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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blunderdog's picture

How does selling my gold get me a job, though?

dark pools of soros's picture

Gold is a store of wealth nothing more..   if you are poor you have no wealth to protect.    But even if you are poor, you would be a fool to not have at least 1oz of gold and a handful of silver so you can keep your wits in the storm a coming



blunderdog's picture

Can you answer for WidowMaker, or are you as puzzled by him as I am?

Killtruck's picture

I see. So you don't see PM's as a store of wealth/converted human labor, but rather fear? Nothing productive? Is that why we so rarely use silver in industry?

True, the young need employment, but in times of crisis a store of wealth allows those young to maintain capital when there is no employment to be had. As far as irate girlfriends, there's always a risk with any store of value. I'd personally prefer the risk of an irate girlfriend as opposed to a desperate bernanke. Age has very little to do with this whole thing though. The real matter we're talking about is that if there's a shitstorm coming, you should find out which way the wind is blowing and try not to get any on you.

In my mind, if you're over 50, you should be buying PM's to cash out of the paper assets so the Fed doesn't print away your life's labor, and everyone who is currently employed that wants to be saving but is getting nothing in interest on savings should be "saving" in PMs instead. I agree with you that everything is cyclical and PM's are not prudent for a long duration (as far as profits are related), but the reasons PMs were good for the Romans are the same reasons PMs are good for us today.

LawsofPhysics's picture

Contradict yourself much.  How about this.  You are young, have a job and want to be your own bank in the future.  Why not by all the gold and silver you can right now and all the way down during the short deflationary spiral?  Regardless of the "fiat du jour", you will be well positioned.

Never knew a PM holder who starved, that is for sure.  Morevover, I hear all this talk that gold is no good for the "long duration".

Seems to have held up for a few thousand years, is that not long enough for everyone?

Golden monkey's picture

Right. Smart money is buying PM's.

Most employed don't, however. Foolish dumbs are everywhere now.


qmhedging's picture

It's rumored that china will have some serious clashes with Philippine for some islands on south china sea very soon

toady's picture

Huh... the US was there for a LONG time... you would think they would've stole all the natural resources back then...

You think there's oil under there?

Cast Iron Skillet's picture

sounds like a very balanced conflict ...

Matt's picture

The Phillipines probably has a better Navy. Is China close enough to these islands they can use land based air fields, or will they be relying on their one aircraft carrier?

AGuy's picture

LOL! You could not be more wrong. You see China is holding a lot of US Money (cash and bonds). Its not going to dump and take a huge loss, much like a investor who lost money on a stock isn't going to sell it at zero, but at the best market price they can get. China, is going to slowly convert its US money into tangible assets, a process that began in 2007-2008 and continues today.

The EU collapse or breakup of the Union will buy the US dollar some time as the world focuses on its options to avoid the EU carnage. Already the price of Oil is falling under the pending breakup of the EU.

QE3 will not break the dollar. Its going to take much more time than the writer of this article claims.  Its likely that the US dollar will survive at least four more years, as the collapse of the EU will happen over a couple of years. Over the next two years we will see the PIIGS leave the Euro, whille the strong northern EU nations stand firm. Eventually the northern EU will choose to abandoned the Euro, probably through a currency diversification (pehaps countries are permitted dual currencies). The US dollar will strengthen against the Euro. Its the classic game of "I don't need to be faster than the lion, I just need to be faster than the person running next to me", which the Euro is the person running next to the US dollar.

Also consider that QE programs in other nations have gone on for very long times. Japan has done it for over 20 years, Even the Zimbawe dollar manage to survive a long peroid of QE before it collapsed. At the very worse the US dollar will experience high inflation for an extended period, lossing between 5% and 12% per inflation. The US gov't will go on printing money to keep its doors open for years during this period.

Also consider that come 2013, tax rates go up. This will likely be disinflationary for a period as consumers cut back spending in order to pay their higher tax rate.

LawsofPhysics's picture

Pssst, everyone has been selling U.S. paper moron.  The Fed is the only buyer.  

So you contend that China is not manipulating their currency?  FAIL.

Moreover, if you are correct I still get to recieve gold in exchange for my soybeans, fine with me.

AGuy's picture

"Pssst, everyone has been selling U.S. paper"

Yes but not dumping idiot. Selling slowly to avoid sending the dollar over the cliff. They been netsellers of the dollar since 2009 and its still hanging in. Psst, they are starting to sell and dump Euros and they will be selling Euros faster than the dollar since gonna fail first.

"So you contend that China is not manipulating their currency?"

Which way are they manipulating their currency? Up or Down? You just help validate my point.

"The Fed is the only buyer." So what that does not mean the Dollar is going to collapse tommorow or before the end of the year. You really think the dollar is going to worth toilet paper by Jan 2013? I think not.






theTribster's picture

I don't think so. The BRICS are likely to provide a Gold backed standard currency that they require everyone to use when pruchasing from them. Counttries will have to deposit Gold to get the currency and then make the trades with BRICS. It is a brilliant strategy as outlined in Currency Wars and its clear they are positioning to do this via all thier covert Gold purchases.

The management of this currency will likely be down outside of the BRICS themselves so everyone can feel comfortable using the currency. We've been stealing growth from ALL of these countries via currency manipulation for years but the last 4 years have been nothing more than rape! The dollar is walking dead, you are right that a flight to safety will occur as the Euro disintegrates - both to the USD and the YEN. This will be short-lived however, because QE III/IV is coming our way and that WILL be enough to kill whatever confidence is left in the dollar. Regardless though, the BRICS are on a mission and they will offer a better alternative (Gold backed or commodity basket backed) than the dollar. 

The days of US financial dominance are over as are the days of the dollar being "as good as gold"! Sticking with that paradigm will likely lead you to a very bad place, very soon. The next QE won't be a QE but a direct transfer of our retirement wealth into Gubmint binds, all 54 trillion worth! That's right, they'll steal that money under the guise of "Good for America and Good for you", this will be an easy sell to Americans after the stock market implosion - maybe they'll use the new floaters they've been talking about?

The actions of our Government over the last 4 (minimum) administrations has been nothing short of Treasonous, by all the branches and almost all the members. The only way to get our country back is to purge the system and start fresh, this is unlikely. The dollar demise was predictable, especially when you look at the actions of our officials over the last two decades. Corporatocracy is the new format, sort of fascism without the ruff edges (so far). Keep printing Ben, you are sealing your own destiny as well as the destiny of all your capitalist cronies.

Since Ben doesn't understand history he is totally unaware of his fate and how he has sealed it with the destruction of our economy and currency, thanks Benny....

LawsofPhysics's picture

Right, so I will get gold or a gold-backed currency for my sorbeans.  Thanks for being so re-assuring.

AGuy's picture

"he BRICS are likely to provide a Gold backed standard currency that they require everyone to use when pruchasing from them. Counttries will have to deposit Gold to get the currency and then make the trades with BRICS"

I think not. That would crush there export led economies. They need to continue to diversify with a basket of currencies, but they won't demand gold since nobody A has enough gold, and B aren't likely to trade gold for oranges (Brazil), or plastic crap (Asia). If the BRICs wish to continue to export they will have to accept non-PM currencies.



LMAOLORI's picture

I disagree they still have Collateral to use (the American Taxpayers)


Hedge Funds Betting Against the Eurozone: Why You Should Worry


Obama's DOJ And Wall Street: Too Big For Jail

LawsofPhysics's picture

Let's hope so.  I have been waiting for several years to add some more physical to the portfolio.

fonzannoon's picture

Yeah it's funny that gold dropping huge gets some downvotes. Makes you wonder who the real bulls are and who the ones who just got in recently and can't handle the thought of a drop are.

fuu's picture

Bring out yer sales!

Manthong's picture

VIX is telling you how real the flight from gold is.

Harlequin001's picture

If gold goes down below 1600 I'll be selling half of my gold... and buying silver.

If it goes down below 1550 I'll be selling what's left of my gold, and all in silver, back in gold by 2000...

Should work out nicely...

ArkansasAngie's picture

Gold is an inflation hedge ... it is not a deflation hedge.


Dr. Richard Head's picture

in/deflation-smation. Delfation in what?  Flat screen TVs, Home Values, cell phones, and new cars?  While I see see lower prices in goods one does not ned, I see see higher prices in goods everyone needs (food and energy).  That being said, the money supply has already been increased.

DosZap's picture

in/deflation-smation. Delfation in what? Flat screen TVs, Home Values, cell phones, and new cars? While I see see lower prices in goods one does not ned, I see see higher prices in goods everyone needs (food and energy). That being said, the money supply has already been increased.

The way I see it we are in Stagflation(if you can get past the lies of the PTB).

Also, this is one of the main reasons for the American pandemic of FAT ass syndrome.............folks are having to eat cheap crap because real food is too damn expensive.

Dr. Richard Head's picture

Hence the constant GMO corn subsidies and corn ingredients in every piece of shit food out there.  Gotta feed the cattle corn I guess.  Get 'em nice and fat and juicy.

Matt's picture

I suspect it is more of a crony capitalism, Corn-lobby based problem then a price-based problem. Although eating KFC instead of home cooked food is a choice (also not price-based), actively avoiding High Fructose Corn Syrup and GMO products is fairly difficult.

Dumpster Fire's picture

Cabbage is cheap and pretty filling.

Bastiat's picture

How about when "deflation" leads to loss of confidence in a currency?  Contracting economic activity means bigger deficits and this means more debt monetization; more debt monetization leads to increasing loss of confidence by foreign investors and requires more debt monetization.  Loss of confidence in the currency devalues it and leads to higher costs for imports.  The fact that the Fed prints trillions only to save governments and banks doesn't mean it is not inflationary.

WonderDawg's picture

Yeah, but the trillions the Fed has printed, including what we don't know about, barely makes a ripple in the global shadow banking market. It's kept the credit bubble from deflating all at once, but when the air rushes out of the bubble by the hundreds of trillions, the Fed will be powerless to stop it.

Dr. Richard Head's picture

Powerless for 15 minutes only.  After that, Ben said he's got it in the bag.

justinius1969's picture

Bingo my man.. Debt deflation is unerway.. All those IOU's that will go PUFF..and no amount of fed printing will compensate ...consequence.. a massive shortage of the dollars, again.

WonderDawg's picture

Exactly. I expect serious deflation prior to hyperinflation, so to me, gold getting hammered is just a great opportunity to phase in more buying. Especially after my recent boating mishap.

fonzannoon's picture

I am going to invent a boat with a built in hole in it but the hole does not sink the boat. This way accidents can still happen but no boat repairs will be needed.

fuu's picture

I've been buying scuba gear off ebay and hiring Filipino immigrants to start scouting lakes in the US for booty.

Gully Foyle's picture


Did your moms take away your little rubber boat from bathies cause you kept slamming it into the lighthouse?

You got to be what fifteen? Who else uses "dawg" these days, except old loony tunes revivals of Deputy Dawg.

Ricky Bobby's picture

I was wondering Gutty Fuge how much do you get paid for spewing all this disinformation, does it come with a pension and full health care benefits?

Floordawg's picture

Wow. I stand in awe, bathed in the glorious light of your contributive insight!

Please, let me join your exceptional club of "dawg" haters... It's really something we should all be worrying about.

WonderDawg's picture

Dude. You're embarassing yourself.

LawsofPhysics's picture

No, gold is a safe store of value because you never have problems turning it into the fiar du jour (well at least in a truly free market).

DosZap's picture

Gold is an inflation hedge ... it is not a deflation hedge.

Epic Fail...................................its BOTH

jayman21's picture


Try a hedge against manipulation and confidance with a fiat currency.  Look through history where you see inflation or deflation and then look a t a gold chart.  Did gold really go up/down where you thought it should?

If you have 6 free hours watch these short videos.  I am still a deer in the headlights thinking about the content.

When you are done, he has created a second video call the silvershield.  Still watching it, but I get the idea.

Stoploss's picture

You can always tell when HSBC is in da haiouse!!


No gold bashing yesterday, UK was closed.

Floordawg's picture

Bravo-Tango-Foxtrot-Delta... Over

Gully Foyle's picture

Ok which one of you had an Al Gore pulled on him by Travolta?

John Travolta
Sued By Masseur
He Touched My Penis According to the lawsuit, Travolta saw the masseur's ad online, and scheduled an appointment for $200 an hour. The masseur did not know it was Travolta when the appointment was booked, but followed instructions and met up with a black Lexus SUV, which Travolta was driving. 

According to the suit, Travolta and the masseur, who says he saw Trojan condoms in the center console, drove to the Beverly Hills Hotel and went to Travolta's bungalow.

The suit claims Travolta stripped naked, appearing semi-erect. The masseur says he told Travolta to lay down on the table and the first hour went without incident. Then, according to legal docs, Travolta began rubbing the masseur's leg, touched his scrotum and the shaft of his penis. 

The masseur claims he told Travolta he did not have sex with his clients, but Travolta was undeterred, offering to do a "reverse massage," adding, "Come on dude, I'll jerk you off!!!"

The suit goes on to allege Travolta then masturbated and told the masseur he got to where he was "due to sexual favors he had performed when he was in his 'Welcome Back Kotter' days," adding "Hollywood is controlled by homosexual Jewish men who expect favors in return for sexual activity."

The masseur -- who is only listed as John Doe -- claims Travolta called him a loser, but then doubled the hourly rate and sent him on his way.

The suit seeks $2 million plus punitive damages. ( The Jew thing was the give away. Now who was it?)

_underscore's picture

Really Sir, what are you doing on here posting these salacious & irrelevant stories? Genuine question.

krispkritter's picture

Guess he ran out of National Enquirer back issues and his Mom cut his internet access to 2 hours a day...

Buckaroo Banzai's picture

It's a badly-kept secret in Hollywood that John Travolta enjoys gay sex.

francis_sawyer's picture

Up your nose with a rubber hose!