Crap, that guy is darker than Dracula. I've heard of him before, but I have to take a closer look.
Posted on 11/28/2008 4:21:26 AM PST by ovrtaxt
It has been an incredible year loaded with surprises but I think that the next few years will surprise even more. Whenever I feel certain about something coming, I ‘m glad to put it in print. In 2004, I had successfully forecast many economic events such as the housing bubble popping and the credit crisis among other events. Current economic conditions and political outcomes have laid the groundwork for more events that we should be prepared for. All of these events combine to create a “Financial Vortex” that will hit us in the coming years.
First of all, be aware of what current conditions will help lay the groundwork for this financial vortex. They are:
1. America’s debt load. The U.S. government has now $12 trillion in debt. Consumers and businesses are drowning in debt. America’s gross domestic product (GDP) is about $13 trillion yet its total debt is over $44 trillion.
2. Derivatives. Derivatives are complicated, arcane and risky securities that now total about $500 trillion. That makes this market ten times greater than the dollar value of the world economy which is just under $50 trillion.
3. Unfunded Liabilities. The current future tally of the unfunded liabilities of Social Security, Medicare and Medicaid is nearly $99 trillion.4. Growth of government. The expansion of the government’s involvement in the economy is (and will be) massive. Taxes, regulations, controls, spending, etc. at all levels of government (both domestic and international) will be problematic by an order of magnitude that the private sector will not be able to tolerate.
Think about it for a moment. The past few months have shown us what a few trillion in bad debt and derivatives can do to the market. The Dow is down several thousand points in the past few months and is down nearly 40% since hitting its all-time high in October 2007 of 14,164.53. What will happen to the stock market when many multi-trillions of debt, derivatives and unfunded liabilities start hitting us like a powerful vortex in the coming years? The economy is extraordinarily weak right now and it would not take much to see millions of hard-working folks get devastated. It is time to prepare. America needs to know what is coming. Some of these events are now unavoidable so being fore-warned and getting prepared is crucial.
Here are my forecasts for what I believe is coming during the next few years:
1. You will see an inflationary depression that will be evident by 2010. Maybe I’ll be off a few months either way but an inflationary depression is almost guaranteed. Why? The latest batch of elected officials see government intervention as either a moral good or a necessary evil. The most likely policy initiatives that we will see in the coming months will be government controls, increased taxes and extraordinary “money” creation (inflating the money supply). In fact we have (and will) see trillions of new dollars will flood the economy in the coming months. This will probably cause the stock market and some economic indicators to rise and give the illusion of economic health during early 2009. This will cause many commentators to proclaim that we are coming out of the current recession. People will think that government intervention worked. Typically, government intervention only alleviates some of the symptoms in the short-term while postponing the problem(s) toward the long-term. Right now many commentators are calling the current economic environment “deflationary” but it is massive de-leveraging by huge financial entities that are selling off everything from stocks to commodities to accrue cash and stave off bankruptcy. As trillions of dollars flood into the economy, that condition will change. If they report the statistics properly, then we will see a contracting economy (measured by GDP) coupled with rising prices. A good example of this is Venezuela where that economy is struggling while their inflation rate is currently over 36% (as of October 2008). The government, in an attempt to revive consumption and job creation will increase the money supply by an order of magnitude never seen before in this country. Seeing the inflation rate soar to 20% and beyond during 2010 (or 2011) is a solid bet.
2. Unemployment in the private sector will soar into double-digits by 2010. As the recession morphs into a depression and as the government grows partly as a “solution” to economic difficulties, the increased burdens of government (taxes, controls, spending, etc.) will grow to burdensome levels for both consumers and businesses. Government spending on unemployment benefits and “make work” projects will soar to address the large job losses in the private sector. Right now you should re-assess your job, your company and your industry to see if you are at risk.
3. More state and municipal governments will be federal bailout candidates. I forecast this condition many months ago in my national seminars but recently this became headline news so it’s not such a great forecast new.. California and New York State are already seeking taxpayer money from the Federal government. However, we will see much more of this. During 1995-2008, many state and local governments over-extended themselves. Because they thought that good times (and housing booms) would last indefinitely, they took on more spending and more borrowing. Many of these jurisdictions will be forced into either spending cuts, higher taxes or both. Some will be forced into bankruptcy. Because of these events, there will be some areas that will experience social unrest due to difficult financial conditions.
4. Commodities will be in the next leg of their long-term bull market starting in 2009. Commodities such as oil, grains, precious metals, etc. had a great upleg in early 2008 and then had a brutal correction during the second half. Although much of it is attributed to deflation and “demand destruction”, these conditions are short-lived. Why? Two basic reasons; shortages (supply destruction) and rising inflation. Since government policy makers will make every effort to avert an economic contraction, they will flood the economy with inflation and renewed government spending. Economic policy decision-makers at the federal level think that “increased consumption” is the key to economic growth because they are influenced by the Keynesian school of economics. The world hasn’t figured out yet that John Maynard Keynes’ policies are flawed and dangerous. The bottom line is that conditions are ripe for commodities to resume their bull market and reach new highs during 2009-2010. As an offshoot of this, you will also see conflicts across the globe tied to natural resources as countries with growing populations need more food, water, etc.
5. We will see oil hit $200 as Peak oil becomes obvious to all during 2009-2012. Don’t be fooled by the recent drop in oil from $147 in the summer of 2008 to $50 during November 2008. the recent data from the world energy market indicates that oil depletion (“supply destruction”) is far more severe than the recent headlines blaring the misleading condition of “demand destruction”. The most severe energy crisis in history is in my mind an unavoidable certainty during the next few years. America needs to go full-bore toward energy independence since we will have no choice. This energy crisis will be very difficult to get through and will cause tremendous social and economic difficulty.
6. International conflicts over natural resources will hit the headlines during 2009-12. As governments across the globe seek to address the wants needs of their growing populations, there will be aggressive competition for the world’s limited resources. Natural resources will be seen as strategic as well as economic. National and economic security for America will be a vital concern.
Now you can see why I refer to it as a “Financial Vortex”. We pray for our country and we hope to get through this with a minimum of suffering but it behooves all of us to be ready. It is better to prepare for problems that may occur than to ignore reality and be set up for pain. Although the Financial Vortex conference will be held in New Jersey on December 6, 2008, let me share with you a few of the strategies that will be covered that day:
1. Buy gold and silver bullion. Yes… there have been physical shortages reported but that shouldn’t stop you from getting some for your portfolio. Precious metals retain their value during a period of economic uncertainty and rising inflation.
2. Keep a cash cushion. Have money set aside in a safe venue such as a treasury money market fund. This is not for long-term purposes since inflation will be a major issue; it is there for an emergency fund for day-to-day needs.
3. Shift your retirement portfolio into stocks and ETFs tied to “human need” such as food, water, energy, etc. These companies and sectors will have a better time surviving the coming years than other sectors that are problematic such as real estate, financials and cyclicals (such as autos and other “big ticket” items). I believe that much of the conventional stock market will get slammed.
The Financial Vortex is coming. Millions will be blindsided but those that prepare will survive and even thrive. I am doing my conference primarily because I want people to be safe and do those things that will ensure greater financial security. It is also why experts such as David Morgan, Jay Taylor and Roger Wiegand will join me that day so that people can get specifics on what to expect and how to prosper. The bottom line is that it is better to be safe than sorry.
Copyright 2008. Paul Mladjenovic. All rights reserved.
6 billion? Oh heck, that’s nothing! lol
Funny how these HUGE numbers are getting smaller in our own eyes, just through the course of discussion.
But thanks for clarifying that point. This is why I post articles like this, the education is priceless. It’s worth, like, a gazillion dollars. :)
Well, this is a happier outcome than Gerald Celente’s TEOTWAWKI scenario.
bump
The fact that keeps coming back to me is our lack of valuable production capacity. When the dust settles, we still don’t make very much that other people want to pay for, except food. Lots of R&D though, (and empty factories) so at least we have something to work with.
The politicians continue to think that consumption is the key to wealth. This is stupid beyond belief.
link?
In 1950, there were 16 workers paying Social Security taxes for every retired person receiving benefits. Today there are 3.3. By 2030, there will be only 2. By 2030, there will be 70 million Americans of retirement age--twice as many as today.
And the author fails to mention the impact immigration is having on our economy and what an amnesty would mean. Then there is the proposed cap and trade program that both Obama and McCain favor, which will wreck our economy even further by rasing the price of energy, the lifeblood of any economy. We re headed for a major financial train wreck.
As far as bullion goes?
Sure get plenty ... chicken & beef bullion, that is.
All services anyone enjoys are performed not by the government, but by private workers. The private workers of the future and only them, will support everyone alive in their own day. Nothing anyone does today can change that one iota.
As for "retirement age", is that encoded in your DNA somewhere?
If you can afford to retire, go ahead if you feel like it. If you can't, work for a living like ordinary people.
bump
LOL!!
Oh, sure. When the welfare class get their relatively tiny wealth redistribution checks which won't buy much anymore because inflation has gutted the dollar, who cares. Right. This is exactly why ammo is a good investment.
I did not mean to imply that the problem is small or does not exist. The problem is definitely real. But as I tried to address in the original post, the uncertainty over who owes who what is acting as a huge amplifier on the forces riling the credit markets. This is crucial, because if you don't diagnose the disease you are unlikely to offer a proper cure.
For example, if the problem in the CDS market is a lack of transparency then what is called for is a regulated central clearing house for these instruments. Giving hundreds of billions of dollars of government money to every potential party that might default may be good for the gangsters who got us into this mess, but it does not address at all the real problem.
Given the sorry state of the nation I suspect we won't get the transparency we need until after the crooks have bankrupted the treasury because they need the fear and panic to keep the public and its representatives compliant.
What exactly does that mean? There are 55 million people in this country drawing SS benefits to the tune of $600 billion a year and 75 million on Medicare/Medicaid. And many of these people have relatives who are not using the program. So at least half the population of the country is affected. The politicians certainly care along with the people affected.
All services anyone enjoys are performed not by the government, but by private workers. The private workers of the future and only them, will support everyone alive in their own day. Nothing anyone does today can change that one iota.
Government, federal, state and local, is now the largest employer in the country--and it is growing. There are about 20 million government employees. The government does provide services, e.g., law enforcement, schools, fire fighting, water treatment, road maintenance, etc.
As for "retirement age", is that encoded in your DNA somewhere?
No, it is encoded in laws and regulations that determine benefits, pensions, etc.
If you can afford to retire, go ahead if you feel like it. If you can't, work for a living like ordinary people.
I am already retired on a government pension plus SS. I retired 10 years ago at 56. My pension is over $100K and I will be receiving a $6,000 raise on Dec 1 payable on January 1. So you continue to bust your butt and pay your taxes so I can enjoy my annual raises. And if they have to raise your taxes to do so, then deal with it. Thanks. I hope you can enjoy similar benefits when you retire, if that is ever possible. Hopefully, they will raise the retirement age to protect those of us already receiving benefits.
Crap, that guy is darker than Dracula. I've heard of him before, but I have to take a closer look.
Until the Government defaults.
bump for later...
The late senator from Illinois, Ev Dirksen once said "A billion here, a billion there, pretty soon you're talking about real money". (Or words to that effect).
ping for later
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