The Next Great Depression
Taking it down a few notches today, I enjoyed a nice cigar from the Dominican Republic this afternoon out on my balcony here in the Windy City. Kind of bummed out that one of my suppliers raised their prices, though. Too bad. I almost pulled a JFK and ordered a stockpile of cigars last year after Washington Democrats were looking to increase the tax cap from a nickel per cigar to $10 a stick— or 20,413%. Unbelievable. By the way, never heard of the JFK cigar story? Well, if you have time, I highly recommend you watch the following video (a little over 3 minutes long) of Pierre Salinger, JFK’s secretary, telling the story (and other cigar-related ones)…
YouTube Video Link
While puffing away, I got the chance to listen to a portion of last weekend’s “Financial Sense Newshour” broadcast. Jim Puplava and John Loeffler have been talking about a financial crisis window for a while now, which they expect to take place between 2009 and 2012. Puplava and Loeffler had this to say last weekend:
JOHN: So looking forward, say, 12 to 24 months, we would say, given where we’re going, we can probably look towards higher gold and metals prices; there will be another money crisis – another currency crisis – and all it would seem like they’re [Congress] doing right now is staving off the day of reckoning. Let’s face it, we said that 2008, that’s the ramp up to 2009 to 2012 – it’s accelerated a little more than I thought it would be and it’s a little more violent than I thought it would be, but nevertheless we’re still on that; and somewhere in that window, all of this stuff begins to fall apart and you can’t tell what’s going to trigger it, but it will go.
JIM: It’s going to trigger. And I think that the thing that’s scaring the heck out of them [Congress] is all of this is starting to unfold – whether it’s $4 gasoline at the pumps, headline inflation with foods, banks going under, stock market manipulation – all of this – and they’re desperately just trying to buy time to get elected because you’ve got 535 people in Congress who are worried about keeping their jobs. And what I think is going to happen is as this worsens the country is going to lurch very hard to the left in the November election (we’re going to get into this in the next segment) and then as a result of the policies that are going to put us in place, that is going to give us our great depression that I anticipate.
By 2010, the United States is going to be in a major depression.
And then, what is going to happen is we’re going to lurch – almost do a 180 degree turn – and lurch very hard to the right as one disaster after another unfolds upon the country.
Great cigar, not so great forecast…
Source:
Financial Sense Newshour
3rd Hour, Part 2
FinancialSense.com, July 19, 2008
July 25th, 2008 at 11:31 am
Great post, very interesting to see your predictions on where this country is headed. I guess all there is left to say is hang in for a bumpy ride folks. I urge homeowners to keep themselves out of foreclosure, and those already facing it, should act quickly because it looks like matters are only getting worse.
July 26th, 2008 at 6:55 am
Yeah, I concur, great post. It’s made all the more resonant by the fact that I see either choice in Nov. as pretty much as disaster in real time (although I will say I see an Obama victory as symbolically a great thing for the country).
July 28th, 2008 at 9:37 am
Thanks for the comment Foreclosure Doc. While I believe there will be a good deal of economic pain ahead of us (more foreclosures included), this is by no means the end of the U.S. story…
July 28th, 2008 at 10:22 am
Thanks for the comment Days. I’m still convinced that whoever is elected President will be seen as the next Herbert Hoover.
July 31st, 2008 at 12:42 pm
The BNP a political party in the UK gives its reason for the US economic crisis:
http://www.bnp.org.uk/2008/07/americas-sub-prime-housing-disaster-will-affect-the-whole-world/
America’s Sub-Prime Housing Disaster Will Affect the Whole World
By News Team ⋅ July 31, 2008 ⋅ Email this post ⋅ Print this post ⋅ Post a comment
With the American housing market in its worst crisis since the Great Depression of the 1930s - caused directly by international capital funding the wave of Third World immigrants into that country from Mexico and other South American countries — President Bush is authorising new legislation to pave the way for massive new government intervention designed to slow the slide.
Faced with seemingly never-ending falls in the value of their properties, some of these new American home-owners are taking radical action; they are choosing to walk away from homes and their mortgages.
Though banks can repossess and sell the homes of borrowers who stop paying their mortgages, under a legal quirk originating in the Great Depression of the 1930s, banks cannot easily pursue borrowers for any balance outstanding on the main mortgage on their homes.
Professor Nouriel Roubini of New York University, one of the first economists to warn of the dangers of the American house price boom, believes the number of people positively choosing to walk away is growing rapidly.
“This is becoming a tsunami of voluntary defaults,” Professor Roubini says. The losses for the financial system from people walking away could be of the order of one trillion dollars when the entire capital of the US banking system is only $1.3 trillion.”
“You could have most of the US banking system wiped out, so this is a total disaster.”
Which is why it is not just US policymakers who are hoping America’s new, multi-billion dollar initiative to stabilise the housing market will succeed in its aims and thus make walking away less attractive.
Because if it fails, the economic fallout could be felt far beyond America’s shores.
August 4th, 2008 at 8:21 am
Thanks for the info Karen.