The Credit Crunch

Over the years, I have lived in several countries.

Practically every single country is affected by this current economic crisis. It defies all conventional economic theories and solutions in terms of its depth and scope.

An elite, bled and milked us dry for years on end in each respective country. You can have legalised corruption, which is clearly what existed in Ireland, leading to excessively high prices for real estate. If a poor man robs a supermarket for 20 Euro, he gets jailed. If a rich man robs 20 Billion or more, he gets a knighthood.

Something is clearly morally wrong with this system. It got out of control, and the balls in the financial juggling scheme finally landed. In 2007 they began to fall. In 2008, the dam burst, and the Tsunami began. 2009 will be the year when despair will set in.

I left Ireland in February 2000 and always felt one day, I would return home. Now, the avenues home are being blocked by the current economic crisis. Each day, we read news of bankruptcies, repossessions, layoffs. Nothing in my lifetime or my parents lifetime exceeds this current economic crisis in terms of its depth and scope.

The various Central Banks around the world have dropped their previous anti inflationary stance and are running the printing presses at lightning speed.

Phase one of this crash will be deflationary. Phase two however will be utterly terrifying and far worse when it starts in roughly 18 months time.

Stocks, shares, commodities and property are being liquidated and transformed into cash.

Simultaneously, the bailout money, thats also more cash.

Government deficits, more cash again.

Where do I put my savings? Do I sit tight and wait for the good times to return? I checked with my regular currency supplier, and there are no gold bullion coins readily available in Malaysia, or the United Kingdom at the time of writing.

All this is symptomatic of a tidal wave of galloping inflation waiting to burst.

After years of reading politics, economics, business, I could not help recalling what I said in 2005.

"The natural interest rate of any fiat (paper) currency should be 5% at a minimum, or inflation +2%. Anything other than that will lead to trouble eventually"

"Are you mad D, you are talking of putting people on the streets with that?"

"Wait and see"

It took a lot longer than I expected. Just about 1 year longer.

"The economy will have a soft landing"

Where have I heard that before.....Haughey? Bertie? Pak Lah?

It did. The longer the madness went on, the longer people boasted of how much their houuse prices increased, the more people lied about their income in order to get a foothold on the property ladder, the more Banks threw DEBT cards and debt at people like condoms in a Thai whorehouse the more insane it became. The average price of a home in Dublin passed the 220,000 Euro (thats 1 MILLION Ringgit) mark in 2000, and back then, most people were earning less than 20,000 Per annum.

"This will end in tears"

But no.....you must buy

"Rent is dead money"

All this bolloxology is coming to an end. Innocent people will suffer. Prudence and common sense are being wiped out. We will all pay. Meanwhile, the ones who caused this will drink their cocktails and eat Lobster on the beaches of the Caribbean.

I don't see bailouts for the poor, the homeless, the sick, the elderly who lost their savings, those in negative equity.

This will be bad. How bad, how long, is anyones guess. We can only hope that something better, more solid, more sound emerges from the chaos.

In 20 to 25 years time, another generation will arise to participate in the same chaos again. They will forget the old lessons. They would be better off locked in to Uncle Lims funshop in Genting Highlands with a DEBT card, and they'd be safer. Throw in a free flow of alcohol, they'll lose the money faster as well.