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Guest Post: Road Map To Ruin

Submitted by Tyler Durden on 07/27/2011 11:10 -0400

From Alexander Gloy of Lighthouse Investment Management

Road Map to Ruin

Budget deficits in “good” times, build-up of government debt
Few countries’ (GER, NED) exports lead to trade deficits for others (GR, ESP, POR)
Costly bank bail-outs and fiscal “stimulus”
Monetary stimulus (0% interest rates); useless
Rating agencies finally wake up (downgrades)
PIIGS unable to sell more debt as yields rise
IMF/EU (read: taxpayers) step in to provide more debt, crowding out private investors
Austerity measures lead to social unrest

Corporations unable to access capital markets
Default and Euro exit by various countries
Run on banks, bank “holidays” (closed for week)
Insurance companies going bankrupt
Capital controls (restricted transfer of money)
Indiscriminate printing of money by ECB/EU/IMF
“Super-tax” on gold to punish “speculators” after gold price triples. Some Central Banks discover their gold is gone. Run on gold. Paper gold worthless.

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Wed, 07/27/2011 - 11:15 | 1497925 flacon

In the end you can't tax gold because the market will price in the tax on the price of gold.

Wed, 07/27/2011 - 11:17 | 1497937 Caviar Emptor

Borrow to pay the tax. repay with further diluted fiat, profit on the way up.

Wed, 07/27/2011 - 12:23 | 1498199 Hulk

Taxing inflation really burns my ass. Makes me want to rise up and bear arms...

Wed, 07/27/2011 - 13:29 | 1498456 KeyserSoze

Stealthily taxing the stealth tax.

Wed, 07/27/2011 - 11:25 | 1497968 sabra1

what if every country had their own tax rate, but of course, where the globalists reside, there would be no gold tax!

Wed, 07/27/2011 - 12:17 | 1498185 malikai

Let us know if you find out where that is. I'd like to set up shop there.

Wed, 07/27/2011 - 11:31 | 1497988 Long-John-Silver

Physical Gold will be sucked into the Black Market never to be taxed again.

http://3.bp.blogspot.com/_OGNyskFRCMo/TU77_Yr63OI/AAAAAAAAAFM/OTisl4JHIv...

Wed, 07/27/2011 - 13:32 | 1498467 KeyserSoze

How long before the gubment passes into law the ability for Federal agents to metal detect your private property to find your secret stashes of Gold and Silver??

Sounds idiotic enough for the gubment to do it.

Wed, 07/27/2011 - 22:49 | 1500199 StychoKiller

To quote a deadpan comedian: "People say it's a small World -- but I wouldn't wanna paint it."

Wed, 07/27/2011 - 11:15 | 1497928 Debtless

Both plans do nothing but allow 7-8 trillion of debt to be added to our nation's burden. They continue to fight over pittance.

Wed, 07/27/2011 - 11:21 | 1497932 swissinv

Wed, 07/27/2011 - 11:23 | 1497957 snowball777

How much coot could a bandicoot coot if a bandcoot could band coot?

Wed, 07/27/2011 - 11:29 | 1497982 Debtless

How many pancakes does it take to shingle a roof if a football has no wheels?

Wed, 07/27/2011 - 11:23 | 1497964 r101958

Gold just when from $9.5 up to 0.5 down and silver retraced most of its gains. Let me guess, the Congress/Senate just agreed on a bill and only the TBTF's were informed. We will be soon be informed, after they are allowed to make their money?

Wed, 07/27/2011 - 11:36 | 1498015 Long-John-Silver

That or someone is about to dump another 250,000,000 ounces of Silver on the market in one go 1 minute after NY closes.

Wed, 07/27/2011 - 11:27 | 1497973 InconvenientCou...

borrow every cent you can and buy gold and then default. We don't like most of the people in this country and we're here to see how low we can take this bitch. Join us now, to destroy collectivism once and for all.

Paul-Trump 2012

Wed, 07/27/2011 - 11:35 | 1498009 tamboo

also bait the bill collectors into breaking the law and sue for even more profit.

http://www.dallasobserver.com/2010-01-21/news/better-off-deadbeat-craig-...

Wed, 07/27/2011 - 11:27 | 1497974 monopoly

So few really get what is going on. They talk about fluff on TV. And the children continue to bicker in Congress. It will be interesting when the sheeples wake up and react. And they sell miners and gold. Just added more on the dump.

Wed, 07/27/2011 - 11:31 | 1497987 r101958

When the sheep wake up they will be flailing about like Wiley Coyote.

Wed, 07/27/2011 - 11:28 | 1497976 High Plains Drifter

brutha mean clyburn say, he worried about dem government checks ...........

Wed, 07/27/2011 - 11:32 | 1497983 baby_BLYTHE

the thought of bank runs is what keeps Benny up at night. The predicate of his thesis is that banking failures caused the Great Depression. Thus, when Great Depression 2.0 was imminent massive liquidity was injected to prevent this outcome.

ZIRP was implemented to maintain and keep the system afloat> Stealing from savers to prop up criminal banks.

They might try to levy a huge tax on gold, but like the poster above said the market will simply price it in.

In the absence of the gold standard, there is no way to protect savings from confiscation through inflation. There is no safe store of value. If there were, the government would have to make its holding illegal, as was done in the case of gold. If everyone decided, for example, to convert all his bank deposits to silver or copper or any other good, and thereafter declined to accept checks as payment for goods, bank deposits would lose their purchasing power and government-created bank credit would be worthless as a claim on goods. The financial policy of the welfare state requires that there be no way for the owners of wealth to protect themselves.- Alan Greenspan

History is repeating again today. With the Federal Reserve manipulating interest rates to historic lows, the American people have no safe store of value in this propped-up banking system. The average American has no faith in a stock market that was crashed twice in the past decade. I don't know a soul that owns any T-bills.

The whole system is a complete mess. The entire ideology of money/credit/savings/capital as been completely perverted by the trickery of the money masters. The American people have basically no economic freedom and are forced to participate in a system that actively is working against their interests.

A hard reset is the only option. It will be a painful outcome

Wed, 07/27/2011 - 11:34 | 1498003 Dr. Engali

I agree with the hard reset , but I think instead of a tax they will try an outright confiscation of gold.

Wed, 07/27/2011 - 11:43 | 1498050 Silver Dreamer

Speaking of history repeating itself, who on here would really be surprised by a move by the government to make personal ownership of gold, by us "little people" at least, illegal? I certainly would not. The stuff is awfully heavy however, and I suspect literally tons of it would mysteriously disappear in boating accidents galore.

Wed, 07/27/2011 - 11:45 | 1498058 Abiotic Oil

And if they do I think they might only find a bunch of lead.

Wed, 07/27/2011 - 11:50 | 1498069 Doyle Hargraves

+.308

Wed, 07/27/2011 - 12:09 | 1498152 Abiotic Oil

Got FAL?

Wed, 07/27/2011 - 12:23 | 1498217 Doyle Hargraves

No in Garand I trust!

Wed, 07/27/2011 - 11:47 | 1498065 Bam_Man

Congress' approval rating was 6% last time I checked.

Compliance with a "gold confiscation law" passed by said Congress would be even lower.

Wed, 07/27/2011 - 12:02 | 1498066 Bam_Man

Dup.

Wed, 07/27/2011 - 12:01 | 1498071 Bam_Man

Dup.

Wed, 07/27/2011 - 12:02 | 1498119 Ghordius

Really? I thought that US Goldbugs are all armed, cranky and without a sense of humor when it comes to their gold! ;-)

Wed, 07/27/2011 - 11:39 | 1498032 Abitdodgie

That was a very good insite at this time in the morning

Wed, 07/27/2011 - 13:33 | 1498435 Pitchman

Dear Baby B.

“This game is rigged man. We like them little bitches on a chess board.” – The Wire

Well put; insightful and concise. If you would like to submit original material for posting; post a comment at Inflection Point

Wed, 07/27/2011 - 13:50 | 1498523 OS2010

Thank you, baby_BLYTHE! Yours is the first time I've read a (readable) reasonable lead on The Bernank's thinking throughout all this. (I know, I know, it's probably been on ZH any number of times, and I missed it.)

It would be overly simplistic and would focus on the most misleading symptom of the GD-I, but at least it would be rational thinking after that point.

Wed, 07/27/2011 - 11:31 | 1497991 lunaticfringe

I ain't paying no fucking tax nor am I complying with any attempt to confiscate my silver and gold. Get a passport and find a place where owning a piece of metal is not some ridiculous felony driven by the ruling class. Or where there are no taxes. Geezus, you'd think we were the last place on earth.

Wed, 07/27/2011 - 11:38 | 1498026 pupton

+1 to your first sentence. Bullshit to the rest of it. We're not going to leave the country, we need to fix it. Hide your gold and organize a resistance. Leaving isn't a realistic option for 99% of us anyway.

Wed, 07/27/2011 - 12:17 | 1498186 Ahmeexnal

A black van just parked in front of you house.

Wed, 07/27/2011 - 12:22 | 1498212 Nom de Guerre

Hold on a sec. There's someone at the do--->>CARRIER LOST<<

Wed, 07/27/2011 - 12:23 | 1498213 Nom de Guerre

Wed, 07/27/2011 - 11:39 | 1498027 Long-John-Silver

or just tell them you lost it all in a boating accident.

Wed, 07/27/2011 - 11:41 | 1498039 pupton

The roadmap points toward ruin but doesn't take us all the way. What happens after "paper gold worthless?" Where is the "ruin".

Wed, 07/27/2011 - 11:41 | 1498040 Abitdodgie

Just shoot them , after all they are pissing us off

Wed, 07/27/2011 - 11:42 | 1498044 Abitdodgie

Does anyone know why spellcheck does not work anymore ?

Wed, 07/27/2011 - 13:11 | 1498389 DCFusor

Because you're not running firefox over linux that has it built in so you don't need the site's version anyway?

And the dupe posts are from click-monkeys who don't notice the site got the first click by looking in their status bar, and is just taking awhile to respond.

Wed, 07/27/2011 - 11:45 | 1498059 TheBillMan

Of course, the game will take awhile longer to play out since the American taxpayer is the lender of last resort via the Fed (i.e. we'll exchange Euro trash for newly minted but depreciating U.S. currency via swap lines). The Fed has been working overtime to bail out everyone, not just the U.S. system. At some point, everyone will realize that the Fed's bucket is full of holes and they're knee deep in water out in a leaky boat in the middle of the lake. That's the point at which the dollar goes from being worth about the value of the paper it's printed on to much less than the value of the paper it's printed on. We're not quite there yet. But the suicide bankers have the accelerator floored and the brick wall of doom rapidly approacheth.

Wed, 07/27/2011 - 11:45 | 1498060 slewie the pi-rat

i think we are nearly to the point where we can all exhale; and breathe a sigh of relief b/c the congolios are pretty close, it looks like, to giving prez0 about a $3 Tril blank check, no cost to anyone.

what the hell! why not? we're not european and it's too good a deal to pass up. we can default later.

print party august 2 @ satan's!

banksters only, but with trickle down parties in mail boxes, eveywhere! plus we've got a lot of bombs ordered, and lots of the cool drones, too!

vive la revolucion!

now, go shopping!

Wed, 07/27/2011 - 22:55 | 1500212 StychoKiller

Senator McCain called the demands "foolish" and "bizarro" and said they were "deceiving many of our constituents" and blamed them on newly elected House members' inexperience.

In other wordz: The noobs haven't received enough bribes from the banksters yet!

Wed, 07/27/2011 - 11:47 | 1498064 TheBillMan

Wed, 07/27/2011 - 11:48 | 1498068 Roger Knights

The garden path is a one-way street.

Wed, 07/27/2011 - 11:53 | 1498075 Doyle Hargraves

Mad Max time Bitchez!

Wed, 07/27/2011 - 12:02 | 1498115 nantucket

Hard reset around Dec. 2012, as the Mayan calendar predicts? sounds like they may be right. People wrongly think the maya calendar end means the "end of the world" but it simply means a transformation form an older world into a new one. The last major transition the calendar predicted was March 1519...Cortez invaded and conqured the Mayan region in that month. That was a game changer, huh? Who would have thought that ripping out hearts and precisely charting the stars was a way to tell the future? Wierd, huh.

Wed, 07/27/2011 - 12:07 | 1498146 Doyle Hargraves

Sometimes truth is stranger than fiction

Wed, 07/27/2011 - 12:48 | 1498321 sgorem

FUCK IT ! With DC the "hometown" with the most "ALTARS", I believe the "RIPPING OUT OF HEARTS" would be a great place to start sacrificing these WORTHLESS MOTHERFUCKERS, then on to WALL STREET to continue the cleansing that needs to be done. There WILL BE BLOOD IN THE STREETS BEFORE THIS IS OVER. Lock & load for sure my friends because WE are entering into uninmaginable new times of hardship that the sheeple will be scratching their asses over and asking "what the hell is goin on?" TOO late. Watch out for these Criminals to ban ammo, taking over/closing down the internet, shutting the cellular com down, etc. YOU could wake up one morning and not have anything left, including your plastic fiat card at your local fraudster bank. just sayin guys.....

Wed, 07/27/2011 - 12:12 | 1498165 vegas

I think the current criminal financial system survives this round of crisis, kicking the can down the road some. If Presidente Dip-Shit gets re-elected it's over as we know it in 2013.

However, whoever gets elected in 2012 [besides BHO] will have to seriously tackle the problem or else by 2015 it's over.

Either way, if you have money in the US, you still have time to get the hell out before government seeks to confiscate it. The system is so corrupt, I don't see how the current US financial system can survive

Wed, 07/27/2011 - 12:17 | 1498187 Rockfish

Cash for KUNLKERS has finaly come to vacant houses.

BofA Donates Then Demolishes Houses to Cut Glut

http://www.bloomberg.com/news/2011-07-27/bank-of-america-donates-then-demolishes-houses-to-get-rid-of-foreclosures.html

Wed, 07/27/2011 - 12:29 | 1498237 OldPhart

THAT. IS. DISPICABLE!

All those homeless due to Bank Loan Fraud.

Help clean up your community:

Shoot a banker.

Wed, 07/27/2011 - 12:34 | 1498239 Dirtt

Literally. I've been saying this since early 2008. If we spent TARP on shedding housing supply instead of spending money on filling houses we'd be out of this mess with deep flesh wounds instead of being in intensive care. Not only would have housing supply destruction created REAL JOBS (actually SAVED JOBS...Obama) , but the proceeds from selling recycled building materials overseas would have subsidized said strategy. And we could have done what the Fed could never do: stabilize prices.

I was a fringe heretic then. Now that an emigration strategy is in place, I'm a fringe heretic now.

Is this what Samuelson calls the fringe heretic economic theory that fills the void for "Professional" economists? All of you professional economists can KISS MY FUCKING ASS. And die. The aforementioned is all very well documented from Q1 2008. Tim Wood's InBox would confirm it if he didn't already delete it.

Wed, 07/27/2011 - 12:19 | 1498189 jmc8888

He forgets two things

At the top he should have ended it

"Budget deficits in “good” times, build-up of government debt"....to feed wall street and corporate machine

and

he forgets at any step in this process from beginning until now, and going forward, Glass-Steagall stops it dead in its tracks.

There is no bullshit continuum we have to go down. Glass-Steagall has always been the answer. There is no script, except the one the banksters want us to follow, and even then it's more like on a napkin, and always changing.

But of course, he doesn't want the thing fixed, he just wants to make a lot of money with gold.

Hey have gold, make money off gold, protect yourself with gold, but don't cheer for collapse because you own gold, otherwise you are just another bankster.

The best future is one that doesn't involve collapse. (that's not applicable to TBTF's as they WILL collapse)

Glass-Steagall

Wed, 07/27/2011 - 13:29 | 1498457 Samual Adams

Would you rather have 2 fingers cut off now, or two hands cut off later?

NOW is better than LATER. Default -- Mad Max -- SHTF -- Collapse NOW, then rebuild.

We ain't getting any younger idiots that don't want that shit above.

Wed, 07/27/2011 - 12:21 | 1498202 Dirtt

My belief is they will control the precious metal dealers first before criminalizing holdings. Make it hard to turn metal into liquid.

Small fish will have nowhere to turn. Big fish are forced into grey markets. History is there for anyone to see. SpookyVision. Try eating precious metals. (Well there is an idea. Trade it for dental care)

Wed, 07/27/2011 - 12:39 | 1498271 OldPhart

I have found that a number of store managers (grocery, car repair, pharmacy) are eager to accept a silver eagle and discount deeply for the exchange to come to a near market price. Best part is making sure sales tax is paid with FRN's.

So far I've done this six times to establish future viability.

Wed, 07/27/2011 - 12:32 | 1498245 Yardfarmer

speaking only personally, i had the good fortune to locate and take up residence in a remote rural location where i will wait out and hopefully weather the implosion of the economy and following social chaos and anarchy. as i am presently herding and milking goats and sheep and reaping produce of numerous hillside gardens, most of my family and acquaintances have concluded that i have abandoned not only my previous residence but my senses as well, convinced as they are of the basic and inherent stability of our social order . for my part i am equally convinced of the inevitability of massive social dislocation and economic collapse necessitating the path i have chosen and the attendant and demanding rigors of an agricultural life off the grid with no running water and only solar electric in a remote location. altogether this is a much more amenable alternative than struggling with hundreds of thousands of others in an urban environment as the underlying technological and economic matrix self destructs.

Wed, 07/27/2011 - 12:47 | 1498313 Lord Koos

Before patting yourself on the back too hard you might want to read up on what happened in Argentina's collapse to people in remote areas vs what happened people in the cities.

Wed, 07/27/2011 - 12:49 | 1498325 Rockfish

Ok I'll bite, what happened?

Wed, 07/27/2011 - 13:15 | 1498405 gdogus erectus

Hungry city dwellers would load up in a pick-up truck and head out to the small farms and raid them. Larger farms with multiple families and strong fences repell most of these types of small raids.

http://ferfal.blogspot.com/2010/05/ferfal-in-usa.html

Wed, 07/27/2011 - 14:29 | 1498703 stewie