This video powerfully presents the ideas in this essay. My first spiritual teacher, who also doubled as a martial arts instructor, taught that people learn from repetition and impact. The video definitely delivers on the impact and I hope my presentation of the words of many delivers on the necessary repetition. It is understandable when people without resources and intelligence ignore all the warning signs but there is no excuse when intellectually capable people stick their collective heads in the sand.
Egon von Greyerz writes, “We now live in a world where governments print worthless pieces of paper to buy other worthless pieces of paper that, combined with worthless derivatives, finance assets whose values are totally dependent on all these worthless debt instruments. Thus most of these assets are also worthless. So the world financial system is a house of cards where each instrument’s false value is artificially supported by another instrument’s false value. The fuse of the world financial market time bomb has been lit. There is no longer a question of IF it will happen but only WHEN and HOW. The world lives in blissful ignorance of this.”
Ben Bernanke, Timothy Geithner, Barack Obama, the Wall
Street banks, and the corporate mainstream media are playing a giant
confidence game. It is a desperate gamble. The plan has been to
convince the population of the US that the economy is in full recovery mode.
-The Burning Platform-
“First, the global economy is in dire straits and riding the wave of a convoluted ‘recovery’ built on fiat and fantasy. So to get to the point (as if it is not painfully obvious); there is no recovery! I don’t care how often CNBC, MSNBC, FOX, or CNN, pull skewed data and automaton analysts from their ghastly dungeon of disinformation, the fundamental dysfunctions of the American economy remain unchanged. The key here is the dollar and its inevitable demise, which the establishment is trying desperately to hide until the last possible moment. Over the next year we are likely to be buried in a deluge of excuses, half-truths, and lies, all meant to divert attention away from the word ‘inflation’ as the masses begin to question just what the hell is going on,” writes Giordano Bruno.The mainstream financial press as usual will be used as a tool to mislead the public even as the storm hits them broadside.
The United States financial system, as it exists, is making
war on its own citizens, and on the citizens of other countries,
by foisting the decrepit system on the rest of the world.
-James West-
After the Federal Reserve went on its latest rampage of printing money, Peter Schiff of Euro Pacific Capital said, “If bond prices failed to rise given such a Herculean effort to lift them up, there can be only one direction for them to go: down.” So as the winter opened her cold doors, the bells of doom are ringing in the huge bond market meaning that a lot of trouble is brewing on the horizon. “The big money realizes that the Fed is fueling a trend of global inflation.And only a fool would want to be stuck holding bonds when interest rates rise,” writes Robert Prechter.
One can hear a storm like this approaching. It sounds like a hundred freight trains converging on you. The above video is like this but reality is always so much worse than any presentation of it. Storms like this are real and they do destroy property and kill people. What is happening in the financial sphere though is so much worse for its going to be like a storm of this destructive power touching down on all points of the earth simultaneously. Everyone everywhere will feel its destructive capacity to destroy lives and wealth though obviously the wealthy that have their wits about them have prepared more than others.
James Howard Kunstler, in a master document of the world’s fate for 2011 says, “As is the case now, first in the unraveling of global financial arrangements – a terrifying matrix of irresolvable mutual obligations that are destined to be repudiated in an ugly way. Everybody owes too much money to everybody else. A worldwide game of financial musical chairs is currently eliminating various nation-players too weak to plant their asses in the diminishing chair-space. Iceland dropped out first, then Greece, then Ireland, and so it goes. Entering 2011, the trouble is that the world is out of runt countries to shove to the sidelines. There are Portugal and Belgium to go, and from these on all you’ve got are nations too big to fail and too broke to keep going, the most conspicuous being Spain.”
It is uncommon to conceptualize the world and human history as an ongoing clash between the filthy rich and almost everyone else, between the extractors of economic renters and the sellers of debt, the oppressors and the oppressed. Today we stand on the brink where large swaths of unproductive private and public debt will not be repaid, and sovereign countries will default on their obligations. International monetary, political or strategic unions that rely on economic stability, mutual trust and confidence will not be preserved in any meaningful form and it’s going to be one hell of a ride down from here.
Governments will do anything to keep funds flowing.
Daniel R. Amerman writes, “Something really interesting (and terrifying) happens when you combine monetary inflation with asset deflation in real terms (meaning the purchasing power of assets is plummeting). As the dollar price of the assets in ever-more-worthless dollars climbs higher and higher, the purchasing power of those assets drops lower and lower. This generates very high taxable profits that are then taken by an increasingly desperate federal government.”
Amerman continues, “Many people, looking at what has just been presented, would see this as being a major reason to keep that deficit spending right up there and maybe even get more aggressive about it. This is indeed the position of many politicians and pundits, as well as a number of mainstream economists. Unfortunately, there is a double problem with this approach: there’s no indication that it’s working other than as a short term band-aid, and the cost of the “band-aid” risks wiping out the value of money, savings and investment on a nationwide basis.”
“Unfortunately it appears quite likely that there will be a crash in the value of money itself. This is likely to be accompanied by a crash in the purchasing power of financial assets. The stock market may collapse in a way we haven’t seen since the last time we saw this level of depression, that being the 1930s. We are likely to see a tremendous bond market crash as US government monetary creation and manipulation is eventually overwhelmed by reality.”
The Western public debt crisis is growing very rapidly. The absence of economic recovery in the United States, the accelerated structural weakening of the United States in monetary, financial as well as diplomatic affairs, and the global drying up of sources of cheap finance are all leading to a storm of unprecedented proportions. Ron Robins writes, “Banks and the financial system will probably soon experience a new round of massive real-estate-related losses and subsequent financial institutions’ bankruptcies. Thus, a new major financial crisis will likely soon engulf America, greatly impairing its lending facilities and creating a severe scarcity of debt.”
The biggest macro-economic story of 2010 was Europe:
It’s falling apart, and there doesn’t seem
to be anything that’s going to stop this collapse.
Jim Willie writes, “Remember in mid-2008 the nation was told that the $1.4 trillion deficit would be reduced to below $1 trillion easily in 2009. It was not, and repeated the $1.4 trillion. Remember in mid-2009 the nation was told that the previous two $1.4 trillion deficits would be reduced to below $1 trillion easily in 2010. It was not, and repeated the $1.4 trillion. Finally, the US Govt deficits in current projections are estimated to be well above $1 trillion, as reality has struck. The $1T deficits are a permanent fixture. Thus the Quantitative Easing #2 is in place, since the US Treasury does not want the shame from failed auctions to reflect badly on the US Dollar or the other galaxy of US$-based paper assets. They masquerade as containing value, when they are largely trash items. They can no longer compete against gold. If truth be known, Wall Street executives are trashing their corporations and buying gold in private accounts as counter-parties. They will someday dump their corporate losses on the US Govt and ride into the sunset zillionaires. Then comes the US Treasury default.”
Practical Economics
Enough of this high finance stuff. Let’s look at how the common man is fairing in all of this. Public Workers Facing Outrage as Budget Crises Grow reads the headline in the New York Times. “Across the nation, a rising irritation with public employee unions is palpable, as a wounded economy has blown gaping holes in state, city, and town budgets, and revealed that some public pension funds dangle perilously close to bankruptcy.”
Everyone either on a pension or soon to deserve one might not get one or will definitely lose ground as the money to pay them dries up. It will almost be like class warfare with people close to or in retirement being the first in line to lose the basic structure of their lives. Equally, the salt of society, its teachers, librarians, police, firemen, and just about everyone else in local, city, and state governments are facing an apocalypse in terms of their promised benefits and even their daily wages.
The young also are not having a good time with things these days either. Europe’s Young Grow Agitated Over Future Prospects is the headline, also published in the Times. Many of the young are getting fed up with how surreal and ultimately sad it is to be young in the first world today. The outrage of the young has erupted, sometimes violently, on the streets of Greece and Italy in recent weeks, as the young protest austerity measures and a rising reality and feeling of being increasingly shut out of their own futures. The young are facing a terrible job market.
“Giuliano Amato, an economist and former Italian prime minister, was even more blunt. “By now, only a few people refuse to understand that youth protests aren’t a protest against the university reform, but against a general situation in which the older generations have eaten the future of the younger ones,” he recently told Corriere della Sera, Italy’s largest newspaper.”
“As a result, a deep malaise has set in among young people. Some take to the streets in protest; others emigrate to Northern Europe or beyond in an epic brain drain of college graduate. But many more suffer in silence, living in their childhood bedrooms well into adulthood because they cannot afford to move out.”
Conclusion: “Sooner or later all this dishonesty will terminate in collapsing living standards, loss of public services, growing civil disorder, and political crisis. You can get there via deflation (no money) or via inflation (plenty of worthless money) but the destination is the same. I don’t see how America fails to begin arriving at that destination before Halloween 2011. Europe may get there by springtime, anyway, dragging the rest of the developed world into a vortex,” writes James Howard Kunstler.
Dr. Mark Sircus:
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