This bust is not the “Big One”
This is only one of a series of boom and busts we have been experiencing since Nixon took us off the Gold Standard. Each boom bigger than the one before and of course each bust nastier and longer.
Eventually we run out of suckers and disappear from history like Egypt, Rome, Greece, Great Britain, etc. No Empire can outsource the means to prosperity and rob it’d most prosperous and survive.
The elites spend too much time, money and man power defending every corner of the globe form interlopers and find themselves rotting from within. Their own children refuse to participate in this defense of their patrimony.
The ruling class becomes insular and arrogant as they have to rob their citizens to pay for all their crumbling assets. Nothing becomes more important then saving their own fat asses.
Especially looking out for the taxpayers who pays for it. Eventually a majority finds a way, legal or not, to avoid the tax man and no one else will lend these people a dime.
Can you say martial law? Everyone becomes a suspect. No assets become safe from the grasping ruling elites. Evey dollar becomes a target for “investigation.” No company treasury is immune from confiscation because of “hoarding” or tax evasion.
In our case, we then need to take over small countries to rob of the oil. Until the armies get sick of it and refuse orders. happened many times in the past empires. (1917 Russia the most famous.)
Finally everyone stays home or rampages through the streets looking for food handouts, unemployment, “free medical service”or pension monies promised by the gang that ran the Empire.
Happens every time the populace loses confidence in and fear of the ruling elites. There are whole bureaucracies dedicated to mollify various constituencies to keep the gang in charge. Finally, these costs become unmanageable.
Meanwhile, until this system finally crashes, some one has to pay for all this dead weight.
Shall we look in the mirror?
The remaining Fannie and Freddie proceeds from the sale of its GSE toxic bonds to the Fed will be used to re-inflate the real estate market by offering new Wild West real estate mortgages to anyone who can fog a mirror, and all the major mortgage lenders are tooling up for one final round of liar loans to suck in anyone who did not get sucked into the real estate bubble the first time around. This will add to the toxic waste pile and compound our problems as the new round of real estate buyers watch the value of their new homes plummet while the stimulus package fizzles out, the economy continues its implosion, stagflation runs rampant, risk elevates to levels unseen in our economic history, and double digit interest rates administer the coup de grace to the real estate markets, the bond markets, the interest rate swap derivative market and the US and world economies in general. All economic activity will then cease, and there will be a crack-up boom the like of which has never before been seen in the history of the world as the Much, Much Greater Depression swings into full gear.