"The End of Wall Street" by Roger Lowenstein

[snoblind]

Anybody here read this? 

Thought about posting about this over in Politics because of higher traffic, but decided on where since it's more relevant to the forum and would get responses from folks who actually knew something about finance as opposed to politic drivel.

The connection that I had never made was that Paulson especially tied the failure/meltdown of Freddie and Fannie to a run on US treasuries.  The way I understood it was the Chinese and others looked at Fannie/Freddie's bonds as being guaranteed by the US government.  So if we wouldn't back stop them why trust treasuries either?

So we were not only looking at a financial collaspe, but a US government collapse since a government running deficits that can't sell it's debt has no way to continue spending.

Am I reading too much into this?  Was 2008 financial armageddon?  Or did we avert it?  Or did we just kick the can down the road and a replay of 2008 (or worse) is going to happen sooner or later?

Interested in hearing folks thoughts on this.  I know we have talked about the debt, spending, etc., but I'm thinking more about the financial system itself (both US and world).   

[HawgWild]

Was 2008 financial armageddon?  Or did we avert it?  Or did we just kick the can down the road and a replay of 2008 (or worse) is going to happen sooner or later?

I vote for the latter but we might not get there because of the nuclear Holocaust that's going to happen in the middle east if you believe Jeffrey Goldberg's writings in this month's The Atlantic.

Really, I don't think it's any one thing; there are too many variables at play but too many things seem to be out of control and heading in the wrong direction.

[snoblind]

I agree on your "any one thing point".  That, IMHO, is one of the biggest issues.  An attempt to fix one thing leads to unintended consequences in other places.

[john c]

Yes, agree, too many variables and it doesn't take many to get into a chaotic state.  The answer my friend, is blowin' in the wind, ....

[Fletch]

Reminds me of a book written in the 80's by Harry Figgie called Bankruptcy 1995 about our country being completely bankrupt by then. Yet we went on to one of the greatest expansions ever. Keep in mind that people that write books like this have one thing in mind, selling books. Sounds like a good contrarian signal to buy to me. Things are not always as they seem even if it seems like we are headed for financial destruction. Remember, an entire generation of people who lived through the Great Depression were convinced we would never recover from that disaster and swore off stocks forever

[GuitarBoy]

 I think we have just pushed it back down the road by throwing more and more money at the problem. How bad the future is IMO is still yet to be determined. I don't think anyone can for sure say that we are heading for financial devastation. The course we are on currently on is leading us down the wrong path, that doesn't mean that we can't change course before everything unravels. I think the question is how much damage will we create in the meantime. I think the U.S. is in for a wake up call. If tomorrow we started doing the right thing there would still be a lot of financial pain. Before all is said and done I see a realignment of the global market place with the U.S. no longer in the drivers seat as the richest country in the world. Here are some sobering stats for the U.S.

http://endoftheamericandream.com/archives/50-statistics-about-the-u-s-economy-that-are-almost-too-crazy-to-believe