Tuesday, June 22, 2010

21 Reasons The Economy Is About To Crash

1) Easy Money was the chosen solution to keep the good times
rolling, even though the good times were questionable.

2) Productivity was already being impacted by poor allocation of
resources, wars not going well.

3) Financial oligarchs effectively took over the government,
existing laws were not enforced, and as thing came to a head in
2006 and 2007 the big brokers (deal makers, IPO, LBO's) were
hiring specialists in bankruptcy reorganization. They were
poised to buy stuff up on the cheap when things blew up.

4) The recent "recovery" is really just the same recession, but
given a hit of crack so it can party on a little longer. Many
trillions were spent, but it mostly benefiting big business, big
banks/brokers. Long term benefits to the economy are

5) Government workers have increased their pay like 30% to 40%
whilst non-gov workers have treaded water, even if they have a
job at all.

6) Government is expanding it's powers and owning businesses.
Whilst theoretically, expanded powers could be useful, why we
anyone assume so, given that existing laws and oversight were
already so poorly performed.

7) Lobbying, campaign contributions, and restrictions on how any
Gov official could migrate from an oversight of an industry to
an executive or lobbying position must be instituted.

8) Deflation is likely to be the near term hobgoblin.

9) The Gov can literally just print money, seriously. They can
hand out that paper money to pay off debts. They do not have to
roll over every debt. All the governments with soveriegn
currencies can do this. The Euro cannot. This is called
competitive devaluation.

10) Inflation can take hold someday. You best not have all your
assets in paper money or equivalents. These changes may happen
relatively quickly, like by 2012.

11) The US has plenty of military muscle, expect it to be used
more, especially as things go bad.

12) If anyone owes you money, get it now.

13) Very few, maybe 1% of the population learned anything from
the greatest financial crisis in a century. Or they "learned"
that the Gov can indeed save us by strong Gov intervention in
free markets. This makes the next crisis more dangerous.

14) Very few of the problems of the crisis were solved by those
trillions of dollars thrown at the situation. It was more just a
transfer of wealth from a captive audience to the ogliarchs. The
bad debts, bad assets are still on the books, they have just
been covered up. Those in the know, know it, and they are
pulling out all the stops to "get theirs" before round 2.

14) There may be a QE2 (Quantitative Easing, money printing,
throwing money at large banks/brokers), or the USA could follow
the austerity trend that is all the rage (pun intended).

15) Reviewed Conquer the Crash by Big Daddy Pretcher. We all
love Pretcher, he is a free thinker, like Armstrong, but he has
been so wrong for so long, he is not infalliable. His view on
Gold is wrong, it is not just a commodity that reacts like

16) Gold is a currency. Paper gold is a speculation device,
owning gold ETFs and even gold miners is not the same as owning
physical gold. Silver is good for making change, buying a tank
of gas, bag of rice, etc.

17) We are not at the precipice of Primary 3 wave down, we could
be near the end of the 1st 5 waves down (completion of wave 1).
Wave 2 could slog sideways for years, like a zombie propped up
by QE2.

18) Most people have lived beyond their means for a long time.
Most "young people" say 35 and younger, have only lived in a
bull market.

19) In order for any chance of moving forward with positive
results a few things must happen--banks and investment
advisers/brokers/deal makers must be separated by a firewall,
not a just a company division name, lobbying must be curtailed,
contract law including making bondholders take their lumps, must
be restored.

20) Never has the world been so intertwined. Never has the
situation for competitive devaluation of every countries
currency been so nicely setup.

21) There is still something like $600T of notional value of
derivatives floating around out there, and apparently no one
even knows where they are or how to track them. This is many
multiples of the world GDP. This can't be good for the common

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