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Central bank body warns of Great Depression

The Bank for International Settlements (BIS), the organisation that fosters cooperation between central banks, has warned that the credit crisis could lead world economies into a crash on a scale not seen since the 1930s.

In its latest quarterly report, the body points out that the Great Depression of the 1930s was not foreseen and that commentators on the financial turmoil, instigated by the US sub-prime mortgage crisis, may not have grasped the level of exposure that lies at its heart.

According to the BIS, complex credit instruments, a strong appetite for risk, rising levels of household debt and long-term imbalances in the world currency system, all form part of the loose monetarist policy that could result in another Great Depression.

The report points out that between March and May of this year, interbank lending continued to show signs of extreme stress and that this could be set to continue well into the future.

It also raises concerns about the Chinese economy and questions whether China may be repeating mistakes made by Japan, with its so called bubble economy of the late 1980s.

EDITORS NOTE: Quite a few comments have been made that there is no direct reference to the Great Depression in this month’s BIS report.

While this is strictly true, BIS warned in June 2007 – just before the Credit Crunch really hit – that the global economy was vulnerable to a major economic set-back because of extraordinary exposure to collateralized credit.

BIS directly made references to the 1930′s as an example of a similarly serious credit bubble, and this month’s BIS report describes the conditions of this being lived out.

So, to be pedantic, the warning “BIS warns of Great Depression” is actually a year old already. What BIS discusses now is the fragility of existing conditions of the fall-out from a massive credit bubble bursting – which has already been made clear across their reports historically can be similarly referenced to the 1930′s, though stated in a typically conservative and non-alarmist language.

Even what optimism BIS had about a weak recovery to the end of May 2008 have been dashed by extreme shorting of financial stocks across the US and UK – Lehman Brothers, HBOS, and property developers such as Barratts, have all taken extreme beatings in June 2008.

So back to the headline – BIS have indeed already warned of repeat of conditions that could be as extreme as the Great Depression, and are now describing that process as we move through it.

In the meantime, unemployment is already on the rise on both sides of the pond, and the analogy some people have concerns about I’m afraid is still salient.

- Brian Turner, Editor, Banking Times.

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Comments (28)

28 Responses to Central bank body warns of Great Depression

  1. Robert says:

    To say that the Great Depression of the 1930s was not forseen is an outright lie and the international financiers. Read up on history.

    “This [Federal Reserve Act] establishes the most gigantic trust on earth. When the President [Wilson} signs this bill, the invisible government of the monetary power will be legalized….the worst legislative crime of the ages is perpetrated by this banking and currency bill.” — Charles A. Lindbergh, Sr. , 1913

    “From now on, depressions will be scientifically created.” — Congressman Charles A. Lindbergh Sr. , 1913

  2. John Gotham says:

    Well, the Bank for International Settlements should know. As THE central bank FOR the criminal central banks, one would think they’d have a cozy insider’s view of things. These private “central bank” banking cabals are leading the world to financial ruin. Here in the US, the Federal Reserve (rather Orwellian, as it is neither “federal” nor a “reserve”) has done nothing but loot the treasury, siphon off the nation’s wealth, cause the working people to take on a massive debt load, and exacerbate the boom and bust financial cycles. The best thing citizens of the world could do is burn the central banks to the ground and give the bankers a good coating of tar and feathers while horse-whipping them over the border. Control of a nation’s currency is control of that nation’s sovereignty.

  3. Alex says:

    http://www.bis.org/publ/qtrpdf/r_qt0806.pdf

    This is the BIS Quarterly Review for June 2008.

    I searched the text for “depression” but got 0 results.

  4. Rainer Rupp says:

    “Central bank body warns of Great Depression”
    This alarmist article by Gill Montia made me read the BIS Quarterly Report dated June 9th. But I could not find anything corroborating her story. Instead the BIS expresses its usual cautious optimism. There is only one passage, namely that “interbank lending continued to show signs of extreme stress”. But nowhere is there a warning “that the credit crisis could lead world economies into a crash on a scale not seen since the 1930s”, as Gill writes. Where did the author get her information from? Not from the BIS-report as she claims!
    Rainer Rupp

  5. BioSphere Mind says:

    The World Central Banks Overlords will play their shell game con until there is not another play left. By then, they will have stuffed their pockets, and personal private Swiss accounts full, as the world rolls over and goes belly up. This is the real re-distribution of wealth going on.
    Money is truly the roots of everything evil!

  6. Steve says:

    I searched the June 2008 quarterly BIS review, but could not find the words “Great Depression” or the word “1930s or the word “crash”. Could you please provide the page references to where you found the equivalent phrase in the BIS report?

  7. I’ve just scanned through (but not read thoroughly) the most recent quarterly report from the BIS and there does not appear to be anything like a warning about a crash or a Great Depression.

    Can you provide a reference to a page or quotes?

    http://www.bis.org/publ/qtrpdf/r_qt0806.pdf

  8. Ron H. says:

    Sir, I read the referenced BIS Quarterly Report for June 2008 (all 89 pages of engrossing economic discussion) and I did not find anything that equated to your statement:

    “According to the BIS, complex credit instruments, a strong appetite for risk, rising levels of household debt and long-term imbalances in the world currency system, all form part of the loose monetarist policy that could result in another Great Depression.”

    Of course the BIS will not explicitly come out and say crash, 1930, or depression.

    This is not a criticism. I am just trying to understand what part(s) in the BIS report you used to develop your conclusion. Would you please site the sections within the report you are referring to?

    Thanks.

  9. Cat Callahan says:

    If you realize that there are billions missing and nowhere to be found and that these billions were
    allocated for use by this congress, who took them? Also where does the money come from(and go to)for the so-called “black projects”? Then there is this
    ‘derivative’ market that is so complicated no one understands it! The whole idea is to strip the average person of their hard-earned wealth and then kill them off via the bird flu or some other medical catastrophe and then just ‘take’ what is left. Democrats and Republicans spend your money. But Republicans make sure you never see any benefit from their theft. They believe that since they are so rich they are worthy of your wealth.

  10. Alastair says:

    I wonder why the architects of the coming crash are speaking in warning about this. Why not just keep mum and let their plan come to fruition?

    Note the blatant, pathetic arse-covering comment about the Great Depression being unforeseen.

    Is this an attempt to not only avoid blame, but also set themselves up as a voice of reason whom the soon-to-be-homeless-and-starving masses can turn to for wise counsel in their time of desperation?

    When the masses are desperate it is probably easier to effect measures that hitherto would have repelled the mind of any sane freeman.

  11. Real Man says:

    Lets not stop there Mr Gotham. Lets tar and feather all of congress and run them out of town too. Big Oil could use the same treatment also. Our country’s mess won’t be cleaned up till we do.
    I really think it’s time to start all over.

  12. Baron The Manipulator says:

    Yes, and the Great Depression all when away
    for varios countries when the Money Men
    redirected the flow towards the War Machine.
    They “lent it” it created it out of thin air
    and “lent it” directed to the War Machine
    of Germany, Britain and America. Funny just
    showed up to fund the War Machine and then
    everyone had jobs. Just a Big Crappy Game
    run from the Bunker.

  13. Baron The Manipulator says:

    Like, In America need a New Library, Levee or
    School. No Money just can’t find the Money.
    But, hey need Money to build bombs or Invade
    someone wow all this Money shows up. It has
    beed approved by the Money Men for the Agenda.
    There is always money for War, because certain
    people get very rich and “whatever asset” is
    sitting in Someonelse’s Country is worth
    stealing.
    Your kids School in not part of the Agenda
    their friends Investments are.

  14. Marxbites says:

    In re:

    1. Dead on Robert!!!!!
    2. For plausible deniability – govt’s best number.
    3. Money is the root of ALL good! Read some Ayn Rand for that problem of yours.
    5. Au contraire mssr dupe. Both parties are overseen, and puppets stood up, by the CFR/NWO/Banking cabal ever since Wilson. Morgan Dems or Rockefeller Reps – not a dime’s worth of difference – said Mark Twain.
    6. = #2
    7. Hip hip hooooraaay!!!!! Indeed – lets please as a nation have no more incumbents nationwide for as many election cycles it takes to give Govt the most painful enema it is at least 100 years overdue in the getting.

    They’ve twisted the Commerce, Gen’l Welfare, Equal Protection clauses to give Big Biz the same special mercantilist privileges we fought KGIII to cast off. Fantastically unimaginable wealth off the suffering and conning of the common man they treat as mere fodder. Those bastards! Hamilton, Lincoln, Wilson, Hoover, FDR, Truman, IKE, Nixon, Ford, Carter, Clinton and those kings of crime the Bush’s! Traitors to our constitution, front men of the money powers ALL OF THEM!

    Read Murray Rothbard’s essay “Wall Street, Banks and American Foreign Policy” at lewrockwell.com for the eyeopener MOST Americans will NEVER be exposed to – the clueless rabble of sheeple who believe the govt cares about them more than it cares about itself.

  15. stakeholder says:

    the bis and sarb (south african reserve bank) have both been delisted in 2002. the bis free float of around 18% private shareholders has been squeezed out and the sarb shareholders only trade otc, not over the main board.

    amandla awethu – reservebank to the people
    sen zeni na – we shall overcome inflation targeting nonsense
    siyaya ethswane – go to pretoria (churchstreet) and tell the governor your opinion
    one shareholder, one vote – reservebank annual general meeting at september 18th
    reservebank shares under http://www.reservebank.co.za -> about us -> south african reserve bank shares —> all information you need to have a say
    with one sarb share you can express your voice in the reservebank building and the governor has to listen
    what better protest from the people to the people?
    amandla awethu

  16. Dave says:

    This is in reply to #5, BioSphere Mind. I agree whole-heartedly with your comments. However, it’s the LOVE of money that’s the root of ALL evil!

  17. Margaret says:

    I’m with the above commenters- LONG past time to clean house. These PR tricks, smoke and mirrors, simply aren’t working anymore. The groundwork is laid and can’t be stopped. The only question remains- who will still be standing when this battle is over, the people or the globalists?

  18. Carl says:

    Green Economics – http://jahtruth.co.uk/greeneco.htm

    Recommended reading for anyone who sees past the deceit and organised robbery.

  19. Smithwick says:

    Comment #16, Dave: It is money itself which is the problem. A third party intervening in exchange is always going to rule over those who have and produce things of real value.

  20. John Ryskamp says:

    We are moving from the scrutiny regime to the maintenance regime in the United States. Whether this will require a trauma–as the BIS suggests–is the question.

    See John Ryskamp, The Eminent Domain Revolt (New York: Algora, 2006).

  21. Morty McNutt says:

    Hot damn! I’m making some popcorn for this one! Coolio! Can’t wait. I missed out on the last one. Sucked to be me. However, this one I got a front line seat! Pass the salt! My name is Morty McNutt and you have just read my ramblings.

  22. Fred Kliora in IL says:

    Why would the architects of the next depression want to tell us about it before implementing it?

    One reason: When the current system is dismantled (due to fabricated “public outcries”) after the coming depression, the masses will open their hearts and minds (with the help of a paid-for mainstream media) to the new, improved version of the central banking families — welcome to your new world government, courtesy of the United Nations.

    And you better love the changes, or you may not be around long enough to experience world peace at the end of the barrel of a gun.

  23. Alistair says:

    I wonder what a wise man would do in the face of all this ?
    It seems the whole of human society is rotten to the core! Tragic and sad that we should come to this. Thas those of us who have tried to live a simple life with some degree of honesty and truth will now bare the full brunt of the coming economic collapse. So be it ……….at least we will have the guts to face it full on with an open heart……….in the face of tirrany love has a strange way of surviving. So however this thing comes at us …lets be humble and open our eyes……..and keep your wits about us……and remember……they may take away our house ……our car……or savings……….but they can never take away our freedom!

  24. marc says:

    People adapt-kicking and screaming towards their own death, and they can’t take it with them.

  25. John Pozzi says:

    The Global Reserve Bank (GRB) is a world central bank that supports a prosperous community of shareholders. The GRB produces GRB ecocredits equal to the shareholders value of Earth’s natural resources. GRB derives income from ecosystem impact charges on GRB accounts. GRB income pays for shareholders communications, ecosystem renewal and earns shareholders a sustainable income.

    I cordially invite the reader to review the Global Reserve Bank charter at http://www.grb.net.

    John Pozzi

  26. John Pozzi says:

    The Global Reserve Bank (GRB) is a world central bank that supports a prosperous community of shareholders. The GRB produces GRB ecocredits equal to the shareholders value of Earth’s natural resources. GRB derives income from ecosystem impact charges on GRB accounts. GRB income pays for shareholders communications, ecosystem renewal and earns shareholders a sustainable income.

    I invite the reader to review the Global Reserve Bank charter at http://www.grb.net.

    John Pozzi

  27. vic says:

    Interest (usury), ownership (mine mine), and the denial that we are One are the root of evil.

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