Will our system crash or blow up? Those seem to be the doomsayers’ questions today.

The Telegraph has a story about bankers claiming that we are on the edge of a market crash to rival the Lehman Brothers saga, whilst the Guardian warns that a global market that extracts money from the poor to fill the pockets of the rich is ready to blow.

Harry Wilson and Philip Aldrick in the Telegraph say that the historic levels of insurance now needed to cover European bank bonds should be flashing red warning lights under our noses. ‘The cost of insuring RBS bonds is now higher than before the taxpayer was forced to step in and rescue the bank in October 2008, and shows the recent dramatic downturn in sentiment among credit investors towards banks.’ They write.

They quote a ‘senior London-based bank executive’ and ‘a senior credit banker at a major European bank’ as saying that ‘it feels like 2008’ and that a major ‘market shock’ is in the offing over the next couple of months.

The piece goes on to say that bank shares aren’t doing as badly as this would suggest, but that there is a significant disconnect between the equity and share markets with regard to banks.

Larry Elliott in the Guardian says that we have reached ‘a fork in the road’ and that we need to do something about making the system more equal as the current one is ‘in deep trouble and it is waiting to blow’.

Taking a different view of the causes of the riots from David Cameron’s charge that they were caused by criminal opportunistic looters, Elliott points the finger at Nixon and his scrapping of the Bretton Woods accord, just about 40 years ago, and the way that successive governments have allowed themselves and their citizens to become ‘debt sodden’ as a result leading to social inequality.

Together, the global imbalances, the manic-depressive behaviour of stock markets, the venality of the financial sector, the growing gulf between rich and poor, the high levels of unemployment, the naked consumerism and the riots are telling us something.’ He says.

Picture: Dan Kitwood – WikiMedia

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