Socio-Economics History Blog

Socio-Economics & History Commentary

Gerald Celente Predicts Economic Armageddon by 2012

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March 27, 2009 Posted by | Economics, GeoPolitics | , , , , , , , , , | 6 Comments

America Adopting Zimbabwean School of Economics!

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  • Where is America headed? How about hyper-inflationary depression? Clive Maund has written this rather interesting and funny article:
     
      …. Wall St had good reason to celebrate on Monday, for as Dr Housing Bubble makes clear in his article Public – Private Investment Plan for Dummies , the PPIP as it is known is just another gigantic scam to funnel taxpayers money into Wall St’s pockets. 
      
    We should therefore bear in mind that due to this latest highly successful fleecing of the taxpayer by Wall St, we could see the rally continue even further to the 900 area on the S&P500. However, upcoming earnings are expected to be AWFUL and this should pull the rug from under this rally before much longer. So if we see any significant further progress by the broad indices it will be time to go short.
     
    There are two central problems that prohibit the return to normal healthy growth of the US economy. One is that natural cyclical recessionary forces have been obstructed for so long that they have built up to disastrous proportions, especially as speculation and pyramiding via derivatives have ballooned the excesses to astronomic proportions, and as is already plainly obvious, these forces are now unstoppable. Like King Canute trying to stop the tide coming in, the response of the system to these devastating corrective forces is to try to beat them back by employing more of the excesses that created the problems in the first place. Hence the continued bailouts and the buying up of Treasuries etc.
     
    This is like a gambler on a losing streak finally going down in a blaze of glory as he throws everything he has on to the table, only to lose anyway and be shown the door. The ultimate outcome of all this will be a hyperinflationary depression – money becoming worthless and most everyone and everything broke and dysfunctional. The other central problem is that the country is essentially run as a gigantic crime syndicate – corruption at the top, across the government and throughout the banks and Wall St is now so deep rooted and endemic that there is only one way that the people can rid themselves of it.
     
    Right now, after years of soft living the population don’t have the stomach to do what is necessary to rid themselves of these parasites, and it will only be when the television flickers and dies and the supermarket shelves are empty that the average American hauls his weighty posterior out of the armchair with the intention of “doing something about it” only to find himself being taken down to one of the large compounds already organized where he can meet and chat with plenty of people like himself.
     
    With last week’s announcement by the Fed and subsequent developments, the powers that be have “nailed their colors to the mast” and made it plain that they are going to manufacture as much money as they think is necessary to prevent the system from imploding – in particular to stop the Treasury market from collapsing and to keep the zombie entities at the center of the crisis limping along. What they have neglected to mention, and what you have to figure out for yourself, is that given the magnitude of debt and especially the enormity of the derivative deleveraging going on, they are going to end up creating blizzards of money to battle the monster, and that means that we are on the road to hyperinflation.
     
    Yet, despite the intent to exponentially increase the money supply to battle the deflationary juggernaut, there is no guarantee that they will succeed – on the contrary, due to its enormity, they are likely to fail, and their obstinate and misguided attempts to block the necessary cleansing forces of contraction, obstructed for so long that they have built up to disastrous proportions, will only make the inevitable collapse that much more total, and involve the destruction of Fiat currencies worldwide, and the forcible elimination of the old order that created this enormous mess by a deeply discontented populace, who will by this time be highly motivated by a lack of food, water and electricity. 
       ….
    Forget the Austrian School of Economics – welcome instead to the new era of the “Zimbabwean School of Economics” which has been field tested and proven in the country which inspired its name.
     
    Proper application of the schools’ precepts will ensure that there is always enough money for everything – problem with a budget deficit? – no problem, just create the money and pay it off, problem with insufficient demand for Treasuries? – no problem, just create the money and buy them, problem with interbank liquidity? – no problem, just pump money into the banks until they have so much they are throwing it out of their tall buildings by the bin load, problem with restive workers pay demands? – no problem, just create the money and pay them more, problem with not being able to pay the CEOs of bankrupt companies their accustomed huge bonuses? – no problem, just create the money and pay them their bonuses, and why not double them?
     
    So we see that there really is no excuse for a liquidity shortfall at all – the problem until now is clearly that those responsible for creating the money have been too conservative, too timid, they have not been bold and imaginative enough – perhaps this is because they have not fully realized the power at their disposal, not fully appreciated that without the restraint of a gold standard, the sky is indeed the limit – why should anyone who wants anything go without? – especially if they are big and powerful and have intimate connections with influencial figures in the government. Fortunately, as the events of the past week have shown, they are waking up to the error of their ways and starting to see the light. We can therefore look forward to 100% cooperation from the US Treasury and Fed in the fight to beat back the demons of illiquidity.
     
    The general stockmarket went wild on Monday celebrating the adoption of the Zimbabwean School model and the unveiling of another plan to siphon taxpayer Money into Wall St. The Precious Metals sector, overbought after last week’s spike, has had to surrender the limelight temporarily, but don’t expect that to last long. Gold and silver are going to go nuts as a result of implementation of the Zimbabwean School’s precepts. This is because an unfortunate flaw of the Zimbabwean School’s model is that it is more difficult to expand the supply of goods and services in an economy than it is to expand the money supply.
     
    This really is a shame because with so much money flying around many people should by rights be rich, but instead they are going to spoil everything by bidding up the price of good and services across the board, so that those who want to preserve the purchasing power of their money will have to convert it into something whose supply is finite and cannot be significantly expanded at short notice, the ideal choices being gold and silver. When the world of Fiat hyperinflates into oblivion the stampede into tangible assets will accelerate and drive a huge parabolic spike in prices with those tangible assets that are compact and durable being the most favored, these of course being gold and silver. It is to be hoped that the stewards of the Fiat money system do not wait until it collapses in smouldering ruins before they restore sanity and order by reinstating The Gold Standard. 
     

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March 27, 2009 Posted by | Economics | , , , , , , , , , , | Comments Off on America Adopting Zimbabwean School of Economics!

Military Industrial Complex Prepares Mass Graves for US Citizens?

  • Truth or Lies? If true, what is the New World Order preparing for? Pandemic bird flu? Martial law? De-population of sheeple? Shepard Ambellas writes :
      
    A usually quiet U.S. Department of Veterans Affairs Cemetery, has been unusually active lately. The National Memorial Cemetery of Arizona is a beautiful 225 acre facility located in Phoenix.
     
    For the past 30-45 days in the early hours of the morning until sunset, a massive construction operation has been underway. Major amounts of earth have been excavated out about 9-10 feet deep and 600-1000 feet wide. There is multiple locations on the property like this. From the satellite view there appears to be more sections that have been covered with the concrete lids and backfilled to look as if nothing is there. ABC rock is put in place under the burial vaults for good drainage and solid bedding. This will help not contaminate ground water sources from decomposition of human bodies.
     
    The cleanliness of the heavy equipment operation and the large perfect cuts of earth is impressive. These Massive concrete boxes are transported from a nearby storage yard on various privately owned flatbed semi-trucks, then unloaded and put into place a half mile away at the actual mass grave site. They are installed tight together side by side with no space in between.
      
    An interview was conducted between my friend and a truck driver involved in this operation. After beating around the bush for ten minutes, the driver admitted “ I got paid a whole lot of money to speak good english.” Take it for what it’s worth but that sounds suspect. The truck driver also admitted “Each burial vault holds four caskets. I took note that if caskets were not used you could fit 40 bodies or more in each one.
     
    So if these were to hold four troops each and the truck driver did know what he was talking about; this would mean that there are plans in advance for over 4000 U.S. soldiers deaths.
     
    If these are not to contain caskets and only bodies are inserted there could be room for over 40,000 civilians bodies.
     

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March 27, 2009 Posted by | EndTimes, GeoPolitics | , , , | 8 Comments

Failed UK Bond Auction!

  • UK is in deep trouble. Who is going to lend money to UK and US? Why is the FedRes buying treasuries? Because foreigners are abandoning the market. All the talk about the FedRes wanting to bring down interest rates to help consumers is BS !

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March 27, 2009 Posted by | Economics | , , | Comments Off on Failed UK Bond Auction!

Is the Bailout Plan Breeding a Greater Financial Crisis?

  • Tim Geithner’s plan is really no plan at all. It is the same O same O and not very cleverly disguised. It is the bailing out of banksters at the expense of tax payers. Taxpayers will foot the bill, guarantee private investors/banksters/Wall Street insiders will not suffer loss and will make a lot of money. How is the American taxpayer going to foot trillions of dollars in toxic assets / losses? Wall Street rallied 20% (DJIA). No surprise here, Wall Street insiders are primed to make a windfall at the expense of taxpayers.
     
  • Paul C. Roberts comments :
      
    Obama’s advisers are focused on rescuing banks and the insurance company, AIG. They perceive the problems as solvency and paralyzing uncertainly or fear. Financial institutions, unsure of their own and other institutions solvency, hoard cash and refuse to lend. Credit is needed to get the economy moving, and the Federal Reserve and Treasury are doing their best to inject liquidity and to remove troubled assets from the banks’ books.
     
    This perception of the problem and the “remedies” being applied, might be causing a greater problem for which there is no solution. Obama’s approach, and that of the previous administration, requires massive monetization of debt by the Federal Reserve and massive new debt issues by the Treasury.
     
    The unaddressed question remains: Is the US dollar’s status as world reserve currency threatened by the massive debt monetization and multi-year, multi-trillion dollar issuance of new Treasuries?
     
    The United States has become an import-dependent country. The US is dependent on imports for energy, manufactured goods including clothes and shoes, and advanced technology products. If the US dollar loses its reserve currency status, the US will not be able to pay for its imports. The ensuing crisis would dwarf the current one.
     
    Obama’s advisers believe that the US can
    monetize debt and issue new debt endlessly, because America’s capital markets are the deepest and most liquid. The dollar is strong, Obama said at his press conference.
     
    But already cracks and strains are appearing. The day after Obama’s press conference, an auction of UK bonds, known as gilts,
    failed when bids fell short of the supply offered and interest rates rose. This is a bad sign for Prime Minister Gordon Brown’ s plan to market an unprecedented amount of new debt during the current fiscal year.
     
    It is also a bad sign for Obama’s similar plan. In the US, interest rates on US Treasuries have risen in anticipation of unprecedented new Treasury issues despite the Federal Reserve’s recent announcement that it intends to purchase $300 billion of existing Treasuries held by the banking system.
     
    Normally, Fed purchases raise bond prices, thereby lowering interest rates. However, the inflation and interest rate implications of the unprecedented supply of new Treasuries necessary to finance the multi-year, multi-trillion dollar budget deficits are beginning to be recognized in bond and currency markets. Everyone knows that the Federal Reserve will monetize the new debt issues rather than allow a Treasury auction to fail. Recently, America’s largest creditor, China,
    expressed concern that the value of its massive holdings of US dollar investments is in danger of being inflated away.
     
    The Fed cannot monetize new Treasury issues without the word getting out. If and when this happens, the US dollar’s exchange value is likely to drop while interest rates and inflation rise.
     
    To avoid a crisis of this magnitude, the US needs to focus on saving the dollar as reserve currency. As I previously emphasized, this requires reducing US budget and trade deficits. 
     
  • Something has got to give with all these massive printing of money out of thin air to monetize debt. It looks increasingly like the USD will collapse. You can save the Treasury bond market or the USD but not both. The amount of rhetoric against the USD this past 2 weeks is escalating to a crisis situation. Not many realize it. Many still think the death of the USD will be gradual and non disruptive. History says most empire ends with a bang! Not a gentle fading away.
     
  • Jim Willie remarks :
      
    This message was just received by a trusted colleague. This summer could be very bloody, in terms of global retribution against the Untied States, its debt peddlers.  …..
     

    He wrote: “However, come the end of May/June/July 2009, the United States will be put through the meat grinder once and for all. You have no idea how pissed off the creditor nations are with the unmitigated arrogance and delusional bullshit coming out of Washington DC / Wall Street. I have never heard people be so furious and vocal on how the US needs to be dealt with from here on forward, as demonstrated during an early morning conference call we had with Europeans, including Russians and Asians. All on the call are heavy-duty decision makers.” A time of reckoning comes for the US, and my opinion is that what lies directly ahead is a dark place with more economic hardship and far less liberty. Be prepared with ownership of gold & silver bullion, bars, and coins. If not, a likely outcome is more destruction of personal finances, savings, and pension holdings, along with job cuts.
     
  • Although, we do not have public statements from creditor nations about how pissed off they are with America, I tend to agree with Jim Willie’s comments above. Politicians will temper their public statements in polite and understated tones. But behind the scenes, action is being taken and quietly the assault on the USD is being prepared. Jim Willie again :
      
    CONFLICT RISES WITH CHINESE CREDITOR
    The war of words, the high-level conflict, between the Untied States and China continues to escalate. This is an significant titanic conflict since China is a principal creditor. The other important creditor nation is Saudi Arabia. Two weeks ago, an unprecedented warning was given by Premier Wen Jiabao, complete with a finger wagging gesture. The implied message was crystal clear: Do not devalue the US Dollar through reckless spending. China already is the biggest foreign creditor to the USGovt, with an estimated $1 trillion in USTreasury debt. Wen wants to avert massive additional losses from a currency collapse. At issue is an vast stream of stimulus packages, escalated federal deficits, endless rescues, to push down the value of the US Dollar, and thus the held value of the Chinese hoard of savings. The international conflict has reached the Bloomberg, Reuters, and Wall Street Journal news. Of course, they leave out major important points. But the WSJ article entitled “China Takes Aim at Dollar” (CLICK
    HERE ) certainly should act like a cold splash of water to readers, unless myopia is a chronic problem, or unless the reader wears flag draped skivvies every day out of the house.
     
    Chinese leaders are openly critical, expressing deep anxiety. Debate is rampant inside China about the wisdom of continued support to purchase USTreasurys. These are preliminary tectonic shifts to be identified before important new financial structures come to fore. They will disturb the US Dollar system at its global foundation, with much inherent hegemony. The shock waves will come region by region, in a succession. By attracting a lot of attention to this issue, China has decided to attempt to gain influence at the G-20 meeting. 
     
  • We should always assess politicians actions and not just their words to see what they are planning. How do they intend to ‘resolve’ this crisis?
     
    CHINESE BANKS TO REPLACE USDOLLAR
    In a bold plan, the Chinese Govt has announced the yuan currency will soon replace the US Dollar as the new Asian regional reserve currency. The stage is set for Asia to install the Chinese yuan for broad usage across Asia, with possible massive dump of USTreasury Bonds. Look for other new global reserve currency to spring up in the next year, especially after the Chinese run interference on the financial, geopolitical, and diplomatic fronts. The impact alone from the Chinese plans presents a dire prospect for the Untied States, with dangerous economic and credit impacts. The Asia News is full of excellent analytic editorials, some full of valuable data.
     
    Due to US Dollar instability and unreliability, Beijing is introducing a serious currency experiment, in order to aid in the stability of the Asian economy. The Chinese intention seems clearly to decouple both China and Asia from the US Dollar and to introduce the yuan as the regional reserve currency. The yuan will be infused throughout their banking system. Other Asian governments will surely follow suit and discharge reserve USTBonds in favor of the yuan currency. The full impact will be felt when Asian nations who participate in this new reserve currency begin to purchase raw materials and commodities like grains, energy, and metals in Asia, using yuan currency in hand. The giant blow taken by the Untied States will result in further isolation. That will severely weaken US$ demand in an important continent.
     
    This is a very clever economic as well as political plan by China. The plan is a pathway for regional economic stability for Asia, centered finally in China in a monetary sense. China will proceed under the legitimate political cover of their own financial reform toward stabilization. Chinese bank leaders like Zhou Xiaochuan have begun to state publicly some nontrivial arguments about how continuation of the current US$-based global unipolar financial system bears costs and risks that far exceed the benefits. If the USEconomy wishes to import Chinese finished products, then the American consumer will indirectly contribute toward financing any new Chinese debt. The Chinese are considering a new debt security, which will compete for Asian surplus funds and thus displace the USTreasury Bond. If successful, the Chinese will turn the tables completely, and wear the big currency boot. Chinese sentiment has changed, as has their patience. Geithner’s initial comments directed against the Chinese were disastrous, and meant the ‘kiss of death’ for the USDollar and USTBond. My firm belief is that a new Asian regional community fund, designed to ward off currency attack, might be vastly expanded to become the precursor of an Asian Credit Market denominated in Chinese yuan, and using newly created Chinese debt securities. The distrust of the IMF is acute these days. They actively seek alternatives. They are collectively wealthy enough to create new support structures, all of which in turn undermine the USDollar and USTreasury Bond.

     
  • The intent is clear. Battle lines are being drawn. Russia, China… and the rest of BRIC nations ….. emerging economies on the 1 side. The Anglo Saxon world : America, UK, Australia and their friends on the other. Can this battle end without major economic upheaval? Without conflict ? Highly unlikely. We live in interesting times!

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March 27, 2009 Posted by | Economics | , , , , , , , | Comments Off on Is the Bailout Plan Breeding a Greater Financial Crisis?