The link below is to a special report by very highly regarded economist John Williams, author of www.shadowstats.com. His website calculates US numbers for unemployment, housing starts, and such the normal, economist way and juxtaposes them with the current largely fictitious, irresponsible, and propagandistic numbers.
Anyway, this is a nationally known, highly respected economist (who is not a moron like Bernanke or Krugman) who predicts the same kind of scenario I have predicted for 2010. The report talks about why it will happen, what it will look like, etc. It is very important reading, as I read economics every day and have not yet seen any explanation of what could be done that could stop this scenario from arriving right on schedule.
I want to be clear, in case I wasn't in my original 2010 economic predictions.
(My Predictions) I don't predict American hyperinflation because of the explosion in the money supply...
due to Bernanke and Geithner and Obama eating lead paint chips and going insane, though that apparently happened. I am predicting hyperinflation due to a run on the dollar turning very disorderly, people climbing over each other to get out of the dollar, followed by a complete loss of faith in it. This analyst gives a very graphic and entertaining explanation, though he is really talking about the sovereign debt crisis in general, and it affecting markets everywhere:
Let’s be totally blunt here. The fiscal policies/ bailouts/ stimulus plans of the world’s central bankers have fixed nothing. Zero. Nada. Nothing. Why? Because shoveling garbage debt from the private sector onto the public’s balance sheet DOESN’T pay off the debt or fix the debt problem.
It’s really quite simple. I’m not sure why the expert economists and pundits don’t understand this. Using the logic (shift debt around, but don’t pay it off or default on it) you could easily argue that the best way to deal with moldy cheese in the refrigerator is to hide it under the kitchen sink. Sure the fridge looks better, but pretty soon the entire kitchen stinks. And the cheese keeps getting moldier.
That’s’ the situation facing Greece, Portugal, Spain, Dubai, Italy, Ireland, the UK, the US, and basically everyone on the planet. DEBT. It stinks. And moving it around doesn’t make it (or the interest payments) go away.
No, there are truly only three solutions to a debt problem:
1. Pay it off
2. Default
3. Inflate it away (a variation of #1)
“Pretend it’s not there” and “move it around and pray the economy recovers before it becomes an issue” are not solutions. They are illusions. The illusion that everything is under control. The illusion that trillions of dollars is NOT a problem. The illusion that Ben Bernanke and the world’s central bankers (NONE of whom saw this coming and ALL of whom perpetuated policies that created it) can somehow fix the situation.
Folks, the world’s bankers haven’t solved the Crisis. The fact that we’re now talking about bailing out entire countries should make this obvious. What’s next? Continents? The entire planet Earth?
At some point this belief “that bailouts will work” will smash into a wall. It may actually already be occurring. The markets didn’t even take out initial resistance in any meaningful way yesterday. Sure, we had an explosive open and massive rally on bailout rumors around noon. But even then the market cooled and closed below resistance.
If a Greece bailout emerges, don’t let it fool you. Spain, Portugal, Ireland and Italy are all in trouble (as is the UK and US for that matter). Any rally or positive spin that comes from a Greece bailout (if it happens) will be short-lived. The fact that we’re only in February and already the sovereign defaults are lining up should tell you how this year is likely going to turn out.
Gary North Feb. 12, 2010
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