# Bad Economic Signs 2012



## UncleJoe (Jan 11, 2009)

In January of this year, I wrote an analytic financial piece entitled 'Baltic Dry Index Signals Renewed Market Collapse':

http://www.alt-market.com/articles/540-baltic-dry-index-signals-renewed-market-collapse

In that article I discussed the record breaking low hit by the BDI and its implications for the global economy; namely, that it signaled a steep decline in true demand around the world for raw materials used in the manufacture of consumer goods, and that similar declines in the BDI's past have almost always prophesized a crisis event in financial markets. The mainstream media attempted to write off the implosion of the BDI as a fluke, tied to the "overproductions of cargo ships", instead of a warning sign of deteriorating demand. Of course, the past 6 months have proven that assertion to be entirely false.

...Despite the astonishing amount of manipulation that goes into our fiscal system by major banks, there are still a few fundamental rules to economics that never change. The bottom line? Demand around the world is derailing, hinting at a broad spectrum disintegration of public buying power. Where demand goes, so goes the economy.

...There is a strange delayed reaction between the initial exposure of weakness in the financial system and the public's realization of the truth, sort of like Wile E. Coyote dashing off a cliff in the cartoons only to continue running in mid-air above the abyss below. It is a testament to the fact that beyond the math, there is an undeniable power of psychology in our economy. The investment world naively believes it can fly, even with the weight of endless debt around its ankles, and for a very short time, that pure delirious oblivious belief sustains the markets. Eventually, though, gravity always triumphs over fantasy.

...Today, I do not think that it would be outlandish to suggest (even to the casual market observer) that the EU has indeed been fractured, though the establishment still strives to maintain the façade.

Spain and Italy have both requested bailouts from the ECB, finally exposing a problem which alternative analysts have been warning about for years. While the mainstream media has been bicycle-kicking the long dead horse of Greece, the much more detrimental problems of the rest of the EU have been completely ignored. Only now are investors beginning to understand that there is no such thing as a "Greek Contagion"; the whole of Europe has been quietly suffering through a debt malaise that surpasses the Greek issue. Still, central banks pushed the idea that Greece was the gangrenous toe of the EU, claiming it had to be cured or amputated, or the infection would invade the entire body. The truth is, Europe has been host to a systemic disease from the very beginning. Greece is just a side-note.

The UK has openly admitted that it has "returned" to recession. Mass credit downgrades have been issued by S&P and Moody's in primary EU economies, including France and Spain. Italy's credit rating has been cut only two notches above junk status and its bond sales have turned to Jell-O. *Spain has declared austerity cuts which include the confiscation of employee pension funds.* Does this sound like an economic body near "recovery", as was the rhetoric spouted by the MSM a year ago, or, does it sound like the EU has gone off the deep end?

...The year of 2012 has proven to be the most startling as far as financial news has been concerned. Vastly more startling to me than 2008. In 2008, the illusion of bank coherence and government action was carefully molded for the consumption of the masses. The intimate connections between government and corporate fraud were glossed over with expert care. There was an active and methodical effort to make us believe that the problems of 2008 were peripheral, and that the system at its foundation was sound. This time around, the corruption has become utterly blatant and disturbingly nonchalant. There is no attempt on the part of central and corporate banking interests anymore to hide the fact that the entire edifice is a cheap magic trick. In fact, they now parade their distortions as if they are "helping" the country, instead of destroying it.

When criminals are no longer concerned with hiding their crimes, it is time for the rest of us to start worrying. That is to say, the current behavior of the establishment leads me to believe that a new phase in the crisis is about to arise.

Three recent events in particular (on top of all that has already happened this year) should be noted by those who wish to gauge the acceleration of financial hazard around the world:

*Read the rest here*


----------



## Marcus (May 13, 2012)

The Obama administration also floated the idea of 'converting' IRAs & 401Ks into government annuities. That's one of the reasons I took out a loan against my 401k and bought gold, silver, guns, and ammo. When you no longer have access to your own private property that you've built throughout your lifetime, you no longer live under the rule of law.


----------



## machinist (Jul 4, 2012)

Stealing pension funds is the mark of a dying administration, as has been done in Argentina and elsewhere. I'm sure they will get around to it here in time. That's why I have taken all of mine out and spent it. They can't steal what I don't have. 

I have tried to solve for myself the inflation/deflation debate that has raged for the past few years, and decided I should prepare first for deflation (credit collapse reducing the money supply, not just price changes), then try to be ready for the Fed/gov reaction to that trend by creating money out of thin air, as in QE-x, sleight of hand in buying US Bonds to monetize the national debt, etc. Eventually, I expect that added money supply to cause some seriously increased prices that most folks call "inflation". Actually, inflation is just an increase in the money supply, and the rising prices are a reaction to that excess money, per Austrian econonomics. 

But I can't figure out how to prepare for that unholy combination punch of deflation then inflation. It gets more difficult if you assume a corrupt and nasty ruling class.


----------



## Woody (Nov 11, 2008)

machinist said:


> But I can't figure out how to prepare for that unholy combination punch of deflation then inflation. It gets more difficult if you assume a corrupt and nasty ruling class.


I am buying what I can with July 19, 2012 dollars knowing that the July 20, 2012 dollar will buy less. Make that July 19, 2013 dollars and you have saved quite a bit of buying power. I just took stock of what I use regularly and what has LTS capabilities and buy them in bulk, on sale or not. It is no good to buy 100# of peaches and expect them to last for several years, unless you can them of course. But I am talking about sundries, goods that you use on a regular basis. Things like toilet paper, baggies, garbage bags, things like that. I particularly look at the things that take petroleum to produce as they will get more expensive as the price of oil goes up. Yes, I know oil affects everything but plastic bags are directly tied to oil.

For example, how many oil changes worth of supplies do you have in your possession? Sure an EMP could make them worthless but what if an EMP never happens?

If my savings were not wiped out in 2008 I would buy more PM's with it. But, being a poor working man all I can do is scrape together what I can to stock up on. My life insurance policy was to buy LTS freeze dried foods that I can store for 15 years or more. I look at it this way, maybe I will need them, maybe not. But the auto insurance I have paid into for years and years I have never used and that money is just gone with nothing to show for it. At least with my supplies I have something I CAN use, that money is not just gone.


----------



## stayingthegame (Mar 22, 2011)

look at what FDR did when he got in office. took us off the gold standard and may it illegal to own gold. why? because people were hording gold coins because of the depression and the banks failing.  he then started printing more paper money to "cover" the coins that were turned in. now when we "need" more money we print it out saying that because it is backed the the US government it is worth what they say it is. :scratch


----------



## Padre (Oct 7, 2011)

machinist said:


> I have tried to solve for myself the inflation/deflation debate that has raged for the past few years, and decided I should prepare first for deflation (credit collapse reducing the money supply, not just price changes), then try to be ready for the Fed/gov reaction to that trend by creating money out of thin air, as in QE-x, sleight of hand in buying US Bonds to monetize the national debt, etc.


I don't think a credit crunch is really deflationary. It will not drive prices down or make your money more valuable, in the short run. A credit crunch will simply mean that some things are unobtainable to those who don't have credit or cash. Supply and demand would dictate that eventually the lessened demand would result in lessened price BUT I don't think the Fed would allow it to last long enough to have that effect.


----------



## mcjlman18 (May 24, 2012)

They are your confiscated funds here on a trial basis. The GM buyout for example.


----------



## machinist (Jul 4, 2012)

Padre,

All true, especially the Fed's reaction. When I define deflation as a reduced money supply, that is an academic definition, that is, not useful without the larger picture. The only real value of that to me is that it gives me some insight into what the Fed/gov. will do in reaction. It is the reactions that cause us problems, IMHO. 

I do think we are seeing reduced demand in many things, mostly the big ticket stuff that is usually bought on credit. But that has trickled down to retail level, too, due too UE being stubbornly high (Shadowstats says it is 22% or so), thus consumers are very tight on money and mostly buy what they have to.

Yeah, GM got bought by the .Gov (with my tax money), and now GM wants to buy out of my pension they owe me. How twisted is that? I'm gonna take the money and run to spend it on something REAL.

This whole economy is a nightmare. Nowhere to run, nowhere to hide.


----------

