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We Are Witnessing The First Great Depression Of The 21th Century: 2013 Will Be A Year of Serious Global Crisis. Austerity, High Tax Rates, Near-Zero Growth Will Last At Least A Decade, Natural Resources Are Running Out At An Alarming Rate, And Many Won’t Survive.


THE MADNESS OF A LOST SOCIETY 3

from SGT:

Another ‘Black Friday’ has come and gone. And it has left us with further evidence of the complete madness of the populace of our nation. America has been dealt a fatal blow by corporate greed, Bankster malfeasance and the insidious nature of collectivism – and it’s all been done to us by design. This is the Madness of a Lost Society, one last ‘fair warning’ for those with the eyes to see and the ears to hear.

Here are the links to the first two ‘Madness’ micro-docs:
The Madness of a Lost Society 1? and ‘The Madness of a Lost Society 2: Final Warnings

GRANTHAM: Here Are The Basic Forces That Will Send Growth To Near-Zero For Decades

from Jeremy Grantham:

“Someday, when the debt is repaid and housing is normal and Europe has settled down, most business people seem to expect a recovery back to America’s old 3.4% a year growth trend, or at least something close,” he wrote. “They should not hold their breath.

“A declining growth trend is inevitable and permanent and is caused by some pretty basic forces.”

Those basic forces include unfavorable demographic trendsdecelerating productivity growthtightening resource constraints, and rising environmental costs.

 

Tax hikes are inevitable: 2013 Looks a Lot Like 1937 in Four Fearsome Ways

from Bloomberg:

Will 2013 be 1937? This is the question many analysts are posing as the stock market has dropped after the U.S. election. On Nov. 16, they noted that industrial production, a crucial figure, dropped as well.

In this case, “1937” means a market drop similar to the one after the re-election of another Democratic president, Franklin D. Roosevelt, in 1936.

The drop wasn’t immediate in that case; it came in the first full year after the election. Industrial productionplummeted by 34.5 percent. The Dow Jones Industrial Average dropped by half, from almost 200 in early 1937 to less than 100 at the end of March 1938.

– Bath of cold water afterward. After this year’s election, President Barack Obama made it clear that budgeting was his priority: “I’m ready and willing to make big commitments to make sure that we’re locking in the kind of deficit reductions that stabilize our deficit, start bringing it down, start bringing down our debt. I’m confident we can do it.”

Roosevelt too opened his second term on a sober budget- cutting note. The president, wrote journalist Anne O’Hare McCormick in 1937, was like “the Dutch householder who carefully totes up his accounts every month and who is really annoyed now that he is bent on balancing the budget, that Congress can’t stop spending.”

 

from econlib.org:

Great Depression In 1930’s

Several other factors also pushed up real labor costs. One factor was the new Social Security taxes instituted in 1936 and 1937. Also, Roosevelt had pushed through a new tax on undistributed corporate profits, expecting this to cause firms to pay out undistributed profits in dividends. Though some firms did pay out part of the retained earnings in larger dividends, others, such as the firms in the steel industry, also paid bonuses and raised wage rates to avoid paying their retained earnings in new taxes. As these three policies came together, real hourly labor costs jumped without corresponding increases in demand or prices, and firms responded by reducing production and laying off employees.

Now Even A Majority Of Republicans Think Tax Hikes Should Be Part Of A Deal

from businessinsider:

In a surprising finding from a new CNN/ORC poll out Monday morning, a majority of Republicans favor an approach to avert the fiscal cliff that includes both spending cuts and tax increases.

 

The poll found that by a 52-44 margin, Republicans in the poll favored a more “balanced” approach, instead of a deal that only included spending cuts. That means that a majority of voters across party lines favor a mix of spending cuts and tax increases.

The results are somewhat eye-opening because the approach backed by Republicans is one that has been advocated by President Barack Obama, who wants to raise taxes on incomes of $250,000 and above. Though some top Republicans have signaled a willingness to add tax revenues in a deal, they remain firm on opposition to increasing any marginal rates.

Chicago Business: Report savages state finances, says more cuts, tax hikes inevitable

 

Buffett calls for 30% minimum tax rate on ‘wealthy’

from Reuters:

In a New York Times editorial printed on Monday, Buffett suggested Congress move immediately to implement minimum taxes of 30 percent on incomes of $1 million to $10 million and 35 percent above that.

Peasants to be even poorer until 2018

from dailymail.co.uk:

Osborne warned his slow economic growth could mean another SIX years of cuts and VAT rising to 25%

  • Institute for Fiscal Studies delivers alarming assessment of the Chancellor’s economic plan
  • More pain to come after growth proved more sluggish than predicted
  • Austerity may have to last until 2018 or impose an extra £23billion of cuts by 2015-16
  • Mr Osborne urged to ditch target for debt to be falling by 2015

 

Bubbles hurt birth rates, cause multi generational living, people to drive less or not buy cars, high food prices…

The Hong Kong Housing Bubble Has Gotten So Bad, The Birthrate Is Collapsing

from businessinsider:

Nomura’s Paul Louie is out with a huge report examining the Hong Kong real estate market for 2013. It highlights another way the economy is changing in one of the world’s fastest growing and dynamic city’s

The country’s condos have always been famously expensive, but as Louie notes, Hong Kong is in a particularly precarious situation, because growth is slowing, while residences are more expensive than ever before.

By at least one metric, home prices/income, housing is as expensive as it has ever been.

 

Hong Kong real estate

 

Japan’s Population Now So Old That Sales Of Adult Diapers Exceed Those For Babies

from businessweek:

Last year, for the first time, sales of adult diapers in Japan exceeded those for babies. Factor in how the strong yen has been making the country’s critical exports more expensive, and you can see why the world’s No. 3 economy (recently pushed into third place by China) has been quicksand for investors; when international markets hit bottom in early 2009, Japan’s Nikkei slumped to levels it hadn’t seen since 1983. A Merrill Lynch survey of global fund managers discovered that their net exposure to Japan is at its lowest in a decade(subscription necessary).

Give Thanks for Low Food Prices as They’ll Rise Next Year

from Bloomberg:

Americans may want to freeze the leftovers from Thanksgiving dinner, as retail food prices are expected to rise next year, sparked by the country’s worst drought in more than half a century.

The dry conditions sent corn futures to a record and wheat prices to the highest in four years. They had less of an effect on food costs than expected earlier this year because slowing economies and oil demand have offset price pressures, economists say. Thanksgiving dinner will cost only 0.6 percent more than in 2011, the American Farm Bureau Federation said, with a 3.1 percent jump in turkey prices leading the way.

Next year, retail poultry prices are projected to increase as much as 4 percent, beef by 5 percent and dairy products by 4.5 percent because of higher feed prices and as herds thinned by the drought tighten supplies, the U.S. Department of Agriculture said. The drought’s effects on food prices may linger as late as 2016, said Christopher Hurt, a livestock economist at Purdue University in West Lafayette, Indiana.

Food scarcity: the timebomb setting nation against nation

Legendary Investor Jeremy Grantham: We’re Headed For A Disaster Of Biblical Proportions. Most of Us Are Going To Starve To Death.

We’re quickly heading towards the point of no return.

from Jeremy Grantham:

The phenomenon of ever-more humans using a finite supply of natural resources cannot continue forever, Grantham says–and the prices of metals, hydrocarbons (oil), and food are now beginning to reflect that.

Grantham believes that the planet can only sustainably support about 1.5 billion humans, versus the 7 billion on Earth right now (heading to 10-12 billion). For all of history except the last 200 years, the human population has been controlled via the limits of the food supply. Grantham thinks that, eventually, the same force will come into play again.

Summary of the Summary

The world is using up its natural resources at an alarming rate, and this has caused a permanent shift in their value. We all need to adjust our behavior to this new environment. It would help if we did it quickly.


 

Why 2013 Will Be A Year Of Crisis: CNN – We Are Being Warned! Prepare Now!

from CNN:

Prediction: 2013 will be a year of serious global crisis. That crisis is predictable, and in fact has already begun. It will inescapably confront the next president of the United States. Yet this emerging crisis got not a mention at the Republican National Convention in Tampa. We’ll see if the Democrats do better.

The crisis originates in this summer’s extreme weather. Almost 80% of the continental United States experienced drought conditions. Russia and Australia experienced drought as well.

Will 2013 bring us social turmoil in Brazil, strikes in China or revolution in Pakistan? The answer can probably be read in the price indexes of the commodities exchanges — and it is anything but reassuring…

 

Jim Rogers – 2013 Will Be a Disaster

 

Secession Movement Spreading Worldwide: Countries All Over The World From Spain To The Secession Movement In The United States, Italy, And Germany… The Chaotic Phase Is About To Begin!

The Stock Market Is Heading For A Third Major Crash of The Century And Monetary Policy Is “USELESS” Under Current Bleak Conditions

Romney, Obama both stock-market killers. Both lack vision and courage, Pimco CEO says

from Paul B. Farrell:

The economy is going to be a disappointment whether President Barack Obama or challenger Mitt Romney is elected in November.

Solution? Can we stop the hemorrhaging before another Great Depression? El-Erian says that the solution depends on what happens after the elections.

But that seems unlikely because, “sadly, neither Obama nor Romney has yet offered a meaningful, forward-looking economic reform program to address problems such as a malfunctioning labor market, unsustainable public finances, a broken credit system, inadequate infrastructure, and a lagging education system.”

Why? Because both Obama and Romney “lack vision and political courage.” And no matter who’s elected their failure of leadership will result in “even greater economic disappointment and financial instability.”

Worse, the longer America’s “economic and political challenges persist, the greater the number of companies and long-term investors that begin to worry, and … act on those fears … hire fewer people … invest less in factories and equipment … sit on the sidelines” leaving America’s fate more and more “in the hands of tactical position players and short-term traders, further ramping up volatility and reducing future growth and job opportunities. And when day traders and company flippers start running a country’s economy, watch out.”

Here’s the list of crash warnings from 2000 to 2008.

2000. Fed Governor Ed Gramlich warns Greenspan

Gramlich later wrote the book, “Subprime Mortgages: America’s Latest Boom & Bust.”

2002. St. Louis Fed President William Poole warns Greenspan

Poole warned low rates would backfire. And Fannie Mae-Freddie Mac lacked capital.

2004. Billionaire Pete Peterson, Nixon’s Secretary of Commerce

Warned that Bush’s reckless finances worst in history, creating a “bankrupt nation.”

2004. Hedge fund portfolio managers start going short

Robert Rodriguez predicts meltdown, began shorting. Soros, others follow.

June 2005. The Economist cover story: “Biggest bubble in history”

Property prices inflate 75% in 5 years after the stock bubble pops in 2000.

June 2005. Economist Nouriel Roubini warns of recession

Economist called housing a speculative sport, will trigger a new recession.

August 2005. IMF Chief Economist to Greenspan and Summers

At Fed’s annual meeting IMF economist Raghuram Rajan warns of disaster.

January 2006. Fortune: Billionaire Richard Rainwater

“First scenario I’ve seen where I question the survivability of mankind.”

February 2006. Marc Faber’s Doom Boom Gloom newsletter

Correction Time: overbought, high optimism, low cash, foreign buying, correction.

March 2006. Forbes Columnist: economist Gary Shilling

“Housing weakness, full-scale rout, painful recession, stocks in tailspin, worldwide.”

March 2006. New book: “Sell Now: The End of the Housing Bubble”

Former Goldman banker predicts an average 47.2% decline in 40 metro areas.

March 2006. Bill Gross in Pimco investment outlook

Bush “failed to tell the truth” about borrowing “from the future for today’s party.”

March 2006. Fortune: Buffett Warns America of deficit dangers

America’s a rich farmer consuming 4% more than they produce, selling, mortgaging.

May 2006. Harper’s: “Guide to coming real estate collapse”

“20 factors will drive down wages, increase debt, push economy into stagflation.”

August 2006. Bloomberg: New Treasury Secretary warns President Bush

Yes Two years before crash Paulson tells Bush derivatives could blow up economy.

August 2006. Wall Street Journal: Countrywide CEO Angelo Mozilo

“Never seen a soft-landing in 53 years, preparing for the worst.”

November 2006. Harvard historian Niall Ferguson in Vanity Fair

“Rome in 331 and America/Europe in 2006 have many problems in common.”

November 2006. Fortune: “Can the economy survive the housing bust?”

NAHB index is leading indicator, plummeted 54%, stocks inevitably fall in year.

January 2007. Los Angeles Times on Schwab’s trading

Averaged 242,300 trades daily in 2006, back at 2000 peak in last collapse.

April 2007. Jeremy Grantham in GMO’s quarterly newsletter

First truly global bubble. Bursting impact all countries, all assets in world

June 2007. Economist Gary Shilling’s Insight newsletter

As bubble is bursting, speculation end, derivatives trigger a meltdown.

2007. Raghuram Rajan, chief economist IMF

Again warns world’s bankers, “headed for doom,” markets not learn lessons.

June 2007 New book: “Pop! Why bubbles are great for the economy”

Bubbles work miracles for economy. Welcome them, let them pop, Pop, POP!

July 2007 Paulson in Fortune: “Strongest economy in my lifetime”

Yes, as the meltdown spread, Paulson failed to warn the public of hard facts he knew.

August 2007. Wall Street Journal: Former SEC Chairman Arthur Levitt

Subprime mortgage crisis rivals crises like 1980s S&L, Enron, mutual fund frauds.

August 2007. Former Fed Chairman Alan Greenspan on “60 Minutes”

Hustling “The Age of Turbulence,” he admits, “I really didn’t get it until very late.”

Politicians ignore economics, will destroy the economy to win elections. For over a decade America’s been morphing into a series of rapid “vicious feedback loops” that are turning “bad economics into bad politics” then recycling “bad politics into even worse economics, further threatening an already tenuous economic future.”

They want a recession. And most likely the third major Wall Street stock market crash of the century. Welcome to the New New New Abnormal, a repeat of the Old Normal.

MARC FABER & JIM ROGERS: ‘Obama Is A Disaster, The Stock Market Should Have Fallen 50%, And You Should Buy Yourself A Machine Gun. I Need To Buy A Tank…’ ‘It’s Going To Be More Inflation, More Money Printing, More Debt, More Spending…’

MARC FABER: Obama Is A Disaster, The Stock Market Should Have Fallen 50%, And You Should Buy Yourself A Machine Gun

 

Marc Faber, publisher of the Gloom Boom, & Doom Report, told Bloomberg Television’s Trish Regan and Adam Johnson on “Street Smart” today that “Mr. Obama is a disaster for business and a disaster for the United States” and that he “thought that the market on his reelection should be down at least 50%.”

Faber also said “I doubt [Obama] will stay at the presidency for another four years. I think there will be so many scandals” and that investors should “buy themselves a machine gun.”

BLOOMBERG TELEVISION

 

Jim Rogers: Obama re-election means disaster is now guaranteed

Under Obama’s first term in office, the Federal Reserve slashed interest rates to near zero and pumped the economy with trillions of dollars in fresh liquidity via a monetary policy tool known as quantitative easing, under which the U.S. central bank buys bonds from banks and floods the economy with excess money supply to encourage investing and hiring.

Republican challenger Mitt Romney has said he opposes such policy and suggested he would not renew Fed Chairman Ben Bernanke’s term when it expires in January 2014.

Now that Obama is set to preside for another four years, expect the Fed to keep monetary policy loose with the aim of spurring investing and hiring, when in reality, inflation rates are on the rise.

“It’s going to be more inflation, more money printing, more debt, more spending,” Rogers told CNBC just prior to Obama’s re-election.

Investors should avoid U.S. government debt and the dollar and stock up on gold.

“It’s not going to be good for you me or anybody else,” Rogers said.

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