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The Inevitability of Economic Collapse

While I haven’t had the privilege of divine revelation, I do try to look at the forces that are in play that have the power to move nations economically. Two dominant countervailing forces right now are those who have George Soros nearly in tears — who make up the anti-global revolution — and then all the globalists like Soros who are panicking that their new world order is being shredded accompanied by all the raging anarchists that Soros can sponsor as his mercenaries.

There is some certainty here: globalists will not give up after decades of massaging and manipulating and cajoling the world in their pluralistic, globalist direction and so will wage battles everywhere they find people or candidates resisting their agenda. At the same time, those who are sick of globalism have risen up in Brexit and with Trump as their champion, and are not about to lie back down. So, conflict is certain for several years to come. That was an easy prediction for me to make earlier, and we’re seeing it play out daily now that Trump is in 0ffice as president.

Internal conflict tends to get in the way of commerce and so is likely to have economic impact. Within this milieu of daily conflict we have an economic structure in the US (and similarly in most of the rest of the world) that is so riddled with flaws that have not been fixed (and have even been made far worse) that it’s collapse is inevitable even without conflict knocking up against it.

 

A list of economic flaws that are too big not to fail

 

  • Banks that were too big to fail are now much bigger than they were in 2008 and 2009. While banks may be a little more solvent at the moment, if failure comes, the risk to the overall economy is far worse than in 2008 and 2009.
  • Banksters who destroyed the global economy were almost all rewarded with much larger bonuses, instead of thrown in jail, so they remain at large to wreck things again and even are enticed to strike again because it all worked out so well the first time; but we don’t know where and at what time their corruption will cause their failure. What we do know, is that corruption drifts that way.
  • Bailing out banks created exactly the “moral hazard” that many people warned about in 2009. As a result, one thing we do know is that bailed-out banks continued their derivative investments that caused many of the 2008 and 2009 failures. In fact, they increased their involvement in this perilous and poorly understood area of investment to such new heights that the number of derivatives in 2009 looks like an large city seen from earth-orbiting altitude — a mere spot compared to all that can be seen now.
  • Goldman Sachs, the most evil of all the companies that helped cause the global economic collapse, now has three high-level positions in the Trump administration, versus the one that it had in the Obama admin. It, in essence now oversees the whole US financial system — the Fed, the National Economic Council, and the Treasury.
  • Thanks to the revoking of Glass-Steagall, Banks are still allowed to invest in risky assets like stocks, and the Federal Reserve has even talked about investing directly in stocks as its next recovery plan, even though the revoking of Glass-Steagall played a major role in setting the US up for the Great Recession.
  • Trump plans to roll back Dodd-Frank (Glass-Steagall’s half-hearted replacement). That means there will be no correction to this serious economic aberration for a long time. Because the Fed can print infinite amounts of money at its own discretion and give it to banks or maybe even start investing it directly, there is no legal limit to how much the Fed and its member bank’s can manipulate the stock market … so long as the keep overall inflation (which doesn’t count stocks) and jobs under control. So, for economic recovery, we’re returning to the old tricks of banking deregulation to loosen up credit; we’ve all seen how beautifully banks policed themselves, as Alan Greenspan assured us they would.
  • Likewise, we are returning to trickle-down economics, and are about to trump it up higher than under Reagan or GW Bush. We’ve had many years of trickle-down economics over the past thirty years, and clearly it has diminished the middle class and shifted wealth to the top one percent to where our market economy is now weaker because it was a well-off middle class that constituted that market. We’ve learned nothing!
  • The erosion of the middle class — the chasm that has widened between the rich and all the rest — is leading us into class warfare. So, while we have a cultural war starting between liberals and conservatives, immigrants and natives, and a simultaneous political-economic war between globalists and nationalists, we also have an economic war starting between the rich and the poor. So many different, major, overlapping divisions creating conflict assure growing civil unrest for a long time to come with no clear path out. It looks more like an angry mob than a major battle between two factions.
  • The national debt, which was completely absurd at $10,000,000,000,000 by the end of the Bush administration, has now doubled to $20,000,000,000,000, thanks to the Obama administration create a tough starting position for the next round of “recovery.”
  • Trump’s infrastructure stimulus plan and military buildup are, so far, estimated to add somewhere between $5 trillion and $10 trillion to that debt over a decade. That means we’ll likely continue Obama’s $1 trillion annual deficit. Thus, we fully plan to continue the immoral game of spending all of the next generation’s money to buy the things we need, build up our military and to fund our generous welfare to immigrants and other nations. We’ve learned nothing! We’re at a bad starting position, and our answer is to make it worse for everyone ahead.
  • Corporate debt has also increased to stratospheric levels, and that debt was a big part of what was keeping stock prices rising as companies created market demand for their own shares by buying them back, which also reduces supply to drive up prices.
  • The stock market, which I believe is already a bubble, is ballooning in speculation of Trump’s grand credit card (not because earnings have greatly improved, for those calculations look more jury-rigged than ever).
  • Housing prices are back up to the same insane levels they reached in 2007 in most of the US, which could only be supported by loose terms of credit back then. The move back up to those prices has mostly been accomplished by resorting again to looser terms of credit. So, we’re back in a housing bubble because real wages are no better now than they were then. (We learned nothing!)
  • Banks continued to issue adjustable-rate mortgages, which we experienced as being safe when home values are rising, but devastating time bombs if home values fall so that people cannot refinance their way out of them when the interest increase hits.
  • Home values have just started declining in several key markets, particularly at the top end, meaning some of those adjustable-rate mortgages bombs may be nearing their final ticks.
  • Interest on all of that debt (housing, corporate, government) remains at historically low levels, but started rising at an historically rapid rate in the last few months, even without the Fed moving its targets, due in part to anticipation of the financing Trump will have to do to carry out his infrastructure plans.
  • [Originally left off the list by oversight but added as a result of discussion below.] Aging demographics are a reality we keep talking about but keep doing nothing about — particularly their effect on Social Security and Medicare, which are now beginning to be felt and will grow increasingly worse over the next decade. As we pass unbearable debt on to the next generation, we are also expecting them to continue to take care of our Social Security and medical needs. My guess is they will thank us for the debt by voting those provisions out of existence when they are in charge and it becomes evident we have left them unable to pay for these things. Don’t count on much appreciation for the world we are handing them.

 

That’s just domestically. Internationally, two of the oldest and largest banks in Europe keep teetering on the edge of collapse. All of Italy’s banks are structurally unsound because they continue to carry the bad debt from the 2008-2009 financial collapse because they cannot afford to write it off. Greece is still walking the fine edge of bankruptcy. Spain, Portugal and Ireland look marginal at best.

 

Trends determine ends

 

These are all problems that are major trends. They are also all structural economic flaws that existed prior to 2007 and that contributed to the economic collapse that started in 2007 and became known by 2008 as the Great Recession. Nothing (or, at best, very little) has been done about them. Nothing is even being talked about being done about them in any serious way. Therefore, nothing is going to be done about them. In fact, all of these flaws are worse today than they were in 2008!

That means they will continue to grow until they erupt in turmoil again. Exactly when I’m not as certain because the election changed things. Trumps stimulus plans on the national credit are so huge they are bound to create some temporary lift. So for the very short term Trump’s policies may boost the economy, but mid-term and longer, Trump and his cabinetful of bankster-barons are not going to be able to stop these numerous trends from crushing us. Trump has expressed no plans to solve any of these overwhelming structural flaws that are trending against us, some of which are past solving (like the national debt). It is questionable he and his cabinet even recognize many of these problems or believe they are important. So, the situation toward the latter part of this year looks worse socially and, in years to come, looks much worse financially and socially.

That is because, ultimately, Trumps short-term stimulus will make some of the items on this list worse. Huge tax breaks for the rich will give some temporary economic boost if they ever make it through congress, but they will also create much greater economic disparity as the cost. That means more political conflict as the gap between the rich and the poor widens more quickly than we’ve ever seen before. The boost, if it happens, will also come at the cost of much more national debt. If interest continues to rise, as it is doing now, that debt will not just be unpayable (as it already is) but will become unserviceable. So, the lon-term economic damage will be significant as it has been after all previous periods of trickle-down economics, marching us toward more debt and stagnation under the service of that debt, because service of the debt soaks up so much of our economic fuel.

The cabinetful of bankster-barons will not likely start putting banksters in jail. They will even less likely break up banks that are too big to fail. They will not put the Fed out of business or the nation back onto the gold standard. They will not likely put Hillary in jail. None of that is going to happen. Or, at least, very little of it.

As it turns out, the first major wave of the Epocalypse that I predicted for 2016 turned out to be political — a revolt against the establishment — rather than economic. Now, the counter-revolution has begun as liberals start fighting back. While I certainly don’t want the non-globalists to back down, you can be certain the globalist establishment isn’t about to back down either. Efforts will intensify on both sides as the pressures above continue to build unabated, making 2017 a year of intensifying battles while the economic time bomb keeps ticking away because no one is paying attention to these structural flaws. We’re too busy fighting over other things.

If anyone doesn’t think this is the Epocalypse, that’s only because they started thinking too certainly that it would happen in a particular way and didn’t note the caveats I gave along the way that said the exact order of events is unpredictable — that an election year could change the timing — but economic failure is assured, and the timing would not be long delayed.

 

My next article will look at the possibilities of when economic collapse will happen by examining the forces in the upcoming year (the headwinds) that are either certain or very likely to add pressure to this top-heavy structure with crumbling foundation.

 

 

  • William Ripskull

    I’ve never seen someone be more right and more wrong in the same article.

    • It would be a lot more helpful if you were specific about what parts are so wrong. Without that, it is meaningless criticism as who can weigh any part of what you’re saying?

  • Steve

    The collapse won’t be televised. It has already started. i.e. 2016 my Subway foot long sandwich was $5, 2017 same sandwich might be $6 or a little more. My fav beer went up %20 in a year, yikes!!! No raises for us workers here. Ergo lower standard of living, and we all are slowly getting poorer. Noticed more beggars in my town this year too. Venezuela today America tomorrow……maybe.

    • Indeed, Steve. There is still so much stimulus in the form of extremely low interest being applied against collapse, that it may be more of a continual subsidence than a sudden collapse. So far, that is what it has been. And Trumps plan is so huge that I think there is a better than 50/50 chance it provides some lift, maybe even a lot of lift; but it doesn’t solve any of the structural flaws in our economy that continue to erode, and it will certainly make the debt problem worse, which is the worst of our problems already. (Imagine how much more zip our economy would have if we were not maintaining payments on $20,000,000,000,000 worth of debt right now.

      In 2015, the US government spent a quarter of a trillion dollars just to service the debt. That doesn’t pay off any debt. It’s just the cost — primarily interest — of continuing to roll over what we have. The Congressional Budget Office estimates that the cost of servicing the national debt will double in fewer than five years. That will make servicing the debt cost half a trillion dollars each year by about 2020.

      Think of how much continual drag just maintaining that national debt is. Think of how much of a tax break could be given to EVERYONE without incurring any debt from the break if we didn’t have that debt to maintain. That is how much energy our debt is sucking out of us. It is estimated that Trump’s plans will add another $5-10 trillion over the course of another decade. At the same time, interest rates will be rising.

      It is estimated that by the end of Trump’s term, interest payments on the debt will exceed our entire spending on defense.

    • Elisa Rial

      Hell, I started seeing the signs in 2015.

      McDonald’s and Starbucks and other franchises pack up and leave certain places because the rent is too high. FRANCHISES.

      • Hi Elisa,

        Welcome to the blog. The signs were definitely there in 2015. The amazing thing is not that people didn’t see it coming then but how many still REFUSE to see the economic collapse coming halfway through 2017.

        I’m just staring an article on the retail apocalypse, and one of the points in that is how restaurants — particularly those like Starbucks and McD’s that are big on mall locations are going to collapse along with retail. Part of the problem is the rising rents you are talking about, but a bigger part of the problem is falling revenue. McD’s has been suffering from declining sales for the last few years. With 23,000 retail stores scheduled already to go out of business within the next two years, you know retail sales have been down for everyone for a long time now. (Easily since 2015.) If fewer people are going out to shop at Macy’s, fewer people are around to stop at the next-door McDonald’s or pick up a cup of joe at Starbucks, too.

        Couple those falling sales to the rising rents you mention, and you double the problem. And, yet, here we are in the middle of 2017 with millions of people still believing we are in an economic recovery! Does economic recovery end in 23,000 boarded-up stores and falling franchises???

  • Harquebus

    It is the diminishing returns on energy production and resources coming up against population growth and the quest for economic and GDP growth that is causing our predicament. It’s just maths and physics.
    Now factor climate disruption and the great human die off is mathematically impossible to avoid.

    It is the ideology of compound growth and the absurd pursuit of it that is the problem.

    Here is my solution and so what if few billionaires go broke:

    1: Forget economics. It is “fatally” flawed. It has polluted the planet, poisoned us all, does not factor physics nor the environment and is what has got us into this mess in the first place.
    2: Implement national and encourage international population reduction strategies otherwise, one way or another, nature will drag us back to sustainable levels and it won’t be pretty.
    3: Properly manage our finite resources which, are currently being pillaged.
    4: Reduce consumption using quotas and not with unfair taxation. We can not shop our way to sustainability and we can not borrow our way to prosperity.
    5: Plant lots and lots of trees. Massive scale reforestation will help the climate, rainfall and be a valuable renewable resource for future generations.
    6: Restore the liberties and freedoms stolen from us by corporate serving politicians.

    Good luck all.
    Cheers.

  • steve jones

    It’s great when the big brains QE, Auld come out firing to stick up for Sir Dave. I’m not sure if Mihail is a real person or a shill. What would someone so ignorant be doing reading this blog? No thinking person could ever have imagined the Ponzi could have gone on as long as it has.
    On the damn metaphor, as an engineer, as with the economy, we will see the whole spectrum of civil assets starting to fail in coming years. Why? Reinforced concrete, thought to be good for hundreds of years, fails in 80 or less, as the steel corrodes and expands. Rebuilding/fixing assets is likely to require an annual capex higher than US interest payments on it’s debt, if rates “normalised”. Rates will not only “normalise” but soar, probably this year.
    The Don will be doing what he does best, presiding over a bankruptcy, this time of the nation. The civil assets will never be fully repaired, anything that is not broken, will be owned by creditor nations. When Mexico launches the silver backed peso, they will be glad if that ridiculous wall is built, they will be one of the wealthiest nations on earth, now living is a bad part of town. Epoxy coated reinforcing will be used on that wall… it will last for hundreds of years.

    • And here’s how much engineers often know. I once asked an engineer why they don’t require rebar in concrete buildings to be coated so that it can’t rust. His response was that rebar doesn’t rust inside of concrete. Subsequently, I’ve managed properties in Hawaii that saw massive repair bills to to rebar INSIDE OF CONCRETE that was doing exactly what you say. When it rust, it expands, and the good concrete around it cracks and falls off the building. The engineers forgot that concrete a) sometimes absorbs waters and still allows some cracks b) gets hairline fractures that allow water to penetrate. The impregnable reinforced concrete, as it turns out, turns to junk in fifty or so years, especially in areas close to saltwater.

      The point. I’m not an engineer and saw an obvious problem staring me in the face that an engineer couldn’t see as being a problem. (An engineering instructor in fact.) How much more so with soft sciences like economics. Anytime humans cry failsafe, as with Fukushima or earthen dams, I’ve learned that’s usually a good time to run. They are usually saying it to keep the ignorant masses from panicking over things they should be concerned about. The economy is cracked like that dam all over the place. I’d be reluctant to trust it, regardless of what our economic engineers, such as the Fed, say about how well it is doing.

  • Recyvuym

    I dunno Dave. If you ask me we’re already standing ankle-deep in the GFC 2, and have been for a couple of months now. When the next earnings report comes in, I expect to discover the US economy is, if not shrinking, then treading water by the slightest of margins. By that time, America will be at $20tril national debt, and Italy will no longer be able to contain its banking crisis. However fat the Trump stock bubble has been blown by then, it’s only going to burst all the harder come April or so, when the dross finally begins to clear and investors realise they’re on the front deck of the Titanic.

    From where I’m standing, despite the record highs on the Dow, there’s a lot of panic and pessimism in the financial industry. A sense that things can’t possibly continue the way they are for much longer. The word Trumphoria is apt. It gets you real high real fast, then it abruptly drops you down to earth while complaining loudly about fake news and other countries’ leaders on Twitter.

    • I know. Some say I tend to be a little hard on myself with respect to missing my predictions. I try to keep the bar fairly high because, like my own critics I’m weary of permabears who predict the same crash year after year until they are finally right and then say they nailed it. I’ve cut myself a little slack on my 2016 predictions because this election year with its Brexits and Trexits and election-cycle manipulations was so topsy-turvy that we are only now beginning to find out how things settle out.

      Because financial meltdown didn’t happen at all last year when I thought it would become evident (but not complete), I’ve backed off a little on the pace that I’m giving for things to happen. The impact of Trump’s proposed tax cuts and spending increases has been huge, and it wan’t clear back when I made those predictions that Trump would even win. Most people believed a Trump win would cause the stock market to crash. Almost no one was predicting it would cause the market to roar into high gear before he even got into office. So, I cut myself a little slack on that.

      The degree to which the Fed now manipulates the economy has become impossible to know. While years ago the Fed did not get into all these asset purchases, it now does so with abandon, and now it even talks of buying stocks openly. That only leads me to wonder if it is already buying stocks secretly (i.e., indirectly). Likewise for oil. While neither show up explicitly on the Fed’s balance sheet, we never have an audit to even know the Federal Reserve’s balance sheet is accurate, and its hard to know how they might funnel one kind of fund to some institution with a directive to convert it and use it to buy oil or stocks. It’s not hard to launder their financial actions when they have total unaudited anonymity anyway.

      My inclination — but not one I’m willing to bank on as prediction — is to believe like you that the economy is sinking into recession already and that by May or June (close to when you put it) things will start looking bad. But it’s hard to say for the basic reason that the Trump plan is, indeed, massive; and, if congress passes it, there is bound to be a lot of short-term lift. If congress doesn’t pass much of a plan, on the other hand, the stock market has banked on it already, so it will fall quickly.

      Trump’s plan in my opinion is largely short-term medicine that is long-term poison. Stocks could really shoot up if all this corporate money gets repatriated to support buybacks or payoff of debt used for earlier buybacks and if corporations wind up getting a retroactive tax break that starts with 2016 earnings. Even if it starts next year for earnings today, that has a huge impact in how much money corporations have available. But, sooner or later the mountain of debt destroys us. If interest rates on the debt even touch what used to be the bottom for interest rates, its all over because we couldn’t even service the interest.

      I lean to thinking we have less than half a year before the world seriously begins to fall apart. Officially, though, I’m giving myself a little buffer to see the year out.

      • Recyvuym

        I also thought it would be obvious to people where things were headed by the start of this year. The market enthusiasm towards Trump blindsided me too (even though I called both his victory and that the markets would not subsequently crash) and frankly it’s very irritating to watch. I’ve never seen such a brazen display of cocksure stupidity as what major investors are doing now. It’s like watching a monkey with an uzi. Everyone with half a brain has already taken cover and we’re now taking bets on when the gun goes off and who gets shot. But for now, let the monkey have his fun.

        Enough is going wrong in the world that I’m pretty sure, at this stage, that I was basically right, but it’s unfolding quietly to begin with, like you say. My prediction made in November 2015 was that we will see the next phase of the global financial crisis by March 2017. Late last year, as the Italian banking crisis began to really start oozing pus, I predicted the Italian Referendum in December 2016 would finally be what gets the boulder rolling down the hill.

        So far, nothing has contradicted either of those predictions, and quite a few things indicate I was correct. We’re only two months after Italy voted no and already, one bank has been bailed out, and tens of billions of euros are being lined up to save the rest, which it’s looking doubtful they’ll even be able to do. Italy’s growth just came in at 0.2%, Germany’s at 0.4%, Australia’s at -0.2%, and America’s rigged figures nonetheless slouching along at a foreboding 1.9%. Global trade is getting smashed, public trust at all-time lows, and the recovery of the past decade has not only ceased to manifest, but now seems to be approaching boiling point.

        I have made a few false specific predictions as things have unfolded, and quite a lot has surprised me, but the general trend (downward… fast) is accurate. What I’ve learned from this is to stick to the overall trend but to be less confident about the details, so as not to discourage people who might not be sold on the underlying trend. Having said that, my current best guess of how things will unfold:

        Around March we’ll see Italy finally go to shit like they’ve been threatening to do for so long. But most people will still just tell themselves it’s an Italian problem. The damage to wider Europe will become apparent subtly at first, then all at once later on.

        Around April, low to negative growth in the US, and news of the national debt hitting $20tril, will finally cause a stock market crash of around 20%. It will give people the jitters but ultimately I agree with you that Trump’s package will cause a short-term boost and the narrative will go that everything’s all right, but serious doubts will begin to surface.

        By around July, the EU will be facing a continental banking crisis coupled with a loss of confidence in the euro and in the political establishment.

        Around August is when I peg the public mood in the United States is going to turn very sour, and from this point to the end of the year, the public narrative will gradually concede that the world is, after all, going into another recession.

        Around the end of the year or the start of next year, the EU will dissolve. By this time, it will be clear that the global economy has been in crisis mode since early 2017 if not late 2016. By around 2018 or 2019, we will be staring down the barrel of the collapse of the US dollar.

        • That timeline looks pretty likely to me, Rec, and I think the main thing is, as you say, that the overall trend in things is down. People tend to gauge the economy by the stock market, but the stock market, as we have seen for years now, often has very little to do with the economy. Profits can be going downhill for years, inventories building as sales decline, etc., but stock prices go up because 1) The Fed is pumping hundreds of billions of free dollars into stocks through its member banks, and 2) companies are using cheap credit to buy back stocks and create their own demand while also reducing the supply of stocks, and 3) speculators care more about what they think all the other speculators are going to do than about what the economy is doing.

          As you point out, many of the basic economic indicators continue to slowly get worse. The trend overall is downward in so many areas that it is clearly a ailing economy, and if the global economy is trending downward in many ways after years of practically infinite money creation and zero interest loans, what will it do when there is none of that? The economy only survives at all by continued life support. For example, while we are no longer at zero interest in the US, we are at a level of interest that would have been considered extreme stimulus during any other recessionary time. So, this is still extreme stimulus, but GDP is dropping, profits are dropping, etc., as you say.

  • Mihail Iliev

    What if no Apocalypse happens in 2017 and even 2018? Promise to us that you will publicly apologise and admit that you scribbled tons of outrageous BS.

    Let me tell ya something: you will be wrong. You will be 🙂

    • I will promise it right here and will ask you to earmark the date to come back to this page and hold me to it. In fact, I’ll very likely do far more than apologize (as I really did for being premature on the economic aspects of this collapse in 2016). I would likely stop writing this blog even before the end of 2018.

      However, I’ve had others tell me I’d be wrong at a number of times and spout what they believed would happen, and I was right, and they were completely wrong; but I have never seen them come back and eat their words. So, will you also promise to come back and grovel in apologies as you’ve asked me to. Or is this a one-way street?

      –David Haggith

      • Mihail Iliev

        Okay, I think I set up a reminder for July 2018. Feel free to write to me an e-mail and remind me I should apologise if the Epocalypse happens. Let me just say that I wouldn’t consider a 10 or 15% stock market correction an Apocalypse. Nor a mild recession. Because these two things are inevitable and with every passing day we are closer to the next recession and correction.

        So we are not talking about the business cycle here, right. We are talking something a little more serious.

        I am saying this because you refer to 2016 where nothing happened except that oil dropped some shale companies experienced a bit of difficulty, some oil nations sold a bit of assets to cover their deficits, and industrial production slowed because of the mining industry, and that was it. So that is exactly not an Apocalypse.

        As a matter of fact, February 2016 was an excellent time to buy shares in Bank of America and make 2x by now. I know very, very well somebody who did it 🙂

        • Neither would I … UNLESS we are at a 15% market correction and in a mild recession and most indicators are that we are still going down, not coming back up. Then we’ll have to take a little wait-and-see to find out what the continuing direction is. So, yes, we are talking about something more serious than a market correction — about a recession about like the Great Recession or worse; but it will unfold over a period of, at least, a year and a half just like that one did. Big crashes happen in multiple stages of collapse.

          As I already said 2016 did NOT turn out to be the economic collapse that I said it would be. The stock market did experience its worst January in its history and right on cue and by going up for a few days after the Fed’s rate increase, not just falling straight off … exactly as I said it would. I said it would recover maybe halfway after than and then take its next leg down, and THAT it didn’t do.

          However, I fully believe a huge amount of intervention took place from February onward, especially with the multiple emergency Fed meetings in March … all of which turned the collapse around. That said, it doesn’t make my prediction right, but I did always put in the caveat that an election year would make any kind of behind the scenes, all-stop-out maneuvers likely and that the Fed with infinite capacity to create money and total secrecy at its disposal could do things we’d never know about.

          Nevertheless, if one is going to make predictions, you cannot cop out on unknowns unless those caveats become actual knowns; so, I just went with saying that the overall economic event came well short of the crash I had said was going to happen. I still think that total collapse is going to come, but Trump will likely forestall it a little just because that much mojo pumped into the economy’s veins is bound to jolt the dying heart a little.

          The flaws are too deep and too fatal and generally unidentified for the patient to recover. That’s why the Fed’s “recovery” remains flaccid even after the most massive injections of new money into the entire global economy that the world has ever seen.

        • Auldenemy

          You are some kind of smug git who has coasted along nicely while millions in the West are working up to 3 low paid jobs to put even basic food on the table. You are an arrogant fool. Go shove your shares where the sun doesn’t shine. It is the selfish, ‘I just care about me’ attitude of people like you that has allowed the West to turn into one great gambling casino for the rich, and when their bets go wrong, it is us plebs who get handed the debt so they can carry on as before.

      • Mihail Iliev

        And allow me to add this, David.

        Just consider that right now US banks are super liquid (with all those excess reserves sloshing in their accounts doing nothing), capital is high, no pff-balance sheet shadow banking, matched book trading only, most derivatives cleared through central counterparties, household debt service ratio at a 10-year record low, household net worth higher than ever, corporate cash as % of current assets at record high, on and on and on…

        You still have time to reconsider and withdraw from this spat 🙂

        • I’ll hang in there ; )

        • Auldenemy

          Household credit card debt in the US, UK and EU is starting to zoom up. It doesn’t matter if a manufactured bubble in house prices means home owners are sitting on a fortune because it doesn’t stimulate economies (unless they sell up and blow it all). Young couples – even with both working – are unable to get a mortgage these days which is why rental costs are soaring. There is now a huge slow down in US car/SUV production because of so many lease cars coming back on the market and there are rising auto defaults. You are obv

          • Mihail Iliev

            > You are obviously someone who is judging the economic situation by your own standard of living, along with the garbage peddled by CNN.

            Just looking at the statistics, dude.

            Sure, there is people in Amercia, as well as everywhere else, who are struggling. But that is no proof that financial Armageddon is coming.

            • If you look at a huge dam towering above a small town and see numerous large cracks along the dam, some of them seeping water … you are looking at our flawed economy. The structural flaws are huge, and we’ve already seen how much damage some of them can do. Those problems (the size of banks, the huge focus on derivatives, the high prices of homes with ARMs at a time when housing prices have stopped rising, etc.) are now bigger than they were in 2007 because we have learned nothing.

              So, you can stand in front of that leaking and cracked dam and say, “Well, it’s generating a lot of electricity right now and keeping my home warm and snug,” or you can see the cracked handwriting on the wall of the dam and do your best not to be under it whenever it does go. Even a structural engineer couldn’t tell you on what day it will go, but he could tell you that it is IS failing and that it hasn’t got a lot of time left.

              Many will downplay the risk. Take the Oroville Dam for example. To keep people from being too afraid, the government is careful to point out that the structure that is failing, which could cause an uncontrolled release of water is not the main dam but a spillway at one end. True enough, but if the spillway fails and they cannot stop the flow anymore, the failure could erode end support of the dam away causing much bigger failure.

              Listening to economists today is like listening to them back in 2007 or like listening to Fukushima engineers in March of 2011 as they told us that it was IMPOSSIBLE that the reactors would meltdown. I remember listening and saying. “What fools! The reactors have already melted down and they don’t know it.” Common sense: Shake a reactor with several 8-point-and-higher earthquakes, break its cooling system, flood it with ice-cold sea water when it is a couple thousand degrees hot, shake it with a thousand more 6-point or above earthquakes, and watch as each reactor blows its roof off; and most of us with any common sense will know the “experts” are arrogant idiots. Nothing built by humans is going to withstand all of that. And, as it turned out, yes, they were melting down.

              Economists were that blind in their arrogant expertise and belief in their their own economic engineering in 2007, and they are that blind today. The enormous flaws in the economy are obvious for people who are willing to see what they don’t want to see. Or you can look at the fact that the dam is still standing and the lights are still on in the town below, and say, “All is well.”

            • Mihail Iliev

              You are looking at the wrong things. Of course, the US but also Europe, Japan, China and the EMs have structural problems. It is a giant global structural problem. But structural problems are not causing financial crises.

              Size of banks? Here in Europe we have much bigger banks, not in absolute terms of course, but relative to our economies. American banks are actually small in terms of concentration on national level.

            • Structural problems are EXACTLY what caused the last financial crisis, so that is an absurd statement. My point with the size of banks is not that size will cause a fall but that when these structural problems begin to fail this time, the banks are twice as “too big to fail” as they were last time. So the level of crisis is even higher when it does happen.

              The size of US banks is larger by any measurement you place on them than it was when they were already too big to fail. They have more assets, far more liabilities, more branches, more people under each bank and far more derivative exposure — because of all the consolidation of banks that was forced by the Federal Reserve as the solution to ailing banks. That was a really odd solution for a problem that required socializing the banks’ losses because they were too big. We should have spent the last seven years breaking them down in size as we did with Bell Telephone.

              The size of your banks relative to your economies is far worse, and so your collapse will be horrible when it comes. Deutsche Bank alone could wipe you out. Europe looks far more precarious to me right now than America. In fact, I anticipate the next collapse begins with you next time, not with us.

              Structural problems (especially when there are so many that are so bad) mean the economies of the nations of this world can withstand less impact from bad events and are more likely to experience a cascade of failures instead of isolated failure when an accident happens.

              In my next article, I’ll be looking at the winds that are likely to blow against these economies this year.

            • Kim

              Fukushima and the current situation at Oroville Dam are excellent illustrations of the propaganda infusing the media in order to prop up a false sense of security regarding the systems in place in this world, whether they be economic systems or energy systems, et cet. We also saw it (the propaganda-infused media) in the phony rigging of the polls suggesting an easy Clinton victory on Nove 8th, 2016. But one has only to look a tiny bit beyond the phony rigging, propped upped, stock repurchased-inflated stock market, non-GAAP, triple-seasonally adjusted numbers to easily see reality and easily understand what’s going on. The numbers don’t add up, they will never add up because they aren’t sustainable for one thing. They aren’t real for another.

              The banking system (esp in Europe) is issuing debt at break neck speed, not seen since just prior to the Great Recession, and insolvent pension funds are jumping in with both feet because they are desperately “chasing yield” because. . .They are insolvent.

              There is no exact time table in this rigged game coming to an end because the FED and its central bank state cartel brothers around the world continue to print with zero accountability, and zero collateral requirements on the money it creates from NOTHING. As long as the FED can keep up the illusion that everything is wonderful, with fake employment stats and phony mark to fantasy valuation on companies that produce absolutely NOTHING (I refer to FACEBOOK, SNAPCHAT, et al, with almost zero conversion rates on ads and therefore zero profitability in the long run) it can go on for a time. We are well into it by now. But it CANNOT go on indefinitely. Just like the Oroville Dam and the wrecked Fukushima plant, it would be utterly FOOLISH to ignore the warning signals.

              As for those who try to dissuade and discredit blogs posts like this one, with no foundational argument, proclaiming nonsense that everything is just fine, decrying actual and real evidence of danger, leave them be. There are always going to be ones that refuse to acknowledge reality even when it’s squarely in their midst. There are lots of reasons for their inability to see reality– they lie, they are misguided, blinded, et cetera.

      • Auldenemy

        Please see my reply to this jerk. This is why I could never do a blog. I would be most happy to take in

      • steve jones

        I hope the damn Epocalypse has happened by then so you keep writing this blog Dave! But seriously, it has to happen for a just and sustainable monetary system to emerge. Having said that, I would not wish to be a citizen of the US in coming years.
        I have to say, I now understand Steve Bannon’s obsession with Strauss–Howe generational theory. All that Forth Turning garbage is very compelling.

    • Auldenemy

      Are you living on a different planet or is the usual case of someone who has done no real research, mouthing off? We are in a collapse and have been since 2008. Governments around the world bailed out crooked banks and handed Main Street the bill, which is why more and more of Main St has struggled to get by ever since. Maybe you haven’t but many of us getting poorer year on year (due to low paid jobs and stagnant wages

    • Kim

      You don’t offer any foundation for your claims that any of what’s written in this blog post is “outrageous BS”, therefore, you are the one scribbling the outrageous BS.

      • Thanks, Kim. And he has nothing to lose if he’s wrong, except a little dignity; but I have put my blog on the line at his request that I own up if wrong because I believe in what I’m writing, and I have no desire to inflict myself on people if I turn out to be that wrong. Creating scares or negativity isn’t what I thrive on.

    • Gerry

      Why do you have to make your point in such a rude manner ?. You have not paid to read this article, the author owes you nothing.

  • QEternity

    The $USD reserve currency has been ravishing foreign lands, where loans have to be borrowed and paid back in $USD’s, while local currency declines in value and leaves borrowers scrambling for cash to repay said loans.

    Demographics in the “first world” find us all aging as a block, leading to more demand of retirement and social services, while the generations following us simply don’t “want” much of anything. Not to mention how much technology has eliminated so many things we used to “need”. Heck my iPhone has practically eliminated my laptop which basically eliminated my desktop. Kids today see cars as utilitarian, not something to covet. They want experiences, not “things”. They share, and don’t all go out and buy their own “everything”.

    Speaking of tech, it’s eliminating the jobs that used to be the training grounds of the next generation of adults. It;s not enough for jobs to be off-shored, now they’re just “offed” completely. Today’s Uber drivers will be eliminated, along with McD’s burger flippers, and a host of other jobs. Amazon is working or near worker free grocery stores.

    Over 50% of the country could not come up with $1000 in cash without begging for it from family and friends, or getting an advance on a credit card, or hocking something at a pawn shop. Meanwhile healthcare just keeps rising under ObamaCare, and the feckless Republicans have no plan to fix what the Democrats foisted upon the nation.

    We are in the end-times of the grifters, where everyone is grabbing all they can, hoping when it all goes tits-up they will still have something left. The grifters inhabit DC, corporate boardrooms and exec suites, and anywhere else their sociopathic personalities allow them to land and extract as much from their fellow man as possible.

    It saddens me that I missed out on a lot of the grift that the Fed put out, as like anyone else, one day I may need it. OTOH, I am happy that I own a bunch of “real things” lie land, gold, and food. So much of my “wealth” is not tied to the system, than in a major reset, I will still be able to survive and hopefully thrive. I wonder how many of my brethren out there will be able to do the same.

    Not long ago there was yet another article about hedge fund managers buying farms in New Zealand, and keeping pilots on retainer with promises to take them and the pilot’s families with if it all goes sideways. They know the score — theirs will be some of the first heads to roll.

    Our family is not hurting — not poor, not mega wealthy. We could live much better, but we choose not to live ostentatiously. Never know when that will turn you into a “target” in the future.

    Jim Rogers was just discussing this on a podcast with Macro Voices (www.macrovoices.com). worht a listen…

    • Interesting points, there. The first three paragraphs are all headwinds to the global economy that I’ll include in my next article. I’m glad you brought them up. The middle one — aging demographics — is also a structural problem in the economy in that we have seen it coming for a long time as a hit to social security and did not restructuring along the way to prepare of it, but only raped social security to fund other things. We talked about a social-security “lock box” that does not appear to have ever happened.

      A good lock box would have been a physical vault (Fort Knox comes to mind) where all SS surpluses were stored in physical gold ad platinum — a global currency that would likely hold its value and could be cashed in the future to cover this huge demographic bubble of an aging populace, particularly if other nations with aging populations were not thinking to do the same thing (which would result in a surfeit of gold on the market in years ahead, potentially bringing down its value when few could afford to buy it).

    • Auldenemy

      Great points. It is people like you who help to expose the great looting of our age, as in a system of government that continually gives way to the interests of big banking and multi nationals before the interests of the people. That sounds like I am a socialist, I am not. I simply loathe repeats of greedy, power hungry people in all the top positions (for decades now). They have no moral compass at all. They talk the talk but they do not walk it.

      • steve jones

        The cabal controlled evil empire not only loots countries of their assets and natural resources, but after it smashes a nation, it head hunts the brightest and best for Silicon Valley. (God knows the US education system cannot produce enough of them.) Orphaned children are also harvested, for the elite. Catherine Fitts refers to it as the “culling machine”. I assume most readers here (except Mihail) know the empire is on it’s last legs. Good news, when the malignant toilet paper it forced down the throat of the world (and essentially weaponised) is finally recognised as worthless, the bribery, murder and corruption that sustains the empire will no longer be able to function.

    • steve jones

      The cabal controlled evil empire not only loots countries of their assets and natural resources, but after it smashes a nation, it head hunts the brightest and best for Silicon Valley. (God knows the US education system cannot produce enough of them.) Orphaned children are also harvested, for the elite. Catherine Fitts refers to it as the “culling machine”. I assume most readers here (except Mihail) know the empire is on it’s last legs. Good news, when the toilet paper it forced down the throat of the world is finally recognised as worthless, the bribery, murder and corruption that sustains the empire will no longer be able to function.

  • Auldenemy

    I look forward to you expanding on this article (as you plan to do). For myself I find it odd the way the Globalist brigade talk about it as if it is something yet to come, like the Messiah always on the horizon. I think it’s already long established. The elites felt it was working just fine, and perhaps it was until 2008 and the great big fault line suddenly opening up along their One World belief system. The rich in banking, big corp and politics are in love with Globalisation because it expands their control over us all. The perfect example of this is the EU. By growing their political powers and legal jurisdiction it becomes harder and harder for any one democratic movement to gain enough support to stop them. They have modelled themselves exactly on the huge and powerful banks that operate within them, advise them and have profited hugely by the expansion of the EU. So the financial squid is also the political squid is also the multi-national squid (all of them engaged in spreading their tentacles further and further afield).

    Look at how much homogenisation the globalist system has already achieved. Every main shopping street looks almost identical in the UK and EU (I presume it is much the same in most US towns and cities). Big Brand world long ago strangled the little people with their little business. All those little businesses are what used to maintain communities and add to their individual character.

    Look at how we have been homogenised into accepting a profoundly stupid Neo Liberal political system, never questioning the fact that what ever political party has been in power, the same policies continue and the dollops of PC just keep growing. The Globalist elites triangle of banking, politics and big business got clean away with it until 2008. The massive financial fracture was a wake up call to reality, as in, they (the elites) screw up and we (the plebs) pay for it. If that wasn’t bad enough they just carried on as if nothing had happened! They went into denial because they are wealthy and powerful and carried on being even more wealthy and powerful. They see the masses as something to control and loot but at the same time dismiss when it pleases them. This was their biggest mistake and why Brexit and Trump have happened.

    The young, along with cosy academics and well paid, middle class, media hacks are completely brain washed with the false PC message peddled by the triangle of banking, politics and big corp. world. They love all the gush about a world with no borders, the entire human race freely moving where they please, everyone being equal. They appear to have no regard for the reality of such an ideology, as in the poor and war torn will of course head to the West. Who wouldn’t to escape wars, lunatic dictators and terrible levels of poverty. The problem is that it is unsustainable. Even if the West wasn’t mired in impossible levels of debt, how on earth can it accommodate endless millions from Africa, the Middle East and Asia? What work is available to them in a climate where many indigenous Westerners are struggling to make ends meet due to low paid jobs and stagnant wages? How will a young, black African male who is barely literate ever compete for work in Greece, Spain, Italy and Portugal when youth unemployment among the indigenous populations of these countries is at all time highs? So they head on for Northern Europe and the UK so as to be entitled to our welfare systems. How do we sustain them exactly? This is something I would dearly like George Soros and all the Snowflakes in the USA, UK and EU to tell us. It is all very well and good going on marches and carrying banners declaring, ‘No Borders’, ‘Everyone Welcome’, ‘We Are All One’ (these are actual quotes from protest banners, not made up by me), but what sacrifices are these Snowflakes prepared to make? How many have offered to house any immigrants at their own expense? How many would even be willing to give up their treasured iPhones and other toys to financially help to support endless immigration? It appears those who shout the loudest against Trump and Brexit are also those who want everything their way but someone else has to fund it!!!!

    Your Great Recession blog has always been completely on target in my view. It doesn’t really matter about timing, what matters is that it is happening right now and has been ever since 2008. The mess of dying Western economies and mass, uncontrolled immigration is like two great plates, grinding against one another on the sea bed. It can go on and on for a long time before finally one completely over rides the other, rises up with great force and causes a tsunami. No one sees it, no one hears it. Hundreds of miles away fisherman are laying their nets, the sea is calm, the sun is bathing tourists on the palm lined beach. We all know what comes next! We can’t say when it will happen but if we care to do our homework or even asses our own situation and that of neighbours struggling more and more to get by, we know damn well what is coming.

    What I don’t have clue about and would love your ideas on, is what happens after the, ‘Epocalypse’. Will it be the elites opportunity to force us all into the final prison, as in to their digital currency and growing jackboot laws (no free speech on the grounds that it engenders, ‘Hate’) etc? Or will there be mass revolts and riots all over the West? Will we carry on being sheep or will we revolt and refuse to obey new, draconian laws? I have no idea and I probably won’t be around to see it (depending how long Banksterville can keep on making things worse by turning historical financial norms like interest rates and once free markets, upside down and inside out by constant manipulation of all things financial). I hope your incisive mind might give us some clues.

    Multum In Parvo

    • It is exactly the same with towns in the USA. I call them Anywhere, USA, towns. Every single one could be any other one — just vast strip malls with no heart and soul. No town square, no nice architecture. Truly ugly everywhere.

      Because Walmart is often the first major store to develop in a predatory fashion on the edge of a small town that does have heart and soul and then siphon all the business away from the mom-and-pop stores, I have refused to shop at Walmart all my life. The ONLY times I will buy there is when they have a product that no one else carries. I don’t care that I can save a dollar or two on cheaper underwear by buying from Walmart. I contentedly pay more and refuse to be a party to their style of business in order to support the locally owned and run businesses in the real town core as long as they can survive.

      I’d rather have a nice town than cheaper underwear.

    • QEternity

      The EU is leading the charges in heading to digital cash and going after people for “hate speech”. One of those targeted may end up in an important position in the Netherlands.

      Personally, and without any death or destruction, I want to see the electric grid fail for 1-2 weeks in some “cashless” country. That would put a real crimp on this nonsense.