Cultural Revolutions

Unhappy Anniversary

The one-year anniversary of the 2008 global financial-market implosion passed with little fanfare.  With the U.S. stock market soaring throughout the spring and summer, the Pollyannas of the American media preferred to focus their attention on the return of good times while ignoring all that ancient ugliness of last year.  In September 2008, at the height of the crisis, most financial prognosticators predicted nothing but gloom as they gazed into their crystal balls.  Yet one year later U.S. equity markets have risen over 50 percent from the March 2009 trough, interest rates on U.S. government debt hover at historic lows, and housing is already rebounding in some markets.

While the stock market’s performance over the last six months has surprised even many bullish investors, danger lies ahead.  Numerous data highlight the persistent economic rot that contributed to the crash of 2008.  The present administration has ramped up deficit spending to an unprecedented level.  The dollar has weakened against all major currencies.  The miniscule interest rates paid on government bonds, representing the latest financial-asset bubble, have drawn cautionary remarks from Chinese and German authorities.  The “official” unemployment rate has reached 10 percent, while the more realistic unofficial rate has blown past 16 percent.  American banks, saddled with toxic mortgages and underwater derivative securities,...

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