The Market Oracle
October 8, 2008
I’m really sick and tired of these economists out there who continue to claim that America will not enter a depression. These are the same bozos that have yet to acknowledge the fact that the U.S. is in a recession and has been for several months now. In fact, as I have previously mentioned, I can make a very strong case that the U.S. has been in the early stages of a silent, modest depression for at least two years; at the very least a protracted recession masked by credit. After the appropriate adjustments have been made for GDP, the U.S. economy has had no more than 3 to 4 quarters of GDP growth since 2005.
Thus far, we have seen drastic emergency interventions by the Federal Reserve and U.S. Treasury – measures not taken since the Great Depression. Thus far, we have seen the failure of the sixth largest U.S. bank – Washington Mutual, representing the largest bank failure in U.S. history. As I have alluded to for several months now, this is just the beginning. Thus far, we have seen many of the world’s strongest, most successful financial institutions file for bankruptcy or participate in a forced buyout to avoid further crisis. Many of these buyouts have been prearranged behind closed doors with the Federal Reserve, the U.S. Treasury and the FDIC. Bank of America, Merrill Bailout Disguised as Buyout?
Wall Street powerhouses such as Bear Stearns, Lehman Brothers, and Merrill Lynch were global icons of banking power and prestige. They survived everything…even the last Great Depression.
But they were unable to survive this one. The other Wall Street firms, Goldman Sachs and Morgan Stanley have only been able to survive thus far due to conversion into commercial banks so they can share complete access to the Fed’s endless printing presses along with the rest of the banking cartel. I have explained what the media, pundits and other “experts” have failed to for several months now. Here is an excerpt from my July 13, 2008 commentary of the IndyMac failure:
In the coming months, I expect to see several bank failures. Not Citigroup or Bank of America.
The “Big 5” won’t fail because the Fed would never permit it. You know the Fed – the entity that’s owned and operated by the “Big 5.” It will be the small local and medium regional banks that fail By the time the washout is finished we could see several hundred take a fall. If we include those destined for the auction block, I can almost guarantee you there will be hundreds of failures.
When the smaller banks fail, the “Big 5” will snatch them up at pennies on the dollar compliments of Bernanke’s printing presses. Maybe now you can see why every nation wants to get as far away from the dollar as possible. They understand the worst is yet to come.
Bernanke’s “Big 5” banking bailout is only ensuring the dollar crisis will continue. However, no nation will be able to completely escape the effects of the falling dollar since it remains the universal currency. It is deeply embedded within global commerce and has extensive reach throughout the global financial system.- Farewell Indymac, What’s Next? Say Hello to the 1970s Inflation Rate (Part2)
I’m going to do something I’ve rarely done in the past two years, but something economists do on a weekly basis – revise a forecast. Instead of the 500 to 600 bank failures I have previously predicted, I’d like to revise that figure to 1,200 to 1,500 over the next five years. This revision is based upon what I anticipate as continued premature seizures by the Office of Thrift Supervision and the FDIC. I’m sure by now you know who will pick up the pieces…that’s right, the banking cartel. And they will do it using taxpayer dollars.
Thus far, we have seen emergency lending by the Fed and U.S. Treasury to both commercial and investment banks; something not seen since the last depression. And now Washington plans to make direct loans to business…once again, something not seen since the last depression. Even the nation’s largest mortgage company, Fannie Mae - created to help the housing crisis during the Great Depression - has failed, as did its younger brother Freddie Mac, formed a few decades later. And taxpayers have been the unwilling recipients of billions of dollars in junk bonds from these two giants, while millions have lost their homes due to fraud, which won’t ever be dealt with appropriately.
Now Washington has forced an irresponsible bailout of the entire banking system down the throat of taxpayers. While this bailout will do very little than mend a short-term credit freeze, it will enrich those who wrecked havoc on the global economy. Even the FDIC, created as part of the Glass Steagal Act of 1934 has been granted unlimited access to the Fed’s printing presses in order to survive.
Yet, these bozo economists still want you to think we have not entered a depression. Ladies and gentlemen, America ’s next Great Depression has commenced. This is not something I an anxious to proclaim, but it is the unfortunate reality. And apparently, most Americans are beginning to see through the web of deceit that Washington and the media has spent so much effort to create. http://money.cnn.com/…
Those of you who understand what is going on should protest when you hear these economic shills rattle off their propaganda. We have no need for this “dog-and-pony” show any longer.
We’ve had our fill from Washington for eight years now. Americans have had enough of this nonsense. And for those who were entrusted with positions of authority to not have seen this coming and/or who failed to respond in a timely manner – Alan Greenspan, banking CEOs, and others – should be sent directly to jail.
For all of you economists who still don’t get it, I have provided some excerpts from a previous publication.
Fooling You with Simpleton Arguments
The pundits and economists continue to make simpleton arguments, such as the current conditions are no way like the depression. They claim that the government made many changes that would prevent the same thing from happening again. They claim that depressions cause deflation. Sure. But that does not mean inflation cannot be the lead into a depression. If things are so different now, why is the US approaching the price declines in real estate seen during the depression? If things are so different now, why has the Fed had to resort to measures not seen since the depression? If things are so different now, why did the New Deal solution to the depression era real estate crisis (Fannie Mae) collapse? All of you guys in denial really need to get with the program.
The Next Great Depression
No we won’t see 33% unemployment like in the depression. Why? Well for starters, Washington fudges all of the data. I have discussed this in detail in the past. As well, the bar for what are considered jobs has been lowered since the depression. Today, you can say you’re employed if you’re a part-timer, you work at McDonalds, you’re a valet or massage therapist (no disrespect to any of you who might be employed in these occupations but let’s face it, they don’t give you a pension plan or healthcare benefits).
Instead of massive unemployment, we will see significant unemployment combined with massive underemployment. Already, my estimates are that the real unemployment rate is approaching 9% while the underemployment rate is 20 to 25%. Over the next few years, the underemployment rate will continue to increase and could top 50%. As well, we won’t see banks close their doors because we have the FDIC. Sure, it will run out of reserves most likely within the next 2 years, but that doesn’t matter because the Fed will just print more money, causing higher inflation. All of this will put further downward pressure on living standards. The devastation won’t be due to a crisis, it will be only heightened by a crisis. The real devastation will be due to the transfer of wealth and jobs overseas. It will be a silent depression.
The Silent Depression
In a few years, the real estate and banking crisis will have cooled off and Washington will start reporting much improved numbers; numbers that will continue to be manipulated. In reality, things will only get worse. Real wages won’t budge, inflation for basic necessities will remain high and most likely be higher, and job quality will continue to decline. It will be a silent depression because there will be no crisis. You won’t feel the full effects on any given day. If you’re in the lucky majority, you will go to work and carry out your life as usual. But you just won’t be able to make ends meet like in the past. Each year things will get worse so you’ll spend more on credit.
It will be more difficult for your children to raise their income status because higher education is becoming an unaffordable luxury for the wealthy. Millions will be stuck in slave labor, working for low wages and no benefits. And they won’t be working in factories churning out goods for the global economy. They will be working in service jobs, tailoring to the needs of America ’s wealthy.
And when you retire, only then will you realize that you’ve lived through a depression because you will run out of money. If you are lucky enough to have a home, you might have to end up selling it to pay for your medical bills, even if you have health insurance. The smaller minority will have a much worse fate.
What the “experts” don’t get is that this will be a depression that will be much more difficult to reverse because it will be gradual. There will be no urgency. Many will wake up one day in a few years and realize that they just can’t make ends meet; they’ll have very little if any retirement assets. It will be a continuation of declining living standards to a point that could lead to some major societal problems.
- The Bailout Plain Truth and the Silent Economic Depression
Make no mistake. There are a few economists who understand what is going on. But the media chooses to interview only those who remain clueless and offer the same denial speeches over and over. The vast majority of the nation’s economists remain largely isolated from the real world and stick to the same status quo ideals that support Washington ’s bogus economic data. It’s like a Boy’s Club. And they adhere to the rules of conduct or face the threat of being ostracized by their peers. These are the same economists who have praised Greenspan and Bernanke’s monetary policies and rogue attempts to destroy the dollar while bailing out the banking system, with a total of over $5 trillion – yes that’s right I said trillion - handed out to the banking system in less than a year. If you do the math you will see this number is correct.
The scary thing is that this printing frenzy has done nothing but worsen the crisis. When it’s all said and done, the disastrous responses by the Fed and U.S. Treasury are likely to have cost taxpayers much more. Counting the losses to the stock market, housing market, banks and corporate defaults, as well as the lost jobs, the main villains of this historic crisis - Alan Greenspan, Wall Street and members of Washington who fought for banking deregulation will result in total losses in excess of $22 trillion for America alone (another revision). Already the losses have surpassed $13 trillion.
For those economists out there who remain in denial, I challenge you to come forward for to debate me on the realities of the economy and capital markets as well as the solutions. I prefer to call it an educational seminar. If you chose to accept this invitation, hopefully it will have a very large audience so that I can demonstrate to the crowd that you people are generally useless and often dangerous.
In fact, I would like to challenge all other “experts” who disagree with my insights and solutions.
This includes all of the clowns on television and radio. I can assure you there is not one person – not an economist, politician, Wall Street executive, pundit, or other self-proclaimed expert out there of sound mind and body who would agree to debate me on these issues. Once they come to realize the strength behind my insights they will run like cowards.
I’d like to encourage all readers to forward this challenge to your economics professors or favorite media personality – from the clowns on CNBC and FOX, to the government shills and financial industry hired hacks on radio. I have proven to be one of the leading experts on the U.S. economy and capital markets. That fact, combined with my lack of celebrity status is precisely the reason why the media has shunned me. They are afraid of my straight-talk commentaries and solutions. They fear that my remarks and criticisms would derail their political agendas and upset their corporate sponsors. And because I don’t have the celebrity status of Warren Buffett or Jim Rogers, the media stands to lose from my cold hard truth.
They’ll let Rogers talk about the realities of this mess despite the fact that he might upset some of their sponsors because having him on air will draw a big crowd, and rightly so.
That, my friends, is the way the media operates in America . That’s why you continue to see Jim Cramer get on national television and claim that he “called the crisis” last year when the facts clearly show he missed everything and has been way behind the curve like the rest of the television and radio clowns. You see, Cramer and others have been made into financial celebrities, so they draw an audience regardless how wrong they’ve been. And for that, YOU are to blame because YOU continue to watch them. Only recently have these media clowns changed faces, hoping you will be fooled into thinking that they actually warned you ahead of time. But the facts speak the truth and they all missed it. The only thing that counts is a person’s track record – something the media ignores.
The next time you hear an economist ramble away the realities of the economy, I hope you will do as I plan and tell them to sit down and shut up. The same applies to the goofballs on television and radio, especially CNBC. The American people are sick and tired of the same clowns feeding us with the same bull. Americans need intellectual leaders with practical experience and excellent track records who are capable of providing guidance and viable solutions. We do not have time for liars, shills and idiots.
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