburg, Vienna, Mozart, etc.
Australian — Shrimp on the Barbie, Sidney Opera House, Fosters, Men at Work, etc.
The post says “Austria, 1931” which is a reference to a belief that a run on the banks in 1931 in Austria took the the world into Great Depression. Kinda like we think it started with the 1929 Stock Market crash.
“with Italian 10-years now well above 7 percent, were now in territory where all the vicious circles get into gear”
Yes and no.
If Italy was using their own currency, they’d be well on their way to a run on their central bank. They don’t though.
When (not if) America gets to that point, we’ll have a run on our currency. No one can back us up.
If the fed does act I guaintee we will be in a very long depression!
If they stay out of it, it will be a much shorter depression.
They have created a situation for themselves for which there is no solution.
[insert spine tingling organ music]
What will John Quiggin say??? Tune in tomorrow, for.......As The EuroZone Burns!
(gotta love a post that ends with that sort of cliff hanger)
I am almost certain they did it on purpose
...and some people need a better sense of the absurd.
I don’t know if this is the beginning of the end,but if they can’t do something to arrest investor fears then things are going to get out of control very quickly.I think that the next two weeks will be critical.
throwing money at it is not helpful
That would just further weaken this country,which may be the plan.
Nothing the Fed does affects only taxpayers. The Fed exists for one reason -- and one reason, only. To print money.
The Fed will relieve banks of the risks they took, but the burden won't fall only on taxpayers. It will fall on anyone who holds dollars. Inflation, it's the real flat tax.
No government ever pays it’s debts.They use inflation instead.
Fight for the USA in the currency and trade war. Or go ahead, and take the anti-American way to default. Either way is fine with me. And Europe...Europe...toss Europe—especially mobbed-up southern Europe.
Dr Marc Faber agrees:
"Before they go bankrupt theyll print money. Theyll print endless money. As long as we have Ben Bernanke and Janet Yellin at the Fed theyll print money and so they can postpone the end game endlessly
Endlessly not, but say for another five to ten years."
At the end of those five or ten years,the abyss awaits....
It won't be that long, IMO.
Good grief, blam. Henry and his comrades are Obammy fascists.
He’s a criminal nailed for inside trading. He roots for the collapse of the economy because this best serves the “progress” of the revolution.
His ideal of a revolution is not something that we ever want to see on American soil.
Same with all the other Wall Street global commies who prop up the DNC radicals and shake down our treasury.
Good Grief, Sara!!
This will all be corrected during the coming revolution.
AND...If you don't think we're headed for a revolution.....
My O My.