47 Statistics That Indicate That Economic Stress Points In 2011 Could Be Setting The Stage For A Global Economic Meltdown In 2012

The American Dream
Feb 16, 2011

Is the world approaching a devastating global economic meltdown?  Right now there are a large number of factors that are creating economic stress points all over the globe.  All of the crazy money printing that the Federal Reserve and other central banks have been doing is putting inflationary pressure on agricultural commodities, oil and precious metals.  Massive floods, horrific droughts and extreme weather patterns all over the globe are ruining crops and creating food shortages.  Some nations are now actually hoarding food, and in other nations rising prices have sparked food riots.  The price of oil has been moving back towards $100 a barrel, and if it stays at a high level for an extended period of time that is going to have very serious consequences for the global economy.  In addition, the growing sovereign debt crisis could erupt again at any time.  Half a dozen nations in Europe are on the verge of insolvency, Japan’s national debt is now well over 200 percent of GDP, and the global financial system is growing increasingly concerned about the exploding national debt of the United States.  The truth is that the entire world financial system is a house of cards balanced on a razor’s edge and it could come down at any time.

Sadly, very little has changed since the world financial system experienced almost a complete meltdown back in 2008.  Global financial markets are still a whirlpool of debt and speculation.  One really bad week could put us right back where we were prior to the infamous Wall Street bailouts.  Very little in our world is truly stable anymore.  As we have seen recently in Egypt, the globe can literally change almost overnight.  All it would take is for one really bad event to happen and world financial markets would instantly start imploding.

So when will the coming economic collapse happen?  Nobody knows for sure, but the fact that the global economy is increasingly becoming less stable as we approach the year 2012 is making a lot of people very nervous.

The following are 47 statistics that indicate that economic stress points in 2011 could be setting the stage for a global economic meltdown in 2012….

#1 According to the United Nations, global food prices set a new all-time record during the month of January.

#2 In early February the worst freeze in 60 years wiped out entire crops all across the southwestern U.S. and northern Mexico.  Already, it has been reported that some U.S. supermarkets have doubled or even tripled prices for certain produce items.

#3 It is being reported that due to the recent horrible freeze in Mexico cases of tomatoes that would usually cost shop owners between 12 and 15 dollars are now going for up to $40.

#4 One of China’s key agricultural provinces is facing its worst drought in 200 years.

#5 The Food and Agriculture Organization says that up to two-thirds of China’s wheat crop could be at risk of failing due to weather conditions.

#6 Officials in Mexico are estimating that four million tons of corn have been lost because of the recent freeze.  That represents a full 16 percent of Mexico’s annual corn harvest.

#7 The price of corn has doubled over the last six months and it recently hit a new all-time high.

#8 The U.S. Department of Agriculture has announced that corn supplies are the tightest that they have been in 15 years.

#9 It appears that Chinese imports of corn will be about 9 times larger than the U.S. Department of Agriculture originally projected them to be for 2011.

#10 The price of wheat has more than doubled over the past year and it hit a 30-month high on Monday.

#11 In the event of a global catastrophe, current global stockpiles of wheat would only be able to feed the world for 82 days.

#12 According to Forbes, the price of soybeans is up about 50% since last June.

#13 The price of cotton has more than doubled over the past year.

#14 The commodity price of orange juice has doubled since 2009.

#15 The price of sugar is the highest it has been in 30 years.

#16 The United Nations is projecting that the global price of food will increase by another 30 percent by the end of 2011.

#17 In the U.K., the official rate of inflation is now twice as high as the target rate of inflation.

#18 Inflation in China is starting to get out of control.  For example, food prices in China rose 10.3 percent during the month of January.

#19 Almost 14 percent of all credit card accounts in the United States are currently 90 days or more delinquent.

#20 New home sales in the state of California were at the lowest level ever recorded in the month of January.

#21 According to the U.S. Bureau of Labor Statistics, the number of job openings in the United States declined for a second straight month during December.

#22 Average household debt in the United States has now reached a level of 136% of average household income.

#23 It is estimated that there are about 5 million homeowners in the United States that are at least two months behind on their mortgages, and it is being projected that over a million American families will be booted out of their homes this year alone.

#24 Today, 46% of all Americans carry a credit card balance from month to month.

#25 700,000 Americans have signed up for a credit card that has interest rates that go as high as 59.9%.

#26 Americans now owe more than $889 billion on student loans, which is even more than they owe on credit cards.

#27 The FDIC is “insuring” U.S. bank deposits that total 5.4 trillion dollars with a deposit insurance fund that is currently sitting at approximately negative 8 billion dollars.

#28 The Social Security trust fund will run a deficit of 56 billion dollars this year.  Just a couple of years ago government planners were promising that we would not have any Social Security deficits until at least 2016 or 2017.

#29 When you adjust wages for inflation, middle class workers in the United States make less money today than they did back in 1971.

#30 4.2 million Americans have been unemployed for one year or longer at this point.

#31 The number of Americans that have become so discouraged that they have given up searching for work completely now stands at an all-time high.

#32 According to a recent Gallup poll, 35 percent of Americans believe that unemployment is currently the most important problem in the United States.  Another 29 percent believe that the economy is currently our biggest problem.

#33 Gallup also says that 19.6 percent of the workforce in America is currently either unemployed or underemployed.

#34 The U.S. government says that 504,000 Americans “dropped out of the labor force” in January.

#35 The Obama administration is projecting that the federal budget deficit will be 1.65 trillion dollars for fiscal 2011.

#36 It is estimated that the total U.S. national debt will be greater than 100 percent of GDP by the end of this fiscal year.

#37 The U.S. government relies on foreign nations such as China and Japan to finance 40 percent of all new government debt.

#38 State and local government debt is now sitting at an all-time high of 22 percent of U.S. GDP.

#39 The Chinese are now hoarding gold like there is no tomorrow.  In fact, Chinese demand for gold has now risen to approximately 25% of total global production.

#40 According to a recent report from the World Economic Forum, the world is going to need another $100 trillion in credit to support projected “economic growth” over the next decade.

#41 According to the U.S. Conference of Mayors, visits to soup kitchens are up 24 percent over the past year.

#42 One out of every seven Americans is now on food stamps.

#43 One out of every six elderly Americans now lives below the federal poverty line.

#44 During the last school year, almost half of all school children in the state of Illinois came from families that were considered to be “low-income”.

#45 According to a survey released very close to the end of 2010, 55 percentof all Americans are now living paycheck to paycheck.  A major economic downturn could quickly wipe out millions of families.

#46 Gasoline prices in the United States are now the highest that they have ever been in the middle of February.

#47 Faith in our economic system continues to decline.  According to one new report, only 26 percent of Americans now trust the U.S. financial system.

Gerald Celente on Obama’s budget: “They’re bankrupting the country!”

The Short Story of How We Lose

Ashvin Pandurangi

A curious thing happened to a middle-aged Frenchman in Monte Carlo last year. He had unexpectedly received a year-end bonus of 10,000 from his employer, and decided to visit Le Grand Casino for a weekend, where he could relax and gamble with his new found wealth. Since his wife and daughters were visiting his stepmother that weekend, he would be able to focus entirely on making some money. His first night was judiciously spent at the Roulette tables, where his sharp instincts and calculated patience presumably allowed him to double his allotted wealth in just five hours. It was an excellent night for the man, who was now 10,000 richer, and he spent the next afternoon lounging in a cabana at the hotel’s pool.

That night, the man locked away the initial 10,000 in his room’s safe and took the rest back down to the casino floor, where he quickly locked up a seat at his favorite Roulette table from the night before. His playing strategy remained the same as always – place a minimum bet on two out of three columns, switching one column each time he won a bet, and sitting out one roll each time he lost – no deviations from the strategy whatsoever. After a series of wild fluctuations in his bankroll, the man was left with only two more bets, and he decided to place them both on black. The tiny steel ball deftly rolled around the wheel for several revolutions and tensely bounced between a few numbered slots before finally choosing to settle on number 21 – red.

The man quietly finished his glass of red wine, shuffled up to his room and lay awake in bed. He couldn’t help feeling extremely frustrated about the events of that evening. Frustrated with the insidious game of roulette, with his own careless betting decisions, with his “bad luck”, with the other players who had won, with the man spinning the little steel ball, with the tiny ball itself. He kept replaying the spins in his mind, fantasizing about the money he would still have in his pocket if he had just made a few different decisions. What especially haunted him was the would-be expression on his wife’s face when he unexpectedly brought home 20,000. The 10,000 bonus would surely lift her into a state of pleasant surprise, but the man speculated that, if he had managed to double that bonus in just two short days at the casino, her pleasant surprise would be magnified ten-fold into a state of blushing pride .

On his journey back home the next day, the man began to realize just how strange his lingering feelings from the night before were. After all, he was exactly even from gambling at the end of his trip, and had actually been comped for a night’s stay at the hotel and a few meals. He had even expected to lose a bit of money going into the trip, since Roulette laid players some of the worst odds in the Casino. The man reflected on the fact that his brief excitement from winning 10,000 on the first night had paled in comparison to his prolonged dismay from losing that same 10,000 on the second night. It was indeed a curious psychology that continued to puzzle the curious man, so he decided to do some Internet research when he arrived home. Hopefully, he thought, a new and more fundamental understanding of this psychology would finally put his mind at ease.

It didn’t take too many Google searches before the man came across the concept of “myopic loss aversion“, which explains that people are significantly more likely to experience pain or displeasure from losing a monetary amount than excitement or pleasure from winning that same amount, especially when they frequently evaluate financial outcomes. This disproportional dynamic is obviously powerful when it involves money that one can barely afford to lose, but it also forcefully applies to losses that may be small relative to an individual’s bankroll. Even the multi-millionaire corporate executive who drops fifty grand gambling at a Vegas poker table will be beating himself up soon after, despite the fact that he will most likely make  multiples of that by the end of the year (or at least he believes that he will).

Many of us may be familiar with the painful/shameful process of losing significant sums of money invested in the “wrong” place at the “wrong” time, but it is much more difficult to imagine the negative reactions produced when an entire economy of millions is serving up losses which, in a few short years, will threaten to wipe out all of the financial gains accumulated over decades. After the most potent “winning streak” in human history, the majority of American society has been blindsided by equally potent losses, which continue to mount and show no signs of abatement:

• It is estimated by Zillow that average home prices in the US have declined ~27% from their peak in June 2007, effectively destroying $9.8 trillion  worth of homeowner’s equity (in an economy worth ~$14 trillion). [1]

• About 15.7 million homeowners have negative home equity (owe more on home than it is worth), representing a whopping 27% of all mortgaged single-family homes. Joseph Stiglitz infers that these trends will lead to a total of about 9 million people losing their homes through foreclosure between 2008-2011. [2].

• According to officially under-stated statistics, the unemployment rate jumped from 5% in 2008 to ~9.6% in 2011, and the U-6 number puts it at ~16.5%. [3]. The official rate is only that “low” because millions of people have given up looking for jobs over the past few years (magically removing them from the official labor force), and millions of other people with part-time, low-paying jobs are counted as employed (26% of new private-sector hires are temporary [4]).

• Between 2006 and mid-2008, Americans had lost about 22% of total retirement assets or $2.3 trillion, and $2.5 trillion in savings and investment assets. [5]. Although a decent amount of this value has been recovered during 2009-10, it has mostly gone to a significantly smaller percentage of people who have held on to such assets and has only been achieved on the backs of taxpayers, who now owe interest on an additional $4 trillion+ in public debt (plus a few more trillion if we include the GSEs). [6]. When the markets crash again, that public debt will be money completely wasted for a large majority of Americans, if it is not considered to be already.

• Credit card defaults hit a near-record rate of 11.4% in 2010, more than double the rate in 2007, and the average late fee had risen almost 10% from $25.90 in 2008 to $28.19. [7].

• Public employees face at least a $2.5 trillion state pension shortfall mostly accumulated since 2008, and the gap can only be made up through drastic cuts to pension benefits, layoffs and cuts to public services for all other citizens. [8].

• Profits of most small businesses (unincorporated organizations such as partnerships and sole proprietorships) have fallen 5% in the last two years. [9], [10]. These businesses employ over half of all private sector employees and have created 64% of net new jobs over the last 15 years. [11].

There are many other losses that have befallen the American people over the last few years on top of those listed above, and recently they have also seen the costs of necessities increase. The real interest burden of private and public debt continues to weigh heavily on businesses, consumers, patients, students and civil servants. State welfare programs such as unemployment insurance, food stamps, Section 8 and Medicaid provide temporary crutches to dull the searing pain, but it is clear that these programs only continue to exist on recklessly borrowed time and will be selectively restricted to the American people in short order. The federal retirement program of Social Security, on which many retired Americans have come to rely on, is at the brink of insolvency (the difference between outlays and receipts for the SSA in 2010 was $76 billion [12]), and Medicare isn’t looking too much better.

American politicians and officials are promising their constituents that this value lost will be recovered, but most of them remember too many broken promises to find any comfort in hollow words. When structural shortages of oil imports become a factor, Americans will have systematically lost not only their financial investments, but their entire way of life and lofty perspectives of reality. Sooner rather than later, we will be forced to fully experience the penetrating anguish and regret associated with unprecedented loss, as the tiny steel ball ceases to bounce around and settles in its pre-determined slot. It is at this time which we will realize that there is only a thinly-veiled political fiction separating us from the furiously desperate protesters in the crowded streets of the Middle East.

The Moral Hazard of Central Banking

Cristian Gherasim

Virtually all economists agree on the proximate cause of the current financial world crisis: institutionalized moral hazard in the financial industries. Banks and other firms operating as financial intermediaries have a tendency to behave irresponsibly. They display an exuberant bias in their investment decisions, often taking risks out of proportion with possible returns on investment. Most notably they have reduced their equity ratios to extremely low levels, typically to less than ten percent. Equity being the economic buffer for losses, it follows that financial firms are more vulnerable the smaller their equity ratio. If such vulnerable firms dominate the market, there is an increased likelihood of contagion, as the liabilities of any one firm are usually the assets of other financial firms. The bankruptcy of just one sufficiently large firm can then trigger a domino effect of subsequent bankruptcies. The entire financial market melts down.

While economists agree on this basic fact, they disagree about its causes and remedies. Some seem to believe that the bias toward irresponsible investment decisions is a fact of nature such as bad weather and death. Financial markets are unstable by their very nature because the agents on these markets profit from superior knowledge as compared to their customers and therefore can enrich themselves at the expense of the latter.

While this theory is very widespread, it lacks any foundation in fact. If financial agents really had a bias to rip off their customers, there would soon be no clientele for them. Common people might be less informed than their bankers about the technicalities of financial instruments and investment strategies, but they can read a bottom line. They can also compare bottom lines and abandon their agent if they feel other people might take better care of their money.

The true cause of moral hazard in the financial sector is to be seen elsewhere, namely, in monetary policy and especially in the current monetary system.

Central banks function as lenders of last resort, that is, they lend money to financial firms and others who are unable to find creditors on the market. The salient point is that they can provide this service without any technical or economic limitations. Indeed, the money they lend does not cost them anything at all. Central banks do not have to borrow money; rather they make the money of the nation. Because paper notes are virtually costless to make, it follows that the amount central banks can lend is basically unlimited. This allows them not only to provide virtually unlimited credit to governments and similar institutions, but also to bail out market participants on the verge of bankruptcy. Thus they can prevent financial contagions and meltdowns.

At first sight, it appears that the activity of central banks is wholly beneficial. However, the exact opposite is the case. The problem is that the financial firms know that the central banks are there to help them out in times of trouble. They know that these institutions can make and lend as much money as they wish, at any price they wish, without being subject to physical or economic constraints. As a consequence, financial agents have the incentive to reckon with this kind of assistance. Rather than making their business plans and investment decisions in a responsible way, relying on other people only through contracts and other voluntary agreements, they now rely on publicly sponsored bailouts.

Who pays for such bailouts? Not the customers of the banks and other financial agents. Rather, these groups belong to the net beneficiaries of this policy. The true paymasters are citizens as a whole, in their capacity as money users. Bailouts through monetary policy always involve increases in the money supply.  Money prices then tend to increase beyond the level they would otherwise have reached, and thus the purchasing power per unit of money is diminished below the level it would otherwise have reached. The real cash balances in the pockets of the citizens shrink, as do the real incomes of all people. Of course financial agents and their customers share this kind of loss, because they too are money users. But they pay only a part of the total bill. The rest is imposed on the rest of society.

To sum up, bailouts through monetary policy socialize the costs of bad investment decisions. This creates a moral hazard on the side of all the beneficiaries. Financial agents can worry less about risk and concentrate on possible profits. They become exuberant and turn to excessively risky business practices. But their customers are prone to moral hazard too. They realize that money invested on the financial markets benefits from central-bank support. Therefore they have a perverse incentive not to look too closely at the risks. They become exuberant as well.

Financial market fragility and moral hazard are therefore only proximate causes of financial crises. The ultimate cause is monetary policy, and in particular, the current paper-money system, which allows the central banks to provide limitless lender services. Monetary policy creates powerful incentives for market participants to reduce their equity ratios and thus increase the likelihood of contagion. The lower the average equity ratio, the smaller is the critical firm size that might entail contagion effects.

The foregoing considerations are perfectly straightforward. They are a hard pill to swallow, though, for true believers in the benefits of paper money and monetary policy.

Has There Been An Egyptian Revolution?

Paul Craig Roberts

I popped the champagne cork to celebrate the Egyptian people’s success in driving out of office the American puppet, Mubarak. However, as I wrote on February 1, Mubarak’s departure doesn’t guarantee that his successor will not find himself wearing the same American harness. As Gerald Celente puts it, “Meet the new boss, same as old boss.”

It remains to be seen how much of a revolution has occurred. Marx and Lenin would be put off by the idealistic jubilation over a spontaneous revolution that caused Mubarak to resign after a couple of weeks of protests. Marx and Lenin would say that nothing has changed. The materialist basis of the old order is still in place: the elites, the police, the army, the bureaucracy, the U.S. Embassy. Moreover, no vanguard has appeared to lead the revolution to completeness. Marx and Lenin would heap scorn on the prevalent idea that the material interests of the old ruling order, which is still in place, have been brought in line with the material interests of the Egyptian people.

Marx and Lenin, and their disciple Pol Pot, believed that no revolution could succeed that did not destroy all representatives of the old order. The effective force in history, Marx and Lenin said, was violence. The Bolsheviks murdered every member of the Czar’s family in order to obliterate any hope that the old order could be reinstated.

How many revolutions have succeeded without violence? Even the American Revolution was violent, and not merely against King George. Colonists who thought of themselves as British and remained loyal to England were dispossessed and had to flee to Canada. Although not Marxists, the American revolutionaries were unforgiving.

Perhaps what we have witnessed in Egypt is just the opening stage. If Egyptians find out that not much has changed, they will erupt again in a more decisive manner, this time under focused leaders. If this revolution is put down, the next development could be civil war, leading on to Celente’s prediction of regional wars developing into the first “great war” of the 21st century.

The elites are greatly outnumbered, and in every country the elites have monopolized resources and opportunities and possess more wealth and income than they know what to do with. The few armed with vast wealth are unlikely to prevail against the many armed with vast anger.

Still, too much should not be given to Marx and Lenin. Material interests are important, but they are not all. There is good and evil in the human breast. People can change their mind. The Soviet Empire was not overthrown by a revolution. It collapsed because the ruling class, the communists themselves, changed their minds, acknowledged the wrongness of their system, and let go of it.

Perhaps this will happen in Egypt and elsewhere.

A Five Year Scenario: 2011 – 2016

Charles Hugh Smith

In this scenario, the wheels fall off the debt-fueled global “recovery” and assets bottom in 2014.

Here is one possible scenario for the next five years

Why do I consider this somewhat more likely than other possible scenarios? Here some undercurrents which may be generally under-appreciated:

1. There is a difference between speculative and organic demand

The two are of course related, as industrial consumers of resources must hedge against rising prices using the same instruments as speculators – futures contracts, etc.

2. Follow the credit, not just the money

It’s not just the U.S. economy which is dependent on cheap, abundant credit – the same can be said of China and the European Union to some degree.

Just because Chinese buyers put 50% down on their fourth flat doesn’t mean they don’t need credit for the other 50%. Chinese developers are heavily dependent on credit issued or backed by the Central Governments banks and proxies.

Credit is not cash, and creating credit is not the same as printing cash

Shoveling $1 trillion in zero-interest credit into the banking system does not necessarily mean that $1 trillion flows into the real economy – that can only happen if someone or some entity borrows the credit.

This is why some claim that hyperinflation has never occurred in a credit-based system; it can only arise in a monetary system in which cash itself is printed (i.e. Zimbabwe et al.)

I am not making any such broad claim, but to identify the two as identical seems to me to be a profound confusion.

This distinction plays out in a number of ways

If the Fed had actually printed $1 trillion in cash and dropped it from helicopters, then those collecting the cash on the ground might have spent it, creating more organic demand for goods and services.

If the Fed creates credit and loans it to banks at zero-interest rate, the credit only flows into the real economy if somebody borrows it.

Without borrowers, the “money” just sits in reserves, where it does not spark inflationary organic demand for resources, goods or services.

If someone borrows the “money” to refinance existing debt, the only money that flows into the real economy is the difference between their original debt servicing costs and their new debt servicing costs, presuming the new costs are lower than the original. (Not always the case if said borrower had an interest-only “teaser rate” mortgage that he/she is now rolling into a mortgage with principal payments and a market rate interest payment.)

Or a large speculator (trading desk, hedge fund, etc.) could borrow the credit-money to speculate in commodities, driving prices up on the widespread expectation of higher costs in the future.

In this case, the credit-money does influence the real world economy by driving commodity prices above levels set by organic demand.

But speculative “hot money” is not organic demand; it flees or is lost if trends suddenly reverse.

Since commodities such as oil are priced on the margins, this matters. A sudden decline in oil from $86/barrel to $76/barrel would trigger an exodus from speculative long positions, reinforcing that decline in a positive feedback loop.

3. Hoarding is a special flavor of organic demand

Like speculative demand, it vanishes once the fear of ever-higher prices evaporates.

4. The global GDP is around $60 trillion; the Federal Reserve has “printed” $2 trillion in the past three years

Placed in the proper context, the Fed’s printing and asset purchases are large enough to influence the U.S. stock and bond markets, but they simply aren’t significant enough or focused enough to enslave the entire global markets in stocks, bonds, precious metals and commodities.

Other players are busy printing and issuing zero-interest credit, too, of course, but we should be wary of sweeping generalizations about the deterministic nature of these central bank campaigns.

As further context, consider that the Fed’s vast interventions have distributed some $2 trillion into the financial sector; meanwhile, U.S. homeowners saw their net equity decline by some $6 trillion.

OK, on to the scenario which will get me in all sorts of trouble:

Here is the sequence of events I consider rather likely:

Q3/Q4 2011-2012: extend and pretend fails

The wheels fall off the global “recovery,” the emerging market equity bubbles, oil, China’s equities and its property bubble, and most if not all commodities. Gold and silver swoon as per late 2008 as raising cash become paramount. Oil retraces to the $40/barrel level, and then drops further as exporters ramp up their exports to generate desperately needed cash.

Interest rates rise sharply, risk assets tank, borrowing dries up, housing prices “slip” to new lows (the stick-slip phenomenon), and the hated/loathed U.S. dollar confounds almost everyone by breaking out of technical resistance levels.

Civil disorder spreads along with recession and lower energy prices, which devastate oil exporters’ primary source of government revenues.

With better grain harvests stemming from improved weather, declining meat consumption in 2012 due to recession and the implosion of the market for corn ethanol, grain prices plummet, wiping out all the speculators who reckoned 2010 had set the trend for the decade.

All of this starts slowly in Q3 2011 but gathers momentum in 2012.

Unfortunately for central banks, all their printing and credit creation is analogous to insulin resistance: without borrowers and solvent banks and consumers, their frantic efforts to “stimulate” their economies with additional liquidity come to naught.

The Central State’s other gambit, monumental fiscal “stimulus,” runs into the brick wall of rapidly rising interest payments and a political revulsion triggered by the realization that only the financial and political Elites actually benefitted from the trillions squandered in the 2008-2011 orgy of Central State “stimulus” and backstops.

With asset prices collapsing in a phase shift, the equity needed to float new loans vanishes; with risks rising, the market for junk bonds and other risk-laden debt also disappears.

All those who clung on through the “recovery,” hoping to made whole, are wiped out. Their bankruptcies trigger a new wave of selling and writedowns.

2013-2014: Re-set and reckoning

Widespread political and financial turmoil leads to a few central choices:

1. Repudiation of the Neoliberal Central State/Financial Oligarchy strategy of 2008-2011 which focused on preserving the insolvent (but politically dominant) banking and Wall Street financial sectors and transferring their private losses to public entities/taxpayers.

2. Replacement of incompetent, venal, exploitative dictatorships with some new flavor or autocracy, oligarchy, theocracy or dictatorship, most of which will prove to be equally incompetent, venal and exploitative – but shorter-lived.

3. Experimentation with new models of governance, “growth” and credit/debt. Some modest recognition of the profound failures in the “extend and pretend” status quo generates a sense that these catastrophically destructive policies have been recognized as such and corrected.

These years will see the near-term bottom in housing, equities, and other assets. Those few who preserved cash during the meltdown are in a position to snap up assets on the cheap. Those who depended on credit/debit find borrowing is now difficult and dear. Those who “bottom-fished” real estate in 2011 are wiped out, along with those who bet that commodities were heading straight to the moon.

2015-2016: false dawn

Things get better; prices stabilize, assets and commodities start rising in price and a sense of hope replaces widespread gloom and distemper.

The real crisis has been pushed forward to 2020-2022

Nonetheless, 2015-2016 will offer those with cash tremendous profit opportunities.