Monday, May 4, 2009

Prologue III (what have happen) – economic crisis summary

This crisis has been predicted beforehand by many economists and others (including myself). In other words there were, there are and there will be many people that know exactly what is going on even if journalists and politicians say the opposite. I have articles from the end of the 90’s I have written predicting much of what we see today. And since 2 year back I have been saying we first face a recession (which no one believed) and now we face a depression (which no one believe). And I’m not alone. Google Peter Schiff, Marc Faber or any of the others saying the same.

So what has happened so far?

- Restrictions, regulations, to high taxes and too many interventions from several governments have created and are still creating bubbles and strange markets around the glob. This is also the main reason for creating this current crisis (Read: Freddie Mac and Fannie Mae).

- However the crisis had never been so bad and it wouldn’t carry on for many years if it wasn’t for governmental borrowing and printing of money (today they play a wee bit with a computer, but you get the idea). This is what’s really concerning right now but also one of the reasons this crisis is so severe.

- Trade is way down and still dropping. For instance the Baltic Dry cargo index has never, in history, fallen more than the last year. Every figure is saying similar things. Still trade is one of the very few things keeping us going at the movement. Protectionism is rising, but slowly which is a good thing if you want to postpone the depression.

- Gold prices have gone up, not really as much as one would expect which is one of the reasons some people want to check the gold reserves in certain countries. India and China are buying gold and have announced they will continue doing so.

- The US dollar is overpriced at the moment and has been kept that way for some time now mainly thanks to China that has borrowed countless billions to the US and also has been instrumental in keeping the charade going. It is said that China hold 2/3 of its currency reserves bound to the dollar. This together with the history of the dollar is the only thing keeping appearances up. This will not and cannot last. And the question is if the American government really want it to last?

- Pretty much every government on the planet has issued complete mad spending sprees mainly on borrowed and newly printed money. Japan has been doing this twice or three times a year since the 80’s but is falling deeper and deeper and is today showing the worst economic results since WW II.

- The American corporate loans and bonds markets in America for example the defaulting (people not paying back the loans) is growing and the situation is very similar to what we did see with the real-estate market in the US 1,5 years ago. The next bubble to crash?

- In the US close to 30 banks and several important companies and businesses has fallen, no one is taking over their commercial space and some is saying this might be the next bubble to burst within the American economy.

- Great Britain is not only broke, it is worse than that. Even governmental bonds are not selling which is the closest thing a country can get to being Bankrupt, still the deficit seems to be around 10% this year. Civil unrest is growing even faster than the gigantic deficit. No wonder the government is calling back troops and asking military officers if they are willing to shoot at their own population.

- Many other countries are also suffering severely. Worst of in Europe is Ukraine and Hungary where both is pretty close to both economic collapse and civil unrest. Island might already have seen the worst in-house troubles but will continue the downward spiral together with the world economy.

- IMF has issued another nail in our collective coffin of screwed-up shit. Calling several “rich” countries to print money like crazy and give them to IMF so this idiotic institution can spread inflation and the depression all over the world.

- More and more voices are being heard for a “world currency” and many are talking about a “New World Order” including the British Prime Minister. Further feeding conspiracy theories.

- Increasing worries from Africa is being heard. Half the continent is showing signs of famine and malnourishment. If things get worse millions might die from starvation.

- The Muslim smurf Ahmadinejad is hitting his bongo drum now and again, North Korea is doing the same although hardly heard since people dies from starvation faster than they can carry out orders. Pirates are a big nuisance and in South America every other country seemingly getting their own Stalin wannabe.

I have certainly missed several things and I have hardly even mentioned all the companies having an economically hard time or already gone bankrupt. I however regard most of those things as symptoms of the illness and consequently secondary. I have neither focused on the particulars or the details on each stupid decision governments make, I see no real point, it is all bad.

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