Financial crisis – what’s happening? how will this end?

This crisis will reshape America.  We do not yet know in what way or how much.  It will strip bare our pretensions, showing what we value most.  It has long been forecast by many, including in articles on this site.  Even now that we are in the whirlwind, these provide valuable background material on its causes — and speculation about the results. 

Contents

1. Other relevant topics discussed on this site
2. Situation Reports
3. Causes of the crisis
4. Analysis
5. Economics — theory and practice
6. Forecasts and warnings
7. Theft pretending to be solutions
8. About Solutions
9. Speculation about the future, about structural changes to America and the world
10. Links to Treasury Department documents

1.  Other relevant topics discussed on this site

For a full list of topics, see the FM reference page on the right side menu bar.  Of esp interest these days:

• about America – how can we reform it?
• about the End of the post-WWII geopolitical regime
• Goods news about America
• links to Damage Reports from home and abroad

2.  Situation Reports

1. The US economy at Defcon 2, 11 March 2008 — Where are we in the downcycle?  What might the world look like when it ends?
2. The most important story in this week’s newspapers, 22 May 2008 — How solvent is the US government?
3. Another warning from our leaders, which we will ignore, 4 June 2008 — An extraordinarily clear warning from a senior officer of the Federal Reserve.
4. High priority report: a geopolitical sitrep on the financial crisis, 15 September 2008 — We’re in the “golden hour”
5. A new sitrep, as we move into phase 3 of the financial crisis, 19 September 2008
6. A sitrep on the financial crisis: why has the treatment been so slow, so small?, 8 October 2008
7. Status report on the financial crisis: we’re at a critical point in time, 10 October 2008
8. Situation report: global economy, December 2008, 19 December 2008
9. Situation report about the global economy, as the flames break thru the firewalls, 26 January 2009

3.  Causes of the crisis

1. The post-WWII geopolitical regime is dying, 21 November 2007 — Why the current geopolitical order is unstable, describing the policy choices that brought us here.
2. Diagnosing the eagle, chapter I — the housing bust, 6 December 2007
3. Death of the post-WWII geopolitical regime – death by debt, 8 January 2008 – Origins of the 1982 - 2006 economic expansion; why the down cycle will be so severe.
4. Let us light a candle while we walk, lest we fear what lies ahead, 10 February 2008 – Putting the end of the post-WWII regime in a larger historical context.
5. A vital but widely misunderstood aspect of our financial crisis, 18 September 2008 — Too many homes.
6. A picture of the post-WWII debt supercycle, 26 September 2008
7. Debt – the core problem of this financial crisis, which also explains how we got in this mess, 22 October 2008
8. Causes of the financial crisis (no, its not the usual list), 29 October 2008
9. Government policy errors and the Great Depession, 1 November 2008
10. Economics is not a morality tale, 14 January 2009

4.  Analysis

1. Is the US Government deliberately underestimating inflation?, 8 November 2007
2. The most important story in this week’s newspapers, 22 May 2008 — GAO estimates the government’s liabilitis:  $57 trillion.
3. The myth of media pessimism about the economy, 13 June 2008
4. Can the European Monetary Union survive the next recession?, 11 July 2008
5. Can you see the signs of spring in the coming of winter? A note about the recession., 10 September 2008
6. What do we know about the financial crisis? What are the key questions?, 20 September 2008
7. Essential steps to surviving the current crisis, 23 September 2008 — analysis
8. Is the US economy in good shape, or in terrible shape?, 27 September 2008
9. The economy is in shock. The effects of this will soon become visible, 11 October 2008
10. Damage Reports from home and abroad, 12 October 2008
11. The coming collapse in business spending – made visible today, 15 October 2008
12. Miscelaneous news and thoughts about the financial crisis, 16 October 2008
13. More reasons why the government will be taking over allocation of America’s capital, 27 October 2008
14. The US economy must go to Defcon 1, 13 November 2008
15. A certain casualty of the recession: the US Government’s solvency, 25 November 2008
16. “What Barack Obama Needs to Know About Tim Geithner, the AIG Fiasco and Citigroup”, 3 December 2008
17. Three people look at America’s economy, 5 December 2008
18. Future generations will never understand our shopping madness, 13 December 2008
19. Destroying houses in order to boost home prices
20. President Bush: “I’ve abandoned free market principles to save the free market system”, 20 December 2008
21. An Epistle to the good savers of America, 6 January 2009
22. A warning from Paul Krugman of what should be blindingly obvious (but is not obvious to many experts), 7 January 2009
23. “We are likely enduring a depression today”, 27 January 2009
24. IMF official says the world’s advanced nations are already in a depression, 9 February 2009
25. Locked into the bailout state, 4 March 2009 — Similarities between now and 1929.
26. The housing crisis allows America to look in the mirror. What do we see?, 9 March 2009
27. A look at America’s future – grim unless we get smart and pull together, 12 March 2009
28. Fetters of the mind blind us so that we cannot see a solution to this crisis, 1 April 2009

5.  Economics — theory and practice

1. The greatness of John Maynard Keynes, our only guide in this crisis, 4 December 2008
2. About the state of economic science, and advice from a famous economist, 8 December 2008
3. “A depression is for capitalism like a good, cold douche.”, 17 December 2008
4. Words of wisdom about the global recession, from the greatest economist of our era, 29 December 2008
5. A very important article by an expert, discussing the necessary next step to solve the financial crisis, 17 February 2009
6. Economic theory as a guiding light for government action in this crisis, 10 March 2009

6.  Forecasts and warnings

1. A brief note on the US Dollar. Is this like August 1914?, 8 November 2007 — How the current situation is as unstable financially as was Europe geopolitically in early 1914.
2. We have been warned. Death of the post-WWII geopolitical regime, 28 November 2007 — A long list of the warnings we have ignored, from individual experts and major financial institutions.
3. Geopolitical implications of the current economic downturn, 24 January 2008 – How will this recession end?  With re-balancing of the global economy — and a decline of the US dollar so that the US goods and services are again competitive.  No more trade deficit, and we can pay our debts.
4. What will America look like after this recession?, 18 March 2008  — The recession will change many things, from the distribution of wealth within the US to the ranking of global powers.
5. Making us dumber, chanting “Dude, where’s my recession?”, 3 June 2008 — Economic columnists do a disservice to their readers by ignoring the data showing a weakening economy.
6. Another warning from our leaders, which we will ignore, 4 June 2008 — An extraordinarily clear warning from a senior officer of the Federal Reserve.
7. When did “Dude” predict a recession? How severe?, 6 June 2008 — Why accurate economic forecasting is difficult, what we know about current conditions, and warnings from a top economist.
8. Consequences of a long, deep recession – part I, 18 June 2008
9. Consequences of a serious US recession – part II, 19 June 2008
10. Consequences of a long, deep recession – part III, 20 June 2008
11. A look at one page of what lies ahead in America’s history, 7 August 2008 — Death of an American industry.
12. “The Coming US Consumption Bust”, by Nouriel Roubini, 6 September 2008
13. The most important news of the month. Perhaps the year., 29 September 2008 — Warnings from our foreign creditors.
14. Forecasting the results of this financial crisis – part I, about politics, 13 October 2008
15. Forecasting the results of this financial crisis – part II, a new economy for America, 14 October 2008
16. Miscelaneous news and thoughts about the financial crisis, 16 October 2008
17. The Coming Global Stag-Deflation (Stagnation/Recession plus Deflation), 28 October 2008
18. A look at the next phase of the crisis, as it hits the real economy, 31 October 2008
19. A look at out future, 2009 – 2010 … and beyond, 9 November 2008
20. A look at 2009 economy – some guesses, 28 December 2008
21. America on its way from superpower to banana republic, 28 March 2009

7.  Theft pretending to be solutions

1. Slowly a few voices are raised about the pending theft of taxpayer money, 21 September 2008
2. The Paulson Plan will buy assets cheap, just as all good cons offer easy money to the marks, 30 September 2008
3. A reminder – the TARP program is just theft, 24 November 2008
4. A solution to our financial problems: steal wealth from other nations, 2 February 2009
5. Stand by for action – more theft of our money being planned in Washington, 4 February 2009
6. Update: yes, the Paulson Plan was just theft, 14 February 2009
7. Now is the time for America to get angry, 24 March 2009
8. America on its way from superpower to banana republic, 28 March 2009
9. Bush’s bailout plan is now Obama’s. His quiet eloquence guides the sheep into the pen, 30 March 2009
10. “The Greatest Swindle Ever Sold”, by Andy Kroll in The Nation, 28 May 2009

8.  About Solutions

1. A happy ending to the current economic recession, 12 February 2008 – The political actions which might end this downturn, and their long-term implications.
2. Slow steps to nationalizing the US financial sector, 7 April 2008 — How this will change our society.
3. How should we respond to the crisis?, 24 September 2008
4. A solution to our financial crisis, 25 September 2008
5. A quick guide to the “Emergency Economic Stabilization Act of 2008″, 29 September 2008
6. The last opportunity for effective action before disaster strikes, 3 October 2008 — How to stabilize the financial system.
7. Prof Roubini prescribes first aid for America’s economy, 4 October 2008
8. Effective treatment for this crisis will come with “The Master Settlement of 2009″, 5 October 2008
9. Dr. Bush, stabilize the economy - stat!, 7 October 2008
10. The new President will need new solutions for the economic crisis, 9 October 2008
11. Results from the IMF meeting – just thin gruel, 12 October 2008
12. The G-7 meeting was the last chance for action before the global recession, 12 October 2008
13. A brief note about our financial system: Intermediation, disintermediation, and soon re-intermediation, 16 October 2008
14. New recommendations to solve our financial crisis (and I admit that I was wrong), 23 October 2008
15. A look ahead to the end of this financial crisis, 30 October 2008
16. Expect little or nothing from meetings like the G20 – or the Obama Administration, 18 November 2008
17. Everything you need to know about government stimulus programs (read this – it’s about your money), 30 January 2009
18. Bush’s bailout plan is now Obama’s. His quiet eloquence guides the sheep into the pen, 30 March 2009

9.  Speculation about the future, about structural changes to America and the world

1. Treasury Secretary Paulson leads us across the Rubicon, 9 September 2008
2. Say good-bye to the old America. Welcome to our new socialist paradise!, 17 September 2008
3. Another voice warning about the nationalization of AIG, 18 September 2008
4. Another step away from our Constitutional system, with applause, 19 September 2008
5. America appoints a Magister Populi to deal with the financial crisis, 21 September 2008
6. Legal experts discuss if the Paulson Plan is legal, 21 September 2008
7. German Finance Minister Peer Steinbrück explains how the world is changing, 30 September 2008
8. America has changed. Why do so many foreigners see this, but so few Americans?, 1 October 2008
9. America is changing. Read some chillling words from a liberal economist, 2 October 2008
10. Does this economic crisis make the State stronger – or is it another step in the decline of the state?, 16 January 2009
11. This financial crisis is the transition to a new world; like birth, it is painful, 11 February 2009
12. Everything written about the economic crisis overlooks its true nature, 24 February 2009
13. A look at the new world – after the downturn, 19 March 2009

10.  Treasury Department documents

A description of the Emergency Economic Stabilization Act of 2008, House Committee on Financial Services

We cannot plead the “we didn’t know the details in the fine print” excuse. The details about this massive nationalization have been clearly spelled out for us by the government.

• Paulson Remarks on Housing GSE Actions
• FHFA Director Lockhart Remarks on Housing GSE Actions
• Fact Sheet: FHFA Conservatorship
• Fact Sheet: Treasury Preferred Stock Purchase Agreement
• Fact Sheet: Treasury MBS Purchase Program
• Fact Sheet: Treasury GSE Credit Facility
• Freddie Mac Warrant to Purchase Common Stock
• Freddie Mac Certificate
• Freddie Mac Senior Preferred Stock Purchase Agreement
• Fannie Mae Warrant to Purchase Common Stock
• Fannie Mae Certificate
• Fannie Mae Senior Preferred Stock Purchase Agreement
• Frequently Asked Questions: Treasury Senior Preferred Stock Purchase Agreement
• OMB Director Nussle Statement on the GSEs Budgetary Status

See this page for a current list of Treasury Department documents.