Is the Financial Crisis Really Behind Us?

Media, government officials, and some economists say the Recession is over; other observers say that the causes of the Financial Crisis continue to undermine economic health.

Michael Panzner, one of my favorite guides through the financial crisis turmoil, pointed to the list below on James Wesley Rawles’ blog. If you find reading this list depressing, remember that awareness is essential to preparation. Being prepared always beats being blindsided.

Link: Twenty-Two Reasons Why this Recession is Different and Why it Will Endure – SurvivalBlog -  James Wesley Rawles

1. A broken global credit market that has not fully recovered. See: After Lehman, U.S. firms adjust to new face of credit
2. Lack of transparency in Mortgage-Backed Securities and other re-packaged debt instruments. See: Geithner Blames Lack of Transparency for OTC Derivatives Hit on Market.
3. The increasing Federal debt, which is growing at an unprecedented rate. See: The National Debt Clock.
4. Mountains of consumer and corporate debt. See: Observations on the US Debt.
5. The Federal budget deficit. See: Federal Deficit Hits All-Time High of $1.42 Trillion.
6. Ever-expanding bailouts. (I call this The MOAB.) See: As More Companies Seek Aid, ‘Where Do You Stop?’
7. Monetization of the National Debt. See: Fed Could Expand MBS Purchases. (Can you spell Oroborus?):
8. The destruction of the American consumer economy. (It had been artificially credit-driven). See: A Year After The Crisis, The Consumer Economy Is Dead.
9. Chronic unemployment, possibly much higher than officially reported. See: Alternate Data at ShadowStats.
10. More than $500 Billion USD in hedge funds that have borrowed short and lent long. See: Assets invested in hedge funds increase by $100bn
11. A double wave of residential mortgage rate resets. See: this chart of scheduled mortgage interest rate resets.
12. Continued down-ratcheting of house prices. See: Housing Prices Will Continue to Fall, Especially in California
13. The under-reported “shadow inventory” of foreclosed houses. See: The “Shadow” Foreclosure Inventory
14. The very likely collapse of commercial real estate (”the other shoe to drop”.) See: Is a commercial real estate bust inevitable?
15. A huge crisis lurking in over-the-counter derivatives. See my analysis published in 2006 and the dozens of articles on the Derivative Dribble Blog.
16. Under-funded pensions. See: Almost half of top unions have under funded pension plans.
17. A coming wave of municipal bond and municipal bond hedge fund failures. See: The Failure of Leveraged Municipal Bond Hedge Funds.
18. Increasing numbers of bank failures. See: FDIC: Bank Failures to Cost Around $100 Billion.
19. Insurance company collapses–some, like AIG, were foolish enough to insure more than a trillion dollars in derivative contracts. See: AIG: Is the Risk Systemic?
20. Worsening state, county, and city budget crises. See: State prepares for shutdown as budget deadline looms, and this article from a liberal site: Predicting Worse Ahead from America’s Economic Crisis.
21. Loss of faith in the US Dollar, on the FOREX. See: Dollar’s reserve currency status in focus as G-7 finance ministers meet.
22. The coming mass currency inflation, following some asset deflation. See: Which is more likely in 2010: Deflation or inflation?
    

Michael Panzner says this list has a few overlapping elements and some that are missing (e.g., the terrible state of our nation’s infrastructure), but publisher Jim Rawles does a decent job of getting the point across.

Tagged as: James Wesley Rawles, Michael Panzner, SurvivalBlog