GFC: All Fixed Now. Oh Sure!

Governments all over the world would like to think that the financial credit and banking crisis, triggered by real estate and mortgage issues in America, that rocked global economies across the world in the second half of 2009 have, by and large, sorted themselves out and are settling down.

However, from what I am observing, nothing might be further from the truth. In fact, the 2009 global financial crisis might really have been just a early tremor leading up to the real Global Financial Crisis—yet to come [December 2012 maybe, Mayan Calendar joke]. There is a school of thought that the 2009 global financial crisis might have been little more than a warning shot fired over the bow of the global financial system, so to speak—and to some degree I can see this line of thinking.

For example, in the USA in March there were 158,000 bankruptcy filings by individuals. This is 35 percent higher than the month before and works out at 6,900 filings per day. This is double the number of bankruptcy filings by individuals at the height of the global financial crisis in September 2009.

One contributing cause of this, according to the BloggingStocks site, is that [in the USA] more and more people are giving up on trying to save their homes. They are realising that they are never going to be able to catch up [on lost funds or income from lost jobs] and the courts have run out of legislative elastic in rescheduling their loans with the lenders to make them affordable. The elastic is perishing and snapping.

As they say at BloggingStocks: “The contrast of stories like this against the backdrop of Wall Street's ongoing rally makes one wonder: where do fantasy and reality come together?”

When stock markets fell worldwide by around 40 percent (average) during the global financial crisis there were numerous articles around telling us that this had to happen. In fact it was overdue. It seems that worldwide stocks had been artificially ratcheted up by Wall Street and other international trading floors. Most companies were unhealthily overvalued. Sooner or later there was going to have to be a ‘correction’, and the 2009 global financial crisis brought this correction about—albeit a little more dramatically than most of us would have liked.

Many articles and discussions during the global financial crisis pointed out that once the worldwide markets stabilised and became healthy again, and new checks and balances were devised and implemented by governments around the world [so it could never happen again, cough], it was still going to take some time for stocks to regain their pre-global financial crisis levels.

I can clearly recall watching one interview where a number of Wall Street experts on Jim Lehrer’s News Hour agreed it would take at least five years, and possibly longer, before the indexes returned to pre-crash levels. And yet, not six months later, which is no time at all, stock markets have recovered a staggering 50 percent of their loses. At this rate the market indexes will be exceeding their pre-global financial crisis levels before the end of 2010.

Surely, as great as this is for Wall Street and billions of pension funds worldwide (including mine), this cannot be ‘healthy’.

It makes me wonder what did Wall Street and the global financial markets learn from the warning shot that was the global financial crisis? In the true nature of modern mankind, which seems to be never to take any notice of history and to sail blissfully on in a pink warm cloud of "What? Me care?” fog, I fear we did not take any notice of it. This being the case then we are guaranteed to fall into this dark chasm again, and the next time it is likely to be wider and deeper.