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Thread: financial 'Storm' brewing

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    Default financial 'Storm' brewing

    (snip)"The first phase of the mega-storm saw prices rise for everything needed in our domestic supply chain. The bull market in commodities is broad, all these items being in hot demand in Asia. That bull will surely return and be resuscitated once the November elections conclude in the United States, like clockwork. In contrast, the Asian trade routes have brought to US shores cheaper finished products over a broad range, involving home electronics, housewares, appliances, and furniture, even as US-based factories were shuttered. Is that progress? The depreciated USDollar value spawned a supply cost increase with a correspond finished product price ceiling. Businesses have been squeezed unmercifully in the cost explosion. They have reacted by replacing workers with equipment, a surefire productivity enhancement, but also by outsourcing to Asia, a trusty low-cost solution. The tragedy lies in how the solutions impoverish the nation. Hence, US domestic wages did not increase, as they have in all past cycles"(snip)

    "The mega-storm will develop and grow more destructive in the next phase. The contrast of greater high pressure against greater low pressure will add to the storm differential. Its power will increase, just like a hurricane. Higher pressure will come from human monetary inflation, otherwise known as liquidity infusions, credit growth, and further leveraged speculation, ongoing carry trade activity, as officials will fight the good fight, urged on by bankers, politicians, corporate chieftains, and influential individuals. Lower pressure will come from the shrinking value of the housing sector, from the diminished credit lines off flat home equity, and from eventual cutbacks in household spending. The reckless drain of home equity is soon to end. The mega-storm will worsen as the USFed next executes its response to the worsening real estate crisis. They will be slow on the uptake, however. New stimulation will eventually accomplish the same effect as the last few years, more cost stress. The stock market loves the new liquidity guarantees and steady influx of easy money, at least initially. The true havoc will come when the mortgage backed securities (MBS) writedowns occur. Their trading is not in the forefront of financial media screens, but rather in the banking world background, in the banking balance sheets and portfolio management.

    Europeans describe the American practice of spending home equity as “burning their furniture to heat their homes” whereas mine is more “actively dissolving their home foundations while continuing to live in them.” A new class of poverty is soon to arrive on the scene: the bankrupt homeowner. Reports of negative home equity are rampant and growing, without the mindful alarm.

    A more pertinent, fitting, and applicable description is one offered by Antal Fekete. Without reference, only to cite his thoughtful assessment, his depiction is more frightening at the same time. He claims the United States lies in the midst of a grand liquidation of capital. My assessed explanation claims it is in direct response to the brutal effects of globalization. This liquidation is being utilized to pay for the rising costs, to finance our pathetic profligate lifestyle, to fund our reckless rampant consumption. Legitimate income has vanished from a gigantic central backbone in the US manufacturing sector long ago dispatched to Asia, where labor has an absolute advantage and will continue to have that upper hand forever. Foreign nations somehow feel motivated or obliged or compelled or coerced to support the USEconomy and its capital needs.

    What will stop this trend? TRADE WAR, then wider MILITARY WAR, and growing geopolitical conflict, not just baseline strain. Trade quotas, motivated by protection from the damaging onslaught, will soon be sold to the US public, if not this November 2006 election season, then undoubtedly in Nov 2008 during presidential elections. The destructive message sells well to the public full of angst, as it repeats the songs sung before the Great Depression over 70 years ago. Politicians will choose to paint China as evil, rather than to make difficult choices."(snip)

  2. #2
    Sitri
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    Default Re: financial 'Storm' brewing

    Seem like we need to rent the old Mel Gibson Road Warrior movies and get some ideas on what it will be like to live 10 years from now.

    Mexico will be thanking us for building that 700 mile fence to keep the Americans from sneaking over the border to get a job.

    Short sited government and business just worried about tomorrows elections or next quarter's earnings and stock option grants are driving us there quickly.

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    Default Re: financial 'Storm' brewing

    ^^^ actually you don't need to look towards 'fiction' for an indication of things to come, you only have to look to actual history !!! The 'tin foil hat' crowd would argue that there are strong resemblances between Venice in the middle ages and America today.




    (snip)"Six hundred and fifty years ago came the climax of the worst financial collapse in history to date. The 1930’s Great Depression was a mild and brief episode, compared to the bank crash of the 1340’s, which decimated the human population.

    The crash, which peaked in A.C.E. 1345 when the world’s biggest banks went under, “led” by the Bardi and Peruzzi companies of Florence, Italy, was more than a bank crash—it was a financial disintegration. Like the disaster which looms now, projected in Lyndon LaRouche’s “Ninth Economic Forecast” of July 1994, that one was a blowup of all major banks and markets in Europe, in which, chroniclers reported, “all credit vanished together,” most trade and exchange stopped, and a catastrophic drop of the world’s population by famine and disease loomed.

    Like the financial disintegration hanging over us in 1995 with the collapse of Mexico, Orange County, British merchant banks, etc., that one of the 1340’s was the result of thirty to forty years of disastrous financial practices, by which the banks built up huge fictitious “financial bubbles,” parasitizing production and real trade in goods. These speculative cancers destroyed the real wealth they were monopolizing, and caused these banks to be effectively bankrupt long before they finally went under.

    The critical difference between 1345 and 1995, was that in the Fourteenth century there were as yet no nations. No governments had the national sovereignty to control the banks and the creation of credit; or, to force these banks into bankruptcy in an orderly way, and replace fictitious bank credit and money with national credit. Nor was the Papacy, the world leadership of the Church, fighting against the debt-looting of the international banks then as it is today; in fact, at that time it was allied with, aiding, and abetting them.

    The result was a disaster for the human population, which fell worldwide by something like 25 percent between 1300 and 1450 (in Europe, by somewhere between 35 percent and 50 percent from the 1340’s collapse to the 1440’s).

    This global crash, caused by the policies and actions of banks which finally completely bankrupted themselves, has been blamed by historians ever since on a king—poor Edward III of England. Edward revolted against the seizure and looting of his kingdom by the Bardi and Peruzzi banks, by defaulting on their loans, starting in 1342. But King Edward’s national budget was dwarfed by that of either the Bardi or Peruzzi; in fact, by 1342, his national budget had become a sub-department of theirs. Their internal memos in Florence spoke of him contemptuously as “Messer Edward”; “we shall be fortunate to recover even a part” of his debts, they sniffed in 1339."

    (snip)"“Venice,” wrote Braudel, “was the greatest commercial success of the Middle Ages—a city without industry, except for naval-military construction, which came to bestride the Mediterranean world and to control an empire through mere trading enterprise. In the Fourteenth century she was in the ascendant to her greatest periods of success and power.”

    And most importantly, Frederick Lane writes, “Venice’s rulers were less concerned with profits from industries than with profits from trade between regions that valued gold and silver differently.”

    Between 1250 and 1350, Venetian financiers built up a worldwide financial speculation in currencies and gold and silver bullion, similar to the huge speculative cancer of “derivatives contracts” today. This ultimately dwarfed and controlled the speculation in debt, commodities, and trade of the Bardi, Peruzzi, et al. It took all control of coinage and currency from the monarchs of the time.

    The banks of Venice were deceptively smaller and less conspicuous than the Florentine banks, but in fact had much greater resources for speculation at their disposal. The Venetian financial oligarchy as a whole, which ruled a maritime empire through small executive committees under the guise of a republic, centralized and supported its own speculative activities as a whole. The “Republic” built the ships and auctioned them to the merchants; escorted them with large, well-armed naval convoys of their empire, with naval commanders responsible to the ruling “Council of Ten” and the magistrates for the convoys' safety. This same oligarchy maintained several public mints and did everything possible to foster the centralization of gold and silver trading and coinage in Venice.

    As Frederick Lane demonstrates, this was the dominant trade of Venice by no later than 1310. Like today’s “mega-speculators” in currencies and derivatives, such as the Morgan- and Rothschild-backed George Soros and Marc Rich, the Venetian banks and bullion-dealers were backed by large pools of capital and protection.

    The size of the Venetian bullion trade was huge: twice a year a “bullion fleet” of up to twenty to thirty ships under heavy naval convoy, sailed from Venice to the eastern Mediterranean coast or to Egypt, bearing primarily silver; and sailed back to Venice bearing mainly gold, including all kinds of coinage, bars, leaf, etc.

    The profits of this trade put usury in the shade, although the merchants of Venice were also unbridled in that practice. Surviving instructions of Venetian financiers to their trading agents in these fleets, specify that they expected a minimum rate of profit of 8 percent on each six-month voyage from the exchange of gold and silver alone: 16-20 percent annual profit."(snip)

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    Default Re: financial 'Storm' brewing

    ^^^ or if you would like a more recent example ...

    "The Daily Reckoning

    Paris, France

    Monday, October 9, 2006


    'The world has gone mad today, and good's bad today, And black's white today, and day's night today...'

    -Cole Porter, "Anything Goes"

    How often does the world go mad?

    The last time the world went really mad was in the 1930s. For some reason, never explained by historians, psychologists or sociologists, people in that decade seemed to take leave of their senses. Of course, in light of what had happened in the Great War and the period just afterwards, the two were barely on speaking terms already. WWI killed millions and toppled and bankrupted almost all the major governments of Europe. The worst outcome was in Russia, where the Bolsheviks took control and proceeded to turn the place into a prison; it remained a Sing Sing for the next 70 years.

    No one knows why, but the absurdity didn't end with the long, pointless war...it just seemed to pick up speed. And by the '30s...practically every major nation was caught up in the farce. The only major exceptions were France, Britain and the United States. And in these countries, too, the institutions of relatively free societies were twisted into hideous new shapes. In all three, taxes were raised...robbing one group of citizens in order to spread the money out among another, more numerous, group. New 'social welfare' programs were imposed - following Bismarck's example - which undermined private, voluntary institutions in favor of the power of the redistributive police state. But the changes were far worse elsewhere.

    Germany was taken over by the Nazis. Italy by the Fascists. Japan by Militarists. China by Maoists...Nationalists...and the Japanese! And, of course, Russia, by the Stalinists."(snip)

    "Of course, some were more ruthless than others. But when the pot gets stirred up...it is the most ruthless who rise to the surface. In a free-for-all, civilized manners count for nothing. There is a time and a place for everything. Chastity is of no use to a prostitute. And the killer who declines to work on Sunday is at a disadvantage; someone less restrained is likely to put a bullet in his brain while he is on his way to mass.

    Spain was relatively lucky. It got Franco. Germany got Hitler. Russia got Stalin. China got Mao. Cambodia got Pol Pot.

    What are we going to get next?

    What bothers us is that there is no satisfactory explanation for these periods of madness.

    Many analysts traced Germany's collapse into the hands of the Nazis to the collapse of the Deutschemark ten years before. It wiped out middle class savings and upset traditional values; what had been black suddenly became white. People didn't know what to believe or what to expect next.

    Traditional beliefs and faiths were called into question. Germany's role in the world...and Germans' roles in their own country...were undermined.


    When Adolf appeared on the scene - sure of himself, with a tough plan to put Germany back together, and no scruples to hold him back - people found it appealing. Pretty soon, they were raising their right arms as if to salute a Roman emperor...flattering the little corporal and making fools of themselves. Who could have known what madness lay ahead of them?

    Who knows what madness lies ahead of us - after America's middle class is wiped out by inflation, mortgage debt, and Asian competition... "(snip)

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    Default Re: financial 'Storm' brewing

    It seems like another great depression...


    MANY MEN WANTED TO LAY ME DOWN, BUT FEW WANTED TO LIFT ME UP

    -Eartha Kitt

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    Default Re: financial 'Storm' brewing

    ^^^ there are probably more similarities than you realize ...



    (snip)"The "roaring twenties" was an era when our country prospered tremendously. The nation's total realized income rose from $74.3 billion in 1923 to $89 billion in 19291. However, the rewards of the "Coolidge Prosperity" of the 1920's were not shared evenly among all Americans. According to a study done by the Brookings Institute, in 1929 the top 0.1% of Americans had a combined income equal to the bottom 42%2. That same top 0.1% of Americans in 1929 controlled 34% of all savings, while 80% of Americans had no savings at all3. Automotive industry mogul Henry Ford provides a striking example of the unequal distribution of wealth between the rich and the middle-class. Henry Ford reported a personal income of $14 million4 in the same year that the average personal income was $7505. By present day standards, where the average yearly income in the U.S. is around $18,5006, Mr. Ford would be earning over $345 million a year! This maldistribution of income between the rich and the middle class grew throughout the 1920's. While the disposable income per capita rose 9% from 1920 to 1929, those with income within the top 1% enjoyed a stupendous 75% increase in per capita disposable income7.

    A major reason for this large and growing gap between the rich and the working-class people was the increased manufacturing output throughout this period. From 1923-1929 the average output per worker increased 32% in manufacturing8. During that same period of time average wages for manufacturing jobs increased only 8%9. Thus wages increased at a rate one fourth as fast as productivity increased. As production costs fell quickly, wages rose slowly, and prices remained constant, the bulk benefit of the increased productivity went into corporate profits. In fact, from 1923-1929 corporate profits rose 62% and dividends rose 65%10.

    The federal government also contributed to the growing gap between the rich and middle-class. Calvin Coolidge's administration (and the conservative-controlled government) favored business, and as a result the wealthy who invested in these businesses. An example of legislation to this purpose is the Revenue Act of 1926, signed by President Coolidge on February 26, 1926, which reduced federal income and inheritance taxes dramatically11. Andrew Mellon, Coolidge's Secretary of the Treasury, was the main force behind these and other tax cuts throughout the 1920's. In effect, he was able to lower federal taxes such that a man with a million-dollar annual income had his federal taxes reduced from $600,000 to $200,00012. Even the Supreme Court played a role in expanding the gap between the socioeconomic classes. In the 1923 case Adkins v. Children's Hospital, the Supreme Court ruled minimum-wage legislation unconstitutional13.

    The large and growing disparity of wealth between the well-to-do and the middle-income citizens made the U.S. economy unstable. For an economy to function properly, total demand must equal total supply. In an economy with such disparate distribution of income it is not assured that demand will always equal supply. Essentially what happened in the 1920's was that there was an oversupply of goods. It was not that the surplus products of industrialized society were not wanted, but rather that those whose needs were not satiated could not afford more, whereas the wealthy were satiated by spending only a small portion of their income. A 1932 article in Current History articulates the problems of this maldistribution of wealth:

    We still pray to be given each day our daily bread. Yet there is too much bread, too much wheat and corn, meat and oil and almost every other commodity required by man for his subsistence and material happiness. We are not able to purchase the abundance that modern methods of agriculture, mining and manufacturing make available in such bountiful quantities14.

    Three quarters of the U.S. population would spend essentially all of their yearly incomes to purchase consumer goods such as food, clothes, radios, and cars. These were the poor and middle class: families with incomes around, or usually less than, $2,500 a year. The bottom three quarters of the population had an aggregate income of less than 45% of the combined national income; the top 25% of the population took in more than 55% of the national income15. While the wealthy too purchased consumer goods, a family earning $100,000 could not be expected to eat 40 times more than a family that only earned $2,500 a year, or buy 40 cars, 40 radios, or 40 houses.

    Through such a period of imbalance, the U.S. came to rely upon two things in order for the economy to remain on an even keel: credit sales, and luxury spending and investment from the rich.

    One obvious solution to the problem of the vast majority of the population not having enough money to satisfy all their needs was to let those who wanted goods buy products on credit. The concept of buying now and paying later caught on quickly. By the end of the 1920's 60% of cars and 80% of radios were bought on installment credit16. Between 1925 and 1929 the total amount of outstanding installment credit more than doubled from $1.38 billion to around $3 billion17. Installment credit allowed one to "telescope the future into the present", as the President's Committee on Social Trends noted18. This strategy created artificial demand for products which people could not ordinarily afford. It put off the day of reckoning, but it made the downfall worse when it came. By telescoping the future into the present, when "the future" arrived, there was little to buy that hadn't already been bought. In addition, people could not longer use their regular wages to purchase whatever items they didn't have yet, because so much of the wages went to paying back past purchases.

    The U.S. economy was also reliant upon luxury spending and investment from the rich to stay afloat during the 1920's. The significant problem with this reliance was that luxury spending and investment were based on the wealthy's confidence in the U.S. economy. If conditions were to take a downturn (as they did with the market crashed in fall and winter 1929), this spending and investment would slow to a halt. While savings and investment are important for an economy to stay balanced, at excessive levels they are not good. Greater investment usually means greater productivity. However, since the rewards of the increased productivity were not being distributed equally, the problems of income distribution (and of overproduction) were only made worse. Lastly, the search for ever greater returns on investment lead to wide-spread market speculation."(snip)

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    Default Re: financial 'Storm' brewing

    So, Melonie, how long do you think it will take for this country to hit rock bottom? I have suspected we have been headed there for some time. But I was hoping to stash enough cash to move abroad and get the hell out of here.

    I do see similiarities in our country to Nazi Germany. Funny, I tell my boyfriend that every day. I do believe we are approaching Neo-Nazi America (Wait, are we there yet?). And the sad thing, is that like cattle, Americans will follow what the leaders say. They already do.

    Everything in history is cyclical. What comes around, goes around. Isn't it true that most every great civilization has fallen? And America hasn't even been around near as long as some of the greatest.

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    Well I guess I need to get to buying gold. Like mel said gold is money around the world. It never looses it value. I just wish I could by the bars and store them in my home. I wonder what we can do to start to prepare for what is to come. You know with the technolgies we have today, this storms might hurts us worst than the depression. People are not use to what people in the 20's was use too! I dont know, what will happen it was to have another depression.
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    Default Re: financial 'Storm' brewing

    Please dont say that we are going to have bad food and no money.
    Last edited by leilanicandy; 10-11-2006 at 05:39 PM.
    If you want the present to be differant from the past, study the past.
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    Dont throw away the old bucket until you know whether the new one holds water.
    Swedish Proverb

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    Default Re: financial 'Storm' brewing

    The worlds economy is changing and becoming globalized we have been so spoiled as a nation of riches and easy money now we must hunker down and figure out how we compete or work with, the rest of the world . We are resource hogs plain and simple and the supply is running low . I'm sure we will figure this one out or at least I can only hope .

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    Default Re: financial 'Storm' brewing

    I'd read that piece by Jim Willie. He is an excellent writer and I fear he might prove to be spot on. Of course in Europe we'll have it different ... very few here have guns so the economy imploding will have different results.

    I don't know what you guys are doing to help yourself about this, but I think it might soon become 'every man for himself' - if you'll forgive the gender bias.

    Personally, I am working furiously on three websites, two are debt related :-) , I have recently started writing a monthly personal finance column for a newspaper and am looking for a second. In other words, I am trying to add to my incomes and at the same time, diversify them. Each may only be a small addition, but it all adds up.

    If the predictions turn out to be even nearly as bad as some fear, we are all going to need to work like mad to survive with any sort of comfort. I hope that you can all gain the extra skills or extra incomes that are needed to see you through.

    To my mind, we have less than 2 years.

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    Default Re: financial 'Storm' brewing

    Quote Originally Posted by Melonie

    The result was a disaster for the human population, which fell worldwide by something like 25 percent between 1300 and 1450 (in Europe, by somewhere between 35 percent and 50 percent from the 1340’s collapse to the 1440’s).
    i agree with the synopsis on the bank problems in italy, however i think that the decimated population was more due to the deaths from the Black Plague than financial issues.
    "Seeing the landscape at this superficial level only captures its boring uniformity, not allowing you to immerse yourself in the spirit of the place; for that you must stop at least several days."

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    Personally, I'm extremely reluctant to make specific claims or predictions. I have already been (painfully) surprised at what the US Fed and other central banks have been able to do in regard to 'propping up' the US dollar without resorting to double digit interest rates - which "by the book" should have been impossible. I have also been (painfully) surprised by the degree to which hedge funds have been able to run up and/or run down the price of commodities (and especially gold and silver, with the help of central bank sales). And I'm continually surprised by the 'orchestrated' purchases of DOW futures by major investment banks (of course it's probably easier to manipulate an index which only includes the stocks of 30 companies). Put another way, the 'by the book' fundamentals say that things should have already turned nasty ... yet they really haven't in any major way.

    The 'tin foil hat' crowd would say that the US Fed is printing money and calling in favors such that the US markets will remain 'propped' through next month's election. They would also say that the official US statistical measures of the economy i.e. Employment, Inflation are being 'adjusted' to present relatively benign data at least through next month's election. And of course the election itself holds at least two major issues with extreme economic importance ... do Democrats regain a majority and raise income and capital gains taxes (by trashing the GWB temporary tax cuts) - and do border / illegal immigration policies wind up being softened such that the increasing costs of providing health care and gov't benefits to an increasing number of illegal aliens force state and local tax increases.

    IMHO of all the historical examples, right now the US most resembles mideival Venice ... at the point where it's monopoly on trade and currency exchange is about to be lost to the Spaniards, French and Brits (in the present case to the Japanese and Chinese and Arabs). Like Venice from that point forward, I suspect that the US will continue to thrive at certain limited fields ... banking, artistry, cutting edge research, luxury goods ... but will wind up being forced out of the picture re many other fields like manufactured goods. This of course fits the 'tin foil hat' scenario of the US becoming a country with a small percentage of very rich people, a huge percentage of poor people, and essentially no middle class in between.

    however i think that the decimated population was more due to the deaths from the Black Plague than financial issues
    As to the 'black plague' analogy, stretch your imagination to think what might happen if states tax revenues were so reduced that they could no longer afford to provide welfare, WIC and medicaid benefits - plus hospitals being bankrupted by being legally forced to provide treatment to non-paying patients (as has already happened big time in So Cal) - under those conditions one nasty flu virus season could kill hundreds of thousands of poor people ! Also consider the results of large numbers of farms being foreclosed on / bankrupted (most large private farms and corporate farms are massively in debt for the purchase of automated farming equipment) - which could lead to a real food shortage within one growing season. This possibility is now more likely than ever since the US gov't has legislated that x% of the US corn crop must be used as a gasoline fuel additive instead of as a food, meaning that any loss of corn production will be a loss on the 'food' side. As much as we like to take for granted the availability of food and medical care for everybody in America, in actuality this is paid for by taxing the rich and the 'middle class'. If the economy collapses and the 'middle class' starts to disappear, farmers and doctors are not going to give away their products / services at a 'loss' to people or state / local governments who cannot pay for it.

    But if you really want me to commit, I'd predict that we'll see the beginning of a major decline in the US stock markets (and particularly the S&P because it is the broadest index and most difficult to manipulate) immediately after the election. As 4th quarter corporate earnings numbers continue to reflect rising 'costs' and reduced 'profits' I expect this trend to continue at least through until spring. Rising home foreclosures/ bankruptcies will continue to put pressure on certain banks / lending institutions, such that by next summer something 'big' will happen in regard to a financial system 'incident'. I do agree with Stuart that within the next 2 years the probability of 'all hell breaking loose' is fairly likely - and 'middle class' people who don't want to become 'poor' people are going to have to work like mad. An unavoidable side effect of 'all hell breaking loose' will likely be a major downward shift in the US dollar exchange rate, such that avoiding a downward devaluation of your savings / investments will require that they be denominated in something else besides US dollars (ounces of gold works for me).

    I just wish I could by the bars and store them in my home
    well, actually, this is pretty easy to do ... ... today's price for 1oz bars is $585, which is $12 over the raw commodity price (gold coins usually charge twice as much 'conversion cost' over the raw commodity price). The tricky part isn't buying the bars, it's keeping them secure once you receive them !!!

    Of course in Europe we'll have it different ... very few here have guns so the economy imploding will have different results.
    America's big 'blue' cities also have enacted gun controls to the point where the results won't be much different than in big european cities once the 'poor' decide that they should 'help themselves' to their neighbors' food, money etc. America's big 'blue' cities will also make the same discovery that French cities did last year during the 'riots' or that New Orleans did last year during the hurricane ... i.e. that there are a whole lot more angry poor people in each city than there are police to effectively deal with them ! For this reason I would not want to be living / own real estate in a well-to-do suburb of a big 'blue' city two years from now.

    This is one of the reasons that I'm very glad to be living in the 'country' ... among family and friends and neighbors that have known me for decades ... who all have big guns, big dogs, big pickup trucks, water wells, generators, chain saws, wood burning stoves, and gardens / fields / freezers full of food ! Hopefully conditions will never get so bad that I'll be forced to depend on these things ... but it's reassuring to know that we could 'hold our own' against whatever adverse situations might be likely to develop. Our greatest 'defense' would be the fact that our small 'country' town is much more distant from nearby 'blue' cities, and much less 'ripe for the picking', than some well-to-do suburbs !

    I used to live in the suburbs of a big 'blue' city, didn't even know most of my neighbors (let alone trust them), and was totally dependent on the local bank for cash, on the local supermarket for food, on local utilities for energy, and on local police presence for 'security'. In that sort of environment, all it would take would be for a few thousand 'poor and angry' city residents to decide to march 1 mile into the suburb, to knock over one main power/phone pole, and to then start looting stores and going house to house collecting 'souveneirs' - with maybe 10 woefully unprepared suburban cops to try and stop them ?. Eventually, the local cops would be able to call in enough 'reinforcements' to get a handle on the situation ... but at that point it's likely that suburban homes would have already been cleaned out leaving the residents with nothing to 'work with' other than filing insurance claims and hoping they'll get paid months down the road.
    ~
    Last edited by Melonie; 10-11-2006 at 05:45 AM.

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    Default Re: financial 'Storm' brewing

    ... of course, there are a few people out there who think that 'all hell could break loose' in a matter of weeks versus months or years.



    (snip)"The aircraft carrier Eisenhower, accompanied by the guided-missile cruiser USS Anzio, guided-missile destroyer USS Ramage, guided-missile destroyer USS Mason and the fast-attack submarine USS Newport News, is, as I write, making its way to the Straits of Hormuz off Iran. The ships will be in place to strike Iran by the end of the month. It may be a bluff. It may be a feint. It may be a simple show of American power. But I doubt it. "(snip)

    according to this ex-NY Times Middle East Bureau chief, $100+ per barrel oil prices / $5 per gallon gasoline and heating oil prices, here we come !

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    Default Re: financial 'Storm' brewing

    and here come the first of the 'shitty' 4th quarter corporate earnings reports ...

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    Default Re: financial 'Storm' brewing

    [Quote]
    I do agree with Stuart that within the next 2 years the probability of 'all hell breaking loose' is fairly likely (quote)

    I say lets have a little faith in America. Let give it five years, before we allow hell to break loose in America. I believe some of us might wake up and smell the coffe. I know everyone will not wake and see what is happening! It will be so horrible. The fall of a great nation that, stood strong for over 200 hundred years. Well I guess my history teacher was right! After 200+ years a nation falls.
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    Default Re: financial 'Storm' brewing

    This is all such a problem. There is massive instability wherever you look, in politics in many nations, the Korean peninsular now, the middle east, in financial markets, central africa and much more. None of this is good.

    I think that without another war or political disaster, the economy of the US has a while to go. But, with another conflict ... who can say?

    Batten down the hatches, pay down the credit cards, buy some tangibles, find a second income and cross your fingers for luck!!

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    Default Re: financial 'Storm' brewing

    Quote Originally Posted by leilanicandy

    I say lets have a little faith in America. Let give it five years, before we allow hell to break loose in America. I believe some of us might wake up and smell the coffe.
    I think you are correct. In fact I think alot of people have already smelled or are starting to smell the coffee. A quick look at the opinion polls seem to say as much anyway. Better late than never

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    Default Re: financial 'Storm' brewing

    ^^^ actually, a large number of American 'consumers' are suddenly overjoyed and confident again because the price they pay for gasoline has dropped 75 cents per gallon - leading to a significant pickup in September SUV sales !!! Similarly, a large number of American 'blue collar' 401k holders are overjoyed that the DJIA is hitting new record highs. I would have to argue (unfortunately) that at least 50% of Americans don't have a clue, economically speaking. I would also reiterate that the results of next month's election might have profound effects on near term tax rates and gov't spending rates, which could create a major 'course change' in the US economy.

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    Default Re: financial 'Storm' brewing

    Buying more SUVs!!! You gotta love it.

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    Default Re: financial 'Storm' brewing

    If the sotrm is so bad why has the Dow broken 4 records in the last two weeks ?

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    Default Re: financial 'Storm' brewing

    So the big storm in coming! What will be the best thing to do to prepare!
    If you want the present to be differant from the past, study the past.
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    Default Re: financial 'Storm' brewing

    Quote Originally Posted by CuriousJ
    If the sotrm is so bad why has the Dow broken 4 records in the last two weeks ?
    Because the DOW is made of globalist companies.

    There was a time when the DOW was a good leading indicator of investment going into american built buildings in america staffed by americans using american built equipment.

    These days, those investments are buildings that are built by non-americans in other parts of the world staffed by non-americans using non-american built equipment.

    So the short of it is, a climbing DOW reports how well a small group of wealthy elites are doing. It says nothing about most americans who work in american made buildings staffed by americans using american built equipment.

    Obviously my opinion is the DOW should no longer be considered a leading indicator for the US economy and US worker.

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    Default Re: financial 'Storm' brewing

    there's also the issue of 'accurate' measurement ...

    "Jason Furman at CBPP.org is one the guys talking about the rise in the nominal Dow Industrial average, which conveniently neglects to adjust the Dow for the changes in the buying power of the dollar (inflation), or mention the other stock indexes.

    Mr. Furman says "The Dow Jones Industrial Average, adjusted for inflation, is down 17 percent from its all-time high on January 14, 2000. It would need to rise another 2,378 points to set a new record, adjusted for inflation. The broader stock market is even further below its 2000 peak. The Dow Jones Wilshire 5000, which tracks more than 5,000 stocks and is the most comprehensive measure of the U.S. Stock Market, is 23 percent below its record close on March 24, 2000, after adjusting for inflation."

    Peter Schiff of Euro Pacific Capital notes "Priced in British pounds, Canadian or Australian dollars, or euros, at 11,850 the Dow is still below its 2000 peak by approximately 25%, 26% and 32% respectively."

    Also, the chart at is definitely worth a look. The chart explains why "While the Dow hit a new high today, not a single of its component stocks did. Interesting, isn't it? The index is at a new all time high, but 70% of its components are down 20% or more!"

    and last but not least, when a Dow stock looks like it's in danger of going down for the count (recent example Kodak and International Paper), it simply gets dumped from the index so it won't drag the index down, and replaced by some 'rising star' (recent example Home Depot) that will give the index a boost (in the short term anyhow).

    Bottom line is that the DJIA is a convoluted calculated index measuring the aggregate performance of a select list of 30 stocks ... which by definition makes it the easiest index to 'manipulate'.

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    Default Re: financial 'Storm' brewing

    So the big storm in coming! What will be the best thing to do to prepare!
    the 'tin foil hat' crowd recommends ...

    A. get out of debt (especially floating interest rate debt)
    B. to the degree that you can, move some of your assets / savings into something that is not denominated in US dollars (because the purchasing power of the US dollar is going to take a nosedive)
    C. to the degree that you can, reduce your risk factors re dependence on all forms of gov't / commercial services ( because if things turn ugly, you can't count on enough cops showing up to stop riots, you can't count on the lights staying on, you can't count on the supermarket shelves staying full, and you can't count on the phone system keeping ATM's / credit card transactions working)


    a bit more 'food' for the argument ...
    ~
    Last edited by Melonie; 10-13-2006 at 04:31 AM.

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