Guest Post: The Economy Is On The Ropes And Going Down

Tyler Durden's picture

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nyse's picture

We're gonna need some smelling salts soon...

JumpinJonnyK's picture

I think we are going to need gold and silver not salts.  Premiums and shipping times are rising on silver in the US again  Glad I took action in 2007 and bought a good bit of silver and lead!

SheepDog-One's picture

Gold and silver metal is ok....copper jacketed lead metals gets you out of severe pinches more surely though.

Jay Gould Esq.'s picture

Appropriate image inserted in that flowchart -- of a Lancaster "Dam Buster."

Purely coincidence, no doubt.

optimator's picture

I read it as a standard Lanc, Battle of Britain Memorial flight,  that carried incendiary conflagration starters. Think firestorm.


Pure Evil's picture

Is it time for World War III already?

Estrella's picture

Yeah but... those guys got shot up very badly. I think the loss rate was over 75%. A bold plan, but it failed. Hmmm...

Silver Dreamer's picture

We're also going to need a lot of lime and trash bags.

HardlyZero's picture

Ron Paul might be on the correct side of this equation.  I think his smaller is better approach may work out just fine.  I don't have any qualms about his integrity or judgement.



Excellent charts and points.  My opinion is that fiat printing is not "capital" at all...its just paper which is not really capital.  Capital is something tangible...that you can touch and feel...that is owned and not borrowed.

The problem is real capital is hard to come by these days...and the economy is based on fiat capital which is 10000x the size of the real capital.  What you gonna do ?

Deadpool's picture

maybe Rue Paul...nobody can fix this multi generational (since 1913 to be exact) problem. By the time the fool that gets sworn in on that freezing January 2013 day the paper currency the world will be floating on will drown everything. The sooner we realize the F'ed killed us the sooner we can be reborn.

SheepDog-One's picture

Rue Paul! Now thats funny!

baby_BLYTHE's picture

that line comes from the Zionist radio talk jock Mark Levin. There are numerous youtube videos of Levin blasting Ron Paul over his views on Foreign Policy. Levin loves war claiming, if in charge, he would double the size of our already oversized military.

go to the :48 second mark

We are not going to let them get away with their tricks this time around!

BigJim's picture

Mark Levin - what an unpleasant man. If he's a semite, I'm not surprised he finds many people are anti-semitic.

MSimon's picture

Economic distress often brings large wars. Ron Paul may not be as smart as he thinks he is.


BTW LOVE him on domestic policy!!!!!!!!

HardlyZero's picture

We just have to figure out how to downsize this megalith, this megadeath.

Listen to Peter Gabriel song from late 70's "DIY"...keep it small....and Do it Yourself.

We have to "come together" and DIY and Keep it Small.

SheepDog-One's picture

Yea thats the problem, which multi billionaires are going to step forward to be 'downsized'? None of em! Meanwhile the rest of the public is bankrupt, so we all know the answer is huge haircuts must be taken but there arent any volunteers and wont be any tomorrow what to do....oh I remember how they always 'solve' this-

World War.

Deadpool's picture

Russia did it, Argentina did it, Iceland did it. All it takes is the political will to rip the band aide off quickly and let the banks that made bad loans and the lenders that lent foolishly take hits. Until the dead wood is flushed out the economy can't heal and begin to grow again. Look at New Zealand post Christchurch earthquake...growing again nicely, thank you very much. Take the pain, heal, grow. What US and Europe are doing is providing the heroin addict more heroin. Keeps the body alive, but doesn't cure the addict. The ever expanding debts that banks need to grow (and governments need to economically enslave) is over. Bring on the hard times so the good times can come sooner. Gov't intervention is the problem...

r101958's picture

....however, we need to realize that the 'growth' or 'recovery' will be completely different from what we have known in the past.

fonestar's picture

The problem is with these bubbles is that population levels are tied to them as well.  Yes, smaller is better and that also spells a die-off just like rabbits in a ten year cycle.

falak pema's picture

small is paradigm change...frugal living...and innovation.

Josh Randall's picture

I didn't see Chewco on that flow chart, now I'm really concerned

NEOSERF's picture

Great article...important to keep the eye on the ball and not get wrapped up in the rumors, headlines and general puffery going on in the media...this is going down, whether this week, next or early next year...the data says it has to.

giocatoli's picture

This article is so negative.  Let's have something a little more 'glass half full' shall we?  I saw a unicorn this morning, for example.  And it gave me a ride to the end of the rainbow...

B9K9's picture

Boy, everyone is embracing sarcasm these days - I guess it's the new black.

As to the main article, Chris, the system was always headed for collapse as long as humanity did/could not discover & develop an alternative to oil. If compound principle+interest is growing @ 2-3% per annum, it requires GDP to grow at the same relative rate simply to stay even. Since GDP correlates exactly 1:1 with oil consumption, that means oil utilization must grow @ 2-3% to avoid a deflationary collapse.

Hubbert nailed it - once the USA passed peak domestic production in the 70s, the transition to a credit financed consumer economy in the 80s was foreordained.  I mean, it's all we had; that, and a global military operation in which to enforce the dollar standard. Otherwise the boomers would have had to eat the shit sandwich that is now on everyone's plate.

Denninger keeps talking about how our political 'leaders' need to conduct "an adult conversation" with the body politic. This little talk should have taken place 30 years ago - now it way, way too late. Of course, the bankers who not only saw this occurring, but actually engineered the system to take advantage of the new paradigm have made off like bandits.

Jesus H. Christ, but wasn't it a sweet ride while it lasted?

SheepDog-One's picture

'Satire is the peoples last weapon'

LFMayor's picture

I thought it was sticks and rocks.

hidingfromhelis's picture

No, those will be the next weapons.

oldman's picture

The glass is half empty of what you want and half full of what you don't want to read or hear about; that is just how things are.

Maybe what we want does not exist and the glass is full of what 'is'. Who can say? And what are we going to DO about it, anyway.

I am tired of reading on ZH fantasies about fantasy as we post every unfounded rumor that shows its head, but this is all the news there is

Yeah, me too: what I want does not exist                  om

Sunshine n Lollipops's picture

Hey oldman! (I'm giving you the Do-Nothing Gang secret handshake.)

Y'know, I got to the point where I didn't want anything. Nothing. It was very boring. It was the result of my trip to transcendentalism. You know, eliminate all desire until you disappear into nothingness. Sheesh, what a goal! Didn't become transcendent, that's for sure, but I was able to disconnect from the material world for a while. But the raw, messy spectacle of it was irresistible, so here I am at ZH with a front row seat at the ongoing carnival of tragi-comic human self-destruction. My righteous fury has almost completely abated, since I've come to terms with the reality that there's fuck-all I can do to change any of it. The apparently cataclysmic trajectory we're on frequently brings moments of despair, but bemused resignation generally takes its place. I'm thoroughly convinced that none of it matters a whit, and as you said, it's all fantasies on top of fantasies, a dream. The world as it's presented to us these days is an aberration, an abomination, nearly devoid of humanity in the macro. All we can do is dream our own dream and make sure it's a sweet one and always keep a song in our hearts. And try to avoid any activity at all if possible.;o)

oldman's picture


We are in just about the same place.

This stuff is addictive and also helpful to an oldman's mental health if I just do not get too attached to it. The conditioned self, however, loves to see how important it is and measure what others think and play games----I go to the forest as often as I can as my remedy---but, it is a trap.

Knowing you are trapping your 'self' is not the same as the feeling of 'being trapped' was----and I laugh at this oldman all of the time.

Living in a cartoon is the best place i've ever lived     om

Going Loco's picture

A delectable example of resource depletion was reported on BBC this week. Helium may be a common element but it's hard to get (damned hard to make), stocks are running low, and it's desperately needed for MRA scanners and other cool things. What are we doing with it? 16% of consumption last year went up into the atmosphere in kids' party balloons and is presently making its slow but inexorable way out of our atmosphere and out into space.

Having said that, and much as I admire him, I don't agree with Chris Martenson's analysis of OT2. I prefer the analysis which was posted here, possibly the most brilliant post I have ever seen on this board:-

papaswamp's picture

Yea Lefty is freaking brilliant. Like the TD's he is one of those people that completely sees the whole game as opposed to just seeing the part immediately in front. It is going to be a crazy ride....what is really nuts is it seems that things really are going to unravel in 2012. I'm not a believer in the craziness of the ancient predictions....but they may end up being damn close to when this game of musical chairs is over and the people have no place to sit.

Joe Shmoe's picture

I think a lot of people agree with downsizing the government.  It's just that the timing is all wrong.  Try to radically downsize now and you could be sure the economy would collapse.  That's what's so annoying about policy right now.  No one had the balls (or votes) to do enough of any particular policy.  We didn't go down a Keynesiain pathway, we went halfway down that path.  So it didn't work and now we can't get off the path.  Austerity measures in a fragile economy may make the Tea Partiers sound macho, but it's totaly suicidal policy.  We're fucked between a rock and a hard place.  We should never have done the TBTF bailouts.  The aftermath of letting C and BAC, etc. fail would have been super painful.  But we'd be working htrough it by now.  We are in the land of classic Econ soundbites: "moral hazard," "pushing on a string."    

SheepDog-One's picture

Well 1 thing is for damn sure, the government does NOT agree with downsizing the government so get ready for war if thats what you want to make happen.

Sgt.Sausage's picture

==> Try to radically downsize now and you could be sure the economy would collapse.

It's going to collapse, anyway.

Might as well kill two birds and knock out the bloated, useless bullshit at the same time.



Joe Shmoe's picture

Define collapse... what you really think is going to happen, in real life and not in some rural trailer park fantasy world where you get to save the world by shooting the bad guys.

PaperBugsBurn's picture


Going down, bitchez!!!

Get the bankstasssssss!!!!!

The zionista drug traffickers and juden fetzen pushers along with their illuminati brethren!

monopoly's picture

A quiet day so far, nothing much going on. FCX almost 50% off its high. The best copper producer out there. China slowing down, we all know the rest and interest rates creeping up ever so slowly.

Quiet before the storm?

It always amazes me that some would rather buy the dollar then an ounce of gold or silver. But, that is why they call them "markets". Always two sides.

gjp's picture

None of this is any problem.  AMZN is releasing a new tablet, the world is saved!

SheepDog-One's picture

Yet equity Hindu cows are looking on at the Western World economic devastation and calmly chewing their cud as if theres no danger at all today, tomorrow, or ever.

fdisk's picture

Cheerleaders forgot to compare SPX and Gold/Silver..
should I say correlation? You better pray for Market recovery
or get your toaster ready for Gold/Silver sandwiches. :)))

SheepDog-One's picture

'Market recovery' in what? Take the lowest index, we're still only 15% below ALL TIME highs.

fdisk's picture

You wanna see $4 Silver? Don't tell me those who hold 10k oz would be happy to see 400k$ turn into 40k..

I guess, you just forgot, that Silver and Gold belongs market as well named - Commodity Market

SheepDog-One's picture

See, your mistake is saying '$4 dollar silver'...what its priced at in dollars is irrelevant. The equation is reversed. 

Going Loco's picture

Sheepdog - if the dollar price of silver is irrelevant I guess you won't mind buying my little stash for USD$10,000 an ounce, today? Not in 2 years' time. Today.

Silver Dreamer's picture

Most people I know are not buying PM's to make US Dollars.  You're missing the entire point.  When all you have is fiat currency and fiat currency backed assets but are still broke because they are worthless, you might begin to understand.  When you're starving because your fiat currency buys nothing, you might begin to understand.  I wouldn't bet any money (or PMs) on it however.

Prometheus418's picture

That's a sad strawman.

No one in their right mind pays more for anything when they do not have to.  It has nothing to do with how a person respects the dollar or not- is is a matter of common sense.

If we are at peak oil, as some claim, and there is a say coming when food is precious and gasoline is non-existant, there is no reason why I would trade you a truck for an ear of corn right now, whether I knew that day was coming or not.  Everything has it's time and place.

Rhodin's picture

 Dollar price of silver is irrelevant today, only if you are the Fed, or Fed crony bank, and have no cost dollars.  It MAY eventually be true for all of us, IF wages, goods, bills, and taxes can be paid in silver and/or if dollars are worthless.

Today i watched silver price drop $2, then bought a small stack.  I then watched it drop another $ in an hour.  The price matters to me because i would have more silver now if it was lower when i bought. 

I will keep stacking  if it goes to $4 or $4k, but that number will impact how much i can stack.



monopoly's picture

Not sure how you figured that. Spoos at 1,530 once, now 1,170. More like 25% to me. Am I missing something?