Can Anyone Really Save The Economy in a Crash?


1998-ltcm-contagion

QUESTION: Mr. Armstrong; Did anyone ever save the world financial system during the 1998 Crash or the 2008 Crash?Also, you said that government will never heed the advice of anyone. You worked on Capitol Hill and testified before Congress and was called upon to form the G5. Yet you say it is impossible to prevent anything for it always crash and burn. Then anyone who claims they saved the economy or markets cannot be telling the truth. Care to comment?

ANSWER: Back in 1985 when I was called upon with the birth of the G5, it taught me a lesson. They will call people in to PRETEND they have consulted experts, but it is just a dog & pony show. They already predetermined what they will do and absolutely nobody can step up and advise them to prevent any such crash. Absolutely no government will ever take a precautionary action in such a manner. Government only responds to event – does not prevent them.

1998-sp500-july-20

There is absolutely nobody who can save the markets or economy in the middle of a crash – NOBODY! First of all, it was a contagion that began in Russia and because they could not sell Russian assets, they sold every other market to raise cash. So I fail to see how any person or any single country could stop a crash that is a global contagion.

Yes, in 1985 they call upon several analysts to pretend they listened but nobody directed them to create the G5. I wrote to President Reagan back then detailing why the G5 would increase volatility and fail. If you want to call me a Presidential Adviser, I think that is a stretch. If you presume you give advise which is then acted upon, there is nobody who can claim to be a Presidential Adviser to prevent anything. Sure I get calls in the midst of a crash, but there is nothing anyone can do to stop a meltdown. They are short-lived and have to play out.

I wrote to Robert Rubin warning about his jawboning the dollar would crate the same crisis as the 1987 Crash. Tim Geithner quickly responded saying they weren’t doing that. The 1997 Currency Crash came within weeks.

Sorry, I do not believe anyone can prevent anything or save the economy in the middle of crash

One comment on “Can Anyone Really Save The Economy in a Crash?

  1. May I have a dissention.

    If the government suspends all market tradings for two years then healthy companies would not be affected by the turbulence while sick companies can quietly die. Some investors would lose, cautious investors would lose only parts of their investments.

    The economy would recover with less turbulence.

    Like

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