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Try Everything by J. Bradford DeLong – Project Syndicate
Try Everything by J. Bradford DeLong – Project Syndicate.
BERKELEY – When it became clear in late 2008 that the global economy was headed toward a crash at least as dangerous as the one that had initiated the Great Depression, I was alarmed, but also hopeful. We had, after all, seen this before. And we also had a model for how to mitigate the damage; unfortunately, policymakers left it on the shelf.
For three and a half years following the start of the Great Depression, US President Herbert Hoover’s top priority was to balance the budget, trying – but ultimately failing – to restore business confidence. In 1933, newly elected President Franklin D. Roosevelt changed course, adopting a simple yet radical strategy: try everything that might boost demand, increase production, or reduce unemployment – and then keep doing the things that work.
Roosevelt abandoned attempts to balance the budget, increased the money supply, and initiated deficit spending. He took the United States off the gold standard, had the government hire workers directly, and offered loan guarantees to those in danger of losing their homes. He cartelized the oil industry and instituted aggressive antitrust policies to break up monopolies.
Read more at http://www.project-syndicate.org/commentary/global-economic-crisis-recovery-strategy-by-j–bradford-delong-2014-12#jyqXZWs7sCusIm06.99
Mass Murder, Widespread Starvation and Even Cannibalism Accompany a Currency Collapse | Dave Hodges – The Common Sense Show
As we race toward the end of the year, we all need to be asking each other if we have done everything that we can do to prepare for the impending collapse of the Federal Reserve Note, that we call the dollar?
Why would I ask such a ridiculous question? Simple, our economy is on the brink with our $18 trillion dollar deficit, our $240 trillion dollar unfunded liabilities (e.g. Social Security, Medicare), our negative national savings rate, the planned bail-ins of your savings accounts and of course, the mother of all debts, the estimated one quadrillion dollar credit swap derivative debt. With the full implementation of the free trade agreements, America has virtually no other source of revenue (e.g. tariffs) than the $2 trillion dollars of annual tax collection. The United States could spend every dollar, dime and nickel on these debts and not pay them off by the 50th century! An economic collapse is inevitable and it will come like a thief in the night. You will have virtually no warning from the MSM.
The collapse will be more massive than the 1929 crash! There will be no breadlines, no government welfare, no handouts, your pensions will be cut off as will your social security. You may or may not have a job to go to, but even if you do, who will cash your check. After the coming crash, our society will be reduced to trading and bartering one hand and thievery, murder and cannibalism on the other.
Diversify With “Physical Precious Metals Stored Outside The U.S.” – Faber – GoldCore United States
Diversify With “Physical Precious Metals Stored Outside The U.S.” – Faber – GoldCore United States.
Dr Marc Faber, respected economic historian and author of the respected monthly newsletter, the ‘Gloom, Boom and Doom Report’,has warned that 2015 is set to be very volatile, urged international diversification and owning “physical precious metals stored outside the U.S.”
In another insightful and witty interview with Bloomberg Television’sIn the Loop, with Betty Liu, Erik Schatzker and Brendan Greeley, the ever charming and affable Dr. Marc Faber reaffirmed his long-standing preference for investing in emerging eastern economies, his lack of faith in the dollar and advised Americans to own gold.
Faber fails to recommend a single U.S. stock in 2015 and when asked whether recent events in Greece were a buy or sell signal, Faber began by pointing out that persistent intervention by central banks into markets had made making predictions far more complicated.
Some commodities have soared in the last six months, wheat has doubled, while the price of oil and natural gas had collapsed indicating great volatility. Forecasters surveyed by Bloomberg had been consistently bearish on bonds for years, until this year since treasuries outperformed the S&P in 2014.
Hedge funds generally only generated returns of around 1%. In light of these discrepancies and central-bank induced distortions to the market, Faber emphasises the need for real diversification.
The American People Are Utterly Clueless About What Is Going To Happen As We Enter 2015
The American People Are Utterly Clueless About What Is Going To Happen As We Enter 2015.
The American people are feeling really good right about now. For example, Gallup’s economic confidence index has hit the highest level that we have seen since the last recession. In addition, nearly half of all Americans believe that 2015 will be a better year than 2014 was, and only about 10 percent believe that it will be a worse year. And a lot of people are generally feeling quite good about the people that have been leading our nation. Accordingto Gallup, once again this year Hillary Clinton is the most admired woman in America and Barack Obama is the most admired man in America. I don’t know what that says about our nation, but it can’t be good. Unfortunately, when things seem to be going well common sense tends to go out the window. A couple days ago, the Guardian ran an article entitled “Goodbye to one of the best years in history“, and a whole lot of people out there are feeling really optimistic these days. But should they be?
Sadly, what we are experiencing right now is so similar to what we witnessed in 2007 and early 2008. The stock market had been on a great run, people were flipping houses like crazy and most people were convinced that the party would never end.
But then it did end – very painfully.
The signs of trouble were there, but most people chose to ignore them.
Sadly, the exact same thing is happening again.
On Monday, the price of oil hit a brand new five year low. As I write this, U.S. oil is sitting at a price of $53.76 a barrel, which is nearly a 50 percent decline from the peak earlier this year.
The Destruction of the Middle Class is Nearing the Final Stages | project chesapeake
The Destruction of the Middle Class is Nearing the Final Stages | project chesapeake.
The events of the past few months seem astounding when taken in all at once. The plan to destroy the U.S. dollar and the American middle class is moving at an ever increasing speed.
At the recent G20 meeting the nations agreed that bank deposits would no longer be considered money. These bank deposits become the property of the banking institution and as such can be used any way the bank wants. This means that any money you deposit in a bank now is no longer yours but makes you an investor in the bank and subject to lose that money if a banking crisis takes down the bank.
The spending bill just passed by congress makes the American taxpayer responsible for any derivatives loses that banks may suffer. These derivative holders now have first priority when any funds are paid out and depositors are relegated to last place. FDIC insurance will have to pay out these funds but it has no where near enough money to pay the more than 300 trillion in losses that will be suffered in a banking crisis. That means any depositor has little hope of getting anything back. In order for depositors to get anything back massive money printing would have to take place making any payout amount to only pennies on the dollar.
And if you don’t think there is any danger of a banking crisis in America you may want to keep in mind that the Treasury Dept. has recently ordered $200k worth of 72 hr emergency kits for dispersion to every major bank in America. These are known by many as bug-out-bags and are used to support individuals when disaster strikes and they have to care for themselves for the first few days of crisis.
The Doom Boom: US Families Increasingly Prepared For “Modern Day Apocalypse” | Zero Hedge
The Doom Boom: US Families Increasingly Prepared For “Modern Day Apocalypse” | Zero Hedge.
From the outside America may seem to be a land of endless optimism and confidence. But, as Sky News reports, an increasing number of Americans seem to think it is danger of falling apart, and they’re preparing for the end. “We’re not talking about folks walking around wearing tin foil on their heads,; we’re not talking about conspiracy theorists. I’m talking about professionals: doctors and lawyers and law enforcement and military. Normal, everyday people. They can’t necessarily put their finger on it. But there’s something about the uncertainty of our times. They know something isn’t quite right.”
A now-privately-held ex-nuclear-missile base in Kansas has been turned into luxury “post-apocalyptic refuge for the very rich”
“It’s an undergorund complex straight out of a bond flick”
Junk Bonds Are Going To Tell Us Where The Stock Market Is Heading In 2015
Junk Bonds Are Going To Tell Us Where The Stock Market Is Heading In 2015.
Do you want to know if the stock market is going to crash next year? Just keep an eye on junk bonds. Prior to the horrific collapse of stocks in 2008, high yield debt collapsed first. And as you will see below, high yield debt is starting to crash again. The primary reason for this is the price of oil. The energy sector accounts for approximately 15 to 20 percent of the entire junk bond market, and those energy bonds are taking a tremendous beating right now. This panic in energy bonds is infecting the broader high yield debt market, and investors have been pulling money out at a frightening pace. And as I have written about previously, almost every single time junk bonds decline substantially, stocks end up following suit. So don’t be fooled by the fact that some comforting words from Janet Yellen caused stock prices to jump over the past couple of days. If you really want to know where the stock market is heading in 2015, keep a close eye on the market for high yield debt.
If you are not familiar with junk bonds, the concept is actually very simple. Corporations that do not have high credit ratings typically have to pay higher interest rates to borrow money. The following is how USA Today describes these bonds…
High-yield bonds are long-term IOUs issued by companies with shaky credit ratings. Just like credit card users, companies with poor credit must pay higher interest rates on loans than those with gold-plated credit histories.
But in recent years, interest rates on junk bonds have gone down to ridiculously low levels. This is another bubble that was created by Federal Reserve policies, and it is a colossal disaster waiting to happen. And unfortunately, there are already signs that this bubble is now beginning to burst…
Will they Hang Bankers Again on Wall Street? | Armstrong Economics
Will they Hang Bankers Again on Wall Street? | Armstrong Economics.
What took place in Washington over the past two weeks with the repeal of Dodd Frank and then the effective repeal of the Volcker Rule sounds strikingly familiar to at least three previous periods in American History that led to total disaster. There were of course the Northern “carpetbaggers”, whom many in the South viewed as opportunists looking to exploit and profit from the region’s misfortunes following the Civil War.The “carpetbaggers” would play a central role in shaping new southern governments during Reconstruction period who were joined by Southerners who saw economic gain in joining the Northerners in the exploitation of the South. There were called “scalawags”.
Then there were the Silver Democrats who were bought and paid for by the mining industry. William Jennings Bryan’s red-hot emotional speech at the 1896 Democratic Convention will forever live on in history. The shenanigans of the Democrats and Republicans who tried to overvalue silver led to the near bankruptcy of the nation and made JP Morgan famous thanks to the Panic of 1896 when he had to arrange a gold loan to save the country.
Then there was what people called the First Gilded Age more than a century ago, when senators and representatives were owned by Wall Street and big business. This culminated in the 1929 Crash.
What did all three of these period have in common with the last two weeks? Then, as now, those who footed the bill for political campaigns were richly rewarded with favorable laws. This is standard operating procedure in Washington and why we are in such desperate need of political reform.
There Is Hope In Understanding That A Great Economic Collapse Is Coming
There Is Hope In Understanding That A Great Economic Collapse Is Coming.
If you were about to take a final exam, would you have more hope or more fear if you didn’t understand any of the questions and you had not prepared for the test at all? I think that virtually all of us have had dreams where we show up for an exam that we have not studied for. Those dreams can be pretty terrifying. And of course if you were ever in such a situation in real life, you probably did very, very poorly on that test. The reason I have brought up this hypothetical is to make a point. My point is that there is hope in understanding what is ahead of us, and there is hope in getting prepared. Since I started The Economic Collapse Blog back in 2009, there have always been a few people that have accused me of spreading fear. That frustrates me, because what I am actually doing is the exact opposite of that. When a hurricane is approaching, is it “spreading fear” to tell people to board up their windows? Of course not. In fact, you just might save someone’s life. Or if you were walking down the street one day and you saw someone that wasn’t looking and was about to step out into the road in front of a bus, what would the rational thing to do be? Anyone that has any sense of compassion would yell out and warn that other person to stay back. Yes, that other individual may be startled for a moment, but in the end you will be thanked warmly for saving that person from major injury or worse. Well, as a nation we are about to be slammed by the hardest times that any of us have ever experienced. If we care about those around us, we should be sounding the alarm.
Since 2009, I have published 1,211 articles on the coming economic collapse on my website. Some people assume that I must be filled with worry, bitterness and fear because I am constantly dealing with such deeply disturbing issues.
But that is not the case at all.
A Full-Blown Economic Crisis Has Erupted In Russia
A Full-Blown Economic Crisis Has Erupted In Russia.
The 8th largest economy on the entire planet is in a state of turmoil right now. The shocking collapse of the price of oil has hit a lot of countries really hard, but very few nations are as dependent on energy production as Russia is. Sales of oil and natural gas account for approximately two-thirds of all Russian exports and approximately 50 percent of all government revenue. So it should be no surprise that the fact that the price of oil has declined by almost 50 percent since June is absolutely catastrophic for the Russian economy. And when you throw in international sanctions, wild money printing by the Central Bank of Russia and unprecedented capital flight, you get the ingredients for an almost perfect storm. But those of us living in the western world should not be too smug about what is happening in Russia, because the nightmare that is unfolding over there is just a preview of the economic chaos that will soon envelop the whole world.
So far this year, the Russian ruble has fallen nearly 50 percent against the U.S. dollar. That is a monumental shift. And as the collapse of the ruble has accelerated in recent days, we are seeing scenes in Russia that are reminiscent of the Weimar Republic. For example, just consider the following excerpt from an article that just appeared in the New York Times…
We Just Witnessed The Worst Week For Global Financial Markets In 3 Years
We Just Witnessed The Worst Week For Global Financial Markets In 3 Years.
Is this the start of the next major financial crisis? The nightmarish collapse of the price of oil is creating panic in financial markets all over the planet. On June 16th, U.S. oil was trading at a price of $107.52. Since then, it has fallen by almost 50 dollars in less than 6 months. This has only happened one other time in our history. In the summer of 2008, the price of oil utterly collapsed and we all remember what happened after that. Well, the same patterns that we witnessed back in 2008 are happening again. As the price of oil crashed in 2008, so did prices for a whole host of other commodities. That is happening again. Once commodities started crashing, the market for junk bonds started to implode. That is also happening again. Finally, toward the end of 2008, we witnessed a horrifying stock market crash. Could we be on the verge of another major one? Last week was the worst week for the Dow in more than three years, and stock markets all over the world are crashing right now. Bad financial news continues to roll in from the four corners of the globe on an almost hourly basis. Have we finally reached the “tipping point” that so many have been warning about?
What we witnessed last week is being described as “a bloodbath” that was truly global in scope. The following is how Zero Hedgesummarized the carnage…
Why a Moscow meltdown could spread around the globe | World news | The Observer
Why a Moscow meltdown could spread around the globe | World news | The Observer.
Russia matters. It mattered in 1998 when the shock waves from its debt default reverberated around the world. And it would matter again should the plunging oil price lead to economic collapse. That’s despite the fact that Russia is a massive land mass with a relatively small economy. It accounts for only 3% of global GDP and it is dominated by an energy sector that is responsible for 70% of exports.
To an extent, the structure of Russia’s economy should mitigate contagion risks. Lacking a modern manufacturing sector, it is not vital for global supply chains and, in theory, any other energy producer could make good the disruption to oil and gas supplies in the event of a deep and damaging recession.
But there are at least five ways in which a crisis for Russia could spread. Russia’s immediate problems have been caused by the sharp drop in the price of crude and it is not the only one to be suffering. Venezuela and Iran are finding it hard to cope with oil down at $70 a barrel. If Russia goes, it will be a case of: who’s next?
Second, Russia still has close economic links with eastern Europe, so a collapse would have serious consequences for countries such as Poland and an already imploding Ukraine. Western Europe, too, would be affected if for any reason gas supplies through Russia’s pipeline were cut off.
…click on the above link to read the rest of the article…
Plummeting Oil Prices Could Destroy The Banks That Are Holding Trillions In Commodity Derivatives
Plummeting Oil Prices Could Destroy The Banks That Are Holding Trillions In Commodity Derivatives.
Could rapidly falling oil prices trigger a nightmare scenario for the commodity derivatives market? The big Wall Street banks did not expect plunging home prices to cause a mortgage-backed securities implosion back in 2008, and their models did not anticipate a decline in the price of oil by more than 40 dollars in less than six months this time either. If the price of oil stays at this level or goes down even more, someone out there is going to have to absorb some absolutely massive losses. In some cases, the losses will be absorbed by oil producers, but many of the big players in the industry have already locked in high prices for their oil next year through derivatives contracts. The companies enter into these derivatives contracts for a couple of reasons. Number one, many lenders do not want to give them any money unless they can show that they have locked in a price for their oil that is higher than the cost of production. Secondly, derivatives contracts protect the profits of oil producers from dramatic swings in the marketplace. These dramatic swings rarely happen, but when they do they can be absolutely crippling. So the oil companies that have locked in high prices for their oil in 2015 and 2016 are feeling pretty good right about now. But who is on the other end of those contracts? In many cases, it is the big Wall Street banks, and if the price of oil does not rebound substantially they could be facing absolutely colossal losses.
It has been estimated that the six largest “too big to fail” banks control$3.9 trillion in commodity derivatives contracts. And a very large chunk of that amount is made up of oil derivatives.
…click on the above link to read the rest of the article…
Oil And The Global Slowdown | Peak Prosperity
Oil And The Global Slowdown | Peak Prosperity.
The world economy is slowing down and the authorities are fretting.
Japan, Italy, and Greece are all in recession. China is slowing down according to official statistics, and even more according to whispered accounts.
Germany, France and the Netherlands are all at stall speed.
According to the BLS, the United States is doing just great at nearly 4% growth for two straight quarters, but you wouldn’t know that either from the quality of the few jobs being created (which is low) or from consumer spending (also low).
The worry, as always, has nothing to do with the central banks’ concern for you, your job, your children, the actual prices you pay, wealth equality, or the future, and everything to do with the simple fact that the stability of the banking system absolutely depends on a steady stream of new loans.
The problem, as always, is that we have a monetary system that is either expanding or collapsing. It has no steady state.
…click on the above link to read the rest of the article…
Guess What Happened The Last Time The Price Of Oil Crashed Like This?…
Guess What Happened The Last Time The Price Of Oil Crashed Like This?….
There has only been one other time in history when the price of oil has crashed by more than 40 dollars in less than 6 months. The last time this happened was during the second half of 2008, and the beginning of that oil price crash preceded the great financial collapse that happened later that year by several months. Well, now it is happening again, but this time the stakes are even higher. When the price of oil falls dramatically, that is a sign that economic activity is slowing down. It can also have a tremendously destabilizing affect on financial markets. As you will read about below, energy companies now account for approximately 20 percent of the junk bond market. And a junk bond implosion is usually a signal that a major stock market crash is on the way. So if you are looking for a “canary in the coal mine”, keep your eye on the performance of energy junk bonds. If they begin to collapse, that is a sign that all hell is about to break loose on Wall Street.
It would be difficult to overstate the importance of the shale oil boom to the U.S. economy. Thanks to this boom, the United States has become the largest oil producer on the entire planet.
Yes, the U.S. now actually produces more oil than either Saudi Arabia or Russia. This “revolution” has resulted in the creation of millions of jobs since the last recession, and it has been one of the key factors that has kept the percentage of Americans that are employed fairly stable.
Unfortunately, the shale oil boom is coming to an abrupt end. As a recent Vox article discussed, OPEC has essentially declared a price war on U.S. shale oil producers…
…click on the above link to read the rest of the article…
