Seattle Bubble Forum Archive

Nouriel Roubini has a video posted on RGE Monitor via Bloomberg on a nearly hour long discussion regarding the genesis of where we are vs. where we may end up.

In the the last 10 minutes or so, during a Q & A session he was discussing with the audience some pretty sobering issues and relating them to what was occurring just prior to WWII.

Now, I'm not suggesting a political firestorm for Tim E's Blog here, but I've been thinking long and hard about this for months. Nouriel was suggesting the relationships of currency problems and social instabilities that led to war at that time.

In my mind, way, way back there, i've always thought about the idea that some powers that be are trying to cripple us economically.

Here is the video: (the last 10 minutes is what really got my attention; about 50 minutes total. The first 2/3rd's is the same stuff we've hear from Nouriel Roubini before. )

http://www.bloomberg.com/avp/avp.htm?N= ... JFMJgA.asf

Great vid and info.

Sniglet says, "Again, I don't think the next big war will be caused by devious plots, but rather by the simple fact that nations under tremendous economic and social stress are far more prone to lash out at one another."

Yes, this is what I think Roubini was implying and I think you state this much better than I did. I do think the oil producing countries are not pleased with oil at their current prices. Equities getting hammered coupled with oil prices under pressure could really push oil producing countries into the instability we speak of.

I guess I was just kind of waiting for someone to bring up the potential for conflict and Roubini was obviously not afraid to say it.

It's difficult to compare two eras, and the more completely you attempt to compare two times the less well you can correlate them. E.g. most/many experts now suggest that this economic downturn more closely resembles the 1870s than the 1930s, but for America, the long depression did not end in a war (unless you count the Spanish American War in 1898).

Look throughout US history (or any nations) and you'll notice a trend that wars are usually fought about every 20-30 years. I'll list our major wars.

1744 French American War
1776 War of Independence
1812 War of 1812
1846 Mexican War
1861 Civil War
1898 Spanish American War
1917 WWI
1940 WWII
1950 Korea
1960-1975 Nam
1990 Gulf #1
2001-Present Afghanistan & Gulf #2

The point is that we go to war often enough that I'm sure you can find all sorts of correlations between event A happens and then as often as not we go to war shortly afterwards.

But there are a number of circumstances which were quite different in WWII than now. For instance, Germany was floundering under punitive measures. I'm pretty convinced a depression will increase violent crime rates and other measures of social dissidence, but the world has been a violent place for the last several thousand years. Even if there are some wars, I don't know how you'd determine how much a global recession is to blame. I mean, if we have WWIII then yeah...but what if it's closer to what we're doing in Iraq and those types of wars. Maybe Russia finishes annexing Georgia, or India/Pakistan have a short non-nuclear war. I don't know that things like that would stick out in history as being caused by a global recession.

The economy was one of the main reasons that Hitler was able to raise such nationalistic fervor. He essentially blamed their economic crisis on the greedy jews.

The economy definitely could be a catalyst for war. I mean, WWII helped bring us completely out of the depression, once we started building things again. Also, if we are at peak oil production, we could start seeing wars over such things as well.

So while economy is not always the main catalyst for wars, it can be used by people to justify their means or can be used to rally nationalistic fervor. It's much easier to blame someone else for your woes rather than look at yourself. I think all of the chatter about the CRA causing our current economic troubles is a good example of this.

If you think there is nobody making money off this crisis then you are delusional.
Tell that to an asset holding that bought $35b of mortgages for $6.5b. With only 50% of those mortgages in some kind of hardship, thats not bad apples. Considering if the mortgages fail, you own the underlying property.

Oh there's robber barons out there aplenty. We're going to see an even bigger redistribution of the wealth up than we've already seen over the last 8 years.

Also on the war issue, it should be noted that crime always goes up when the economy is bad. So we'll probably have plenty of issues domestically as well.