In a report entitled "Worst-case debt scenario", the bank's asset team said state rescue packages over the last year have merely transferred private liabilities onto sagging sovereign shoulders, creating a fresh set of problems.
Overall debt is still far too high in almost all rich economies as a share of GDP (350pc in the US), whether public or private. It must be reduced by the hard slog of "deleveraging", for years.
"As yet, nobody can say with any certainty whether we have in fact escaped the prospect of a global economic collapse," said the 68-page report, headed by asset chief Daniel Fermon. It is an exploration of the dangers, not a forecast.
Under the French bank's "Bear Case" scenario (the gloomiest of three possible outcomes), the dollar would slide further and global equities would retest the March lows. Property prices would tumble again. Oil would fall back to $50 in 2010.
Governments have already shot their fiscal bolts. Even without fresh spending, public debt would explode within two years to 105pc of GDP in the UK, 125pc in the US and the eurozone, and 270pc in Japan. Worldwide state debt would reach $45 trillion, up two-and-a-half times in a decade.
(UK figures look low because debt started from a low base. Mr Ferman said the UK would converge with Europe at 130pc of GDP by 2015 under the bear case).
The underlying debt burden is greater than it was after the Second World War, when nominal levels looked similar. Ageing populations will make it harder to erode debt through growth. "High public debt looks entirely unsustainable in the long run. We have almost reached a point of no return for government debt," it said.
Inflating debt away might be seen by some governments as a lesser of evils.
If so, gold would go "up, and up, and up" as the only safe haven from fiat paper money. Private debt is also crippling. Even if the US savings rate stabilises at 7pc, and all of it is used to pay down debt, it will still take nine years for households to reduce debt/income ratios to the safe levels of the 1980s.
The bank said the current crisis displays "compelling similarities" with Japan during its Lost Decade (or two), with a big difference: Japan was able to stay afloat by exporting into a robust global economy and by letting the yen fall. It is not possible for half the world to pursue this strategy at the same time.
SocGen advises bears to sell the dollar and to "short" cyclical equities such as technology, auto, and travel to avoid being caught in the "inherent deflationary spiral". Emerging markets would not be spared. Paradoxically, they are more leveraged to the US growth than Wall Street itself. Farm commodities would hold up well, led by sugar.
Mr Fermon said junk bonds would lose 31pc of their value in 2010 alone. However, sovereign bonds would "generate turbo-charged returns" mimicking the secular slide in yields seen in Japan as the slump ground on. At one point Japan's 10-year yield dropped to 0.40pc. The Fed would hold down yields by purchasing more bonds. The European Central Bank would do less, for political reasons.
SocGen's case for buying sovereign bonds is controversial. A number of funds doubt whether the Japan scenario will be repeated, not least because Tokyo itself may be on the cusp of a debt compound crisis.
Mr Fermon said his report had electrified clients on both sides of the Atlantic. "Everybody wants to know what the impact will be. A lot of hedge funds and bankers are worried," he said.
The wisdom is growing.Thank God. The scales are falling from our eyes.
Both America and the UK could do with Revolutionary approaches whereby land is
given back to communities to grow food for themselves and for export of surpluses to those places like China that need it, instead of them having to buy up all of Africa.
What's that going to help in the end, but to feed corruption, starvation and war, just where and when those people deserve a break !
Inheritance tax should ensure none of the over-endowed dynasties can rise to such unequal heights . But people are reticent and brainwashed and bling-awed, so we have that nuclear war threat still, that WorldView blithely believes these Rockefeller,
Rothschilds, Carnegie, Vanderbilt, Dupont and other long since hiddenmoney types
and the Bilderberg clubs they belong to won't permit. Big as they are, there are bigger things afoot. We shall gain our libery, but the road there will be filled with great difficulty and our humility will be carved from our persistence in the face of
hardships, for arrogance has come before our fall.
This junk time was not made by the Chinese, that is unjust and a lie, they are as much victims as the rest of us and will be every bit as used, though China's behaviour in Africa, encouraging corruption and ecological destruction, deserves the strongest censure. This one was made in hell it seems, and its longtime servants are
counting the pieces of silver resulting from their Judas kiss, their promises of untold
wealth, their glittery credit streams and their Hollywood fantasy American dreams.
But for all the oil and bombs and chemical sludge and banks that they've slushed the bucks around in, Dylan puts it well to these mawsters of the universe, these mawsters of war, when he says:
'Let me ask you one question,
Is your money that good,
Will it buy you forgiveness,
Do you think that it could?
I think you will find
When your death takes its toll
All the money you made
Will never buy back your soul.'
When the people of our lonely planet Earth realize WE ARE ONE; we have WON.
Until then: Close,but no cigar. Plenty of smoke though, and there's no smoke without fire.
The Bilderberg version of 'One... World Government' ain't quite the same thing. It's
called slavery. Did you sign up for that? Seems they think we did.
Truth v. the Lie.
Steer clear of the Bilderberg brand, even the Chinese version.
One world...Revolution;
The People gonna win. Yeah! China, Asia, Africa, Australia and America, India and
Africa and Russia and Arabia, Europe and the Islands of the World of one
Humanity. One World. (One peaceful, dogged, stubborn, resolute) Revolution. One
World, The people gonna win.
Oh, and I'd pass on the injected barcode vaccine chip if I were you, its far more,
dangerous than the lab unrolled, remote con trolled synthetic bypassed
robot-powered man-made gunge-in flu. But that's maybe a bit quantum cryptic, or
quantum leapic (what some might call mumbo jumbo, or maybe QE or reserve currency or derivative:)
Pace.Together, as one , living as brothers and sisters we can win through this time of
trial. Divided we fall.We are ONE.
All these countries in so much debt.
Who are they in debt to?
There must be somebody lending it out, but apparently not.
This is what happens when banks are allowed to lend 990% of what they own under the fractional reserve system.
Interest from all of this debt goes straight to Goldman Sachs and the other institutions that own the central banks, and gets paid in bonuses.
Its an utterly crazy system.
'We are at the start of the end..Yes.There is no human solution for the world predicament we find ourselves in.No amount of number crunching can fix this,or even time.But not to worry the Beast has a short term solution.But God has a plan..yes Brace for impact.. soon'
Gods plan has never saved anyone but the Church and its coffers. Remember Bang La Desh? Let alone all the wars and genocide over the last 100 years alone?? Where was gods plan when the children starved, and are starving all over the world?? Now ALL will be in dire straights and this God of yours will fix it and set the wrong right? Or will your Church that helped Nazis escape, notably Mengele, Eichman, and Brohm, through Italy to South America. And ALLOWED pedophiles to rape children for years help you or anyone else??
ABSOLUTE NONSENSE and religious trash. Save it for your Sunday lie sessions; all of you bible thumping idiots are just a rung or 2 below the green idiots who back this world take over because they buy the lie and live with a delusion that has been spoon fed to them; to live and die for a lie promoted as a cause while sane people pay the price for every idiot who isnt smart to follow the money.
Checking this with the world global poilitical agenda in mind (10 economic blocks modeled on the eu) has anyone got a cost benefit analysis of the EU and so it like that is being developed ? The Roman empire collapsed becaue the wealth produces could no longer afford the overgrown civil service. (Say NO to the EU and like)
James Smith @ 11:56
"Your claim �the choice and management of the monetary system should fall outside the democratic process� confuses me."
I'll say! If ever it was possible, your reading comprehension is even worse than your writing skills.
The thought that you were in charge of trading instruments that few people understand speaks volumes...
If I were you, I'd immediately stop posting any opinion. Any further intervention on your part will only dispel any lingering doubts that finance is in the hands of a group of people that can barely make heads or tails of what they read.
As i wait for the worst again! i find myself more and more drifting of and looking down the wheelbarrow isle, shock and horror there seems to be a concensus that the new barrow is on 4 wheels and is in an array of shocking pinks with a neat digital 70's calculator in the handlebars, are you really serious and is the sat nav barrow really necessary to make your point, are you kidding or not?
MIKE N....I agree 100%..but what can be done by us Little People? We are indeed like dust in the wind, the Whirlwind. There is little we can do but try to protect ourselves from the Monster Federal government. My trust is in Jesus Christ and the Gospel. We are not engaged in warfare against flesh and blood but against spiritual wickedness in high places. The Bible is a spiritual book and we must not forget that. May the Lord have mercy on you all and bless you.
I challenge all of you to simply Google the phrase, "Cloward Piven". Then tell me what you think.
This depression will be worst than the 30's This will be global and in the US there is too much divisiveness between Americans this is going to be on par with utter chaos!
AAAAAH!!! THIS Y2K WILL KILL US ALL!!!....oh wait....
I am still in doubt as to what we may expect. (a) Deflation or Depression, already beginning, possibly.
(b) Or else rampant inflation brought on by foolish policies (not deliberately induced.)
Deflation seems the likeliest & possibly arriving suddenly or with another crash.
As one old (long-retired) American, I sit on my nest egg & wonder which must come:
(a) Possible deflation, depression. This has seemed to me very likely for quite some time & in fact may have begun.
(b) Or ruinous inflation chosen by desperate governments to abolish impossible debts.
We all know that ruinous inflations HAVE occurred, no doubt because of bad policies. Ironically (or ignorantly) I'm haunted by the thought that under present conditions governments may not have the option of inducing wild inflation.
So I stick with (a) above: Looks like a kind of world depression coming, maybe not quite as bad as in the 'Thirties.
In predicting the "global economic collapse" and how to prepare for it, so called protecting your assets, I find the talk here very confusing to say the least.
Not that other societies before us have not fallen, but how and who survived these events?
Even the great depression was not a complete collapse.
But to say buy gold now, as much of it as you can, will put you where? Do you carry it around or bury it?
And might I ask, what do these people and firms who are SELLING GOLD and all the hyped up advertisements to scare the bejebbies out of you,what are they doing with the dollars?
What are "they" doing to protect their investments?
If as they say gold is absolutely going to $3/4/5,000
what do they do with the "paper money" that you give them to buy some gold now at $1100 per ounce?
Explain that,please?
Actually if the economy collapses life will continue via barter. Stockpile things that people need. Guns, smokless powder, medicine, food, water desalinator, generator, gas, transistor radio, tools,
Look up - your redemption draws nigh.
Answer is simple as it is common sense - Austrian Shool of Economics:
www.mises.org
Too bad Gordon Brown sold all of the Uk's gold. Uk has the lowest gold reserves in the G8 and possibly in the G20.
With the world falling into the worst social, economic and environmental crisis in history, a solution is a new world order based on responsibility towards the environment, people and all other living beings on Earth.
Future generations will not measure us by what we created, but by what we saved.
www.ecohumanworld.com
One thing is certain.
We're in for a rough time for the next few years but the Max Max scenarios that many contributors to this blog envisage will not materialise.
Guns, land, barbed wire, diesel stores and dried food will all prove to be unnecessary and ridiculous.
Society and civilisation as we know it will not collapse.
Houses will be repossessed, bankruptcies and company liquidations will rise, many more people will become unemployed and we will generally feel, and be, less affluent.
That's it.
What's the answer?
Just use your common sense.
Play off debt as fast as you can.
Make sure you have somewhere to live by concentrating on getting your mortgage manageable in a worst-case scenario.
Avoid major purchases.
Adjust your lifestyle and expenditure - much of the money we've spent over the past decade has been on junk, unnecessary items.
You'll be amazed how much lower your supermarket bill will be if you stop buying booze and ready-made meals, for example.
Become aware of prices.
Milk in 4 pint containers costs �1.53 in both Tesco and Sainsburys. The same product is available for �1 in Iceland stores.
If you're worried about inflation and have modest savings (as most of us do), buy Index-Linked Savings certificates (you can buy �15,000 worth of each issue).
Stay clear of the stock market - its movements over the next few years will be impossible to predict, and current levels are difficult to justify.
Stay clear of gold.
A major characteristic of bubbles is a herd conviction that prices can only go up.
There are always jolly good reasons why THIS bubble isn't a bubble.
Gold is a bubble.
Generally, hunker down and prepare for a bumpy few years.
We won't see any really growth in the world economy until 2011 at the earliest, and then it will be anaemic.
We borrowed heavily from the future, now we have to pay it all back in an equivalent number of years of misery.
You cant eat gold, how many more times, history shows it is trusted.
The tin hat brigade who cannot understand what will hold the economic system together.
Conspiracy theorists who find it impossible to see it is all a mistake.
"Pity the man who tries to eat gold or to live in it when the winter comes."
This is the catchcry of those who did not have eyes to see
"Jesus is coming back soon"
Jesus came back a few years ago
had a quick look at the mess all
around and said
"Shite i'm outta here"
Some people have made noise about potential deflation. The central banks of the debtor nations will NEVER let that happen on a large scale. The trillions of dollars of debt would be more costly to pay back in real terms. Inflation has got to come on in a big way eventually, if for no other reason than to erase the debt. Land, guns, and ammo (all of which I can imagine BHO and Co. trying to take away to some degree), and I'd go into massive (fixed rate) debt to finance it if I were sure enough about my future cash flows to service it (on the assumption that massive inflation will cause debt to evaporate in real terms).
re: catnip to the tin foil hat wearers... The article was linked to on a US based mailing list and a couple of sites that have attracted a lot of the Alex Jones type NWO/Iluminati paranoid nut jobs :-) It's all a massive calculated conspiracy (possibly involving shape shifting lizards).... obviously.
@John Sudgen,
"It wasn't me that brought down the bank" said the banker. "It was the costumer"
Great to see a banker demonstrating British banking accountability at its best :-)
"Trust in the Lord with all of your heart and lean not on your own understanding. Acknowledge Him in all of your ways, and He will make your path straight."
Some good comments... Looks like gold and silver isn't the fool-proof answer. It will be thrown into the streets. You can't eat it. It may get you into trouble. Seems that land has value that may last... You can live on it. I wouldn't put my trust in guns. For one thing, guns are no contest against lasers, bugbots, etc. And it says in the good book that those who live by the sword shall die by the sword. Get yourself right with your Creator through faith in His Son Jesus Christ. And then ask Him what to do...
Just to show how silly people's thinking is: Gold is money because it MAY be in finite supply. However real estate (land) IS WORTHLESS because land is 'definitely' in finite supply.
Note for 'fast eddie' - Good job you're in the US. Some thoughts for you:
'My gold is stashed and untraceable' - People were doing this when the Roman Empire collapsed. Things got really bad, they died with their gold in the ground. 1500 years later their hoards are still being dug up. Make sure your family know where it is.
'I took our business onto the black market for cash only (which I convert to gold) and so I am officially "unemployed".' - That would be a public admission of tax evaision then?? Presumably that's still illegal in the US.
'I will declare bankruptcy, wipe out 100% of our remaining debt and continue to hoard gold.' - Is it really sensible to advertise your ciminal plans??
'Once it clears, I will short sell iconic American corporations in the collapse and make a killing, then when it bottoms out, go long and ride it back up.' - Please post details of where bankrupts can get brokerage accounts.
'So the only way to play in a corruption based environment is to be corrupt yourself.' - The system may be corrupt, but the moment you corrupt yourself they'll put you in prison.
Now that sure is scary, believe the federal bank and the world bank. That are run by governments as a very major factor. I have been convinced for a while we are already well on the road to the collapse. In the USA we have states the biggest two being CA and NY already going over the brink of collapse because of spending. The Federal Government is Deficit spending at a rate that is unthinkable. All while wanting to spend more of china's borrowed money. Even the Chinese are very concerned. In the states we say as California goes America goes. Well as far as a good portion of the goes as America goes. There are ways to turn the tide here but regulation won't allow it. Starting with Nuclear energy. Then on to drilling here, keeps our money here, have not worked that one out to an end point yet. Of course through drilling here we use a portion of the profit to sustainable energy. The only way this can work is if the government does not regulate it. The governments of the world have been altering and falsely propping of markets with lending incentives for the past twenty years forcing all bank to do the same to stay in business. Ergo the real estate crash, lending to less than credit worthy borrowers because the government requires you have so many of these loans on the books. Then throw in some really bad practices of jumbling A rated and B- rated paper into the same bonds and you have worthless paper. Then the fed gets involved again and devalues them all to good bonds and bad to pennies on the dollar and not allowing people to buy them or trade them. The actual value of a significant portion being much higher. More in the range of 70 percent of book. Proper regulation not more.
So you see the governments promoted spending and the people stupidly fallowed as our grand parents rolled in there graves. I am as guilty as any.
So God help us the big spenders in government can't spend and borrow there way out anymore we are at breaking point already. This report would not even be looked at five years ago when it was truly need for our non thinking leaders.
We can't forget about the corruption and greed either, this decade we have had billions bilked from investors by the likes of Burney Madoff so many times, to find out they paid the the regulators off. This is your government at work.
Government corruption, greed, narcissistic power hungry politicians that in no way perform what there constutuants want. They lie, they pay off with grants and government contracts.
We are doomed. I don't see a real solution besides everybody getting there morals in order, god or no god. Morals are a guide to live by. Obviously we all need a ethical code of some kind.
Where does the line start to get the mark of the beast?
We "meaning all of us" allowed us to get into this mess and We "all of us" have to get ourselves out of it. No God, no higher power, no demon of evil or any other extraterrestrial being did this. Mankind will hopefully eventually learn from the mistakes we allowed ourselves to make.. it might be difficult, it might be a long time but the faith we should have is in ourselves not in God... because he, she or it won't be listening. Because if there is a master plan from a supreme being than its one sick twisted f'd-up plan that you might want to reconsider being apart of.
Charles Lee,
I don't know if you are going to see this, but I will respond in the possibility you will.
The reality is that the Japanese were already defeated. We'd fire/carpet bombed all their industrial base, we'd mined the crap out their waters, destroyed almost their entire merchant fleet, taken crucial resources from them like oil. They were even trying to surrender at the time, just not on exactly the terms the Americans wanted.
It was an excuse to test out the new weapon and intimidate the Russians. Our government murdered 1/4 million innocent people, simple as.
Folks, research who the Khazars are...and who they are today...the root of all misery.
Everytime I hear the word "democracy" I want to pull my hair out. America is not a democracy, it is a REPRESENTATIVE REPUBLIC.
Basic living is not tooo bad if a little thought is put into it. Buy land with older water rights, if possible find land with some 10' drop minimum of flowing water. Look into micro-hydro power and other energy generation sources. Land with trees for fuel and construction. The tools of basic food production. Give it some thought. Buy the land now before too many others catch on. Save yourselves before the government does anything more to improve our lives.
Systemic Global Economic collapse starting around December 21, 2012 sounds likely. Even the 3G's wont save us. Oh theyre Gold, Guns and Groceries... well stock up anyway and get ready for a crazy world. Gross leadership mismanagement.
To G-Money
Here is a rant from Feb97 my dear Sir... I have one up on you would you not agree?
http://guidoromero.wordpress.com/the-little-guys-may-yet-stick-one-to-the-bankers-vintage-rant-feb-07/
Gold...as though that is the only valuable substance on earth.
As for me, I'm stocking up on toilet paper.
To Mort at 8:23
"6. Built the bomb to end WWII in Japan"
What is cause, what is effect?
What if it was proven that the USA allowed Pearl Harbor to happen so that they could set about building the bomb?
Consider the amount of human and capital resources that was required to devise and build the bomb and all the collateral projects it engendered thus helping to increase industrial capacity utilization at home and obliterating significant industrial capacity abroad?
And by the way G-Money; about the little people blaming their stupidity on predatory lending. Their rage may be misplaced but calling things names is all they can do. In the meantime, government appropriates even more public funds and props up the banks to save them from their own stupidity and, incidentally, allowing to keep the stupid consumer on the hook for decades to come.
I fail to see the fiduciary duty in that.
Silver might just be better than gold because it has vastly greater practicality and is actually consumed and discarded (as in electronics, medicine and photography). Too, it likely won't be confiscated, at least not until long after gold.
G-Money @ 5:54
No argument from me on that dear Sir.
I do what I do in an attempt to substitute for the total lack of fiduciary duty on the part of our �leaders�; I try to do my bit to help those that may not have the wherewithal to inform themselves. I do what I do because I can see that unless we the people effect change, Western leaders sitting on their high moral horses as they do, would rather blame everyone else than themselves and so as to avoid being shown for the dumb and immoral dimwits they are, would rather plunge us into a world war.
A world war, dear Sir, may very well strip you of the wealth you have so shrewdly accumulated over past years if not strip you of your life or that of your family members.
In order to effect change, we have to be aware of the environment we operate in. Few people are. Right, left, Communist, Fascist, Liberal or Conservative initiatives or policies all have to come to terms with the monetary system. A government has a moral duty to manage that system sensibly and if it does not, it is up to the people to force them to.
Whilst I am at it. Let me ask again. Why is the choice and management of the monetary system not part of the democratic process? And why does the government of a democratic country retain the exclusive and arbitrary right to manipulate interest rates?
We are at the start of the end..Yes.There is no human solution for the world predicament we find ourselves in.No amount of number crunching can fix this,or even time.But not to worry the Beast has a short term solution.But God has a plan..yes Brace for impact.. soon
Thanks for your responses � I will try and answer them in turn.
Guido: I will simply ignore the first half of your post criticizing my punctuation which you wittingly introduce, without even a full stop as me �taking it really hard� � Nabokov you are not�
The knowledge of any finance professional varies depending on their role within a bank. Most employees of any bank work in support functions � when I traded equity derivatives for an investment bank, our team of six were supported by roughly 70-75 staff who had no say in our assumption of risk etc. I hope you will spare them and their �trophy wives� the �insults� which you so academically introduce your post with.
Your claim �the choice and management of the monetary system should fall outside the democratic process� confuses me. The management of the interest rates, taxation and regulatory environment [through the FSA] falls very much inside the democratic process: hence is decided by an unelected Prime Minister and his cabinet. And to be brief I can say with ease why the �vast majority� of �bankers� aren�t to blame: they have NOTHING to do with credit / equity trading or risk. To require a back office employee to understand vanna would be akin to requiring your milkman to have a phd in molecular biology � it simply is not necessary. Quite how this point still escapes you I don�t know why nor can I be bothered to find out.
Alan: Ill just ignore the opening paragraph if that�s ok. �It is the few at the top�that matter.� One of the biggest themes of the current crisis is ignorance of heads of banking departments about the products and risks their traders managed � quite clearly hierarchy and knowledge do not go hand-in-hand in banking: so no, its not just the top that matters, and no, the fact that most bankers have no say in risk reveals them as blameless in this crisis: an irrelevancy though according to you. The rest of your jaundiced synopsis on the history of money is however an irrelevancy, particularly when decorated with gems of knowledge such as �The major money changers have no loyalty to any country and if they see greener pastures will move on to whichever the most favourable host is�: the aim of almost every major investment bank still is to have domestic dominance, and as for loyalty pls refer to German labour unions with regards to banking � loyalty to one�s own is a necessity not a choice. Only recently have banks such as Standard Chartered openly rejected domestic growth in favour of �greener pastures�: and how much money have they taken from the Government?
DKV: Many thanks for your interesting response. A knowledge of the financial industry summed up in �I wonder why bankers are still bombarding my household with utterly pointeless applications for creditcards that I have no use of�. When Goldman Sachs is issuing you a credit card and Capital One moves into M&A, I�ll respond to your post. Take care. Seriously. Ignorance can be extremely dangerous.
GOLD can't be PRINTED
Our government did not "get the constitution of the US right" as mentioned by mort and ed earlier. The current government did not exist when the constitution was created. Instead, the current government was born when the constitution was ratified. The current government has been chipping away at it ever since.
The constitution is weak in quite a few areas. Personal privacy is one, there really is no right to privacy. Government taking of property is another, it's far too easy for the government to take property or property rights without equitable reimbursement. The right of the government to regulate under the interstate commerce clause to too loosely and broadly interpreted, while the right of the private citizen to keep and bear arms is way too narrowly interpreted pointing to big problems in the way the supreme court is comprised and managed.
Just my opinion on the matter.
Siegmund Wagner
on November 19, 2009
at 03:01 PM
said it perfectly.
I think our global economies have been on a roller coaster ride for a while and will continue. Don't look at the stock market for answers. They are in their own little world. Look at facts, and the facts tell us that job lose is not getting better and people are not having income gains who are employed. This will mean less spending however way you want to look at it.
As someone said further up, the powers that be WANT the monetary system to collapse.
What's being created at the moment is a financial "ark" into which a small, select group of people will go.
When the global catastrophe comes, around the time of the technological singularity, a vast percentage of the population of the planet will be eliminated, and those "special" survivors will become a part of The New World Order, and the way we look at the planet and society now will be fundamentally different.
Around this time, humanity will reach out to Mars, computers will be as intelligent as humans, and there will be technology existing that we can't even comprehend now.
This will all happen around 2050
Money will cease to have any relevance around that time, too.
Obama a one term President. A world socialist ahead of his time. The world is heading for choas beyond are dreams. That little island in the middle of nowhere is looking better and better each day.
We are in a Presidential and Congressional slump not seen since the period from 1840 to 1860. All of these guys (Republican and Democrat) pretty much suck. Remember, they are millionairre attorneys that are power hungry, not "citizen representatives" and definitely not economists. Obama is being advised by Larry Summers, the same a hole that protected the derivatives racket with Greenspan, Rubin, Dodd and Frank. They were bribed and those enriched by the derivatives took their cut as bonuses and stowed it away, then walked away before the collapse.
The only economy that matters is your individual economy. I sold our home in a short sale, took other assets and cashed them out, bought physical gold coins and have them hoarded and stashed, just like my Dad did in the Great Depression. My only remaining debt is from five banks (all of whom contributed greatly to this collapse with sub-prime loans, credit default swaps and derivative scams) and a PMI insurance company that extorted us into agreeing to pay them back half of their loss on the short sale of the home.
So what is a guy to do??? What is best for my family. My gold is stashed and untraceable, I took our business onto the black market for cash only (which I convert to gold) and so I am officially "unemployed". I will declare bankruptcy, wipe out 100% of our remaining debt and continue to hoard gold. Once it clears, I will short sell iconic American corporations in the collapse and make a killing, then when it bottoms out, go long and ride it back up. Only leveraging stocks in long term trends, keeping half the assets in gold, free of the dollar collapse and that of other fiat currencies.
They say you don't want to bring a knife to a gunfight and you have to realize that we are dealing with corrupt politicians and corporate boards (not dissimilar to Enron). These politicians like Dodd and Frank were actually BRIBED to protect the racket. So the only way to play in a corruption based environment is to be corrupt yourself. You have to play the game. I will be debt free, amass millions tax free on the black market and only pay 15% capital gains on the stock and Forex investments. And I don't feel an ounce of guilt about it--until the corruption is wiped out, there are term limits and a balanced budget amendment, they will continue to seize private capital and redistribute it to themselves. Eff them all!
Dr Watson, why gold? What's it for? Why is it worth anything? Why would you put your faith in it? Any ideas?
You folks are all nuts.
"gold the cannot be inflated at will"
But it can be DEFLATED. According to USGS historical data, its ridiculously overpriced. The current price rise has naught to do with golds value, its a deflated dollar.
Gold is useless except for industry which is why we dont use it for trade. Industry is on collapse and dont need it. Producers find it less expensive during a downturn in buying to keepit in the ground, the price goes...you decide.
The FUNDAMENTAL law of investing is "buy low, sell high"
Monex called trying to sell me gold, I laughed at them. "Buy now at record high prices?"
Global econ collapse, absolutely, IT HASNT HAPPENED YET. The non-crash so far is real estate based. In US, there has been no Dow Jones crash, its been a real estate crash with cashing in Stocks for funds to pay short position losses. The stock market crash is next.
The US DJI is at a high, WHY would I buy now, especially when the only market movements are due to hedge funds popping in and out unpredictably. I did call a significant drop in NSDQ YHOO, and recouped some losses, when the hedge fund Galleon went under and sold off. That sell off could be directly traced to simultaneous drop in price of their divestitures.
Im in tangibles, food, rebuilding old vehicles, guns, ammo and FRIENDS with food, rebuilt old vehicles, guns and ammo. Guns, ammo and bulletproof vests are the only economic sectors in the US that are flying by admission of their manufacturers/suppliers
Ah Gold....and silver to a lesser degree. Back in 99' I tried like the dickens to get my friends and family to buy all they could, but to no avail. They thought I was just crazy when I cashed out my retirement and put my home up on a chance with some old rocks that offered Zero return. I was buying Gold/Silver at $300/$5 an ounce as fast as I could find it, losing a few friends and almost a wife. Well let me tell you something. #1 - Whether it's gold, pork bellies, or worm crap timing is the key. #2 - It's having a plan for all that money you make when you sell!
Over the past year I've sold 50% of my gold/Silver off TAX FREE at coin shows. I literally had a backpack full of cash at one point! Funny thing is, I was scared not of robbers, but of the cash losing value the longer I had it!
I have since used the money to buy a beautiful ranch house on 40 acres in a small mid-west town that allows me the full extent of my 2nd amendment rights. Through a previously discussed deal, the owner willingly took a large part of payment quietly in cash. My wife has never been happier and as free as she is now. I still have over 300 ounces of gold, and $15000 face value in US silver coin only because I feel we are not topped out yet, and also for future bartering.
Well gotta go pick up that tractor I just bought for 5oz of gold....lol Retirement is so sweet!
Ah Gold....and silver to a lesser degree. Back in 99' I tried like the dickens to get my friends and family to buy all they could, but to no avail. They thought I was just crazy when I cashed out my retirement and put my home up on a chance with some old rocks that offered Zero return. I was buying Gold/Silver at $300/$5 an ounce as fast as I could find it, losing a few friends and almost a wife. Well let me tell you something. #1 - Whether it's gold, pork bellies, or worm crap timing is the key. #2 - It's having a plan for all that money you make when you sell!
Over the past year I've sold 50% of my gold/Silver off TAX FREE at coin shows. I literally had a backpack full of cash at one point! Funny thing is, I was scared not of robbers, but of the cash losing value the longer I had it!
I have since used the money to buy a beautiful ranch house on 40 acres in a small mid-west town that allows me the full extent of my 2nd amendment rights. Through a previously discussed deal, the owner willingly took a large part of payment quietly in cash. My wife has never been happier and as free as she is now. I still have over 300 ounces of gold, and $15000 face value in US silver coin only because I feel we are not topped out yet, and also for future bartering.
Well gotta go pick up that tractor I just bought for 5oz of gold....lol Retirement is so sweet!
Evil Banker,
You said, "Lending AND borrowing with "interest" is sinful, yet most modern religious leaders ignore this cannon."
I can agree with the Biblical principle but this is not a religious forum. To have credibility, it is not good enough to quote Bible verses such as Deuteronomy 23:19-20, where it says to not charge interest to citizens but OK to charge interest to foreigners, but one must also link the principle to real world causes.
The real cause of usury in the USA? Read "Creature from Jekyll Island" by G. Edward Griffin. Also see Aaron Russo's documentary "America: Freedom to Fascism" for real world realities of how big the problem is. These two resources are very easy to find (google) in order to educate yourself. It is too big a problem to fight on our own. Only through prayer and the power of the Holy Spirit can people stand in the face of this kind of evil. Just quoting Bible verses is like throwing pebbles at a charging grizzly bear.
In the meantime, those of us who are catching on suffer from slipping into poverty through debt and unemployment.....
GA
Sell the dollar in a deflationary spiral? Huh? As long as we don't see a simultaneous global debt default, (which is not an impossibility) that's a nutty perspective. If that were to happen, you can imagine the U.S. could use its political clout (the most threatening military presence in the history of the world) to ensure that doesn't happen.
The winds of war are very real for many reasons.
loosetoe, people prefer gold to paper as a store of value and medium of exchange because gold the cannot be inflated at will. The purchasing power of the dollar has lost 93% of its value since 1913. In that same period of time, the purchasing power of any given weight of gold has remained about the same. Inflation leads to malinvestment and eats away at savings.
It does matter who was president, Bush or Obama. The fact of the matter is the US Government has failed. There are no democrats or republicans...just goons who take payola from special interest parties.
The government has proved time and time again that it has failed and has become de-coupled with main street usa. This problem will effect 99% of Americans but not those at the top. Our economy has become the Bernie Madoff Ponzi economy and it is about to collapse.
I am a die hard patriot with decades of experience in finance and quite frankly I am amazed that Americans have not revolted and walked away from all the debt. People should just walk away from their mortgage and credit card debt.
Better to burn right now and rebuild than keep printing money and prolonging the endgame.
I was in NYC during 9/11. Our country is fighting two wars without a clear strategy and our troops our suffering abroad and at home. Our country is broke in more ways than one.
That's a good list, Mort, and we do absolutely need a functioning government! However, everything on your list combined cost less than the TARP and the "stimulus" in today's dollars. Scary, don't you think???
Wow.
This article has proven to be catnip for the tinfoil hat crowd.
I think that my government (USA) should suspend the Personal Income Tax and drastically reduce spending. Anyone agree with me? I think that would spur an economic recovery never before seen.... I'm not holding my breath, of course...
At G-Money,
Good point. Well said. Personal accountability.
"If so, gold would go 'up, and up, and up' as the only safe haven from fiat paper money."
SILVER has been outperforming gold 3 to 2 for at least 8 years...
(...and how will you use a gold ounce coin when it's worth $3,000+ and fiat paper is only good for use in the bathroom?)
I'm just sayin'...
Mort,
1. The constitution of the United States.
Correct
2. The Lousiana Purchase.
Seller under duress
3. The purchase of Alaska.
Seller under duress
4. Funded the internet.
Correct
5. Put a man on the moon.
False, huge waste of money
6. Built the bomb to end WWII in Japan.
False, murdering 1/4 million civilians was not necessary to end WW2
7. Made student loans available to all qualified students.
False, distorts the market
8. Built the interstate system.
False
9. Deregulated the railroads.
Correcting previous mistakes and not done properly
10. Desegrated America.
Correcting previous mistakes and not done properly
The things the government does right are VERY few and far between.
President said: 'we're out of money
If the income of all Fortune 500 compaines combined .... we couldn't pay off the national debt for a total of 145 years. ... we have idiots in Washington DC
Gold is not a hedge against fiat currencies. The moment the price of gold rises to the point it interferes with world governments policy aims succeeding, they will make it criminal to own gold, except in nominal amounts for jewelry and numismatic purposes, and it will cease to be legal tender. FDR (and the USA) did in 1933. When that happens, the price of gold will quickly fall; anyone holding it on leverage will be wiped out, the rest sorely disappointed.
What are you talking about? Gold has ALWAYS been a storage against fiat currencies. ALWAYS. As far as FDR stealing it in 1933 less than 22% was ever turned in. We've been off a gold standard since 71 they won't go back on it and confiscate it. They are the paper aristocracy, they will expand "infinitely" as Greenspan stated 3 times in his speech at Belgium in 96.
"You have to choose between trusting to the natural stability of gold and the natural stability of the honesty an intelligence of the members of the Government. And, with due respect for these gentlemen, I advise you, as long as the capitalist system lasts, to vote for gold."
George Bernard Shaw
Oh, Doug, if only you weren't a contradiction in 3 sentences.
Obviously you wouldn't be able to tell the difference between Jesus and the Antichrist. Especially as Jesus said the meek will inherit the earth.
Your incoherent philosophy is disturbing at best.
And Mark N, your intentional disregarding of history is unduly (and probably unintentionally) pronounced. In other words, your pathetic attempt of revisionist history is transparent as hell. I hope for truth's sake that nobody takes what you write as reality.
Food, Watet Gold and most inmportant Guns and several thousand rounds of ammo. That is REAL security for what's going to happen soon!
One thing that our government got right.
1. The constitution of the United States.
2. The Lousiana Purchase.
3. The purchase of Alaska.
4. Funded the internet.
5. Put a man on the moon.
6. Built the bomb to end WWII in Japan.
7. Made student loans available to all qualified students.
8. Built the interstate system.
9. Deregulated the railroads.
10. Desegrated America.
The great, fearsome truth about macroeconomics is that imbalances, excesses and errors of policy ALWAYS, but ALWAYS correct themselves over time.
There's no escaping these corrections.
The price is inevitably vast dislocation, economic and industrial chaos, collapse of institutions and terrible human suffering.
Balance always returns, however inept our politicians and their economic advisors might be, and however much they get it wrong.
Do what you will with your money, it won't matter. This is not a train wreck because the conductor is asleep, this is a kamakazie dive by those that hold the reigns. They WANT the monetary system to collapse. That is the only way that they will be able to establish the one-world government they seek. It is not a conspiracy theory, Dr. Quigley in the 1970's protested that he thought that it should not be kept secret, and it isn't. Anyone with sense enough to read the CFR website can see that this is completely intentional.
They'll cast their gold and silver into the street (prophecied in the Bible)
The Antichrist will take from the rich and give to the poor, and like lemmings people will follow him.
Jesus is coming back soon
It�s a truth universally acknowledged by MOST normal people and those �in the know� � i.e. most financiers and Central bankers throughout world - but DENIED by a certain former Chancellor and former Bank of England Governor (Gordon Brown and Eddie George) for their own political and financial purposes, that gold is the ONLY true and �ideal� measure and store of true (labour and commodity) and thus contains a universal exchange value as a money-commodity.
That GB and EG do NOT accept the UNIVERSAL truth that gold is a true and ACCEPTED WORLD MONEY-commodity and thus contains ideal money-vale and commodity value and has established this ideal commodity-money form for over 5000 years!
Those who disregard and deny gold�s universal money-commodity-exchange value are those who would try to sell you worthless paper CDOs, junk bonds and toilet paper �funny money� and tell you it has �value�!
Paper money (i.o.u.s) and so-called �asset values� and paper �credit� are merely forms of �fictious capital� (Marx, Capital Vol I, II and III).
In sharp contrast �gold serves as an ideal measure of value, only because it has already, in the process of exchange, established itself as the money-commodity. Under the ideal measure of values there lurks the hard cash.�*
(*Marx, Capital Vol. 3)
WATCH OUT ! Conservatives, Republicans, Democrats (Real Ones Not The Social Democrats) banded together to severely slow the progress of health care. This served as a probing attack to gauge resistance on the roll out of all the new policies coming out in the next few years. The results surprised them and caused them pause but it did not deter them. They haven�t given up. They will continue on their path and the next step will be to push a further decline in the economy , the GLOBAL economy. Then once everyone throughout the world gets pissed and blames us THEY will blame the same Conservatives, Republicans, Democrats which offered up resistance as the reason. They will tell china that the �Teabaggers � (actually a deragtory sexual reference and they know it) are the ones holding up the works and why they cant be paid in time and the economy is failing. Basically because we wont Socialize, we are at fault. Interesting times ahead� WATCH OUT !
Some of the comments on this board are quite interesting. Others are downright illogical, naive, or simply wrong. A couple of points:
1. These problems all have a genesis in governments spending more than they take in, which, in turn, requires loans. In walk the wealthy who offer loans, which, of course, come with terms governments must then accept.
2. This entire bust has BEEN CAUSED BY GOVERNMENT. The private sector was only involved as a matter of government fiat. It was the US government that required banks to make bad loans to un-creditworthy people. It was then the government that, due to the bad loans, allowed the banks to create the securities to get the bad debt off the books (and had Fannie Mae and Freddie Mac buy billions to make this happen). The government then looked the other way as ratings organizations gave AAA's to securities wrapped with the government required bad paper/loans. So, don't give me this garbage about private banks being the problem, as without government interference and requirements, those private banks would not have fueled the bubble through bad paper.
3. What we have seen is what occurs when governments remove the organic checks and balances inherent in the capitalist system. In other words, this global recession should serve as notice of what occurs when government tries to pretend reality and market forces are unimportant, and do not apply to them.
This was nothing more than a government-created cycle, created by leftist politicians with the desire to buy votes and power through distribution of goodies and benefits, all to be paid for by someone else, at some later date.
We have seen this movie before, in the 1930's. The only thing that allowed world governments to pull out of that was war. What I am wondering is where the politicians will decide to send millions to die to solve this one. Mark my words, a crisis will have to be manufactured to create that scenario. And leftist politicians have proven they will do anything to continue buying votes and power. Lives do not matter to these "people".
G-Money, that has to be the stupidest and hollowest excuse I've ever read.
When losers like you are making the rounds for the banksters' defense, it is clear that the days of the blue-bloods are numbered.
In very small numbers....
If you think your poorly-paid and debt-saddled police and military pawns are going to continue to back you, you are not only stupid, but living in a complete fantasyland.
I sincerely hope you CAN'T deal with what the future brings.
A deflationary spiral is inevitable now, the only question is for how long and by how much will assets by artificially inflated beforehand. When it all crashes Gold will rise for awhile but eventually the deflation will rear its head there as well.
Sell the dollar and short equities in a deflationary spiral? This advice is so simplistic, misguided and poorly thought-out that any investor listening to it will end up losing their shorts (pun intended) and living out of a minivan. You sell dollars (paper) and buy money (assets) in an inflationary environment because your paper is losing it's value everyday due to lack of scarcity. As an example, the last eight years (the timeline is really longer) saw higher inflation and all assets went up in PRICE (i.e. homes, equities, commodities, etc.).
In a deflationary scenario, which they themselves forecast, you BUY dollars (ie. they even mention deleveraging "for years") and sell assets as their prices plummet across the board, commodities included. The reason is simple: paper is scarce.
What the world governments are ATTEMPTING to do is "paper over" the problem by spending. Japan tried it; it didn't work. The world will try it. Guess what? It won't work either. It's the equivalent of giving a dying patient a blood transfusion but ignoring the huge gash in the jugular. Expect a few lost decades. Deflation is the end game.
Everybody is over-thinking the problem. The core problem is USURY.
Lending AND borrowing with "interest" is sinful, yet most modern religious leaders ignore this cannon.
Popes, in the past, considered usury heresy. Jesus Christ became violent against the money-changers over usury. Plato, Aristotle - all considered USURY to be anti-social and detrimental to civilized society.
What happened??
"Thou shall not lend upon usury to thy brother."
Deuteronomy 23:19
Sell the dollar and short equities in a deflationary spiral? This advice is so simplistic, misguided and poorly thought-out that any investor listening to it will end up losing their shorts (pun intended) and living out of a minivan. You sell dollars (paper) and buy money (assets) in an inflationary environment because your paper is losing it's value everyday due to lack of scarcity. As an example, the last eight years (the timeline is really longer) saw higher inflation and all assets went up in PRICE (i.e. homes, equities, commodities, etc.).
In a deflationary scenario, which they themselves forecast, you BUY dollars (ie. they even mention deleveraging "for years") and sell assets as their prices plummet across the board, commodities included. The reason is simple: paper is scarce.
What the world governments are ATTEMPTING to do is "paper over" the problem by spending. Japan tried it; it didn't work. The world will try it. Guess what? It won't work either. It's the equivalent of giving a dying patient a blood transfusion but ignoring the huge gash in the jugular. Expect a few lost decades. Deflation is the end game.
After reading all those comments I still believe that governments are perfectly able to sustain higher levels of national debt. Remember that for example the United States does not have a nation-wide value added tax as is common in Europe. Also, fuel taxes are far below German or British levels. There is plenty of scope to increase taxation without really hurting the American people. Do not get me wrong, I am not a socialist, but if needed the state has the resources to pay for higher debt.
It can also choose the Weimar approach by printing money and inflating the debt away. The central simply prints money and hands it over to the government, which then pays off its debtor and/or uses the money for investive purposes (such as rebuilding the physical infrastructure). So, there is actually no need at all to expand credit markets or force banks to lend to consumers and businesses.
Of course, such a harsh course would be the ruin of the middle classes (and that is why the impoverished German middle class voted for Hitler). But a middle road can sureley be found. As I know, the British state had a debt level of 200% of GDP when WW2 finished. And they managed to pay down a significant part of it, despite the incompetence of most British politicians.
@James Smith.
You offer little in term of a root-cause analysis.
The closest I got to a consensus reading your post was that the little man and his abuse of his creditcard was to blame.
I wonder why bankers are still bombarding my household with utterly pointless applications for creditcards that I have no use of. Thsi even include what I used to think were reputable British banks.
As to whether bankers are to fault, please explain this.
Did the banks not themselves introduce practices of leveraging that effectively made them vulnerable for any significant market hick-up? Had banking not ceased to function, if not governments had injected trillions of dollars globally, all this due to bankers strategic decisions on how to run their businesses?
Blaming lack of regulation is too far-fetched. The fact there's no speed camera doesnt make speeding neither legal, nor an acceptable practice.
Therefore bankers are definitely to fault, however they were contributory to the size of the meltdown. The other factor clearly is the incredibly unhealthy relationship the western world is growing with China. Excessive amounts of western capital is queing up to grow China even further, and that's imho the last thing we need at the present time. Bankers (as it could be expected) is of course heavily involved in this export of Western capital into the emerging markets.
Your post to me indicates a lack of a moral compass, that to me indicate you yourself must be active within banking.
And then there's the rumors of tungsten-salted gold being held by central banks around the world. Perhaps gold won't be the safe haven after all. This is why people like Jim Rogers are advocating physical gold, rather than ETFs.
I am NOT buying gold--as was pointed out by many commenters, gold is intrinsically almost worthless.
I am buying farm land, structures, and forests. Soon I might start stocking up on long-life comestibles fuel, and wholesale liquor (to sell AND imbibe!)
This "idea" that a money system needs to be based on debt and "loaned money at interest" is absurd. A money system would work just fine with usury outlawed. In that scenerio, it would work just like the stock market: when a lender makes a loan to a borrower the lender gets some "stock" in the profits that the borrower generates from that money. That way both lender and borrower take some of the risk. The current system is "riskless" on the side of the bankers.
Welcome to the N.W.O.!!!!
This has been planned for a long, long time... they were just waiting on the right "CRISIS" to implement their world plan!!!
"The Creature from Jekyll Island" by Edward G Griffin
the word "criminal" doesnt even BEGIN to describe these reptiles.
Alan @ 4:55 touches on what is largely the truth.
The fact of the matter is that private entities control the economies of nations by having the power to create money through the issuance of credit.
The solution is to have governments issue the credit necessary for an economy to operate and expand. Governments can operate on the profits made on the interest collected on the loans they issue thus eliminating all taxes at all levels.
Private banking should be abolished and made completely illegal just as slavery was.
The gold at Fort Knox is owned by the Federal Reserve. It was paid by the Treasury as interest on our National Debt (to the Fed). We can't monetize it because it is now privately owned.
Great article.
Massive fiat money (and ever green expansive fiscal policies) will balloon very soon public debts worldwide and at the same time will have effects on reducing private debt only in the long term.
Very interesting point about the fact that Japan,in its efforts to contrast the asset bubble�s collapse,could count on a robust global economy (sure driven by an increasing private debt worldwide).
This time instead Japan and many other countries won�t be able to do that once again.
Maybe Japan�s past story,a benchmark at the moment,in the years to come will be seen as a great success compared to what will occur to other countries.
Moreover,in my opinion,very soon it will arise the problem about who will purchase all this huge mass of government bonds in the world.
I think many countries will be obliged to finance their structural deficits and debts at higher interests rates while others might default on them.
I don�t know what is more desiderable between a default/collapse or several lost decades.
For the moment Shinkansen is bringing its country straight to both of them.
Another option
(let deleveraging and deflation go on),and seeing if it�s really (both economically and socially) the most painful choice, it�s not given.
The reason the world adopted fiat money is that gold can not be loaned.
Compound interest increases exponentially, but gold production only increases linearly. Debt based on gold *must* inevitably default.
That is why the world experienced panics every 20 years or so when currencies were pegged to gold. The aggregate debt was defaulted because there was insufficient gold to pay the accumulated interest.
The flip side is that fiat money can be created too quickly, which is the current case. It takes extraordinary judgment and integrity to correctly manage fiat money. Only Ronald Reagan could accomplish it.
The answer is simple... evolution. We must seek self-sufficiency and information sharing. Debt is a fiction. There are just as much resources on Earth now as there was 100 years ago... money is as valuable as the world decides.
Do away with the monetary exchange and dependencies and replace it with self-sufficiency and information sharing. We all share a similar self-interested goal... and that is not "jobs" and "money".
Guido. Lots of tough guy talk, a long winded scenario and all of it spoonfed "I'm the victim" garbage.
Here's how its NOT bankers fault.
BANKERS USE YOUR MONEY. Banks don't have their own money. The money they make, spend, loan, and borrow starts with YOUR money. In other words everything they do is FUNDED BY YOU. So if you didn't or don't approve of what they are doing, you can take your money out and do something else with it. But you and many others were too lazy to do that. Instead you took $500k loans to buy overpriced houses, and when the reality of your stupidity hit you you called it "Predatory Lending". I bet the gazelles on National Geographic wish those lions chasing them were this type of "predator".
I have a savings account with Bank of America. They pay like .000000000000001% interest per decade. I decided that was unacceptable, so I took my money out and bought Bank of America STOCK, which doubled in 6 weeks. That is but one example of the upside that comes with TAKING CONTROL OF YOUR FINANCES. You are free to do it, it is legal, and nobody can victimize you when YOU own THEM. Since you have claimed yourself to be so much smarter than the rest of us, maybe you can explain how a bank can victimize me when I have no money in any accounts with them AND own their stock, complete with the right to vote on all their business decisions. Their stock may tank, and I may lose money, but it is the direct result of MY decisions making not anyone else's. On the flip side this type of control is not afforded to you when you take 100% mortgages to buy into a bubble market and lose your shirt. This is giving away control of your finances and if you're stupid enough to do it the outcome IS 100,000% YOUR OWN FAULT.
And since this is precisely what every one has done, it is no surprise that the global financial system is in ruins. But the blame belongs equally on everyone.
Want to be pissed about something? Be pissed about the fact that when the dust settles, the same people will return to wealth by the same means. Because despite your dimwitted view of how it works and who is in charge, you are not required to be in debt, waste our money on overpriced garbage, or be crapped on by commercial banks. You CHOOSE TO DO THIS. And therefore YOU own the consequences. But you are not a victim just because someone else made better choices....
The latest rumour is that the gols stocks of the US (and others) are actually gold plated tungsten bars.
If true, the price of gold will go the same way as the rest of the market.
Is there a safe haven?
Guido, I agree with you, and your charts illustrating the inherent problems with fiat currency are excellent.
However clever the fiat money construct is, it ALWAYS ultimately fails. I challenge anyone to name one that has not. So too will the Dollar; maybe not this week or next, but ultimately the Dollar as it is currently minted cannot sustain. In the medium term, its only salvation will be awful inflation.
Fiat failure is because of human greed, usually exercised at government level, as has been clearly expressed here below by others.
Hold on here one damn minute! Do all of you actually think those "central planners" would create a financial-mega-crisis?Opppps----sooooo sorry,did I leave out those diabolical "Central Bankers"-locked in with Central Governments?Lets remember their mantra,which is:"The Crime that pays-is the Crime that stays"! Isn't it remarkable how easily they do it all in plain view,and do it globally,all at the same time? Thats simply amazing isn;t it?
The very people who caused these problems, will propose their "solution": A single world currency and the defacto demise of nation states. Can anyone say "World Government"?
James Smith - Right on!!! Nothing else needs to be said except that the tribunals for Fed Chiefs should begin right after the collapse.
James Smith is at best naive and has little or no understanding of the history of money and the so-called Money Power.
The fact that the great majority of people who work at banks are just job slaves is irrelevant. It is the few at the top - especially the big members of the major banking families of Europe - that matter.
The major money changers have no loyalty to any country and if they see greener pastures will move on to whichever the most favourable host is.
The power battle between the money changers and their opponents that dominated American politics from the mid-18th century until 1913 has been written out of the history books - by the money changers network.
We need some intelligent debate about how best to create money. There are many alternatives most of which could run parallel to each other. The current system is absurd and must go before it completely collapses under a mountain of debt that has been created primarily by the commercial banks.
Nationalise the CAYMAN ISLANDS...more yachts berthed there than either MONACO or CANNES.
And arrest all those sleazy hedge fund managers...raiders of the lost arc..formerly known as our banks.
There is no conspiracy. there is no rat 'mal' . There is mis-management and management. Of course some people try to manipulate markets but generally this fails. Bubbles blow, bubbles burst. And really governments including the UK and US have failed to govern. What caused current issues we have now is well documented but really ballooned when Clinton signed off documentation allowing insured CDSs to get out of control. The current crisis was inevitable caused by every man and his dog wanting to get in on the act including every property owner in the world who was was chuffed to bits on how their investment had risen in value. Politicians failed, Supervisory bodies failed, The bankers failed and the people failed to control their greed because almost everyone had vested interests. People lobbied hard from web platforms for years (such as housepricecrash.co.uk - including me) which had many threads on the current predictable mess, not necessarily about houses BTW. People simply didn't want to hear. We are all to blame. In the end all we could do was protect our own investments as best you could and wait for everything to kick off.
Which it did. Sadly the incompetence is not over . The general populous has become less greedy but huge problems still exist systemically. The bankers such as GS still make money because thats what they do. They are though no more to blame than anyone else. It is the job of government to bring everything back under control. They have not done so yet. Hence this article.
James Smith is taking it really hard and making it personal
For someone riling about the �lack of education� of the general public, your feeble command of written English and your appalling misuse of punctuation along with your presumptuous attitude paints a fairly clear picture of what type of person you might be. If you are a banker or a finance professional, it is all too clear that you are obviously (and I dare say, all too expectedly) unable or unwilling to edify yourself to any appreciable degree that would allow you to make intelligible conversation at a cocktail party for bored trophy wives.
But insults aside I must admit that the majority of bankers do not earn exceptional salaries. I also freely admit that the majority do no wield much power.
However, purely as a matter of professional ethics, it is dismaying to see that the vast majority of finance �professionals� are criminally unaware of the context their industry operates in.
Fiat money is a fantastic construct and, if used properly, would allow us to modulate and moderate the economic and business cycles so as to mitigate the consequences of the natural ebb and flow of the economy. However, as is the case for most human endeavors, the efficiency of a system is directly proportional to the degree of fiduciary duty of the guardians of the system.
Today, the bankers or finance professionals that can state with any degree of certitude what kind of monetary system we are on, are few and far between. That is a shocking lack of fiduciary duty and gross disregard of ethics. It is incumbent on the professionals working in the fields of economy and finance to be aware of the context they operate in and, eventually, to take a stand if things seem amiss.
Why is it that in an ostensibly democratic context the choice and management of the monetary system should fall outside the democratic process? Furthermore, why is it that in a democracy the government should retain the power to set interest rates?
One of the characteristics of democratic societies is the decentralization of power. Why is the management of the money supply and of the interest rate are kept under one roof?
Does the following graph appear to you to portray the effects of rational and reasoned policy that is independent of political influence?
http://research.stlouisfed.org/fred2/series/WGS10YR
Do you know what a fiat monetary system is, how it is supposed to work and what the consequences of mismanaging fiat money may be? Can you recall any historic examples?
If you can, how can you say that bankers are not to blame? More to the point; how can you say central bankers are not to be blamed?
Where can I obtain a copy of this report ?
There is no conspiracy behind this mess. This was brought about by the absolute stupidity of human beings powered by short-sited greed, narcissism, and entitlement. Governments are just people, often the most stupid, who could never put together an intricate plot, have all the parts come together perfectly, and then keep it a secret. The US and English govt's couldn't build a tuna fish sandwhich without totally screwing it up, having it come in at less than 10x estimate, and the secret never getting out.
The poster that said you can't tweak your way out of this mess is absolutely right. This mess we have gotten ourselves into cannot be fixed by pulling some levers, pressing some buttons and turning some knobs. Financial wizardry will not get us out and we'll have to suffer through it the hard way. True, there are dark days ahead. But what and how it will all come down on our heads is a mystery for speculation.
I think SocGen's suggestions for wealth preservation are erroneous since those vehicles will: 1. Keep your money out of your hands and you may never get it back through unfair laws yet to be created, 2. Your money is still denominated in the currency that is failing.
Sure, there is silver and gold, but there are also the items that will be sought after during a global economic collapse that should be considered for "investment." Start thinking about all the items you would need to survive and prosper in a world like SocGen and many, many others predict because your neighbors and fellow citizens will need those items as well. Stock up, and profit in the barter.
Further, read FerFal's blog, Surviving Argentina, for great insight on what happened there.
The problem with a blue-blood apologist like James Smith is that banks at one time, several decades ago, DID actually provide a quality service without excessive parasitism, only due to regulations. As they were dismantled, the moral bankers got washed away by the criminals, and subsequently we are stuck with all banks being run by greedy immoral bastards. Philip Augar has identified that perfectly several years ago in his book 'The Death of Gentlemanly Capitalism'. All the moral and good bankers are gone.
At this stage of over-corruption, the defense of the modern bankers is a pathetic apology for which there is no legitimacy. The system has proven Karl Marx 100% correct in his predictions of where capitalism would take us.
Banks and insurers MUST be entirely state-run. They are the preferred source of the illicit rent-seeking goals of the elites. And they have become entirely parasitic in their natures.
The misuse of the very moral Adam Smith to defend simple greed is one of the biggest injustices in all modern propaganda; and that is quite something considering how prominent propaganda is right now. Wen Jiabao was seen recently reading 'The Theory of Moral Sentiments', I wonder how many modern bankers have read or even know of that masterpiece.
Production is the only way to create wealth and true sustainable growth. The Banksters are parasites into that wealth creation.
Defense of the parasites is idiotic, and highly suspect. I'm with Mal. And I'm much smarter than James Smith.
Just read Harry S. Dent's latest book. The economic future is laid bare chart by chart. 2010 - 2013 will be a disaster. 2014 - 2023 is flat. The economy gets back to real growth only when the eco-boom population reaches their 40s in the 2020s.
Gregory - You're not factoring in inflation. I was looking at a chart and factoring in inflation, we're at 1966 levels which is approximately 600. This is nowhere near 90x the 1945 DJIA.
HOGWASH...The world is as flush as we want it to be...the problem is the world's billionaires and upper crust are successfully cornering every ounce of every commodity.
We can move to more equitable distribution now or face the coming revolt.
J Smith-
But don't those responsible for creating and maintaining the gargantuan unregulated derivatives market bear much responsibility? There is plenty of blame to go around -- central bankers, regulatory agencies, ratings agencies, politicians, and esp. banks that once served a "gate-keeper" function in providing loans and credit lines. It's not entirely fair to blame the consumer. Although the power institutions would like for us to blame ourselves and go back to sleep so they can rob us again by spending our grandchildren's money.
Sheeple work for penny.
The smart print money.
Simple. The debt-fed welfare state is dying rather quickly, and the Marxist wolvess who remain in power hiding in "liberal" and "moderate" sheeps' clothing have no idea what to do, because there is ONLY one thing to do nationally. Stop the welfare cycle, individual and corporate. Pare away the tax burden and allow individuals and companies to compete with one goal, to keep more of what they win. Those who will not produce will be angry, but so what? They are angry now.
It's incredible the way central banks and governments keep thinking "if we just tweak this everything will be OK". They haven't yet come to grips with the fact that it's their constant "tweaking" and meddling and interference that has caused all of these problems.
Although some people have speculated about gross deflation in housing and other hard-asset prices, there's no way that these debt-ridden governments will allow deflation...it will make their debt that much more expensive in real terms.
What would happen if the the US defaulted on its debt and said to all it debt holders to "kick rocks". Is that an option?
I couldnt agree more with James Smith below - finally someone who has some common sense and intelligence. Were we to have more James Smiths and less Mals, we would bet in a much better place. JS
It's not higher math.
Simple arithmetic calculates the demise of the dollar from 1933 to now. From $20 to $1,140, that works out to .018.
My guess is ultimately 0.0001 and the Dow will be bought with 1 0z of gold.
Cheers,
b
With regards to Mal and others once again scare-mongering the public and laying the blame for the current crisis at the doorstep of the bankers: please spend a day or two actually educating yourselves about basic economics and the role of the vast majority of bankers worldwide � preferably actually read the SocGen report. To get you started�
It is exactly the very same ignorance which casts �inter-bank [sic] transfers� as suspicious and blames the economic mess on a group of �criminals�, which is itself the cause of most of today�s financial problems: lack of education leading to over-consumption and obscene personal debt:savings ratios.
FYI interbank transfers merely refers to continual restribution of any asset amongst the large investment banks and related funds / institutions in what is called the �market� [yes � this is the level of financial know-how we have stooped to]. These assets could be anything from equity to debt to commodities etc. Unless you personally have �5billion to spend on gold Mal, I think it requires purchases on an institutional level to allow transactions of this nature to take place. Risk is then mitigated / increased through the selling / buying of these assets or related securities.
The �create-money-outta-thin-air-and-charge-interest-on-it crime syndicate� which you speak of I guess refers to the BOE or similar institution abroad and the money-supply. If u were to constantly print money (called remonetarization by the way) then u wouldn�t get �gyrations� of �inflation and deflation� � which is what u do have now � but one way inflation / hyperinflation.
The majority of bankers do not earn exceptional salaries or bonuses, do not wield much power (a majority of people having power is logically false), and as much to do with trading CDS, CDOs etc as your milkman. Nor are they �criminals� nor do they know �criminals�. A sustained recovery in financial markets required policy on a government level � but it is personal responsibility from the credit card holder, the homeowner, the journalist to the banker which can allow us to avoid this catastrophe again. None of which I see you demonstrating by pointing the finger of blame with truculent confidence at others with your definitive paper on liquidity in the gold market and Australian journalism (not).
Neither I, nor anyone with a hint of intelligence would want you to �wrest control of global money supply from private hands� (suddenly �private� and not institutional as five lines above): the �rat� is in fact you, and the desire to broadcast your armchair-economics, informed by careful reading of the Daily Sport. The only privilege that is being abused here is the freedom of speech which you enjoy � clearly more than most. As for your views on the true purpose of money, kindly spare us � thanks.
Mike Wilson: London house prices are just another manifestation of an unsustainable bubble, supported in this case by the BoE's generous �4000-for-every-man-woman-and-child bailout of the busted financial services structure. Don't hold your breath that such rises are for the long term.
FactFinder: if short term is over the next 6-12 months, I would say 75%.
JR Smith: You can't avoid the demographic time-bomb. You might tinker at the edges, but eventually people will retire and there simply aren't enough young people to support the burden. You can't just raise the retirement age indefinitely.
Fred C Dobbs, I think you are incorrect!
Why should the price of gold fall if the government confiscated it as FDR did in 1933? Actually, he INCREASED the price from $20.67 to $35 per ounce soon afterwards, after he stole it from the people. Anyway why should we care what its price is if the gov't has already confiscated it?! That will be their problem! Having stolen it they would want to maximise its value to allow them to print as much money against it as possible. Revaluing gold from $20.67 to $35 allowed FDR to raise the money supply by about 70%, potentially.
Anyway, gold is not meaningful legal tender anywhere. Sure, a Sovereign is a �1 coin but it's worth �150 so who will spend it as �1 anyway? No-one. Until 1933 it was issues d coinage. There would be meagre amounts of gold to confiscate in the USA or UK these days. No-one has any. Even the great unwashed public are handing in their last bits of broken gold necklaces at booths in shopping malls these days. What are the powers that be going to do? Invade India and China to nick the gold back from all the citizens there? Errr, nope.
About the only comforting thing with this is that there are switched on people only too aware (on this site and others like Market Oracle and housepricecrash.co.uk) of the potential nightmares being forced upon us and stored up for the coming years. Nightmares that governments, banks etc would rather we not know about.
What it needs is for this kind of frank discussion to be in the mainstream TV.
We cannot continue to be lied to like this whilst the biggest money heist in history takes place.
Yet in London house prices continue their meteoric rise. Estate agents have sold everything that was sticking during 2008 and early 2009.
Restaurants and pubs in my local town are full to bursting at weekends.
Yet we're, apparently, on the verge of some sort of systemic collapse.
Funny old world.
Guys, what's your take on the probabillity of another bubble burst short-term as SocGen is suggesting ?
The "Buy No-Pay Later" scheme started in the 1960's. Later has arrived.
Since 1945 the stock market has created a giant tsunami financial wave. The DJ index has swelled from 125 to 13900 (2007) then down to 6600 (March 2009) and now back to 10400. At 10400 it is trading at about 90X its 1945 value. It seems that there is something wrong as the US economy has not expanded its size 90X in this period.
Governments and central banks are pulling out all the stops to prevent a massive correction from happening and whether they succeed not remains to be seen.
The odds appear to be stacked against them.
Should this house of cards begin to fall apart then there is potenial for the DJ to fall below 4500 and to an extreme of 2500.
There is no means of avoiding the final collapse of a boom brought about by credit expansion. The alternative is only whether the crisis should come sooner as the result of a voluntary abandonment of further credit expansion, or later as a final and total catastrophe of the currency system involved.
LUDWIG VON MISES
Hey I'm no economist, but here goes.
Does anybody remember the GOLD SALES back in the nineties? Something odd about it at the time I remember - the Aussie propaganda machine kept using the words SALE, SOLD, SELLING etc., but not a word about BUYING (anybody, was this same line taken in other countries as well? I bet it was!). Well SOMEBODY must have bought all those tonnes that were being disgorged from central banks all around the world (@ $250 an ounce I think or somewhere in that vicinity).
After doing a little digging at the time I heard tell that it was "inter-bank transfers". Hmmm.
Could this have been in preparation for the crisis we are facing now - the planned crisis? I smell a rat. In fact I smell a new gold-backed global rat under control of the same crime bosses that caused this S H one T in the first place!
Until we wrest control of global money supply from private hands (the create-money-outta-thin-air-and-charge-interest-on-it crime syndicate) then we will always be at the mercy of the power wielded by planned gyrations between inflation and deflation.
An abuse of privilege and a perversion of the true purpose of money.
I think Tim Williams 11.10 might be right.
John
Check out Rev 3. 16:18 reference to gold.
These predictions are based on the erroneous assumptions that economies and politics are static. When in fact they are fluid entities.
Billions of Baby Boomers retiring ....well no with a sweep of the legislative pen the retiring age is increased. Superannuation is changed / taxed or in some other way tweaked.
Sooner or later sovereign governments are going to have to haul in the hedge funds and speculators. Either through a tatxation regime or legislative regime either will suffice....unemployment is neither good for governments or business.
To: Ismail @10:50
The capacity to induce inflation is predicated on the ability to expand credit markets. If despite galactic printing and QE credit markets, for whatever reason, don't cooperate then government is pushing on the proverbial string.
Are credit markets expanding?
http://research.stlouisfed.org/fred2/graph/?chart_type=line&s[1][id]=TOTBKCR&s[1][transformation]=pc1
Some thoughts on the fiat monetary system.
http://guidoromero.wordpress.com/2009/11/07/the-utility-of-a-fiat-monetary-system/
Oh dear, difficult to see through the fog. Just keep trading lads, that drives our commission.................we will be alright.....we are the experts, I don't think......sad isn't it.....the we want higher returns says the Mr 10%ers....they drove the banks to take the risks they did. This is where the problem is.....
Spot on, mostly.
No question about the forthcoming depression. If in any doubt, read Harry Dent's recent book which uses global demographics to explain why we are living in a fool's paradise right now, and why Japan's lost decade (14 years actually) happened, apparently against the odds.
70 million baby boom Americans are due to retire over the next 10 years. They will move from being productive, tax-paying contributors, to an ageing drain on growth - they will withdraw what assets they have from equities to provide income and the ratio of workers to dependents will worsen dramatically. The same is true in Europe.
Keynesianism has been taken to ridiculous extremes by western governments over the past 12 months. You cannot grow simply by printing yet more money.
In the short term (say 12 months) we will see collapsing commodity and asset prices (equities, housing, gold and oil) and a resurgence in the RELATIVE value of the Dollar as investors turn to "safety" in the light of collapsing equities. Stock markets will test the March 2009 lows (and some!). Be prepared.
Then, a year or so from now, all that money that's sloshing around will re-awaken fears of inflation. That's when gold, precious metals and oil will increase in value parabolically.
Watch out below.
I wonder though how things might look like if the Fed and other central banks introduce a moderate inflation rate of say 3-4%. Assuming that the US economy is still able to grow by 2% in real terms (1% for EU and Japan each) then we would have a nominal growth rate of 5-6% (3% for EU/Japan). This might just be enough to erode debt to a more sustainable level. If the US economy is worth $15 trillion (as is the EU) then in 5 years it would have grown to $20 trillion. Currently national debt in the US is $12 trillion (=80% of GDP), so it could safely grow to another $16 trillion without worsening the debt ratio. The extra $4 trillion of debt would be the fiscal stimulus required to help the economy grow.
In a second 5-year period the US could then embark on a low debt trajectory, whereby debt levels are growing slower than the inflation rate (ie in relative terms declining).
It is pretty obvious that the Fed is following this policy at the moment. And to be honest, what else could it do anyhow?
If you want my investment advice, The Wizard of Oz in the 1.10 at Huntingdon looks a sound prospect.
At least I know of what I speak unlike a good 90% of the the wide boys in the City!
want a rough idea of "how it'll be"..????
have a look at :
http://www.silverbearcafe.com/private/10.08/tshtf1.html
you might have a clear view of what must be a "survival kit"..!!
Yet in London house prices continue their meteoric rise. Estate agents have sold everything that was sticking during 2008 and early 2009.
Restaurants and pubs in my local town are full to bursting at weekends.
Yet we're, apparently, on the verge of some sort of systemic collapse.
Funny old world.
Gold is not save investment anymore, because now gold is just paper. The gold market today is many times bigger than the actual stock of gold. Just the same as with paper money. There is much more money on the market then the actual value behind it. That gives us inflation. We have much more serious financial crises then most of us understand. And part of the problem is that governments are not ready to deal with the real problems. They just think that spending a little money here and a bit more there will make everything ok again. But we have reached a point where this can not be a long term solution. In best case it can give us a few relaxing years until everything collapses again.
Methinks that maybe we are at the point when we need to take heed of more reliable advise:
"Fallen! Fallen is Babylon the Great!
She has become a home for demons and a haunt for every evil spirit, a haunt for every unclean and detestable bird.
For all the nations have drunk the maddening wine of her adulteries.
The kings of the earth committed adultery with her, and the merchants of the earth grew rich from her excessive luxuries."
Then I heard another voice from heaven say:
"Come out of her, my people, so that you will not share in her sins, so that you will not receive any of her plagues; for her sins are piled up to heaven, and God has remembered her crimes.
Give back to her as she has given; pay her back double for what she has done.
Mix her a double portion from her own cup.
Give her as much torture and grief as the glory and luxury she gave herself.
In her heart she boasts, 'I sit as queen; I am not a widow, and I will never mourn.'
Therefore in one day her plagues will overtake her: death, mourning and famine.
She will be consumed by fire, for mighty is the Lord God who judges her.
So Bilbo is correct, except crawling back into your hole will not save you.
Revelations 18.
There's only one answer to that problem.
John 3:16
No need to worry. It won't affect football! That is what we were told a year ago.
Gold confiscation is a possibility but it depends on what the big time insiders have in mind. If the whole world did it gold would be worthless.
In the event of utter fiat money collapse why would central banks and very big time investors destroy the only thing of value they hold?
The fiat money game is up perhaps central banks understand this, the top .2% might understand this and when the rest are wiped out they are kings. It is not as straight forward as some people imagine.
We none of us know but I am taking no promises states have made too many. There is little doubt paper will continue to loose value.
Currency debasement is a different form of inflation than supply and demand induced. The former I would say is inevitable trust is vital for equity.
High unemployment, less gov expenses, waste of money into the financial system and new taxes on the public will without doubt give us new wave of econimical collapse all over the world. The Brits have said 2 days ago that they are going to pay back public debt by 50% in 4 years. That means higher taxes and more unemploymet and more crisis for Britain. The main problem is that the financial market is not serving anything anymore except itself. It is basically like a vampire, sucking all the blood from the central banks and governments and leaving them financial dead. The only way out of this situation is to attach the vampires by new rules and regulation.
Until then, lets hope for the best and be prepared for the worst.
I suppose a collapse is possible, and that would be bad enough. What would follow would be infinitely worse.
I have read that the toxic debt is unknown though falls between 486 trillion dollars and 636 trillion dollars: No idea how these figures have been reached, though the author is a renkowned authority.
I am told that some 28 Trillion or thereabouts has been loaded onto the Public Tax Mule, who is by now virtually unable to walk so that the Oligarchs do not have to bear any personal loss. Sounds almost like Russia from Yeltsin to the post cold war collapse of the Berlin wall.
In the first place the wealth transfer to the banks was a huge mistake or a deadly policy according to who you believe. Because, in the second place the extra burdens pushed onto the public mule by our out of control politicians have destroyed spending and cancelled out confidence in Government as well as banks and the financial world generally. The sharks are already pumping up new bubbles in gold and commodities as an alternative to fraudulent financial products. The rising costs in energy are Greed plus over speculation by investors determined to profit ecessively from the public mule. Ambrose, self control, indeed any control is missing. Corporatist governments lay helpless as rampant greed tears the west to pieces. As well greed we have policy. Policy set by the Central Banks. There is your enemy, right there. Central banks and the issuance of money MUST be returned to public control. Not government control, as governments are private corporations. If this is done: And it can be done, then things will automatically improve,as rule by Oligarchs crumbles.
The thing is, all of this will pale into insignificance when people realise we don't have the oil required to feed large scale agri-business and sustain the current population levels anymore without a paradigm shift in food production (i.e. a move to small scale, localised "permaculture"). Knackered economy, big deal! Food shortages, now we're talking! Seems crazy to me that we've got record unemployment yet a food production system begging for thousand of new hands to avert a major supply catastrophe. Look for recent articles about the IEA whistle-blowers if in doubt about the oil situation! Search for the website peek food. Start joining the dots! We need to nationalise housing, eschew interest bearing "money" to be replaced with tight knit barter systems (see Richard Dowthwaite's "Short Circuit" (free to read online!)). We need to rebuild the social support networks (i.e. communities) which used to provide the help and support we needed before it was replaced with a thousand private companies all skimming profits out of every aspect of life. We're about to reap what we've been collectively sowing for the last many decades. Unless people revert to being people, not consumers, we've had it. People need people, not packaged crap. Get yourself a copy of Dimitri Orlov's "Reinventing Collapse". That should help the mind's eye focus on what is in store and how out selfish system of "screw you" individualism is so unprepared to cope. The economy is over. We can waste time worrying about how to fix it or we can simultaneously start to build our alternatives. I bid you good day.
As for the comment below about pandering to single mums and beer swilling teenager - we're all responsible for allowing the Tesco-isation of the UK thats knackered communities and meaningful employment. So don't sit there berating the symptoms / victims without sparing a thought as to how we got here and who's actions contributed. I'd ask anyone who wants to have a go at society's "losers" to spend a 2 month "all expenses not paid" holiday in Leeds' Seacroft and see how things look from that side of the fence.
The thing is, all of this will pale into insignificance when people
realise we don't have the oil required to feed large scale
agri-business and sustain the current population levels anymore
without a paradigm shift in food production (i.e. a move to small
scale, localised "permaculture"). Knackered economy, big deal! Food
shortages, now we're talking! Seems crazy to me that we've got record
unemployment yet a food production system begging for thousand of new
hands to avert a major supply catastrophe. Look for recent articles
about the IEA whistle-blowers if in doubt about the oil situation!
Search for the website peek food. Start joining the dots! We need to
nationalise housing, eschew interest bearing "money" to be replaced
with tight knit barter systems (see Richard Dowthwaite's "Short
Circuit" (free to read online!)). We need to rebuild the social
support networks (i.e. communities) which used to provide the help and
support we needed before it was replaced with a thousand private
companies all skimming profits out of every aspect of life. We're
about to reap what we've been collectively sowing for the last many
decades. Unless people revert to being people, not consumers, we've
had it. People need people, not packaged crap. Get yourself a copy of
Dimitri Orlov's "Reinventing Collapse". That should help the mind's
eye focus on what is in store and how out selfish system of "screw
you" individualism is so unprepared to cope. The economy is over. We
can waste time worrying about how to fix it or we can simultaneously
start to build our alternatives. I bid you good day.
As for the comment below about pandering to single mums and beer
swilling teenager - we're all responsible for allowing the
Tesco-isation of the UK thats knackered communities and meaningful
employment. So don't sit there berating the symptoms / victims without
sparing a thought as to how we got here and who's actions contributed.
I'd ask anyone who wants to have a go at society's "losers" to spend a
2 month "all expenses not paid" holiday in Leeds' Seacroft and see how
things look from that side of the fence.
I don't recall soc gen seeing the current crises coming. They had there snouts in the trough with the rest of them.
God bless the american consumer!!!. The world needs him/her more now more than ever!!..Please default on your debt, get a new currency and consume your way to glory while the rest of the world gets busy feeding you...the rest of the world needs its jobs to feed their families too you know!!! Please wake up and pile on the pounds once again..pls pretty please.
"SocGen advises bears to sell the dollar"
One interesting scenario that SocGen has failed to explore is the possibility that the American people, in extremis, will walk away from the colossal debt burden that the profligacy of countless past generations have inflicted on them.
As President I would be seriously war-gaming that scenario.
Imagine the power of an America, with all its vast natural assets, industrial base, technological superiority and entrepreurial people, starting afresh with a New Dollar?
Who would not want to forgive the default and pile into the New Dollar?
We would be talking about an American Renaissance.
Do not, under any circumstances, write America off.
If you want a home for your money, wait until the end of 2010 (the US property market has further to fall) and then buy a vacation property or two in a nice location in Florida.
On the theme of inflation. Will this inflate away my mortgage with the bank and cause wage inflation to cover the cost or will it be one sided as in stagflation, which I believe is massive price inflation with zero, no, or negative wage inflation (which really would cause me to become uncomfortable). I'm not a recent house owner, far from it, but I really don't want interest rates to rise as they did in the early 90's.
Where do people see this going. This is a serious question from someone who is generally concerned and extreme,y wet behind the ears regarding economics.
This is absurd - The world's monetary system is broken. Why don't we have more discussion about debt-free money solutions such as those advocated by prospertyuk and the American monetary institute? We're all in debt to bankers because of our credit money system. We need to have government issue money and spend it directly into circulation instead of having it created by a the private banking system. Economists and bankers are to blame.
For Bilbo Baggins:
"So what should I do, where should I hide until this is over. Back in my Burrow?"
Dead right, Bilbo.
Only burrowing rodents survive Ice Ages.
One thing we can be sure of - 2010 will be a brute of a year.
In Britain we can count on higher taxes of all kinds, higher interest rates, slashed government expenditure, the ending of QE and possibly even controls on capital movement.
The price of property will continue to plummet (it is still at unaffordable bubble levels), unemployment will rise inexorably (4 million is an easy traget), personal expenditure will plunge as people tighten their belts and save as best they can.
Liam Halligan nailed the shape of the economic cycle when he memorably called it "bath-shaped".
Fasten your seat-belts, folks, we are in for the bumpiest of rides.
Stock market bulls are living in Cloudcuckooland.
That happy little visit to the casino is over.
What's that biting?
Reality.
For Fred C.Dobbs:
"Gold is not a hedge against fiat currencies. The moment the price of gold rises to the point it interferes with world governments policy aims succeeding, they will make it criminal to own gold, except in nominal amounts for jewelry and numismatic purposes, and it will cease to be legal tender. FDR (and the USA) did in 1933. When that happens, the price of gold will quickly fall; anyone holding it on leverage will be wiped out, the rest sorely disappointed"
Absolutely right, Fred.
FDR in 1933 demonstrated the unique power of the state to do whatever it likes in an emergency.
Gold is just a pretty, heavy, almost entirely useless metal if you can't trade in it.
Bilbo Baggins will not find any safe havens.
I have been where he is twice in the past 15 years and each time my financial comfort zone was destroyed by the good old UK method of inflation first and devaluation second.
So, I can claim to have been shafted by both a Tory and a nulav government. (Fat man Lamont & chicken brun).
We survive now because we have some � income which does not get up and "I may be some time" exit stage left!
Not only are these two fiscal manoevres not honest (as are not hedge fund manipulations and short selling as a precipitator), but if attempted by more than one major currency lead to a run.
The price of gold and other precious metals reflects the confidence of those with a bit of liquid cash to protect ,in the policies of the present.
To survive, countries like the UK must restart their manufacturing and expoloitation of raw materials indigenous to the Kingdom. This will require screwing the lid down on the greens and profligate socialists until at least the debts have been paid off using the skills still available.
If all this is left to wait then China will swallow all manufacturing of domestic products and survive on its huge market of internal and local asian peoples (probably 2 billion by now.
The west will not have an income apart from further reckless borrowing and its industry limited to making weapons for either self defence or keeping down their own populations. Of course, it is always possible that the recent immigrants may up sticks and follow the money eastwards but I don't think that many of our African friends would get much of a welcome in China!
These days, having passed 70, I have an almost constant impression that someone is calling "Come in ,your time is up! We need your pension to throw beer down teenage throats and pander to unmarried teenage mothers"!
Its not about as much (what) is invested in its (who).
Laban at least understood this much , the
strange works and acts , are not to be understood completely
as much he was getting large complimentary side dish for his
investment in Jacob.
Similar examples of this can be seen with Daniel and Joseph, and others.
However sad it is this has been
forgotten priniciple investment
insight by many, more decisive short and long term with the strange range of it all, more understood later, than immediatetly so it is with any investment actually.
Biblical strange investements have a strange range of returns,
short and long similar to a song
yet longer and stronger than a song alone.
Signed 76 in this world of sagging and and or sadden shoulders.
Gold is not a hedge against fiat currencies. The moment the price of gold rises to the point it interferes with world governments policy aims succeeding, they will make it criminal to own gold, except in nominal amounts for jewelry and numismatic purposes, and it will cease to be legal tender. FDR (and the USA) did in 1933. When that happens, the price of gold will quickly fall; anyone holding it on leverage will be wiped out, the rest sorely disappointed.
Only countries as Andora can live without the manufacturing and without the export.
Big countries without the manufacturing industry and without the export are sooner or later the beggers.
Financial industry is creating a bubble because that is how they make the money - boosting the numbers up and creating the peaks.
If economy is steady and quiet they are not happy, so they lie and cheat to rip of the society.
Ambrose,
Societe Generale's report is a bullseye. The debt levels are too high and we are in a debt-induced deflationary depression that will last for years. How bad would things have been in Japan if they couldn't grow their exports? Well, as the report says we can't all grow our exports when most of the world is reducing spending.
The only way to avoid an utter economic catastrophe is to print money, and lots of it. The FED has a dual mandate; price stability and full employment. I expect the FED will throw the inflation hawks under the bus when unemployment reaches 12% in the U.S. next spring and print with abandon.
Let's just hope the globe doesn't resort to a combination of protectionism and resource wars in the next decade.
http://www.escapethenewgreatdepression.com
P.S. Ambrose, did you receive the copy of How America Can Escape the New Great Depression I sent you?
Sorry Andrew, Greenspan utterly discredited! Clueless about the disintermediation within finance that led to the crisis.
This is just another shock tactics article in the desire for self promotion within finance.Like most guys this guy probably missed the collapse last year. It was all over after BS for smart guys like and Paulson! Work in Japan and it was easy to see that BS fall said that all other assets were massively overvalued. Great short opportunity!! But value donkeys get sucked in and pee away 5/6 yrs of returns!
How about a middle line, slow demand recovery with low inflationary pressure given the output gap. Gradual reduction of govt debt over the years. Gold trade sideways? Sorry is that too boring for readers?
Notice that Paulson, while buying gold as a hedge has started buying the collapsed banks Citi etc. You may not like it, but it is a recovery of sorts! Ambrose, it's time to shake the bear off!
Nice shot of Fuji.
Lets wait for the Oh AEP you are doom mongering again brigade.
There is the 5000 dollar gold article as we speak. Gold should correct back down unless this is the big one.
The short term fix governments of the day seem incapable of stopping digging the hole we are in. I wonder if collapse is avoidable. Big cuts in state spending adequate to avoid printing would cause mayhem.
I am still waiting for the fallout from a EU credit crunch from European banks Mr AEP and a reversal of dollar carry trade. Interesting.
With the Commmercial Real Estate Collapse on its way, within two quarters, and toxic debt off-the- books, hidden in off-shore holdings, there is no chance there won't be more Bear Stern events soon.
Central Banks will not be able to bail out the biggest when it comes to the next crunch. Oil will NOT drop to $50 a barrel ever again as declining oil stocks and resource wars will see that particular crisis impact badly on every industry - unlike after the Second World War, when the world swam in oil, depleting oil will exacerbate the impact of the second wave of the Great Financial Collapse.
This pretty much encapsulates my view. I think that government debt has already reached the point of no return as the forecast GDP figures are simply unrealistic. Markets are also pricing in a simple and quick return to pre market crash levels of consumer spending which will enable tax receipts to rise and so help pay off govt debt. Look at tax recepts-this is simply not happening.
The comment on gold and commodities is accurate but oil at $50 seems unlikely with high inflation and a falling Dollar. Also inflation would support a higher price. In addition a recent press release has stated that the IEA under US pressure has hidden the fact that peak oil was reached in 2005. With both a falling Dollar and falling prices I would expect some producers to insist on payment in another currency other than the Dollar but we shall have to wait and see.
Under this worst case scenario I would also suggest that war is an increasing possiblity. If this was to happen we would then see if the vaunted US military machine is as formidable as some people continue to spout. For me, the recent negative reports by US commanders on battle exercises makes me think that it is not clear cut.
To: Aungier
"why is it always a global collapse scenario, rather than muddling though or something better or slightly worse?"
"This [inflation] is why gold, oil have been going up."
"[...] sovereign bonds will become like toilet paper."
The reason this is about to turn into a depression is that governments can no longer expand credit markets hence they can no longer induce inflation. Incidentally, even assuming we could induce a further expansion in credit markets, the multiplier effect of each unit of currency on the overall economy is today neutral. This is because inflation is a dynamic that is exponential in nature.
http://research.stlouisfed.org/fred2/series/MULT
As to why gold has been rising in price, it is not strictly correct to say that �inflation� is the cause. Throughout history gold has risen in inflationary as in deflationary situations. Gold is the ultimate currency. As such, it rises when credit markets are in distress and sovereign finances are teetering on bankruptcy. Gold is anathema to a fiat monetary system. Thus, for as long as there is room to expand inflation in a given market, that is, for as long as nominal revenues can sustain the expansion of debt (with gradually declining interest rates), gold is not an attractive investment.
Regarding sovereign bonds becoming toilet paper, we are already there. The US Fed is now the largest buyer of US Treasury paper. In a fiat monetary system of floating exchange rates, governments prop each other's currencies buy buying each other's debt. If you find that ridiculous, it is and it is clearly a strategy that is limited. Hence the need for QE today that is a euphemism for �our monetary system is buggered!�
The rationale of QE is to buy time in the hope that things will stabilize and/or turn around. The problem is that this would be a viable strategy IF we had room to expand inflation. Right now, the only thing we could reasonably do to induce a further bout of inflation would be to introduce a new currency (think Euro). But that too would be just kicking the can down the road.
Today a total collapse of the monetary system is a distinct possibility. But that is not what worries me.
What worries me is that historically, credit dislocations causing the bankruptcy of governments have resulted in conflicts of major proportions.
http://guidoromero.wordpress.com/2009/10/19/the-next-world-war/
Ah yes but what happens when desperate governments confiscate privately held gold? The US did in 1933.
From a micro level when the average man on an average wage cannot afford the average house, then the balance will be corrected.
At the macro level, governments the World over cannot afford the debts that they owe. They are not prepared to tax their citizens to reduce it because those very same citizens are so indebted that raising the tax take to balance budgets and national accounts, will break the tax payers.
How can there be a 'global' recovery as usual recoveries after recessions have occurred when no one can afford to spend money that gives life blood to the recovery. A slow stablization is all I can see ahead, until, governments lazily chase the deflating debt solution of inflation. Isn't it always easier to inflate by 10% having paid a 5% return to reduce your debt by 5% year on year?
There, I told you so! (Cough, cough). No really, this is what I have feared.
I think the answer is to start the machinery of production again. Open the mines, invest in communications/transport/energy (not nuclear it is too slow and dangerous for UK and is jobs for the boys) and produce the goods we will not be able to import for a while.
The government should immediately pull the plug on price boom promotion and price manipulation. The six oil tankers hanging off our coast waiting for the oil price to rise should suffer heavy fines if they do land in Europe. Hedge funds and bankers should realise they must not act like yobs, or they will get ASBOed.
OK So all my savings are in two Banks on 3.25% monthly interest. I have no home as sold in Dec 2006. Will take pension in 2months time. So as to protect it and grab it now. 36K / yr and lump sum of 70K. No debts, no loans. So what should I do, where should I hide until this is over. Back in my Burrow? So much uncertainty, all a house of cards?
Murray Rothbard must be laughing at these fund managers from beyond the grave. We are headed for the great crack-up boom and the vindication of the school of Austrian Economics. Buy gold, buy silver, the is going to getting very consumer-price-inflationary and, therefore, very, very ugly.
gold will go to the multiple thousands.. give up on your isa and buy some gold! ... .greenspan agrees with me in his article "gold and economic freedom"!
why is it always a global collapse scenario, rather than muddling though or something better or slightly worse? This article has some inconsistencies. "inflating debt away" by a government would imply more paper money chasing the same assets. This is why gold, oil have been going up. Sovereign bonds are promisory notes to a creditor to pay back a loan at a fixed rate of return. If governments are to reduce the unit value of curreny by printing, inflating or using quantitative easing, then surely sovereign bonds will become like toilet paper. The fundamentals of assets cannot be changed by money printing. However increased asset prices will be an increased cost to business and the consumer, so equities are unlikely to outperform on the earnings front but will give some protection against inflation. Basically it will all depend how far and how fast governments take the easy road to inflating the debt away
The FTSE is 30% QE. The pound is hot air. It really is a case of pass the parcell. I wish I was brave, I would settle for darjeeling, 1p books on Amazon, and 15000 in pocket fro the state.
http://www.dailymail.co.uk/news/article-1227287/Households-receiving-benefits-15-000-year-doubled-Labour.html
really nice.