A Global Depression is Coming This Year or Next. Why? Because Bubbles Burst. Always.
Depressions suck. So much so that most of us don’t even want to contemplate them. But once you realize that something is inevitable, at least you can prepare, financially and emotionally. ;-) And our globally-shared bubble this time is MUCH bigger than the one that existed in 2008, although the US is once again (still) at the pointy end of the sharp point that will burst it.
Contemplate the value decline illustrated here:
The author who borrowed David Levine’s tweet (click here to read his article on the issue) points out that this staggering loss of $119 billion is like Google and Apple combined, MANY TIMES OVER, being completely wiped out in the space of 14 months (and Google and Apples have cash on hand, unlike most global and US corporations). What would an overnight loss like that do to the world’s financial markets? Would you expect a vast sell-off, or confidence?
There is no such thing as “Democratic Capitalism.” By definition in any system based upon ‘capital’ the few who have it get all the votes. Democracies only work if the many determine how the wealth of the nation as a whole will be shared.
America’s rich, with the eager support of their global brethren, in their ongoing habit of hoarding ever more money (profit), have leveraged their countrymen and women out the wazoo in terms of debt over the past 20–30 years (click here to see the charts I compiled). This debt crisis is a ginormous bubble on the books of the world’s ‘too big to fail’ financial institutions that is just waiting to burst:
And no frenzy of ‘printing money’ to bail them out on the part of governments is going to be fast or plentiful enough to prevent a depression. The world is going to finally have to go the way of Iceland in 2009 and start from scratch. Bernie Sanders has the blueprint for where we’ll likely have to go in systematic terms, but one thing I’d like to point out is that our current global financial system that is based almost entirely on speculation and ‘confidence,’ both in consumer spending and between investors, has to change. Yes, the ‘stock market’ as a platform for the world’s finances has to go.
Think about it. The stock market (lumping all of them from around the world together) is nothing but a global gambling pool. Companies ‘go public’ (it’s not very ‘public’ if only the rich and the pension funds of the poor can afford to invest in it…) and traders/investors either ‘buy into’ the valuations and toss money into the pool, or they don’t and the value comes down to the point that all the gamblers decide it’s worth the gamble.
I laugh every time I hear stock market information discussed in great detail on the “BUSINESS NEWS.” Sure, some fluctuations are due to actual business like Apple inventing a new device or business model that consumers actually want and buy into, but MOST of what is discussed is gambling speculation and confidence or panic on the part of the gamblers. Based upon rumours, announcements, or whim, either certain stocks go up or down, or the entire market does because the pool of bettors gets either nervous, or ‘bullish.’ Stock markets don’t crash because global GDP has gone up or down, they crash and impoverish billions of people (or soon will) because a bunch of speculators got panicky and started trying to beat each other to sell off.
It was originally called “Capitalism” because it was based upon the ‘capital’ of the wealthy few. Now there is very little real capital in the market because, with deregulation, most of the ‘money’ is actually debt ownership — leverage, not capital.
And what we have seen over the past decades is NOT ‘real business’ making valuable stuff and therefore generating more capital, it has been the creation of new imaginary ‘money’ through derivatives (bets placed on a what others might bet on) and credit (you can have this stuff now if you promise to give me money we hope you’ll make later). And this ‘money’ (capital) hasn’t been generated by hardworking, smart entrepreneurs, it has been generated by the financial wizards who profit by manipulating the wealth of the world’s richest FAMILIES (not the now-dead original entrepreneur). We are all floating in the ether clinging to a balloon filled with promisory notes and gambling debt.
So on the basis of the fears or brashness of the brokers representing a few astoundingly rich children of guys who schemed their way into taking vast sums of money from taxpayers (all the families whose wealth was made on natural resources like oil, paper or minerals or from war or health insurance), or the mindbogglingly wealthy kids of guys who were smart enough to come up with something people wanted, like cars, smart phones or television stations, the entire world’s fortunes depend. Our fortunes don’t depend upon the smart, OCD, relentless entrepreneurs who make the original financial stockpile, but on the kids they happened to procreate. The originators are FAR outnumbered now by the staggeringly wealthy offspring now doing nothing but hoarding ever more wealth via stock market speculation.
These families are “The Royal Class,” exactly what all the so-called ‘democratic’ countries of the world were determined to do away with through the system of one person, one vote.
Despite nothing changing in terms of how many consumers are out there going to work every day, using all the stuff they need in their lives, despite nothing changing in terms of how much natural resources exist on the planet, or how much electricity we can generate, or how much gold there is in the ground or out — suddenly we will all suffer for years (like 2008 until now), or for decades (take a look at Japan, the first major ‘developed country’ to get trapped in the modern world’s broken capitalist system). We are all about to suffer for a very long time NOT due to a meteor crashing into the Earth, but because a few rich people ‘gamed the system’ and have gone unchecked by the rest of us.
“Big Government” — like those of all the happy, healthy countries with Democratic Socialism — ensures that every citizen lives a quality life and is fairly well protected from economic hardship. They do this by regulating the rich and forcing them to share their the obscene amount of wealth that they’ve managed to extract from the rest of us. It’s a system that works pretty well, and it is what America was founded upon.
For the frightening graphs illustrating just how consistently this bubble has been inflated, go to my post on the topic by clicking here.
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