Everyone is hurting. Pessimism has replaced opportunism. Free market democracy is being laughed at by leaders such as Chavez of Venezuela and Evo Morales of Bolivia. They are gleeful this evening. And, so far, nothing we have done proves them wrong.
We are in serious times, folks. Emerging markets could easily side with these despots as it is pointed out that capitalism is a failed system. Excess profits are only achieved by manipulation. Laws are flexible enough to reward the law makers.
Should it tilt in that direction half the world could go the other way.
Study of the problem will take years. As I review it I am sure of only one thing. We were all gleeful during housing price revaluations and were glad others, even those with little money, were bidding up housing prices. As they bought our own valuations rose. We threw money at them based upon formulaic equations suggesting housing prices would rise forever. When they did not rise the formulas collapsed.
The mortgages financed had multiplied into trillions upon trillions as eager bankers packaged and re-packaged the mortgage tranches. This was exacerbated by leveraging these mortgages as eager investors hungered for bullet proof yields.
Notwithstanding, there are learned pundits suggesting we are way, way overdue for another rally. Not sure I have the strength.
And now for your listening pleasure is one of our great hair bands. Pay special attention to the tom-toms at the bridge, fab. `Nazareth – Love Hurts
