Millions of jobs will be lost over the next 3-5 yrs

The only way to ease this pain is for our govt to invest in infrastructure and hire the millions of people who will lose these jobs…to invest in infrastructure will not be wasted like these bailout will.

the bailouts will not work as the problem is much too large now…we have 700T worth of derivatives out there and at least 60T worth of CDS’s we need to deleverage over the next 3 yrs…the mkts tanking is showing that they are re-pricing risk …the days of 40:1 leverage are gone…this is by far the biggest deleveraging process in human history…here is why.

1. not debatable most of the growth over past 5 yrs was from tapping the home equity…3-4 % of the past few yrs positive GDP was based on tapping home equity lines…without this we would have entered a severe recession 5 yrs ago(even beyond 2000-2003)….this is gone and wont be coming back anytime soon.

2. it doesnt matter that the govt is flooding the banks and the financial system with trillions because these institutions are hoarding it to survive as they are essentially bankrupt…so while the M3(money supply) number might be going up according to govt figures, in all practicality, the M3 is shrinking severely…this means less money to borrow for small business, student loans, consumer loans…we are like a crack addict that has been cut off cold turkey.

3. despite all the money being poured into the system, look at credit spreads…they havent come down at all…LIBOR might have come down abit but the spread between low grade corp debt and 2 yr treasuries have widened…not good…the credit freeze is still in full force…dont believe me, go to the bank and try to get a loan for a low rate for something reasonable…sure they exist but 80% of the people who would have qualified in the past have been weeded out now.

4. unemployment will skyrocket…530K jobs lost last month…multiply that by 12…if you dont believe me just read the first page of MW daily and there are 10000’s of jobs being lost everyday…these numbers will be accounted for later…6.7%(official) unemployment is a joke…the real U6 rate which counts people the way we used to before it became manipulated is running at 12% at least…it was 25% during great depression.

5. and if you think real estate is anywhere close to a bottom you’re crazy…median household income 45K..median home price will be 140-150K within a few yrs…right now were at 190Kish…another 30% and we “might” be done….plot out home prices for past 100 yrs and we should be right at 14K…remember, the reason we have been struggling is because “real ” wages have been going down and evrything else has been going up in price…hence both parents now have to work yet the wheels keep spinning.

6. commercial real estate implosion and credit card defaults is in the 1st to 2nd inning…when they decrease your credit card limit by 50% overnight and raise rates to 20-25% for no apparent reason you will understand that your ability buy things has been diminished significantly…the way our society loves credit, this is highly deflationary….there will be many many empty commercial spaces soon.

Everything I have written about will ceate a vicious circle and will feed on itself…the next 5 yrs will be the most important 5 yrs of your lifetime(esp with respect to finances)…you better learn who runs this country and for who…better learn about the relationship between the dollar, oil, inflation/deflation, GDP and our relationship with Japan, China and Russia real fast.

Yes we will have a bear mkt rally soon..we are either in it right now or will enter one after 1 more intermediate term selloff…but be warned, this will be the last decent time you will be able to get your house in order…when this rally ends, sell all stocks, second homes, pay off all debts, seriously look at gold/silver, put emphasis on personal safety.

Civil liberties will be a thing of the past…riots will ensue..if I didnt have kids I would buy a gun myself…nothing will ever be the same again…not trying to scare anyone but better to be prepared and safe then unpleasantly surprised over the next 3-5 yrs.

Related Posts:

• The big question is, Where to put money?
• The fractional banking and inflation
• One wrong move, and the entire thing could come crashing down.
• The bottom line: In less than one decade, investors who trusted Washington and Wall Street were fleeced to the tune of $22.1 TRILLION!
• In FY 2009, the US government spent $383billion on interest payments on the US debt.

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