Those "who study economics fr a living" should receive an " 'F' for Failure" since their economic models did not indicate the portending problems in the economic situation, and consequently did not recommend any palliative measures to correct them.
According to Blomberg, world debt is $373 trillion with a "t.". That's $373,000,000,000,000. That represents a lot of "obligation," claims that some have against others, and it was reported that it amounts to $60,000 per person. This would include every impoverished infant born in subSaharan Africa, nomads in Asia, and dwellers in the Amazon, so that the "amount owed" by those whose economies are "active" in the markets would be far more.
It's a very complex system with cross-obligations. The Iceland bank failures, which occurred after their banks ventured into markets and began dealing in "play money," not sustainable by their economy, and being several times their gross domestic product.
Of course, this bailout is an effort at misdirection with the need being provision of a mechanism to enable short term borrowing for businesses, a matter which was not in the focus of the bailout scam. Now "the fed" is finally addressing the crux of the current economic problem by setting up mechanisms to provide for meeting that critical need. www.breitbart.com
London has been the center of world economic stability with the LIBOR setting rates used worldwide. This index provides not only the overnight rate but rates for increments as long as a year with the three month rate a benchmark for many other indexes. Now the London banks are in "freefall," losing some 10% with some losing some 20% in "value" overnight, so to speak. This instability threatens the world's baning system. All 16 of the group of international banks, whose data is used in setting LIBOR, are involved in the worldwide problem.
But there are some places that rain does not fall. Some bear is recommending purchase of "Hershey's" as the cost of chocolate, sugar, and milk, have decreased significantly, the company has increased what it charges for its product twice, it has streamlined its operations and has a competent CEO (or whatever he's called), and the company is entering international markets. Oh, and Halloween helps. We'll see. Oh, and he thinks the gaming companies that sell those electronic "toys" will not do well this Christmas season.
In the meantine there is a 600 pound guerilla in the banking system that could really bring down the economies of the world. The PRC, the Peoples Republic of China, operates on a very thin margin. When the Chinese economy is adversely affected by reduction in purchases by its overseas markets, beware. The holdings of China's many billionaires have been reduced.
This is a house of paper, $60,000 (more or less) in cross-obligations for everyone in this world. And our government controlled by the same worthies who circulate between official government positions and the financial institutions has sought to bail them out at the expense of the American taxpayer's decrease in living standard instead of providing a mechanism for them to disgorge their ill-gotten gains secured by instruments such as derivatives.
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