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Originally Posted by Skybird
I think there is a reason why they already call it the worst economic crisis since the great fall in the 1920s. And some officials point out that it already is worse.
However, it will become worse this year. AIG just illustrated that end of good news is not in sight: with 100 billion lost, they just marked the highest loss of a single company in the history of economic recordings.
What is worrying is that more and more of the real system key nodes reveal how deep they are in trouble, like AIG in America or HRE in Germany. If any of these key players falls, they pull a whole rat tail of others down with them. HRE in Germany falling, for example, would mean the total collapse of Germany's national infrastructure construction and the breakdown of all national services associated with that.
Once we see such key players falling, the real fun begins. Compared to that, GM and Lehmann are just funny entertainment for the interruption in the main program.
If anything is to be learned from current times, then how deeply sick and unhealthy the economic structures are that have been risen in the past. There is little reason to be proud of them or sell them as a success story. More realistic assessment obviously would be to call them rightout dumb and stupid.
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Skybird is absolutely right. The economic structures of modern times have many flaws, and foremost amongst them is the omnipresent trend towards centralism.
Nations like the U.S. have always been a beacon to capital because of the economic freedoms allowed, but now that the state has decided to intervene and nationalize many key industries, it will suffer the same fate as every socialist nation. Worse yet, the world will be dragged down with it because so many weak socialist economies are dependant upon U.S. fiscal markets and the weakening fiat dollar.
Things are going to get bad, mark my words. Very bad. Maybe not this year, or the next, but very soon. The state's intervention and massive, unwise, expenditures are a perfect recipe for stagflation in today's economic environment. The excessive overhead incurred on businesses by over-regulation coupled with the inflation of currency brought on by borrowing and printing fiat currency can only lead to that end. Some economic schools disagree, but none have an empyrical example to point to.
At this point the best hope for the U.S. is that the rest of the world economy will buckle more quickly than ours, thereby placing us in a position to emerge once again as a world leader. Unfortunately the current administration is inadvertently hell-bent on expediting our economic demise.
All these lessons have been learned before. The state cannot be trusted with the wealth of the people. They always consume and destroy it and they always cause the economic and/or/and then military collapse of the nation. The modern crop of states is no exception, even if some of the withering plants have yet to die.
Economic freedom is paramount to the prosperity of any nation, period.
But don't take my word for it. Watch what the current administration does to the economy. Honestly, the economy may even "recover", somewhat, but the prices of goods and the labor required to obtain the capital to purchase them will increase, exponentially and contextually(in the fiscal sense).
America is rapidly becoming the newest experiment in centralist government. The results should be noted, for once.