I wouldn’t often turn to Vanity Fair for real news but the magazine seems to have some insight into our dire financial situation.
Here’s a taste:
This start to 2016 comes off the worst year for markets since 2008. Hedge funds lost an average of nearly 4 percent in 2015, according to estimates from hedge-fund research firm HFR Inc, as even top fund managers had their most terrible years in history. Billionaire financier George Soros, speaking at an economic forum last week, told an audience that what’s going on in China amounts to a crisis.
“When I look at the financial markets there is a serious challenge which reminds me of the crisis we had in 2008,” he said.
The global economy may be beginning to show signs of circling the same 2008 drain. And much as they did in the years leading up to the financial crash, people are still recklessly spending themselves into oblivion while the drain could be slowly sucking them in.
Last week alone brought the kind of 2006 excess that writers and filmmakers now love to cite as the “it’s no wonder the bottom fell out” moment. An Hermès Birkin bag sold for $99,750 on an online consignment marketplace just shortly after it was listed (well below the record price paid for the cult-like status symbol, set this summer at a cool $221,844). Manhattan apartment prices surged to a new record, with the median price for condos and co-ops hitting a new high of $1.15 million. The price per square foot also reached a record level at $1,645, according to a report from Douglas Elliman. A Williamsburg establishment started selling a $100 edible 24-karat-gold-covered doughnut dunked in Cristal-infused icing. It’s $1,000 for a dozen and it’s not even in Manhattan.
In other words, we are in a huge financial bubble even while we are already seeing signs of the collapse.
What are we to make of Soros admitting that we’re seeing a crisis that reminds him of 2008? In 2008 we were told that we were in the worst financial crisis since the Depression. Only seven years later we’re seeing a comparable collapse. I thought George Bush and Hank Paulsen’s bailout was supposed to save the economy. Then we had Obama’s trillion worth of “stimulus.” Meanwhile, the Federal Reserve was engaged in “quantitative easing.”
And yet here we are again only seven years later.
Of course, this really isn’t a second crisis. It’s a continuance of the first one. The government and the media just managed to hide it (sort of) behind a fake recovery.