Posted by: doggings | October 17, 2008

Stock Market Meltdown Starts

It’s started and it won’t be stopping any time soon.

The media and TV are desperate to portray the image that it’s all under control and that the collective pissing in the wind by the world governments has in some way averted the inevitable conclusion and soon we can all get back to business as usual, but don’t believe a word of it…

Nothing is going to stop this now, and it’s going to get really bad.

from Christopher Laird here

“What is going on is relentless deleveraging of over $1000 trillion of financial leverage (it’s more than that but the figure gets the idea across. So, over a period of a year, the US and ECB /Europe alone have added $5 trillion worth of financial backing to the world, but that is against $1000 trillion deleveraging – the bailout efforts are simply miniscule compared to what is driving markets down – at a ratio of 1000 to 5 so far. The bailouts and liquidity injections simply cannot work.

And, the markets relentlessly tail down, even within a day or two of major new bailout announcements. I think this kind of makes the point. Which is that $5 trillion is not near enough to stop $1000 trillion from deleveraging worldwide..”

Realization

And, when markets finally wake up to the fact that, despite new gigantic bailouts by governments, it’s not working, it’s definitely not working, and financial institutions are still afraid to loan money out. The realization is that it’s basically over, the cake is baked.

Or, to be more clear, the markets are not going to recover, and are going down far more.

Now, after the totally unprecedented actions in the last two weeks, particularly the announcements Monday by the Europeans and the Fed, with another what $2 to 3 trillion thrown at the problem, the markets this week are just crashing.

What really concerns me is another Great Depression. And, we are actually closely following the script of that time. First, economic and financial crashes. Then big public bailouts. Then economic activity collapses. Then we have a grinding depression.

And, in a depression, we get huge unemployment, and even food shortages. In fact, I wonder if we will see something like what happened in Iceland this week, where the stores are running out of food and everything because there is no foreign exchange. They won’t accept the Iceland Krona. So, Iceland can’t import food.

Lest you think that problem is isolated to that island nation, in the Great Depression millions starved in the US and Europe and elsewhere, even in big food producing countries. One reason is that big food producers sell their food for foreign currency – ie export it. The natives be damned. That’s what happened in Argentina in the early 2000’s.

And, god forbid, there can be a big war after the depression. This is exactly what happened in the 1930’s/40’s.

So, batten down the hatches, and be super cautious. Don’t believe the financial TV that seems to be always saying the bottom is here. I don’t believe that for a minute. The credit crisis is just grinding away at the world economies like a big wood chipper.

The next quarter or two, we will see big declines in economic activity, and also big layoffs all over the world.

The main problem as I see it for the US is that there are just too many guns there for this not to turn really nasty when the general public start getting hungry en masse.

Bizarrely enough, much like David Icke, all those “survivalists” with their well stocked mountain hideouts and guns and ammo aplenty now don’t look quite so mad after all do they?

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