If this doesn’t make you think–make you want to prepare–I don’t know what will. From “Big Jake” on SeekingAlpha, “The Worst Case Scenario (Someone Has to Say It)” [edited for length]
Since the economy began sliding downhill in late 2007, mainstream economic and market experts have consistently erred on the sunny side.
As late as June 2008, mainstream consensus held that the U.S. was heading for a “soft landing” and would avoid recession.
Several months later, the slump was acknowledged to have started in January 2008, but we were supposed to see renewed growth by mid-2009, with unemployment peaking in the eight-to-nine percent range. A quick “shovel-ready” stimulus bag was supposed to set us back on the road to prosperity.
In January, recovery projections were pushed forward to late 2009. Today, the consensus is for a mid-2010 recovery, with unemployment peaking at just over 10 percent. Clearly, the mainstream has struggled to catch up to reality for well over one year. What are the chances that they finally have it right this time?
In the interests of providing you with an alternate vision—something outside the mainstream—below are ten predictions for America through the year 2012. This is not boilerplate doom-saying. Rather, I am laying out in highly specific terms what will happen over the next three-odd years. Others have thrown around the term “Depression”, but I am going to tell you precisely what it means for you, your investments, and your community.
Prediction one.
The twenty-five-year equities bubble pops in 2009: the S&P 500 will sink below 500. In a bid to stem the panic, the government will enforce periodic “stock market holidays”, and will vastly expand the scope of its short-selling prohibitions—eventually banning short-selling altogether.
Prediction two.
With public pension systems and tens of millions of 401k holders virtually wiped out—and with the Baby Boomers retiring en masse—there will be tremendous pressure on the government to get into the stock market in order to bid up prices.
Therefore, sometime in 2010, the Federal Reserve will create and loan out hundreds of billions of fresh dollars to the usual well-connected suspects, instructing them to buy up stocks on the public’s behalf. This scheme will have a fancy but meaningless name—something like the “Taxpayer Assurance Equities Facility”. It will have no effect other than to serve as buyer of last resort for capitulating smart-money types who want to get out of stocks entirely.
Prediction three.
Millions of new retirees—including white-collar people with high expectations for a Golden Retirement—will be left virtually penniless. Thousands will starve or freeze to death in their own homes. Hundreds of thousands will find themselves evicted and homeless, or will have to move in with their less-than-enthusiastic children. Already strained by the rising tide of the working-age unemployed, state and local welfare services will be overwhelmed, and by 2012 will have largely collapsed and ceased to function in many parts of the country.
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rediction four.
“Quantitative easing” will fail to restart previous patterns of lending and consumption. As the government sends out additional “rebate” checks and takes ever-more drastic measures to force banks to lend, hyperinflation could take hold. However, comprehensive debt relief via a devaluation of the dollar is even more likely. This would entail the government issuing one “new” dollar for some greater number of “old” dollars—thus reducing both debts and savings simultaneously.
Prediction five.
The government will stop pretending that it can finance continuous multi-trillion-dollar deficits on the private market. By late 2010, the sole buyers of new U.S. Treasury and agency bonds will be the Federal Reserve and a few derelict financial institutions under government control. This may or may not lead to hyperinflation. (See prediction four).
Prediction six.
The government’s narrow unemployment figure (U3) will rise into the high teens by late 2010. The government’s broader unemployment figure (U6) will cease to be reported when it reaches 25 percent—it will simply be too embarrassing. Ultimately, one in three work-eligible Americans will be unemployed, underemployed, or never-employed (e.g. college grads permanently unable to find suitable work).
Prediction seven.
With their pension dreams squashed, and their salaries frozen or cut, police and other local government workers will turn to wholesale corruption in order to survive. America’s ideal of honest, courteous, and impartial cops, teachers, and small-time local functionaries will have come to an end.
Prediction eight.
Commercial overcapacity will strike with a vengeance. By 2012, thousands of enclosed malls, strip malls, unfinished residential developments, motels, truck stops, distribution centers, middle-of-nowhere resorts and casinos, and small-city airports across America will turn into dilapidated, unwanted, and dangerous ghost towns. With no economic incentive for their maintenance or repair, they will crumble into overgrown, plywood-and-sheet-rock ruins.
Prediction nine.
By the end of 2010, tens of millions of households will have fallen behind on their mortgages or stopped paying altogether. Many banks will be unable to process the massive volume of foreclosure paperwork, much less actually seize and resell the homes.
Devaluation (as mentioned in prediction four) could ease the situation for those mortgage holders still afloat, but it would also eliminate any incentive for most banks to stay in the mortgage business. In any case, the housing market in many parts of the country will lock up completely—nothing bought or sold.
With virtually no loans being made, even the government will finally acknowledge that most banks are fundamentally insolvent. A general bank run will only be averted through a roughly one trillion-dollar recapitalization of the FDIC, courtesy of new money from the Federal Reserve.
Prediction ten.
As an economy is never independent of the society within which it functions, the next few paragraphs will focus on social and political factors. These factors will have as much of an impact on market and consumer confidence as any developments in the financial sector.
Whether rightly or not, President Obama, having come to power at the dawn of this crisis, will be blamed for it by over 50 percent of the population. He will be a one-term president. In response to his perceived socialization of America, there will be a swarm of secessionist and extremist activity, much of it violent. Militias and armed sects will be more prominent than in the early 1990s. Stand-off dramas, violent score-settlings, and going-out-with-a-bang attacks by laid-off workers and bankrupted investors—already a national plague—will become an everyday occurrence.
For both economic and social reasons, millions of immigrants and guest workers will return to their home countries, taking their assets and skills with them. The flow of skilled immigrants will slow to a trickle. Birth rates will plummet as families struggle with uncertainty and reduced (or no) income.
Property crime will explode as citizens bitter over their own shattered dreams attempt to comfort themselves by taking what is not theirs. Mutinies and desertions will proliferate in an increasingly demoralized, over-stretched military, especially when states can no longer provide the educational and other benefits promised to their National Guard troops.
There will be widespread tax collection issues, and a huge backlash against Federal and state bureaucrats who demand three-percent annual pay raises while private sector wages remain frozen or worse. In short, the “Tea Parties” of tomorrow will likely not be so restrained.
Finally, between now and 2012, we are likely to see another earth-shaking national embarrassment on the scale of the 9/11 attacks or Hurricane Katrina and its aftermath. This will demonstrate conclusively to all Americans that their government, even under a savior-figure like Obama, cannot, in fact, save them.
By 2012, there will be a general feeling that the nation is in immediate danger of blowing up or coming apart at the seams. This fear will be justified, given that the U.S. has always been held together by the promise of a continuously rising material standard of living—the famous “pursuit of happiness”—rather than any ethnic or religious ties. If that goes, so could everything else. We were lucky in the 1930s—we may not be so lucky again.
Filed under: Predictions, The Meltdown
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The systematic destruction of our currency is not a mistake – people who are impoverished and dependant on the government are easier to control. Buy gold. Buy silver. Kepp your wealth outside of the corrupt system that is doomed to failure.
Well Said P.S.-
I would not own anything a clever Wall Street lad
can take away overnight.
Bad news sells,
If you ask alot of older people they will say it was much harder back in the early 80′s and we survived.
It’s not up to the goverment to take care of the poor
it’s up to the church.
In the 30′s people wanted to work, now people want the Goverment to take care of them.
America wake up and get to work.
Just because this guy “had to say it”
doesn’t make him right.
It’s Aug 2010 well over a year later and 90% of what he said has not come true.
I do not trust the goverment ,but we have ALOT of smart honest people in this country still most people are good in their nature and I think thats why we will be ok.
Stop being so negative people.
If your not part of the solution your part of the problem.
:) God has blessed America and I believe He will continue to.
Wake up America! What happened to we the people? This has been in the works for about 100 years. I ask you to Pray? Please watch Glenn Beck! Were repeating history.
in acapulco most of people throw garbage on the street and few dont.Then you have mess as a consequence. in USA is normal very normal to smog weed and very often adults in front of their kids,and for most of the people is not too bad that teens experience this kinds of drugs and since most of the american acept this behavior things are the way they are. when in acapulco most of the people decide to be clean then would be acapulco a clean place i know is hard to digest for many MANY OF YOU …….COMPRENDE….. Adios amigos
IF WE ARE SO BAD GO BACK WHERE YOU CAME FROM WITH OUR BLESSINGS!!!
Hello America, Israhell ain’t DONE with you YET!
The two party system in America has more in common than not. Except during the campaign season. Over the last 50 years they have been striving for a progressive government. This progressive new government removes the liberties and freedoms from the peoples thru social justice legislation by the Federal Government including congress support. Thus in reality, the two party system while in Washington D.C, are really a centralized planning committe to usher in a one controling party with tight support from the globalists.
The American working class including the middle class will be under such huge financial bondage to the Government with out the dream of owning a house or that of a retirement pension.. This coming November will be the people vs the Government election. The American voter will take amnericas back ot allow it to fail.
THAT IS IT EXACTLY
Welcome to the “New World Order”. America is dying and it is a slow death. Our government from the President down to the last dog catcher are living the free good life while, the working class pay the price.
Our government has become so corrupt it is hard to to tell anymore who is lying and who is not.
I grew up trusting my government and it’s officals. We have been sold out. The laws are designed now for the folks who are here illegally, who do not want to work and never intend on putting back or giving back the ideals which made our country strong in the first place.
Ask the Germans in WWII about printing money to buy them out of their money problems. Bad economics. It simply does not work. I would have thought the government by now would have thought this out before trying to print money for a stimulis package. Stimulis packages are just another free hand for the government.. Heres an idea create jobs, stop welfare and close the borders. OMG this can’t be so hard to do, unless you want to be re-elected or some other gain.
Nobody just a concerned American
I agree. It kills me to think what is going ot happen to America. We have become a very SELF ABSORBED society. Hey, whatever “feels” good…as NIKE says…”JUST DO IT.”
Essentially, as a nation we do what we “feel” is right. We kill the unborn, teach our kids that perverse sexual bevahior is ok, print money like there’s no tomorrow, elect a President (Obama) who looks good, talks good, but has absolutely no qualifications for the job. We, as a nation, spend money for worthless, damaging social programs that actually help bring our nation down.
Change is coming. It has to.
He promised change and that’s what they got.We always think it’s greener on the other side of the fence..sometomes we need to open our eyes!
He promised change and that’s what they got.We always think it’s greener on the other side of the fence..sometimes we need to open our eyes!
NONE OF THE THINGS YOU MENTION ARE BY ACCIDENT!!!
thtats righ my friend we all going down becouse we dont have personality like, lincoln, kenedy.etc now this is the result of the abuse of of power like selling guns to el salvador nicaragua with oliver norht remember you know thats unhuman this is just couse and efect i dont think US been nice with mexicans i will remain you every time you eat a vejetable or fruit a mexican cut it for you i think we deserve a lot a lot credit for that see you my friend and god bless us all
I ONLY BUY IF IT SAYS GROWN IN THE USA!
Hi Scott
As much as I laughed… it also makes me freak out. We are june 2010 and it is getting worse. The Governement does not help. But, we have to go with the flow. I guess it’s a matter of a survival now. I cannot believe this is happening here in US and ..to me as well!
Some have come to pass, some haven’t, and some the jury’s still out. The prediction of “another earth-shaking national embarrassment” is perhaps the most accurate hit. Gulf oil blowout to a tee!
It clearly isn’t sand that Nostradamus has his head in…
Alot of what he has predicticed has happened, it’s not 2012 , yet! The government is making things look better by creating alot of government jobs. The government is artificially making the economy look better than it really is. For example, when government housing insentives stop so does housing sales. The government is creating alot of government jobs to keep the unemployment numbers down. The more government gets involved the worse the economical problem will be. Untie the economy and it will grow. Don’t tell the rich your out to get them, so they have no insentive to create more jobs. The Government is printing money to keep us afloat and we are headed for the bubble to bust. After, Greece’s economic collapse the European Countries are making cuts, because they have figured it out. A country can’t spend themselves out of a finacial problem, and they can’t spend more than what they have. The U.S is acting irresponsible like the European Countries have alway done. The U.S. Gov.is just making things worse. Less government and less spending and more money in the hands of all Americans is the only way. Not taking from one group and giving to another. Where is the insentive for the economy to grow if people have no insentive to work. The Mexico border has to be closed. The government needs to finish the fence and then talk about amnesty for all the people that broke the law coming into the country. They gave amnesty in1986 and it didn’t stop illegal entry, it encouraged more. This has been a great expense, since the 1970′s, because the people coming over the border are poor, costing the U.S. alot of money. The drug traffickers are greatly contributing to the drug problem that is costing the U.S. alot of money from the crime. They ship approx. 65 % of the cocaine that enters the U.S., plus they ship heroine and meth. The government needs to do whats right for the country, not what will make them popular with the voter.
YES ! BUT OUR REPRESENTATIVES DO NOT HEAR US ANYMORE EXCEPT AT ELECTION TIME, AFTER WINNING THEY ALL FORGET US!!!
You might want to revisit your “predictions” in light of the fact that NOTHING you predicted has come true.
Clearly ‘Nostradamus’ has his/her head stuck in the sand. Every single prediction this guy made has happened – and he made the predictions in 2009!
Suggest you buy yourself some new reading glasses Nostradamus, or stick to shilling on other sites.
Wilf I suggest you read the article again..none of these predications came even remotely close to being true..umemployment in the high teens..well not offically anyway..yes the govt lies and the fiqures are inaccurate etc but they are the figures..