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If Everything Is Just Fine, Why Are So Many Really Smart People Forecasting Economic Disaster?

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Apocalyptic Disaster - Public DomainThe parallels between the false prosperity of 2007 and the false prosperity of 2014 are rather striking.  If we go back and look at the numbers in the fall of 2007, we find that the Dow set an all-time high in October, margin debt on Wall Street had spiked to record levels, the unemployment rate was below 5 percent and Americans were getting ready to spend a record amount of money that Christmas season.  But then the very next year the worst economic crisis since the Great Depression shook the entire planet and everyone wondered why most people never saw it coming.  Well, now a similar pattern is unfolding right before our eyes.  The Dow and the S&P 500 both hit record highs on Monday, margin debt on Wall Street is hovering near record levels, the unemployment rate has ticked down a little bit and Americans are getting ready to spend more than 600 billion dollars this Christmas season.  The truth is that the economy seems pretty stable for the moment, and most people cannot even imagine that an economic collapse is coming.  So why are so many really smart people forecasting economic disaster in the near future?

For example, just consider what the Jerome Levy Forecasting Center is saying.  This is an organization with a tremendous economic forecasting record that goes all the way back to the Great Depression.  In fact, it predicted ahead of time the financial trouble and the recession that would happen in 2008.  Well, now this company is forecasting that there is a 65 percent chance that there will be a global recession by the end of next year…

In 1929, a businessman and economist by the name of Jerome Levy didn’t like what he saw in his analysis of corporate profits. He sold his stocks before the October crash.

Almost eight decades later, the consultancy company that bears his name declared “the next recession will be caused by the deflating housing bubble.” By February 2007, it predicted problems in the subprime-mortgage market would spread “to virtually all financial markets.” In October 2007, it saw imminent recession — the slump began two months later.

The Jerome Levy Forecasting Center, based in Mount Kisco, New York, and run by Jerome’s grandson David, is again more worried than its peers. Its half-dozen analysts attach a 65 percent probability of a worldwide recession forcing a contraction in the U.S. by the end of next year.

Could they be wrong?

It’s certainly possible.

But I wouldn’t bet against them.

John Hussman is another expert that is warning of financial disaster on the horizon.  He believes that we are experiencing a massive stock market bubble right now and that stocks are approximately double the value that they should be

If you look at corporate profits and especially corporate profit margins, they’re one of the most cyclical and mean-reverting series in economics. Right now, we have corporate profits that are close to about 11% of GDP, but if you look at that series you will find that corporate profits as a share of GDP have always dropped back to about 5.5% or below in every single economic cycle including recent decades, including not only the financial crisis but 2002 and every other economic cycle we have been in.

Right now stocks as a multiple of last year’s expected earnings may look only modestly over valued or modestly richly valued. Really if you look at the measures of valuation that are most correlated to the returns that stocks deliver over time say over seven years or over the next 10 years the S&P 500 in our estimation is about double the level of valuation that would give investors a normal rate of return.

Could you imagine the chaos that would ensue if stocks really did drop by 50 percent?

Well, Hussman says that this is precisely what must happen in order for stock prices to return to historical norms…

Right now, like I say, we are looking at stocks that have been pressed to long-term expected returns that are really dismal. But more important than that, in every market cycle that we’ve seen with the mild exception of 2002, we’ve seen stocks price revert back to normal rates of return. In order to get to that point from here, we would have to have equities drop by about half.

If that does happen, it will make the crisis of 2008 look like a Sunday picnic.

Meanwhile, other very prominent thinkers are also warning that an economic nightmare is rapidly approaching.

Economic cycle theorist Martin Armstrong foresees major economic problems in 2015 which will ultimately lead to “civil unrest”  in 2016

It looks more and more like a serious political uprising will erupt by 2016 once the economy turns down. That is the magic ingredient. Turn the economy down and you get civil unrest and revolution.

And of course there are a whole lot of other economic cycle theorists that are forecasting that we are about to experience a massive economic downturn as well.  For much more on this, please see this article and this article.

What is truly frightening is that we have never even come close to recovering from the last economic crisis.  One poll that was taken just prior to the recent election found that only 28 percent of Americans said that their families were doing better financially.  In addition, here are some more survey numbers about how Americans are feeling about the economy

According to voter exit polls conducted by CNN, 78% said they are worried about the economy, with 69% saying that, in their view, economic conditions are not good. 65% responded that the country is on the wrong track vs. only 31% who believed that it is headed in the right direction.

Even though we are repeating so many of the same patterns that we experienced back in 2007, we are doing so with a fundamentally weaker economy.  The last crisis did a tremendous amount of permanent damage to us.  For an extensive look at this, please see my previous article entitled “12 Charts That Show The Permanent Damage That Has Been Done To The U.S. Economy“.

And there are lots of signs that much of the planet is already entering another major economic slowdown.  In a recent article, Brandon Smith summarized some of these.  He says that we are currently witnessing “the last gasp of the global economy“…

Global exports, and thus consumer demand, are plunging. Germany, the only pillar left to prop up the failing European Union, has experienced a severe decline in exports not seen since 2009.

China, the largest exporter and importer in the world, and Chinese companies, have been caught in a number of instances using fraudulent invoices to artificially inflate their own export numbers, in some cases reporting 50% more exported goods than had actually existed.

China’s manufacturing has also declined for the past five months, exposing the nature of its inflated export stats and indicating a global slowdown.

The Baltic Dry Index, a measure of global shipping rates for raw goods, and thus a measure of demand for shipping, continues to drag along near historic lows.

The U.S. consumer (the only economic asset the U.S. has besides the dollar’s world reserve status), has seen declines in spending as well as wages.

In the meantime, long term jobless Americans continue to fall off welfare rolls by the millions, making unemployment numbers look good, but the overall future picture look terrible as participation rates dissolve into the ether of government statistics.

How is such poverty being hidden? Foodstamps. Plain and simple. Nearly 50 million Americans now subsist on food stamp programs today, and this number shows no signs of dropping. In states like Illinois, two people sign up for food assistance for every citizen that happens to find a job.

From time to time, I get accused of “spreading fear” and of being obsessed with “doom and gloom”.

But that is not the case at all.

I actually want our economy to stay stable for as long as possible.  Many Americans don’t realize this, but even the poorest of us live in luxury compared to much of the rest of the world.  It would be wonderful if we could all live out our lives in peace and quiet and safety.

Unfortunately, it is simply not going to happen.

And it does not take an expert to see what is coming.

Anyone with half a brain should be able to see the economic disaster that is approaching.

There is hope in understanding what is happening and there is hope in getting prepared.  Millions of Americans that are willingly blind to our problems are going to have their lives absolutely destroyed when they get blindsided by the coming crisis.  So please use this brief period of relative stability to get prepared and to warn others.

Once this false bubble of hope runs out, all of our lives are going to dramatically change.

  • jakartaman

    I believe most folks that have been paying attention would agree that a world economic collapse is on the way. What might be unknowable is the timing and how it will start and how it will cascade. Other unknowables are how bad it will be? How long it will be? What will the USA and world look like when we emerge? I would love to hear from some smart folks of plausible surnerios

    • CRAT

      I, like you, would also like to have an idea of how things will develop. Many smart and informed people have very different opinions, from a “mad max” scenario to a longer, slower descent (decades) into a much lower standard of living. Snyder’s book on this website gives one scenario.

      • jakartaman

        Thanks for not beating me up on the misspell

      • Ardit Spahija

        well i hope it’s a mad max scenario,cuz for people like me,the descent scenario is all i know since the day 1 of my life..

  • K

    I think I finally have the answer. A chlorovirus has been shown to be able to affect people’s behaviour, by sapping their intelligence according to reports. Some economists are not infected. But D.C. is obviously at a pandemic level. Maybe a fairly large outbreak on wall street too.

    • jakartaman

      Yes it has a 40% infection rate same as Obama’s approval rating
      Coincidence – I don’t think so!

    • Bill

      Good thinking.

  • Cleber Ribeiro de Paula

    Hi,
    Let me inform you that DryShip site stop showing the index anymore. They stopped about a month ago. I think they stoped due to a huge fall in the index!

    • sharonsj

      I was surprised by this so I googled Baltic Dry Index and the first thing to pop up was Bloomberg. They have the daily quote as well as a six-month chart. Shipping spiked a few days ago and is going down again (must be the Xmas crap from China). The index is down 37% since the same time last year.

  • Erik Bergum

    The sad reality is when the economy falls apart, there would be a huge riot worldwide. All of the financial problems we are facing worldwide (globally) is a good indication that the stage is set up for a one-world government predicted in the Bible. I just hope more people will wake up to reality of what is going on not only in our economy but other economies worldwide. It just seems our secular mainstream media is not being very truthful these days, sure deceiving a lot of people of course.

    • Kent Harris

      This coming weekend the Vatican will have just about every religious sector in Rome to discuss marriage and family. One World Government and One World Religion are coming together and when you see all the major powers declare we need a single currency then you know the jig is up. When the Pope announces to the world we need a person who can save us from ourselves then we have all the necessary ingredients for the Last Days.

  • Priszilla

    Whatever. You can only prepare for less income and rising costs. And imo the only way to do that is by reducing operation costs like for energy transport communication and stock up on easily storable goods.
    And well, keep quiet about it. Or your stores will be a target.
    Insulate your house. Fortify your bunker against flood and wind, have your teeth fixed for some hard bread, close your holes in the house against rain, wind, mice, insects.
    Maybe the money you spend on preparation will keep the economy afloat for another month.

    • Mike

      Couldn’t agree more.

    • Priszilla

      Just moved to a new house. A bit smaller than the previous. In walking distance to one of our jobs. In cycling distance to the other job. Gas heater instead electric, gas being cheaper.
      Now I’m insulating the pipes from the heater to the radiators. No need to heat unused storage space.
      And set the thermostat to fit our attendance and absence, with easy manual override should the need arise.
      Now we are down to £15 per month for heating, cooking and bathing.

  • T.

    Many really smart people are forecasting economic disaster because “drum roll” – It is the truth. The US economy being the largest in the world – Is nothing but a giant sand castle built upon trillions of dollars of “Debt” and sustained by trillions more. The Fed creates trillions and trillions of “Digital Dollars” to support and sustain our economy and the western world. It is the biggest “Con” game in the history of the world. When the big “Event” hits – The sand castle will “Collapse” and the jig will be up and the people will be impoverished and enslaved. Of course, This is all Planned – Believe it or not.

    • willie

      The final crash will come on a symbolic day, they will keep printing all the way to the bottom.

      • willie

        They will collateralize global debt and takeover the resources of the planet under a global government.

        • T.

          Yes. And slaughter millions upon millions of “Useless” eaters.

        • Jane the Plummer

          The largest aquifer in the world (s america) was bought by the Bush family…

      • alan

        Exactly, we will look like Africa and no body will say anything on how we got there, it will be the new Norm.

  • DJohn1

    I did see the 2008 crisis. I had an inheritance at the time and I did not invest in the market.

  • Bill

    Tuff question, easy answer. The government consistently lies. We have been had–we are doomed.

  • VegasBob

    People don’t think exponentially. They don’t realize or understand that the so-called “prosperity” of the last 30 years has been fueled not by the production of anything of value, but by exponentially increasing debt.

    The problem with exponentially increasing debt is that eventually the payments on the old debt become too great in relation to current income, so current consumption must be reduced.

    The Fed has tried to paper over that problem with zero interest rates (ZIRP) and money-printing (“Quantitative Easing”), but both of those policies are mathematically destined to fail at some point.

    The fact is that a healthy economy does not need ZIRP or QE. That these policies have continued well into 2014 is prima facie evidence that the so-called “economic recovery” of the past 5-1/2 years is a fraud.

    The historical record shows that no country in history has ever borrowed its way to prosperity, and no country in history has ever brought about prosperity through money-printing.

    The solution, painful as it may be, is to default on the trillion$ of unpayable debt at all levels – government, business, individual.

    Unfortunately, that kind of default will bring about the economic collapse that Michael is warning about.

    The real question is whether we try to engage in a controlled default of all the bad debt, or whether we allow ourselves to be blindsided when default is forced upon us.

    I would look to Japan or Great Britain for clues. Both countries are being strangled by oppressive debt levels. My guess is that the Japanese Central Bank will print yen up to the point of economic collapse and depression, and may drag the world along for the ride.

    • XSANDIEGOCA

      Default is the only solution. Our total liabilities, funded and unfunded, exceed 100 TRILLIONS. At minimum, that is 6x the GDP. As I recall my definition of bankruptcy, when you owe more then a years income in consumer debt … you are bankrupt. We have been bankrupt of years. The Elites have tried the Big Print and ZIRP. This has worked spectacularly well for the 1% but leaves the rest of us high and dry. This explains the recent spectacular electoral shift. Message to the GOP: you did not win. The Demos lost. You can lose again unless you show us something.

      • The winner of our latest election was “not voted”. Despite constant exhortations from “neutral” commentators to vote, a good percentage of Americans chose not to participate in the farce of our politics. Refusal to participate is in fact the strongest way of repudiating oppression – indeed, apartheid came to an end when the South African government held an election with only a 7% turnout.

  • Paul

    This might sound mean but I hope the economy does experience a full blown collapse. The masses will then realize that their government has sold them out. Americans that were previously apathetic might spring into action to root out corruption that is running rampant in the U.S government and corporations. The status quo is simply not sustainable.
    Peter Schiff said it best in order for the healing process to begin a lot of pain must be felt first. The Federal Reserve needs to be abolished. The market, key economic indicators, commodities, have been grossly manipulated by the Federal Reserve. This Ponzi scheme must come to an end. It is criminal millions of Americans are being sold out.
    Less regulations, lower taxes, investing in renewable and non-renewable sources of energy, infrastructure development, and abolishing the Federal Reserve are a few ideas for revitalizing the economy.

    • we_have_one_that_can_see

      the masses are dumb down,..when the economy collapses the government ,or federal reserve will never take responsibility,..and the talking heads on cnn,..and msnbc will put the blame some how on an outside group,..they may find a way to use the economic collapse to get the dumb down masses behind a war. the american people still believe the the democrats,.and republicans are actual two different political parties, Americans have not figured out that democrats,and republicans are two cheeks on the same @ss, and we are in the middle getting screwed,..but some how they will figure out , when they cant find a job, or buy food,..that the federal reserve did that to them? the powers that control this country will never come out of the shadows,..they learned from the french revelution

      • Paul

        I am doing what I can to wake up as many people as possible. I prepared a Powerpoint Presentation that illustrates how the middle class is being decimated. I plan on going to college campuses and distributing the presentation.

        • T.

          Good luck with the college campus thing. Those administrators/profs don’t like anybody horning on their little monopoly of ideas and intellect.

          • Jane the Plummer

            People still believe they are free, whatever that means. I would never try to speak out like Paul, it is dangerous.
            There was a time in history when Jewish families had to make the decision, based on instincts , to flee the only life they had ever known. Only about 10K made it out. The rest is history.
            For some time I have seen modern parallels to this piece of history, right here in America. Yet few see what is right in front of them.

          • T.

            Agree. I’ve found it fruitless indeed in my efforts to illuminate the blind. Also, there are many who are best left in the dark because they will Never understand and when it gets ugly would turn on you – knowing that you have made preparations.

          • apeiron

            It’s a bad idea to make it widely known that one has stores of goods…even in good times. A lot of ‘preppers’ are foolish that way.

          • Tom_F

            @T, how true. My thought is that the ‘willfully blind’ have only hope that “things will get better, they always have.” Facing a hard truth is pretty unattractive to most people in western civilization, where we have prepared by education, work, and govt. dependence. It is scary to rely on yourself!

          • Paul F

            Jane, I also see a parallel between the Jewish Holocaust and the holocaust coming to America–the Christian’s will be at the front line, and many will fall away scared or actually turn against other Christians thinking they are in the right to do so. I am a Messianic Jew–and I feel that the Jewish Holocaust will once against take place in the near future, only this time, it won’t be the Jews that are attacked. I could be wrong–but according to the book of Revelation in regards to the mark of the beast, I see a Holocaust taking place.

          • Jane the Plummer

            I strongly believe we are living the Holocaust you speak of. It is a global pre-meditated extermination. There are many methods being used simultaneously around the world. The latest is Ebola in America. Now cue the “early polar vortex” cold to make it airborne!
            This would usher in martial law, suspend elections, de-populate and the economic collapse would be blamed on a virus!
            Ps: I predicted, ON THIS BLOG,, that the temps around the country will fall like a rock after the elections. They did, almost immediately..All we need is one cough into frigid air from an Ebola patient.

          • Paul F

            Jane, thank you, I didn’t even consider the drop in temperature. This is one reason I read the comments-I learn a lot from other reading their comments.

          • apeiron

            I don’t believe in big conspiracies, humans can’t reliably keep their big mouths shut. I do however, believe that the powers behind the ‘seen’ (pun intended) are not even human.

          • Neil

            Believe it; the conspirators often take measures to ensure that big mouths do stay shut.

          • Gay Veteran

            the Christian’s will be at the front line of what?

          • GSOB

            The primary concern with prophecy is ethical conduct.

            Most of the Revelation has been fulfilled.

            Jesus Christ came as the Son of Man (the second Adam), to set up God’s Kingdom on the earth.

            What’s left is the conversion of sinners to Christ and then the end, when Christ returns.

            The great tribulation has come and gone. Its not a future event. Antichrist is not some futuristic character you are wanting to see.

            In general, any apostate teacher or system can be called ‘Antichrist'; but the word does not refer to some future Fuhrer

            Satan has been bound.

            The Kingdom is now made up of all those who have been redeemed by Jesus Christ.

            When John tells us that he saw ‘ a new heaven and earth,’…. recognize that the primary significance of that phrase is symbolic and has to do with the blessings of salvation in Jesus Christ.

            The New Jerusalem coming down out of heaven is Christianity.

            Those who believe in Jesus Christ as the Lord and Redeemer of their life are in this New Jerusalem now.

            Get to work.

          • ractivist

            I don’t think you really understand end time prophecy. Two thirds of the worlds population is to die. That hasn’t happened yet. Blood up to a horses halter. Please don’t give up your faith if you are wrong and have to endure the worst of the worst this world has to offer, cuzz it’s likely to be at your door some day, if you are still alive to witness it. Just saying, Saul, who became Paul, as well as all the disciples died horrible deaths and were tortured and oppressed all their lives. I doubt we suffer any less due to a get out of jail free card here on earth..that comes next, after the great tribulation.

          • Devon

            Paul, do you have any advice for us who are Christians and Messianic Jews? Do we flee for the hills? Do we hunker down and passively accept the coming hard times? I also have been thinking about these things…and I am in Western Canada where things are quite a bit better then in many parts of America but with the oil turn down, we here in Alberta are starting to feel the pinch…but I am more concerned about this coming persecution??? To the point, me and the wife have even thought of leaving the West as it turns darker and darker…..What do you think?

          • apeiron

            Who will be the ‘Jews’ this time Jane? Looks to me like the white Christian man is being portrayed as the root of all our problems.

        • Jane the Plummer

          I don’t try to enlighten anyone. Been there done that. It’s useless and I fear being turned in.

          • Richard

            I have tried to prepare my family and friends about what is going down. They just laugh at me. They think I am wack, Well when the S.H.T.F. guess who will be the first ones to my door??

          • Alex

            True, people must get really desperate first, a lot of thinking needs to be done, only the they might start seeking for the right knowledge. Another thing is the ability for critical thinking, it is not that common these days which results in total inability of the crowd to get the point of the problem. To be short, the ones that do understand what’s happening will always find what they are looking for, while the rest is absolutely doomed and is not worth the effort.

        • we_have_one_that_can_see

          paul,..i will pray for you. we once had a president who tried to stop the federal reserve, he turned the printing of the curreny back over to the u.s. tresury department. and now we have a airport in queens ny named after him

        • Tom_F

          Once people “wake up” what would you like them to do?

        • alan

          No one wants the music to stop! People don’t like thinking about bad things happening. They want a new car or house, just have to work out how to finance it.

      • Calling Elvis

        Here here sooo well said

      • TK

        Oh yeah, this guy knows what’s up! !! How do we get you elected? ?

    • MichaelfromTheEconomicCollapse

      Paul:

      I honestly do not hope that it gets as bad as I believe that it will. In fact, I believe that what is coming will eventually be so bad that it will shock all of us. Nobody should wish that on their worst enemy and there will never be any recovery from that.

      Michael

      • T.

        AMEN.

      • Paul

        Michael,
        I am frustrated that America is in decline. From rising obesity rates to exploding debt levels something must be done to reverse the decay of America. I wish we had a solid economy and a vibrant middle class. It sickens me that millions of Americans are being hung out to dry. Peter Schiff once stated the longer the Ponzi scheme goes on the more painful it will be when the house of cards finally collapses. Though it is hard for me to stomach the system in place has to collapse. It is corrupt and only caters to the interests of the elite.

      • K2

        ”Nobody should wish that on their worst enemy and there will never be any recovery from that.”

        Very well said.

    • Johnny U

      Paul I could not agree with you more. I intend to sit back in here my well secured rural locale an watch the cities burn 230 miles away as the sheep-people go bonkers an consume each other in a spectacular display of mass-group insanity

    • Zach Watkins

      Dear Paul: Sadly I think you’re right. Americans need to realize that wealth isn’t an arbitrary thing that just appears out of thin air to a privileged few. People should understand that creating value be it in producing a computer, tomatoes, or whatever people will pay for is how life improves and society advances.

      Also, Paul, I wish people understood that you have NO RIGHT to health care, education, or anything of that nature. You have the right to PAY FOR those goods; however, that is about it. No right to heath care, education (beyond high school), or anything else.

      People want jobs? Answer: Why not make it easier for business people to do business in this county.

      College cost too much? Answer: Ending the federal monopoly on student loans will force them to be competitive with prices.

      Healthcare: Answer: The federal intervention in the 1960s is the major source of the cost inflation of the last 50 years.

      That is my opinion.

  • Bill

    Sick—-

  • Pecos Percy

    You can carry a lot of instant potatoes and powdered gravy in a backpack. A water purifier, vitamins, a good knife and good woman who doesn’t complain will be helpful.

    • Mike Smithy

      Where does one find a good woman that doesn’t complain?

      • T.

        Trade Secret.

      • Pecos Percy

        Haha. Not easy. China or Korea maybe.

      • Tim

        LOL.

    • Johnny U

      I hope you don’t mean one of those grossly overpriced ‘water purifiers’ that Alex Jones pushes on his tabloid Infowars web site and cock-an-bull story radio show. Truly a tinfoil hatter’s sucker market that one is!

      • Pecos Percy

        Seems to me the stuff sold on prepper specific sites is overpriced and over rated. I use Amazon for a lot of stuff. Most dried or canned foods available in grocery stores will last long beyond their sell by dates.

    • Joel Peeters

      Add to that the importance of knowledge. The ability to creatively transform “garbage” and crap into useful tool on your way is an absolute need for any wise “prepper”.

      Sadly, some prepper underestimate craft skills (the McGyver kind hehehe) and overestimate the storage. Balance between both is essential.

      I find the Third World people rather creative and a lot of ideas can be gleaned from them since they know what it is to be creative with nearly nothing else than garbage for decades…

  • toadsticker

    One month this summer it was reported that there were 250,000 new jobs created. Then it was learned that there were 500,000 full-time jobs lost and 750,000 new part-time jobs gained. That’s 250,000 net new jobs, but people are working fewer hours at lower pay. I lost my full-time job with benefits and managed to find a job at less than half the pay with no benefits. It has been a struggle to keep up with the bills. Thank goodness we had very little debt other than our mortgage. What really gets my goat is that as a 58 year-old who started to caddy when I was 8, worked paper routes when I was 10 and worked washing dishes when I was 15 and have worked and paid taxes my whole life I now find myself in a position where I can’t afford the premiums or deductibles for health care, but my taxes go to pay for health care for people that don’t work. I went out and I found a job and I’m always looking to move to another better paying job with benefits. I feel no loyalty or thanks to the employer. The companies have employees by the short hairs and they are offering bare minimums. New employees in all lines of work (both public and private) are working at low wages with no health care benefits or retirement plans so retirees and employees hired previously get theirs. If the average person now has less than $40,000 put away for retirement think how little these people that are working to pay for the benefits and pensions of the people above them will have when they near 60. This is the way it is and the way it will continue. I don’t see it getting any better.

    • T.

      No. It will not get any better. The whole “System” is a giant “Mirage”. The real economy which produces goods and services which provide the jobs and benefits for workers – Is in a Gigantic downward spiral. The real economy is “Concealed” in all of its ugliness by the lies, money printing, and Government handouts. The Fed; the Government and Wall Street have “Conspired” along with Their control of the MSM to cover up the truth about the real economy and its very ugly ending.

      • energizedmortal

        It will get better! After the great war. It is darkest before sunrise.

        • Twisk

          Yes, yes, more wars are going to save America. More blood, more mass murders, more bombs, more dead children, more homeless – no problem as long as it happens to others.
          How can any country become so utterly perverted?

          • T.

            Amen. “How can any country become so utterly perverted”?
            By first forsaking the way of Almighty God – Then by following our own Evil desires.

    • Maneb

      Welcome to OB’s transforming America. Sad sad sad.

      • Econocobas

        I get that OB is terrible and to this point is one of the worst presidents ever but do you really believe that America’s problems are due to him and that if we get rid of him things will be better.. Or better yet if McCain was elected that things would have turned out any different.. What I am getting at is for you to understand the solution you must have correctly identified the problem. OB is one man (really just a puppet) in the corrupt global system that has systematically brought down not only this country but all countries.. It’s full spectrum dominance

        • ractivist

          This is accurate. World government via the UN, created in part by the US gov. in 1945, a committee led by Algier Hiss, later to be convicted as a Soviet spy. Connect the dots folks, McCarthy was right, the fifth column is alive and well, in the end run destroying this nation….bringing us to our knee’s. Prepare wisely people.

      • Gary

        That transformation began along time ago. It began the moment we believed we could have what ever we wantedand that we could do what ever we wanted. The entire American way of life was conceived and supported by making war. So, is it any surprise that the bill has come due?

      • Alexandre Pepin

        the president responsible for the destruction of the american economy is not Obama. Geez, you don’t create such systemic problems in 6 or 7 years. This goes back all the way to Woodrow Wilson who signed the Federal Reserve act into existence in 1913. It’s the fed that has propped up the stock market to such ridiculous highs…

    • peace angel

      You are just getting a dose of what has really been going on in the US for four decades.

      I began working on my parents large ranch at the age of 6. It was a 7 day a week responsibility. I went to work in my grandfather’s shoe store at 15 for $2 an hour. I have been working ever since until I got both mentally and physically ill compliments of the US gov. poisoning programs.

      I bought houses and rental property, paid cash for cars and have not had any debt since the early 80’s and today all that is gone.

      But the Cabal began killing the US in the early 80’s by using the FDA and EPA, etc. to begin creating tons of useless regulations and taxes to destroy anything they did not own, ie small businesses.

      By the mid 80’s the banks were doing a sweep on the whole nation of the farmers and ranchers to call in their loans. John Deere is cabal owned and operated and they first drove the prices of farm equipment through the roof and farmers and ranchers could no longer pay cash for equipment and as soon as they got millions of them on the hook they began calling in their loans.

      We watched as ALL our friends lost their two hundred year old family properties and livelihoods. America slept through all that and today the Cabal (Cargill) and the gov. own all our ranch and farm land from coast to coast and when they took over there was no longer anyone to protest the poisoning of the food supply and Monsanto and Dow went to work poisoning millions more animals and people.

      Today

      • K2

        You love telling people they have no clue dont you? :)

        • derekzan

          Idiot…

  • Jane the Plummer

    You are the ‘religious nut troll’ for the ECB. I, personally, am so sick of your crap I could puke. You take up a lot of space criticizing others with your moronic views. Admin can take care of his own blog, he doesn’t need a babysitter.
    P. S.- I won’t respond so don’t bother.

    • Kent Harris

      What does his comment have to do with the discussion? Michael should remove comments that are completely unrelated to the article. I have a Youtube video concerning Muslims and I actually remove comments that are stupid and are off topic.

  • JailBanksters

    I dunno, but I’m getting that 7 year itch again.
    It could be because all the Financial Indicators are all spinning in different directions and at different speeds just don’t match with what the World can see is Physically Happening. And to that, all the Central Banks are being run by Madmen or Madwomen that are all Psychopaths that have absolutely no Idea what is happening outside their own office, only what they tell CNN and Bloomberg what to publish.

  • Michael Dubin

    Michael,

    Why do you think the DOW is rising when the Fed ended QE? Maybe they lied about ending it. It kept rising when they tapered earlier this year.

  • Richard

    Another excellent article, Michael. Congratulations on staying away from trouble!

    Be very careful who you quote. I’m sure you must be aware that John Hussman has been disastrously and horrendously wrong for the last five years in his assessment of the traded markets. His prose is extremely difficult to follow and the “wronger” he gets (and is still getting, by the way), the more tortured seems to become his writing. I am not the only one to notice this, by the way.

  • Hans

    I notice that some seem to look forward to the coming collapse, so as to see a reset without the Federal Reserve, corrupt politicians and so forth.
    Just be careful that as a country you don’t reap what you (or rather your politicians) have sown.
    After the collapse the survivors might find themselves having to learn Russian or Mandarin. It is much easier for them to wait for you to destroy yourself and then move in to pick up the pieces. The Russians showed exactly how to do it during the Warsaw uprising during WWII.

  • DJohn1

    The problem that I see happening is the banks have failed to think of new ways to help people in bad times.
    Instead they are attempting to do business as usual.
    Well that really does not cut it.
    One of the highest income getters is home mortgages.
    They tout things like 4% – 5% interest on a home. What they do not tout is the loan starts out at 95% interest and 5% into paying off the home.
    What happens when a mortgage isn’t paid?
    Chances are the place will be wrecked before the bank even sees it.
    The rules say that the bank has to receive 2/3rds of the value of the remaining mortgage. Not the value of the house. The money left owned on the house.
    They lose big time because of the interest to principle ratio.
    So why foreclose?
    It would make better sense to make a deal with the home owner to help him get back on his feet if that is possible.
    We are reaping what we have sown.
    We all cry that the jobs and wages are going down. It is true. What no one says is we used to have Unions out there to help protect wages and jobs. That is the uncomfortable truth.
    We don’t have those unions in private industry any more.

    • Priszilla

      One of the strangest things: “For the first x years you don’t need to pay back a cent.” And keep the interest payment at a maximum!

    • Gay Veteran

      the banks are criminal organizations, they help no one but themselves

      • DJohn1

        That is my point. The banks would be helping themselves if they provided a method for people to keep their homes and keep making payments to them.
        The current situation is they lose.
        Foreclosure is not working.
        There are too many foreclosures and the banks are eating a dead loss the way things are now.
        What I have suggested would be that they set up a payment plan that both the home owner and the bank win.
        One method is to give them a break by only collecting escrow money for taxes and insurance. Then add the amount of lost payments onto the back end of the mortgage on an emergency situation to keep the home owner in his home.
        I think they could substain this emergency help for at least a year or more.

        After the home owner finds work, then reset the mortgage with the extra payments on the back end of the mortgage.
        Under the best of circumstances that is far better than evicting them. The home owner then has a reason to keep his property repaired and in good condition.
        In most cases rent is far higher than mortgage payments.

        My way would keep the mortgage going which is a huge profit for the bank vs a dead loss.

  • rentslave

    The small town of Harrison,New Jersey-home of the leeching,tax-evading Red Bulls-have just created another 200K job for an unemployed relative.How long can this go on?

  • Paul F

    The LORD said HE told us the ending from the Beginning, all we have to do is search the scriptures for the true answers. I suggest people watch Dewy Bruton’s Daniel Timeline (I walways and still remain of people’s interpretations of Daniel’s timelines–but Dewy Burton, I truly believed the LORD was with this man) What have you got to loose–if you disagree, then disregard the video, but you might be taught somehting that may help you see further. Pray on it. The evils of man have already been prophesied–there is nothing new under the sun. the evil before us is nothing new.

    • danbax

      the shemitah ends September 2015

      • Paul F

        The two upcoming blood moons (Pesach and Sukkot) the Holocaust prophecy, the Shemitah, Israels timelines in regards to Her birth as a Nation, the timeline from 1967 when Israel took back Yerushalyaim–and more. We see Zechariah Ch12 taking place, the goyim trampling Yerushalyaim–earthquakes, wars and rumors of wars, the love of many waxing cold, a fallen away, and now the anti-Christ possibly revealed on March 20 2013 (yes, I mean the current traitor in office).
        From the moment demon in office was nominated for the noble peace prize in 2009 to Sukkot 2016 is 7 yrs, by the way. 3 1/2 yrs later the demon visited Israel on the same day in History YESHUA rode on on the donkey (a lamb to inspected before being slaughtered). The day the demon visited Israel until the blood moon Sukkot 2004 was 1r 6 months–2 1/2 yrs later ends on Sukkot 2016 9the year the demon is suppose to leave office). Do the research and help others as much as you can.

  • We need to create a leaner, more versatile economy that is not subject to periodic collapse and that does not rob from workers. First off, the monetary system needs to completely change. We need sovereign money issued by an independent board within the Treasury, free of debt, and spent into circulation by Congress. Personal and small-business credit would be furnished by banks owned by the several states as a means of providing them revenue.

    Secondly, we need to realize that the modern collapse is but a blip on the larger era of fake growth since the 1970s, in which increasing ownership of automobiles and single-family homes in suburbs has directly created economic demand, and has also created a huge credit bubble that also contributed to economic activity. We need to face the fact that real economic activity has stagnated since the 1970s, and re-urbanize our society. Suburban populations should be moved into denser towns, with space in between for farmland and linked to central cities by public transit. All exurban development should stop.

    Thirdly, large enterprises should be owned and operated democratically by their workers, who actually produce value; capital markets should exist strictly as a means for raising capital and distributing economic risk to those who are willing to bear it, not as a means of determining control over the means of production. Shares of stock should last 20 years, or however long it takes to achieve a rate of return equal to half the growth in real GDP, whichever is shorter. Consequently fewer corporate profits will be distributed to shareholders, and more will be given to workers, increasing the standard of living.

    GDP per capita will immediately fall quite dramatically (20% or so), but a lot of the impact will be mitigated by the fact that people will be consuming less unnecessarily rather than an actual reduction in the standard of living. It may continue a slow decline for some period afterwards as the reforms solidify. Ultimately though, the areas of the economy whose size is reduced will be those (finance, insurance, real estate, construction, utilities, automotive) that are already excessively large. However, other sectors (public transit manufacturing, clean energy manufacturing, advanced manufacturing and research) that need to grow would increase in size. Thereafter, our economy would be primed for future growth, on a solid base.

    • Priszilla

      As long as you have positive feedbacks you’ll have the periodic collapse. Positive feedback: buy when the stock is rising. Sell when it is falling.
      Use a thermostat instead: switch off the heater when the temperature is rising.

      Use anti-cyclic behaviour. The price to pay: less profit for some.
      For stocks, this also requires to know the company and the condition and the market. No more trading based on “chart analysis”.

      But then, this goes against the very nature of capitalism: maximising profit.

    • Decided to reply, because this debate is essentially dead and that is a terrible thing. Agreed on your first point: Government spend fiat, it’s an interesting way to keep the power away from a forming Plutocracy, and out of foreign powers (which is difficult with gold). Agreed on the need to control credit, the way you propose could work. Agreed on that larger businesses need to be worker-owned. What exact law would you propose. Agreed that it would be nice to create agricultural land closer to where people live (is that what you’re saying?), although this seems to be an issue for a Government program rather then new Constitutional laws (and the fundamental principles of society). I would like to add: everyone owns its share of natural resources (a big chance in society-system; I think this would correct the essential mistake of human society since the last iceage, which is to trade and hoard land; it is disappointing how few people are willing to see that there is no true personal freedom without economic independence; the labor class still wants to be held on a Leash by their Masters it seems).

      Your idea to limit stocks/shares is a good one, limit those parasitic documents which are mostly merely games for the shrewd and not for the productive. I would add to outlaw all trade in these documents, because this Casino Capitalism is not what we need, and it leads to various frauds but also to wealth concentration. The housing market scams (making then selling defacto defunct mortgages) would not be possible under this law. You make the loan, you own it, so you better watch out who you are lending to. Both ideas could work together to get rid of the professional investor classes as much as possible.

      I share your sense that these reforms will likely lead to a sharp drop in the wealth people enjoy, for the simple reason of the shock it gives to the system, and the likelyness of contrarevolutionary activity by the banking establishments who retain their financial power while these reforms gain momentum. They are likely to go to war against those who like these reforms, and will likely eventually totally destroy the country. It will then have to be rebuild from scratch. Anything short of that, I call a great achievement. Less then 50% of the people die during the conflagrations, we can call ourselves lucky. Sorry to sound cautious, we have seen many long wars in the past of this nature. A rather famous one is called ‘the 80 years war.’ We are unlikely to see the fruits of our labor, but that’s ok. To a degree it all depends on the speed with which these reforms are sought. If the speed is slow, nothing dramatic may need to happen. Having said that, I think that capitalism all by its own is now creating a new world war, the destruction of which may outdo any Revolutionary war. All in all it doesn’t look good because the capitalists have sought confrontation with the labor class ever since they created the 1st world war, rather then seek compromize and slow reforms. The time is now up, the world is primed for the nuke war. I would say the chance to do it slow has passed, not because the labor class wouldn’t want to, but because the capitalist system is choosing the extreme confrontation again, and going to force the system to go into war and destruction. Notice how this eventually results in a great chance to rebuild the system … which depends on this very debate being widely held, with the necessary seriousness and thinking; for which the labor class is not know by any means, unfortunately ~ in the end they seem to rage just as much for greed, as does the banking establishment, merely on a lower income level. Greed greed greed is what this planet is about, and eventually everyone will have nothing because of it. Well served, please excuse my rantings.

  • Ian Beattie

    I’m 32, self-employed and I work to support my family (three kids). My wife and I own two businesses, and it’s still hard to get by. It angers me when I see able-bodied men holding hand-written signs on the street corners who are coherent enough to beg but not equipped to work. I’m a recovering drug addict myself, so I try to have empathy. I was raised by a single mom after my dad walked out. My dad is white, and my grandfather earned a purple heart in the US ARMY. Drugs, alcohol and complacency are what is killing this great nation. We brought this on our damned selves.

    • Arthur Wholeflaffers

      Expunge the bums

      • Ian Beattie

        Vlad, is that you?

  • alan

    I still say this is a slow motion collapse that most people don’t notice it. No one wants the music to stop, so therefore I don’t think anything huge will happen over night. All the other countries tip toe around the US while we unwind.

  • danbax

    i keep getting 0 percent interest credit cards. they keep sending them. i guess they want me to go into debt so they can make more money.
    the latest i got expires in 2016. if i see one that expires in 2017 I’ll know the economy will last another year

    • john

      u are correct. I went to bank of American when I was a new USA immigrant. they wanted me to borrow money. I told them I have money, why do I need to borrow money, duh? . all they want is you to borrow so all your life you pay them cash and they increase interest to screw you.

  • Ghost11111111

    I agree with your statement that America is a great country, and hope we all live in peace and safety. Along with our coming generations

    • XSANDIEGOCA

      Let us pray…

  • Juggalo

    I prefer to dismiss people who disagree with me on the internet as trolls, that is much more comfortable than asking myself hard questions and hurt my own ego with the idea that I am wrong.

  • Flakecheta

    With it as crazy as it is how do you all recommend someone prepare with limited resources and just starting out?

    • Paul F

      How many are in your family? What is your budget? Where do you live? What type of job do your work? Are you retired? What are your neighbors like? Do you live in a rural area? In you live close in, make sure you have a good firearm to defend your home from looters. If you live far out, it’s the same; a good firearm is vital. Second, visit discount grocery stores and begin purchasing can goods (make sure you have a good can opener) and water. Aim for at least a years supply at the least. Depending on your budget, this may take a while; I’m still in the process. Second, think about medicines, toilet paper (yes I said toilet paper) lamps, flash lights, large buckets to collect rain water. Do feel anxious or rushed–write out your objective, break each section down into your budget, and go from there. Also, research survival skills–never hurts to know how to navigate the land. Most important, focus on family security. Make sure that wherever you are you can protect your family, your supplies and your home. I hope this helps.

  • sharonsj

    It’s pretty obvious that the stock market has nothing to do with reality. We all know that. And government statistics are manipulated so that we’ll think everything is fine while they use those numbers to pay less benefits to the elderly, disabled, and veterans.

    The European Union is going into the crapper because of austerity measures. I bet the Republicans, when they get control, are going to spend more money on the wars on terror and drugs but cut spending for all social programs and anything else that would help the average American. So, yes, we’re next in line for more economic disasters.

  • Brian Bradley

    Honest question… How in the world do you prepare for an economic collapse aside from moving to the middle of no-where and living off the land? Seriously… what are we supposed to do?!

    • danbax

      buy food water. store as much as you can. get fit. learn how to defend yourself. if you can grow your own food then stay or learn how to do it.

      if nothing happens, great. now you have food and water and will be fine if you have a job loss, a financial setback , or a natural disaster

  • underaged

    Why you ask? Because there’s money to be made with gloom and doom predictions … follow the money.

  • prisonerno6

    I have been reading since 2003 that the economy is going to implode and everyone in America will suffer. I never paid much mind to it until these past few years.

  • peace angel

    Michael

    IS there a way to how many people are participating in the stock market on any given day or in any time frame?

    I understand that most people who trade are trading several stocks at one time but is there a body count that can be found at any given time.

    Like is it much more than 1% or 2% of the population? And I also know that participation comes from outside the US, so I am guessing that this number is not verifiable, but if anyone knows it will be you.

    Thanks for all you do.

  • peace angel

    TOO BIG TO FAIL was one of the MOST important movies in the past 6 decades and MOST Americans did not see it.

    It should be running day and night until everyone has seen it.

    When Geithner (no idea how to spell his name) was on the steps of the Capital building AFTER the White House had been holding frantic behind closed door meetings for a week, he looks down and people are running like rats below him and he says on his cell phone, so profoundly, “they have no idea what is coming” and they didn’t.

    AND today they still don’t and the next collapse will make the last one look like a picnic.

    600 Billion dollars to be spent on this Christmas for plastic Chinese trinkets is EMBARRASSING.

    Other nations are not sleeping like ours. Most have hundreds if not thousands of years of life before the US was founded and they KNOW what not paying attention to the TRUTH leads to.

    Most nations are taken over by other nations in their first 200 years. America has been taken over and still the nation sleeps.

  • Pat Riarchy

    Everything will be fine as long as you aren’t married, don’t have any kids, you are debt free, financially independent and healthy… otherwise you’re screwed.

  • T

    So how does someone get prepared for what’s coming with limited resources? I hear a lot about what’s coming but how do you best prepare? Buy gold silver?

    • Matt

      I think I understand why this site and other like it are popular. I agree with the underlying theme that the World economy hasn’t recovered from 2008 and most Governments and Media sources are lying about the numbers. I get it that many would like to see an economic downturn to Right the wrongs so to speak and flush out corruption. Willing to deal with a little pain to get things back on level ground. But be honest with yourselves. We aren’t going to be hit by a comet or invaded by space aliens or eaten alive by a zombie apocalypse. This is the new normal and as depressing as that is, most of you know it’s probably true. Meanwhile Mike keeps writing the SAME articles day after day, year after year so he can fill his web site up with paid advertisement. Tell me that doesn’t sound logical…….

  • frank1569

    Theory:

    Our entire economy is based on everybody wanting more and better stuff on credit every day until they die.

    But most of us have way too much stuff already. How do ya get the people to buy more of what they don’t want or need?

    Every seven years or so, take as much stuff away from as many people as possible. Including their dignity.

    Then ‘recover’ the economy so those people can ‘get back on their feet’ and start replacing all the stuff they ‘lost.’

    Planned obsolescence of the life you’ve grown accustomed to, for profit…

  • Stacy Wyles O’Brien Gross

    Ok, so how do we get prepared. What steps should be taken by me as an idividual? I am listening……..

  • Stacy Wyles O’Brien Gross

    So what can I do as an individual to prepare for this. I am listening……

  • Twisk

    There are solutions. In America, those are culturally unacceptable. Oligarchs rule the country, and nobody wants what it takes to get rid of them.

    So what are you going to do?

  • Stupid Americans

    We are at fault. The American people are to blame for our own demise . We willingly allow our government to destroy us. We allowed our civil liberties and rights to be taken away from us everyday by not holding our corrupt political system responible. We allow executive action to dictate what we WILL have instead of what we WANT. Every one of us born in America are our own worse enemy and we deserve everything coming to us for letting it happen. We say nothing to open boarders, executive orders or to the militarized police state in which we live in. We are a country of complainers , of do nothing crybabys. I read about our banks ready to fail at any moment because the Banks are BANKRUPT and yet if you tell people this they look at you as a freak and then say where do I put my money? You stupid American not in a failed bank , take it out. This IS the stupidity of America. I’m ready as much as I can be for the collapse but it’s sad to say that I may be forced to kill some of you someday just to protect myselfe from you stupid people when the collapse comes.

  • SoF

    This is an important article and foreboding in its prediction. I feel in my bones we are on the verge of something big and ugly and this article and others confirm it.

    V the Guerrilla Economist predicted a false flag in January or February 2015 in the Middle East that will galvanize the broke US army into a final conflict that will be its own Armageddon and the world will see the US as unable to protect its interests militarily. This will embolden them further to drop the Dollar.

  • Ignorantbutlearning

    Forgive my ignorance, but I have very little understanding of all of this. What I do have is fear. Is this the kind of depression where I need to worry that my children are going to starve, or that we are just going to be seriously broke? The former is obviously really scary. The latter I can handle. Would appreciate kind, intelligent responses.

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