View-Master Scenic 3-Reel Card includes 3 reels with seven 3D stereo images per reel. This 3D Tour is a timeless gift with universal appeal among young and old alike.We all enjoy laughing at David Letterman's top ten lists.
Sorry to say that the following list on our woeful economy won't provide you much of a chuckle, though.
Evidence is mounting that things are indeed getting scary out there, and, what's worse, we're all more or less in denial about it. It's like we're sitting around the campfire trying to shoo away a big grizzly that wandered into our camp. Unfortunately, saying "shoo" or "scoot" or simply "go away" means virtually nothing to 800 pounds of hungry, bad-tempered, non-English-speaking bear.
So while many analysts and talking heads believe that the idea of a severe recession or even depression is laughable, the case is building that these economic days, the ones we're now living in, may be getting as bad as Hoover's first year in office.
That said (drum roll please), here's...
THE TOP TEN LIST OF WHY THE PROSPECT OF ANOTHER DEPRESSION ISN'T FUNNY AT ALL
Okay...number ten...
#10/ According to Nouriel Roubini, former senior advisor to the U.S. Treasury, the FDIC has already depleted 10 percent of its funds rescuing IndyMac alone. He believes it will quickly run out of funds salvaging the other troubled banks now lined up around the block and will have to be recapitalized by Congress (i.e., the American taxpayers) soon.
Which brings up the question, did a lot of banks fail during the Great Depression? Is Tiger Woods good at golf? There were about 60 bank failures a month through most of 1930, then 254 in November and 344 in December of that year. In fact, from 1929 to 1933, 10,000 banks simply vanished (there were only 25,000 to start off). Should something like that happen today, Washington would be frantically printing increasingly worthless dollars just to keep the banking industry afloat. Definitely not an amusing prospect.
#9/ Roubini also had a great observation on the coming Fannie Mae and Freddie Mac bailout, another unbearable load on taxpayers. He said that the Treasury rescue plan is "socialism for the rich, the well connected and Wall Street; it is the continuation of a corrupt system where profits are privatized and losses are socialized." Nothing funny about that.
OPTIMISTIC -- OR ENTIRELY UNINFORMED -- OUTLOOKS
#8/ "I see nothing in the present situation that is either menacing or warrants pessimism. I have every confidence that there will be a revival of activity in the spring and that, during this coming year, the country will make steady progress." Andrew W. Mellon, the former U.S. Secretary of Treasury, said that on December 31, 1929, two months after Black Tuesday. The Great Depression delayed his cheery prediction by roughly ten years. Unfortunately equally oblivious experts are out there at this moment insisting the economic downturn will be nothing of great significance.
And doing it with straight faces.
#7/ At the beginning of October 1929, taxi drivers, hairdressers and many everyday folks felt stock-market-wealthy. "The first day of October in 1929 made me feel like I was rich," wrote Greek immigrant and restaurant owner, George Mehales. A few short weeks later, the man was wiped out. "I had nothing left." That's because it took stocks just two days during the Great Crash to shed 20 percent in value. But that wasn't the worst of it: Three years later, stocks were down a staggering 90 percent.
Ancient history? Maybe...until you realize that we're in something of a freefall ourselves. From July of 07 to July of 08, stocks also fell 20%. Have we hit bottom yet? Not according to the Royal Bank of Scotland, the bank that produces those funny commercials. Bob Janjuah, a senior credit analyst there, is warning of a stock market crash in the autumn. Not exactly something to put a grin on your face.
THE DREADED "HOBSON'S CHOICE" THIS FALL
#6/ Speaking of Bob Janjuah, he referenced Hobson's Choice in discussing the likelihood of a market crash in the fall. Hobson's Choice is one of those paradoxes-a "damned if you do, damned if you don't" kind of thing- that refers to a free choice where only one option makes sense...but nobody wants to even think about taking that one.
In this case, the choice will be between rampaging inflation and higher interest rates. The obvious choice would be to raise rates...though the Fed doesn't want to be caught dead doing that. The consequence may well be a contracting stock market-Janjuah's collapse. In truth, he may have some credibility in these matters; he accurately predicted the beginning of the current mess, last year's credit crunch.
#5/ The world no longer finds our debt amusing, and that includes our debt-devouring pal, China. Merrill Lynch recently warned that the U.S. could face a foreign "financing crisis" as the "full consequence of the Fannie Mae and Freddie Mac mortgage debacle spread through the world." Unfortunately, America still needs some $2 billion a day in foreign capital, one way or another, to service its current account deficit.
So what happens if we end up defaulting? Will the world foreclose on us?
DOLLAR DEPOSED AT THE WORLD'S CURRENCY?
#4/ The price of gas may be the wild card in this 2008 version of recession/depression. In the 1930s, energy prices were a non-factor-a gallon of gas cost about 10. This time around, however, the cost of getting to work would cut deeply into the cost of eating and the cost of staying out of the weather. So while recessions, even depressions, come and (eventually) do go, today's one-of-a-kind energy costs may prolong the economic misery and delay any recover. And that's some pretty serious stuff.
#3/ The aforementioned Nouriel Roubini had this alarming forecast on our tanking dollar: "The Bretton Woods 2 regime of fixed exchange rates to the US dollar...will unravel-as the first Bretton Woods regimes did in the early 1970s-as US twin deficits, recession, financial crisis and rising commodity and goods inflation in emerging market economies will destroy the basis for its existence." Not exactly a laughing matter.
#2/ Should the dollar go the way of the dodo, as horrible as that sounds, investors would have to get pretty agile pretty fast in deploying their assets into currency-proof investments. The 1930's depression was deflationary; the smart investor back then found the antidote by getting liquid early on. This time around, should we face another depression, it will likely come in the fiendish form of hyper-stagflation and a collapse in confidence...both of which can be successfully treated with gold.
AND NUMBER ONE ON THE LIST...
#1/ We still have to deal with financial "experts" like famed economist John Maynard Keynes, who said in 1927, "We will not have any more crashes in our time."
Come to think of it...that iskind of funny. *
You've seen him on Fox News Television and heard him on the Rush Limbaugh Show. He's a published author, writer and an expert guest on more than 1000 radio programs discussing today's economy and gold.
Kevin DeMeritt, President of Lear Capital, is a nationally renowned analyst whose insight into the future of domestic and global economies is unmatched. And, now more than ever, his insights are welcome by nervous investors. Visit http://www.LearCapital.com for all the help you need.
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