Cleaning out the stables
Saturday, December 13th, 2008The implosion of the US financial system gets worse by the day. Treasury bills printed negative yields whilst the Fed prints “enter your own number here” dollars. Now comes the largest financial scandal so far (discounting the banks which are a scandal all of their own).
A $50bln ponzi scheme. It’s so daft i can’t bring myself to write about it. As usual others cover this story better than I could. But it seems the US financial markets are receiving the greatest hosing out since Hercules cleaned up the Augean stables. There is no doubt more to come as rogue players just fess up and come clean. This may take some time as the initial reaction is to close ranks and pretend everything is fine.
The unveiling of dubious credit structures over the last 18 months is way overdue and may at least provide an opportunity for another look at how our money system works. Bubbles come and go, part of human nature, but never has a bubble so exposed the inner workings of the banking system.
The giant hubris of “tamed inflation”, “end of history” and “the end of boom and bust” has been exposed for the posturing it always was.
Time for a major serving of humble pie all round. But will those in power get down and start eating it?
