Great Depression v2.0 by 2011 ~ 30 reasons

By Paul B. Farrell, MarketWatch
Last Update: 11:53 AM ET Nov 19, 2008

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. 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: Bloomberg News reports that shortly after leaving Wall Street as Goldman Sachs' CEO, Henry Paulson was at Camp David warning the president and his staff of "over-the-counter derivatives as an example of financial innovation that could, under certain circumstances, blow up in Wall Street's face and affect the whole economy."

Yes, they knew. And still both Paulson, a Wall Street insider, and Greenspan's successor, Ben Bernanke, a Princeton scholar of the Great Depression, stayed trapped in denial and kept happy-talking the public for months after the meltdown began in mid-2007. Get it? While they could have put the brakes on this meltdown years ago, our leaders were prisoners of their distorted, inflexible views of conservative Reaganomics ideology.

As a result, once again the "best and the brightest" failed America and now they and their buddies in Washington and Corporate America are setting up the Crash of 2011.

Now it's time for my 2008 update, a look into the future where things will get far worse during the next presidential term. And given human behavior, especially in the deep recesses of Wall Street's "greed is good" DNA, it seems inevitable that no matter how well-intentioned the new president may be Wall Street and Washington's 41,000 special-interest lobbyists will drive America into the Great Depression 2.

]Full article

ties in nicely with the thread

Depression 2009: What would it look like?
www.abovetopsecret.com...

I posted that same article link yesterday:
www.abovetopsecret.com...

I was surprised and just a little dismayed at how little attention it even got. Here we have a mainstream analyst breaking down the 3rd wall and supporting what alot of people here believe, that we're headed for a second great depression... and few seemed to care about it.

As far as I'm concerned, that $60 trillion medicare/Sociel Security shortfall alone is enough to frighten the crap out of me and make me want to see the government aknowledge the problem and discuss solutions to it. Every time I read a new article that contains some potential multi-trillion dollar colapse (CDS, Derivatives, Social Security, etc) it makes me wonder if this whole bailout fiasco's ultimate intention was to try to "gently" ease the minds of the citizens into huge losses anticipated to occur in the not too distant future. After all, had we been hit with, say, a $10 trillion colapse in some given sector, the public's reaction prior to the bailout would have been pandemonium. However, now you see a figure like a potential $10 Trillion loss and unless you really stop to think about just how freaking ridiculously insane that is, your brain initially relates it to the $4 Trillion the media is now claiming the recession has cost us and you think "Eh, that isn't so bad." We're being conditioned to accept the "Trillion" suffix following a dollar sign and a number. Imagine even 10 years ago if these types of figures had been tossed around as losses.

reply to post by burdman30ott6


weird I did a search before posting and didn't find it

In regards to why there were no replies, I think we are being saturated with this kind of stuff recently so people are becoming desensitized to it. And then you get the sheeple's throwing off the topic and getting everyone's knickers in a twist.

I try to read everything to hopefully find a nugget that will indicate a good time to head for the hills before the SHTF.



In other News, the Dow Jones dropped almost 5% today ~ 8,015.92 -408.83

[edit on 19-11-2008 by warrenb]

I just saw this thread (I as read marketwatch on daily basis) as I wanted to open it.

It's really sad that almost nobody replied .

I also recommend these to articles by Paul B. Farrell:

20 reasons new megabubble pops in 2011
Greed blinded us to subprime meltdown, it'll blind us next time too
www.marketwatch.com...[537F9AC4-DAE4-48BF-9ED1-A54AE6B6C0B9]

King Henry Paulson says: 'Buy banks!'
But gurus say no: Cool Andy, Mad Jimmy, Genius John, Nervy Naomi
www.marketwatch.com...[52A2D9BC-E319-44B4-8FA7-8FAA0E67BFFE]&dist=morenews

Warning: King Henry's bailout like Rummy's Iraq
Reaganomics hidden in 'sleeper cell' armed with lethal 'financial WMDs'
www.marketwatch.com...[A1408383-3517-40A0-8363-DBD03829CEA1]&dist=morenews
Unfortunately, while you were distracted by the election, Wall Street gained control of our Treasury using a Trojan Horse, Hank Paulson, who filled Treasury with Goldman Sachs alums and pulled off one of the greatest inside heists in the history of the world.

While you were distracted, Wall Street privatized the U.S. Treasury, got the keys to Fort Knox and will be stealing trillions for years to come, through a secret "sleeper cell," a "virus" installed in the $700 billion Wall Street bailout. They're laughing: All you got was a heavily discounted paper IOU for you, your kids and generations to pay off. The winners: Paulson, Goldman, Wall Street banks and Reaganomics. The losers: America.

Wall Street and its buddies in Washington (all those politicians bankrolled by 41,000 lobbyists) know two things the voters never, never learn: that no matter how incompetent they are -- how greedy, how stupid and how destructive -- America's naive voters will always bail them out of a crisis.

...

The American taxpayer is being royally screwed by the Wall Street bailout giveaway. According to Klein, they're adding insult to injury, rubbing salt in our wounds:

*
"Many of the banks appear to have no intention of wasting the money on loans."
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Merrill CEO John Thain said "it's just going to be a cushion."
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Citigroup CFO Gary Crittenden "hinted that his company would use its share of the cash, $25 billion, to buy up competitors and swell even bigger," giving them the "possibility of taking advantage of opportunities that might otherwise be closed to us."
*
And my old colleagues at Morgan Stanley are "planning to pay themselves $10.7 billion this year, much of it in bonuses." So screw the taxpayers and Main Street homeowners.

...

So now you know the truth: The Treasury did not nationalize America's banks. The fact is, Wall Street privatized the U.S. Treasury with a $700 billion rescue plan being controlled by the very banks that created the mess. You were distracted by the election, hoping for a savior, while Wall Street was turning defeat into victory using a classic "disaster capitalism" strategy.

...


This Paul B. Farrell is very brave because is one of rare who truly speaks what is going on!

EDIT
Formating of text is completely broken...



[edit on 21-11-2008 by Vojvoda]