Economic Alert: If You’re Not Worried Yet…You Should Be

For the past four years I have been covering the progression of the global economic crisis with an emphasis on the debilitating effects it has had on the American financial system.  Only once before have I ever issued an economic alert, and this was at the onset of the very first credit downgrade in U.S. history by S&P.  I do not take the word “alert” lightly.  Since 2008 we have seen a cycle of events that have severely weakened our country’s foundation, but each event has then been followed by a lull, sometimes 4 to 6 months at a stretch, which seems to disarm the public, drawing them back into apathy and complacency.  The calm moments before each passing storm give Americans a false sense of hope that our capsized fiscal vessel will somehow right itself if we just hold on a little longer...

I don’t have to tell most people within the Liberty Movement that this is not going to happen.  Unfortunately, there are many out there who do not share our awareness of the situation.   Debt implosions and currency devaluation NEVER simply “fade away”; they are always followed by extreme social and political strife that tends to sully the doorsteps of almost every individual and family.  The notion that we can coast through such a tempest unscathed is an insane idea, filled with a dangerous potential for sour regrets.

There are some people who also believe that the private Federal Reserve with the Treasury in tow has the ability to prolong the worst symptoms of the collapse indefinitely, or at least, until they have long since kicked the bucket and don’t have to worry about it anymore (the ‘pay-it forward to our grandkids’ crowd) .  I can say with 100% certainty that most of us will live to see the climax of the breakdown, and that this breakdown is about to enter a more precarious state before the end of this year.  You can only stretch a sun-boiled rubber band so far before it snaps completely, and America’s financial elasticity has long been melted away.

A pummeling hailstorm of news items and international developments have made the first half of 2012 almost impossible to track and analyze.  The frequency at which negative information has surfaced is almost dizzying.  However, a pattern and a recognizable motion are beginning to take shape, and, I believe, a loose timeline is beginning to form. 

At the end of January, I covered the incredible nosedive of the Baltic Dry Index (a measure of global shipping rates that signals a fall in global demand) to historic lows.  I pointed out the tendency of stocks and the general economy to crash around 8 months (sometimes a little longer) after the BDI makes such a dramatic downturn.  Mainstream analysts, of course, attributed the fall to an “overproduction of ships”, which is the same exact excuse they used when the BDI collapsed back in 2008 just before the derivatives bubble burst.  It would seem that the cable TV talking heads were wrong yet again, as the international market facade quickly evaporates right in line with the BDI’s almost prophetic knack for calling an economic derailment in advance.

Here are some of the most important reasons why every American should be prepared for much harder days, especially before the end of 2012:

The European Union Is Officially Dead In The Water


Stick a fork in er’, the EU is done!  We are talking about full scale dismantlement, likely followed by a reformation of core nations and multiple collapse scenarios of peripheral countries.  The writing is all over the wall in the wake of the latest election results in Greece and France, where, as alternative researchers have been predicting for some time, the battle between the government spending crowd and proponents of austerity has reached a fever pitch. 

The Greeks and the French are royally pissed over draconian cuts in public programs and the destruction of pensions which have been a mainstay of their economies for quite some time.  They are also furious over being sold off like collateral to the IMF and World Bank.  Rightly so.  Like the American taxpayer, the taxpayers of floundering EU nations are wrongly being held responsible for the financial mismanagement and fraud of their governments and global banks which have remained untouched and unpunished for their trespasses.  The problem is, the voters of both countries are signing on to the socialist/quasi-communist bandwagon in response.  In Greece, the Left Coalition Party, a splinter group of the traditional communist party, has now taken a primary position of power:

http://www.reuters.com/article/2012/05/07/us-greece-idUSBRE8440DG20120507

In France, voters have elected socialist Francois Hollande (a Bilderberg attendee), whose latest promise is to spend France into recovery through his “pro-growth agenda”:

http://news.yahoo.com/blogs/ticket/french-president-elect-hollande-won-t-difficult-obama-195617064.html

I have no doubt that the elections of the EU are as manipulated by elitists as they are here in the U.S., and I’m sure false paradigms abound.  Have Europeans forgotten that it was overt government spending that set them on the path to calamity in the first place?  Or, are they like Americans; just desperate for any change in the ranks of leadership?  One would think that they would take note of the problems here in our country and realize that electing a socialist to replace another socialist is no way out of economic hardship.

Former officials like Nicolas Sarkozy may have claimed to be distanced from the socialist ideal, but, as with all globalist puppets, their actions did not match their rhetoric, and they have always supported policies of centralization and big government.  The French and the Greeks have essentially replaced closet collectivists with outspoken collectivists, and will see NO relief from the crisis in the Euro-zone as a result of the political reordering.  In fact, the stage has now been set for a volatile chain of dominos.  Germany, which is the only economy left holding the EU together, has been unyielding on austerity cuts.  A conflict between France and Germany is now inevitable.  Neither will compromise their position, and I can see no other eventual result than a reexamination and perhaps abandonment of the EU charter. 

How does this affect America?  Being that international banks and corporations have forced our countries into interdependency through the engineered chicanery of globalization, any collapse in Europe is going to strike hard around the world, but the worst will hit the U.S. and China.  Which is probably why China is disengaging trade away from the U.S. and the EU and focusing on other developing nations:

http://www.reuters.com/article/2012/05/08/us-china-economy-trade-idUSBRE84702N20120508

If you thought the Greek rollercoaster was a pain in the neck for investment markets, just wait until the whole of the EU is in a shambles! 

Spain is next in line, with a 25% official unemployment rate and a massive black market economy forming.  As I have been saying for years now, when governments disrupt the financial survival of the people, they WILL form their own alternatives, including black markets and barter markets.  It is about survival.  The Spanish government does not care much for these alternatives, though, and has now banned cash transactions over 2500 euros in a futile attempt to squeeze taxes out of the populace through digitally tracked payment methods:

http://thedailybell.com/3814/Spain-Bans-Cash

Another major concern for Americans is the fact that Europeans are inching towards an abandonment of the dollar.  Francois Hollande has openly called for an end to the dollar’s world reserve status, and with a majority backing of the French people, he could easily make this happen, at least where France is concerned.  All it takes is for a few key countries to publically and completely drop the Greenback and the dollar’s reputation as a safe haven investment will be quashed.  This could very well happen before 2012 is over.

QE3 Is The End

Here is the bottom line; U.S. growth is a theater of shadows.  There has been no progress, no recovery, only the misrepresentation of statistics.  Millions of Americans have fallen off unemployment rolls because they have been jobless for too long, which lowers the unemployment rate, but does not change the fact that they are still without work.  Durable goods orders are dropping like an avalanche.  U.S. credit has been lowered yet again by ratings agency Egan-Jones.  With China making bilateral trade deals in numerous countries on the condition that the dollar be dropped as the primary purchasing mechanism, and with the EU turning to economic mulch, the currency’s safety is nonexistent.  Traditional investors who cling to the idea that a falling Euro spells dollar strength will be sorely disappointed when the currency is suddenly being rejected in international currency markets.

The Federal Reserve has already stated that any signs of “relapse” into recession (the recession that we never left) will be met with all options on the table, including QE3:

http://www.reuters.com/article/2012/04/12/us-usa-fed-idUSBRE83B1KD20120412

I believe that QE3 will probably be announced this year (due in large part to trauma from Europe), and, that this will trigger a mass movement by foreign nations to drop the dollar as the world reserve.  QE3 will be the straw that broke the camel.  How exactly this will play out socially and politically, I do not know (I could take a good guess though).  But, the technical results are predictable.  The Fed will respond to the lack of treasury purchases by ramping up fiat printing in order to cover the ever increasing costs of the government machine.  The Greenback will immediately lose a large portion of its value, at least in terms of imported goods, causing inflation in prices.  Oil and energy prices will skyrocket if OPEC follows suit (which they will, though the Saudis may still honor dollars for a time).  Doing any traditional business will become nearly impossible, and price inflation will dominate the lives and the minds of average unprepared citizens.            

The amount of time that it will take for these difficulties to unfold is also not clear.  We are operating in uncharted territory, and dealing with a collapse scenario on a truly planetary scale.  My best advice is to assume that the avalanche will move fast.

While markets in our country have seen only mild disruptions so far this year, their solidity is predicated on a host of props and costume pieces, any one of which could pull the rug out from under America’s suspension of disbelief if it strays but a little from the illusion.  As long as the dollar holds, stocks can be infused with bailout juice through major banks.  So can major companies and even desperate state governments on the verge of bankruptcy.  The Dow will remain relatively friendly, and day traders and the public will remain happy.  As soon as the dollar comes into question, all bets are off…

Does This Mean Doom, Or Just Another Bad Day?


The real beginning of today’s collapse is tied to the events of 2008.  The pace of it has been deceptive, but also, in a way, it is a gift.  Over the past four years, I have personally seen the awakening of thousands of people that may have never had the chance if the system had gone into full spectrum breakdown right away.  The question now is, how much longer can the U.S. wobble along on one wheel?  In my view, and from the evidence I see in markets at the moment, not much longer. 

It is hard to set aside any expectations that the next leg down will be easy to digest for the populace.  The reality of our predicament is starting to hit home.  All the tax return checks have been spent.  The credit cards have been maxed.  The new cars have been sold off and traded in for ghetto-mobiles.  The good jobs have been replaced with Taco Bell slavery.  A trip to see The Avengers is now the family vacation.  And, the distractions of reality TV just aren’t buttering our bread anymore.  It’s the little things at first that really signal the financial mood of a society, as well as reveal the more vital and looming issues just over the horizon.

All indicators suggest that this year will be unlike any other before.  In 2008, we saw the first trigger events for the collapse.  In 2008/2009, we saw the creation of the bailout culture, setting the stage for inflation and dollar disintegration.  In 2010, we saw the first bilateral trade deal cutting out the dollar between China and Russia, which is now the template for trade deals all over the globe.  In 2011, we saw the first downgrade of the U.S. credit rating and the crisis in the EU become epidemic.  In 2012, I see not just another difficulty to add to the mountain, but a culmination of all these detriments to produce something entirely new; a vast and subversive realignment forcing many of us to take a more aggressive stance in the fight for an economically and socially free America.

Financial disasters have always been a convenient catalyst for a host of even more frightening obstacles, including civil unrest, and blatant totalitarianism.  This is the cusp.  It is one of those moments that people of later generations read about in awe, and sometimes horror.  The “doom” is not in the event, but in the response.  What we make of the days approaching determines the darkness that they cast upon the future.  It is a test.  It is not something to be dreaded.  It is something to be seized upon, and dealt with, as great men and women before us have done.  At the very least, we know that it is coming.  That, in itself, could well seal our success…

 

 

You can contact Brandon Smith atThis e-mail address is being protected from spambots. You need JavaScript enabled to view it

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Emergent Reserve Currency
written by Pdog , May 08, 2012

Thank you for taking my comment. I have enjoyed your work from afar for a while now. Your position that QE3 may precipitate a dollar devaluation is generally in line with other bloggers and sites that foresee a dollar devaluation near term. Many realize the inevitable of this occasion. Why specifically do you think that QE3 will do it?
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Brandon Smith
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written by Brandon Smith , May 08, 2012

@Pdog

As we all know, the first QE never stopped, and has been ongoing, though the Fed would never admit this. What they can do is announce QE3, which would represent a PUBLIC admission that the dollar is going to be further devalued. The announcement would affect the psychology of international markets more than anything else, triggering a move by foreign countries to step away even further from our currency than they already have. Being that nations like China have formed bilateral trade arrangements with many of their primary economic partners that cut out the dollar, I can only predict that any signs of further dollar weakness will accelerate this process.

If the dollar loses its world reserve status, America's economy will tank. Period. If other countries are no longer required to hold our IOU's, we lose our last financial pillar. I believe QE3 will facilitate the perfect excuse for other countries to make the drop.

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Hedge Funds Betting Against the Eurozone: Why You Should Worry
written by LadyLiberty , May 08, 2012

Excellent article thanks here's what worries me

http://www.dailyfinance.com/2012/05/05/hedge-funds-betting-against-the-eurozone-why-you-should-worry/

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...
written by Sophie12 , May 08, 2012

Awsum article! I bet you're right.
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Hocus Pocus
written by thecrownofthemagi , May 08, 2012

This article sums it all up very well, and yes it is a test. I have been saying this for years, it is a stupid test. Anybody reading this has most likely prepared, that does not mean you will pass the stupid test but your chances are better. Good Luck everyone and I hope you pass the stupid test.
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poc376
Economic Alert
written by poc376 , May 08, 2012

Great article! I appreciate what you said about not taking the word "alert" lightly, which is why you got my attention. Apparently you struck a nerve on ZH with over 378 comments and over 33K reads in little over four hours. Good Work!
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A gentleman's agreement
written by pdog , May 08, 2012

Have you heard anything to the effect that Geithner's most recent trip to China has resulted in an agreement to pass the reserve currency baton to China devaluing the dollar so that our foreign debts might be repaid? Maybe on the heels of QE3? Let's call it an "orderly rebalance of the debtor-creditor relationship".
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Catchy Headline, Low-rated comment [Show]
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^^^ asshats abound...
written by ferndale , May 08, 2012

the markets might rally, but only because assets priced in dollars will explode in nominal value. too bad that the price of bread will have exploded, as well.
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housing
written by thebluerocker , May 08, 2012

So maybe I want to wait and put the house purchase on hold huh?
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Brandon Smith
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written by Brandon Smith , May 08, 2012

@Same Old Story

I find it a bit cowardly that you have to revert to Ad Hominem attacks rather than confronting the information on its own merit. This is a typical strategy of web trolls.

If there is any part of the analysis that you take issue with, by all means, be specific and then back your point with source information, rather than acting like a four-year-old.

Who said that Europe would implode by December 2011? What is your definition of implosion? Does it involve the complete breakdown of financial compromise within the EU system? Because that is exactly what we have seen over the past year. Or, does the situation have to go utterly Mad Max before you'll admit that something is not quite right?

I posted this article late last night. I had no idea whether the markets would rise or fall today, and I see stocks as quite secondary. Only people completely ignorant on basic economic fundamentals judge economic health on the daily motions of the Dow alone. That said, the index dropped 76 points today. Did you not notice?

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Brandon Smith
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written by Brandon Smith , May 08, 2012

@theblurocker

The best investment right now would be land. Solid acreage. 10-20 if you can afford it. Somewhere far away from the city...

Suburban tracts and McMansions will create a black hole in your wallet from which there is no escape.

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Bernanke was in China
written by Mlarocco , May 08, 2012

Pdog..
I happened to be watching Fox news at my Dad's house on Thursday May 3 on a recent visit. They were covering the blind dissident story, and showed a video clip of Hillary, Giethner, and sitting along side to the far left of everybody was Mr. Ben Bernanke himself. I don't believe this was old file footage either..It's telling indeed when the emissaries must bring along the master. I was lucky enough to actually see this, the news only reported on Clintons and Giethners presence in China. Brandon is not howling from a rooftop in vain..Big moves in the markets are about to begin. Falling gold and rising USDX is a barometer. Be Prepared.

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A controlled downward spiral
written by PhilippinoBob , May 08, 2012

Brandon, excellent article, plenty of good quality research!
For the rest of the story you should read this as well.
http://escapetophilippines.wordpress.com/free-booklet-life-beyond-2012/

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written by bbob , May 08, 2012

great synopsis , Brandon ! I have been following Tyler Durden's Zerohedge, Max Keiser , Bob Chapman , King World News,etc. for the past 3 and 1/2 years and you have succinctly wrapped up the agenda of the Global Elite and the dilemma we face in protecting ourselves along with the potential for opportunities to change back into a sovereign country. Vote Ron Paul in , Americans !
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Incisive/eloquent article...FYI on relocation
written by B Cat Stone , May 09, 2012

Thank you for a well written and researched article that was also interesting to read thanks to your writing skill and wry wit ("Taco Bell slavery" -- HA!). I appreciate all the related links.

Like others here, I've heard political/economic analysts recently discussing a likely US dollar collapse later this year. Extremists (or realists?) predict resulting civil unrest helped along by the commies in Capitol Hill and the march of dissidents and the economically desparate to "re-education camps." (Try searching Youtube for the latest from Gerald Celente and Alex Jones, for example.)

IMO a very good source for US relocation info., for those interested, is Joel Skousen (http://www.joelskousen.com/) - a practicing relocation consultant with 40+ years experience. His book is "Strategic Relocation." He was recently interviewed by Alex Jones on this topic and gave out some excellent info. and tips. Youtube first segment: http://youtu.be/o34NI-N_h0E

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Brandon Smith
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written by Brandon Smith , May 09, 2012

@B Cat

Thanks. We actually have an ongoing discussion in our forum on Skousen's ratings of states. Check it out and join in if the mood strikes you.

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Good article but....
written by Brent D , May 09, 2012

Brandon,

This is a good article and very well written. However, I disagree with your timeline. I heard there would be a total collapse in 2008, then it was 2009, then it was 2010 and so on. I parroted this on many forums and now am the laughing stock on them. I agree with your general premise because there is no doubt this house of cards will crumble, but honestly it could be 5, 10, or even 20 years before it happens. Therefore, I no longer let this stuff interfere with my daily life, nor do I predict doom and gloom anymore.

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Brandon Smith
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written by Brandon Smith , May 09, 2012

@Brent

We have been in the middle of a collapse since 2008, so I'm not sure what your forum friends are laughing at. The problem is that everyone's concept of collapse revolves around the endgame; they've seen too many movies and now believe collapse is only real if the cannibals are roaming the countryside. That's not how it works.

Four to five years into the Great Depression there were STILL citizens and journalists (who still had jobs) who thought they were in the midst of recovery. People are generally uninformed and oblivious until they themselves are starving to death.

My timeline is for a major economic event to occur this year which will drive forward the devaluation of the dollar. This may look like the kind of event we see in the movies, or, it may be slightly less terrible, at least initially. However, there is absolutely NO chance that the dollar and the markets will remain as they are now for another five years. This is not my opinion. It is simply mathematically impossible. Every indicator is screaming derailment.

I'm not interested in other peoples ideas of what a collapse should look like. I am only interested in the facts. And, the facts are clear; foreign nations are moving away from the dollar, the Federal Reserve will continue to print wildly, and our economy as we know it will not be able to hold for much longer according to the pace of this breakdown.

It is foolish to assume that the collapse will happen tomorrow. But, it is even more foolish to assume it will not happen for years to come. We are in the middle of the storm right now. There are those who can see it, and those who are naive. There is no in-between.

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hope this helps....
written by Brent D , May 09, 2012

Brandon,

I do agree that we have been in the middle of a collapse since 2008, but that was 4 years ago. The economy has been no better or worse since then (I do not buy into the whole recovery thing as I know better). Why could it not go on another 5 years? I might have exaggerated when I said 20 years, but still. I am a big follower of Gerald Celente, but he keeps predicting the same thing and he is always wrong, at least in recent years. Same thing with Peter Schiff, who I also respect. One thing to think about is the establishment will not let the economy fall until at least Obama is re-elected. That is why I say the 8 month time frame from January most likely cannot happen.

thoughts?

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Brandon Smith
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written by Brandon Smith , May 09, 2012

@Ben

Actually, the economy is much worse since 2008. I'm not sure what indicators you are using, but the dollar has been severely weakened, resulting in accelerated inflation and the doubling of most commodity prices. Also, the national debt is now rising exponentially, reaching an "official" 100% of GDP (400% unofficial). Real unemployment is at 22%. China and Japan, our two largest foreign holders of treasury debt and dollars, have signed a bilateral trade agreement designed to drop the use of the greenback. The Baltic Dry Index has collapsed to all time lows; an indicator which is nearly ALWAYS followed by a market crisis around 8 months to a year later.

I recommend you go back and read my previous articles on all of these subjects in order to understand why the fundamentals, not myself, are warning of a major event this year. The elections are irrelevant. There will come a point where even the globalists will not be able to prop up the system. They are not all powerful as some seem to fantasize.

Celente and Peter Schiff have been right. They predicted the derivatives collapse of 2008 when the mainstream pundits laughed. They see that market manipulation through fiat injections is propping up the Dow and know that a trigger event could occur at any time.

If you learn how collapses throughout modern history have progressed, you will find that there is always a breaking point, and that point for us, according to the data, and the behavior of our creditors, is near.

You are welcome to believe whatever you like. I and many others plan to track the economy as it is and prepare for the worst.

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Ok, fair enough
written by Brent D , May 09, 2012

I just learned of your website today from another website, so I have never gone through your past articles, but I will. Here is the website that posted your article:

http://www.shtfplan.com/headline-news/economic-alert-if-youre-not-worried-yetyou-should-be_05082012

Now here is the thing, I live in Las Vegas. You were asking what indicators I am going by, and I will show you how I was made out to be a fool on a public forum. Here is the thread below, with many positive links from the mainstream press.

http://www.city-data.com/forum/las-vegas/1518617-las-vegas-numbers-keep-going-up.html

I will admit I go by "las vegas drunk" on that link which could undermine my credibility, but I still could really not dispute the the links the OP logline posted regardless. Just scan over the thread and you will see what I mean. Why are all the economic indicators improving here if we are collapsing? Don't get me wrong, I still think it is a temporary uptick, but it still makes me look bad when I try to refute it.

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Brandon Smith
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written by Brandon Smith , May 09, 2012

@Brent

Well, I've never lived in Las Vegas, but my good friend Stewart Rhodes of Oath Keepers has, for most of his life until he moved here to Montana. And, he moved because the housing developments were turning into ghost towns.

Also, gambling revenues are hardly a realistic indicator of economic health. In fact, gambling, though illegal, was a primary form of recreation during the Great Depression. Gambling often INCREASES during times of economic stress, because it gives people the hope of easy money (as a side note, movie theaters also do great business during financial crisis, because of the escapist fantasy element).

If you want the real scoop on Las Vegas, you have to check the fundamentals, like housing:

http://www.post-gazette.com/stories/local/region/las-vegas-is-ground-zero-for-americas-housing-collapse-222672/

Or "official" unemployment, which is holding well above the national average at 12%:

http://www.deptofnumbers.com/unemployment/nevada/las-vegas/

Or how about the city's debt rating, which has been switched to 'negative' by Fitch:

http://www.lasvegassun.com/news/2012/apr/09/fitch-changes-las-vegas-debt-rating-outlook-negati/

What about the city's homeless numbers? The 4th highest in the country:

http://www.8newsnow.com/story/16698328/las-vegas-has-fourth-highest-rate-of-homelessness

Or how about a $33 million dollar budget shortfall which is leading to conflict between north Vegas and city unions, threatening mass layoffs of firefighters and police:

http://www.lvrj.com/news/north-las-vegas-plans-for-massive-city-police-firefighter-layoffs-150509095.html?ref=095

I could go on and on. Again, the fundamentals are what is important. If someone wants to debate you on the economy, the only positive data they will be able to find is either manipulated, or arbitrary. Of course, you have to be sure to do as much research as possible before engaging in debate on any subject, otherwise, people WILL use skewed data to support their erroneous claims.


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Wht do we do ?
written by Seth , May 09, 2012

How shall I prepare for a Dollar devaluation ? What must I do to survive this event ? I can only relate to this from my own personal position, which is, Retired, fixed income, modest savings, no debt. Can you refer me to such information ? Is there a source for answers to these questions ?
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from Nebraska
written by obadiah , May 09, 2012

Great article originally I saw it on ZEROHedge

Living in Lincoln NE we missed most of the crazy uptick so we also have seen much less of a downturn.

We are looking to exchange frns for a house and the nice ones in the $300-$500 range get snapped up like lifesavers at the check-out. I know the reality is there will be a great shakening but I would rather have my money in depreciating home/acreage that sitting in a bank? Also I know these satanic dirtbags can extend waaaayyy beyond what is mathematically possible, they're experts at it.

If I could convince my wife things look as I see them I would leave town, but her lifes work is here and believing the dream is critical to her success. She outworks the rest and leaves them in the dust.

So what a guy to do?

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from Nebraska
written by obadiah , May 09, 2012

Another question wont the dollar just get repriced at 33% off or something? If this banking crisis comes again, wont it mean a new dollar overnight?
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Brandon Smith
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written by Brandon Smith , May 09, 2012

@Obadiah


No, it will not be a new dollar. Like Argentina, the currency will devaluate until the public can no longer stand the inflation in prices of goods. In a best case scenario (which is still bad), the government and the Fed will attempt to tie the dollar to a basket of currencies, like the SDR. Argentina tied their currency to the dollar to halt its slide. However, our standard of living would still be dismal, and our economy would lose all sovereignty.

This could happen quickly, or it could take months to culminate, depending on how quickly foreign creditors dump their dollars.

A reprice of the dollar at 33% would be a catastrophe as well.

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Brandon Smith
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written by Brandon Smith , May 09, 2012

@Seth and Obadiah

If you look into our article archives you will find numerous pieces on gold and silver investment, barter networking, prepping, as well as articles that you can show to your loved ones that may help in convincing them that they need to support you in your preps.


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RE: Timeline Collapse
written by RadTurbo , May 09, 2012

"Suburban tracts and McMansions will create a black hole in your wallet from which there is no escape."

And you can see this happening right now in real time on the TV show "Selling L.A.". What the show is depicting exactly is a modern day version of "Tulip Mania".

It's the Greater Fool Theory in action. Who in their right mind would buy into a community where the infrastructure is 60 years old and crumbling all around you while the most important life support of all, water, becomes more scarce each and every passing day.

I once heard that if you study Nostardamus, Cayce and the rest you would see that WW III will be a long and protracted war, in fact a 30 year war. Do people admit we are about 20 years into World War 3 Nope. Same with the collapse of our monetary system. It's hard to see the forest for the trees sometimes.

But look at who was in the "coalition of the willing" in the first Persian Gulf war. 30 nations publicly with another 15 nations not publicized for a total of 45 countries from around the world. 45 nations from around the world fighting one nation silently backed by much larger more powerful nations is the very definition of World War III.

The monetary collapse is already here and happening all around us, it's just that it is like spring grass, it starts off so slow you won't notice it is time to mow until it's too long.

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Proftrek
Austrian System - Free Banking
written by Proftrek , May 09, 2012

Brandon,
This is a timely article. Great writing style.
I paste a link to a fascinating book (and concept) of "free banking." This involves competition among various currencies. Aside from a national currency, there is the possibility of each of the 50 states also issuing currency (backed up fully or partially by precious metals or by public shares in a productive company, or by modest state taxes). More importantly, "free banking" enables banks and corporations to issue currency, with penalties for fraud of course. So there might be 5 - 6 currencies, and people would use different ones for different things. Some issuers would "compete" to extend currency while also retaining value (all transparent); other currencies would be more closed. The system moves towards currency complexification, allows the real market to set interest rates, and thus allows for the operation of a true free market. It's complicated, forcing people to get smart about money (not a bad thing).
Thanks again for your postings.
http://mises.org/daily/4898
My own news page is here, feel free to use or duplicate anything:
http://multipolarfuture.com/

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QE3+++
written by jay67 , May 09, 2012

In theory the Fed could continue to be the main buyer of it's own debt and force interest rates to remain very low because they control the monetary system. All other countires that buy our debt worry about is our ability to pay the interest on that debt. The Fed's ability to hide true inflation behind fake numbers and real unemployemnt via the same means does not fool the average consumer. The political price for all this will be felt next November, but both major parties buy into the Fed's policy so nothing will change but the gift wrapping.
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What to do??
written by clstevens , May 09, 2012

It's hard to know what to do with your money. I know you can't tell others what to do with their money but if you were 45 and had $300,000 in a 401k and owned no land and little gold, would you take the hit and get out?

If inflation takes away the value of those dollars I know it doesn't matter anyway but it's still a hard decision to make. Trying to do the right thing for my family.

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ECONOMIC ALERT
written by RICH99 , May 09, 2012

I have read articles eeerily similiar to this for the past 4 years and we are still chugging along.....things are ugly but i dont agree with this article that things will rapidly deteriorate , i believe it will still be a slow degredation over many more years
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The kind of language I use to describe this stuff:
written by Blair T. Lonlgey , May 09, 2012

My language for describing this is based on energy laws and general systems theory. The most labile component controls the system. In human ecology, that means the most dishonest and violent people control human societies. That has been developed by the history of warfare. The states which were constructed that way have been astronomically amplified by science and technology. The top carnivores in human ecology, the men who prey on men, are the pyramidion people in the established social pyramid systems. They fill that niche in human ecology, because energy laws and systematic selection pressures develop to reinforce them to be who they are, and what they do. Similarly, the men that get preyed upon were also developed in similar fashion. The astronomical amplification of those systems has continued to pump more and more energy into them, until they are now on the verge of unprecedented changes of state, towards something that has never existed before in known human history.

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Brandon Smith
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written by Brandon Smith , May 09, 2012

@Rich

Will you only consider it a collapse when you lose your own job, or when your family is starving?

Plenty of people during the Great Depression were saying the exact same thing you are 5 years into the crisis, because they were lucky, not because the economy was "chugging along". Our economy has completely stagnated. I think it is dangerous to assume that the economic atmosphere of today will not drastically change tomorrow. In fact, I suggest looking into the history of most modern day financial breakdowns; there is always a moment (or several) in which everything slides off the cliff. Always. It is a law of fiscal physics. Just look at Wiemar Germany, or Argentina.

I find that the people who shrug off this distinct possibility generally do not understand much of what goes on behind economic systems.

They simply decide; "hey, I don't like that idea, so I'll just form an opinion based on my apprehensions instead of the facts at hand."

It's a recipe for disaster.


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$BDI
written by PhilippinoBob , May 10, 2012

Baltic dry Index is doomed as of 2008.
Since then we got two more warnings, for a total of 3...!

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I have spent so much time and energy thinking about this since 2008.
written by Slow it down a little , May 10, 2012

Ignorance was bliss. But, the fundamentals have been way off for a long time. New Century Mortgage crashed and filed or a BK in Q1 of 2007. That was the start of all of this. It started the liquidity crisis that started the derivatives crash that led to A.I.G. crash......and so on and so on. So what has been done to fix the system. Absolutely nothing!

Do you remember all the main stream media prestitutes talking up the green shoots in 2010? Then the prices of commodities started to go up. Cotton was at $2 a pound. What scares me though is that ALL markets are now rigged. If prices go up then random naked shorts come in and force them down. If a corporation starts to fail then a secret backdoor bailout is arranged behind closed doors. It is one messed up fascist mega computerized economy. This grand experiment has never been done before.

I remember my grandmother's stories of the Great Depression. The insiders got all of their money out of the banks before the crash. Then they used all of that money to buy up all of the land and businesses at fire-sale prices. Most people were lucky to have 1 pair of shoes or to even have heat in the winter. Her family slept in the same bed with one feather mattress beneath them and one on top of them to try and keep warm. Hobos had sock soup for dinner sometimes where they put a sock on a pot of hot water to give it taste. The prices of food were below the cost to produce so farmers quit producing. Gold was made illegal to own. Farmland was repossessed for the back taxes on the ditches.

The boomers have pillaged everything they can during their spoiled lifetimes of excess. Now they are retiring like a herd of fattened cows to their McMansions with all of their government guarantees and pensions. The youth of today is so screwed. It is a recipe for disaster.
What can we do? When will it all come crashing down? How can we prepare? All these questions haunt me daily. I started a 50' X 70' garden on my yard. I got some cows and some chickens that I keep at a friends place outside of town for a small fee. Simple livin'.

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Terrible Birth Pains
written by B. Danielsson , May 10, 2012

I appreciate the final positive note of this thought provoking article. A brave new world awaits us...and the birth pains that are intensifying will hopefully be bearable - may a saner system emerge from the ashes. My gut tells me too that something has got to give soon.
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The “doom” is not in the event, but in the response.
written by David Stringer jr , May 10, 2012

Too true, and thank you
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Favorite
written by Xlntkjb , May 10, 2012

Excellent article

I just stumbled to this while browsing. I am adding this site to my Favorites

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gman
written by gman , May 10, 2012

the dollar is the world's reserve currency because:

1) it is the only monetary unit large enough to handle world trade. no other currency is any where near large enough.
2) its owner, the united states, is the only nation able and willing to upholding the house of saud against its enemies foreign and domestic.
3) if any other nation's currency becomes the world reserve that currency will be manipulated to the benefit of the owning nation far more than anything the united states would or could do.
4) virtually every nation on earth has a large interest in exporting to america. if the dollar loses its reserve status then the american market will collapse, dooming most industries around the world to severe recession if not outright collapse.

any one of these reasons is enough to guarantee the reserve status of the dollar. taken together they are and impenetrable barrier to any serious replacement of the dollar. any assertion that the dollar is about to lose its reserve status must deal with these four facts in detail before it can be taken seriously.

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schmaboo
written by Avram , May 11, 2012

The cruel irony of this collapse is that gold and silver
may not rise to the levels that preppers expect, simply due to manipulation. Nonetheless, I own a bunch of both. Land, unless it is confiscated is a better bet, but it is getting mighty expensive these days. Where to go? Where is is not too cold, there is at least
30 inches of annual precipitation, and where social institutions and moral cohesion are still strong. Better for
the population density to be modest. For me
that is eastern Kansas.

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Brandon Smith
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written by Brandon Smith , May 11, 2012

@gman

Apparently you've never heard of the IMF's SDR (Special Drawing Rights). The SDR, supported by a basket of world currencies, is already slated to replace the dollar as the world reserve currency. The IMF has admitted to this plan on MULTIPLE occasions. The BRIC nations have publicly demanded that the SDR replace the dollar. China is replacing the dollar now through bilateral trade agreements!

They are already dropping the dollar, so your assertions that the dollar will not be dropped are empty and irrelevant.

Please do your research before coming here and preaching about things you know nothing about.


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Escapist/Reality TV
written by Doktryn , May 11, 2012

I read the whole article and all of the comments up to this point and I think too that the proof is in the pudding. Reality TV is at all time viewership levels, maybe not for individual programs, but as a whole, the number of programs devoted to reality tv is astounding. It goes to show that Americans know that there is a huge problem on the horizon, but instead of being serious and dealing with it, we would rather bake our brains with the images of that American dream that we've grown so accustomed to played out on a cold, impersonal TV screen. Look at all the talks for new football, baseball, and basketball stadiums and compare that with the talks of fiscal responsibility in our governments. It is literal insanity. We are looking to expand the ever-increasing entertainment industry so the government machine can have more channels from which to siphon the almighty tax dollar instead of tightening our belts. We deserve what is about to happen.
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Brandon Smith
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written by Brandon Smith , May 12, 2012

@gman

You aren't a very good listener, are you. As I have already stated, the SDR is the replacement for the U.S. dollar. That is not just a "plan", it is a reality. China is already dropping the dollar in trade with BRIC nations and Japan. This is a REALITY. China is NOT dependent on the U.S. or the dollar for its economic sustainability. In fact, if you knew anything about China at all, you would know that they have been building an Asian trading block with enough trade opportunity to replace the U.S.

It is obvious you have absolutely no knowledge on this subject. I'm not sure why you would try to debate something you are completely ignorant of. What do you hope to accomplish?

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Another right wing crackpot
written by Frankiethepunk , May 13, 2012

Sorry pal, the world is not going to devolve in a socialist dictatorship.

Maybe anarchy, or low growth, but in the end the problems will be worked out somehow.


Oh and by the way, America will benefit from it. What do you think will happen if Europe falls apart? All that wealth will flee to the United States. Its got no where else to go.


And incidentally, Spain has always had a "black market economy" to avoid paying taxes. Part of the reason why Europe is in this mess in the first place is because like all the Mediterranean countries, it is taken as an inherent right to evade taxes. Everybody does it. As a result the government cannot collect enough taxes to pay for the very programs that are necessary to keep everything running.

What you right wing-nuts always fail to grasp is that in the countries that are most stable, social programs and paying taxes just part of what you do to make a just, peaceful and prosperous society. Look at Australia, Germany, Canada, New Zealand, Austria and on and on.

The problems that exist are only in the countries where people have the philosophy of "me first, and screw everybody else". That's the ethic of the right wing and the Tea Parties.

Your ideology is just totally nuts. It makes no sense.

Incidentally, it was a right wing party in Greece that cooked the books and lied about their financial condition.

So my suggestion is go off and hide in some cave with your gold and survival gear and guns. When you crawl out of it in a few years you will find the world has passed you by.

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Brandon Smith
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written by Brandon Smith , May 13, 2012

@Frankie

Sadly, you seem to think that your uneducated opinions count as some kind of rebuttal to the information and data presented. Next time, come bearing FACTS. Your Ad Hominem attacks reveal your complete lack of understanding of economics in general. Because you know nothing, you are forced to hide behind adolescent name calling and sweeping generalizations.

Socialism is a complete and utter failure. Germany is now in dire straights economically as is the rest of the EU, it just happens to be the strongest of the weak European nations. I noticed you conveniently left out France and the UK. Gee, I guess they don't fit into your delusional world of almighty socialism.

The EU is in trouble because of the overspending, mismanagement, and complete corruption of the host countries. Your assertion that "tax evaders" are somehow to blame for this is baseless, and to be honest, idiotic.

Also, you make the foolish assumption that the "right wing" within Greece is actually not socialist, despite their expansive spending and entitlement programs being absolutely socialist in nature. Just like in the U.S., "left" and "right" are illusions designed to shaft gullible persons such as yourself.

You also assume that "wealth" flows into the U.S. dollar or economy because it is a safe haven. In fact, the U.S. dollar is a fraudulent mechanism, whose world reserve status is predicated on debt, not strength or safety. When that debt can no longer be PAID, the status DISAPPEARS. And then the so called "wealth" will flow into other mechanisms, like precious metals, foreign currencies, or the IMF's Special Drawing rights.

The philosophy I happen to espouse is individualism and sovereignty. You are obviously a collectivist. Collectivists love to see everyone working together towards a common goal, as long as it is a goal THEY happen to approve of. They use the illusion of the "greater good" to marginalize free thought and individual rights. Sorry to break it to you, Frankie, but the "group" is an abstract illusion. It is a fantasy within your mind. There are, in the end, no groups. Only individuals. The individual is the element that makes a "society". Without respect for the individual, the society becomes empty, and irrelevant.

I think you will find that you are the one that is greatly mistaken, and I highly doubt that you will survive in the world that is to come. Actually, I am certain you will not. In the end, I get little satisfaction in exposing the ignorant musings of people like yourself. I suppose, in a small way, I feel sorry for you.

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Timing is everything
written by Just an observer , May 13, 2012

I read the article and about half of the comments. I agree with the premise overall but not everything for these reasons: First you said the EU is done stick a fork in it then you backed off and said "maybe". Exactly. We don't know other than the elites will try and keep it together at all costs.

No-one knows the timing or the severity. Saying 2012 will keep folks glued to your blog but you do not know. I respect your work but you do not know the timing.

The elites don't have an interest in social upheaval. America luckily is armed to the teeth. As long as this is the case social upheaval must be diverted at all cost. Big business knows this as well. Because big business is now aligned with government in almost all of the world (fascism) the titanic known as the economy can be more easily managed, even in an inflationary/deflationary spiral.

I am not economist. I just look at the big picture. I believe the problem of guns and the internet must be dealt with before the elites can tighten the noose much further. Look for a major event/catastrophe at some point. Also, the idea of soverighty among nations is a problem as well.

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Liberty or Enslavement?
written by tall tom , May 13, 2012

Brandon

What is very sad is that most are afflicted with a Slave Mentality.

You must agree that Debt is Slavery. And you understand that the currency...the lifeblood of any economy...is based on Debt.

Most people desie this debt and are willing to reject the Liberty of ownership of an unencumbered monetary system based upon Gold and Silver.

The willingly will trade their Gold and Silver...their means to Liberation...for the perceived safety of their Fiat Currency...the means toward their enslavement. Therefore they really do not deserve the Liberty which Gold offers or the perceived safety of the currency which is doomed to devaluation and destruction.

Sometimes the best response to those whom brush off your warnings is...no response.

Tall Tom
I Cor 13

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What to do? individualist vs collectivist
written by Jim Loving , May 13, 2012

Just linked through to this site today. Lots of questions here about what to do. www.chrismartenson.com has lots of good advice about developing personal/family mitigation strategies. You can take the 20-part "crash course" for free. As for the last comment about individualism vs collectivism (big topic), I will note that all individuals are part of a family, probably a tribe. Those are collective groups. Individuals negotiating (or killing) for resources join together in groups - or collectives. This site is a site of "collective" knowledge and collaboration. It is a question of scale and governance. New governance mechanisms will emerge. Safe havens are collectivist even!
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Where did the money go...
written by PacRim Jim , May 13, 2012

As an average U.S. taxpayer, I have no idea where Congress spent the hundreds of billions of rescue dollars borrowed since 2008.
Would someone please explain where the money went and why?

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Brandon Smith
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written by Brandon Smith , May 13, 2012

@Observer

No, I never backed off of my assertion that the EU is nearing a break up. Please list where in the article I did so.

The timing of market events is indeed knowable, just look at the Baltic Dry Index. Just look at the work of Peter Schiff and Gerald Celente, who predicted the derivatives implosion. The question is not of timing, but of INTENSITY. How bad will it really get, and how fast? That is something no one can predict. I can only point out that there will be multiple major market events this year that will have negative consequences. Does that mean we'll be in the middle of WWIII? Hard to say, but the potential is there. It is best to assume the worst and prepare accordingly.

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Brandon Smith
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written by Brandon Smith , May 13, 2012

@Jim

You need to learn the difference between a GROUP and a COLLECTIVE. There is a big disparity there. Just because a group of people are working together towards a similar goal, does NOT mean they are collectivists. Collectivists demand that members of the group abandon their individualism for the "sake of the whole", or for the "greater good". When a group takes on a hive mind, and enslaves the individual, this is collectivism.

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You might be right Brandon.
written by Brent D , May 14, 2012

After seeing what has been going on in the last week, I have to admit your 8 month timeline might be right. I was under the assumption that the powers that be would keep the economy propped up at least until Obama is re-elected.
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Mr. John J. Wilson
written by John J. Wilson , May 28, 2012

One would think that they would take note of the problems here in our country and realize that electing a socialist to replace another socialist is no way out of economic hardship."
------------------
Overall good article, but, your view on causes for capitalism's cancer needs adjustment since it has NOTHING to do with "socialism".

How about global deregulation? Free Market economics? Casino banking? New product of unregulated derivatives?

Of course socialism and capitalism are contrarian in nature. But, so is night and day.

If very tipsy Aunt Mary smashes her car into a tree at 3 PM on the way to the market, should we blame poor nightime visibility or should we blame self-induced over alcohol consumption?

Please.

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Brandon Smith
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written by Brandon Smith , June 02, 2012

@John

The predominant economic policy over the past quarter of a century in Europe has been SOCIALISM. This is not debatable. The predominant subversive policy initiative within the United states for the past half century or more has been SOCIALISM, and expanded government control.

So, I ask you, John, what kind of jackass blames "capitalism" or free markets (which have been non-existent for over a century) for the problems we now face today?

Deregulation? This is a non-issue peddled by stooges.

There is MASSIVE regulation in financial markets, especially in the U.S. What you don't seem to understand is that this regulation exists, but has not been ENFORCED. The government has been complicit in the corruption of the financial sector. Therefore, no amount of regulation would make any difference anyway. We have collective socialism to thank for this dynamic. The conglomeration between big government and big business has been THE catalyst for the collapse we now bear witness to.

Please stop kidding yourself with these mainstream excuses and rationalizations...

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look for the silver lining
written by P.G. , June 04, 2012

One thing stood out to me in this article. China looking to lessen trade ties with the US. So if not as much is coming from China, doesn't this just maybe open the door for some enterprising US citizens to take on the challenge of manufacturing that merchandise right here at home, and thereby create jobs, etc? Just a thought. I hope that spirit is still here, and that Americans can rise to the challenge.
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economic alert or another manipulation
written by koldis18 , July 01, 2012


I have read some of the comments, here in .be we have strong unions who always ask more pay increase, may be we are no more very competitive, I don't know; in .de they have apparently another kind of unions, they did lower their wages, believe it or not and their economy is running a bit better may be. There is a lot of talk of hamburgerjobs also and merkel's stubborness is hated most of all!, should she be right or not after all? Of course they are under heavy moral pressure to give in to the .fr; they lost the war after all...Economic alert? BDI index plumeted -65%, quiet, wait and see, we don’t panic so fast as across the ocean.

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A note
written by Buck Jackson , October 06, 2012

It is too late for gold and silver, now is the time for 'beans and bullets'.
Anyone else noting the moon is bounching all over the sky?
Please, do some reading on Nibiru, and never trust NASA

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