[Texgreen] Four economic pieces that all point in the same direction

[Roger Baker]

This is today's story:

<http://business.guardian.co.uk/story/0,,2130580,00.html>

"US mortgage crisis could cost lenders $100bn, says Fed chief

=B7 Once top-rated bonds slashed to junk status
=B7 Default rates among low earners rising rapidly

Larry Elliott and Philip Inman
Friday July 20, 2007
The Guardian

Losses from the sub-prime mortgage crisis in the United States could =20
reach $100bn (=A350bn), the US Federal Reserve warned yesterday.

Giving evidence to the Senate, the Federal Reserve chairman Ben =20
Bernanke stressed that there would be a hefty cost of clearing up the =20=

bad debts resulting from the downturn in the US property market..."

                      =20
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This is the big picture as recently seen by a US economic analyst =20
Richard Cook looking at the US and global economy, the housing =20
bubble, and the highly leveraged nature of both domestic and =20
international finance:

<http://www.globalresearch.ca/index.php?context=3Dva&aid=3D6239>

The Crashing U.S. Economy Held Hostage
Our Economy is on an Artificial Life-support System

by Richard C. Cook

Global Research, July 7, 2007

                           =20
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Third, here is the big picture of the global economy as seen by Henry =20=

C.K. Liu, a savvy NY economic analyst,
who skillfully weaves cause and effect behind the global liquidity =20
bubble built on a foundation of inadequate real physical assets. In =20
my opinion, this is the best and clearest to understand the dynamics =20
of the current problem. There are other similar good pieces on the =20
Henry Liu collection on the Asia Times site:

<http://www.atimes.com/atimes/Global_Economy/IE09Dj01.html>

Liquidity boom and looming crisisA debt-driven financial crisis =20
threatens to put an end to the liquidity boom and the accompanying =20
global financial mania that has decoupled equity markets from =20
economic reality. All will melt away in a catastrophic unwinding some =20=

Tuesday morning (New York time). And China cannot save the world. =20
It's part of the problem.

                          =20
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Fourth, here is the Levy Institute's take on the global economy and =20
the precarious practice of trying to keep the system expanding with a =20=

succession of credit bubbles that attempt to keep the system =20
stimulated and expanding, despite erosion of the real asset base. The =20=

conclusion is that US politics keeps the system from reforming until =20
it presumably crashes due to some unpredictable over-extension. Quite =20=

consistent with all the above. -- Roger

<http://www.levy.org/vdoc.aspx?docid=3D921>

Strategic Analysis | April 2007
The U.S. Economy
What=92s Next?

The collapse in the subprime mortgage market, along with multiple =20
signals of distress in the broader housing market, has already drawn =20
forth a large body of comment. Some people think the upheaval will =20
turn out to be contagious, causing a major slowdown or even a =20
recession later in 2007. Others believe that the turmoil will be =20
contained, and that the U.S. economy will recover quite rapidly and =20
resume the steady growth it has enjoyed during the last four years or =20=

so.

Yet no participants in the public discussion, so far as we know, have =20=

framed their views in the context of a formal model that enables them =20=

to draw well-argued conclusions (however conditional) about the =20
magnitude and timing of the impact of recent events on the overall =20
economy in the medium term=97not just the next few months.