I HAVE ONLY ONE COMMENT FOR THE COMING ECONOMIC COLLAPSE

Simple Leadership

Why is it that our leaders complicate everything to the point where it is no longer manageable. Maybe it's politics, selfishness, greed, or ignorance - who knows. But usually, the solution is so simple and takes nothing more than some leadership and direction. T. Boone Pickens, and his strategy to partially solve our energy dependency issue, is a prime example. I'm sure it is far from perfect, but the fact that it can so easily be explained illustrates how sensible it just may be. Why does our government not even have a plan, something that can be explained to the American people in this fashion?

And from an economic perspective, now would be the time to make this type of investment, assuming a few simple things were in place. First, you need to generate budget surpluses during economic booms so you can spend this surplus responsibly during the busts and take advantage of cheaper labor, keep people employed in value added work. Second, you need to make a good investment decision based on a solid plan, such as the Picken's plan, where resources are invested in public projects that have long-term real economic value benefit. Instead, our government throws bad money after bad money, giving it to incompetently run financial institutions, car companies that can't compete internationally, and homebuyers who have no business buying the homes they bought. This will be the economic calamity of our times. A complete inability by our leaders to manage an economy through a cycle. Maybe, in the end, these times will serve as a lesson, but unfortunately, I'm afraid it won't, just like the Great Depression didn't teach us anything.

You Better Send a Penny You Nimwit

Art Laffer didn't even know he was getting schooled by Peter Schiff, and now when it comes time to settle up, I doubt Schiff has seen a penny. Laffer, stop being an expert after the fact and going on shows trying to convince people how smart you are. You are part of the establishment that doesn't get it. Running a country responsibly would mean pulling the plug in nations building and stupid wars and bringing those dollars back home. It would mean maintaining a sound currency and discontinuing the charade that the Federal Reserve can manage the economic cycle via monetary policy. It means building surpluses during booms so that they can be spent on infrastructure during busts. These are simple principles, the same types of principles that would apply to running one's household, and that our government does not seem to get. Is there a true leader out there that sees this and has the ability to lead this country from the edge of the abyss. I don't know, but they certainly are not in charge of our country right now.

Unbelievable Forces are Forming

This economy is spring loaded, and the tension is almost palpable. The pressure on the dollar, in the midst of a mind numbing socialization of our economy, is daunting. The banana republic is playing with dynamite and we have seen nothing yet.

What the...

Umm... is the little graph thingy below supposed to do that? Don't cry for me Argentina.

Two More Years and a Further Deepening of the Great Recession

The U.S. consumer has gone on a consumption binge for the last 10 years unlike anything seen in history. That binge has been financed by housing debt, car loans, credit card debt, college loans, etc... This easy credit has fed this consumer binge just like pushers feed a drug addict. We have seen the first half of the drug addict's withdrawal, and the second wave is coming, as illustrated by the graph of monthly mortgage resets. In 2009, there is a slight respite from the extremes we've seen over the last year or so. But in 2010, a massive wave of option adjustable rate and Alt-A (also known as liar's loans) are coming. Add to that credit card debt and other forms of consumer debt, bubbles that have yet to burst, and unemployment that may well top 10%, and you have a collapse of credit just as extreme and just as painful, if not more so, than the first wave. With the Feds pumping money into the system with corporate bailouts and stimulus plans, both past and proposed, an effort that is simply pouring more gasoline on the fire, you have a recipe for disaster. Fighting deflation comes at price. How is the Fed going to stimulate a corpse of an economy over the course of 2009 and 2010 as this economy spirals further into the abyss. I suppose they could institute negative interest rates and send everybody a free printer to print money at home. And when they have to suck all this liquidity back out, how are they going to time that sensitive maneuver without creating further havoc throughout the economy. The best policy is to stay out, let failed institutions fail, let deflation do what it needs to do, and let the consumer learn to be lean and live within their means again. The graph illustrates that we will not come out of this until 2012, and whether it takes longer depends on how many zombie corporations the Feds create and how far they take their socialist policies.

The "Complex" Economy Made Simple

The following series of videos will illuminate what those in power want the American people not to understand. Frankly, those in power themselves don't understand what they are doing to the economy, but believe important sounding ivy league degrees provide them a basis to always consider themselves correct. The following videos are of those economists, investors, analysts, and journalist who get it. In fact, they "got it" well before the vast majority of the "experts" even had a clue as to the economic calamity that was directly underneath their noses. This series of videos may seem long, but will provide a foundation of understanding for this blog. Whether you watch some or all of them, you will soon understand where we're at and how we got here and where we're headed. Mocked in the early stages as doomsdayers, they have called the current meltdown like clockwork.