Tuesday, March 16, 2004
"Argentina may be a difficulty for the Fund and for the financial world, but if you're looking for the really big crisis, look at the United States. A giant crisis is coming there, sooner than most people think. It is now clear, that what has been keeping the system going, is just pumping of liquidity.... The United States is the place to look, for where the really big crisis will hit."
A steadily shrinking labor force has never appeared in any U.S. "post-recession" in 100 years—only in the first years of the Great Depression.
One newsletter published by a senior Republican Party figure reported that Greenspan frankly "fears another great depression," and believes that all that has held off disaster so far "is the exponential growth of credit derivatives" which have "sheltered the banking system from a catastrophic collapse."
Fannie Mae and Freddie Mac have been the huge bellows blowing up the tremendous U.S. real-estate mortgage bubble, which has become both the financial "lifeline" of American households' consumption, and the engine of their ruinous and rapidly increasing indebtedness.
But should one of the mortgage enterprises fail, or be taken over by regulators as Greenspan had mooted, the shock to the super-heated American mortgage bubble would cause an explosion.
Entire article here.
A Majority of One