Prof James Hamilton argues for the oil shock (ie Peak Oil) being the cause of the present recession – here and here: “had there been no increase in oil prices between 2007:Q3 and 2008:Q2, the U.S. economy would not have been in a recession over the period 2007:Q4 through 2008:Q3.”

First a good video which I originally watched at Justin’s place, tho’ it has done the rounds since then.

The Crisis of Credit Visualized from Jonathan Jarvis on Vimeo.

This post is really for Alex so that he can parade the size of his economic little finger (grin).

Some propositions for discussion:
a) the great majority of banks are radically insolvent;
b) the extent of the insolvency dwarfs the assets of the governing class (including nations);
c) all attempts to keep insolvent banks afloat will fail – the only question is about how much of our money is destroyed trying to keep them afloat;
d) the way things are going, the authorities will _probably_ end up inflating their way out of the crisis (‘quantitative easing’) – we’ll have a deflationary moment and then a sustained period of inflation, which will lead to the middle classes being wiped out; those that survive will be those that have access to either land (including being mortgage-free) or tradable skills (and most white-collar skills are not tradable);
e) the attempt to keep things going is immoral as it punishes the virtuous and rewards the vicious;
f) the status quo ante is gone, vanished, kaput. It is Obama’s failure to grapple with this – symbolised by his appointment of various corrupt and shady establishment figures – that is the most ominous thing in the world scene at the moment.

(Actually, that last is hyperbole. The implosion of Pakistan and the forthcoming implosion of Mexico are much more serious. I still think that the financial crisis is overemphasised!)