What in the world is going on?
First, United stops all flights after its quite large computer network fails.
Next, NYSE stops all trading because its computers suffered some fault.
This comes after China(?) hacked multiple allegedly well protected federal computer systems over the past several months.
So what else is in the news? Greece, China, and the probable shutdown of the US government because of unfettered Teabuggery.
Let’s take Greece first. Austerity not only does not work, it actually makes things worse. The only word that describes what Austerity has done to Greece is “horrific.” And Merkel wants to make things worse. Piketty, and many others are waving a red flag in Merkel’s face, but she is color-blind, and immune to any outside advice. Her mind is made up, much like concrete that has already set.
Luckily for the US, our brush with disaster was limited (but we still suffered damage) when the mandated cuts in all federal spending actually took place. Almost everyone was shocked that the imaginary hammer actually fell in 2013. What we have now as the status quo, will stay with us, doing damage until 2021. Budget Sequestration was, is and will be a disaster for the US. Yet, we should survive, if only we do smart things like dropkick the F-35 in the process. Merkel’s Austerity solutions for Greece will be far worse, especially when one out of four Greeks are unemployed.
China? Wow. Shades of 1929. In the last few days, the huge, insular (ATM-based *) margin-festered Chinese stock market lost 30% of its value. At least 1,430 of the 2,776 companies traded in China which make up the Shanghai, have decided to pull their shares as markets continue their lemming-like march off the financial cliff.
We are talking TRILLIONS of dollars that have evaporated. An amount larger than the total GNP of the UK for an entire year.
The problem is compounded because the Chinese government deliberately permitted, even pushed, margin trading, with unbelievably easy terms (if the market rises). People who owned any asset, including a home, were able to double, triple, even quadruple their “bet” on the market by using their assets as collateral on a loan for the stock purchase. When the market value drops, those loans are due, wiping out hundreds of millions of families’ assets and destroying hundreds of thousands of small companies in the process.
Much like a Monty Python skit, (Nudge, nudge, wink, wink) everyone knew that the Chinese market was heavily over-inflated, and bore no factual relationship with their actual economy. Worse yet, the allegedly “thriving” parts of the economy (building new cities, new skyscrapers, and pouring concrete and laying steel) had run out of demand, while the pace of investment actually increased. Building an 80 story building in three weeks? Impressive, except when it remains empty.
Someone made out during this mess. Goldman Sachs clearly profited on both the start of the current Greek tragedy, swapping decent debt for crap, and now, like vultures picking and pecking among the corpses. It is likely that someone also profited from the Chinese disaster in the making.
The Greek Tragedy was a designed failure. The Chinese one, quite possibly was, too. (along with some really short-sighted policies from Beijing. The US govt. was seriously hacked. Today, United’s massive computers fail, AND the NYSE shuts down.
And now, the Wall Street Urinal is reporting that the US government will be shut down again, by the GOP.
Is there a pattern in the making here?
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* The Chinese have used this latest market bubble, which was artificially created by margin investing, to fund various military, social, and democratic investments, but these have been badly directed, and unbelievably fraudulent and inefficient. Think of the margin investment as creating a giant ATM that Bejing has used as a source of free money. It cannot and will not last.