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Civil unrest will break out before the end of the year. The Military and Guard will be called up to try to stop it. They won't be able to. Big cities are at risk of becoming a free-fire death zone. If you live in one, figure out how you can get out and live somewhere else if you detect signs that yours is starting to go "feral"; witness New Orleans after Katrina for how fast, and how bad, it can get.
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The underlying problem is not the stock market. It is the credit (bond) market - that is, the underlying reality that there is too much debt out there in relationship to GDP, it cannot all be serviced, and as the economy contracts it feeds a vicious spiral where a default produces unemployment which drops both spendable income (and thus income available debt service) AND tax revenues, giving it to the credit market in all orifices. This is "deflationary destruction" and it is inevitable when government pushes off the normal cyclical cleaning out that recessions do, as our government has.
I have many times referred to anger rising in the American population, but this little screed on The Internet makes clear exactly how pissed off some people are getting. I firmly believe that the law can be the best form of justice when people do really evil things, mostly because death at the hands of an angry mob is usually fast if brutal but life in prison always looking over your shoulder in the yard is a special kind of Hell. What the politicians need to understand is that when the public's demand for justice rises as it has been for the last year or so you can't placate it by getting 50 people to return bonuses from AIG or by putting Madoff in prison. You need to go get the bad guys - a lot of them - and try them in our public courts, with public indictments and public juries, and do it to enough of these malfeasors so that everyone "gets it" - if you pull this in the future, you WILL be brought to justice and punished, just like the guys who did it this time. Promises to do it "next time" won't do.
Originally posted by theWCH
Just to further address the original question: I know for a fact that some very respected academic Economists watch Denninger's blog, for whatever that's worth.
[edit on 26-3-2009 by theWCH]
We can do this the hard way or we can do this the catastrophic way, but whether we like it or not it will happen, because the mathematics of the situation make it inevitable - whether the government and "elites" like it or not. I will repeat what I said months ago - Barack Obama is our first Black President, and if he does not get his act together and stop this stupidity he is going to be our last President.
Oops. Under Millard's strategy, the pension agency was directed to invest 55 percent of its funds in stocks and real estate. That included 20 percent in US stocks, 19 percent in foreign stocks, 6 percent in what the agency's records term "emerging market" stocks, 5 percent in private real estate and 5 percent in private equity firms. What I warned of was the potential loss of your private pensions a few months back, if you remember. Here's the formula for your impending doom, if you forgot: 1. The S&P 500 goes to 300 as the "bailouts" and "handouts" collapse the economy. 2. The PGGC's equity investments are worth 20 cents on the dollar, the private equity and REITs are zeros. This puts the fund 40% underwater across-the-board. 3. It is unable to pay and goes to Congress. 4. Congress can't fund additional borrowing because the bond market has dislocated. 5. You get 10 cents on the dollar for your supposedly 'guaranteed' pension. Oh, and your Social Security and Medicare are cut by half (or more) too due to #4 at the same time. Congratulations America, this is the price of remaining asleep while the robber barons fleece the Treasury. Still think you ought to watch American Idol eh? I give this two, maybe three years before it plays out.
We agree - but I doubt this is going to take two or three years. More like one to two. Kind of depends on how long the world keeps the U.S. on life support. Karl, the longer this insanity goes on, the more I come to believe that there is much happening below the radar - like what kind of renumeration was required to keep China from selling bucky down the river? Was it institutional - or (my guess) personal? My guess is that sooner or later something much more embarassing than the AIG bonus deal will come out and the collusion between U.S. decision makers and global monied interests will be exposed. Then things will get real interesting real fast. When folks come to understand that every U.S. citizen is paying taxes to support the lifestyles of the rich and famous, there will be a party - a necktie party.
I'm saying there is a very high probability that the bottom line is (a financial nuclear blast) And thehe AIG bailout was nothing more or less than an undisguised attempt to paper over the boom that has, in fact, already occurred. It appears that attempt has now failed, which means things will be getting very interesting very soon.
Originally posted by tgidkp
i cannot seem to navigate that forum. i can find nothing of particular relevant interest. what am i doing wrong? can you please link directly to a thread in which they are discussing current topics?