The Global Meltdown and the Worlds Solution?

So I dont really post here very often although I have been a member for a good while. However I am hoping there are maybe a few people who are smarter than me who can help me out with some questions.

I will start out by saying I am by no means an Economist and my knowledge is limited. However I watched with great interest the markets starting from the week of the initial major collapse at the end of last year. I started watching CNBC (which I can get via satellite tv here in the UK) and have picked up some of the basics. (I gotta say though that Rick Santini? does that man have any other expression other than a huge cheesy grin?)

Anyways getting back to the point, I have been listening over the last few weeks and I sat today and watched as much of the hearings in the US with the banking CEO's. They have everyone talking about how lending has dried up and with so many banks and other lending institutions no longer in a position to or willing to lend money is why we are heading into what is possibly the worst recession in history.

This is where I get stuck and the part im a little confused about. I have it in my head that all of the problems that exist today are because of debt. I will be honest and say I actually dont think we have even begun to see the worst of it as everyone has been focusing on the large debts that a lot of people have (such as morgages) and hardly anyone has looked at the smaller debts such as credit cards, store cards, home improvement and car loans etc. It seems to me that a large part of the (western) world at least is basically living on debt and if I understand leveraging correctly this debt is basically money that shouldn't exist because there is basically nothing to back up the currency in a lot of cases.

Now I see the governments of the world's solution to this problem is to issue more debt. I can understand the need to ensure businesses have access to credit to cover things like payroll etc, when the debt is covered by future income on existing contracts. What I dont understand is how governments can say it is in any way resposible to ask consumers to get even deeper into debt when a lot of them cannot manage the debts they have now, this also applies to business.

Surely this is just a temporary band aid to the problem and will only magnify the eventual damage caused?

Are we getting to a point where in reality no only the banks, but effectively the world is bankrupt?

How far are we from being in a position where their is more debt than actual currency in the world and if we reach that point are we not effectively bankrupt then?

Is it fair to say the only real answer is to force banks and other lending institutions to resort back to a position where leveraging is kept to single figure percentages. (instead of lending out 30 dollars for every dollar income, they are reduced to 5-8 dollars per dollar income.

I know this next bit is going to be unpopular, however I do think the only real answer is a single regulatory body responsible for regulating all banking and other money management/money lending institutions worldwide. My reasoning for this is basically we now already live in a global community when it comes to virtually all aspects of our lives except government. I listen to these committies asking what is going to be good for America or what is good for England and hear phrases like Buy American or Buy British or whatever. Surely this doesn't really help in the long run as our own countries are not the only countries in the world and none of us are truely self sufficient any more.

I see us in now in a position where we are now so inter-dependant on each other that we need to make sure that everyone is placed on a level playing field. I also believe that instead of encouraging consumers to increase their debt just to increase their lifestyles they should instead encourage people to be reducing debt into manageable proportions.

Sorry for the long post.

I'm also not very well versed in economic matters, but see what your point is. I think it's valid, but I don't think it's the answer. You'd be giving a lot of power to one entity, and it still doesn't solve the problem really. The problem is the people. And I'll be the first to admit it, "I am at part responsible for this disaster". I have never missed a credit card payment, or mortgage payment, but I have still contributed.

If we had more privately owned banking institutions I think we would foresee some local versions of Morocco.

Moroccan officials claim not to be affected by the United States financial crisis because their banks don’t contain any subprime assets. But that notion only scratches the surface of why Morocco will survive the shakeup. Its resource and agricultural assets are the real keys to its invulnerability. For one, this stable, slow-growth economy relies heavily on agricultural assets, such as almonds. It could feed its entire domestic population with the food it produces, beneficial in a world of rising food prices.

The Libertarian in me says, "If big banks can't support their own weight and fail, they should just fail, and make way for small banks to do the right thing. People will understand what's safe and right and choose the correct path". But the American Kid in me says "MONey MoNey money money spend spend spend Plasma screen TV wOoO!"

But really... people are just too greedy and/or uneducated in the financial market to make the right decisions.

[edit on 2.11.2009 by Avarus]

The Libertarian in me says, "If big banks can't support their own weight and fail, they should just fail, and make way for small banks to do the right thing. People will understand what's safe and right and choose the correct path". But the American Kid in me says "MONey MoNey money money spend spend spend Plasma screen TV wOoO!"

Is this not the mentality that has brought the world to the current position though. Again this view may be totally way off but this is kind of the way I see it.

Lets go back say 100 years and look at nations like the U.K. and America. They were basically industrial nations. By that I mean as a nation they built things, they sold those things to people in their own country and they exported those overseas. The money this generated enabled them to import other things which were then sold to its citisens.

However something happened post war and expanded massively in the 80's and a truely global economy was born. Then I basically see a situation where there was a revolution for want of a better word. The common man on the street started to look at the rich and started to want what they had. The big house, the nice car, the holidays abroad.

Then the 90's came and the demands on the average family grew exponentially where not only did the adults want all these fancy toys, but so did all the kids. Now the average household has 2 cars, 3-4 TV sets and matching DVD players. A couple of computers. His and Hers mobile phones with maybe a couple added on for the children. Everyone wanted designer gear and the banks and lending institutions duely obliged by allowing more and more people access to credit and store cards.

Now we are in a position where people's lives revolve around debt. Its great that you make your payments every month, but my question is this. What would happen if these cards were taken away from you. Where your only real debt is your household morgage (which is at an easily affordable level) and maybe a car. Everything else you want to purchase is made with only your earnings.

This is the root of my point I think. Having debt is fine as long as the debt is manageable. Its all very well to blame the banks and lending institutions for whats happening now, Its also easy to blame government. But I think there also has to be blame placed on the general public to. Our demand to improve our lifestyles is what has created the demand for debt that the banks etc have been happily and in some cases encouraged to provide that has brought us to where we are today. It almost feels like that as a planet and certainly with regards to the larger economies of the world we have grown faster than can be sustained in any real terms

Now I am all for improving ones self and our surroundings, but this needs to be done responsibly and over time. That hasn't happened and honestly I think that we have gone to far. I dont think there is any real way back. It almost feels like we are one card in one huge house of cards and one more card taken away from the bottom is going to bring everything crashing down.

"They" want everyone deep in debt so that they can then control us more easily. You watch. Eventually all private individuals will be totally bankrupt and swamped with debt. At that point the government will offer a "bailout" to individuals that comes with many strings attached. They will do this to remove the last of our dwindling freedoms.

The terms of the "bailout" to individuals will include telling you where you can live, what jobs/fields you can and cannot work in, what kind of schooling/education you can undergo, what kinds of information you can look at, etc. Coincident with this, they will use fearmongering about a gigantic natural catastrophe of some kind or perhaps war/terror. They will use the fear this generaties plus the control the "bailout" gives them to herd people into large urban areas, where they will be tightly packed and easily controlled. Cities will become essentially massive urban prison camps and a society of total survalience and control will have arrived.

NWO 's plan all along was to get the WORLD in this mess. the post before this was correct. wait and see. the worse situation the world is in, the more we rely on our government.

watch this space

reply to post by Slowpoke

I sum it up pretty good for you right here.

Warren Buffett warns of 100's of trillions of derivatives set to collapse

That is the end of the dollar, and the birth of the Amero in my books.

Also a good chance they will expand the "Constitution Free Zone"
several hundred miles more.

Constitution Free Zone

I know you might feel the urge to protest or something, but
keep in mind you can only protest in your "Freedom of Speech Zone".

Freedom of Speech Zone

My advice at this time is get ready for things to get more weird than
they already are and be ready to defend yourself and your family,
and have lots of food hidden WELL in multiple locations that has a
long shelf life.

Worst case scenario you have food you can eat, and as inflation is
going up, you got it cheaper than what it is going to be.

If you can afford it get some affordable survival gear and do a lot
of reading of the survival forum on here and survival blog.

Get a small group together of like minded ppl you trust with
your life, and go "camping" and practice your skills.

If you have questions use the search feature for answers, and
if you cannot find them post it, and someone will answer you.

Good Luck to you all !