thomaspaine23
12-17-2008, 05:38 PM
Here are some of the items I see coming to pass from here into summer:
Collapse of the dollar. I view the dollar rates as a Tsunami, the recent strength has been the precursor to a collapse.
I.E. right before a tsunami strikes all the water is sucked backwards into the ocean, followed by the wave itself.
We have seen the outgoing water as the dollar strengthened (due to contract settlements and uncertainty)
IMO we are starting to see the first part of the wave coming in now. With Treasury rates at 0% and the fed now saying they
will print money, any further investment in T Bills guarantees a loss. I expect a sudden large drop in T Bill prices,
during which time the Fed itself will step in and buy.
As the Dollar goes south, I believe China will begin to unload Treasuries (this may have already begun) to finance their domestic
bailout.
New year - many retail companies, declare bankruptcy in January-Feb due to high leverage and poor holiday sales.
Many companies suspend 401k matching (depressing stock investment even further)
Mid to late spring - commercial property owners start defaulting on commercial real estate loans.
Later Spring to Early Summer - Commercial Loan Crisis hits the Banks causing a rash of failures.
Mid Spring
Collapse in the DOW (my guess ~5,000) as current P/E ratios are shown are being out of whack
Most companies will show negative p/e's, dividends will disappear. 401k investment will essentially cease.
Further loss in the Baltic dry index prices as world trade grinds to a halt.
US unemployment at 15-18%.
Other countries attempt to devalue their currencies to keep their export markets functioning.
Protectionism comes back into fashion further curtailing world trade.
States and Local governments
New Year - Increasing problems funding unemployment programs. State budgets become increasingly untenable.
Numerous states try to raise taxes on everything imaginable.
I.E. "sin taxes" on Alcohol, Tobacco, junk food. Fees for licenses and permits increased.
Taxes on small business increase to unsupportable levels (regular tax rates and increases in unemployment insurance)
Spring-Summer - States line up for federal bailouts which will come with increasingly onerous anti-liberty strings attached. (REAL-ID etc)
Summer - State Pension funds are revealed to be essentially insolvent.
The probable outcomes of the above:
Many more small businesses fold adding to the unemployment rolls.
Citizens already disgusted with cut backs in service, increasing taxes and red tape begin to ignore local laws/fees.
Unemployed citizens start to work for unreported cash, preferring to eat versus declaring the income.
A "cash only" black market grows to large levels.
States and Local government attempt to control this spread by doing numerous raids etc.
To combat the black market, the federal government floats the idea of electronic only currency.
Unemployment payments and Federal job programs under an Obama administration are forced to use
automatic deposits. This idea becomes attractive to government as it forces all transactions to be reported,
would help to recapitalize banks, disguises hyperinflation and allows for short term control over the velocity of money.
A carrot and stick approach is used to encourage adoption. At some point a date is set where paper notes within the country
will cease to be redeemable. Notes outside the country are redeemable for a longer period of time.
Federal make-work jobs are created to allow for enforcement and tax generation for state and local laws.
Instead of gold being confiscated it will be Reserve Notes this time IMO due to the above.
Gold will be available, but again the sale of gold will be done by electronic deposit.
A switch to gold/silver on the black markets begins at this time.
Owning undeclared gold becomes a felony.
Economy
Mid Summer
A curious mix of inflation and deflation set in. Basic Consumer goods (food, alcohol, etc) experience inflation as small
businesses providing these have failed due to poor credit market. Non-essential consumer goods (cars,tvs,furniture) experience deflation
as people put off purchases.
Social unrest begins by Late summer as store shelves begin to empty and basic consumer goods become unaffordable.
Government begins to nationalize "critical" sectors including utilities, agribusiness and health care.
Federal troops begin to be called out to urban centers as unrest spreads.
As states line up for bailouts, pressure grows to increase tax revenues. Federal government confiscates private retirement accounts (or does a one time special tax),
forces new mandatory government retirement account, (which is invested in T-bills) via automatic electronic tax debits from paychecks.
Using the increasing social unrest for cover, The federal government bans most semi-automatic weapons, and creates a system
to license all firearms and ammunition (probably under the guise of an annual tax on gun ownership and sales tax on ammunition.)
The Heller decision (allowing "reasonable" restrictions on firearm ownership) is used to justify these acts.
Rural areas become dangerous flash points for terror attacks as the government attempts to assert more control over
local production of foodstuffs etc.
So that is some of the things I see happening in the coming year.....
Thoughts anyone?
Collapse of the dollar. I view the dollar rates as a Tsunami, the recent strength has been the precursor to a collapse.
I.E. right before a tsunami strikes all the water is sucked backwards into the ocean, followed by the wave itself.
We have seen the outgoing water as the dollar strengthened (due to contract settlements and uncertainty)
IMO we are starting to see the first part of the wave coming in now. With Treasury rates at 0% and the fed now saying they
will print money, any further investment in T Bills guarantees a loss. I expect a sudden large drop in T Bill prices,
during which time the Fed itself will step in and buy.
As the Dollar goes south, I believe China will begin to unload Treasuries (this may have already begun) to finance their domestic
bailout.
New year - many retail companies, declare bankruptcy in January-Feb due to high leverage and poor holiday sales.
Many companies suspend 401k matching (depressing stock investment even further)
Mid to late spring - commercial property owners start defaulting on commercial real estate loans.
Later Spring to Early Summer - Commercial Loan Crisis hits the Banks causing a rash of failures.
Mid Spring
Collapse in the DOW (my guess ~5,000) as current P/E ratios are shown are being out of whack
Most companies will show negative p/e's, dividends will disappear. 401k investment will essentially cease.
Further loss in the Baltic dry index prices as world trade grinds to a halt.
US unemployment at 15-18%.
Other countries attempt to devalue their currencies to keep their export markets functioning.
Protectionism comes back into fashion further curtailing world trade.
States and Local governments
New Year - Increasing problems funding unemployment programs. State budgets become increasingly untenable.
Numerous states try to raise taxes on everything imaginable.
I.E. "sin taxes" on Alcohol, Tobacco, junk food. Fees for licenses and permits increased.
Taxes on small business increase to unsupportable levels (regular tax rates and increases in unemployment insurance)
Spring-Summer - States line up for federal bailouts which will come with increasingly onerous anti-liberty strings attached. (REAL-ID etc)
Summer - State Pension funds are revealed to be essentially insolvent.
The probable outcomes of the above:
Many more small businesses fold adding to the unemployment rolls.
Citizens already disgusted with cut backs in service, increasing taxes and red tape begin to ignore local laws/fees.
Unemployed citizens start to work for unreported cash, preferring to eat versus declaring the income.
A "cash only" black market grows to large levels.
States and Local government attempt to control this spread by doing numerous raids etc.
To combat the black market, the federal government floats the idea of electronic only currency.
Unemployment payments and Federal job programs under an Obama administration are forced to use
automatic deposits. This idea becomes attractive to government as it forces all transactions to be reported,
would help to recapitalize banks, disguises hyperinflation and allows for short term control over the velocity of money.
A carrot and stick approach is used to encourage adoption. At some point a date is set where paper notes within the country
will cease to be redeemable. Notes outside the country are redeemable for a longer period of time.
Federal make-work jobs are created to allow for enforcement and tax generation for state and local laws.
Instead of gold being confiscated it will be Reserve Notes this time IMO due to the above.
Gold will be available, but again the sale of gold will be done by electronic deposit.
A switch to gold/silver on the black markets begins at this time.
Owning undeclared gold becomes a felony.
Economy
Mid Summer
A curious mix of inflation and deflation set in. Basic Consumer goods (food, alcohol, etc) experience inflation as small
businesses providing these have failed due to poor credit market. Non-essential consumer goods (cars,tvs,furniture) experience deflation
as people put off purchases.
Social unrest begins by Late summer as store shelves begin to empty and basic consumer goods become unaffordable.
Government begins to nationalize "critical" sectors including utilities, agribusiness and health care.
Federal troops begin to be called out to urban centers as unrest spreads.
As states line up for bailouts, pressure grows to increase tax revenues. Federal government confiscates private retirement accounts (or does a one time special tax),
forces new mandatory government retirement account, (which is invested in T-bills) via automatic electronic tax debits from paychecks.
Using the increasing social unrest for cover, The federal government bans most semi-automatic weapons, and creates a system
to license all firearms and ammunition (probably under the guise of an annual tax on gun ownership and sales tax on ammunition.)
The Heller decision (allowing "reasonable" restrictions on firearm ownership) is used to justify these acts.
Rural areas become dangerous flash points for terror attacks as the government attempts to assert more control over
local production of foodstuffs etc.
So that is some of the things I see happening in the coming year.....
Thoughts anyone?