Collapse of U.S. economy?

[Max Murdoc]

International experts foresee collapse of U.S. economy
Posted By Hielema, Bert
Posted 9 days ago

And you thought that I had a gloomy outlook on the economy. Now the bad news pops up everywhere.

Harry Koza in the Globe and Mail quotes Bernard Connelly, the global strategist at Banque AIG in London, who claims that the likelihood of a Great Depression is growing by the day.

Martin Wolf, celebrated columnist of the U.K.-based Financial Times, cites Dr. Nouriel Roubini of the New York University's Stern School of Business, who, in 12 steps, outlines how the losses of the American financial system will grow to more than $1 trillion - that's one million times $1 million. That amount is equal to all the assets of all American banks.

Every day now, thousands of people all over the U.S. and Great Britain are walking away from their homes - simply mailing their house keys to the banks - as housing bailout plans fail.

With unemployment growing, the next phase will hit commercial real estate making the financial institutions the unwilling owners not only of quickly depreciating houses, but also of empty strip malls and even larger shopping centres.

The next domino to fall will be credit card defaults, and after that... who knows? There are so many exotic funds out there, with trillions of dollars in paper - or rather computer-screen money - all carrying assorted acronyms, and all about to disintegrate into nothingness. Over the next couple of years, scores of banks that have thrived on these devices, based on quickly disappearing equities, will fail.

The most frightening forecast so far comes from the Global Europe Anticipation Bulletin (GEAB), available for 200 euros - about $300 - for 16 issues annually. Its prediction is quite specific.

Where my warnings never spelled out an exact date, this think tank has it pegged precisely. Here are its very words:

"The end of the third quarter of 2008 (thus late September, a mere seven months from now) will be marked by a new tipping point in the unfolding of the global systemic crisis.

"At that time indeed, the cumulated impact of the various sequences of the crisis will reach its maximum strength and affect decisively the very heart of the systems concerned, on the front line of which (is) the United States, epicentre of the current crisis.

"In the United States, this new tipping point will translate into - get this - a collapse of the real economy, (the) final socio-economic stage of the serial bursting of the housing and financial bubbles and of the pursuance of the U.S. dollar fall. The collapse of U.S. real economy means the virtual freeze of the American economic machinery: private and public bankruptcies in large numbers, companies and public services closing down."

The report goes on to say that we are entering a period for which there is no historic precedent. Any comparisons with previous situations in our modern economy are invalid.

We are not experiencing a "remake" of the 1929 crisis nor a repetition of the 1970s oil crises or 1987 stock market crisis.

What we will have, instead, is truly a global momentous threat - a true turning point affecting the entire planet and questioning the very foundations of the international system upon which the world was organized in the last decades.

The report emphasizes that it is, first and foremost, in the United States where this historic happening is taking an unprecedented shape (the authors call it "Very Great U.S. Depression").

It continues to predict that, although this crucial event is global, it will be the beginning of an economic 'decoupling' between the U.S. and the rest of the world. However, non 'decoupled' economies will be dragged down the U.S. negative spiral.

Concerning stock markets, the GEAB anticipates that international stocks would plummet by 40 to 80 per cent depending where in the world they are located, all affected in the course of the year 2008 by the collapse of the real economy in the U.S. by the end of summer.

The European authors of this report - it appears simultaneously in French, German and English - state that they simply and without prejudice try to describe in advance the consequences of the ominous trends at play in this 21st-century world, and to share these with their readers, so that they can take the proper means to protect themselves from the most negative effects.

So there you have it. Three reports from three different sources, all well regarded, and all pointing to a disastrous fall-out from our monetary moves.

This and earlier columns can be seen at hielema.ca. Comments to hielema@allstream.net.
Article ID# 918803

Canada looks pretty good right about now. [;)]

[coop41]

There are a lot of valid points here and I have been saying for quite some time now people don't realize how bad things are about to get. I chuckle when people don't want to admit we are in a recession and I think we are heading staright on into the worst depression this country has ever seen. I'm not sure we will get there but I think it is more likely than people think. I think back to not that long ago when people were bragging how much equity they had in their homes, now to hear those same people are in foreclosure or bemoaning the fact that they owe more on their home than it's worth. The end is near!

Have a great weekend![:)]

[eight6]

Yes, yes, but will all this result in lower Starbucks coffee prices?

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[Bitter Almonds]

<p align="justify">We are in a recession-like state, but not a bona fide recession (at the moment[;)] ). It's so fucked up right now that massive teacher lay-offs were done recently. It's funny how at my job there is a high turn-over: hmmm - would I rather face the ever-impending doom unemployed/underemployed or keep working this crappy job (with security of keeping it)? I QUIT![8D]


We are going to hell in a handbasket, but I HAVE TO BE AT THE ORPHEUM before this happens![}:)]

[eight6]

If Canada goes into a recession, there will be a mass exodus of people to economic powerhouses like India and China. Who will be left to mumble unintelligibly "Do you want fries with that?"

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[djcraig]

[quote]Originally posted by Max Murdoc
[br]International experts foresee collapse of U.S. economy
Posted By Hielema, Bert
Posted 9 days ago

"... the losses of the American financial system will grow to more than $1 trillion - that's one million times $1 million."
[/quote]

A TRILLION? Why that's less than we spent on the last war!

Sorry to interrupt. Carry on with all of your talk of gloom, destruction and apocalypse...

I'll be in my bunker.



<a href="http://www.djcraig.net/los_angeles_dj">DJ Craig</a>

[coop41]

LOL - "recession - like" state - that's actually a state of denial![:)]


Ironically, I have been working with a huge amount of investors from Canada recently. They will probably own our Country soon.

[Bitter Almonds]

[quote][i]Originally posted by eight6[/i]
<br>If Canada goes into a recession, there will be a mass exodus of people to economic powerhouses like India and China. Who will be left to mumble unintelligibly "Do you want fries with that?"

<a href="http://photobucket.com" target="_blank"><img src="http://i194.photobucket.com/albums/z302/eight6pics/letmein7.jpg" border="0" alt="Photo Sharing and Video Hosting at Photobucket"></a>
[/quote]

<p align="justify">SoCal will turn into a 3rd world shithole thanks to mexico, but there's no fuckin' way I'm gonna move to India or China for better prospects[}:)] Now, Japan... hell! Even Korea[:D]

[Bitter Almonds]

<p align="justify">THE BOARDS OF CANADA WILL PWN US![:0]

[eight6]

[quote][i]Originally posted by coop41[/i]
<br>LOL - "recession - like" state - that's actually a state of denial![:)]


Ironically, I have been working with a huge amount of investors from Canada recently. They will probably own our Country soon.
[/quote]

So instead of us being your 51st state, you'll be our 11th province. Tiger will have no choice but to choke back some of our crappy beer.

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[eight6]

[quote][i]Originally posted by XXX[/i]
<br>[quote][i]Originally posted by eight6[/i]
<br>If Canada goes into a recession, there will be a mass exodus of people to economic powerhouses like India and China. Who will be left to mumble unintelligibly "Do you want fries with that?"

<a href="http://photobucket.com" target="_blank"><img src="http://i194.photobucket.com/albums/z302/eight6pics/letmein7.jpg" border="0" alt="Photo Sharing and Video Hosting at Photobucket"></a>
[/quote]

<p align="justify">SoCal will turn into a 3rd world shithole thanks to mexico, but there's no fuckin' way I'm gonna move to India or China for better prospects[}:)] Now, Japan... hell! Even Korea[:D]
[/quote]

Not sure you got my drift.

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[Bitter Almonds]

<p align="justify">Hahaha. Maybe if it was translated to Spanish for my benefit, I'd have gotten it on first read[}:)]

[drsevrin]

Sadly ironic that this is posted the day Ron Paul formally exits the campaign. He was the only candidate who consistently warned of this. With a national debt of $9 trillion ($50 trillion if you include the sum total of government obligations) and a steadily collapsing currency, I continue to shake my head in bewilderment over how the election is shaping up. John McCain is promising us "more wars". How on earth will we pay for it? It's nothing short of insanity.


http://www.brillig.com/debt_clock/

[KYYX4ever]

I think this is pretty real, although we do not know how serious it may get.

Of course, our stupid disconnected administration (not that they control this) appears to have no clue about what's going on, and continue to spend billions on this overseas occupation. Last week, when GW was at some press conference, and a reporter asked him about gas prices being $4.00 a gallon in some places, didja hear him when he responded "I wasn't aware of that" ?!? WTF ?

The other thing I wanted to add was the whole home prices thing. OK, so we all have seen home prices soar over the last decade. Some of us bought while the buying was (relatively) cheap. And we've seen home values double. If you go to websites like zillow.com, these types of websites that show an aerial view of your neighbourhood with home "prices" (values) stamped on the roofs, well I don't know about you guys, but I am continually amazed what the price shows for our home ! I find it hard to believe that our home's value has doubled in the 7 years since we bought it. I find that very, very hard to believe. And it gets me thinking, [i]HOW ? WHY ? [/i]. It always seemed artificially inflated to me. Part of the whole "housing bubble", I guess. And now people and the industry are all finding out how unreal, and how unrealistic, that all was. Perhaps falling home values are merely a reflection of their [i]actual worth[/i].

Just like everything else in this consumer economy. What do you think?

[Bitter Almonds]

<p align="justify">I think some of those seemingly-inflated prices are based on real purchases (i.e., what people were willing to pay), but those numbers weren't updated and not many purchases were made at those prices anymore. If you live near the coast or at a good neighborhood (for example: Newport Coast, Laguna Niguel, Irvine), you will still see houses that retained those seemingly-inflated prices. It's the more riskier prospects that lost half their value (Riverside, San Bernardino, cities near Vegas). The upside is that if you saved up enough money, you can buy a house in those areas for cheap. They will lose more value, but not that much. Then, prices will settle and it may or may not go up, BUT the gist of buying a house is to live in it!