GLOBAL FUTURE ANALYSIS
SIDEWINDS | CREDIT
The problems of the Credit Crisis are severe under estimated by many political/economic/financial leaders. They doesn't see that the credit model is overstretched, that there is no relation any more between credit and payment power, that this lack of payment power will lead to severe asset revaluation and that by this revaluation almost all financials technically are bankrupted. This blindness for the problems is caused by the blind believe in endless growth, the blind believe in endless credit, the psychological fear for not growing anymore, the psychological fear of not being the world leader anymore, etc. Leadership is attached to power. Economic power. Needing credit is not economic power, but economic weakness. The size of the Credit Crisis is severe under estimated. The problems around 1980 where just some drops considered these huge waves. Trillions of assets are overvalued and must we corrected. Bond insurances for incidental failure are not capable to cover a market failure. The US house market is 50% overrated in relation to current and future payment capabilities. The Credit Crisis is also only just started. The second wave effects of the general economic decline will come in sight soon (bankruptcy of GM/airlines/retailers), giving the financials a second blast, robbing them of their private loan, corporate loan and last bond/stock assets. After the first blast (correction of US real estate over valuation due to actual payment power) the whole financial industry is house of cards. Artificial valuation and daily capital injections is what keeps it running. People who say that the Credit Crisis is over, must be nailed as totally buttheads with no economic knowledge or sight on facts/developments what ever. No matter if they are in politics or in corporations, these people should be fired due their stupidity. The damage these people cause is to big to describe. Hoping against all odds is stupid. The credit system is overstretched, there is no upside solution what ever any more. It's correction time. If a government send you money to spend, you know for sure that your economy is in really bad/terminal shape, has grown in structural wrong directions. Economy = Production/Earnings. Somewhere on the line we've forgotten that crucial truth. The sacrificing of growth and consumption has cut of loose of the source of both: earning capital instead of borrowing it. Times over overconsumption, not sustainable growth/prosperity, will be followed by times of corrections. The leaders of the spending age, has a hard time to tell this (as in: will never do that, without making fools of themselves and their former policies), these message needs a new type of leadership: real leaders, not fancy summer sailors. Sustainable prosperity will be the keyword of the 21st century, growth for the growth, short time excessive growth followed by troubles will not resonance as much as it did. People like stability in prosperity. Credit will not be the word of the 21st century, but will be recognized as the curse/drug of the 20th century, that has created crashes and vaporizing of assets of decades of human work and families. The price of too much greed is pain and payback time.
Author: Gijs Graafland
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