February 27, 2009

This Time It's Different...?

If there’s one warning that financial advisors try to give their clients whenever the market indexes are trending downward, it’s that the markets are cyclical-- they go up and they go down, so stay cool. In response, the harried clients, or some of the so-called contrarian investors, say ‘But, this time it’s different.’
Ever since the big crash of 1929, worry-prone investors have fretted that this time the downturn will not recover… and every time, they have been wrong-- very wrong.
The blue line on the beloved Andex charts may wiggle a bit, but its inexorable trend over the last 100 years has been, overall, onward and upward-- despite those horrid blips in ’29, ’89, the technology bubble burst, and so on. Anyone who stayed the course-- kept invested-- long enough ended up making handsome profits. So the recurrent doomsayers have come to be regarded as people who ‘cry wolf,’ and are scornfully dismissed.


As someone who’s been observing the situation for many years now (admittedly as an amateur) I can’t help but wonder as the world economy falters in 2009, whether this time it will, indeed, be different. My financial advisor acquaintances assure me that this is just another go-round in the cyclic financial ride, only a bit bumpier. We’ve had a good ride up-- now it’s time for the inevitable ‘correction.’ No need to panic; just make a few adjustments to your asset mix, and trust the ‘fundamentals’ to do their old magic... Heh, heh; relax and enjoy the ride. Yes, I’ve been thru this scene before, like the guy in Groundhog Day; and it always makes me uneasy. Yet, I’ve had a nagging suspicion in my gut that says one of these cycles, it is going to be different. How long can this insane, global pyramid scheme of free-enterprise capitalism keep on expanding before it finally crashes under the weight of its bizarre, fundamental beliefs? Among those doctrines is the notion that the economy in a closed system (this planet) can expand indefinitely when it is based on the consumption of ‘goods’ produced from limited resources. We have ecologists informing us that if the entire world population consumed goods at the same rate as Americans, that it would take 4 Earths to sustain such a system. Unless serious steps are taken to reduce the consumption of the rich nations, it is clear that the system must collapse. And far from reducing our intake, the opposite is happening, rapidly. Developing nations are making great strides in ‘industrializing’ and ‘raising the living standards’ of their citizens, with the inevitable result that their consumption has risen sharply. Since the whole capitalist system is premised on increasing consumption and unending expansion, then reducing the production of goods is failure, as judged by the only measure recognized by the system.

Sooner or later, this insane system is destined to implode; the question is when. That’s always the problem in financial matters-- you may have the right idea, but at the wrong time. It’s a question of timing, always. That’s a general kind of observation, but there are a number of factors converging lately in a way that makes the probability of disaster/ depression seem unavoidable. Just consider some of the major ones:
• The US dollar is being gratuitously printed to fund the mega-theft of public funds (a.k.a. ‘bail-outs’) with the inevitable result that inflation must soon follow.
• Several countries have signaled that they will no longer accept only US currency for their commodity transactions (esp. petroleum), so the dollar is effectively no longer the world’s ‘reserve currency.’
• Regardless of election rhetoric, the US government shows little sign of stopping its on-going wars-- wars that are draining huge sums of money; even if the US leaves Iraq, it is already planning a big ‘surge’ in Afghanistan.
• There are stories that US unemployment figures are being fudged to look better than they really are, and hence, the true extent of unemployment (and under-employment) is much worse than stated.
• The markets were being artificially buoyed by a White House ‘plunge protection team’ to appear more robust than they really were; but with the mortgage crisis, nothing could stop the dominoes from toppling as they are doing.
• The bail-out packages rigged by TPTB in the financial world haven’t the least chance at restoring stability in the global system; the smart buzz is that we are just seeing the beginning of bigger catastrophes to come.
• The financial guys cannot factor in the effect of global warming; no one can. The climate is becoming a wild-card in the world economy, and while some optimists see possible gains, most scientists predict instability and consequent crop reductions and increasing damage caused by turbulent weather. In ‘worst case’ scenarios, famines would result, and infrastructure would be severely impaired and require huge sums to repair.
• Wheat reserves are already at a long-term low point; food prices are beginning to escalate.

My deep, gut-level suspicion is that this time-- the crash of ’08-- really is different. In fact, I think it will turn out to be very different. Remember that in the ‘dirty 30s’ the market crash was followed by the ‘dust bowls,’ the years-long draught in the bread-basket prairies of America. That made for a brutal combination, compounded by a lack of social safety nets of any kind. Today, we are seeing crazy weather patterns in several crucial, food-producing areas of the world-- Australia (wild fires), China (draught), and the USA (draught/flooding/fires). So far, due to the international flow of food, and other management methods, we’ve avoided the sting of food scarcity (at least in the comfortable West). But a few more unexpected disasters in the right places, and we could see the beginning of serious food shortages. That will drive the price of some foods higher at a time when there will be a lot of unemployed people trying to survive on much less money. Do you see images of ‘soup lines,’ from those old b&w news-reels from the 1930s?

Another Great Depression, that of the 21st century, is one more bolt of tribulation to strike this planet at a moment when it is coping with an unprecedented onslaught of troubles. As if in preparation for a date with destiny, the planet is in turmoil. Geo-politically, the chess moves have been fast and furious since 2001; that hardly needs elaboration. In terms of weather, again, the global agitation is well known, even if there is disagreement over the cause. Now, financially, we are seeing a gigantic melt-down in the making, affecting virtually every country on Earth. (First, ‘they’ lock us into international trade agreements... then they pull the plug!) On the religious front, there is great confusion, due in no small measure to the failure of mainstream Christian churches to free themselves from the tyranny of the Old Testament.

In short, the ‘winds of strife’ seem to be blowing quite actively. All we need now is for a few ‘good’ earthquakes in populated, ‘modern’ centers, along with another ‘good’ hurricane season, and things will get very ugly. Oh, and of course, we’re all expecting another ‘attack on America,’ because the powers that be are telling us to expect it. In other words, they will ensure that it will happen ‘when the time is right.’ Then the mayhem meter will really climb, and there will be anger and confusion in the streets of Yourtown, USA, the like of which hasn’t been seen before. All these things influence the economic situation, and vice-versa. The Bible’s book of Revelation mentions specifically ‘buying and selling,’ (ch. 13:17) in what many have taken to be reference to economic upheaval, although other commentators treat it more symbolically. It’s difficult to say for certain, but if it does refer to the world economy, we will recognize the pattern when it occurs (or at least some of us will).

It’s interesting to note what seasoned financial commentators and entrepreneurs are saying about the current mess and the almost ad-hoc strategies being invoked by the US government. While Bernanke, Geithner, and Obama make their ‘cautiously optimistic’ predictions for a hoped recovery, almost every other authoritative voice is saying, unequivocally, that the plan of throwing vast sums of money at the problem is doomed to fail. First I found the ‘nay-sayers’ only on the ‘alternative news’ websites. Now I’m finding them on the mainstream economic advice sites. The officials seem to have no alternatives, no ‘plan-B;’ it’s just throw public funds wildly or ‘doing nothing is not an option,’ to quote directly. What will happen, therefore, when this madness must end-- when trillions have been ‘spent,’ and the situation is worse? When individual nations have gone bankrupt, they were placed into a kind of ‘international receivership,’ and had to accept many deprivations as a consequence of their indebtedness. What will happen when the whole world is effectively bankrupt? Well, where did all those billions of dollars go? Someone must have them. It’s the international bankers (banksters) who will hold all that vast treasure, and it’s the governments-- representative of their peoples-- who will be indebted. Which means, if you haven’t seen it coming, that each of us poor saps will be considered to owe an unpayable debt to the banking elite. Think of that for a bit. Whether populations accept that neo-bondage with quiet resignation or not, the result will be a new era of misery for the great majority of us.

We were duly warned-- right at the start of the century, on Sept. 11, 2001-- that the new millennium was going to be different; that it was no longer ‘business as usual’ on planet Earth. The powers behind the scenes have been setting things up for a long time-- since the founding of the USA, one can argue. The creation of the ‘Federal Reserve Bank,’ the decoupling of the dollar from the gold standard, the creation of GATT/WTO, the IMF, international currency flows, the triumph of capitalism; all these innocuous milestones were but stepping stones to the turn of the millennium and the final maneuvers to bring the world to its ultimate financial crisis. You have to recognize that crisis, or ‘chaos,’ is the blatant methodology of the bankster elite-- they print it right on the US dollar bill, as the inscription ‘Ordo ab chao.’ They create the chaos; they wait for the wailing to reach the right pitch; and then they offer their ‘solution.’ In this latest crisis, it remains to be seen what trap they will spring to solve their monetary crisis. But many jaded observers speculate that it will involve a global currency, and may make use of electronic id of some kind. At the rate money is being hurled down the rat hole, it won’t be too long before the game reaches the climax, and we’ll be presented with our Hobson’s choice.

So, while it may be far more comforting to believe the liars (oops, I mean experts) who assure us that this ‘recession’ will soon be over, as the magic economy cycle chugs along as usual, the awful truth for those with the stomach to face it, is that ‘this time it IS different. You would do well, dear reader, to prepare yourself for the possibility.

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