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The Latest Signs Of Complete Economic Meltdown

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The Latest Signs Of Complete Economic Meltdown

On the eve of the Inauguration, while at least half of America is absorbed and distracted by the ‘Farcical Pageantry’ of the great political stage play, the world economy teeters on the brink of oblivion. The numbers for Retail and Wholesale, Shipping and Production, and most importantly, Christmas, are now coming in. They leave nothing to be deciphered, the message is clear; the second stage of the financial free fall is about to begin. Most if not all of the Main Stream Media’s attention has been directed at the “Banking and Credit Crisisâ€. This narrow focus on the Credit Sector has underscored the far more important and precarious situation in the home of the average family. While the Private Federal Reserve has continually printed up bailout after bailout for entities such as Bank of America, or Fannie Mae and Freddie Mac, the regular American has plunged deeper into debt than ever before. The government has deliberately tried to fix the situation from the top down, squandering the wealth of the entire country on the coffers of elite bankers, knowing that the collapse is occurring from the bottom up. In a credit based economy, if people do not have the ability to take on new debt, then the act of repairing credit markets so that they can lend again is meaningless. Credit is NOT the same as SAVINGS. In their ignorance, Wall Street automatons have completely forgotten what makes all economies run; the everyday consumer, not banks. This ignorance has kept the illusion of market stability going for far longer than it should have, just as credit cards and mortgage loans kept American consumers spending money they never really had. At this moment, the DOW and everything associated with it are running on the acrid fumes of blind faith. Recent signs show that the smoke and mirrors are beginning to falter, and a timetable for the collapse is beginning to reveal itself:

CHINA

China, though far across the Pacific, will be a major factor in this collapse. It is difficult for those uninformed in currency trade to see how this could be. For one, China holds over $1 Trillion in U.S. Debt, and 2 Trillion U.S. Dollars in its reserves. The Treasury sells Bonds to countries such as China in order to raise money for the U.S. Government. Basically, China invests money in us (so that we may continue our wars in the Middle East, etc.), expecting that the debt will eventually be repaid by the American Taxpayer. China has a strange symbiotic (some on both sides would say parasitic) relationship with the U.S. While China buys bonds in dubious American debt, the U.S. Government allows for a beneficial ‘Trade Deficit’ with China. Meaning, it is cheaper for China to export their products to us, than it is for us to export products to them. This deficit drives the entire Chinese economy. It is the reason why hundreds of U.S. Corporations shut down industrial jobs here and sent them overseas. Labor in China is simply much cheaper and the products can be sent here for little added cost. The problem is that this relationship is based entirely on an assumption; the assumption that America will be able to honor its debts. As the Private Federal Reserve dropped interest rates to near zero, with the intention of creating massive inflation of the dollar, it is becoming increasingly impossible for America to pay off what it owes.

If China comes to the decision that the U.S. Dollar will inflate to worthlessness, they will dump their holding in Treasuries as quickly as possible. Meaning, they will realize they have made a bad investment, and will try to sell off their “stocks†to recoup at least some of their original wealth. If China were to suddenly throw 2 trillion U.S. dollars back into our economy, the inflationary effects would be heavily exacerbated. The dumping of Treasuries by China would effect the Dollar’s reputation world wide, causing the value of our currency to completely collapse. Our ability to import goods from other countries would be destroyed. The Treasury would be unable to pay ANY of our debts, and would be forced to declare insolvency. The Dollar would effectively no longer exist. The economy would be frozen in stasis, and the worst depression in history would begin. As of the 25th of December, China has reported that it will begin a “baby step†process in which they will stop using the Dollar in international trade, and begin using the Yuan instead. Such a move is unprecedented;

Central bank governor Zhou Xiaochuan was quoted by the South China Morning Post as saying: “The US dollar is unlikely to be stable next year and later.

“And the likelihood of the United States issuing more money in the near future adds to the depreciation risk in US-dollar-denominated assets and trade settlements.â€

This news is further compounded by reports from a South Korean Economic Blogger going by the name “Parkâ€, and the alias “Minervaâ€. Park was made famous in web circles for his very accurate predictions of the current collapse, and even the bankruptcy of Lehman Brothers. Park recently reported on his Blog that the South Korean Government has ordered banks to stop purchases of U.S. Dollars and Treasury Bonds. The man was quickly arrested by the supposedly democratic South Korean government on the charge of “spreading damaging informationâ€. While there is still little evidence yet to support Park’s claim, if the information was false, wouldn’t it be simple for the South Korean government to prove that they were still using U.S. Dollars, instead of arresting the man, denying him bail, and violating his right to free speech?

THE REAL ECONOMY

All eyes are on banks and bailouts, but the truth of the collapse is found in the real economy. All banks and all corporations for that matter are dependent on the health of the consumer. So, how has the consumer been faring lately?

U.S. mortgage foreclosures increased by 81% in 2008. Families are losing their homes at an alarming rate:

Consumer Credit posted a record drop in borrowing for November; normally the most active time of year for credit companies:

Home and Property values plummeted at the beginning of 2008 and have not stopped yet, hurting those who bought homes two years ago or more. At the same time, banks have tightened lending restrictions, making it impossible for new buyers to take advantage of the current market’s low prices. As property values decrease, so will property taxes, which may seem like a good thing, however, as states like California near bankruptcy, such property taxes will be needed more than ever:

Homelessness in major U.S. cities is increasing exponentially along with all the problems associated with poverty:

And even high-brow events such as the ‘Consumer Electronics Show’, which were once touted as “Celebrity Extravaganzasâ€, are now turning into ghost towns, as people have very little money or time to waste on such frivolous luxuries:

THE CORPORATE MELTDOWN

While the the massive losses of banks have been widely publicized, the extent of the situation still has not been made clear to the public. The bottom line; most American companies are BROKE. They have no savings, large debts, and because of the stretched consumer, will be completely unable to create enough capital to pay their debts before they are declared insolvent. Even $8.5 Trillion in bailouts (as recently reported by Bloomberg) has not quenched the corporate thirst for capital. The reality is that they are so far in debt, no bailout will ever save them:

After already receiving $100 Billion from the Treasury, Fannie Mae has reported continued losses, stating that the company will need even MORE money if it is to remain financially functional:

Bank of America has recently been given seconds on the Bailout buffet, after receiving $25 Billion in the first round of TARP funds, as the Bank has slowly developed into a financial black hole, now reporting its first “loss†in 17 years:

Citigroup, once thought invincible, has recently posted $8.3 Billion in losses, and has now split in two:

Very few companies remain in a strong position today. Wal-Mart of course, and not surprisingly, the premier New World Order Company, Monsanto, which has posted doubled profits while most other businesses are falling apart:

THE WORLD COLLAPSE

To force people to accept “Global Governmentâ€, one would first need to create a “Global Problem.†The current economic collapse is in no way limited to the U.S. It is a worldwide phenomenon.

The most recent sign has been the reports by the RBS (Royal Bank of Scotland) stating that they have suffered a record loss of $28 Billion, and that their shares are in “freefallâ€.

However, the best way to monitor the health of the World economic situation is to track a little known index called the BDI (BALTIC DRY INDEX):

In an Economic System whose every facet and nuance is subtly linked with that of every other country through the domino chain monstrosity known as “Globalismâ€, shipping of goods and commodities is the lifeblood of our current consumer society. A massive drop in shipping activity is a prophetic indicator of near-future economic instability, or in this case, complete collapse. The “Baltic Dry Indexâ€, which tracks and records this activity, would certainly be a warning alarm to such a collapse. So why then has this index been completely ignored by the Mainstream Media? Perhaps because it is one of the few index’s that is not directly associated with Stock Market trade, meaning, its information cannot be manipulated by short sellers, corporate monopolies, or speculators, the way that the Gold and Silver markets have been manipulated. If the MSM were to inform the public of the BDI’s 93% drop over the past year, they would be effectively alerting the people (who still have naive hopes of some fantastical recovery) that a complete disintegration is about to take place. Such an early warning would surely risk the plans of the Media’s CFR puppet masters.

Creditors are no longer willing to take lending risks on the shipping of goods that may not sell. Shippers are then unable to continue operations of their businesses, and thus, the vicious cycle of “scarcity†begins. This is how the current Food Crisis will expand one-hundred fold within a period of only a couple years, crushing what was left of the ‘American Consumerist Illusion’, although it is likely that island nations such as the UK and Japan will be effected first. Here is a very well made video explaining how the BDI works, and what it means:

All of this may be incredibly depressing, but it is the reality of our times. For decades we have been taught that only “positive thinking†can save us from our problems, and that reality is something we “createâ€. While I agree that we decide our own destinies, it is ludicrous to think that such an important thing as the future can be determined by a “happy outlookâ€. Determining ones future takes incredible effort and sometimes painful sacrifice. Only by understanding and accepting (instead of naively ignoring) our concrete reality can we then ever hope to change it for the better.

As things stand today, a total economic collapse is imminent. The timeline appears to be a little over one year before we are in the midst of this event. Once one accepts the reality that this collapse will occur, one can prepare, and perhaps direct its outcome for the good of all, instead of the benefit of an elite few.

Good stuff, and right on the money. There are all kinds of links on the actual web page if you want to enlighten yourself, or demand citations and references etc...

No amount of bullsh1t from Sibley or McTwatish types can disguise the reality we all face.

2010-2015 is going to make 2007-9 look like a walk in the park.

EDIT: Yes Alan, I was aware of the dates, but it's just a great bit of blogging which is relevant to the continuing crisis which we are all in waist deep.

Edited by cashinmattress

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Why are you posting a 7 month old essay - getting nostalgic for the good old days?

Unfrotunately, because of the actions taken by the central banks/governments the situation we face today is identical (indeed, worse) to that which we faced when the crisis began.

Edited by Errol

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Unfrotunately, because of the actions taken by the central banks/governments the situation we face today is identical (indeed, worse) to that which we faced when the crisis began.

How's the BDI doing lately?

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How's the BDI doing lately?

bdi.gif

http://investmenttools.com/futures/bdi_baltic_dry_index.htm

Skidding along the bottom.

Maersk CEO sees shipping lagging world recovery

His remarks came after Maersk, the world's biggest container shipping group, reported a net loss of 3.02 billion Danish crowns ($577.4 million) for the first half of 2009 and said the second half would be as weak.

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Unfrotunately, because of the actions taken by the central banks/governments the situation we face today is identical (indeed, worse) to that which we faced when the crisis began.

The idea is not to be around when the shtf leave it for someone else to clear up.

As far as Bush is concerned job done, not his problem. Now it's Obama's.

The debt mountain remains and impressively has been added too without collapsing. However I can't see how that can be sustainable for too much longer.

Ouch

Ouch

My thought chip has just kicked in.

Increasing the debt mountain is the correct decision as debt is wealth. Therefore we are on the road to recover and prosperity for all.

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