All around the world this Friday, investors are wringing their hands. The papers are full of the cause. More job losses. Slower growth. Bankruptcies. Debt.  There. Don’t you feel better now?

“Investors are taking losses of up to 90% in the $1.2 trillion market for collateralized debt obligations (CDOs) tied to corporate credit,” reports Bloomberg. Much of the losses have been triggered by the failure of Lehman Brothers and Icelandic bank.

From Bloomberg:

A U.S. Securities and Exchange Commission investigation into credit-rating companies found the firms improperly managed conflicts of interest and violated internal procedures in granting top rankings to mortgage bonds.

When the gold standard was abandoned and fiat money became the only game in town, the economy may have been set up to take a huge fall. Can human beings really be so bold as to think they can control the value and worth of a country’s money?

From 1982 until the first half of 2007, global bank stocks led the secular long-term bull market in company profits. Long-term interest rates plunged from over 21% in 1981 to a low of just 3.5% in 2004. As a result, earnings at the majority of banks were literally stupendous, including huge dividend increases and massive shareholder buybacks.