Another Depression? 18 comments
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Slowly but surely, a growing number of people - except equity investors and Wall Street "strategists," many of whom seem to lack the brainpower necessary to figure such things out -- are coming around to the idea that there is something highly unusual about what is happening on Wall Street and Main Street.
Instead of another brief crisis that quickly blows over - aided, perhaps, by the supposedly all-powerful Federal Reserve - and a garden-variety downturn that rumbles by without causing too much damage, we have a lingering and contagious disaster in the financial sector that is wreaking widespread havoc in an already unraveling economy.
Such circumstances bring to mind an earlier, more dangerous time. In fact, according to a report in the Scotsman, "Slowdown Echoes Great Depression, Says Bank's Deputy Chief," even central bankers are beginning to acknowledge that the once unimaginable is now a very realistic possibility.
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This article has 18 comments:
This means another dog-leg down, and tock prices do not reflect that, or the losses that banks will have to bear.
Add to that the fact that we have discovered more oil at a rate which is a fraction of consumption for decades, which means that over the medium term oil prices have nowhere to go but up, and it is clear to anyone who chooses to look that we are in depression territory, not recession.
The American family's wealth is built upon inflated home values going back to the 70s. These values were intoxicating to the point where the national mantra and cocktail chatter turned to how real estate can't fail!!! This, of course, led to greater borrowing, extended credit card commitments, and a tendency to eschew savings entirely. Real estate turned into a casino , a roulette wheel, and a Ponzi scheme at the same time.
The crash is inevitable, inexorable, and ineluctable, but don't look for a "black Friday" event to kick it off. The same old groups will be blamed for it as those blamed in the last depression. You can see it now in the chat rooms.
Until the crash blows over, I'm out of stocks and in cash, treasuries and gold.
So attack away, the vast majority of the country is discovering the truth behind the republican lies... tick tick tick
The precipice upon which we are perched will determine whether American Capitalism will continue. Freddie & Fannie won't go under simply because that would salt the fertile playground we call financial markets with a dose of socialism. The real masters of the universe won't allow that as there are so many suckers lining the tables and no eye in the sky.
First, it came in between the two European civil wars that destroyed the European hegemony over the world and left the economic field open for the United States after 1945.
Second, it saw the rise of Adolf Hitler's closed economy which contributed to America's defensive decision to close our own economic borders. France also existed as a closed economy in the 1930's. Both the French and German economies prospered under the protectionist doctrine of the 1930's but the American economy obviously suffered.
It came at a time when France and England still controlled most of the third word's resources but Japan and Germany were challenging them. America could only look to South America, the Philippines, Hawaii, Alaska and other territories for commodities. Fortunately, we found most of the commodities we needed on our own continent.
Third, the Great Depression came after a twenty year economic revolution where 80% of the people lived on farms in 1900 but only 20% in 1935. This produced a socio-economic dislocation which contributed to the economic chaos.
The post 1900 economy was the first American economy which looked much like the present economy and was based on mass consumption and advertising and a fast developing technology.
We have a similar economy today but the world economic situation is completely different.
In the present situation, America seems to be in the process of destroying itself, the same way Europe did from 1914 to 1945.
History repeats itself but with variations.
There is still hope if we come to our senses. History doesn't provide very many examples of good sense, however.
So if all goes to plan, we will see a slow eroding of standard of living and wealth in the USA. If things go odd track, well....a violent nose-first decent might give us much different results. (I'm not sure the Lobster ends up any less dead after the slow-rising temperature boil as opposed to the plunge into the boiling pot.....but perhaps one is more tasty than the other...no?)
My advice I tell all - Buy 60 days supply of food, I prefer wheat pasta and butter flavored Crisco. Have a bottle of chlorine bleach to add one drop to purify two gallons of water, making almost any water supply drinkable. Stick it in a couple of plastic bins and hope you never need it. However, as Ben Franklin once said 'Its better to have it and not need it then need it and not have it'. Besides that, we'll get through a depression and then square off against our enemies. Jim Carey has some good historical points and contexts. America still has a very formidable military to seal it's borders, enough innovators to tap our own energy, America has six times the food supply of the Great Depression era with only twice the population. The comforts and luxuries are what will kill of many in our nation and that is a shame. War will kill those not prepared in mind and spirit, but as a nation we will survive, just as the USSR is now Russian Federation, we will be called something else besides the USA by the time it is all over.
Specific forecast: Bull market in 2013. North Korean conflict and true flash point of WWIII by 2015. WWIII would last about five years and go nuclear. 1/3 world population of casualties. 1,000 years of peace afterwards and amazing technology innovation including fixing our broken genetics and the ability to accelerate particles of energy many times the speed of light, insert AI into them and explore the entire universe in a second. Good things coming friends, just take care of your famalies and neighbors. The American population will get it's grit back, but pain is the catalyst that spurs necessary innovation. Necessity is the mother of all invention. God bless and see you on the battle lines gentlemen (and ladies).
Yes, we are in debt up to our eyeballs and that debt requires most of the planet's savings to keep it afloat. Yes, we do not have a lot of headroom to borrow more. Yes, the central bankers are aware of this.
Why do you think the dollar rallied the last couple of weeks? Foreign dollar reserves at the Fed rose 100 billion in a couple of weeks. Why? The reason is twofold. One, to put downward pressure on commodity prices which were crippling economies worldwide because most of the commodities are priced in dollars. And two, to keep the US market from going further in the tank which will prompt further US borrowing to head off a collapse and put us closer to the day we cannot service the debt we owe them.
It does not matter who gets elected in November. We are too far past the point of no return to fix what the village idiots in DC have done to us. We are now "The Economy too big to fail" and central bankers around the world are loosing sleep trying to come up with a way to keep us afloat.
The choices are now either inflate globally to stave off depression, or depression itself. Or, as happened with the invention of the Credit Default Swap, hope some Cambridge graduate can come up with a brilliant idea which will hold off the inevitable for another 8-10 years and leave us in even worse shape. As a cynic, I am betting on option 3.
And, you do nothing about it. Go To
www.stopoilspeculation.../
And do something.
Also, the two writers who want another war are jerks. Just like the bomber McCain....remember bomb, bomb, bomb, bomb, bomb IRAN???
Senator OBAMA and Senator BIDEN will get us out of Iraq and they will not go to war against Iran.
OBAMA /BIDEN 08