CRASH 2008-09 -- first wave

Financialization and the Bubble/CRASH

Quotes on our banking system: a forgotten struggle
U.S. Monetary Supply--the root of the Crash
Great Depression, causes and parallels--jk
The Second Great Depression--why-jk
Great Depression and the New Deal
Argentina's Collapse
Asian Crash 97--model for U.S. Crash
NEOLIBERALISM, the globalizers
Robber Barons
Fed Stats--the deception
More Debt no FIx--jk
Financialization and the Bubble/CRASH
Class nature of the CRASH--jk
Obama and the Second Great Depression--jk
Nobel Lauret on the Crash--Stiglitz
Second deed solution--jk
Three Crashes--Models
Financial Crisis, a socialist perspective
Fairness Doctrine overturned yields corporate media
Funny Money Solution--more fed debt
Why We Need Regulation of the Market Place
10 to 1, the Credit Expansion
Fed debt--the debt game
WaMu Give Away by Feds
Offshoring and the Auto Industry
Economic summit November 15th
Figures on the CRASH
Pod Cast of CRASH plus much more

Financialization and the Bubble/Crash



Professors Jeremy Brecher, Tim Costello, & Brendan Smith, November 30, 2008 at


Highlights selected by jk. 


Japan has followed a traditional “Keynesian” approach to its crisis–running government deficits and on one occasion (2002) drastically increasing base money (by over 30 percent in one year). When its Bubble Economy burst at the end of 1990, aggregate Japanese debt was equivalent to 162% of GDP–consisting of a 108% private debt to GDP ratio and a 54% government ratio. In 2008, aggregate debt was 259% of GDP–made up of a slightly smaller private ratio of 94% and a much larger government ratio of 165%. 


US Debt to GDP ratio is 381% of GDP (with the private sector’s share of that being 290%). -- 10/08


November unemployment  increase (unadjusted) 533,000, 6.7% (in December of 1974 there were 602,000 lost), October 320,000 (revised up from 240,000, + 33%) and for Sept 403,000 (up from release of 264,000, + 52%).  For November manufacturing dropped 85,000 and construction 82,000.  Factory jobs have shrunk for 29 straight months and construction 17.  Loss totals for the 3 months 1.256 million, and almost 2 million for the year—according to a December release at


Huffington Post blog December 7, 2008 on the job melt down, human losses—good reading


The Japanese stock market traded like a “growth story”, all the way back to 1965 when the NIKKEI was at 1300 and the DOW at 1000. In 1989 the DOW was around 3000 and the NIKKEI at around 40000; now (11/21/08) they’re both about 8300.


Gold raised from $20 to 35 in 1933-4, went off the gold standard in 1971. 


40% of Chinese manufacturing is foreign owned. 


The Federal Reserve Bank requiring only 10% assets to be held, financial institutions.

Government makes up 21% of GDP compared to just 3% in 1929.

Household debt rose from about 50% of a $3 trillion GDP in 1980 to over 100% of a $13 trillion GDP today.

The financial world's unprecedented accumulation of debt in relation to equity sometimes with over $30 of debt for every $1 of equity, much of which is in the form of securities and derivites. 

From 2002 to 2006 housing values appreciated at the astonishing rate of 16% per year compared to only 3% for the 55 years between 1945 and the year 2000

Huffington post at Zuckerman, October 22, 2008-





According to Reuters, between January and September, 2008, the stock market index for "emerging markets" lost nearly 55 percent of its value and the index for "developed markets" lost 42 percent.  The S&P 500 of US stocks lost half its value from its October, 2007 peak.


Ten million Americans are out of work, nearly 3 million more than a year ago.  The official unemployment rate rose to 6.5 percent in October, its highest rate in 14 years.


Capitalism has been the most dynamic economic system in history, but it has a peculiarity:  No matter how great the need for houses, clothes, food, or other products, those who control the means of production won't produce them unless they can make a profit doing so.  As a result, the history of capitalism has been marked by periods of economic crisis and stagnation in which millions of people suffered unemployment and poverty while the resources that they could have used to produce the things they need lay idle.  Such a peculiar state of affairs is possible because markets are regulated only by the pursuit of private profit, not by a matching of resources and human needs. If production isn't profitable, the wealthy individuals and institutions who own the means of production have no incentive to produce.  Since 1900, the US experienced depressions and recessions in 1903, 1907, 1911, 1914, 1921, the whole decade of the 1930s, 1949, 1954, 1957, 1961, 1970, 1982, 1990, and 2002.


Globalization has similarly undermined the effectiveness of "Keynesian" national economic stimulation, as experience has shown time and time again.  For example, stimulation of the British economy in 1986 led not to higher domestic output but increased imports and inflation. The huge Japanese expansionary public spending initiative of the late 1990s had little long- term effect, except perhaps in buoying the stock market in the US.  In short, economic stimulus may create jobs and buying power -- but often in countries other than those where the stimulus is applied.  Whatever Americans bought with their "stimulus checks" this year, much of it was undoubtedly made in China, not in the US.  This casts grave doubt on the effectiveness of conventional national economic stimulus -- including those currently being planned in Washington -- to address the current economic downturn.


Financialization "Bubbles" of large-scale financial speculation are a common feature of the lead-up to economic crashes - witness the stock market boom of the late 1920s that preceded the great stock market crash of 1929 and the bubble and bust of the 1990s.  But the extent of financialization in the current economy may well be unprecedented.  According to Martin Wolf of the Financial Times, "The US itself looks almost like a giant hedge fund.  The profits of financial companies jumped from below 5 per cent of total corporate profits, after tax, in 1982 to 41 per cent in 2007."  Between 1980 and 2007, the ratio of US gross financial debt to gross domestic product increased from 21 percent to 116 per cent.  The market in credit derivatives in September, 2008 was valued at $62 trillion -- more than the world's annual gross domestic product. 


{Financialization is a giant parasite.  We got along fine with a burden of much smaller burden in the 1980s, but with it growing from 5% to 41% of corporate profits, it has become unsustainable.  We can thank the loose monetary policies of the Federal Reserve for creating this—jk}



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Teddy Roosevelt's advice that, "We must drive the special interests out of politics. The citizens of the United States must effectively control the mighty commercial forces which they have themselves called into being. There can be no effective control of corporations while their political activity remains."

Don’t miss the collection of Pod Cast links


Nothing I have seen is better at explaining in a balanced way the development of the national-banking system (Federal Reserve, Bank of England and others).  Its quality research and pictures used to support its concise explanation set a standard for documentaries--at  The 2nd greatest item in the U.S. budget is payment on the debt.