We Have Just Lost The War On Terror.

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Since 2001 I have been posting about a crisis of liquidity bringing the house of cards that represents is the Global economy down . My thinking was that it would be brought about by a terrorist attack. However the US and world has laid itself low on its own accord. One thing is certain that the low interest rate environment that 911 created allowed for the greed that set in later. It is quiet a possibility that 911 created the cracks in the system that have now spread and is now causing the system to crumble before our very eyes. So in this sense Al Qaedea may just have won.

[id10t]

I thought it was lost when we created teh TSA and DHS

[Jim Richards]

9/11 didn't create the low interest environment.

[DanielDudley]

Never attribute to treachery what can be explaned by stupidity...

Or in this case greed.

[Porsche-O-Phile]

Originally Posted by Jim Richards

9/11 didn't create the low interest environment.

Actually it did.

In late 2001/early 2002, there was a HUGE slowdown/cutback in consumer spending. This was DIRECTLY caused by a slowdown in consumer spending after 9/11 and the resulting uncertainty. This in turn caused a de facto recession. Many people were out of work (remember?) Layoffs, rising unemployment, sagging earnings reports, etc. The response was to RAPIDLY slash the lending rates and give housing (which was one of the only sectors showing even some resilience) a shot in the arm - which it did. The problem was it (and the other sectors of the economy) suffered from a sort of "turbo lag". Rates got cut, cut, cut between 2002 and 2004 and by the time '04 rolled around, housing was on fire and people were spending money they didn't have like mad, fueled by an insane orgy of low-interest debt "easy money" and promises of insane, endless appreciation connected to housing and ultimately the low-interest environment. By the time everyone realized it was overheating and started to push rates up, it was WAY too late. And you get to today.

Now we've got a bigger problem. We've borrowed out the ass and driven our currency value down to spur foreign investment and to help pay for nonsense like the war in Iraq. As such, we face very high inflationary pressures. We are also facing a national (and starting to reach into the global realm) slowdown - probably a recession soon. We can't simply manipulate rates to get ourselves out. Nor can we just print more dough (it'd further devalue and destabilize our currency). We've gotten ourselves in a fine mess this time... The word "stagflation" that was used in the 1970s and which we swore we'd never hear again is starting to rear its ugly head.

And once the bills start coming in to fund the latest round of government bailouts (and there will undoubtedly be more), we're going to be in a much bigger mess than when we started.

I honestly think we were better off in the 1970s under Carter.

[Jim Richards]

Originally Posted by Porsche-O-Phile

Actually it did.

Interest rates dropped steadily for 1 year prior to 9/11/01. It was the Fed's response to the tech bubble's burst. As I said, 9/11 did not create the low interest environment. The premise of this thread is wrong.

http://www.economagic.com/em-cgi/data.exe/fedbog/dwb

[red-beard]

Originally Posted by Jim Richards

Interest rates dropped steadily for 1 year prior to 9/11/01. It was the Fed's response to the tech bubble's burt. As I said, 9/11 did not create the low interest environment.

http://www.economagic.com/em-cgi/data.exe/fedbog/dwb

Al Queda did not attack symbols of the USA. If they had, they would have flown the planes into the Statue of Liberty.

Al Queda attacked the economic, military and leadership structures of the Western world. These guys knew exactly what they were doing. The only screwups were they used 757s for the attacks on the Whitehouse and Pentagon, and that the crashes were not timed as well as they could have been. They should have attacked the Whitehouse and Pentagon first, then WTC.

We are still feeling echo's from the attacks. Some of the issues created afterwards were our own doing. But Al Queda understood the the writings of Sun Tzu better than we. They studied and were patient. They struck when we were weakest, and it magnified the effect.

I'm re-reading SunTzu and the commentaries around it. I think I see exactly how our Media is falling right into the trap of the enemy. Maybe I'll create a new thread on this.

[Aurel]

9/11 has had a role, direct or indirect. When you add the cost of the war with Iraq and Afghanistan to the cost of bailing the financial instutions out of bankruptcy, all at the expense of taxpayers, you figure that we got bankrupted just like the russians were bankrupted by Reagan.

Aurel

[Jim Richards]

That was due to the Iraq adventure, Aurel. It was an unnecessary diversion of our military resources and taxpayers' money.

[Aurel]

The irony of all that is, in order to finance the big plan, taxation of the higher middle class will increase dramatically. And that will be to bail out of debt all the Alt-A subprime lower income famillies who bit more than they could chew. In other words: income redistribution. Socialism just came to america, whether we vote for McCain or Obama...

Aurel

[dentist90]

Lending money to individuals way beyond their comfort zone, with the ONLY security for lenders and borrowers alike being the hope that housing prices would continue to climb in perpetuity, is the root cause of this latest panic. Sheer greed. Lenders pushed all their chips onto the table without adequate security. Just watch now... the next home you go to buy will cost you 25% down regardless of market, unless the feds are willing to secure the balance. Credit assesment and debt ratio calculations are not always bad things.
Bin Laden couldn't have planned a better sabotage, unfortunately this one is domestic.

[Zeke]

Wasn't this the doctrine of the Russian Communist's regime? Attack the US from within using our own devices? Seems like we are doing more to destroy ourselves than any outsiders. They just provide a catalyst.

I think ol' GWB had the country's well being in mind all along, just had no clue as to what to do. And none of his cronies were going to help either because it would cause them financial loss or they were just too damn old fashioned (like pappa).

The same fast thinkers that evolved from the likes of Michael Milken should be recruited to work on the govm't side. I mean if we could reward them to steal on behalf of the govm't, we could get going on this.

[dentist90]

Kinda like hiring hackers to work for internet security companies, eh?

I likey. They could look over a new investment scheme, report to the gov't that this is a house of cards and let the feds take it from there.