Interest rates are bottomed out and the Dollar is indefensible, depression defenses are exhausted already. If interest rates are raised to defend the Dollar, the stock market will crash(worldwide). Unemployment, home foreclosures and bankruptcies are epidemic while state governments sink into insolvency. Pension plans and 401K's are shedding value. Do you see the writing on the wall?
In the Republican Great Depression of the nineteen thirties, which lasted ten years, by 1932 the DOW lost 77% of it‘s value, the S&P Index lost 80%. Stock market crashes precede depression by 2 or 3 years. It took 4 years for maximum unemployment to be reached in 1933. The typical duration of a depression is 7 to 10 years. The most likely culprit to trigger the final crash is the fall of the Dollar. In the 20's and 30's we had low national debt with high manufacturing activity, today we have a very high national debt with huge budget and trade deficits and our manufacturing has been off shored. From what I read Reaganonomics will lead us into the worst depression in history. Well, we shall see, won't we.
According to economist Dr. Ravi Batra:
“ The coming cataclysm would be historically the worst in intensity, but it would last only six or seven years, because the American public, much more conscious of it’s rights today than before, won’t stand for another decade of devastation. However market imbalances caused by extreme wealth disparity take a long time to unravel. No depression in history has been shorter than seven years, and I think the next one would also be that long.
The economy does not prosper in proportion to a market bubble, but it does suffer tragically in the aftermath of the burst. In the rising stage, the richest wallow in waste and luxury, but in the declining stage the bitter fruit of their greed and folly poisons everyone. This is exactly what happened in 1929. One after another, the basic pillars of the economy fell like dominoes. By 1933 the unemployment rate reached a high of 25% of the labor force, with millions employed only part-time.
The stock market crash in America will be either preceded or immediately followed by similar crashes all over the world .Foreign lending to the United States will then cease altogether. The Fed will be caught in a cruel dilemma. It will be sailing in uncharted waters, with no guiding precedents. Accommodating the gargantuan appetite of the government deficit and of failing banks, with foreign investment chocked off, would require the Fed to print great quantities of new money, enough to threaten the return of crippling inflation along with the sky-high interest rates, which in the end would bring about a depression anyway. On the other hand, keeping the money supply under reasonable control, with limitless government borrowing and banking needs, would also sharply raise the interest rates and cause thousands of bank failures. The fed will have to choose between two evils - an inflationary or a deflationary depression.
If America were a surplus nation, it would continue to lend money abroad, keeping other countries afloat. It did that for three decades following WWII. But now the worlds largest economy is also the worlds largest debtor. It is simply impossible for other countries to keep America prosperous for long. The American appetite is gargantuan. A debtor can thrive on the fortunes of a lender, but a lender cannot forever prosper when a borrower has an insatiable appetite. Something will have to give and that will be international commerce. When the dollar begins to fall freely, foreign lending and international commerce will sharply decline. The drop will be faster this time than in the 1930’s because of increased global interdependence. "
Our depression fighting weapons have been used up, Commercial banks received the boost and overnight Investment banks were allowed to change their charters to become eligible for bailout money. The American people received no relief other than extended unemployment benefits and Cobra medical coverage for those qualifying, the former is in a congressional fight for it’s life right now and Cobra is planned to expire. If relief had been given, even as a low interest loan to struggling home owners the money would have trickled up to the banks and a multiplier effect would have added a boost to the economy as well as to the struggling banks. But no, open the Fed up to .25% loans to the banks and let them do as they please.
The free money policy of .25 percent interest has addicted the financial titans to free money. They are speculating in commodities, the stock market(it is your money they are gambling with in the market, for now this is what props it up), they continue to buy up competitors( with your money once again), and they drain the profits out through mega salaries, mega bonuses and dividends.
The interest on the .25 loans from the Fed is subsidized by you, the American taxpayer, to the tune of $400,000 added to the deficit for each ten million. That is insanity. We are paying the financial titans to screw up the economy. The Federal Reserve is giving away money below cost to stimulate the economy with no direction what so ever on how to spend it. How do I get in on that racket?
I have phrased it this way before and it is imperative that you understand….….. The Republicans created the deficit, expect the poor and middle class to pay it off while they buy the debt up and sit around the pool collecting the interest. Not only do they sit around the pool waiting for dividend and interest checks but they only pay 15% tax(capital gains). They have a racket going for themselves……….As the average working man kills himself working for shrinking wages and losing 1/4 to 1/3 to taxes the wealthy’s Cosmopolitans and Mai Tais are tasting great in the sun!
We have an economy going into convulsions and on a respirator while the Financial institutions have a free prescription for steroids. Will there be anyone providing for the survival of the people? Are we headed into depression? Well we shall see, won’t we.
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Thucydides (431 B.C.): " I fear our mistakes far more than the strategy of our enemies. "
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Hang onto your ass for it may be all that is left you!
Good Luck
KAK
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