When? That’s the question that is on the minds of people following the economy. When will the “you know what” hit the fan and we start another global meltdown. I am not going to string you along. I will tell you right now, I don’t know. I will tell you the headlines I read and the things I am hearing from people in power around the globe say we are in deep danger. The time is close.
Mervyn King, Ben Bernanke’s counterpart over at the Bank of England, said last week, “This is the most serious financial crisis we’ve seen, at least since the 1930s, if not ever.” If this is what he’s willing to say publicly, what is he saying behind closed doors? This means today’s financial conditions are worse than the meltdown of 2008.
King is not the only one sounding an alarm.
UK Prime Minister David Cameron said yesterday, “Time is short, the situation is precarious.” The Financial Times (FT.com) reported yesterday, “Mr. Cameron wants Germany and others to accept the “collective responsibility” of euro membership and to increase the firepower of the Eurozone’s €440bn bailout fund to stop financial contagion spreading from Greece. Although he refused to speculate on a Greek default – some British government ministers believe it is now inevitable – he said all uncertainty had to be removed about the country’s economic future.”
The FT.com story also said, “Mr. Cameron believes it is vital that Europe’s leaders get ahead of the markets by announcing a comprehensive plan, comparing it to the “bazooka” approach once advocated by Hank Paulson, former US Treasury secretary.” (Click here to read the complete FT.com story.)
I hope that “bazooka” approach doesn’t end up being like the gigantic bait and switch U.S. taxpayer rip-off called TARP. That stands for the Troubled Asset Relief Program which was supposed to buy “troubled assets,” but none were bought. The reckless, crooked bankers did get some sweet bonuses that following year though. I hope the crisis holds off until the G-20 meets in France in early November. I am sure the subjects will include how to handle the coming Greek default and recapitalizing European banks.