Saturday, 30 May 2009

The True Economic Apocalypse Begins Now

The economic crisis we have seen so far is just the pre-curser to the economic apocalypse to come.

Read the articles below and realise that the role of the Corporate Media is to tell you lies in order to ensure the economic interests of those who own the Corporate Media are protected.

Therefore the Corporate Media and the politicians that they control and own will not tell you the truth, they only tell you what they want you to hear in order to get you to do what they want.

Whilst the occassional voice is allowed onto the media to tell the truth, they are marginalised by the media itself which promotes the political lies of whatever political party they support. Whilst the truth tellers telll the truth in late night shows with small audiences, the politicians get to lie on the prime time news.


Take a good, long look. You can see that from the beginning of 2007 through September of 2008, subprime loans (the gray bars above) were resetting like crazy. Those are the ones people were walking away from, sending a shockwave from defaults and foreclosures smack into the middle of the economy. Now they're gone.

The ARM market got very quiet between December 2008 and March 2009, hitting a low that won't be seen again until November of 2011. Small wonder a few "green shoots" have poked their heads above ground. But in April, resets began to increase and will reach an intermediate peak in June. After that, they tail off a little, going basically flat for the next ten months.

It's not until May of 2010 that the next wave really hits. From there to October of 2011, the resets will be coming fast and furious. That's 18 months of further turmoil in the housing market, and the beginning is still nearly a year away! (Although the months in between are likely to be no picnic, either.)

Once the carnage begins, will it be as bad as the subprime crisis? That's the $64K question. Perhaps not. For one thing, subprime loans were a much larger chunk of the market when they started going south. For another, there's been a lot of refinancing as interest rates dropped; that should help ease the default rate. And the government has massively intervened, with measures designed to prop up those who would otherwise lose their homes.

On the other hand, we're in a severe recession, which wasn't the case when the subprime crisis started. More people will be unable to meet payments. And the housing market has continued to decline, pressuring both marginal homeowners and banks that can't sell foreclosed properties.

Is the stock market's next 10/9/07 on the way? Yes. Which day will it be? That's unknowable. It could be in a week, or not for another year.

But make no mistake about it, the second crash is coming. It can't be prevented, no matter what desperate measures Obama and his hapless financial advisors come up with. All we can hope for is that, with a little luck, it won't be as severe as the first one. But it will last longer. We aren't even in the middle of the woods yet, much less on the way out.


A dire warning that the Republic is a prime candidate to go bust has come from one of the world's leading economic historians.

"The idea that countries don't go bust is a joke," said Niall Ferguson, Harvard professor and author of The Ascent of Money.

"The debt trap may be about to spring" he said, "for countries that have created large stimulus packages in order to stimulate their economies."

His chosen prime candidate to go bust is "Ireland, followed by Italy and Belgium, and UK is not too far behind".

Argentina is top of his list of shaky countries but "the argument that it can't happen in major western economies is nonsense".

Professor Ferguson believes the economists are ill qualified to analyse the current economic situation since they lack the overview of historians such as himself.

"There are economic professors in American universities who think they are masters of the universe, but they don't have any historical knowledge. I have never believed that markets are self correcting. No historian could."


Davidowitz, who is nothing if not opinionated (and colorful), paints a very grim picture: "The worst is yet to come with consumers and banks," he says. "This country is going into a 10-year decline. Living standards will never be the same."

This outlook is based on the following main points:

With the unemployment rate rising into double digits - and that's not counting the millions of "underemployed" Americans - consumers are hitting the breaks, which is having a huge impact, given consumer spending accounts for about 70% of economic activity.

Rising unemployment and the $8 trillion negative wealth effect of housing mean more Americans will default on not just mortgages but student loans and auto loans and credit card debt.

More consumer loan defaults will hit banks, which are also threatened by what
Davidowitz calls a "depression" in commercial real estate, noting the recent bankruptcy of General Growth Properties and distressed sales by Developers Diversified and other REITs.

As for all the hullabaloo about the stress tests, he says they were a sham and part of a "con game to get private money to finance these institutions because [Treasury] can't get more money from Congress. It's the ‘greater fool' theory."

"We're now in Barack Obama's world where money goes into the most inefficient parts of the economy and we're bailing everyone out," says Daviowitz, who opposes bailouts for financials and automakers alike. "The bailout money is in the sewer and gone."

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