|
| |
| | Page 1, 2, 3, 4, 5, 6, 7 | >>THE NEXT GREAT DEPRESSION<<
| Anonymous Coward
User ID: 425678
5/4/2008 7:43 AM | | Re: >>THE NEXT GREAT DEPRESSION<< | Quote |
Bank bail-outs to be kept secret.
The Bank of England has imposed a permanent news blackout on its £50bn-plus plan to ease the credit crunch.
Ferocious and unprecedented secrecy means taxpayers will never know the names of the banks that have been supported through the special liquidity scheme, which was unveiled by Bank Governor Mervyn King last week.
Requests under the Freedom of Information Act are to be denied. Details will be kept secret even after 30 years - the period after which all but the most sensitive state documents are released.
[link to www.thisismoney.co.uk] |
| Anonymous Coward
User ID: 428707
5/6/2008 8:04 AM | | Re: >>THE NEXT GREAT DEPRESSION<< | Quote |
Award winning economist says America has bankrupted itself with the Iraq war.
[link to www.abc.net.au]
TONY JONES: If it is the worst downturn since the great depression, how can the rest of the world avoid being dragged into the abyss along with the United States?
JOE STIGLITZ: Oh I don't think it can. |
| Anonymous Coward
User ID: 430346
5/9/2008 12:22 PM | | Anonymous Coward
User ID: 431759
5/12/2008 6:21 AM | | Re: >>THE NEXT GREAT DEPRESSION<< | Quote |
"The Government and the market are trying to boil this down to a ’sub-prime’ thing, especially with all constant talk of ‘resets’. But sub-prime loans were only a small piece of the mortgage mess. And sub-prime loans are not the only ones with resets. What we are experiencing should be called ‘The Mortgage Meltdown’ because many different exotic loan types are imploding currently belonging to what lenders considered ‘qualified’ or ‘prime’ borrowers.
This will continue to worsen over the next few of years. When ‘prime’ loans begin to explode to a degree large enough to catch national attention, the ratings agencies will jump on board and we will have ‘Round 2′. It is not that far away."
[link to blogs.marketwatch.com]
[link to mrmortgage.typepad.com]
[link to mrmortgage.ml-implode.com] |
| Anonymous Coward
User ID: 432860
5/14/2008 8:24 AM | | Re: >>THE NEXT GREAT DEPRESSION<< | Quote |
[link to www.fedupusa.org]
[link to financialpetition.org]
[link to www.denninger.net]
WE will end up re-living a repeat of the 1930's, complete with soup kitchens and epidemic unemployment !
# Inflation is more than obvious in the food you eat and the fuel you burn.
# Even though the Fed has cut rates to the bone, mortgage and loan rates have INCREASED!
# The credit markets are tightening up, increasing the burden on consumers and business who don't have access to the "Discount Window"
# The lack of transparency in financial reporting, and the "Marked to Myth" off balance sheet accounting that accompanies it has destroyed trust in the credit markets, making it more expensive for most to borrow money.
# Did your elected representatives authorize the Fed to give JP Morgan $300 out of your pocket to buy Bear Stearns?
# The President and Secretary of the Treasury have given their approval to Unconstitutional acts which have clearly breached the Separation of Powers! |
| Anonymous Coward
User ID: 424156
5/14/2008 8:50 AM | | Re: >>THE NEXT GREAT DEPRESSION<< | Quote |
WHAT?? WHATS this about, I THOUGHT they said the ECONOMY was S-A-I-L-I-N-G ALONG JUST FINE???? And now they go and change their MIND??? |
| Anonymous Coward
User ID: 432860
5/14/2008 9:37 PM | | Re: >>THE NEXT GREAT DEPRESSION<< | Quote |
WHAT?? WHATS this about, I THOUGHT they said the ECONOMY was S-A-I-L-I-N-G ALONG JUST FINE???? And now they go and change their MIND??? Quoting: Anonymous Coward 424156
And the sad thing is that many sheeple actually believe the lies about the 'strong' economy.
Unfortunately they will suffer for their stupidity. |
| Anonymous Coward
User ID: 434951
5/18/2008 2:50 AM | | Anonymous Coward
User ID: 435424
5/19/2008 12:08 AM | | Re: >>THE NEXT GREAT DEPRESSION<< | Quote |
In just the past 18 years or so we have witnessed two of the largest speculative manias in the history of the world. They are the NASDAQ Stock Bubble "Dot Com" mania and most currently the "Housing Bubble", now entering its decline phase. These cycles are best described as "Boom-Bust" cycles, brought on by easy credit and excess currency circulating within our monetary system. Money was abundant in the early stages of these trends, and a lot was lost at the end of the trends when most of the public entered the bubble! Social Security and Medicare are for the most part, bankrupt. The Comptroller General of the United States, David Walker is sounding the alarm. Who's listening? Hopefully you are.
Mainstream media, employing daily "Cheerleading" techniques, would have its viewer believe that flipping stocks or houses are sound investment vehicles. However, speculation is not the basis of a sound investing strategy. Though some may make money in the short-run, it's certainly not a strategy to develop a plan for the future.
[link to www.contraryinvestorscafe.com] |
| Anonymous Coward
User ID: 435424
5/19/2008 8:05 AM | | Anonymous Coward
User ID: 435424
5/21/2008 8:18 AM | | Re: >>THE NEXT GREAT DEPRESSION<< | Quote |
Behind the Rise in Prices: A Plan to Torpedo the Dollar.
Who do you think was one of the Bush Administration’s key players on the economy ?
If you say Paulson or Bernanke, you might be half right. But there’s another no-name lurking around in the background who tends to be doing the wrong thing at every key moment in the covert history of he Bush (or should we day “Bush League”) Republic.
His name is Jim Wilkinson. He helped organize the GOP protest/obstruction of the Miami election recount in 2000.He was the White House’s key media spinner at the Doha Coalition Media Center. A reporter from Texas said he used techniques first perfected by Stalin. He was an architect of the Republican convention in New York in 2004. He was later dispatched to keep an eye on and act as ‘dissembler in chief’ for Condi Rice.
But at a crucial moment in the history of the western world, Mr. “I work in the shadows” Wilkinson became chief of staff to Treasury Secretary Hank Paulson, the Goldman Sachs Embed in the Cabinet.
Operative Wilkinson was then given the assignment of monitoring the world’s financial markets in a secret operation modeled no doubt on the great intelligence plan that produced the Iraq War.
[link to www.commondreams.org] |
| Anonymous Coward
User ID: 437426
5/22/2008 9:48 AM | | Re: >>THE NEXT GREAT DEPRESSION<< | Quote |
"If Washington's harping on weapons of mass destruction was essential to buoy public support for the invasion of Iraq, the use of deceptive statistics has played its own vital role in convincing many Americans that the U.S. economy is stronger, fairer, more productive, more dominant, and richer with opportunity than it really is. The corruption has tainted the very measures that most shape public perception of the economy," especially three key numbers, CPI, GDP and monthly unemployment statistics."
[link to www.marketwatch.com] |
| Anonymous Coward
User ID: 434951
5/24/2008 11:07 PM | | Re: >>THE NEXT GREAT DEPRESSION<< | Quote |
This is a cool thread check this out
Here's the REAL reason the US Dollar is shrinking... and will continue to shrink !
[link to www.silverbearcafe.com] |
| Anonymous Coward
User ID: 342628
5/24/2008 11:14 PM | | Re: >>THE NEXT GREAT DEPRESSION<< | Quote |
The Rothchild family will save SS because they have all the money. They will take care of us. |
| Allan
User ID: 439160
5/24/2008 11:22 PM | | Re: >>THE NEXT GREAT DEPRESSION<< | Quote |
George Bush was right,..YOu can put any name u want on it.BUT,,it needs a whole new name,depression and recession just dont equate with the modern way of things.like the "great inflatuation" or something.. |
| Anonymous Coward
User ID: 443593
6/1/2008 1:54 AM | | Re: >>THE NEXT GREAT DEPRESSION<< | Quote |
$11 BILLION A MONTH. 
All of the Iraq and Afghanistan war money -- about $11 billion a month -- is effectively being put on a government credit card at a time when U.S. government debt has skyrocketed to more than $9 trillion, up from around $5.6 trillion when Bush took office in January 2001.
[link to www.alertnet.org] |
| Anonymous Coward
User ID: 447958
6/8/2008 5:35 AM | | Re: >>THE NEXT GREAT DEPRESSION<< | Quote |
" All investment is speculation, and there is no speculation more dangerous than the one that is confidently viewed by the
majority as an investment ”
~ EWI founder Bob Prechter. |
| Anonymous Coward
User ID: 447958
6/13/2008 11:24 AM | | Re: >>THE NEXT GREAT DEPRESSION<< | Quote |
"We will not have any more crashes in our time."
- John Maynard Keynes in 1927
"I cannot help but raise a dissenting voice to statements that we are living in a fool's paradise, and that prosperity in this country must necessarily diminish and recede in the near future."
- E. H. H. Simmons, President, New York Stock Exchange, January 12, 1928
"There will be no interruption of our permanent prosperity."
- Myron E. Forbes, President, Pierce Arrow Motor Car Co. January 12, 1928
"No Congress of the United States ever assembled, on surveying the state of the Union, has met with a more pleasing prospect than that which appears at the present time. In the domestic field there is tranquility and contentment...and the highest record of years of prosperity. In the foreign field there is peace, the goodwill which comes from mutual understanding."
- Calvin Coolidge December 4, 1928
"There may be a recession in stock prices, but not anything in the nature of a crash."
- Irving Fisher, leading U.S. economist , New York Times, Sept. 5, 1929
"Stock prices have reached what looks like a permanently high plateau. I do not feel there will be soon if ever a 50 or 60 point break from present levels, such as (bears) have predicted. I expect to see the stock market a good deal higher within a few months."
- Irving Fisher, Ph.D. in economics, Oct. 17, 1929
"This crash is not going to have much effect on business."
- Arthur Reynolds, Chairman of Continental Illinois Bank of Chicago, October 24, 1929
"There will be no repetition of the break of yesterday...
I have no fear of another comparable decline."
- Arthur W. Loasby (President of the Equitable Trust Company), quoted in NYT, Friday, October 25, 1929
"We feel that fundamentally Wall Street is sound, and that for people who can afford to pay for them outright, good stocks are cheap at these prices."
- Goodbody and Company market-letter quoted in The New York Times, Friday, October 25, 1929
"This is the time to buy stocks. This is the time to recall the words of the late J. P. Morgan... that any man who is bearish on America will go broke. Within a few days there is likely to be a bear panic rather than a bull panic. Many of the low prices as a result of this hysterical selling are not likely to be reached again in many years."
- R. W. McNeel, market analyst, as quoted in the New York Herald Tribune, October 30, 1929
"Buying of sound, seasoned issues now will not be regretted"
- E. A. Pearce market letter quoted in the New York Herald Tribune, October 30, 1929
"Some pretty intelligent people are now buying stocks... Unless we are to have a panic -- which no one seriously believes, stocks have hit bottom."
- R. W. McNeal, financial analyst in October 1929
"The decline is in paper values, not in tangible goods and services...America is now in the eighth year of prosperity as commercially defined. The former great periods of prosperity in America averaged eleven years. On this basis we now have three more years to go before the tailspin."
- Stuart Chase (American economist and author), NY Herald Tribune, November 1, 1929
"Hysteria has now disappeared from Wall Street."
- The Times of London, November 2, 1929
"The Wall Street crash doesn't mean that there will be any general or serious business depression... For six years American business has been diverting a substantial part of its attention, its energies and its resources on the speculative game... Now that irrelevant, alien and hazardous adventure is over. Business has come home again, back to its job, providentially unscathed, sound in wind and limb, financially stronger than ever before."
- Business Week, November 2, 1929
"...despite its severity, we believe that the slump in stock prices will prove an intermediate movement and not the precursor of a business depression such as would entail prolonged further liquidation..."
- Harvard Economic Society (HES), November 2, 1929
"... a serious depression seems improbable; [we expect] recovery of business next spring, with further improvement in the fall."
- HES, November 10, 1929
"The end of the decline of the Stock Market will probably not be long, only a few more days at most."
- Irving Fisher, Professor of Economics at Yale University, November 14, 1929
"In most of the cities and towns of this country, this Wall Street panic will have no effect."
- Paul Block (President of the Block newspaper chain), editorial, November 15, 1929
"Financial storm definitely passed."
- Bernard Baruch, cablegram to Winston Churchill, November 15, 1929
"I see nothing in the present situation that is either menacing or warrants pessimism... I have every confidence that there will be a revival of activity in the spring, and that during this coming year the country will make steady progress."
- Andrew W. Mellon, U.S. Secretary of the Treasury December 31, 1929
"I am convinced that through these measures we have reestablished confidence."
- Herbert Hoover, December 1929
"[1930 will be] a splendid employment year."
- U.S. Dept. of Labor, New Year's Forecast, December 1929
"For the immediate future, at least, the outlook (stocks) is bright."
- Irving Fisher, Ph.D. in Economics, in early 1930
"...there are indications that the severest phase of the recession is over..."
- Harvard Economic Society (HES) Jan 18, 1930
"There is nothing in the situation to be disturbed about."
- Secretary of the Treasury Andrew Mellon, Feb 1930
"The spring of 1930 marks the end of a period of grave concern...American business is steadily coming back to a normal level of prosperity."
- Julius Barnes, head of Hoover's National Business Survey Conference, Mar 16, 1930
"... the outlook continues favorable..."
- HES Mar 29, 1930
"... the outlook is favorable..."
- HES Apr 19, 1930
"While the crash only took place six months ago, I am convinced we have now passed through the worst -- and with continued unity of effort we shall rapidly recover. There has been no significant bank or industrial failure. That danger, too, is safely behind us."
- Herbert Hoover, President of the United States, May 1, 1930
"...by May or June the spring recovery forecast in our letters of last December and November should clearly be apparent..."
- HES May 17, 1930
"Gentleman, you have come sixty days too late. The depression is over."
- Herbert Hoover, responding to a delegation requesting a public works program to help speed the recovery, June 1930
"... irregular and conflicting movements of business should soon give way to a sustained recovery..."
- HES June 28, 1930
"... the present depression has about spent its force..."
- HES, Aug 30, 1930
"We are now near the end of the declining phase of the depression."
- HES Nov 15, 1930
"Stabilization at [present] levels is clearly possible."
- HES Oct 31, 1931
"All safe deposit boxes in banks or financial institutions have been sealed... and may only be opened in the presence of an agent of the I.R.S."
- President F.D. Roosevelt, 1933 |
| Anonymous Coward
User ID: 447958
6/14/2008 1:35 AM | | Re: >>THE NEXT GREAT DEPRESSION<< | Quote |
Robert Kyosaki ~ 2007.
During the height of the real estate bubble, I wrote a column saying that the crash was coming and suggested selling any piece of real estate that was overpriced, questionable, or non-performing. As expected, I received angry replies.
Today, I'm predicting the next crash, what I believe will cause it, and why it'll be a severe blow to the global economy. The signs are already here.
Busts Beat Booms
First of all, it's no big deal to predict booms and busts. All markets boom and bust. It's just easier to predict a bust because the signs are so obvious -- like excess euphoria, easy access to money, huge profits, and scores of happy amateurs entering the market.
Booms are harder to predict. They start silently, like oak acorns buried in the ground -- you don't notice them until they're towering trees. For example, few people recognized Microsoft or Google for the giants they were until after they'd become major players and the big profits had been made.
Paradoxically, that means busts are better because we can see them coming. This gives us time to prepare, and makes it easier to capitalize on them.
The Year the Dollar Died
The coming bust started in 1971. That was the year Richard Nixon took the United States off the gold standard, thus converting the U.S. dollar from money to currency -- that is, from an asset to a liability, and an instrument of debt. That was the year the dollar died.
After Nixon was forced out of office, the U.S. economy went into a slump under presidents Ford and Carter. We had high inflation and low growth, otherwise known as "stagflation," before Ronald Reagan and his dedication to supply-side economics -- Reganonomics -- came along.
Reagan cut taxes and started borrowing money, increasing the national debt. As a nation and as a people, we began borrowing and spending to spur the economy. And the economy boomed until 2000.
A World of Debt
It began to sink after 9/11. We lowered interest rates and began printing more money. In 2003 and 2004, the Bank of Japan created 35 trillion yen to save the dollar and their economy. It was like a loan of $320 billion to the United States, and probably prevented a run on the dollar.
This loan kept interest rates low, which prolonged the boom with easy money from cheap debt. The problem is that interest rates are now beginning to rise, and the mountains of debt will have to be paid back. If interest rates rise and the economy slows, a severe crash could occur -- a crash caused by years of accumulating debt in order to spur the economy.
The world has never been in this position before -- and the whole world is involved. That's because Nixon's actions in 1971 made the United States into a virtual empire. As an empire, we began dictating the terms of world trade: If you wanted to do business with us, you had to accept our new dollar as gold. Unfortunately, the world complied.
The New Money
Today, China ships us products and we ship them dollars. The problem is that the Chinese can't spend those dollars. If they do, the price of their currency, the yuan, would go up. Why? It's simply a matter of supply and demand.
So instead of spending their U.S. dollars in China, the Chinese buy our assets, especially U.S. bonds, with them. Because they buy our bonds, interest rates in the U.S. remain low, and low interest rates encourage Americans to borrow more money. This causes bubbles in real estate and the stock market.
The problem is almost as bad in China. The Chinese are using U.S. debt as collateral in borrowing yuan to finance projects within their country. With the Chinese economy booming and in preparation for the 2008 Olympics, the Chinese have gone shopping -- they want to look good for the world.
Using Chinese debt collateralized by U.S. debt, they've been buying natural resources from all over the world. Consequently, countries that are rich in natural resources -- such as Canada and Australia -- are booming. Real estate and stock markets in those countries are hot.
But the global boom is clearly built on a mountain of debt.
A Familiar Cycle
This type of boom has happened before. In 1971, Japan was finally emerging from the effects of World War II and becoming a world economic power. The Japanese were exporting cars and televisions to the United States, and because we were importing more than we exported, the Japanese took payment in U.S. gold. In fact, one of the reasons President Nixon converted the dollar from money to a currency was to stop this hemorrhage of gold.
In the 1980s, instead of using gold to finance their economy, the Japanese used U.S. debt as collateral for Japanese debt. This caused the Japanese economy to boom just as the Chinese economy is booming today, and it made the Japanese look like geniuses. Business books and magazines trumpeted the magic of Japanese business management.
Then, in the early 1990s, the Japanese boom busted. Their stock market crashed and the most expensive real estate in the world became cheap. Today, the Japanese economy continues to struggle.
China Isn't Japan
China's advantage is that it learned from Japan's mistakes. That's why the Chinese stubbornly refuse to revalue their currency -- they don't want to make it more expensive the way the Japanese did theirs.
Currently, the Chinese yuan is pegged at 7.6 yuan to one U.S. dollar. This makes the United States accuse China of being unfair; we'd like to see the yuan float the way the Japanese let the yen float. This would make it easier for us to reduce our balance of trade, as well as pay back our debt with cheaper dollars.
The problem is that the Chinese know from the Japanese experience that we can talk tough but not act tough -- they simply hold too much of our debt for us to take measures. And if the Chinese started dumping U.S dollars and bonds on the world market, the world economy might well crumble, just as the Japanese economy crashed nearly 20 years ago.
Time for a New Standard
While it's tough to predict the future, one thing is for certain: The U.S. dollar will continue to go down in value, and savers will be losers. With people all over the world piling debt upon debt and spending like fools, it might be best to follow the Chinese.
They've never trusted banks, but have always trusted gold. Maybe it's time we started doing the same. |
| Anonymous Coward
User ID: 275258
6/14/2008 1:42 AM | | Re: >>THE NEXT GREAT DEPRESSION<< | Quote |
The Great Unwind near The Speed of Light
New Media Asymmetries?
London, UK - 16th March 2008, 10:11 GMT
Dear ATCA Colleagues
[Please note that the views presented by individual contributors are not necessarily representative of the views of ATCA, which is neutral. ATCA conducts collective Socratic dialogue on global opportunities and threats.]
Having stopped at a traffic light just going red, it suddenly became clear that the Great Unwind is now beginning to take place near the speed of light generating financial hurricanes and twisters of category five with several "New Orleans" equivalents in target range. The near failure of Bear Stearns, one of America's largest investment banks, is the clearest "red alert" signal yet that the country's financial system is in the middle of a violent spasm which has the potential to spark the worst meltdown since the Great Depression.
========================================================== ==
Is Iceland the Canary in the Mineshaft?
Dear Friends, Iceland is described as a Nordic hedge fund masquerading as a country! Like many hedge funds, Iceland is now in trouble. Their central bank was forced to raise interest rates to 15% this week...
...in an emergency move to halt the collapse of the Krona, which has fallen 18% since mid-March as "Carry Trades" have been unwound.
Particularly, the unwinding of Japanese Yen positions has been a key factor in the sudden capital flight away from Iceland this month. The Yen's surge in recent weeks has played havoc with the capital in-flows into many countries across the world. While Iceland's inflation target is 2.5%, the February inflation rate was 6.8%. The central bank's rate hike is designed to increase confidence in the Krona, that has slumped and made imported goods more costly. It is now apparent that sovereign central banks cannot manage the "Global Credit Crunch" without severe pain and it would appear that the financial markets and margin calls are calling the shots in the accelerating "Great Unwind near The Speed of Light." This leaves central banks and regulators as front row interactive spectators who are following the markets and NOT leading them!
From where did the troubles emanate in Iceland? Banks. The country's all-conquering banks -- including Kaupthing, Glitnir, and Landsbanki -- pushed the asset base of the Icelandic banking system to a world record of eight times GDP, tapping the global capital markets to launch M&A raids across the UK, Scandinavia and beyond. As access to easy credit all but dried up in the financial markets, the spreads on Icelandic bank debts rose from less than 50 basis points to 800 over a few months. They are now near levels seen in Bear Stearns' debt just before the Federal Reserve's rescue. This raises a critical question: Is the Icelandic government -- which presides over a population smaller than the Canton of Geneva -- big enough to rescue its highly leveraged banks? If the government tries to raise billions in the global markets it would damage its own credit rating. The central bank has just USD 2bn (GBP 1bn) in reserves.
What happens next? Iceland is not alone in living far beyond its means. The Baltics, the Balkans including Romania, Hungary, Turkey, and South Africa (to some extent) are all in a similar boat as they are all living far beyond their means. History shows that countries which run current account deficits above 10% of GDP for any length of time almost always get into trouble. East Asia's debt crisis in 1997 erupted even before any nation reached double digit deficits. Iceland's deficit is now 16% of GDP. Latvia is at 23%, Bulgaria 21%, Georgia 18%, Estonia 16%, Lithuania 14%, Romania 14%, Serbia 13%, South Africa 7% and Turkey 6%. All these economies have let credit grow faster than what would be considered safe, some exceeding 50% growth a year! The region will need USD 350bn in foreign loans this year to stay afloat. Iceland is one of the first "large deficit nation states" to succumb to investor flight, sending an early warning signal of potential troubles across a great swathe of Eastern Europe, the Mediterranean and across the world.
Peripheral European economies that depend heavily on foreign investors -- most recently Iceland and Romania -- are left with no choice other than to raise interest rates aggressively to shore up their currencies and to fight rising inflation as financial markets question whether the countries can sustain their debt-fuelled growth. Tuesday's 1.25% rate increase in Iceland, took the key short-term rate there to 15%. Romania's central bank has raised its key interest rate by 0.5% to 9.5% on Wednesday to bolster the Leu. Poland's central bank also raised rates on Wednesday. Hungary is expected to do so on Monday.
The rate increases contrast with the US Federal Reserve's policy of cutting rates in the face of turmoil in financial markets and fears about an economic slowdown. Poland, Slovakia, the Czech Republic and Russia, are in a better position to ride out the storm in global markets, thanks to better-balanced economies, strong inflows of foreign direct investment, and in Russia's case, huge oil-and-gas revenue.
The Turkish Lira is another enigma. How it has stayed so high for so long is thanks to the "Carry Trade." Until now Turkey has been the darling of the Yen "Carry Trade," for example, offering irresistible yields to Japan's army of house wives and investors. There are huge imbalances in the economy. The current account deficit is nearly 8% of GDP, and the chief prosecutor is trying to shut down the government. Last week the court moved to ban the ruling Islamic AKP party, as well as the president and prime minister, for alleged breach of the country's secular laws. Turkey has a foreign debt of USD 275+bn. Turkish companies may have great difficulty raising some USD 50bn of fresh loans needed this year to stay afloat.
The other side of the "Carry Trade," borrowing in foreign currencies, has also been in vogue in the euphoria of the credit bubble. For example, most mortgages in Hungary over the last two years have been in Swiss francs, with the Balkans and Poland not far behind. This is now turning into slow torture. The Swiss Franc has risen 5% against the Euro since October. The real level of the debt is ratcheting up fast. Foreign debts have reached 122% of GDP in Latvia, 101% in Estonia and 73% in Lithuania, mostly in Euros. For now the debtors are shielded by fixed exchange rates in Europe's ERM system, but this could make the shock even worse should the currency pegs start to snap. There is now a real risk of global financial contagion from Iceland as it increasingly looks like the canary in the mineshaft!
[link to www.intentblog.com] |
| Anonymous Coward
User ID: 447958
6/14/2008 7:51 AM | | Anonymous Coward
User ID: 447958
6/15/2008 9:11 AM | | Re: >>THE NEXT GREAT DEPRESSION<< | Quote |
'Maxed Out' is a feature-length documentary.
Maxed Out takes viewers on a journey deep inside the American style of debt, where things seem fine as long as the minimum monthly payment arrives on time. With coverage that spans from small American towns all the way to the White House, the film shows how the modern financial industry really works, explains the true definition of "preferred customer" and tells us why the poor are getting poorer while the rich keep getting richer.
Maxed Out paints a picture of a national nightmare which is all too real for most of us.
Maxed Out forces us to face the consequences of our national debt addiction: the suicides, the ruined lives and, ultimately, the disappearance of the American middle class.
[link to www.maxedoutmovie.com] |
| Anonymous Coward
User ID: 447958
6/15/2008 9:57 AM | | Re: >>THE NEXT GREAT DEPRESSION<< | Quote |
Central bank warns of Great Depression.
[link to www.bankingtimes.co.uk]
The Bank for International Settlements (BIS), the organisation that fosters cooperation between central banks, has warned that the credit crisis could lead world economies into a crash on a scale not seen since the 1930s.
In its latest quarterly report, the body points out that the Great Depression of the 1930s was not foreseen and that commentators on the financial turmoil, instigated by the US sub-prime mortgage crisis, may not have grasped the level of exposure that lies at its heart.
According to the BIS, complex credit instruments, a strong appetite for risk, rising levels of household debt and long-term imbalances in the world currency system, all form part of the loose monetarist policy that could result in another Great Depression.
It also raises concerns about the Chinese economy and questions whether China may be repeating mistakes made by Japan, with its so called bubble economy of the late 1980s. |
| 19.47™
User ID: 282917
6/15/2008 10:44 AM | | Re: >>THE NEXT GREAT DEPRESSION<< | Quote |
All of this financil stuff is just the warm up act (so to speak) for the main event...
[link to www.chick.com] |
| Anonymous Coward
User ID: 452829
6/17/2008 7:05 AM | | Re: >>THE NEXT GREAT DEPRESSION<< | Quote |
12 Steps to the Next Great Depression. ~ HS Dent
In November we released a short video to subscribers outlining how we expect this bubble boom
to continue to play out and finally come to an end between late 2009 and late 2010. In fact, our
next book in mid 2009 is likely to be called The Great Crash of 2010. The key message we have
today is that this bubble boom has and will continue to unravel in a complex manner—in a
number of steps and a series of bubbles that burst. Our strategy will not be as simple as getting
out of most stocks in late 2009 and moving into high-quality bonds. Strong buying opportunities
will occur in different stock and real estate sectors throughout the extended downturn from 2010
to 2021 through 2023.
Here, we will look at 12 steps on the way to the next great depression—it was 10 in
the video—we’ve already added a couple more. NOTE- We do not think that the current boom is over just
yet, even though we are experiencing significant volatility in the equity markets. This is all part of
the process as the economy and the equity markets work through this topping process.
The first real bubble from the massive Baby Boom generation was actually the oil, commodity, and inflation
bubble that peaked in 1980 after the highest sustained inflation rates in centuries. This trend correlated with
the rising expenses and investments necessary to incorporate that massive generation into the workforce.
Small-cap stocks peaked in out-performance in 1983 with the Baby Boom’s Innovation Wave (22- to 23-year
lag on births for workforce entry after college). We saw the first bubble in stocks in 1987, but the real bubble
led by tech stocks occurred from 1995 to early 2000 as the S-Curve adoption rates took off. That crash
worsened with the onset of a long-term adverse geopolitical cycle in 2001 that began with 9/11.
Subsequently,investment dollars flowed out of stocks into real estate as the Baby Boomers were approaching their peak
spending on housing, with that bubble peaking in July 2005. The aftermath of such explosive growth there
lead to the subprime crisis, which may have caused financial stocks to peak long term in June 2007.
The next great bubble in stocks has sprouted in emerging markets and Asia. That bubble looks likely to peak
next between late summer and fall 2008 (as will tech stocks and growth stocks in the US) as inflation resurges
and the final bubble in commodity and oil stocks is the last to peak between late 2009 and early 2010—at the
expense of most other sectors in the stock market. Once oil prices and inflation trends begin to curb the
growth of stocks, we will see the long term slowing in technology and baby boom spending trends we have been
forecasting for two decades. Hence, the great bubble boom finally ends around late 2009, and we will enter
the next great depression from 2010 until around 2020/2024, when the Echo Boom generation drives rising
spending and productivity trends again.
We have three major bubbles bursting in similar time frames: a stock bubble (now concentrated more
in emerging markets), a real estate bubble, and a commodity bubble. The theme of this decade is that
we see one bubble burst while the next rises until the whole bubble boom ends. The first bubble to peak
long term was the tech bubble in early 2000; the last will be the commodity bubble around late 2009,
with others peaking in between.
Step 1: The Tech Bubble Peaks
The bubble in Internet and tech stocks was a classic bubble that paralleled that of cars and electricity into the
1920s. As radical new technologies move mainstream on an S-Curve path, new growth industries explode and
productivity rises beyond normal generational trends. Internet and cell phones hit a market penetration level
of 10% of households between 1993 and 1994 and accelerated, reaching 40% market penetration between
1999 and 2000. This move from 10% to 40% market penetration is when the first tech bubble occurred in
automotive stocks between 1914 and 1919, 80 years earlier on our New Economy Cycle. We have been
forecasting a second bubble, similar to the bubble in equities in 1925 to 1929, between 2005 and 2009, as
market penetration in many new technologies approaches 90%. But Chart 1 shows that the Nasdaq likely
peaked long term in March 2000, unlike the first tech peak in late 1919, which was followed by a greater peak
in late 1929.
This current bubble has been building momentum
since mid 2006 but is unlikely to exceed the past
highs. We are forecasting a continued bubble and
burst scenario, but to lesser degrees as we move
forward. The current bubble in the Nasdaq is likely
to peak between 3,500 and 4,000—and then we are
likely to see another bear market bubble rally
between late 2014 and 2017 with another crash to
follow. Why did we not see a second greater bubble
in tech stocks as occurred in the Roaring 20s? That
brings us to Step 2.
Step 2: The Adverse Geopolitical Cycle
In 2000, the tech correction looked more like a
normal setback. But in 2001, the bubble fully burst
with a crescendo around the tragedy of 9/11. The
stock market and tech sector simply haven’t been the
same since. Even after the strong recovery that we
forecast between late 2002 and late 2003, the market
has not followed the same bubble path that we saw
from 1925 to 1929 or from 1995 to 1999 during the
S-Curve progression. When we got strong
divergences from these past bubble scenarios in mid
2006, we made the biggest change ever to our longterm
forecasting models. We added a new
Geopolitical Cycle (Chart 2) after restudying stock
market history since the Industrial Revolution and
modern era of the last 200 years.
The stock market tends to have a more favorable
geopolitical environment creating higher valuations
and growth rates for 16 to 18 years, and then the
cycle turns more adverse for 16 to 18 years. It clearly
seems that the last adverse cycle began in 2001,
much like previous ones in 1965 (Vietnam, Cold War,
and inflation) and 1930 (Great Depression and World
War II). Chart 3 shows how a model for the stock
market that uses earnings trends adjusted for
interest rates correlated closely with stock market
performance from 1983 to 2000 but has diverged ever
since. Stocks are about half of where they should be
if the trends of the 1980s and 1990s had continued
to follow the strong earnings of this decade. We were
forecasting a Dow of 32,000 to 40,000 before we
incorporated this model. Now we are forecasting a
Dow of 16,000 to 20,000. This adverse Geopolitical
Cycle should continue until around 2018 to 2019.
Expect world events to get worse, not better, for over
a decade to come.
Step 3: The Housing Bubble Peaks
As soon as the stock market started failing, housing
prices began to accelerate from 2000 to 2005, even with
a minor recession. The money that had been flowing into
the stock market simply was diverted rapidly into
housing speculation, in which the trends remained
strong, with the Baby Boomers in their peak housing
spending years between the ages of 37 to 42. That boom
continued until house prices reached their most
overvalued levels in US and Western history in July 2005.
We warned in The Next Great Bubble Boom and in our
special report on Demographic Trends in Real Estate that
the bubble would peak between 2004 and 2005 and that
prices would go flat or fall slightly at first before crashing
to an unexpected degree in the next decade when the
economy finally slowed.
Chart 4 shows how much housing has gotten overvalued vs. inflation and long-term replacement costs,
which is what drives housing prices long term (as opposed to what drives stock prices long term, which is
economic growth). Similarly, housing prices are extremely overvalued vs. rents and incomes. Housing would
have to fall 40% to 50% just to get back in line with fair value. Housing should see a peak in foreclosures by
late next summer (see Chart 2 above) before we see a rebound in the economy and in housing demand. Rising
inflationary pressures should cause interest rates to rise again between late 2008 and late 2009, slowing any
recovery in housing until the economy weakens from 2010 on (due to demographic trends discussed ahead),
which could cause a long slide in housing prices similar to what occurred Japan from 1991 to 2005 (down
60%-70%). The worst of the housing slide is likely to hit between early 2010 and early 2015
.
Step 4: The Lending Bubble and Subprime Crisis—Financial Stocks Peak
The bursting of the housing bubble led to rising foreclosures and falling home prices, which was deadly for the
bank and mortgage companies—especially the investment companies that bought packages of securitized
loans. Throughout this boom, economists have been saying that consumers carry too much debt and that
they can’t continue to borrow and spend. But, just as we forecast based on the family spending cycle,
consumers continued to borrow and spend—until 2007. Banks and financial institutions have finally realized
that there is a limit to what households can borrow, especially when the largest collateral source by far, homes,
are falling in price instead of almost constantly rising.
Banks didn’t see that much risk in lending with “zero
down” and low short-term rates as long as housing kept
appreciating. Now, many lower-end households are
defaulting, and such foreclosures make the housing
downtrend worse.
On November 21, 2007, we warned that the financial
sector (XLF) was threatening to break below the last
major upward peak, which could cause both a short-term
panic in stocks and mark the long-term top in financials
as June 2007. The financials are recovering and will
continue to recover after the correction into November
2007, but chances are that they will not reach new highs
in mid to late 2008 as will most international and US
sectors. The financials (Chart 5), along with the Dow
Transports (which also may have peaked already), will be sensitive to the rising inflation trends we are
projecting for late 2008 to late 2009. Hence, they are likely to continue downward to sideways in 2009.
This likely peak in financials long term represents the most recent step toward the next great depression. The
economy will not be as hot as it was in the late 1990s or mid 2000s now that banks are tightening credit
standards significantly.
Step 5: Emerging Markets Bubble
The greatest bubble to emerge since the housing bubble peaked has been the emerging markets and Asia.
Many countries are quickly following the capitalistic and development models of the West but have stronger
demographic trends and are benefiting from the rising bubble in commodity and oil prices, which we will
discuss ahead. This sector has replaced the tech bubble of the 1990s, and this is where the next great bubble
has been occurring. Chart 6 shows how the emerging markets sector, which we track by watching the ETF
symbol EEM, closely parallels the Nasdaq and tech
bubble of the late 1990s. In past issues, we have shown
similar trends and correlations for stock markets in
China, India, Brazil, and Russia. If these stocks continue
to follow this trajectory, they are likely to peak from their
own momentum between summer and fall 2008. Hence,
this will be the next major stock bubble to peak.
Recall that the tech bubble did not peak because the
economy slowed but because of its own extreme
overvaluation. We did not see a minor recession until
2001. Hence, these markets will not peak because of a
slowing in demographic or economic trends. Sky-high
valuations clashing with rising inflation and commodity
prices trends will burst this next bubble. Like the
Nasdaq in 2000, these markets are likely to have a mini
crash and then look as if they are coming back in 2009.
The greater crash then is likely to follow into 2010, when
the worldwide economy starts to slow and the commodity
bubble bursts as well.
Step 6: Tech S-Curve Trends Hit 90% Market
Penetration
Just around the time that emerging markets are peaking,
most of the key technology S-Curve trends we have been
tracking will have hit 90% market penetration of
households in the US—from Internet to wireless and cell
phones to broadband. The growth in these leading
sectors will slow from double-digit rates to modest singledigit
rates at best, which will cause earnings forecasts
and price/earnings ratios to start falling. Chart 7 shows
the chart for wireless and cell phone market penetration,
which has most closely paralleled the auto S-Curve 80
years back, from 1914 to 1928. Penetration should hit 90% by the end of 2008. Hence, many leading growth
stocks will slow in the US and Europe after 2008.
Step 7: Inflation Resurges From Late 2008
into Late 2009
Alan Greenspan warned a few months ago that inflation
was likely to return to 4% to 5% in the coming years.
That level of inflation is exactly what our best inflation
model shows based on workforce growth on a 2.5-year lag
(Chart 8). Hence, this model gives us a more accurate
forecast of inflation trends 2 to 3 years ahead. Inflation
has fallen in line with this model since 1980, as the Baby
Boom workforce entry has slowed and their productivity
has risen. Since 1998, Echo Boom entry has started to
push inflation trends upward only modestly due to minor
Baby Boom retirement to offset thus far—and peak Echo
Boom entry will be in the years ahead. Baby Boomers will start to retire more rapidly starting in 2010 and
cause deflationary trends, as we will discuss ahead.
The slowdown in the economy that the Weekly Leading Index (Chart 1) forecasts should keep inflation and
commodity trends at bay until late 2008. However, the recovery that is likely by then will reignite the inflation
trends that are already built into the economy from Echo Boom workforce entry. A resurgence in inflation to
4% or higher will raise 10-year Treasury Bond yields significantly, toward 6% to 7% and will cause the Fed to
start raising the Fed funds rate again. Both of these trends will create headwinds for stocks just as the
economy starts to improve and earnings get stronger again. Hence, we continue to think that most stock
indices in the US will peak long term by late 2008—except the commodity-oriented sectors. The Fed then will
hit its next great dilemma: it will be fighting inflation just before we hit the first great deflationary period since
the 1930s !
Step 8: The Oil and Commodity Bubble Peaks
Adding to inflation trends will be the continuation of the
oil and commodity bubble that has also returned since
the late 1990s, after a long hiatus from the last peak in
1980. Since late 2006, we have been predicting that oil
prices would go well over $100 by the end of this decade,
along with new peaks in precious and industrial metals.
But we also reviewed the last two centuries thoroughly
for commodity price trends and uncovered a new 29- to
30-year Commodity Price Cycle that derives from the old
Kondratieff Wave model that seemed to fail so miserably
in the 1990s (when it was calling for the next Great
Depression). The model did not fail so much as become
overridden by the massive demographic and generational
trends of this and the last century. However, commodity
prices still follow a regular cycle, as Chart 9 shows.
The last Commodity Cycle peak was in 1980. The next Commodity Cycle peak is due between late 2009 and
early 2010. Our Elliott Wave projections for oil prices also suggest that one more wave upward is ahead, which
will peak around that time frame. Hence, the last bubble to peak in this great bubble boom will be oil and
commodity prices, around late 2009 or early 2010 at the latest. Along with rising inflationary pressures, such
a final bubble is likely to keep most US and global stock indices from reaching new highs in 2009, as interest
rates rise and central banks tighten monetary policies.
The commodity and oil bubble will be the last primarily
because the long spending spree of the massive Baby
Boom generation will finally start to slow long term and
deflation will set in as they start to retire. A decade-long
cycle will also peak here as well and point downward into
the first half of the next decade.
Step 9: The Decennial Cycle Peaks, Around
Late 2009
One of the most consistent long-term cycles is the
Decennial Cycle in Chart 10. Corporations tend to plan
on ten-year cycles and thus over-expand toward the end
of each decade; then they must consolidate in the early
years of the next decade. Stocks and the economy tend
to make almost all of their long-term gains in the second
half of most decades and tend to see their worst
corrections in the first few years of each new decade. The
last cycle bottomed on cue in late 2002, and now we are
due for a peak around late 2009, right in line with the
commodity and oil bubble cycle. That means the next allout
crash is not likely until after late 2009—similar to the
early 1920s, 1930s, 1940s, 1960s, 1980s, and 2000s.
The next strong bear market rally is due from late 2014
onward, which probably will be the best time to reinvest
in international and health care sectors.
Step 10: 4-Year Presidential Cycle Turns
Down, Late 2009 to Late 2010
The most consistent short-term cycle is the 4-Year Cycle
(Chart 11). It tends to peak well into the first year of the
President’s term and has its worst corrections into the
mid term elections in the year to follow. Every major correction in the last 5 decades outside of 1987 has
bottomed in this second year of a Presidential Cycle, typically between the summer and late fall. This cycle
also peaks along with the Decennial Cycle by late 2009, which suggests that the greatest probability for a
strong crash will be between late 2009 and late 2010; hence, our forecast for “The Great Crash of 2010.” For
most markets, that crash is likely to start in late 2008, but the real panic probably will follow between late
2009 and late 2010. The rise in short-term and long-term interest rates and the commodity bubble all play
into these two cycles peaking around late 2009 almost perfectly. The next time for a likely follow-through
crash and market bottom will be into late 2014 on the next cycle. Hence, late 2010 and late 2014 should bring
some great medium-term buying opportunities in the best sectors of stocks, although we may be in a general
bear market well into the early 2020s due to the Baby Boom spending mega trend that has been driving this
boom since the early 1980s.
Step 11: Baby Boom Spending Wave Peaks and Slows Long Term
Our central premise since the late 1980s has been that the most fundamental trends driving our economy are
the spending and productivity trends predictable as new generations age. Since we invented the Spending
Wave (Chart 12) in 1988, we have been predicting that this boom would finally end around the end of this
decade. However, the bursting of the emerging markets bubble and then the commodity bubble will not be
caused by this trend at first. This is a long, slow trend
that peaks and declines more gradually. As we start to
recover from “The Great Crash of 2010,” these trends
increasingly will work against the economy and the
earnings of companies. From around 2010 to around
2023, we have been predicting that we would see the next
Great Depression and extended downturn, much as the
Japanese saw (and as we predicted that in the late 1980s)
from 1990 to 2003. Hence, The Great Crash of 2010 will
not be just another bubble that bursts with new ones to
follow. Instead, it will lead us into the next Great
Depression and the deflation of the entire bubble boom
that started somewhere between 1975 and 1983
(according to different measures). The Echo Boomers,
with their own productivity and spending, will not lead us
out of that extended downturn until somewhere between
2020 and 2024. The worst of this next depression is very
likely to occur between 2010 and early 2015 on the
Decennial Cycle and in the early years of the great bubble
bust.
Step 12: Inflation Rapidly Shifts into
Deflation
The first surprise for economists and the Fed will be the
sudden resurgence of inflation by mid to late 2008 just
when they thought it was licked. The biggest surprise of
all will be when that inflation resurgence suddenly shifts
into a deflationary cycle, starting in early 2010 or so. The
long term slowing of Baby Boom spending, the much
greater banking crisis that will follow as housing weakens
further, and the bursting of the 29- to 30-year
Commodity Cycle clearly suggest such a trend, but it will
be the aging of the Baby Boomers and their progressive
retirements at higher rates starting around 2010 that will
make deflation an inevitable and persistent trend!
Taking the same correlation of workforce growth and
inflation in Chart 20 shown previously, we can now in
Chart 13 roughly forecast such trends out two decades
by projecting when new workers will enter the workforce
(20-year lag) and when retiring workers will exit (63-year
lag). As discussed above, the Echo Boom generation
started to enter the workforce in rising numbers in the
late 1990s, but this generation is slightly smaller than
the Baby Boom generation, which started its first stages
of retirement around 2000. This has kept the rise in
inflation to modest levels. Even though the Echo Boom
generation will continue to enter the workforce into
around 2010 - 2011, Baby Boomers will start to retire
more rapidly from 2010 into 2024. This strongly
suggests deflation in that time period. Remember, this is
not just falling inflation rates, but real deflation. The commodity bubble bust and the long-term slowing of the
economy will again play into this trend strongly.
In addition to all of this, an even broader cycle strongly suggests deflation in the coming decade: our 80-Year
New Economy Cycle (Chart 14). With every other 40-year-generation, radical new technological and social
trends emerge in an Inflationary/Innovation period. That is followed by a Growth Boom that sees bubbles in
the new technologies and trends. That bubble boom is followed by a Shake-out/Deflationary stage that wrings
out the excesses and lowers prices in a survival-of-the-fittest drama that makes the strongest companies and
institutions stronger. The next generation then reaps the benefits of those efficiencies in the Maturity Boom
that follows and the technology revolution from the previous generation fully extends its benefits to the
everyday worker, much like the post World War II boom.
As these three bubbles burst—stocks, real estate and commodities—the banking system will have to
write off major loans, which will contract the money supply exponentially and cause the both deflation
and the next great depression. The worst of it is likely to come in the first few years and during the
ebb of the Decennial Cycle between 2010 and early 2015 — especially for stocks between late 2009 and
late 2010. The key thing to understand is that during a period like this, all assets deflate except highquality
bonds and cash. |
| Anonymous Coward
User ID: 368888
6/17/2008 9:07 AM | | Re: >>THE NEXT GREAT DEPRESSION<< | Quote |
While it's tough to predict the future, one thing is for certain: The U.S. dollar will continue to go down in value, and savers will be losers. With people all over the world piling debt upon debt and spending like fools, it might be best to follow the Chinese.
They've never trusted banks, but have always trusted gold. Maybe it's time we started doing the same. Quoting: Anonymous Coward 447958
Savers will be winners if they save in silver and gold.
Thanks for your post! |
| Anonymous Coward
User ID: 368888
6/17/2008 9:23 AM | | Re: >>THE NEXT GREAT DEPRESSION<< | Quote |
12 Steps to the Next Great Depression. ~ HS Dent
We were
forecasting a Dow of 32,000 to 40,000 before we
incorporated this model. Now we are forecasting a
Dow of 16,000 to 20,000. This adverse Geopolitical
Cycle should continue until around 2018 to 2019.
Expect world events to get worse, not better, for over
a decade to come.
Step 5: Emerging Markets Bubble
.... stock markets in
China, India, Brazil, and Russia. If these stocks continue
to follow this trajectory, they are likely to peak from their own momentum between summer and fall 2008.
Like the
Nasdaq in 2000, these markets are likely to have a mini
crash and then look as if they are coming back in 2009.
The greater crash then is likely to follow into 2010, when
the worldwide economy starts to slow and the commodity
bubble bursts as well.
greatest probability for a
strong crash will be between late 2009 and late 2010; hence, our forecast for “The Great Crash of 2010.” For
most markets, that crash is likely to start in late 2008, but the real panic probably will follow between late
2009 and late 2010.
The Great Crash of 2010 will
not be just another bubble that bursts with new ones to
follow. Instead, it will lead us into the next Great
Depression and the deflation of the entire bubble boom
that started somewhere between 1975 and 1983
(according to different measures).
The Echo Boomers,
with their own productivity and spending, will not lead us
out of that extended downturn until somewhere between
2020 and 2024. The worst of this next depression is very
likely to occur between 2010 and early 2015 on the
Decennial Cycle and in the early years of the great bubble
bust.
As these three bubbles burst—stocks, real estate and commodities—the banking system will have to
write off major loans, which will contract the money supply exponentially and cause the both deflation
and the next great depression. The worst of it is likely to come in the first few years and during the
ebb of the Decennial Cycle between 2010 and early 2015 — especially for stocks between late 2009 and
late 2010. The key thing to understand is that during a period like this, all assets deflate except highquality
bonds and cash. Quoting: Anonymous Coward 452829
all assets deflate except
and silver and gold.
Thanks for the great info! |
| Anonymous Coward
User ID: 453329
6/17/2008 12:27 PM | | Re: >>THE NEXT GREAT DEPRESSION<< | Quote |
I do not believe in a next great depression in 10-15 years,after maybe. |
| Anonymous Coward
User ID: 455019
6/20/2008 5:08 AM | | Re: >>THE NEXT GREAT DEPRESSION<< | Quote |
Savers will be winners if they save in silver and gold.
Thanks for your post! Quoting: Anonymous Coward 368888
You're welcome. |
| Anonymous Coward
User ID: 455019
6/21/2008 3:11 AM | | Re: >>THE NEXT GREAT DEPRESSION<< | Quote |
Ross Perot's site.
"The economic crisis facing America today is far greater than anything since the Great Depression."
[link to perotcharts.com] |
| | Page 1, 2, 3, 4, 5, 6, 7 | |
|
