Economic Alert: If You’re Not Worried Yet…You Should Be

Tyler Durden's picture

Submitted by Brandon Smith from Alt-Market

Economic Alert: If You’re Not Worried Yet…You Should Be


For the past four years I have been covering the progression of the global economic crisis with an emphasis on the debilitating effects it has had on the American financial system.  Only once before have I ever issued an economic alert, and this was at the onset of the very first credit downgrade in U.S. history by S&P.  I do not take the word “alert” lightly.  Since 2008 we have seen a cycle of events that have severely weakened our country’s foundation, but each event has then been followed by a lull, sometimes 4 to 6 months at a stretch, which seems to disarm the public, drawing them back into apathy and complacency.  The calm moments before each passing storm give Americans a false sense of hope that our capsized fiscal vessel will somehow right itself if we just hold on a little longer...

I don’t have to tell most people within the Liberty Movement that this is not going to happen.  Unfortunately, there are many out there who do not share our awareness of the situation.   Debt implosions and currency devaluation NEVER simply “fade away”; they are always followed by extreme social and political strife that tends to sully the doorsteps of almost every individual and family.  The notion that we can coast through such a tempest unscathed is an insane idea, filled with a dangerous potential for sour regrets.

There are some people who also believe that the private Federal Reserve with the Treasury in tow has the ability to prolong the worst symptoms of the collapse indefinitely, or at least, until they have long since kicked the bucket and don’t have to worry about it anymore (the ‘pay-it forward to our grandkids’ crowd) .  I can say with 100% certainty that most of us will live to see the climax of the breakdown, and that this breakdown is about to enter a more precarious state before the end of this year.  You can only stretch a sun-boiled rubber band so far before it snaps completely, and America’s financial elasticity has long been melted away.

A pummeling hailstorm of news items and international developments have made the first half of 2012 almost impossible to track and analyze.  The frequency at which negative information has surfaced is almost dizzying.  However, a pattern and a recognizable motion are beginning to take shape, and, I believe, a loose timeline is beginning to form. 

At the end of January, I covered the incredible nosedive of the Baltic Dry Index (a measure of global shipping rates that signals a fall in global demand) to historic lows.  I pointed out the tendency of stocks and the general economy to crash around 8 months (sometimes a little longer) after the BDI makes such a dramatic downturn.  Mainstream analysts, of course, attributed the fall to an “overproduction of ships”, which is the same exact excuse they used when the BDI collapsed back in 2008 just before the derivatives bubble burst.  It would seem that the cable TV talking heads were wrong yet again, as the international market facade quickly evaporates right in line with the BDI’s almost prophetic knack for calling an economic derailment in advance.

Here are some of the most important reasons why every American should be prepared for much harder days, especially before the end of 2012:

The European Union Is Officially Dead In The Water

Stick a fork in er’, the EU is done!  We are talking about full scale dismantlement, likely followed by a reformation of core nations and multiple collapse scenarios of peripheral countries.  The writing is all over the wall in the wake of the latest election results in Greece and France, where, as alternative researchers have been predicting for some time, the battle between the government spending crowd and proponents of austerity has reached a fever pitch. 

The Greeks and the French are royally pissed over draconian cuts in public programs and the destruction of pensions which have been a mainstay of their economies for quite some time.  They are also furious over being sold off like collateral to the IMF and World Bank.  Rightly so.  Like the American taxpayer, the taxpayers of floundering EU nations are wrongly being held responsible for the financial mismanagement and fraud of their governments and global banks which have remained untouched and unpunished for their trespasses.  The problem is, the voters of both countries are signing on to the socialist/quasi-communist bandwagon in response.  In Greece, the Left Coalition Party, a splinter group of the traditional communist party, has now taken a primary position of power:

In France, voters have elected socialist Francois Hollande (a Bilderberg attendee), whose latest promise is to spend France into recovery through his “pro-growth agenda”:

I have no doubt that the elections of the EU are as manipulated by elitists as they are here in the U.S., and I’m sure false paradigms abound.  Have Europeans forgotten that it was overt government spending that set them on the path to calamity in the first place?  Or, are they like Americans; just desperate for any change in the ranks of leadership?  One would think that they would take note of the problems here in our country and realize that electing a socialist to replace another socialist is no way out of economic hardship.

Former officials like Nicolas Sarkozy may have claimed to be distanced from the socialist ideal, but, as with all globalist puppets, their actions did not match their rhetoric, and they have always supported policies of centralization and big government.  The French and the Greeks have essentially replaced closet collectivists with outspoken collectivists, and will see NO relief from the crisis in the Euro-zone as a result of the political reordering.  In fact, the stage has now been set for a volatile chain of dominos.  Germany, which is the only economy left holding the EU together, has been unyielding on austerity cuts.  A conflict between France and Germany is now inevitable.  Neither will compromise their position, and I can see no other eventual result than a reexamination and perhaps abandonment of the EU charter. 

How does this affect America?  Being that international banks and corporations have forced our countries into interdependency through the engineered chicanery of globalization, any collapse in Europe is going to strike hard around the world, but the worst will hit the U.S. and China.  Which is probably why China is disengaging trade away from the U.S. and the EU and focusing on other developing nations:

If you thought the Greek rollercoaster was a pain in the neck for investment markets, just wait until the whole of the EU is in a shambles! 

Spain is next in line, with a 25% official unemployment rate and a massive black market economy forming.  As I have been saying for years now, when governments disrupt the financial survival of the people, they WILL form their own alternatives, including black markets and barter markets.  It is about survival.  The Spanish government does not care much for these alternatives, though, and has now banned cash transaction over 2500 euros in a futile attempt to squeeze taxes out of the populace through digitally tracked payment methods:

Another major concern for Americans is the fact that Europeans are inching towards an abandonment of the dollar.  Francois Hollande has openly called for an end to the dollar’s world reserve status, and with a majority backing of the French people, he could easily make this happen, at least where France is concerned.  All it takes is for a few key countries to publically and completely drop the Greenback and the dollar’s reputation as a safe haven investment will be quashed.  This could very well happen before 2012 is over.

QE3 Is The End

Here is the bottom line; U.S. growth is a theater of shadows.  There has been no progress, no recovery, only the misrepresentation of statistics.  Millions of Americans have fallen off unemployment rolls because they have been jobless for too long, which lowers the unemployment rate, but does not change the fact that they are still without work.  Durable goods orders are dropping like an avalanche.  U.S. credit has been lowered yet again by rating agency Egan-Jones.  With China making bilateral trade deals in numerous countries on the condition that the dollar be dropped as the primary purchasing mechanism, and with the EU turning to economic mulch, the currency’s safety is nonexistent.  Traditional investors who cling to the idea that a falling Euro spells dollar strength will be sorely disappointed when the currency is suddenly being rejected in international currency markets.

The Federal Reserve has already stated that any signs of “relapse” into recession (the recession that we never left) will be met with all options on the table, including QE3:

I believe that QE3 will probably be announced this year (due in large part to trauma from Europe), and, that this will trigger a mass movement by foreign nations to drop the dollar as the world reserve.  QE3 will be the straw that broke the camel.  How exactly this will play out socially and politically, I do not know (I could take a good guess though).  But, the technical results are predictable.  The Fed will respond to the lack of treasury purchases by ramping up fiat printing in order to cover the ever increasing costs of the government machine.  The Greenback will immediately lose a large portion of its value, at least in terms of imported goods, causing inflation in prices.  Oil and energy prices will skyrocket if OPEC follows suit (which they will, though the Saudis may still honor dollars for a time).  Doing any traditional business will become nearly impossible, and price inflation will dominate the lives and the minds of average unprepared citizens.            

The amount of time that it will take for these difficulties to unfold is also not clear.  We are operating in uncharted territory, and dealing with a collapse scenario on a truly planetary scale.  My best advice is to assume that the avalanche will move fast.

While markets in our country have seen only mild disruptions so far this year, their solidity is predicated on a host of props and costume pieces, any one of which could pull the rug out from under America’s suspension of disbelief if it strays but a little from the illusion.  As long as the dollar holds, stocks can be infused with bailout juice through major banks.  So can major companies and even desperate state governments on the verge of bankruptcy.  The Dow will remain relatively friendly, and day traders and the public will remain happy.  As soon as the dollar comes into question, all bets are off…

Does This Mean Doom, Or Just Another Bad Day?

The real beginning of today’s collapse is tied to the events of 2008.  The pace of it has been deceptive, but also, in a way, it is a gift.  Over the past four years, I have personally seen the awakening of thousands of people that may have never had the chance if the system had gone into full spectrum breakdown right away.  The question now is, how much longer can the U.S. wobble along on one wheel?  In my view, and from the evidence I see in markets at the moment, not much longer. 

It is hard to set aside any expectations that the next leg down will be easy to digest for the populace.  The reality of our predicament is starting to hit home.  All the tax return checks have been spent.  The credit cards have been maxed.  The new cars have been sold off and traded in for ghetto-mobiles.  The good jobs have been replaced with Taco Bell slavery.  A trip to see The Avengers is now the family vacation.  And, the distractions of reality TV just aren’t buttering our bread anymore.  It’s the little things at first that really signal the financial mood of a society, as well as reveal the more vital and looming issues just over the horizon.

All indicators suggest that this year will be unlike any other before.  In 2008, we saw the first trigger events for the collapse.  In 2008/2009, we saw the creation of the bailout culture, setting the stage for inflation and dollar disintegration.  In 2010, we saw the first bilateral trade deal cutting out the dollar between China and Russia, which is now the template for trade deals all over the globe.  In 2011, we saw the first downgrade of the U.S. credit rating and the crisis in the EU become epidemic.  In 2012, I see not just another difficulty to add to the mountain, but a culmination of all these detriments to produce something entirely new; a vast and subversive realignment forcing many of us to take a more aggressive stance in the fight for an economically and socially free America.

Financial disasters have always been a convenient catalyst for a host of even more frightening obstacles, including civil unrest, and blatant totalitarianism.  This is the cusp.  It is one of those moments that people of later generations read about in awe, and sometimes horror.  The “doom” is not in the event, but in the response.  What we make of the days approaching determines the darkness that they cast upon the future.  It is a test.  It is not something to be dreaded.  It is something to be seized upon, and dealt with, as great men and women before us have done.  At the very least, we know that it is coming.  That, in itself, could well seal our success…

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fonzannoon's picture

There's the gold smash down everyone was waiting for. 1585 by lunch?

maxmad's picture

Dollar will be all but dead by the end of 2012!  China is short the dollar preparing for the collaps!

LawsofPhysics's picture

If you are correct then I personally cannot wait to recieve gold in exchange for my next shipment of soybeans to China!  Pssst-everyone is shorting everyone's currency because they know all central banks are manipulating the shit out of them.  Wake the fuck up already.

hedgeless_horseman's picture



I believe that QE3 will probably be announced this year (due in large part to trauma from Europe), and, that this will trigger a mass movement by foreign nations to drop the dollar as the world reserve.

In exchange for what? 









fonzannoon's picture

I love the argument that because something has not been created yet means there is no possible alternative.

SilverTree's picture

Silver is on sale today.

Clueless Economist's picture

Pshaw..I will be worried when Jimbo Cramer is worried.

He was crowing last night that things are looking great because the Panera Bread and Chipolte's near his home in Short Hills NJ were PACKED!!!


pacu44's picture

BOOOOYAHHHH CRAMER did say the pigs were ready for slaughter !

whstlblwr's picture

Ron Paul Subcommittee to Examine Proposals to Reform or Abolish Federal Reserve

on CSPAN now.

Money 4 Nothing's picture

LOL! Good luck with that Political Kabuki theater! great entertainment though.

Xkwisetly Paneful's picture

War is always coming and has always been coming since dirt turned brown and decimating every military in the world won't change that.


How can anyone around here not be worried?

No fear, 26 pieces will be posted today to scare you if you are not already worried.

Largely from the same myopic POV and largely regurgitating the same crap over and over and over again. If you are already worried and insecure you have come to the right site for your daily affirmation.

francis_sawyer's picture

Maybe we could all just agree to have a "Dancing With the Stars" International Olympics, winner take all, to decide who goes home with all the loot...

redpill's picture

"The “doom” is not in the event, but in the response."

This is a critical concept in the coming turmoil, and perhaps the least understood.

chunga's picture

Redpill, yesterday I predicted SEC would sue BAC...I meant to say indict.


Popo's picture

That "myopic POV" seems to be empirically supported by history.

Xkwisetly Paneful's picture

Empirical history shows that the world floods into US bonds and dollars when things get dire,

to the point that at the worst times, they pay the US federal goverment to hold their fiat via negative yields.

Anything to the contrary is not empirical history it is ancient history.

and want to go to the endgame, it always ends in rioting and violence regardless of the amount of government intervention.  But the sun is still immature so who cares?


akak's picture

All you need to add to your babbled inanities is the repeated phrase of "US Citizenism", and your identity here will then be fully obvious.

Killtruck's picture

"Anything to the contrary is not empirical history it is ancient history."

Clearly nothing can be learned from ancient history, because this time it's different. It's so useless in fact, that we really only keep it around out of a sense of tradition.

matrix2012's picture


-deleted - unreadable due to indentation :-(


IToldYouSo's picture

also supported by numbers too

WatchingIgnorance's picture

Its cool. While he is celebrating, I am stealing his shit first.

dogbreath's picture

he didn't see the 2 for 1 kids eat free sign.

Rikky's picture

i live close to cramer and frequent the panera and chipotle's he does.  short hills and the immediate surrounding towns are upper middle class think family income north of $200k.  they live in their own little bubble around here and don't understand what's going on in 90% of the rest of the country.

WatchingIgnorance's picture

Good reply. People also don't realize that you don't need fiat currency. I can make something you need and exchange it for something I need.

Barter bitchez!!

LawsofPhysics's picture

Cannot wait to see companies like goldman sucks and GM bartering, it will be epic.

fonzannoon's picture

Goldman has warehouses full of commodities. They will have no problem bartering.

LawsofPhysics's picture

Bashhhhha ha hahha ha ha ha!!!!!   Sure they do.  Let me know how that works out for you when you try to take delivery!! (just like MF-Global clients)


CPL's picture

They have the slimmest line of JIT goods on the planet.  Most of those parts that come from the auto industry are from a company called Axel (, even then, they build parts on order.


so unless someone wants a block of a universe saturated with a recycling and scavenging business, I don't see the large corp making it very far.



LawsofPhysics's picture

Unless your "alternative" is backed by something fucking real, no-one will give a shit.  Thanks for showing additional support for the gold/commodity standard.  Oh, that isn't what you meant?  LOL!

Let me guess, your "bit coin" will save us all?  Fuck you, I produce real commodities, now give me something fucking real in exchange if you want to live.

Half_A_Billion_Hollow_Points's picture

hate to be the one to break the news for you, but bitcoin, based only in supply & demand and the laws of mathematics, has been for 2012 more expensive/valuable than all other currencies in the globe.  All of them.  Make that what you wish.

sunaJ's picture

Remember the "Amero" conspiracy following NAFTA  (American dollar union with Canada, U.S., and Mexico)?  Now we are speculating that the dollar may not be  intact by the end of the year.  What a world.  The forthcoming alternatives will be black market, barter, silver, gold and whatever central planning tries to impose.  It will be chaos.   Strap yourself in, boys!

francis_sawyer's picture

I see what you did there...


The odd thing is is that Hugh (You should start panicking) Hendry was now, just the other day, talking about being dollar bullish...

So I guess HE thinks...

Badabing's picture

hey HH i'm someone.

In 1933 they (the Fed) printed more dollars than gold, and they (the Fed) said we where experiencing a gold shortage! A fucking GOLD SHORTAGE? We don’t consume gold; all the gold ever mined is still here.

What we where experiencing was a dollar surplus.

Today is no different too many dollars and not enough products. This will not end well. They can use the markets to suppress the price of everything and make the dollar look strong but they can’t make food or oil or gold.

The world is awash in fiat and everyone has dibbs on a limited supply of the real stuff that keeps the world going. What the fuck gives them (THE FED) the right to starve people?


hedgeless_horseman's picture



Ok, be someone and answer the question...

"...foreign nations to drop the dollar as the world reserve."

In exchange for what?

GeneMarchbanks's picture

You must break free of Hegelian dialectics.

hedgeless_horseman's picture



Bullshit.  Let us hear some thesis statements on this question. 

The RMB?  Back it up.

Some new BRICS currency, on Brandon's timeline? 

I believe that QE3 will probably be announced this year (due in large part to trauma from Europe), and, that this will trigger a mass movement by foreign nations to drop the dollar as the world reserve.

It was a good movie, and Jane was hot despite being a commie pinko, but the imminent demise of King Dollar continues to be greatly exagerated. 

The world leadership is all on the petrol dollars.  Good luck ending that racket.

Paul Atreides's picture

1. Provide US dollars to the increasingly desperate IMF for more voting rights, just like the BRICS just agreed to do.

2. Setup bilateral currency deals with my largest trading partners with quarterly or yearly deficits to be paid in gold*.

3. Exchange US Dollars for tangible assets on the market ie: Oil, Gold, Silver, Corn, Grain, Copper, Steel, Manufactured goods etc...

4. Steadily sell my position to UST and US paper.

5. Purchase US Military hardware with worthless US dollars to beef up my defences.

6. Urge my countrymen to start saving in precious metals and have my Treasury by up as much gold and silver as possible.

7. Play along with the western MSM/US foreign policy and just when the SHTF I would deport/eliminate all the Rothschild Zionist banking scum that infiltrated my country, banks, media and government.

*Gold will become the mechanism for final settlement, the new reserve currency. With bilateral trade agreements you only need enough to cover the deficit with gold NOT all trade.


LawsofPhysics's picture

You are correct sir.  The dollar will be replaced and a gold/commodity standard will replace it.  Arguing that the dollar will lose reserve status is pointless unless you have something fucking real to replace it.

Popo's picture

Right, because you believe the dollar is backed by nothing.   It's just vapor, right?

It's a popular belief but in order to believe it, you have to believe that markets just "haven't figured it out yet".  And when they "get it",  the USD will all fall apart.

That belief, in turn, is predicated on the belief that markets are dumb, inefficient and misguided  -- And that you're "right" and the majority is "wrong".   And that indeed could be the case.

Or you could take the position that the dollar is backed by oil.  Which in turn is backed by the petrodollar.  Which in turn is backed by the biggest military in the history of the world, with bases strategically located throughout the oil producing centers of the world,  and active military engagements controlling production and supply.   Demand for dollars is indeed synthetic -- but it's there nonetheless.

Yes -- the US is fraying at the edges.  Yes, the US is in very deep shit economically.   Yes, the banking system is deeply insolvent.  But power -- militarily speaking -- is still power.  And America is not suffering a post-Soviet style power-slump.   Quite the opposite.    America is still unchallenged despite the rhetoric of a rising China,  who last time anyone checked still doesn't have the capacity to globally project air power (at all).

It's politically incorrect to say it, but it's the truth:   America is a military empire.   And it is the military that backs her currency through military and geopolitical control of energy resources.   Until the military is threatened, there will not be a replacement to the dollar.

Will that day come?   Yes.  Of course it will.  No empire lasts forever, and America is being stupid -- so they will eventually lose.   But betting against the house, when the house is armed to the teeth is generally considered a bad move.


LawsofPhysics's picture

Popo, I served my country.  Did you?

America will remain a military power so long as you are willing to sacrafice yourself or your children for the "leaders" you vote for.  Why don't you go think about that for a while.  Lot's of people talk about America's military, yet they didn't serve or don't know shit about how it works.

Take the creed of the Marines for example (Unit, Corp, God, and Country).  Notice that "Country" is the last priority on the list.  It is that way for a reason.  A military coup is a very real possibility that most paper-pushers and the average stupid American think will never happen.  Better think again.

Popo's picture

Are we all American here on the Internet?   News to me!   I am, however quite familiar with the US military.

And I agree with you about a military coup potential in the US.   Historically speaking, that would not be outside the realm of possibility if things got ugly.

Hugh_Jorgan's picture

"It was a good movie, and Jane was hot despite being a commie pinko, but the imminentdemise of King Dollar continues to be greatly exagerated. 

The world leadership is all on the petrol dollars.  Good luck ending that racket."


I agree but I think you missed a salient point; Brandon asserts that QE3 will be triggered by EU chaos which I think is valid. However, I think it is important to point out that the Euro-Collapse will likely be the very reason that investors will flee TO the USD in the short term, therefore no dropping the USD as reserve currency. It won't be until the USA finally (and fully) reveals the extent of its rotten core of concentrated ignorance, debt and economic malaise, that anyone will be able to realistically try to look at a new reserve currency.

centerline's picture

I think that the most direct comparison one can make to the former USSR is that we (US) are more likely going to rot/rust from the inside out than find ourselves out gunned.  The threat to the military you talk about very well could be socio-economic in nature.



blunderdog's picture

This just isn't right, though:

  Until the military is threatened, there will not be a replacement to the dollar.

The US military is the most powerful on Earth, and there's no meaningful threat from GUNS.  But "the military" can fall to pieces in a matter of months if the money flows are severely impacted.  The cause of the disruptions isn't at all relevant.  There needn't be any "threat" for it to collapse. 

Can't expect to maintain esprit de corps amongst a bunch of the underclass who aren't being paid.