Stock Market Decline Just the Beginning
(The New American) -- by Charles Scaliger --
The stock market is in freefall once again, evoking specters of 2008. As one fund manager told the Wall Street Journal on Monday, “the sense of déjà vu is almost sickening.” The storied Dow lost more than 600 points Monday following huge declines late last week, appeared to get its footing yesterday, then plunged more than 500 points today. All over the world, markets are taking stock, so to speak, of the burgeoning debt crisis in the United States and Europe, and fearing the worst.
Despite the parallels with the autumn of 2008, the Wall Street Journal views the two crises as stemming from entirely different causes. Wrote the Journal’s Franceso Guerrera on Tuesday:
The [crisis of 2008] spread from the bottom up. It began among over-optimistic home buyers, rose through the Wall Street securitization machine, with more than a little help from credit-rating firms, and ended up infecting the global economy. It was the financial sector's breakdown that caused the recession.What’s more, Guerrera claims, the first crisis came about as a result of easy credit, whereas this time around, there are piles of money sitting around that nobody wants to lend. And, whereas in 2008-2009, governments were able to “solve” the problem and eventually succeeded in “avoiding a global Depression,” governments this time around don’t have as many options. There’s plenty of money out there, so injecting more won’t make much of a difference – or so the Wall Street Journal believes.
The current predicament, by contrast, is a top-down affair. Governments around the world, unable to stimulate their economies and get their houses in order, have gradually lost the trust of the business and financial communities.
That the most venerated source of financial news in the United States could be so utterly mistaken about the financial crisis, its origins, and its solution, is indicative of just how severe the problem is. First of all, we are not entering a new crisis but experiencing a new phase of the very same crisis that began back in late 2007. Government bailouts and other forms of “shock therapy” did not prevent a global depression, but guaranteed one. The anemic “recovery” touted by the Obama administration and other governments worldwide has been a mere blip akin to the reflexive action of a dying patient on a defibrillator. The economy of the West as we have known it for several generations is dying, and the various economic and financial crises that are becoming drearily routine are all symptoms of its terminal illness. And the illness has a name: Big Government...MORE...LINK