Monday, August 8, 2011

Overdose: The Next Financial Crisis


When will be the next financial crisis? In late 2011? 2012? 2013? Whenever it would be, it would be bigger than we had in 2008. The documentary named Overdose: The Next Financial Crisis, based on the book Financial Fiasco by Johan Norberg,  is "the story of the greatest financial crisis of our time;the one that is on its way." Although the corruption in financial world started in late  80s, this documentary chose to start narration from a later date, September 11 2001. In its nearly 46 minutes it shows how each bail out to rescue a part of economy caused another and larger bubble but still how the same failed solution is employed again:

"The solution is the problem, that is why we have a problem in the first place."
Vernon L. Smith - Chapman University

"The financial crisis (of 2008) started in a way that is very similar to today's situation. It started with an economic crisis in US (dot com bubble burst and 2001) and a government which responded decisively. After dot com bubble and 9/11, US government decided to save the economy by inflating a new bubble. Today the world is trying to get out of a financial crisis by inflating a new bubble. The difference is that this bubble is much bigger."

You can watch this documentary below. It is a must watch.






Here are some quotes from the documentary:

"Banks and speculators loved it (FED guarantee to clean up the mess). Now they could take greater risks then ever before. If they were successful they could keep the profits. And if they were unlucky, Greenspan will rescue them."

"We went on an unprecedented global spending bitch!Americans borrowed and spent trillions of dollars to buy staff. And that is why we are in so much problem now. That is because we were drunk and fed alcohol."
Peter P. Schiff Euro Pacific Capital

"Low interest rates caused the housing bubble. Cheap loans caused the people to buy more and bigger homes. House prices began to rise 10 percent a year. So many took out a second mortgage to fund consumption."

"Why do you need a decent income to buy a home if you can get rich by just living in it? The market even coined a term NINA loans. No Income, No Assets No Problem! You will get a loan anyway."

"Huge moral hazard created by the government in the mortgage market. When the government started to guarantee the mortgages, then the lenders stopped worrying about getting their money back, because the government said we guarantee it."
Peter P. Schiff Euro Pacific Capital

"They were great days. But it was all based on a market on steroids. Loans were cheap enough to keep driving housing prices up. But when interest rates returned to normal levels in 2006, the spell was broken."


"It is a pretty unlikely possibility, we have never had declining house prices in nationwide basis."
(Ben Bernanke answering a question back in 2005. The question is this: "Tell me what is the worst case scenario if in fact we see the prices come down across the country".Jim Rogers is right when he says this man has no idea about economics.)

"After they did the dot-com bubble and that burst, they re-inflated it with real estate bubble and when that burst, they have created the bubble of all bubbles. It is not only the United States now. This is a global bubble. They are all into it. It is called the bail-out bubble. Hey the economy is going down, recession is setting in, sales don't look good, exports soft, need more money. How about we call it stimulus package!"
Gerald Celente 
Trend Analyst Trends Research Institute

"The big guys on Wall Street. They cannot take their loses. They are cry baby capitalists. They preach capitalism to everybody but themselves."
 Gerald Celente 
Trend Analyst Trends Research Institute

"The housing bubble they inflated have blew up with all the carnage and all the bankruptcies. And now what is their solution: well just do the same thing we did before. Instead of having interest rates at 1 percent, let's keep them at zero. And let's buy everything we can. Let's print money and buy mortgages, buy credit card debts, buy student loans. Let's buy bunds, let's drop money from helicopters to try to get to the same excessive risk taking and gambling on the Wall Street. Let's convince American's already loaded with huge debt to go and buy new stuff and go into deeper to debt. The banks do not wanna lend money, let's make them lend more money. This is economic suicide."
Peter P. Schiff Euro Pacific Capital

"I was just very surprised that the people would accept the idea so readily (cash for clunker) not they have excepted the money, who wouldn't. That they have found this a viable solution. This does not give me a good impression of rationality of the voters and the tax payers."
Dr. Karen Horn
Head of Berlin Office IW Koln

"George W. Bush almost accumulated more debt then all US Presidents before him combined, from George Washington to Bill Clinton. And Obama is almost creating more debt than the all Presidents before him, including George W. Bush. 

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