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2012 - Far worse economic slump than 2011, possibly lasting 20 years longer

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posted on Dec, 14 2011 @ 03:33 AM
Governments, mostly western countries, have simultaneously overspent and over-burdened their populations. On one hand governments ARE the privileged bankers shoveling trillions into banks. On the other hand they pretend to be the same as the impoverished people, while taxing, fining and levying fees against the impoverished and their businesses for the slightest excuse.

Because of overspending, nearly every western government will enact a form of austerity in 2012. The US Super Committee is to trim from $1.4T to $4T from the budget and can't agree on the cuts. All euro countries will enact austerity measures and many already have. Rather than let banks fail, they've bailed them out and spread the pain. It's like your neighborhood block of households bailing out your neighbors mortgage to prevent a foreclosure on the block, and instead the increased financial burden on neighbors is causing more and more neighbors to need bailing out.

Austerity is unavoidable. However it means overall GDP will decrease, which means the flow of money slows, and bureaucratic self-preservation in an austerity scenario will demand increased taxes which will further burden the economy.

One article compares 2008 to 1929, and 2012 to the deep of the depression in 1931.

Our decade from hell will get worse in 2012

Commentary: Market crash, political gridlock, revolution, new class wars

Niall Ferguson writes in Newsweek: “Double-Dip Depression … We forget that the Great Depression was like a soccer match, there were two halves.” The 1929 crash kicked off the first half. But what “made the depression truly ‘great’ …began with the European banking crisis of 1931.” Sound familiar?

Pimco’s Bill Gross asks rhetorically: “Where is the euro headed? More than likely down, perhaps significantly.” Gross warns of a “terrifying situation” where “the euro may fall … and take the U.S. recovery with it.”

Jeremy Grantham, whose GMO firm manages $100 billion. He predicted the 2008 crash a couple years in advance. Predicts ‘Seven Lean Years” ahead, till 2016, the end of the next presidential term. Now, in his latest newsletter he feels “sadly … vindicated by my ‘seven lean years’ forecast.” The world “will not easily recover from the current level of debt,” as our self-destructive American and European leaders have “permanently slowed their GDP growth.”

Forbes columnist Gary Shilling just issued his semi-annual outlook: “Global Recession Likely” in 2012. OK, the best he can say is that this one “will be milder than the 2007-2008 nosedive.”

Joseph Stiglitz also reexamines the dark history of the Great Depression, warning that in our ignorance of history we’re missing a fundamental economic “shift in the ‘real’ economy,” missing what will generate future jobs, just as we did back in the ‘30s. Yes, we “risk a tragic replay” of the Great Depression.

Another article compares us to the long depression of the 1870s, not 1929. They predict the economic slump will last 20 years longer to 2031. Some of us will be dead of old age by then, probably because we didn't have the savings to survive after we are retired.

This slump won’t end until 2031

Commentary: Our predicament parallels the Long Depression of 1870s

In retrospect, it wasn’t hard to see that the markets were becoming dangerously unstable. Germany had just adopted a new monetary system, and Europe was being flooded with cheap German money. Greece had just signed up to a monetary union with Italy and France but was struggling to hold it together. Financial markets had been deregulated. New technologies were transforming production and communications, allowing money to move across borders at lightening speed. And a massive new industrial power was flooding the world with cheap manufactured goods, blowing apart old industries. When it all fell apart in an almighty crash, it was only to be expected.

A prophesy for London, New York or Berlin in 2012? Not exactly. It is a description of Vienna in 1873. In that year, in one of the great crashes of all time, the Austrian markets triggered collapses across Europe, swiftly followed by an equally spectacular collapse in New York. It was the start of what economic historians call The Long Depression: a prolonged period of volatility, unemployment and slumps that lasted an epic twenty-three years, only finally coming to an end in 1896.

Lessons we should learn from history:
  • First, depressions can last a very long time, and when their origins are in a debt bubble they should be measured in decades not years.
  • Second, this depression is structural.
  • Three, it’s uneven. The long depression of the nineteenth century was a sustained period of lower growth compared with what came before and what came afterward.
  • Four, good things are still happening. It isn’t all doom and gloom. In the long depression, some countries were largely unscathed.
  • Five, it won’t be fixed easily. The parallel with the 1930s is dangerous, because it has convinced bankers and policy makers that if you can just pump up demand, everything will be okay. It won’t.

    There was a feeling that some economic savior was on it's way; home values, auto manufacturing, a high tech manufacturing boom, a hopey-changey mood, or just people selling each other massages. Now we're beginning to see there's nothing n the near future that will pull us out of the economic slump. This is going to last a while.

  • posted on Dec, 14 2011 @ 04:53 AM
    The builders of the systems are quite experienced with their controlled demolitions. I'm sure whatever the outcome, they will introduce a 'solution' in reformation tailored to their ultimate goals and desires.

    posted on Dec, 14 2011 @ 09:16 AM

    Originally posted by Dbriefed
  • Four, good things are still happening. It isn’t all doom and gloom. In the long depression, some countries were largely unscathed.

  • Unfortunately, this was long before the world had so much integration of not only economies but also financial markets. Everybody's got their hands in everybody else's markets and debt. I could see Sub-Saharan Africa maybe be spared or some of the countries in Southeast Asia, but that's going to be about it.

    posted on Dec, 14 2011 @ 09:43 AM
    Ron Paul on Alex Jones' show yesterday: At ---11:36--- in this vid (near the end) Alex Asks Paul what are the first 3 things he will do if sworn in, Jan 2013?

    Change the foreign policy ---immediately--

    Go after the Federal Reserve

    Cut a "trillion" dollars in government spending "the first year"

    I dont see how the US could remain long term in dire straits with Ron Paul in?.......
    edit on 14-12-2011 by Saucerwench because: x

    posted on Dec, 14 2011 @ 05:05 PM

    Originally posted by Saucerwench

    I dont see how the US could remain long term in dire straits with Ron Paul in?.......

    Won't matter if you change the captain on the ship when the ship is sinking. The new captain may be able to prolong sinking to allow more people onto the lifeboats, but the ship will sink. And don't be deluded, the US economy is part of the greater global economy, so the US cannot stand and succeed alone. Hence Geithner making trips to Europe and urging Europe to get its house in order. Hence the Fed Reserve helping with European bank bailouts. Non of this is for the mere appearances of kind gesture, you realise? This is a clear indication of the urgent efforts underway to prevent a meltdown of the global economy.

    posted on Dec, 14 2011 @ 05:27 PM
    reply to post by surrealist

    I blame Henry Ford's pioneering of mass production techniques for all our woes.

    Why can't countries be self sustaining? Why can't we grow and produce food locally where possible? Why can't we simply import what is impossible to produce for ourselves.

    Throughout the 80's and 90's the economic war cry was 'specialise specialise'....of course that means putting all your eggs in one basket....and they dropped the whole basket didn't they.

    The war cry of this new century should be 'diversify diversify'....have a broad range of skills in the community and when trends change (as they always do) entire cities don't have to be left destitute.

    The other mantra of the 90's was global 'interdependence' - now that didn't last long did it? What that actually meant was 'if one goes we all go' as we're discovering to our cost.

    I can only laugh when I hear government stats - moving us in and out of recession by the quarter, houses prices up, house prices down from week to week. We're in this for the long haul and the pain hasn't even begun to bite yet.

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