Aware Brain

Bob Chapman sums it up with the quote: “Most people do not have a clue how bad it is.” “We are well on our way to joining the third world and if you do not let Congress know you know what they are up too, then you will eventually live in a slum reminiscent of Calcutta, either that or in some US detention camp. The bottom line is a lower dollar is disastrous for the US economy. The US is being slowly strangled to death.”

“Those in their 40s and younger are about to get an education in how real life works. Not the life created by Wall Street and the Fed, because that era is about to end and with it the fairy tale life they have been used too.”

“There are two basic schools of thought regarding the economy. One is buying bonds for safety and the other with virtually no interest money is gambling in the markets. As a result we have a bull market in bonds and a bear market rally in the stock market. These factors lead investors and the public to the perception that a recovery is underway when nothing could be further from the truth. If it was true someone has to explain to us why consumer spending is off 20% yoy, which makes up 69.3% Of GDP? It is no wonder households are not spending. They have just lost $13 trillion in home equity and the housing bubble still has 20% to go to the downside. Quantitative easing has been a failure. We are still in a prolonged period of credit contraction that has been subdued temporarily by massive dose of liquidity. Those hardest hit are small businesses and homeowners. All that retirement money is gone, because the Fed created a housing bubble. In 2009, homes lost 40% of their value and they have 20% to go and who knows how long the housing market will bump along the bottom.”

Gerald Celente correctly predicted the “Panic of ‘08″, and the “Collapse of ‘09″, his 2010 prediction released today sees a “Collapse of 2010:” Unemployment statistics tell the real story of real money that millions of real people no longer have and can’t get, regardless of rising equity markets.   This is no time to be caught off guard…..”

Strategic defaults are an increasing trend. Even the Wall Street Journal chronicles the rational decisions of several professionals, comparing the options of remaining in an underwater home.

Some are even “strategically defaulting” on the country. “With unemployment at 10% and prospects for finding work bleak, foreign-born professionals who came to the United States in search of better job opportunities and prosperity are now retreating. Many of these workers have become dissatisfied with their compensation or advancement opportunities in the U.S. and perceive better opportunities back home or in other parts of the world. Michael Burda, a professor of economics at the Humboldt University of Berlin, says while unemployment is at 7.6% in the country overall, the majority of the unemployed are unskilled. ”I keep telling my friends in the States you need to look for a job here; there’s no job shortage if you have a college degree,” says Ms. McAnally.”

Before you say “good riddance,” think “brain drain.”

Government liabilities have been measured at 60 trillion, 100 trillion, or even more depending upon who you ask. The amount buried within the toxic assets of derivatives contracts is almost immeasurable, but the market itself is estimated to be between $500 trillion and $1.5 quadrillion.

With up to 4 – 6 million foreclosures hitting next year, those derivatives could unwind with a leveraged torque which could take everything out.

Where does all the debt go? “The principal must be paid with interest by society as a whole in one form or the other. This is either done through:

1) A deflationary depression where debt is defaulted upon and living standards plummet and millions are left broke and homeless – a societal disaster.
2) A hyperinflation that leads to the complete debasement of the currency and the utter failure of the monetary system – a societal disaster.”

“Market gives us hints, hints not to listen to the fools, the ones that missed the crisis and are now predicting its early demise. The hints are obviously the rising USD over the last few days, the considerable fall in gold, the problems re-emanating across Dubai, Spain, Greece, Ireland etc. Looks like Mr. Market is saying that the flight to safety has begun and lord knows it will be grand. When those on the slope of hope get caught up at the greasy end, when they suddenly lose grip, with horror etched on their faces as they tumble away far down into the nether regions of the world.”

Celente picks up on this theme as well: “In 2010, survivalism will go mainstream.  Unemployed or fearing it, foreclosed or nearing it, pensions lost and savings gone, all sorts of folk who once believed in the system have lost their faith.  Motivated not by worst-case scenario fears but by do-or-die necessity, the new non-believers, unwilling to go under or live on the streets, will devise ingenious stratagems to beat the system, get off the grid (as much as possible), and stay under the radar……”

In the meantime, the greatest outpouring of money and credit in history is trying to put out the fire. Fighting on multiple fronts, government is bailing banks, extending unemployment benefits, boosting food stamps, and cheerleading economic conditions. All of these Herculean efforts do not appear to be moving the needle much, simply barely holding onto the status quo.