Guest Post: Worse Than 2008

Submitted by Tyler Durden on 12/21/2011 - 11:46 Bank of England Belgium Bond Budget Deficit Central Banks China default Deficit Spending European Central Bank Eurozone Fail Federal Deficit Federal Reserve Fisher Fitch fixed Global Economy Greece Gross Domestic Product Guest Post Ireland Italy Monetary Policy Paul Fisher Portugal Rating Agency ratings Real estate Reality Recession recovery Reuters Sovereigns Unemployment United Kingdom

There are clear signs of a liquidity crunch in the asset markets right now, and the question I keep hearing is, Is this 2008 all over again? No, it’s worse. Much worse. In 2008 there was a lot more faith and optimism upon which to draw. But both have been squandered to significant degrees by feckless regulators and authorities who failed to properly address any of the root causes of the first crisis even as they slathered layer after layer of thin-air money over many of the symptoms. Anyone who has paid attention knows that those "magic potions" proved to be anything but. Not only are the root causes still with us (too much debt, vast regional financial imbalances, and high energy prices), but they have actually grown worse the entire time. As always, we have no idea exactly what is going to happen and when, but we can track the various stresses and strains, noting that more and wider fingers of instability increase the risk of a major event. Heading into 2012, there's enough data to warrant maintaining an extremely cautious stance regarding holding onto one's wealth and increasing one's preparations towards resilience.