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-- households will be pressured to make mortgage payments, pay for health care, meet other obligations, and provide for their families at a time state and city budget crises force deep cuts in vital social services, not made up for by the federal government;-- tax revenues are down 17%, the sharpest decline since 1932;
-- $600 billion in investment losses will result plus another $5.9 trillion in lost output through 2014; and
In sum, CBO projects a more severe protracted downturn than it earlier forecast in January.
Troubled Times Ahead
On July 14, Egon von Greyerz, Founder and Managing Partner of Zurich-based Matterhorn Asset Management AG, specializing in precious metals and other investments, said "The Dark Years Are Here" and explained why.
Because of "the devastating effects of credit bubbles, government money printing (and) disastrous actions that governments are taking, (upcoming) tumultuous events will be life changing for most people in the world." They'll begin by year end, last for two to three years, then be followed by extended economic, political, and social upheaval, perhaps continuing for two decades.
Greyerz cites three main concerns:
-- exploding unemployment and government deficits;
-- trillions of unreported bank losses and worthless derivatives; and
-- rising inflation, high interest rates, collapsed Treasury bond (and UK gilt) valuations resulting in more money creation, worthless paper, and a "perfect vicious circle (leading to) a hyperinflationary depression followed by the collapse of the dollar and British pound.
America is hemorrhaging financially and economically. Other countries now realize they hold "worthless" US dollars. Reckless money creation achieved short-term hope, benefitted Wall Street alone short-term, elevated world stock markets, and led some to believe the crisis was over when, in fact, it's worsening.
Aside from expected short-lived upturns, "every single sector of the real economy is deteriorating whether it is production, unemployment, corporate profits, real estate, credit defaults, construction, federal deficits, local government and state deficits etc."
In response, the Fed keeps printing money and destroying its value. "This is total lunacy! How can any intelligent person believe that printed pieces of paper can solve an economic catastrophe?"
We're in "the first phase of this tragic saga." Likely by year end, a second more serious one will start. Real unemployment now tops 20%. It hit 25% in the Great Depression with 35% of the nonfarm population out of work and desperate.
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