# Systemic Economic Collapse



## machinist (Jul 4, 2012)

Raoul Pal is a noted forecaster and past hedge fund guy who publishes a newsletter. The following piece titled "The End Game" was given in Shanghai last May:
http://www.scribd.com/doc/95493792/The-End-Game

He indicates that the system is too broken to be fixed at this point, and why. Then he concludes: 
Quote:
"As defaults in governments and banks come to fruition, we risk a closure of the stock markets and a closure of the banking system as occurred in Argentina in 2001, Russia in 1998, Brazil in 1991&#8230;&#8230;

We have around 6 months left of trading in Western markets to protect ourselves or make enough money to offset future losses. Spend your time looking at the risks of custody, safekeeping, counterparty etc. Assume that no one and nothing is safe. After that&#8230;&#8230;we put on our tin helmets and hide until the new system emerges.

I wish I could see another outcome with an equally high probability, but I can't&#8230;&#8230;,All we can do is hope that I am wrong,but either way, a new system will emerge and it will open up a whole new set of opportunities&#8230;&#8230;but we will be going back 40 years in time&#8230;&#8230;and 1500 years&#8230;&#8230;and 3000 years&#8230;&#8230;"
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By way of explanation, a member at Tickerforum http://tickerforum.org/akcs-www?post=210858&page=3#new
offered this today.

Quote:
"...There are no more organic buyers of debt. In other words, no intrinsic demand. The debt peddlers have no other choice but to sell to each other and the governments they control, as long as said governments continue to be willing to loot their citizens' (future) production (deficit spend/borrow). The bankers continue to buy and re-sell their own (existing) debt, which process is, as Karl describes: leverage.

So, there is no indication at this point that either the bankers or the governments are going to lose confidence in this little charade. The citizens...well, there are signs for certain. However, until there is a more wide-spread understanding of the mechanism by which we are being looted, and until there is an alternative to said looting mechanism that people can wrap their heads around, the chances of the citizens losing complete confidence at this point are remote.

In summary, a loss of confidence in a currency is REQUIRED for a hyperinflationary event. Since we are not speaking of 'a currency' in this case, but the entire debt-denominated monetary system itself, any hyperinflationary event will NOT be isolated or contained. (Heh.) Just as we have discussed here for nearly 5 years, due to the reserve status of the U$D, we will flush last as this event continues to unfold and confidence is lost in certain currencies. However, don't get confused, because ALL currencies in existence are debt-denominated. What people will not understand is that the confidence they are losing is not in any one currency, it's in the SYSTEM. So, because this is a long, drawn-out process, there will be no real catalyst that allows everyone to wake up one morning and have zero confidence in the system - therefore, long before there is ever any chance for real hyperinflation of the system itself (not to be confused with what will undoubtedly be incidence(s) of massive price inflation [which cannot result in a wage/price spiral due to debt exceeding production capacity]), the monetary system will cease to be a means of exchange."
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That too, says, systemic collapse. Okay, unless some of you folks have a better idea, I'm looking for my place to hide until it's all over.  :surrender: :gaah:


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## kejmack (May 17, 2011)

With all the warnings out there, people will not be able to say they didn't see it coming!


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## Davarm (Oct 22, 2011)

About 10 years ago, when I realized that debt was a commodity just like corn and pork bellies, I started telling my 3 DD's that when the Debt Market played out, it would all be over for this country. 

I guess we are about to see if thats the case.


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## partdeux (Aug 3, 2011)

kejmack said:


> With all the warnings out there, people will not be able to say they didn't see it coming!


That's why I keep saying it will be a black swan event  Systemic collapse is too obvious...


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## Tirediron (Jul 12, 2010)

kejmack said:


> With all the warnings out there, people will not be able to say they didn't see it coming!


is that anything like changing to their winter tires (in parts of the continent where there are REAL seasons) most wait for the first big snow.


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## BillS (May 30, 2011)

I agree with the first part. I disagree with the second part. I believe that we're rapidly approaching a time when the world will lose confidence in the dollar. It's rumored that Ben Bernanke will be announcing QE3 soon and that he'll announce the intention to print money until the economy gets better. Gold and silver have already had big gains since Bernanke's speech on Friday. I believe both are heading for the stratosphere. 

You have to think of it this way: Once the situation becomes fragile enough, all it takes is one big country to dump their dollars and panic selling will begin. 

Last year the value of the dollar dropped for some time until the situation in Europe was bad enough to restore relative confidence in the dollar. The dollar dropped because of the failure of the congressional debt commission and because of the debt downgrade. There HAS to be another debt downgrade coming. Between that and Bernanke's actions the dollar's days are numbered.


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## machinist (Jul 4, 2012)

My brother in law is FINALLY getting it. He's pretty late to the party, though. Wife has a second brother who understood it all along, but was stuck with a recalcitrant wife. She's gone now, so he is making steps. So, that is 3 out of the 10 siblings. Not a good percentage, even if it is way above the national average. 

When Argentina collapsed in 2003 (?), lots of those people left and went to Spain. In other cases, like Weimar Germany, there were many who fled and came to the US. No place to run when the whole world is in the sewer.


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## BillS (May 30, 2011)

We won't have a safe currency to keep our money in either. In Yugoslavia when they had hyperinflation they would buy German marks on the black market as soon as they got paid. In Zimbabwe they bought dollars. I believe that all fiat currencies are heading towards zero.


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## machinist (Jul 4, 2012)

Yep. Fiat will be worthless, so governments will grab for the gold. That only leaves commodities, land and such for wealth preservation. I bet they have plans for those, too.


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## invision (Aug 14, 2012)

Um, china owns how much US debt? I was in the smokey mountains over the weekend. While we were driving through Gatlinburg, my wife pointed out that she hadn't seen the typical tourists - hardly any Asians, like we see in Vegas or NOLA... As we hit a pull over area for some photo opportunities, there was a bus full of Chinese in business suits taking pictures. I look at my wife and said "yep, scouting out land to take when our dollar collapses and they want their money back" she slapped my arm, said that's not funny... Then looked back at them and said, I think your right... Sad but true.


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## Immolatus (Feb 20, 2011)

*Quote:
"...There are no more organic buyers of debt. In other words, no intrinsic demand. The debt peddlers have no other choice but to sell to each other and the governments they control, as long as said governments continue to be willing to loot their citizens' (future) production (deficit spend/borrow). The bankers continue to buy and re-sell their own (existing) debt, which process is, as Karl describes: leverage.

So, there is no indication at this point that either the bankers or the governments are going to lose confidence in this little charade.

*This is one of the keys to this whole situation. I disagree that its "confidence in the charade" because its more by force. They have no choice but to continue this little scam because they all know its over. Once they stop this circular debt buying/selling/printing crap the system falls apart. You would have to be delusional to think you are going to get your money back buying a PIIGS sovereign bond. They can only be 'bailed out' for so long. In fact, so delusional that you are willing to buy a bond with a negative interest rate as the alternative. Theres no way the Western economies could generate enough money (so much so that that statement in itself makes no sense) to 'grow' themselves out of this hole.
I'll agree with PD, it will be some event that causes it, because its not really up to 'them' unless it is completely planned out already which is pretty scary to think about, but how can one reach any other conclusion? Ugh. Something will cause the sheep to realize that its all a house of cards, or more likely said event will cause everyone to panic and stop spending money at all, and force the collapse.


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## machinist (Jul 4, 2012)

A great number of consumers are tapped out now, with maxxed out credit cards and underwater houses. No more debt-spending for them. As the price increases for food and fuel ratchet up, then more of the lower and middle income folks get strapped too, as the hardships work their way up the pay scales. 

Debt-saturation of consumers will force the collapse of spending (already begun, IMHO) if nothing else does. The .gov will try to make up for it with more deficit spending, but that will hit the limit of international confidence in US Treasuries. The US govt spending is already 40%+ of the GDP, IIRC. Every round of fake debt-money they put into the system now finds its' way to commodities and drives up prices there, increasing hardship on consumers. 


I can't believe that this has very far to go now. It is a matter of which road we take to fiancial ruin. Or, maybe that choice is already made...

I think we have reached the point analogous to the one in the movie Ghostbusters, when the heroes are told to "choose the manner of their death". Cue the Sta-Puff Marshmallow Man. Oh, what a mess this is going to be.


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## invision (Aug 14, 2012)

Machinist - dead on with the statement people are tapped out. I agree it's only a matter of time. I think it might need an event to trigger it say Iran/Saudi starts up and oil skyrockets. The eruo fails, germany pulls out of EU, etc.

However, it could also be a slow burning wick that takes 4-6 more years. Word I am getting from investment guys is 6-8 more years, so I am cutting that in half if Obama wins and saying 5-6 if Romney wins... False hope for Romney will help drive a status quo, even though I like him, there is not much anyone can do.


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## machinist (Jul 4, 2012)

Jim Willie, of the financial newsletter, Golden Jack***, gives his timely analysis here, indicating that systemic collapse is underway in slow motion and is picking up speed. He says that Morgan Stanley, the biggest stock brokerage firm in the US, is ready to implode. He explains how, based on recent events, that could mean the loss of a LOT of stock brokerage account monies for investors there. The Money Market funds are readying themselves to have a run on them, with govt help due to new rulings. (MM cash ain't available like used to be.)

http://www.silverbearcafe.com/private/09.12/failure.html

He also claims that the Deustschmark is already in daily use in Germany, and the Lira in Italy, preceding the eurozone collapse. And he goes into happenings in Saudi, too.

Willie is NOT given to hyperbole, yet his report is bloody from end to end. Hang on, looks like we just topped the big hill on the roller coaster ride, according to him.

Edit to Add: I think I just scared myself rather badly...


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## db2469 (Jun 11, 2012)

machinist said:


> Jim Willie, of the financial newsletter, Golden Jack***, gives his timely analysis here, indicating that systemic collapse is underway in slow motion and is picking up speed. He says that Morgan Stanley, the biggest stock brokerage firm in the US, is ready to implode. He explains how, based on recent events, that could mean the loss of a LOT of stock brokerage account monies for investors there. The Money Market funds are readying themselves to have a run on them, with govt help due to new rulings. (MM cash ain't available like used to be.)
> 
> http://www.silverbearcafe.com/private/09.12/failure.html
> 
> ...


 It doesn't sound good at all!.....I'm meeting with our bank 401K guy this week. Even tho there is a strong possibility that the dollar will be worthless in the future, we do not want the 401K absorbed, if you will, by the bank when the SHTF...even if it means cashing it out now with the 10% penalty and paying the income tax on it...it's getting to be crunch time!


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## machinist (Jul 4, 2012)

Yeah, wife and I have cashed out all our retirement things now. There is still a small pension from a short term employer, but I can't get a lump sum from that one. 

Now, the responsibility is on me to invest it wisely, and that is not easy to do when everything financial is ready to fall apart. We got the last one as far as our checking account, and into the best rated local bank, but that isn't good enough. Need to move that to something that will endure the crash.


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## db2469 (Jun 11, 2012)

If we cash it out before the "crash" I will buy a few more ounces of gold, maybe more silver...it's too late for me to buy a dwelling in the hills and prepare it for total off the grid living...will use money to continue to fortify our home here in the small town neighborhood...


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## invision (Aug 14, 2012)

Most of the big houses like Morgan use smaller companies like Cornerstone Investment Group, Earnest Partners, and Investco to manage their 401k packages that are in their name. They concentrate on this big clients. I have a close friend who was an EVP at M.S. back in 2003-4 timeframe. He left them because they forced their brokers to shift away from small accounts and only work with people willing to invest $1MM with M.S. It was right after they released an internal memo predicting potential collapse in the mid-2010s.... But it wasn't due to the debt, it was that most retiring people would start cashing in 401ks and there would be not enough buyers of existing stock.


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## machinist (Jul 4, 2012)

db2469,

Small town living has a lot to reccomend it, especially if you get involved in the community and get well acquainted with everybody. Mutual support with such a group can be a real lifesaver, and is the only way can see things working over the long term.

Sure, there will be a few stinkers in every community. There are always a few. But at least you will know who they are so you can keep an eye on them.


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