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Another Financial Crisis Coming?

Former U.S. Treasury Secretary Henry Paulson says the world should prepare for another financial crisis, while Morgan Stanley CEO Jim Gorman views such an event is a virtual impossibility. Hmmmm … The conflicting views come on the fifth anniversary of the collapse of Lehman Brothers, with Paulson arguing systemic issues…

Former U.S. Treasury Secretary Henry Paulson says the world should prepare for another financial crisis, while Morgan Stanley CEO Jim Gorman views such an event is a virtual impossibility.

Hmmmm …

The conflicting views come on the fifth anniversary of the collapse of Lehman Brothers, with Paulson arguing systemic issues in the American banking system have yet to be resolved and Gorman arguing “dramatic” reforms to the system have been made.

“The probability of (it) happening again in our lifetime is as close to zero as I could imagine,” Gorman told Charlie Rose recently.

Really? Both of these guys are total interventionist/ crony capitalist jerk-offs, but we’re inclined to believe Paulson’s forecast.

America’s economy has never recovered from the last recession – which technically ended in mid-2009 but in reality is ongoing.

Case in point? In September 2008, America’s labor participation rate – which measures the percentage of the working age population that’s either employed or actively seeking a job – stood at 66 percent.

Last month? It had plunged to 63.2 percent – its lowest level since August of 1978. More than half a million Americans exited the labor force in August – bringing the total number of Americans outside of the national workforce to an all-time high of 90.5 million.

In the meantime politicians in Washington, D.C. of both parties have continued to kick the can down the road with regard to deficit spending and entitlement expansion (including the most onerous entitlement of them all, Obamacare).

Taxation and regulation are on the rise, as is the cost of living. What isn’t on the rise? Incomes.

Meanwhile the federal government is re-inflating the housing bubble and further inflating the student loan bubble (as if there were any decent-paying jobs out there for all those new college graduates to repay those loans).

Yeah … we’re gonna go with “another financial crisis is likely” on this one.

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14 comments

TontoBubbaGoldstein September 10, 2013 at 7:46 pm

Re: Our Founding Editor’s Twitter pic

Looks like someone lost a bet…..

Reply
larry September 10, 2013 at 8:07 pm

Both f these men have strategies to make money either way he market goes, but have decided a market turn in a certain way is best for THEM.

I am a capitalist through and through. But believe me, these tools of big government have become filthy rich by manipulating perception and policy for their benefit. They can make you money but don’t ever, and I mean ever, trust them!

Reply
Smirks September 10, 2013 at 8:47 pm

The banks lobbied big time to defang what little reform was passed, the Federal Reserve still acts in their interests, Obama was largely funded by the largest banks (although so was Romney) and constantly considers putting bank people in positions of power, and the last crisis resulted in a bailout.

Nah, no crisis looming. People aren’t in jail because banks did nothing wrong! The government really is trying to reform the financial industry! The banks never lie to their customers to make a buck! They certainly don’t gamble and lose billions and have to go before Congress and explain it, and Congress would never kiss their ass in such a hearing!

God bless America, land of the free (to robosign a foreclosure on a house you paid off already)!

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Vanguard16 September 10, 2013 at 8:50 pm

And Alan Wilson on behalf of SC, uuuh, the TP/GOP, is suing the Feds over the Dodd-Frank Act!!

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Gregory Geddings September 11, 2013 at 7:15 am

I understand that close to 1,000 bankers and their associates went to jail as a result of the S&L scandal a couple of decades ago. Prosecutors and investigators stayed busy for several years.

The only sound you hear from the regulators these days is of crickets.

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Hank Fuckn' Paulson September 10, 2013 at 9:46 pm

Seriously tho…if anyone would know Paulson is the guy. He was single handly responsible for making the financial crisis exponentially worse, and much more protracted than it otherwise would have been. So if he says watch out, watch out he was a historical student of the worst, and author of the second worst economic downturns in our lives.

Reply
Gregory Geddings September 11, 2013 at 7:17 am

Add Tim Geithner, Larry Summers, and Alan Greenspan to that list.
Brooksley Born warned us but she was ignored…make that she was hooted down.

Reply
Squishy123 September 10, 2013 at 11:09 pm

This Wall Street bubble is about ready to blow. The markets keep going up, jobs are scarce unless you want to work part-time minimum wage. The Treasury has about run out of ink and paper to inflate the dollar and countries we owe money to want to get paid before the dollar becomes more worthless than it already is.

Reply
just another guy September 11, 2013 at 8:26 am

Will, When you understand why James Gorman said that, you will understand he was right. The banks have SO MUCH CASH right now now and their capital levels have never been higher. Banks will not cause it. Now a Government debt problem, that is a different story.

Reply
hack September 11, 2013 at 8:44 am

Panic of 1907 which ushered in the Federal Reserve Act (October). Crash of 1929, October 24. Black Monday, October 19, 1987. September 11, 2001. September 16, 2008 Lehman Brothers goes down. These things tend to happen about every 5 years or so whether it is an all out crash or recession. Just follow the money, or the boom/bust cycle. Something about September/October and the start of the 4th quarter though…
Also interesting to note that the income disparity between the rich and poor is the highest it has been since 1928. Coincidence? Or a sign of imminent trouble ahead?

Reply
nitrat September 11, 2013 at 9:57 am

People don’t like to hear about that income inequality at banana republic levels, do they?
Keep on praying your Gilded Age II continues, maggots. The Progressive era of Teddy Roosevelt followed it…

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nitrat September 11, 2013 at 9:48 am

FITS, you people have done everything you can to sabotage, not only the government in general, but the implementation of Dodd-Frank…which should have been the resurrection of Glass Steagall. But, you wouldn’t stand for that.
You people did this because you really don’t like the free market at all.
You like a rigged market that benefits your massas.
You dumb asses.
Your massas don’t care if you live or die…as long as you support them ’til your dying gasp.

Reply
William September 11, 2013 at 11:18 am

I really can’t understand the doom and gloom crowd. They are so certain the country is destined for economic disaster, and they feel the need to tell everyone. Why? You are not in charge. No one elected you, or trusts you to know how to run the country’s economic system. Unless, I am mistaken many of you could not even get a job as a janitor at a Big Wall Street firm (you can’t have a criminal record because of the sensitive data you have to trash). So, if you are so confident you know where the economy is going, stop bitching and use your power to predict the future to get rich. The direction of the market is irrelevant to investing, if you are confident in your ability to predict the future. You can become rich no matter which way the markets move. The only risk is predicting wrong. You seem to have plenty of confidence that is not possible.
So here is what you should do. Short sale stocks and buy gold or similar investment grade commodities, with the proceeds. Then when the market crashes, sell gold and buy stocks. Follow this simple advice and if you are right you will be rich. If you are wrong you will be broke. But hey, you are not worried about being wrong, right?
Of course there is the possibility you do not have the resources to implement this strategy. But if that is the case, why should anyone listen to you? You obviously have not done such a great job thus far.

Reply
? September 11, 2013 at 11:20 am

“So here is what you should do. Short sale stocks and buy gold or similar investment grade commodities, with the proceeds.”

Good advice!

It certainly went well for me back in 06′.

Wash, rinse, repeat.

Reply

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