Why a second banking crisis is inevitable

Looking back at the banking crisis of 2008 there are some interesting conclusions that can begin to be drawn. The official reasons for the crisis are reasonably well established, coming down to essentially bad bets by investment banks, seeking ever higher profits, and a reliance of a global property bubble that was unlikely to be sustainable. So far so good, investment banking has always been based on risk and gambling, and as any good gambler knows, you don't win all the time, if you didn't it wouldn't be a gamble. Now the argument goes that as long as property prices continued to rise, there really was no gamble, because there was always money in the pot to cover any losses so everything would always be ok. This made quite a big assumption, and one which has no basis in historical fact. There has never been an example of a price bubble being sustained indefinitely, and this is particularly the case with property. Property prices have previously occurred in the 1950's in the UK and in the 1920's and '30's in the US and across much of the Western World. There were also small collapses in Australia in the 1990's and in South East Asia in the 1970's, but for some reason there is very little mention of these events. The lack of information itself is interesting but it is far from the whole story.

It is also interesting to note that one of the key reasons for the ability of investment banks to act in these high risk ways was that there had been a shift in strategy on the part of governments to control banking operations. This was a deliberate policy of “light touch” regulation both in Europe and the US that allowed very limited monitoring of banks actions and policies with regard to risk. Officially this was to allow banks the necessary freedom to react quickly to rapidly changing financial environments, but this lie was exposed when the banks singularly failed to respond to just such a rapid change. So, what is the real reason that banks were not only allowed to act so irresponsibly, but to be supported such that they avoided the obvious consequences of their actions? The reason is surprisingly straightforward and goes back to the period in the late 1970's and early 1980's when a shift from post war austerity to consumer credit boom was used as a tool to spark economic growth in a stagnant market. As long as property prices kept going up, people felt confident and were encouraged to take on ever increasing debt in order to keep economic growth going. This was a conspiracy that encompassed governments, the media and the money lenders themselves, with the ultimate aim of creating such a level of personal debt that when the inevitable bursting of the property bubble occurred people would be helpless to support themselves forcing them into slavery to the corporations behind the markets.

So, what does this have to do with a second banking crisis. Simply that the ineptitude of the banking elite and governments and their misunderstanding of the inherent strength of the population meant that the original plan failed, creating only a partial enslavement most heavily felt amongst those with the most tenuous grip on solvency anyway, in other words the soft targets. Many of those who had a firmer grasp, those who had been more successful in the good times, those who were the real targets of the plot were not hid hard enough to control them completely. That will happen with the next collapse. This time there will be no bailout. There will be no protection for private investors, there will be no safety. Only the elite will survive intact, the remainder being consigned to servitude with the complete loss of their assets and therefore their power and even their sense of identity. This will occur in late 2013. You have been warned.