This is the point at which the global economy falls the rest of the way off of the cliff. The false hope raised by the illusion of decisive action on the part of the Obama administration is giving way to Democratic party in-fighting and an increasing public perception that Obama and Geithner are out of their league.
A number of events on the macro economic and political fronts threaten to converge simultaneously to force another major contraction in global markets.
— Auto industry’s impending contraction as a result of imminent bankruptcies and mergers;
—Hold-up of stimulus money in the U.S. Congress as squabbling and criticism over the proposed budget and regulatory reforms bog down progress;
—Increasing public outrage over the role hedge funds have played in forcing Bear Stearns and Lehman Brothers into bankruptcy, and the apparent collusion between hedge funds and the Securities Exchange Commission is undermining confidence in both the Obama administration and the S.E.C.
—China’s growing agitation for an alternative to the U.S. Dollar as default foreign reserve currency will continue to put downward pressure on the U.S. Dollar and help undermine treasury auctions;
—Disastrous corporate earnings (7th straight quarter of declines, this time upwards of 35 percent), bankruptcies, and layoffs continue to destroy economic health at the street level;
—The upcoming G20 meeting in London, England will likely result in the failure of all nations to agree on anything on a unified basis, which will trigger major market declines in the weeks to follow.
Investors should get out of equities and bonds and into precious metals or cash (not U.S.!) exclusively.
This next wave of financial mayhem will also catalyze elevated levels of civil unrest where unemployment is highest and where food shortages will soon begin to underscore how serious the crumbling global infrastructure really is.
Governments throughout the G20 will likely react by protecting domestic supplies of energy and food as public pressure to solve the problems forces governments to act according to popular sentiment.
Organized crime groups such as drug cartels and bankers will take advantage of the growing chaos to perpetrate their own interests to the detriment of (mostly) urban centers.
We are progressing solidly toward a situation where lawlessness emanates from the top down, and leadership by example is the most to blame. The U.S. government is being implicated more and more in duplicitous acts that appear to provide cover and escape for high net worth bankers who have supported the election of governments with billions in ill-gotten gains for the last twenty years.
Among the biggest problems are the regulatory loopholes, unregulated over-the-counter status of the derivatives market, and continuing ability of major naked short activity by hedge funds all continue to exist. As these fundamental flaws in the (mostly) American financial system gain exposure through investigative media, the glaring absence of meaningful legislative change, and the inability or unwillingness of existing regulatory bodies (like the Commodities and Futures Trading Commission, S.E.C., etc.) to enforce current statutes and regulations, confidence in the global system of banks and their associated regulators is eroded.
We are still in a phase of primary deterioration of leading economic indicators. The anomalous rise in figures such as mortgage applications and housing sales is a reflection of the massive re-allocation of assets now underway as a result of crushed prices and demand, and homeowners and speculators exploiting easier mortgage terms as a result of federal bailout moves.
The economy continues to contract globally, jobs continue to disappear, credit continues to be lethargic or frozen, and government money directed towards economic stimulus continues to be hijacked by banksters and parasitic corporations who are led by experts in the exploitation of loopholes in regulatory language that results in legal forms of theft.
There is a strengthening voice of “the worst is over” in mainstream press, but it is important to recognize that these media outlets are controlled editorially by the same multi-national conglomerates who have a vested interest in convincing citizens that the economy is on solid footing so you keep spending.
A time will come when you will look back and marvel at the sheer audacity of the criminal banking and government cartel, and also at our own collective naïveté in swallowing the perception management diatribe and taking the integrity of our society’s elite for granted. Those days should be over once and for all.
Finally, there is increasing instability in the currencies of G7 nations, and at some point, the devaluation of the U.S. Dollar will trigger a revaluation of all currencies. How each country’s will fare is difficult to predict, because against what will they be measured if the USD is abandoned?