OT ***ECONOMIC COLLAPSE IN SEPTEMBER?***

[Guest guest]

Also consider seeing this:

You Think NAFTA, CAFTA & the Economy is Bad Now? Wait...

http://uk.youtube.com/watch?v=TShPYA-OuPs

 

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ECONOMIC COLLAPSE IN SEPTEMBER?***

http://www.safehaven.com/article-10280.htm

 

May 17, 2008

 

Economic Collapse in September?

by Clif Droke

 

A rumor is swirling around the Internet that an inglorious end to the U.S.

economy is imminent. Unlike previous rumors to this effect, this one carries the

weight of recent events in the financial realm and has many believing the rumor

will come to pass.

 

Let's examine some of the claims being made: On March 18, 2008, a " closed door "

session of Congress was held for only the fourth time in history. According to

House Rule XVII, clause 9, it is forbidden for members of the U.S. House of

Representatives to reveal the discussions held behind those doors. The penalty

for leaking such information includes loss of seniority, fines, reprimand,

censure or expulsion. According to news sources, one purpose of the meetings was

to discuss new surveillance techniques to be used by U.S. Homeland Security.

Rumors continue to swirl as to what the other topics of discussion took place in

that meeting.

 

According to the Australia.TO newspaper, as reported in the May 2008 Last

Trumpet Newsletter (LTM), several congressmen were so incensed about what was

discussed behind those doors that they were compelled to leak the contents of

the meeting. Following is what is rumored to have been discussed: Imminent

collapse of the U.S. economy by September 2008; imminent collapse of the U.S.

Government finances by February 2009; possibility of civil war within the U.S.

resulting from the collapse; detainment of " insurgent U.S. citizens " in

anticipation of their moving against the government; the potential for violent

action taken by citizens against members of Congress due to the collapses; the

merger of the U.S. economy with those of Canada and Mexico as a solution to the

collapse; the introduction of a new tri-national currency called the " AMERO " as

another economic solution.

 

Needless to say, that's a lot of information to process. Unfortunately none of

it can be verified and it essentially falls under the category of rumor and as

such must be treated as suspect. It brings to mind another rumor that had the

Internet community abuzz last September regarding the so-called " Bin Laden

options trade. " You may recall the rumors that circulated across many Internet

sites in Sept. 2007. The rumors concerned an unknown trader(s) placing options

bets on the S & P 500 and the Dow Jones Eurostoxx50 index that wouldn't pay off

unless a 25%+ crash occurred by options expiration that same month. These

high-profile " mystery " trades were used by several independent and mainstream

media outlets to conjure up images of another

9/11-type terrorist episode.

 

The end result was that the stock market rallied sharply shortly after the

stories appeared and several indices made new all-time highs in October. The

terrorist event that was conjured up by the options trade never came to pass.

 

Now before you dismiss me as a Pollyanna, let me say that there does ring a

certain measure of truth to the rumor concerning an economic collapse. There

wouldn't be as much fear generated over the headlines, nor would they be as

widely circulated as they have been, if there wasn't. The fact that many people

even consider these stories as being potentially true is revealing of the

mindset of Americans today: they are nervous about the economy, scared over high

oil and gas prices and none too happy over the housing price deflation. So we

can imagine how easily someone might be swayed by a rumor of this magnitude.

More than anything else, the rumors of an imminent financial and economic

collapse are symptomatic of a wounded mass psyche.

 

The next consideration is that even if the substance of the rumor is untrue

(to say nothing of the projected timeline), the fact that many are inclined to

believe it doesn't reflect well, nor does it bode well, for the government. When

rumors like this one begin to spread, and are believed even in part, it is a

vote of no confidence for the government and monetary authorities. While such

problems can be remedied with short term solutions, the longer term implications

are disturbing and are much harder to remedy.

 

The Fed may well have dodged the bullet this time but in so doing it has created

for itself a new set of difficulties down the road. Those challenges can only be

viewed properly through the lens of the long-term Kress cycles. Quoting

Machiavelli, " It is in the nature of things that you can never escape one

setback without running into another. "

 

In the here and now, consumers are feeling the weight of high gas and food

prices. An article appeared in the May 14 edition of the Washington Post bearing

the headline: " Burdened by the weight of inflation, standards of living are

challenged. " The article reported the results of a Washington Post/ABC News poll

which surveyed households across the socio-economic spectrum.

 

The poll found that nearly 7 in 10 are concerned with their ability to keep up

their lifestyles high. Moreover, those expressing concern are not only from the

lower and middle classes but also from upper income levels. The results showed a

significant spike in just the last five months when a previous poll was taken.

The Post reported that anxiety over the economy is at its highest level since

1981.

 

The poll found that 40% of respondents are " somewhat worried " about their

standard of living, compared to 34% in December 2007. Of those saying they are

" very worried " , the number is 28% compared to 17% in December. The combined

totals for these worried responses equals 51% in December compared to 68% today.

 

Among other findings of the poll is that the top five economic worries among

consumers are:

 

Inflation Gasoline Healthcare costs Taxes Jobs

 

The Post also asked respondents to give their reasons why they think oil and gas

prices are as high as they are today. The top responses were:

 

Greed/profit motive of the oil companies Iraq war George Bush

 

With nationwide gas prices hovering precariously close to $4.00/gallon, the poll

found that many respondents had already cut back on their driving habits and

were more inclined to use public transportation. Of those who haven't cut back

on their driving, the poll asked what the gas price would have to be to make

them drive less. The average response was $5.65/gallon.

 

How have the authorities responded to the problems that Americans are now

facing? The Congresses' response to the economic malaise has been the approval

of a " tax relief " bill which provides a few paltry hundreds for the purpose of

stimulating the retail economy. But will this measure succeed in winning a vote

of confidence from the people?

 

Let's turn once again to the wisdom of the one of Machiavelli for the answer.

Machiavelli, in his Discourses on Livy, wrote that " no ruler should...wait for

dangerous times in order to win over the populace. " He stated further that " in

the eyes of the populace, it will not be that ruler who grants them their new

benefits, but his enemy, and they will have every reason to fear that once the

adversity has passed, their ruler will take back what he was forced to give.

Consequently, the populace will not feel bound to him in any way. "

 

Since the announcement that $600 checks would be mailed to taxpayers in the form

of " relief " , we've heard nothing but criticism from the taxpayers. The remarks

range from, " Bush is borrowing the money from Red China, " to " we'll have to pay

it all back in next year's taxes, " to " $600 won't cover my expenses for even a

month! "

 

As Machiavelli informs us in his Discourses, a government " must try to foresee

what adversity might befall it, and that a government " which acts

otherwise...and then believes that during perilous times it can win back the

populace with benefits is deceiving itself. Not only will [it] not win over the

populace, but it will bring about its own ruin. "

 

To this end, an article appearing in the May 14 edition of the Financial Times

addressed the evolving monetary policy of the Federal Reserve in dealing with

asset " bubbles. " The old-line method employed by former Fed Chief Greenspan was

to wait for the bubble to burst, then belatedly attack the problem. Of this

unwise policy we have only to consult Machiavelli...or simply look at the

results of Greenspan's many policy blunders in recent years.

 

In the wake of the latest blunders, the Bernanke-led Fed is examining the role

the Fed should play in lancing asset price bubbles before they burst. How

successful the Fed will be in implementing its new strategy remains to be seen.

With time running out on the 120-year cycle clock, the economic winds are not

against their back as was the case in the 1990s.

 

To that end, beginning sometime around the summer of 2009, we'll be entering a

period that not a single one of us has ever experienced before. The last of the

Kress long-term cycles peaks at that time, namely the 10-year cycle. From that

point until 2014 there won't be any yearly cycle of long-term consequence in the

ascending phase, a configuration that hasn't been seen since the 1890s. The

120-year Master Cycle will be in its final " hard down " phase and the government

along with the monetary authorities will be confronted with many challenges and

obstacles.

 

It's very easy, though, to get wrapped up in the fear that anticipating this

coming event will bring. Fear is paralyzing and causes us to miss opportunities

we might otherwise recognize were we not under its grip. As Jesus said,

" Sufficient until the day is the evil thereof. " Let's not get caught in the trap

of constantly fearing the problems of the years to come when we have today to

concern ourselves with.

 

Let's turn now to the present stock market outlook. In my April 24 commentary

entitled, " At last, good news is on the way! " , I pointed out that " beneath the

surface of this stock market, things are improving more and more each week. It

won't be long now before eventually those individual stock prices start moving

higher in response to the market's internal improvement. " This statement was a

reference to the dramatic improvement in the stock market's internal momentum

indicators, which show the 30-day,

90-day and 120-day internal rate of change for the NYSE broad market. These

indicators are in turn reflections of the dominant interim cycles.

 

Since then the stock market has been in recovery mode with the S & P 400 Mid-cap

index (MID) showing the most impressive rally of the major indices. Take a look

at the progression of the mid-cap stocks since the March price bottom. The

Mid-cap index is now at a high for the year and has completely recovered the

damage inflicted by the sell-off in December-January. Besides being a good

barometer of the corporate outlook, the MID is also a good leading indicator for

the S & P 500.

 

The stock market continues its upward bias in spite of a lack of broad

participation from sidelined investors. The rally up until now has been of the

" phantom " variety in the sense that few have participated in it. Billions of

dollars in cash remains in low-yielding money market and other " safe haven "

funds as the crowd demands more proof of recovery before jumping back into the

stock market. This speaks to the paralyzing fear that has many investors in its

grip. By looking at the cycles, however, we don't have to be controlled by fear.

Instead, we can put fear aside and take advantage of the opportunities the

market hands to us along the way in this once-in-a-lifetime adventure on the

road to the 120-year cycle.

 

 

 

Bonita Poulin

 

Canadian Coordinator

GLOBAL RECOGNITION CAMPAIGN

Multiple Chemical Sensitivity

and other Chemically Induced Illnesses, Diseases & Injury

affecting civilians and military personnel

www.mcs-global.org 

More coordinators needed!