Earlier, during the downturn in the equities market between December 1999 and September 2002, approximately $10 trillion of equity was erased. But a measure of financial system performance, the Keefe, Bruyette, & Woods BKX index of financial firms, fell less than 6% during that period. In the current downturn, the value of residential real estate has fallen by approximately $3 trillion, but the BKX index has now fallen 75% from its peak of January 2007. The financial sector has been devastated in this crisis, whereas it was almost completely unaffected by the downturn in the equities market early in this decade.
How can one crash that wipes out $10 trillion in assets cause no damage to the financial system and another that causes $3 trillion in losses devastate the financial system?
http://online.wsj.com/article/SB123897612802791281.html?mod=googlenews_wsj
The Fed has already started this process by starting to purchase $300 billion of Treasury Notes. This has pissed off China. They see the endgame.
Resistance is Futile. http://seekingalpha.com/article/129529-the-economic-end-game-nuke-the-debt
THE MARGINAL PRODUCTIVITY OF DEBT
Why Obama's Stimulus Package Is Doomed to Failure
by Antal E. Fekete,
Professor of Money and Banking
San Francisco School of Economics
March 30, 2009 http://www.financialsense.com/editorials/fekete/2009/0330.html
The year 2006 was the watershed. Late in that year the marginal productivity of debt dropped to zero and went negative for the first time ever, switching on the red alert sign to warn of an imminent economic catastrophe. Indeed, in February, 2007, the risk of debt default as measured by the skyrocketing cost of CDS (credit default swaps) exploded and, as the saying goes, the rest is history. http://www.marketoracle.co.uk/Article9753.html
The Radicalization of Ben Bernanke
He is throwing trillions of dollars at the financial crisis. What happens if his gambles don't pay off? http://www.washingtonpost.com/wp-dyn/content/article/2009/04/02/AR2009040202573_pf.html
