30 reasons for Great Depression 2 by 2011

[Dover]

ARROYO GRANDE, Calif. (MarketWatch) -- By 2011? No recovery? No new bull? "Hey Paul, why do you keep talking about a bigger crash coming by 2011?" Readers ask that often. So here's a sequel to my predictions of 2000 and 2004, with a look three years ahead:

First. Dot-com crash

We pinpointed the dot-com crash at its peak, in a March 20, 2000 column: "Next crash? Sorry, you won't see it coming." Bulls-eye: The dot-com bubble popped. The economy went into a 30-month recession. The stock market lost $8 trillion.
And today, over eight years later, the market is still roughly 40% below its 2000 peak. Video: Discussing the Great Depression

Dorothy Womble and William Hague survived the Great Depression. They share their stories of living during that time as children. (Nov. 14)Factor in inflation and the average stock has lost well over 50% of its value. Stocks have proven to be a very big loser, a bad investment for Americans, thanks to Wall Street's selfish greed, plus the complicity and naiveté of politicians, press and public.
Second. Subprime meltdown

We reported on warnings of another crash coming as early as 2004, wrote a sequel, also titled "Next crash? Sorry, you won't see it coming." Yes, we were early, but in good company. We wrote many more warning columns. Few listened.

Subsequent events, notably former Fed Chairman Alan Greenspan's admission of his failures in congressional testimony, prove that if he and other Reaganomic ideologues weren't so myopic and intransigent about proving their free-market deregulation theories, they could have acted earlier and prevented today's colossal mess. Instead, their ideology kept the bubble blowing, delayed the pop, making matters worse.

So once again, as history proves over and over, ideology trumps common sense, reality and the facts. Greed drives ideologues to blow bubbles. They pop. Crashes happen. The public is collateral damage.

Third. Megabubble cycles

We also detailed the broader, accelerating macroeconomic sweep of cycles last summer in columns like "20 reasons new megabubble pops in 2011." We summarized a long list of major warnings from financial periodicals -- Forbes, Fortune, the Wall Street Journal, Economist -- and from the voices of Warren Buffett, Bill Gross, a sitting Fed governor and a former Commerce secretary. Multiple warnings "hiding in plain sight," beginning with a Fed governor warning Greenspan in 2000 about subprime risk.

But the big shocker came from the new Treasury secretary two years before the meltdown....cont'd

http://www.marketwatch.com/news/story/well-great-depression-2-2011/story.aspx?guid=%7BB28B49B5-EFD1-4941-B57E-A2BA1545BA09%7D&dist=TNMostRead



Printable Version:
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[Gman]

1. I don't think our families are going to be climbing onto a truck

and going to California to pick peaches for 5 cents a pail anytime soon with hundreds of others doing the same thing because they all saw the same flyer. But it may get to be worse than it's been for a great many years.

[Dover]

2. Are we killing off the dollar?

Moving to a new currency? If so, how much of this 'crisis' is intentional?

While the following article seems a very good and understandable explanation of Deflation and Hyperinflation, I don't agree with the proposed solution at the end, as I think we are headed
for something new/different rather than a return to an old standard. Other areas of the world
have been busy working on the creation of their own currency, and I don't think we are any different. Perhaps a currency defined by 'trading blocs' or geographical/geopolitical realignments...

-------

History is replete with bouts of deflation and hyperinflation. One distinction that history shows, however, is that hyperinflation ends the life of a currency - it no longer is accepted as the medium of exchange. Although deflation is wrought with pain and suffering, defaults, bankruptcies, job losses, depressions, etc.; the currency is not destroyed. The slate of debt is wiped clean and the game begins anew. Deflation prolongs the life of the currency; hyperinflation destroys the currency. The first allows the game to continue. The second ends the game.

http://www.gold-eagle.com/editorials_08/gnazzo112108.html

[kurt_cagle]

5. Not one currency - hundreds

Gut feeling - the USD is a dead man walking, at least with regard to its primacy as the world reserve currency. At some point this debt will have to be reified (or rationalized), at which point either you see hyperinflation or you see global debt forgiveness and the creation of a basket currency. In essence, the latter amounts to a reset of the economy - all outstanding debts are wiped out, the US dollar is removed from its role as reserve currency. We begin a massive global effort of renegotiation at every level - wages, futures contracts, mortgages, bonds, etc, while moving to a system where monetary contracts are negotiated daily in terms of spot oil purchases (which is, admittedly a gold proxy, though there are differences). This would also tend to be a strong green solution, since, unlike a gold standard, oil has real uses, and you become poorer the more oil you export.

[Dover]

7. Yes, a "reset" or re-valuation period seems imminent.

However I wonder if 'how' we value (re: assigning a monetary value to everything perhaps going out of style) will provide even deeper changes than simply currency. In other words, perhaps
our whole measure of what's valuable, meaningful, of worth, etc. will be part of the new equation.

[spin]

6. Conspiracy theorists discuss the NAU...

the North American Union.

Google will produce lots of info on this supposed plan. I refuse to link to most of these sites as they are extremely right wing.

While I tend to discount conspiracy theories, it is strange that all of our government officials seem determined to make our financial situation worse. When a gaggle of politicians appear in front of a camera to discuss our economic problem, the stock market drops like a rock.

[Dover]

8. It's not a conspiracy. It's been proposed to Congress.

Similar to the EU. Goggle is your friend.
http://en.wikipedia.org/wiki/Independent_Task_Force_on_North_America

http://www.canadians.org/water/documents/NA_Future_2025.pdf


Also google world currencies to see how various countries are joining to discuss a more 'localized'
currency (Asia, S. America, etc.)

It's association with conspiracies has primarily been fueled by very conservative 'nationalists'.
I'm not familiar enough with the details to have an opinion, but a new or shared currency doesn't seem inherently to be a negative thing.

[spin]

10. Very interesting... thanks for the links. (n/t)

[Taverner]

3. So how long before farmers can't harvest their food

Due to market conditions?

Personally I don't see that happening

But this was part of the crux of the Great Depression

[Turbineguy]

4. There is no need for a 2nd Great Depression is there?

The fact is we are already turning things around. But a big economy has a lot of inertia. Both upward and downward.

People are always predicting depressions.

Howard Ruff made millions predicting the imminent end of the world in the late 1970's. Predict a Depression and eventually you may become right.

It might be nice to punish or show up those who fervently believe in Reaganomics, but I think that living well is the best revenge. Besides, in order for the real true believers to get the picture, there is nothing that can be done. Look at what Hitler did for Germany. And yet there are still those who worship him.

[Citizen Number 9]

9. What's turning around?

Looks to me like just about every economic indicator is still on the downward trend.