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alstry (35.41)

Is Paulson "straight" with America???? England in TURMOIL

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August 31, 2008 – Comments (3)

The government was plunged into turmoil yesterday as the chancellor admitted the full scale of Britain’s economic crisis.

Downing Street and the Treasury launched a desperate damage limitation exercise after Alistair Darling declared that Britain was facing “arguably the worst” slump in 60 years. As Treasury aides claimed that he had been misrepresented, Darling took to the airwaves to clarify his remarks.

However, instead of reassuring voters, the chancellor risked compounding the crisis by failing to modify his dire assessment. Darling insisted it was his duty to be “straight” with people. His warning that the slump will be “more profound and long-lasting than people thought” comes at the worst time for Gordon Brown as he struggles to shore up his leadership.

Hazel Blears, the communities secretary, moved to reassure voters, saying: “We know things are tough and understand that people are worried. But Britain’s economy is fundamentally strong.”

One senior Labour figure, who was out canvassing voters, said: “This hardly gives activists a morale boost. We are out on the doorstep, trying to reassure people, at the same time as Darling is telling them we are all doomed.”

http://www.timesonline.co.uk/tol/news/politics/article4641381.ece

 We are all doomed??????  Even I don't think I have gone this far.....but I can understand the logic.  If you think England has more problems than we do....just wait.

Chancellor Darling is Paulson's counter in England.  The behavior in England by government seems to mirror ours by sweeping everything under the rug.  How long can officials keep the levee from breaking???  To understand Darling's position only takes a basic understanding of accounting.  Up until recently, Paulson was telling us everything is fine but we now know different.

Including BearStearns, the 11 banks that have failed this year approach the assets of the over 1500 banks that failed for the entire S&L crisis.....and we are just at the beginning of this crisis.  But for some creative accounting....many more would have also failed.

The problem now is trust.  Without trust....the entire system breaks down because it is a system of counterparty promises.  The customer promises to pay the storeowner.  The storeowner promises to pay the landlord.  The landlord promises to pay the bank.  The bank promises to pay the depositor.  The government promises to provide services in return for the citizens promise to pay taxes....ect......

When trust breaks down and promises are broken, the system breaks down, and we all live in the system.

Folks, there is simply tooo much debt and payment obligations out there for too little income.  And income is shrinking.  That means defaults will rise.  When we live in a country where the debt exeeds the cash savings by 5,10, 15 to 1, once you can't service the debt......defaults occur.

Loaning more money to money losing GM where debt exceeds cash over 25 to 1 is insane...especially since GM's revenues are now contracting and margins getting smaller.  Until we restructure and relieve GM of its debt burden, it will not be able to make money and innovate.  The same is true for many other businesses and municpalities in America where debt is suffocating a declining revenue stream.

The private and municpal debt burden in America is HUGE.  Until we deal with it...the problems are going to get much worse very very soon.

The cracks are becoming more visible....when will the system come clean????

 

 

3 Comments – Post Your Own

#1) On August 31, 2008 at 8:41 AM, alstry (35.41) wrote:

DARLING IS NO ALSTRY (or is it Alstry has been conservative in his blogging???)

These remarks are striking at several levels. First, because their author is Mr Darling, a man normally characterised by the caution of his public utterances and not previously renowned for a demotic turn of phrase. If he says things are bad, then they really must be very bad indeed. The words he uses are also extraordinary because it is usually the case that Chancellors try to talk up the economy. Mr Darling does the opposite. He further depresses expectations. He does not protest that everyone is being too gloomy; he says people may not be pessimistic enough. He forecasts bleakly that the downturn will be 'more profound and long-lasting' than everyone had expected.

http://www.guardian.co.uk/commentisfree/2008/aug/31/alistairdarling.gordonbrown

Understanding Chancellor Darling is understanding being conservative and understated.  If you don't appreciate the mess we are in right now, you soon will.

The question is how will our government deal with it...by concealing the problem more??????  Create a distraction???? 

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#2) On August 31, 2008 at 9:52 AM, alstry (35.41) wrote:

Alistair Darling took to the airwaves to "clarify" his comments in a newspaper interview, saying that he was referring to global economic conditions rather than those in Britain.

http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2008/08/31/cndarling131.xml

Seriously, if not Britain......who????

You think its time for our government to come clean so we can start addressing the problem.

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#3) On August 31, 2008 at 10:45 AM, daayoo (< 20) wrote:

Is Paulson "straight" with America????

That would be big fat NO!! 

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