Monday, 29 September 2008


Just finished reading George Soros's 'The New Paradigm for Financial Markets' who supports the view that we have entered a paradigm shift. We are witnessing an explosion of a super-bubble which began after the second world war and now marks the end of an era. The UK government debt as a percentage of GDP is 65% and if the government has to acquire HBOS that will rise to 85%. The percentage for sustainable growth is 40% so we are now officially in an unsustainable stage. Collapse appears inevitable. As a nation we are close to debt levels that mirrored those of the 1960's -a period of social revolution and radical social and economic changes. A lot of control is going to central government- soon they may own and control the majority of the financial markets- a kind of socialist state. There may also be one or two monolithic private financial institutes left standing, making mockery of monopoly laws- which may then fight for dominance against the government.

If a super-bubble has exploded than the pattern for the future is already set. There will be a super financial crash, which means house prices and investment schemes will nose dive into the ground creating a financial crater. This could mean 40-50% drops in house prices. This will mean at the bottom of the dive, things will actually be undervalued- this is the point of recovery as those in a position to do so start snapping up bargains and give stimulus to the next paradigms growth.

It is quite possible that all hell is about to break loose over the next several days/weeks or months. Like all bubbles- it is always the people at the bottom of the money pyramid that are the worse affected. If this is a super-bubble than it is going to affect a super amount of people. Once the effects are felt in people's personal lives- an explosion of emotions could result in unpredictable consequences. A state of emergency might be overstating the case but with our national debt in the red alert category we have probably entered it already. Denial is a common human reaction to having to face the unthinkable. The unthinkable and the unsinkable have one thing in common- there is no such thing.

No comments: