Claus Vogt sees two possible events occurring from where we are today:
Bond collapse scenario. Mass psychology in global bond and currency markets drive the action.
One night, you go to bed thinking that the majority of market participants retain confidence in government debt, more than enough to prop up bond markets forever.
Then, the next morning you wake up to discover that the global confidence in the U.S. has been shattered by a singular event, and all hell is breaking loose.
Borrowing becomes next to impossible or prohibitively expensive. Banks fail. The financial system as we know it unravels. The economy plunges into another recession.
A video replay of 2008? No. Because this time governments do not have the will or the means to fight it.
Recession scenario. We wind up essentially falling off the same cliff as in the bond collapse scenario, but we get there via a different pathway.
This scenario begins where the first scenario ends — with a double-dip recession.
The recession guts government tax revenues, bloating the federal deficit even further.
And this is what leads to a government funding crisis, much as it has for many cities and states around the U.S.
He discusses the signs that point both ways in his article.
As most readers of the site should know, I consider either of these possible and probably lean more to the former. The important point, at least for me, is that neither of these are endings. Either represents just another intermediate step on the way to a Great Depression.
