"Panic of 2008" - Dollar could drop 90% and Gold soar to $2000 an ounce
Hold on to your hats - the floodgates are about to open . . .
A financial crisis will likely send the U.S. dollar into a free fall of as much as 90 percent and gold soaring to $2,000 an ounce, a trends researcher said."We are going to see economic times the likes of which no living person has seen," Trends Research Institute Director Gerald Celente said, forecasting a "Panic of 2008."
"The bigger they are, the harder they'll fall," he said in an interview with New York's Hudson Valley Business Journal.
Celente -- who forecast the subprime mortgage financial crisis and the dollar's decline a year ago and gold's current rise in May -- told the newspaper the subprime mortgage meltdown was just the first "small, high-risk segment of the market" to collapse.
Derivative dealers, hedge funds, buyout firms and other market players will also unravel, he said.
Massive corporate losses, such as those recently posted by Citigroup Inc. and General Motors Corp., will also be fairly common "for some time to come," he said.
He said he would not "be surprised if giants tumble to their deaths," Celente said.
The Panic of 2008 will lead to a lower U.S. standard of living, he said.
A result will be a drop in holiday spending a year from now, followed by a permanent end of the "retail holiday frenzy" that has driven the U.S. economy since the 1940s, he said.
Welcome to the real world, America - where there is NO MIDDLE CLASS.
One that's stellar for "the rich" and unbearable for "the poor."
A world that we have all worked hard to make possible through our apathy and indifference to the suffering of the poor at the exploitative hands of our corporate pay masters.
9/11 was just the beginning - America's initiation to the club, where every other country on earth is already a member.
I read this article and I have to be skeptical. I have to be skeptical about the severity of the expectation that everything is going to collapse.
I have to wonder whether there will be some areas of the country, and the economy, which will suffer more than others. I have to wonder whether the government, even those parts run by the crooks, will let everything fail. I suspect that there are some people left in positions of influence who will do something to protect their constituents.
So, there will be an effort to protect big banks, but won't that have some "trickle down" effect to smaller people. They'll be able to keep their jobs or their houses a little longer...
Maybe there will be a few states that won't be as bad off and will be able to therefore start some kind of recovery...
I live in a place where the life for a lot of people is grim, but their suffering isn't part of the general consciousness of the work force. I have to say most of the middle class is oblivious to the problems of the uninsured and underemployed. There's too much distraction created by the papers, TV stations, radio, etc.
So, I can imagine that the downturn will be a surprise. It will also effect many of those people who are now oblivious to the problems discussed by the people in this gloomy article.
But, will it really be as bad as this article predicts?
"So, there will be an effort to protect big banks, but won't that have some "trickle down" effect to smaller people."
Protecting the big banks and letting them run amuck is what got the US in this spot to begin with.
After the Wall Street Crash of 1929, caused mostly by banks investing in questionable schemes to inflate their investments, the Great Depression descended upon America.
In 1933, Congress passed the Glass-Steagall Act, which following the Great Crash of 1929, one of every five banks in America fails. Many people, especially politicians, see market speculation engaged in by banks during the 1920s as a cause of the crash.
In 1933, Senator Carter Glass (D-Va.) and Congressman Henry Steagall (D-Ala.) introduce the historic legislation that bears their name, seeking to limit the conflicts of interest created when commercial banks are permitted to underwrite stocks or bonds. In the early part of the century, individual investors were seriously hurt by banks whose overriding interest was promoting stocks of interest and benefit to the banks, rather than to individual investors. The new law bans commercial banks from underwriting securities, forcing banks to choose between being a simple lender or an underwriter (brokerage).
Thru the years, the banks chaffed at regulations that forced them to stay out of the speculation business and tried repeatedly to get Glass-Steagall repealed.
In the spring of 1987, the Federal Reserve Board votes 3-2 in favor of easing regulations under Glass-Steagall Act, overriding the opposition of Chairman Paul Volcker. The vote comes after the Fed Board hears proposals from Citicorp, J.P. Morgan and Bankers Trust advocating the loosening of Glass-Steagall restrictions to allow banks to handle several underwriting businesses, including commercial paper, municipal revenue bonds, and mortgage-backed securities.
In January 1989, the Fed Board approves an application by J.P. Morgan, Chase Manhattan, Bankers Trust, and Citicorp to expand the Glass-Steagall loophole to include dealing in debt and equity securities in addition to municipal securities and commercial paper. This marks a large expansion of the activities considered permissible under Section 20, because the revenue limit for underwriting business is still at 5 percent. Later in 1989, the Board issues an order raising the limit to 10 percent of revenues, referring to the April 1987 order for its rationale.
In 1990, J.P. Morgan becomes the first bank to receive permission from the Federal Reserve to underwrite securities, so long as its underwriting business does not exceed the 10 percent limit.
In December 1996, with the support of Chairman Alan Greenspan, the Federal Reserve Board issues a precedent-shattering decision permitting bank holding companies to own investment bank affiliates with up to 25 percent of their business in securities underwriting (up from 10 percent)
By loosening the restrictions imposed by the Glass-Steagall act, banks like Citicorp and Chase go on an investment and merger spree.
Finally, after 12 attempts in 25 years, Congress finally repeals Glass-Steagall, rewarding financial companies for more than 20 years and $300 million worth of lobbying efforts. Supporters hail the change as the long-overdue demise of a Depression-era relic.
The innocuous sounding Financial Services Modernization Act of 1999, also guts the Bank Holding Company Act of 1956, which had set restrictions on banks, preventing bank holding companies owning two or more banks from engaging in non-banking activity and from buying banks in another state.
Just days after the administration (including the Treasury Department) agrees to support the repeal, Treasury Secretary Robert Rubin, the former co-chairman of a major Wall Street investment bank, Goldman Sachs, raises eyebrows by accepting a top job at Citigroup as Weill's chief lieutenant. The previous year, Weill had called Secretary Rubin to give him advance notice of the upcoming merger announcement. When Weill told Rubin he had some important news, the secretary reportedly quipped, "You're buying the government?"
With the barrier between banks and shady investments gone, they engaged in a buyout/merger spree that helped to fuel the dot.com boom/bust.
When that failed, they moved into real estate speculation.
To keep up with this financial feeding frenzy, the private banks of the ill-named Federal Reserve have been printing their brand of counterfeit money, 24/7, 365.
Between the inflated money supply, which is based on the governments word and banks playing fast and loose with their investments, we are now facing another Crash of '29 and another Great Depression.
Frontline
It only seems like poetic justice that the U.S., the source of so much grief and so many wars in the world that have devasted other countries, is now going to be on the receiving end of that devastation.
A "trickle-down" effect? More like a "tinkle-down" effect, as the rich will still be rich, while the rest of us saps and suckers fight over bread crumbs and jobs that pay $2.00 an hour.
Unbelievable.
I had no idea!
I mean, I'm not surprised. But, these are pretty significant developments and NOBODY talked about it.
NOTHING. NADA. ZIP.
Americans need to learn about this - maybe then they can understand that the only enemy we've ever had has been right here at home, charged with managing and protecting our wealth.
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"Money" has no value - people do.
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A financial crisis will likely send the U.S. dollar into a free fall of as much as 90 percent and gold soaring to $2,000 an ounce, a trends researcher said.
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The dollar has been in decline for about a hundred years. However, since 9/11 the dollar has lost a considerable amount of it value
some say 40 percent. Gold has more than double since then. ($271.40 compared with $836.00 11/26) I think it is safe to say that if the dollar "free falls" the price of gold would most likely be in the $2,500 range.
quote:
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Many people, especially politicians, see market speculation engaged in by banks during the 1920s as a cause of the crash.
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This is inaccurate! It was caused the dollar supply shortage. Banks called in their loans and refused to make new loans.
"Many people, especially politicians, see market speculation engaged in by banks during the 1920s as a cause of the crash."
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This is inaccurate! It was caused the dollar supply shortage. Banks called in their loans and refused to make new loans.
That qoute is directly from the FRONTLINE article, not me.
And yes, when the banks refused to lend more money after the crash, it compounded problems.
Problems that were put in place by the bank's hog-wild speculative schemes leading up the 1929 Crash.
They hoarded the money to try and reign in their soured investments.
Banks put their money into high risk investments, that for awhile, paid off handsomely.
Until the Crash, when their fly by night schemes came unraveled.
Just like what has been happening the past eight years, during the mortgage credit boom.
They have NO money on their books to back up their failed investments.
At one time, the law required them to hold one dollar in reserve for every 100 dollars loaned.
They managed to slip provisions past Congress that allowed them to only have .25 cents on the dollar for every 100 dollars loaned out.
And it won't matter if the private banks of the federal reserve keep printing and pouring their funny money into the economy, it will just make things worse.
All the countries that have USD reserves are getting fed up with their stash being worth less each and every day and will start diversifying their portfolios to dilute the risk.
This mess will defy ALL attempts to define it's ACTUAL course. We are headed into uncharted and dangerous times for EVERY life on the planet.
Will it be worse than the article lets on...? Well let's just say Moses had two lungs FULL of WARNINGS and the sheep just looked away then.
The splatter of poo is going to be sptacular and DEADLY.
Have those MEDICAL supply's yet? Better get on your survival folks time is short and the bankers want YOU DEAD and GONE.
First you take D.C. Then you take New York
I agree that 2008 will be interesting. Homeowners in the USA and England will be affected directly. There are more Adjustable Rate Mortgages in England than the USA, and the British Council of Mortgage Lenders predicts a 50% rise in foreclosures in 2008.
In the USA, most “interest only” ARM mortgages were taken out between 2005-2006, which was the last and most furious phase of the US bubble. Over the next six months (December 2007 to July 1, 2008) more than $690 billion in mortgages will face a sudden jump in interest rates, meaning a sudden doubling of payments. Many homeowners will get the bad news during the Christmas buying season. People won’t be able to sell their house, or refinance their mortgage, or keep up with payments, since their incomes will keep dropping. Even if they could keep up with their mortgages, they will abandon their houses. If a house is worth 100K on the market, then why keep paying on a $330K mortgage that, at the end of 30 years, means $600K in payments? Newspapers will report mass foreclosures for two or three weeks, until people get tired of hearing about it – but the hemorrhaging will continue. Millions of homes will go into default, but the banks won’t be able to seize them, because of the Deutsche Bank debacle. Who could the banks resell houses to anyway?
Still, banks will find ways to make homeowners suffer for the banks’ greed. Newspapers will blame “greedy” homeowners. Most Americans will agree, since the bank is always “right.” And the hemorrhaging will continue to expand.
Yes, the U.S. economy will crash, because it’s based on growth (i.e. various kinds of ever-expanding bubbles). After the dot.com bubble, and the real estate bubble, what kind of new bubble can the Fed dream up? None that I can see. The entire USA is a bubble. The only solution will be another 9/11 with rationing, martial law, a military draft, and so on. Millions of people will be sent to their deaths to ensure “national security,” but these measures will postpone the final U.S. crash for another year or so at best.
Israel will be okay for a while, since it will have its pipeline from Iraq, but even the pipeline will not save Israel when the USA collapses. Millions of Israeli Jews will flock to China, as many Jews did during the Great Depression. Some will go to India, Argentina, and Jewish-controlled nations in Africa such as Uganda and Zimbabwe.
In the USA their fate is uncertain. They will either be cleansed, or rule as gods, as they did in Weimar Germany.
@Abdul...
It is not only based on growth, it positively requires growth. Deep at the centre of this form of economy lies a voracious parasite known as the central bank. In the case of the U.S. that central bank is the (distinctly non-Federal) Federal Reserve.
The interest owed on every dollar printed by this parasite ultimately manifests itself as inflation. There is only one true inflationary pressure, and it is not the cost of materials or labour, but the interest owed to the central bankers. An economy where inflation is a given can not succeed given a stable state. It literally demands "growth" in order to survive. The growth is, in reality, an economic cancer.
Until this unseen usury is excised from our economies, we will continue to fight an uphill battle against the inflation it causes.
Paragraph 5, of Section 8, of the First article of the new American Constitution read :
“CONGRESS SHALL HAVE THE POWER TO COIN MONEY AND REGULATE THE VALUE THEREOF”.
On Thursday 39 November, Federal Reserve Chairman Ben Bernanke said there may be another interest rate cut when the Fed meets on Dec. 11, its last session of the year.
The worsening credit crunch, a deepening housing slump, and rising energy prices probably will create “headwinds for the consumer in the months ahead” Bernake said.
The odds have grown that the USA will enter a recession. A sharp cutback in consumer spending could send the economy into a tailspin.
“Bernanke is leaning in the direction of a rate cut,” said Brian Bethune, economist at Global Insight.
Twice this year the Fed has trimmed rates, in September and late October.
In last October’s meeting, Bernanke said further cuts might not be needed, but financial markets have continued to sour. The housing slump has deepened, consumer confidence has plummeted, and consumer spending “has been on the soft side,” Bernanke said.
He spoke hours after the White House lowered its economic growth projection for 2008 due to the deteriorating housing market. The White House also raised its estimate for unemployment next year.
Bernanke said rising gasoline and heating oil prices, as well as higher food costs might cause inflation.
Source
WHAT THIS MEANS is another massive infusion of debt into the economy. Wall Street will briefly rally, and then return to ambient levels.
Credit is like adrenalin. It can revive a dying body, but it has negative side effects (debt).
Eventually it is adrenalin shots that finally kill the patient.