Global Meltdown, Part III

This is the point at which the global economy falls the rest of the way off of the cliff. The false hope raised by the illusion of decisive action on the part of the Obama administration is giving way to Democratic party in-fighting and an increasing public perception that Obama and Geithner are out of their league.

A number of events on the macro economic and political fronts threaten to converge simultaneously to force another major contraction in global markets.

They are:

• Auto industry’s impending contraction as a result of imminent bankruptcies and mergers;
• Hold-up of stimulus money in the U.S. Congress as squabbling and criticism over the proposed budget and regulatory reforms bog down progress;
• Increasing public outrage over the role hedge funds have played in forcing Bear Stearns and Lehman Brothers into bankruptcy, and the apparent collusion between hedge funds and the Securities Exchange Commission is undermining confidence in both the Obama administration and the S.E.C.
• China’s growing agitation for an alternative to the U.S. Dollar as default foreign reserve currency will continue to put downward pressure on the U.S. Dollar and help undermine treasury auctions;
• Disastrous corporate earnings (7th straight quarter of declines, this time upwards of 35 percent), bankruptcies, and layoffs continue to destroy economic health at the street level;
• The upcoming G20 meeting in London, England will likely result in the failure of all nations to agree on anything on a unified basis, which will trigger major market declines in the weeks to follow.

Investors should get out of equities and bonds and into precious metals or cash (not U.S.!) exclusively.

This next wave of financial mayhem will also catalyze elevated levels of civil unrest where unemployment is highest and where food shortages will soon begin to underscore how serious the crumbling global infrastructure really is.

Governments throughout the G20 will likely react by protecting domestic supplies of energy and food as public pressure to solve the problems forces governments to act according to popular sentiment.

Organized crime groups such as drug cartels and bankers will take advantage of the growing chaos to perpetrate their own interests to the detriment of (mostly) urban centers.

We are progressing solidly toward a situation where lawlessness emanates from the top down, and leadership by example is the most to blame. The U.S. government is being implicated more and more in duplicitous acts that appear to provide cover and escape for high net worth bankers who have supported the election of governments with billions in ill-gotten gains for the last twenty years.

Among the biggest problems are the regulatory loopholes, unregulated over-the-counter status of the derivatives market, and continuing ability of major naked short activity by hedge funds all continue to exist. As these fundamental flaws in the (mostly) American financial system gain exposure through investigative media, the glaring absence of meaningful legislative change, and the inability or unwillingness of existing regulatory bodies (like the Commodities and Futures Trading Commission, S.E.C., etc.) to enforce current statutes and regulations, confidence in the global system of banks and their associated regulators is eroded.

We are still in a phase of primary deterioration of leading economic indicators. The anomalous rise in figures such as mortgage applications and housing sales is a reflection of the massive re-allocation of assets now underway as a result of crushed prices and demand, and homeowners and speculators exploiting easier mortgage terms as a result of federal bailout moves.

The economy continues to contract globally, jobs continue to disappear, credit continues to be lethargic or frozen, and government money directed towards economic stimulus continues to be hijacked by banksters and parasitic corporations who are led by experts in the exploitation of loopholes in regulatory language that results in legal forms of theft.

There is a strengthening voice of “the worst is over” in mainstream press, but it is important to recognize that these media outlets are controlled editorially by the same multi-national conglomerates who have a vested interest in convincing citizens that the economy is on solid footing so you keep spending.

A time will come when you will look back and marvel at the sheer audacity of the criminal banking and government cartel, and also at our own collective naïveté in swallowing the perception management diatribe and taking the integrity of our society’s elite for granted. Those days should be over once and for all.

Finally, there is increasing instability in the currencies of G7 nations, and at some point, the devaluation of the U.S. Dollar will trigger a revaluation of all currencies. How each country's will fare is difficult to predict, because against what will they be measured if the USD is abandoned?

Comments

[Jack Reacher:]

...and we are. Stocking up on soup and Uzis.
jr


On Mar 31 10:01 AM Carl Spackler wrote:

> Let me finish your story for you - "Dogs and cats sleeping together,
> mass hysteria" - From the movie "Stripes".
>
> Your a little heavy on the pending apocalypse, but I think we do
> have further to fall. My brother also falls into the same category
> - the "end of the world is coming" bear. Heck, I am bearish too,
> but if we get this bad why even invest. You would be better off buying
> an old nuclear bunker in Idaho and holing up for the next few years.
> Will things get worse - yes, but I doubt we are going to see the
> end of American democracy, modern industrialism and capitalism. These
> are great times for those that can see beyond the bullish diatribe
> that the press floats out there, but people have been betting on
> the end of the world for ever and nobody has collected on that bet
> yet. My brother too is talking about "civil unrest" and the coming
> gangs of marauders, but if it gets that bad, betting on the direction
> of any market or commodity is worthless. If you truly believe in
> this scenario, you should be stocking up on soup cans and Uzi's.
>

Mar 31 11:21 AM

[Leftfield:]

With the G20 and China unrest towards us, the last justification for throwing trillions for fig leaves at an unreformed, unrepentant Wall St. seems going down the drain. Our leaders want to hold on to their unparalleled privilege at any cost. Rats are grabbing the bailout trillions and deserting the Titanic. (I believe much of the bailout money ends up overseas, through AIG et al, and private hijacking). And of course, foreign governments.

The article hits on so many points. Too bad it's the truth.

Mar 31 12:13 PM

[Peaknic:]

I would add that the possibility that the credit freeze will severely impact the ability of the US farming system to have the capital to plant this spring may have catastrophic consequences on the costs and/or availability of foodstuffs this summer and fall.

I suggest investing some of your capital on storable, freeze dried food as an insurance policy. If it all works out, you will still have it available for the next 25 years in case of any emergency or natural disaster.

Mar 31 12:18 PM

[Socialism c...:]

And...maybe your brother is right? I think we SHOULD be stocking up on arms and canned goods. With the civil unrest that IS coming, what else is barterable besides food & ammo???

Why do I say civil unrest IS coming? Because we are a nation that has lost its moral compass. Anyone that can't see that...well...no amount of proof is enough for that person. Just look around at what the news headlines are...what behaviors we now justify by the mantra of "personal choice"...the total lack of ethics in government and the not-total-but-very-pre... lack of ethics in business...the absence of real, traditional values being taught in our schools, with them being replaced by P.C. "values" of "tolerance"...etc.

Related to all this, I see massive fallout from the Mexican drug war -- no, not cartels invading the whole U.S. The civil unrest we could see will result from the disruption of our "ghetto economies" -- we have whole segments of our population who do not work real jobs, but make their "living" by dealing, doing runs, etc. -- and should we ever really disrupt that flow -- we will see a large spike in crime by gangs needing other sources of revenue.

Likewise, to have REAL mortgage reform and a real bottoming for the housing and financial sectors...it will be necessary to have more foreclosing going on with those who should not have been lent to -- and that is going to cause riots and disorder over "disenfranchisement". There will be many who cry racism, etc. Those who fomented redistribution as a form of "reparations" will not be blamed (you know who), but instead "greedy Wall Street bankers" (as already), and there will be racial and class warfare.

Economics goes deep. But what goes deeper is that Big Government has USED ECONOMICS to prop itself up in the form of entitlement classes -- the buying of votes. And when those entitlements are removed -- as must needs be, given the collapse of our nation's economy and debt load -- there will be hell to pay for having ever begun that socialist farce.


On Mar 31 10:01 AM Carl Spackler wrote:

> yet. My brother too is talking about "civil unrest" and the coming
> gangs of marauders, but if it gets that bad, betting on the direction
> of any market or commodity is worthless. If you truly believe in
> this scenario, you should be stocking up on soup cans and Uzi's.
>

Mar 31 12:53 PM

[Al-USA:]

It appears then that the only way American, indeed, Western civilization, can progress, in the forward direction, is by abandoning the decaying form of capitalism now in practice.

It has now been exposed that the ruling class of the USA is, in fact, no different from any other "banana republic", that is, an Oligarchy. How can Democracy work when its economic model, capitalism, has been hijacked to serve the maximum interests of a very small clique?

It appears Lenin was correct after all in his description of capitalism:
"The capitalists will sell the rope used to hang them." This fabricated financial crisis is analogous to that statement.

However, there is still hope. The corrupt American Oligarchy can still be defeated by the mobilization of the masses. In fact, that is the only force which strikes fear into the hearts of soulless rulers...

The Quiet (American) Coup
www.theatlantic.com/do...

America the Tarnished
www.nytimes.com/2009/0...

Welcome to America, the World's Scariest Emerging Market
www.washingtonpost.com...

The Obama Deception Full Length
video.google.com/video...

Mar 31 12:55 PM

[Fred Voetsch:]

Sounds a bit alarmist but those who understand generational patterns understand that this "crisis era" (similar to the 1930's & 1940's) will usher in a very different world from the one we have known.

Want to know more? Google "4th turning" or "generational dynamics". There's a lot of research behind this stuff.

Mar 31 01:26 PM

[Conan the B...:]

Cetin: you will make a lot of money and so will I.

DOW 9,000 here we come.

Whether there is screaming and the gnashing of teeth behind closed doors, when the G 20 comes out, there will be smiles all around and a lot of "talk" of progress.

It will be a show for the world. If you believe otherwise, then you believe that Government Officials never "spin" the truth. imo

Mar 31 02:45 PM

[Conan the B...:]

Mar.31, 3009 James West has issued a statement that today we are at an inflection point: " This is the point at which the global economy falls the rest of the way of the cliff."

I have made a note of your prediction and filed it away.

Can I presume that todays activity is an anomaly?

Mar 31 03:10 PM

[HBWOW:]

The greedy and the power hungry egotists have working toward today's chaos and have won. The problem is they are not done but rather plan to suck every drop of blood from the general masses.
You hit the nail on the head with your "organized crime groups such as drug cartels and bankers". You did not mention the egotistic governmental "what me worry" boyz, and behind the scenes investment manipulators, the option craving big business "executives/looters", and the investment scramers (*).
There (*) are many, many more Madoff's yet to be uncovered.

Mar 31 04:10 PM

[fxmaven:]

That was from Bill Murray, but in Ghostbusters! ( talking to the mayor of new york city).


On Mar 31 10:01 AM Carl Spackler wrote:

> Let me finish your story for you - "Dogs and cats sleeping together,
> mass hysteria" - From the movie "Stripes".
>
> Your a little heavy on the pending apocalypse, but I think we do
> have further to fall. My brother also falls into the same category
> - the "end of the world is coming" bear. Heck, I am bearish too,
> but if we get this bad why even invest. You would be better off buying
> an old nuclear bunker in Idaho and holing up for the next few years.
> Will things get worse - yes, but I doubt we are going to see the
> end of American democracy, modern industrialism and capitalism. These
> are great times for those that can see beyond the bullish diatribe
> that the press floats out there, but people have been betting on
> the end of the world for ever and nobody has collected on that bet
> yet. My brother too is talking about "civil unrest" and the coming
> gangs of marauders, but if it gets that bad, betting on the direction
> of any market or commodity is worthless. If you truly believe in
> this scenario, you should be stocking up on soup cans and Uzi's.
>

Mar 31 04:12 PM

[Roger Knights:]

CTB wrote: "I have made a note of your prediction and filed it away. Can I presume that today's activity is an anomaly?"

What anomaly? The Dow fell off a cliff (down 100 points) at the close. What's an 87-point bounce-back after a 275 point drop the day before?

Mar 31 06:19 PM

[r0364:]

Last month the US government finished its Inertial Fusion reactor that they've been working on for about 20 years. The first year will be for getting the device tuned and next year they should be running experiments(small H-Bomb explosions) that produce much more energy than is input to the lasers to start the reaction. Its URL is lasers.llnl.gov
The US also has another experiment called the Z-Machine that achieves fusion using a high current to compress the fuel pellet to achieve fusion. Its URL is zpinch.sandia.gov. During the previous 8 years oil was our main interest and funding was minimal with the testing of nuclear weapons the main purpose for these programs funding.


On Mar 31 06:58 AM Roger Knights wrote:

> It seems as though the focus of officialdom and the MSM commentariat
> is on keeping the frog from jumping out of the crock-pot by dampening
> down sharp up-spikes in the temperature and waving a fan over the
> frog to cool his fevered brow. Critics complain that the focus should
> be on turning down the heat--but what if that's not possible, and
> the pot is too deep to jump out of, and officialdom realizes those
> facts, and therefore believes that the only hope is to play for time
> and hope for a miracle?
>
> If so, then of course they wouldn't admit their awareness of the
> true situation publicly--they'd have to play dumb. (This is quite
> terrifying, of course.)
>
> The only "miracle" I can envisage would be the discovery of a gigantic
> cost-saving technological breakthrough, such as practical cold fusion
> or something like it. (There was a glimmer of hope from this field
> a few days ago from a Navy researcher, here: www.breitbart.com/arti...;show_article=1
> )

Mar 31 07:52 PM

[DaveW:]

The cause of potential unrest, a big decline in living standards, may also be our guiding light out of this mess. The ONLY way for us to morph our GDP away from dependence on consumer spending is to make the American worker more affordable. Lower living standards and lower wages wiil hurt, I won't like it either, but it will increase our industrial output & exports and make for a 'real' economy that is not based on credit and consumer debt. IMHO


On Mar 31 11:10 AM Allan Frain wrote:

> Deteriorating economics always weighs heavily on social order. A
> steep
decline
> in living standards in an entitlement society will most
certainly
> lead to civil unrest.

Mar 31 08:06 PM

[nova:]

"The economy continues to contract globally, jobs continue to disappear, credit continues to be lethargic or frozen, and government money directed towards economic stimulus continues to be hijacked by banksters and parasitic corporations who are led by experts ... in legal forms of theft. "

"marvel at the sheer audacity of the criminal banking and government cartel"

James West very accurately summarized the present reality.

It is absolutely incredible and totally unbelievable to watch as the Obama administration and the Congress threw away any pretence of integrity, honesty and decency. No society can survive and continue its normal functions after being exposed to such an incredible lawlessness of its government and the business elite. This just cannot continue for long. The climax is near.

I agree it is impossible to predict the future. I don't think the Great Depression provides a good guidance. In my view, the events that took place in the former Soviet Union 15-20 years ago are more relevant to events about to happen in America.

Mar 31 10:57 PM

[CJJ:]

All of you people need to stop talking about one day moves in the market.

Also I have no problem with people's opinions one way or another, but if you think the world is ending as this author proclaims, why not just leave it and leave the rest of us here, we'll be just fine.

I find it hard to believe that in the history of mankind THIS is the greatest crisis. Seems more to me that with the internet everyone now thinks they are experts in all things and have a vehicle to express those views.

Economists of all sorts should be scared if a world as this author describes comes to pass, they will be first up on the block and that's not going to matter if you follow Schiff or Krugman or whoever.

Who are crime groups going to get money from if the economy fears? Actually crime groups need the economy just like Governments do. Military or Dictatorship is much more likely than this guys call. There is no proof of extreme crime in the 30s(or more extreme than any other time period).

Also what a goofy smile on this author for a guy calling for the end of the world. Oh yea, he's just a guy shorting stocks and trying to must support so his yields rise.


On Mar 31 06:19 PM Roger Knights wrote:

> CTB wrote: "I have made a note of your prediction and filed it away.
> Can I presume that today's activity is an anomaly?"
>
> What anomaly? The Dow fell off a cliff (down 100 points) at the close.
> What's an 87-point bounce-back after a 275 point drop the day before?

Mar 31 11:05 PM

[Fighting Yoda:]

Yes we are heading towards a bad end – complete mayhem maybe not in the near future, but what I clearly see is class warfare. This Wall Street preference over auto industry is a glaring example. AIG bailouts helping the cronies likes of Goldman. Now we have the Public-Private program – just shift the toxic assets onto the tax payer. There will be a lot of political backlash in addition to bankrupting the nation. We have cabal of crooked bankers aided and abetted by their moles in the government.

Credit bubble has burst; we are heading towards deflation and contraction big time.

I do not see any upside for the markets, S&P heading towards 500 in a month or so. G-20 fiasco and Friday’s job report will get us moving in the downward slope.

Apr 01 12:08 AM

[Fighting Yoda:]

Dow futures currently down 91, likely a bad day tomorrow after quarter end window dressing.

Apr 01 12:09 AM

[Carl Spackler:]

I am duly corrected and you are right!


On Mar 31 04:12 PM fxmaven wrote:

> That was from Bill Murray, but in Ghostbusters! ( talking to the
> mayor of new york city).

Apr 01 09:24 AM

[Conan the B...:]

RK: the follow through should have been to the Downside, it wasn't.

The next day should have been to the Downside, It wasn't.

The Article started with "Today Is The Day" everything goes to hell in a Handbasket.

If Today, is not the day, do you actually think Mr. West will Post a retraction?

He will ignore it and come back a month or 2,3 down the road with the same but updated dire prediction.

and I will be there to guide him back to this Article.

The "boy who cried wolf"... I slaughter wolves.

Apr 01 04:55 PM

[Conan the B...:]

Cetin, the story never changes. I really appreciate the fact that they have to be dragged kicking and screaming into a new Bull maket.

Fasb Changes, depending on the details, a few downtrend lines will be broken. I have run out of breadcrumbs.

Apr 01 05:05 PM