Suddenly it is getting crowded in the world of those predicting economic armageddon. In a sense, that is comforting for those of us who were early and few. Once relegated to the lunatic fringe, it appears as though this view is expanding, possibly even going mainstream.
.That more are calling for a terrible ending to the crisis does not ensure that it will occur. It does however make those of us who were mostly alone early on appear less crazy.Some of the predictions below suggest we may be approaching an economic equivalent to a Return to the Planet of the Apes.
Kudos to Michael Snyder of Economic Collapse for providing the 12 quotes shown toward the end of this piece. Two quotes struck me as bracketing the range of views:
- George Soros believes that “financial markets are driving the world towards another Great Depression with incalculable political consequences.” No problem there, but he seems to believe that proper actions by authorities can prevent this ending. It is unlikely; the point of no-return was passed about five years ago. There is nothing that can be done by governments (other than to make things even worse) to avoid the Great Depression ending.
- Ann Barnhardt is more decisive:
It’s over. There is no coming back from this. The only thing that can happen is a total and complete collapse of EVERYTHING we now know, and humanity starts from scratch. And if you think that this collapse is going to play out without one hell of a big hot war, you are sadly, sadly mistaken.
Her economic ending is consistent with my position of the last two years. A war need not happen in a collapse scenario, although politicians have incredible ability to muck things up more than necessary.
Mr. Snyder did not include the following two quotes which seem appropriate:
— Bill Bonner captures matters nicely, agreeing with Ms. Barnhardt except with no mention of war. Here is his conclusion (emboldening added):
… the world is a lot poorer than it was in June. But back then people still thought the Bernanke team was engineering a ‘recovery.’ Now we know, recovery hopes were fantasies. This is not an economy that can recover. It has to die. Then, a new economy will take its place.
— Phoenix Capital Research provides an opinion and what he perceives as proper investment response:
Yes, I believe that before this mess ends, the financial system as a whole will have collapsed. What’s coming is going to make 2008 look like a joke.
If you have yet to prepare yourself for what’s coming, now is the time to do so. Whether it’s by moving to cash and bullion, opening some shorts, or simply getting out of the markets altogether, now is the time to be preparing for what’s coming (remember, stocks took six months to bottom after Lehman… and that was when the Fed still had some bullets left to combat the collapse).
Here are Mr. Snyder’s 12 shocking quotes from different “experts”:
#1 George Soros: “Financial markets are driving the world towards another Great Depression with incalculable political consequences. The authorities, particularly in Europe, have lost control of the situation.”
#2 PIMCO CEO Mohammed El-Erian: “These are all signs of an institutional run on French banks. If it persists, the banks would have no choice but to delever their balance sheets in a very drastic and disorderly fashion. Retail depositors would get edgy and be tempted to follow trading and institutional clients through the exit doors. Europe would thus be thrown into a full-blown banking crisis that aggravates the sovereign debt trap, renders certain another economic recession, and significantly worsens the outlook for the global economy.”
#3 Attila Szalay-Berzeviczy, global head of securities services at UniCredit SpA (Italy’s largest bank): “The only remaining question is how many days the hopeless rearguard action of European governments and the European Central Bank can keep up Greece’s spirits.”
#4 Stefan Homburg, the head of Germany’s Institute for Public Finance: “The euro is nearing its ugly end. A collapse of monetary union now appears unavoidable.”
#5 EU Parliament Member Nigel Farage: “I think the worst in the financial system is yet to come, a possible cataclysm and if that happens the gold price could go (higher) to a number that we simply cannot, at this moment, even imagine.”
#6 Carl Weinberg, the chief economist at High Frequency Economics: “At this point, our base case is that Greece will default within weeks.”
#7 Goldman Sachs strategist Alan Brazil: “Solving a debt problem with more debt has not solved the underlying problem. In the US, Treasury debt growth financed the US consumer but has not had enough of an impact on job growth. Can the US continue to depreciate the world’s base currency?”
#8 International Labour Organization director general Juan Somavia recently stated that total unemployment could “increase by some 20m to a total of 40m in G20 countries” by the end of 2012.
#9 Deutsche Bank CEO Josef Ackerman: “It is an open secret that numerous European banks would not survive having to revalue sovereign debt held on the banking book at market levels.”
#10 Alastair Newton, a strategist for Nomura Securities in London: “We believe that we are just about to enter a critical period for the eurozone and that the threat of some sort of break-up between now and year-end is greater than it has been at any time since the start of the crisis”
#11 Ann Barnhardt, head of Barnhardt Capital Management, Inc.: “It’s over. There is no coming back from this. The only thing that can happen is a total and complete collapse of EVERYTHING we now know, and humanity starts from scratch. And if you think that this collapse is going to play out without one hell of a big hot war, you are sadly, sadly mistaken.”
#12 Lakshman Achuthan of ECRI: “When I call a recession…that means that process is starting to feed on itself, which means that you can yell and scream and you can write a big check, but it’s not going to stop.”
HappyinHowell: 
Mr Misno: 
Marsha: 
Brian Wilson: 
Steve: 
Larry Crouse: 
Brian Wilson: 
Monty Pelerin: 
Bob Snyder: 
Syrin: 
As the banking/financial system implodes, and this process will begin in Europe and not here, but we will continue to have numerous warnings. Despite all of our egregious flaws, the US will probably be the last fiat currency left standing among the G-7, but that will give us some time to try and develop a transition to a financial system that enhances instead of punishes a free people. (The best book outlining our current plight and begins the process for thinking about the challenges ahead is John Mauldin’s “Endgame,” in my opinion.)
The development of 100% reserve financial institutions, whether they are called banks or something else, will be an imperative once legal tender laws are either repealed or become defacto defunct. People will need to find a way to create and develop institutions that are financially trustworthy. A stable commodity currency(or currencies) will appear using Hayekian principles–the sooner the better–see Ron Paul’s HR 1098. Technology, or the remnants thereof, will provide burdens, opportunities, and challenges for making this new financial structure work. Lovers of liberty need to be prepared to step up and show entrepreneurial strength when this terrible day arrives.
Restoring the American Dream will be a hard, lengthy, and difficult adventure that we must undertake. To shirt this responsibility would consign our descendants a legacy of tyranny and barbarism that I for one, will fight until my last breath. The TEA Party demonstrates what self education combined with intelligent activism can achieve in returning the focus to the first principles that was this country’s bedrock foundation. Now we need to prepare a better transition than the one that President Jackson provided when he destroyed the 2nd Bank of the US. The banksters here and abroad will not go quietly or meekly into the darkness that they have done so much to create. There is a lot of work to do.
I’m a CPA and not prone to following the mainstream hype. That said by my reckoning the world has a very serious problem and there is no avoiding it. Capitalism in it’s current form is based on a simple and yet ludicrous formula. Infinite Growth + Finite Resources = Total Collapse. Most rational people know this is a recipe for disaster and yet everyday, (including Bernanke this morning) what word is guarenteed to come out of the mouth of an economist or a politician. “Growth”. Growth is the problem not the solution so why keep espousing it? The answer is quite simple. Short term thinking in the face of an ever increasing population. We knew this was a recipe for disaster but corporate greed stopped anyone from stating the obvious. Well now they ae going to reap the whirlwind. The first sign that the system is collapsing is borrowing. Countries are not borrowing money but resources. Think of it as a reallocation of a finite sum. Countries borrow because their economies are already unsustainable. i.e. resources cannot sustain current population levels. The borrowing is made on the illusion that more growth will repay the debt. Of course it never happens which brings me to the second red flag. Inability to repay debt. This is still the good bit. This part is simply driven by a population level that is simply too high for available resources. The next part is coming. When abvailable resources start declining rapidly and population levels remain the the same or go higher. Thats what I call SHTF time. It’s coming. We are on the road to Olduvai Gorge. Our future will look like our beginning. The Stone Age.
Greg,
I think your conclusions correct although your reasoning a bit too Malthusian. The malignant mechanism is the Federal Reserve which is driving everything and attempting to prevent the price system from working properly. In a properly working price system, we would never run out of any resources. We might not like the prices, but that’s the protection against running resources down to zero.