Friday, February 5, 2016

A Global Depression Is Sadly Inevitable in 2016-17

The global economy will experience another, MUCH larger depression late in 2016 or early in 2017 because of the efforts made after 2008 to stimulate a grossly over-inflated situation.  This is not a prediction, it's just simple math.

The world's rich (both the 0.1% with the REAL money and the 0.9% who have made enough to have a decent amount of stock market investment), to ensure their stock market gambling pool grows at 10% per year AND to continue hoarding ever more cash (because that's what the ones who don't sit around partying with daddy's money do to keep busy everyday) have forced the rest of us to borrow from them at an INSANE rate over the past 20 years (and what happens in the US is mirrored in Canada's economic trends, more or less).

[NOTE: the vast majority of the wealth of the human species is held -- not 'trickling down' -- by 0.1%  of our members.  Explain to me how that makes any sense?  The Koch brothers, the Rothschilds and their ilk who own all of global banking (credit) spend all of their efforts doing nothing but using their unimaginable power of wealth to manipulate the global markets to increase their hoard.  Why?  They do not need one more dime of wealth.  Not at all.  Not ever.  Yet they just keep hoarding more and more of the our species' money every year because it is what they do for work.]

To increase our need to be indebted to the world's banks (all owned by the very rich), since World War II they've pushed for legal changes in the US to encourage:

1940 - 1980 -- Home mortgages (ownership)

When that rate peaked in the mid-80's, they shifted to...

1980+ -- Charge-Cards with revolving credit and insane upper limits (eventually including, first college kids, now teens)

Which, once the default rates got too high in the mid 90's led to ZERO down payment....

1993-2008 -- Home Mortgages (Again!)

When the bottom fell out of this scheme in 2008, they shifted to...

2009+ -- Don't OWN your car with a loan or cash!  LEASE IT!  (i.e. "Never own a car again, just rent a new one forever.")

But with the rush on to force even MORE indebtedness to the banks they looked to the people who are not yet even working....

2004+ -- Student Loans

And where have the rich been putting most of their money?  To be sure they have a lot of it in precious metals, currency and real estate, but much of their money (and the retirement funds of the 99%, if they have any), is in global stock markets, invested in corporations that are, you guessed it, over-leveraged with debt in order to continue operating while they struggle to grow 10% per year.  As many of the middle class shifted their money out of personal savings in the early 90's into home ownership (and cottage ownership), the Dow Jones index rose astronomically as the world's rich took the money the poor were spending on mortgages and 'invested' in the stock market:

As the orange (personal savings) line declined, home (red) and stock ownership (green) increased.
The first thing that every developing world economy has done, the moment their 1% had the liquidity, was open a new stock market.  This was true of all the former Soviet republics, Latin America, China and the rest of Asia.   The sheer volume of money in these 'gambling pools' is astronomical -- and all of it is not only out of reach of 99% of the human population, we are all held at the mercy of it:

Note that in 2016 we are ABOVE where we were in 2008.
As we all learned in 2008, when the stock markets plunge, the rich experience a minor set-back while the 99% lose their jobs, sometimes their careers, their retirement savings and their homes.  The problem today is that, as the 're-capitalization' of the global stock markets has take place since 2009, much of the really BAD financial instruments, like 'derivatives' (bets placed upon bets on whether stock and/or commodity prices will rise or fall), is still out there!  To the tune of trillions and trillions of dollars of, not anything 'real' like gold, or oil, or real estate, or even actual businesses, but simple promissory notes between bettors -- both notes for the chance things will go up, AND DOWN (so they are all worthless).  The American government, having let the rich buy changes to de-regulate their manipulations of money in the marketplace in the early 2000's, did not eliminate these toxic 'products' that were invented by shysters.  They are a time bomb just waiting to explode...

Most of the entire world never, ever thinks about what the stock market really is.  We hear about it on the news all the time, usually in the 'business section,' but the stock market has very little to do with 'business performance' and everything to do with common gambling: the luck of the cards dealt and the confidence or lack thereof in the various players' 'poker faces' and what they are REALLY holding.  Oh, certainly stock values (prices) go up and down due to real business successes or failures (Apple invents a new gadget or business model, or a car company puts out a massive recall due to a screw-up), but most of the time the values are going up and down merely due to rumours and mass hysteria -- either positive (the "Dot-Com Bubble" of 1999-2000), or negative (see "Dot-Com Bubble" 2000-01):

Graph of value of 'software' stock ("Dot-Com Bubble" of 1999-2000)
Our entire global economy is NOT based upon real "business performance" -- it's based upon 'herd mentality.'  Really.  If one company in one strong segment in one country screws up and every investor in the world gets scared the same thing could happen to either other companies in that country, or other firms anywhere else, we experience a mass global meltdown (sell-off).  The so-called 'recovery' since 2008 has been largely based upon governments 'printing money' and bailing out banks they considered 'too big to fail.'  (Iceland did NOT and is now the most stable economy in the world.)

The 'Occupy Movement' of 2011 occurred because the perpetrators of the global economic crash of 2008 not only got bailed out, they were not punished and turned around and gave a lot of the bailout money to each other as bonuses.  The supporters of the Occupy Movement are now voting for Bernie Sanders -- and for good reason:  he's the only American Presidential candidate who is talking about re-regulating an out-of-control financial sector that is still buying and selling (creating) toxic derivatives that are not based upon any real value other than promissory notes for bets for and against possible fluctuations (Hillary pays lip service to it, but with all her ties to big business after a lifetime of politicking...).

Today's global financial situation is one huge 'bubble' (click to watch the explanation):  
In other words, the world owes much more than it can ever pay back.

300 million Americans in the world's wealthiest economy have been enticed into being HUGELY over-leveraged with debt:

The vast majority of them not only own nothing, they owe debt of an incredible total amount to the 1% who own the banks: 

And with REAL (adjusted for inflation) household income declining in the US there is no likelihood that consumers will ever be able to turn things around soon:

The moment anything REALLY bad happens to the US or global economy (intimately related, as we witnessed in 2008), most of the debtors will have to renege on all their debts.  And not only do the 1% have most of the money of the world in their hoards, much of it is in derivatives (worthless in the first place).  This house of cards WILL implode, and soon, as there is no real substance to it.

This latest analysis illustrating that in the past 14 months we've seen the value of Google and Apple combined (companies with cash on-hand), many times over, evaporating out of the globe's financial markets is very likely going to precipitate the coming slide -- and remember that what began the drop in oil prices was the rush of Canada and the US's 1% (and the governments that the 1% controls, lock stock and barrel) to make yet more trillions by getting into domestic oil production by fracking shale and extracting tar sand oil:

And with 'cheap debt' (low interest rates) likely to vanish as the crisis forces interest rates up, even the many global corporations worth trillions on their books, but with extensive debt fueling their day-to-day operations, won't be able to pay down their debt and things are going to implode:

Bernie Sanders and many smart economists have answers.  Ways to get us OFF the system that the 1% invented to get rich quick at the expense of the 99% (and stay that way).  Ways to reject the fiction that 'Capitalism is the natural outcome of evolution' and invent a better way.  NO, the better way is not 'communism,' it's just the same system that the world's most stable and happy countries have been using for decades: 'Democratic Socialism.'  Before you run screaming in the opposite direction and bury your heads, listen to how it works (click for the YouTube 15 min. long interview)....

What never ceases to amaze me is how the rich in America have so easily manipulated the poor into believing the OPPOSITE of what actually makes America great.  After WWII the rich of America contributed to help all Americans dig out from under and improve their lives.  What the hard core Republican voter now says is "Everyone should keep all the money they make!" (and I'm not rich and that's what I want for myself) -- the irony of the fact that, once your household has a stable income of over $300k a year, you really can't buy anything more that you REALLY need is lost on them. 

If you can handle a REAL education about things, here's an hour and a half long BRILLIANT lecture by Rick Wolff..


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