Friday, March 14, 2008
The Bear is Yet to Come: The U.S. Economy will fall into a Depression
Bear Stearns, Merrill Lynch, Morgan Stanley, Lehman Brothers and Goldman Sachs are the benchmarks for high-yielding banks that produce money/provide liquidity in the Capital markets. If they start to falter, the next group is the commercial banks, which affects all Americans, Europeans and Asia markets.
The signs have been clear: Commodity Prices (Gold, Corn, Wheat, Silver, Oil) are at record highs, Mortgages are failing at huge rates, with ex-Fed Chair Greenspan asleep at the wheel in allowing the housing market to gallop ahead unrestrained, the United States Dollar is at record lows versus the Japanese Yen (99 Yen), Canadian Dollar (1.01), Swiss Franc (0.9987), The Euro (1.567) and to add to that, we are in a economic standstill right now, zero growth.
The United States Economy will trigger larger problems as it continues to pump liquidity into the market via lowering interest rates (expect .75% ease on Tuesday), thus causing the dollar to decrease in value and thus continuing to raise commodity prices, which introduces more inflation into an all ready, dicey situation.
Inflation has been a European concern of utmost importance which is why they have not lower their interest rates in lockstep with the United States. They are uniquely aware of the triggers of the Great Depression, which started in Europe, namely Germany, after WWI.
We are just at the beginning of a major economic shake up. And we have one Presidential candidate, John McCain, who said, "I don't understand the economy..."
Which leads one to wonder, do you want another ill-equipped President running a country in a economic meltdown? What did the Iraqi war gain us in economic terms? (The cost and money spent could have been used better...)
George W. Bush, with a Harvard MBA, has taken us back to the edge of the 1929 October financial meltdown.
He and his policy people pushed for easy/no regs on lending of money to people that should not have ever received a banking loan on a house. These people got over their heads. Then the banks got too tight - on lending, or passed their bad paper on to other banks, and other banks did the same,etc. - and the money has been devalued in the process. Meanwhile, the Fed and Government has done us in with bad policies.
Oil prices are being driven by devaluation of currency. Your money is buying less and less - and the problem is spreading to corporations that are cutting jobs - as Ford, Chrysler, GM and other big manufacturing are reducing their forecasts but cannot lower prices, while those that do overseas business are doing ok or better. So, not all is lost.
So, I am sounding the alarm on the 1MC: "start preparing for a long downturn in the U.S. Economy. Expect prices to rise 20, 30 and 50% above today's rate. And get your money out of risky investment vehicles. Hedge funds are the first to go. Stock up on staples. Get prepared for more bad news..."
Predicting another Great Depression is sometimes a self-fulfilling prophecy. But the government as currently constituted is not going to save you or me. "Let them eat cake," is their mantra.
I have made numerous posts on the American Economy prior to this, which means I have been paying attention longer than just today...so, though this is radical to say "Depression," in 12-18 months, it may "bear" itself out.
I'll tell you more when you tell me yours. ;)
Patience, grasshopper. You must use the force. Nothing MacGyver couldn't solve... My new bag: to make lives better through their health, their mindset. It's new, but we should always look for new. Take a gander there at Bringin' Gas & Dialin' 9: A Seven Score Addiction to the National Pastime. Writing is just about the only thing one can do to live on permanently - buildings will crumble, pictures can fade, memories blur before we know it, but words can remain visible, and understandable, long after we pass from this mortal coil. (That's why that Socrates guy still gets play!) So that's my story. Create your new story!