Until last week, most economists were divided on whether the U.S. was in a recession or not. Now, with the ailing mortgage agencies Fannie Mae and Freddie Mac on the ropes, it's clear that what's unfolding is far worse than any recession.
As Britain's normally staid The Telegraph newspaper notes, we could be on the verge of a new Great Depression. That might seem far-fetched until you consider that last month, the Dow suffered its worst June since 1930.
But The Telegraph is hardly alone in using such apocalyptic language these days. The "D" word is starting to be mentioned more and more in the business media, as well as by economic commentators. As David Bullock, managing director of investment fund Advent Capital Management, put it in a comment to The New York Times on Tuesday, "We are closer to the Depression scenario than not."
Yes, a real Depression, complete with tent cities now springing up in what once were prosperous suburbs.
This doom-and-gloom language in describing the U.S. economy first began to pick up steam after investment bank Bear Stearns had to be bailed out by the government in May. In describing the bailout, the Associated Press said that Bear Stearns was "On the verge of a collapse that could have shaken the very foundations of the U.S. financial system."
The current crisis with Fannie Mae and Freddie Mac is infinitely larger than Bear Stearns. The two companies either hold or guarantee a staggering $5.3 trillion worth of mortgages. Indeed, the investment magazine MoneyWeek has noted that the crisis is big enough to doom the dollar.
As MoneyWeek notes:
Fannie Mae and Freddie Mac might have been deemed too big to fail---but who's big enough to bail out the US? When investors start seriously asking themselves that question, expect the dollar to plunge.
Make no mistake, a catastrophic U.S. economic collapse is on the way. Such is the inevitable fate of any Ponzi scheme economy that has been running on nothing more than smoke and mirrors (and oceans of foreign capital) now for many years.
Of course, those who are poor or working class know first-hand that the U.S. economy has been in increasingly serious trouble since around 1980. Wages have been steadily declining for everyone but the very rich. And working class people now toil more hours for less pay than their counterparts in any other First World nation. (They have to, as a 40-hour workweek no longer is enough to put groceries on the table).
But as long as America had a tiny elite of prosperous super wealthy, we could always point to them and try to convince ourselves that our economy couldn't be all bad. After all, we would note, there are some people out there making a fortune. All it takes is hard work and ambition, right?
Today, with the stock market in the toilet, and the Fed having to step in to bail out the financial sector, it should be clear to anyone that the U.S. economy is in crisis.
If the U.S. economy actually produced anything of value, this would be nothing more than just another typical downturn in the economic cycle.
The problem is, the U.S. economy no longer produces anything of value. Our economic activity basically consists of importing trillions of dollars from central banks in East Asia---which we then use to prop up our Ponzi scheme economy. The ocean of foreign capital that flows into our nation daily is used to pay for the shopping habits of U.S. consumers.
In fact, in recent years, the Great American Consumer has been hailed by U.S. economists as the "locomotive" of the world economy. There was only one problem: U.S. consumers had zero savings and were depending on foreign capital to finance their shopping binges.
The creator of the progressive site, BeggarsCanBeChoosers.com, Marc McDonald is an award-winning journalist who worked for 15 years for several Texas newspapers, including the Fort Worth Star-Telegram, before he quit his day job and set up shop in cyberspace in 1995. McDonald's articles have appeared in a number of popular progressive Web sites, including OpEdNews.com, BuzzFlash.com, Crooks and Liars, Salon.com, Progressive Daily Beacon, The Neil Rogers Show and The Raw Story. McDonald's Web articles have also been featured and reviewed by various national and international media, including CNN Headline News, the BBC, the Washington Post, USA Today and many more.
I had two different people that were stranded without gas money hit me up for spare change. I have noticed that the networks are focusing on the failures, strange they would ignore the Ron Paul march on DC that took place on the 12th and they also spike many other important stories. Some of us believe that the elite are planning this crash, and it appears the media is attempting to spread panic by publicising the bank failures. If there was a story that needed to be kept quiet it would be the failures. Runs on the banks can cause a domino effect. A dollar crash will give the elite a good excuse to implement the cashless society, then the bastards will live in your wallet and take your substance at will.
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john riggs (0 articles, 0 quicklinks, 0 diaries, 426 comments)
on Tuesday, July 15, 2008 at 8:42:47 AM
Well if the money will soon be worthless, perhaps we should be doing what all of those who are abandoning the stock market are doing. Buy gold. US currency, no matter where you hide it won't be worth monopoly money.
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Michael Shaw (7 articles, 1 quicklinks, 1 diaries, 329 comments)
on Tuesday, July 15, 2008 at 11:39:16 AM
that this depression was manifested by the power elite. And although I also agree they own major media, the truth is they aren't trying to enhance a panic, they are in fact denoting one.
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Michael Shaw (7 articles, 1 quicklinks, 1 diaries, 329 comments)
on Tuesday, July 15, 2008 at 11:43:19 AM
Indeed, I too believe we in the USA are heading for a Great Depression; but since big corporations do not want the public to think things are that bad they will use their ownership of the main-stream media to keep the word "Depression" from being said.
I believe the world production of oil has peaked and the world demand is skyrocketing. The Global Market depends on oil and with the price skyrocketing the price of almost everything will rise. With Americans deeply in debt already rising prices will result in severely cutting back purchasing anything that is not essential for survival.
I also think that this depression that we have just entered will be much more long lasting than the Great Depression of 1939; because the fundamental fact that oil is the basis for our global economy.
I also forsee that Global Warming will contribute to the collapse and severe storms and rising sea-level will cause destruction of several major coastal cities (Miami, New York, Washington, DC). High heat and drought will be the norm in the south-western states.
Having said this, I also see the possibility to deal with the condition by switching our energy from fosill fuels (oil, gas, and coal) to solar and wind power. Solving the global warming problem also solves the peak oil problem. This change would also provide many new jobs right here in the USA.
The polititians are so committed to the free enterprise, let business solve the problem if and when they see it makes economic sense, that they may choose to avoid taking any action that big business does not want. Thus the problem with switching from oil, gas, and coal to solar and wind is that big oil, gas, and coal companies are spending lots of money to prevent it.
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Philip Pease (0 articles, 0 quicklinks, 1 diaries, 128 comments)
on Tuesday, July 15, 2008 at 10:04:01 AM
at the conspiracy theorists who claim that the Rich, the 12 Who Rule the World, the Bilderberg Group, Davos--you name it are devising financial collapse for their own personal gain. Who profis from that? Bill Gates, as the market for Windows dries up? The Walton family, as Wal-Mart comes apart at the seams?
This crash has been a long time coming, but the sobering of America is more a response to abuse than someone's great plan.
Get a grip, people.
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Jim Freeman (108 articles, 51 quicklinks, 221 diaries, 382 comments)
on Tuesday, July 15, 2008 at 12:20:28 PM
If I have 100 billion dollars and the dollar devaluates 100 times I still have a billion dollars but Your ten grand savings is now 100 bucks. You cant pay Your property tax, but the guy with the billion can buy Your house at the sheriffs auction for a song. As for the theories, You are parroting dubya and his ilk trying to diminish the free thought of the US citizen. The Council on Foreign Relations set a target price for oil at 200 bucks, and that was before the war. I saw the thousands of military vehicles painted beige being taken down the rails in Grand Prairie Texas in 1988 on their way to Portland and on to Kuwait for the war they had planned for years. Nothing You can say will cause me to doubt what I have seen with My own eyes. Your country is being sold down the river while You have Your head in the sand. You probably still think Yellowstone park belongs to the US, well it doesnt. Agenda 21 and Codex Alimentarius will make a believer out of You when Your dinner bell goes off and the cupboard is bare.
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john riggs (0 articles, 0 quicklinks, 0 diaries, 426 comments)
on Tuesday, July 15, 2008 at 3:04:23 PM
After every crash, the rich end up with more tangible assets, as those who could not pay their asset backed loans, and those smaller banks and companies fail, and get bought at 10 cents a dollar.
The other reason to crash the US economy is to lower the standard of living of the average American even more to pave the way for One World Government. The standard of living between the various regions need to be equalized before we can be merged together.
America has 5% of the population, the future growth is ex-Americana. We are no longer relevant to the Microsofts and Wal-Marts. Your world view is too America-centric. CEO's and the money power are looking beyond America, and have been for 30-40 years. Asia has 40% of the global population.
The other reason for the planned collapse is to dump the USD and move to a World Currency. The large banks and investment companies in the US are global entities, they could care less about the USD since they will know in advance when the crash comes and take the appropriate positions. The beauty of the USD crash to them, and a World Currency, is that it means the US will not be able to service it's debt, and must go to the IMF for credit. The IMF will have all kinds of strings on the credit and this will mean a huge sell off in US assets, resources, gold, military, land (Alaska, Hawaii), etc. that the Big MNC and Financial institutions will get cheap. An IMF controlled world currency is a necessary step to One Wolrd Government.
For those wanting to buy gold as a hedge against the dollar, remember 1933. The fed still marks it's gold at 40 dollars an oz. More likely than not, you will get 40 dollars an oz for gold, and it will go to the IMF to settle our debt at market price. As in 1933, anyone not redeeming their gold will go to jail.
Our leaders and Washington and the CEO's are not loyal to American sovereign interests or the welfare of it's people. They are globalists who serve the Globalization movement towards a NWO.
Globalization, ain't she grand.
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pft (0 articles, 0 quicklinks, 0 diaries, 466 comments)
on Tuesday, July 15, 2008 at 6:38:15 PM
as far as gold goes you are essentially correct in pointing out what has happened in the past will very likely happen again. A way around it however can be found in gold coin currency, particularly gold minted US coins predating 1908, which in fact are not subjected to the same kind of government intrusions that are subjected to gold bars and ingots. Neither are British Sovereigns which are also accepted worldwide. No matter what does happen we are essentially screwed anyway since multitudes of people will be without money and without hope. Expect mass violence if a third way is not initiated.
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Michael Shaw (7 articles, 1 quicklinks, 1 diaries, 329 comments)
on Tuesday, July 15, 2008 at 11:56:42 PM
As to the possibility of violence when people wake up, this has been anticipitated and and is the reason for the police state apparatus that has been built up under the guise of the GWOT. Those who protest too much will be treated as terrorists. Dissent will be crushed. This is not 1776. Frankly, I see little evidence people are waking up, and, I do not think Americans have much fight in them in any event, which is probably for the best.
They will take what comes like sheep, and continue to pretend what is happening is just due to stupid and greedy politicians, and will hope for change every 4 years. Any violence is likely to be led by government sponsored provocateurs to justify a crackdown and martial law. America and much of Europe has embraced insanity, believing in the medias consensus reality of lies and myth that is so detached from reality, that even when exposed to the truth, they would deny it as fantasy. I mean, how many people have fallen for the Orwellian babble that the rich and powerful are incapable of conspiracy. LOL. That is insanity called sanity by consensus. It is indeed 1984, where Truth=Lie.
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pft (0 articles, 0 quicklinks, 0 diaries, 466 comments)
on Wednesday, July 16, 2008 at 1:19:43 AM
We've been growing and home canning food. That way we'll at least be able to eat. I'm also using heritage seeds so I can save them for the next season and not have to buy them again. My potato crop is doing really well.
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Susan Cass (0 articles, 0 quicklinks, 0 diaries, 12 comments)
on Tuesday, July 15, 2008 at 1:55:49 PM
What I find so depressing about the current state of affairs from a personal basis is that the prime movers in all that is wrong in the U.S. economically and otherwise are the Republicans and their neocon administration who have been in charge for almost eight years but who do not take responsibility for what they have done. In fact My sister and her husband who live in Oregon and are born again Christian supporters of the Bush Republicans had the absolute nerve to e-mail me an article that blames all the current ills on the Democratic Party because they gained so-called control of Congress in 2006. Not a word about the Republican scandals and venality, not a word about the expenditure of a trillion dollars on foreign wars, not one word of censure for the Great Decider who orchestrated the whole mess. I won't be responding to her believe me because she would definitely get a piece of my mind and it wouldn't help familial serenity.
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Archie (0 articles, 0 quicklinks, 0 diaries, 1130 comments)
on Tuesday, July 15, 2008 at 5:49:01 PM
you sure no how to stir up a hornets nest...way to go.
As far as gold goes, it represent no standard, has no guaranteed redemption value and is simply valued by belief.
Most gold is horded and has little value as an industrial metal and is primarily used to produce trinkets. Millions of acres and thousands of miles of river and stream beds have been destroyed for all time to mine the yellow metal. For what? To horde it and pay someone to guard the same? A hungry man would trade a pound of gold for a sack of rice.
We are in for a depression; some areas such as Detroit are already in one. We used our resources foolishly and America is built to consume everything in our path. Exponential consumption of finite resources is mathematically impossible, yet, that is the basis for our system. But then who cares about math?
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Mike Folkerth (120 articles, 0 quicklinks, 2 diaries, 566 comments)
on Tuesday, July 15, 2008 at 7:22:30 PM
So? Would this be a good time to max-out the credit-card ...
and go on one big binge before I fill a syringe?
Damn ... if only I had taken my own advice.
I don't claim to be a clairvoyant, but it just seems to me that my generation could lay claim to being our species last gasp ... and it's simply amazing to me how closely it resembles all the fables, from dawn of history, though religion's prophesy of Apocalyptic doom. Lord of the Rings in real life.
But this isn't fable, and during the last "Great Depression", 85 to 90% of our populace was rural, if things got bad we could at least eck out something to eat by growing it. Now those percentages are reversed and I would bet what little money I have that 9 out of 10 people couldn't grow weeds if you gave them seeds and instructions.
And one would think of all the cities, New Orleans would be prepared for this disaster, after going through Katrina. Don't bet on that. People here are just as much in denial as I'm guessing anywhere right now. They're looking forward to planning their Mardi Gras balls and thinking that because they have a few million and are old family that they'll be able to ride this out.
Not this time sparky ... Monsanto owns the family farm, and those seeds you need to plant your backyard garden, and every thing with skin belongs to CODEX.
Get ready folks, you're about to experience mankind's last fling at evolution, for who knows what results will come from our monkeying with Mother Natures genetic code? What monstrosity might prevail in the primordial toxic soup will we leave? Was it God's will that this should happen?
Not even the Illuminati will survive, no matter what their Black Magic, they will not escape what's coming. Those 500,000,000 carved in granite in Elberton Georgia aren't going to make it either. Their guide-stones might last, but they won't - and it's for certain we won't.
Short of divine intervention I don't see much hope. What a shame. It is such a beautiful world - or was.
I guess I should be glad I've lived a relatively charmed life, having caught that wave of the 60's when we actually thought we might stop those powers-that-be ... oh so naive, but at least it was something, and than watching it all just blow away. Instead of growing-up and taking over we grow-out and became them.
The only hope I have now is that I hope I'm wrong.
And that my friends is a sad, sad song.
by
Mr M (4 articles, 0 quicklinks, 12 diaries, 1435 comments)
on Wednesday, July 16, 2008 at 12:45:57 AM
As M. King Hubbert said, " We are not in the position we were in 1929-30 with regard to the future. Then the physical system was ready to roll. This time it is not. We are in a crisis in the evolution of human society. It's unique to both human and geologic history. It has never happened before and cannot possibly happen again." Nuff' said.
Or as Fred Sanford put it, "This is the big one Elizabeth."
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Mike Folkerth (120 articles, 0 quicklinks, 2 diaries, 566 comments)
on Wednesday, July 16, 2008 at 7:50:42 AM
I think on the other side of this epic disaster, perhaps a few hundred years or more after the wars and destruction, there is a chance that whatever remains of humanity may be a little closer to an egalitarian society. The disaster will have claimed countless lives, civilizations destroyed, authoritarianism and capitalism debunked, and mythical religions forever laid to rest when no savior of any flavor shows up to save mankind. Finally, the remaining humans may learn the meaning of humanity; that all we really have is each other. Maybe.
by
Shelby (1 articles, 0 quicklinks, 2 diaries, 27 comments)
on Wednesday, July 16, 2008 at 10:18:02 AM
You know I also don't believe there is a small group of conspirators planning the demise of our financial system and our economy but I do believe that these problems are systemic and may be created by a very few large corporations or financial institutions which wishing to increase profits embark on risky programs that may provide for high short term profits but long term pain and economic suffering. A very few people may be the genesis of today's economic problems and may have been followed by many others like Lemmings seeing only the tail of the Lemming in front of them as they plunge over the cliff (as they reap short term profits but long term economic disaster). So while no one blatently set out to destroy the economy, many contributed to such destruction by high risk behaviour and should be castigated for such egregious actions.
by
Archie (0 articles, 0 quicklinks, 0 diaries, 1130 comments)
on Sunday, July 20, 2008 at 12:32:28 PM
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