See the fear is in their eyes... desparation to follow

True as the fundamental human traits, the bloodbath that many, including us, had predicted to happen in the world financial systems has begun, read for instance this report from BBC. The US housing subprime disaster, on which many, we emphasize many, gorged on and profited handsomely, is now biting every hand that touched this toxic mix. "Its getting to the point where everything seems scary and that its hard to trust what financial institutions are saying." (a trader in Japan, Nov. 12, 2007). Japan Nikkei is at its lowest point in the last 15 years, i. e. to the point in time when the last mortgage disaster, remember the S&L crisis, hit the US and UK.

What non sense. We were promised, ala the Fed and other talking heads, including the heads of Citigroup, Merrill Lynch, and other trustworthy masters, that the subprime mess will be not spread and its effects on the economy will be limited. Ah, what these really smart, but NOT trustworthy people, ignored to tell us was that it is almost impossible to factor in human's most mundane feelings, such things as fear and greed. Yes, a few of these trustworthy bulge bank heads of states- let us not forget, many of these banking institutions have larger budgets than most countries on Earth- are gone. The fear has spread, even though, the actual subprime dosed CDO and other exotic creations of the financial markets in NYC and London, may or may be not. The trust is gone, as exemplified according to the utterance of the above Japanese trader.

Homebuliders are next to follow. It was just announced that the company which started the condo craze in the 1950's, Levitt and Sons, has filed for bankruptcy. A lot more will follow in this bloodbath.

Credit worthiness is not worth a penny any more. This is what happens when the largest pillar in the financial system, the trust, is largely gone. What will follow is first the break in the consumer credit.. Many will also default on their personal credit card debts, after maxing on their housing ATMs. To counter, the classic cycle will follow. The central banks will be forced to cut. Cut, they will and push up inflationary pressures. Companies, gorged in credit from the last cycle, are forced to cut forces, pushing up unemployment, hence embarking on the next round of debt bankruptcies.

We are now in the first few innings of this process, which could likely end this cycle of globalization, as the last one almost 100 years ago did.