A Quote From Our Latest Issue

So - What DID It Take?:

In essence, it has taken much more than lowering official US rates to rock bottom this time. This time, to buy six months of stock market rally and a patina of credibility to aid all the talk of "recovery", it has taken the virtual absorption of the entire US and global financial system by government.

The bailouts, guarantees, subsidies, interference with market pricing and all the rest have been exhaustively examined in the global press over the week just ended - the first anniversary of the Lehman collapse and the credit market deep freeze. The message has been unrelenting. Had the government NOT stepped in, then millions more jobs would have been lost. Had the government NOT stepped in, then investors and retirees today would be staring at much bigger paper losses than they were at the nadir of the crisis in March this year. Had the government NOT stepped in, then the entire US and global financial system would have collapsed. The government HAD to step in. That's what they are for.

Now, of course, the message coming from these same governments is that they will be co-ordinating plans to step OUT again, notably at the upcoming G-20 summit in Pittsburgh. But most governments CANNOT step out again. They are in too deep. In the case of the US government, the Federal Reserve's "Flow of Funds" report for the second quarter of 2009 makes this very clear indeed.