The Greatest Depression Is Coming

Financial Sense ^ | 11 Mar 2003 | John Finger

[sourcery]

So what do you own? How old are you? What is your net worth?

I'm 46. I own lots of cash, some put options on the US stock market indices, and shome shares in the Rydex Tempest fund, which increase in value as the S&P 500 index falls--at double the percentage rate of change. Until recently, all of my 410(k) was in the PIMCO long term government bond fund, but I recently closed that position and went entirely to cash in that account (I predict that bonds will soon be falling in price.) In early February, I sold all my gold mining shares, since I expected the market to soon resume its secular decline--which it obviously has since done.

My net worth I decline to answer, except to say that I still work for a living, but at a salary well into six figures. I'm no Warren Buffet, but I consider myself rather well off.

I expect the current sell off in the stock market to continue (in the usual two steps down, one step up pattern) until about 21 March, give or take a day. Then a multi-week bear market rally should start (regardless of what happens in Iraq, and again in the typical two steps up, one step down pattern.) My market timing is not perfect, but I'm right substantially more often than I'm wrong. Obviously, I have enough confidence to make predictions like this in public :-).

Disclaimer: I am not a professional investment adviser, and do not intend my comments to be taken as investment advice; they are only meant to establish a basis for judging the quality of my analysis. Trade entirely at your own risk.

OK, now it's your turn...

[TaRaRaBoomDeAyGoreLostToday!]

"The U.S. government has a technology, called a printing press - or today, its electronic equivalent - that allows it to produce as many U.S. dollars as it wishes at essentially no cost.”

Now this is deep. So how about abolishing the IRS and all taxes and giving us back 62% of our pay and then just print a trillion dollars for the war and a million for me and everybody else. Then no one would work, we would all fight over which port to pull into or that I saw that yacht first.

Someone can invent the money tree my grandma and ma said we never had.

[sourcery]

I understand about the left and what it wants.

I don't blame Bush for the mess we're in. I don't think there's much he can do--unless he wants to risk impeachment, and he would probably fail even then.

My concern is that failure to accept the reality of the situation will make Bush and the Republican Congress sitting ducks for socialist demagoguery. The way to avoid that is to make radical proposals to fix the economy, that at least seem plausible, but that the left could never accept. For example, Bush could propose elimination of the income tax, and cutting all unconstitutional government spending. Actually, he could do all that by Executive Order, although the political risks would be very high, and he would risk impeachment.

The strategy would then be to blame Democrat opposition to the radical proposals for everything bad that happens in the economy. The President and the Republicans in Congress would need to incessantly blame every lost job, every bankruptcy, every stock market fall on "do nothing" Democrat intransigence to Bush's "Free Society Program." Eventually, the Democrats would either start losing elections, or they'd cave under the political pressure.

[paul51]

The guy is all wet on the part of iraq not having wmd but just in case he is right on a few items, I better get a law degree.

[Cacique]

economics ping

[razorback-bert]

These threads help me to understand kool-aid drinkers and buggy whip investors.

[sourcery]

The guy is all wet on the part of iraq not having wmd

Whether Iraq has any WMD, or what they may be, I have no idea. What I do know is this: many will never believe Iraq has them, even when the US produces the evidence after the war is over, and many would never believe Iraq's innocence, regardless of how well the country was "inspected."

Due to the consequences of Iraq's invasion of Kuwait, and the agreements and commitments that Iraq made in order to end that conflict, Iraq is like a convicted felon whose rights have been limited by court order (the UN). Like any felon, Iraq doesn't have the right to "keep and bear arms" without restriction. And Iraq has to prove that it is not in violation of those restrictions. This is one reason why the US is handling the Iraq situation differently than Korea or Iran. It's one of the two reasons I'm not against the coming war--the other is that I can't imagine Bush, Blair and Howard taking things this far unless they know that Saddam is guilty.

[U S Army EOD]

My god!!!!! Has the war on Iraq and its allies started????

[U S Army EOD]

You forgot Al Gore, he was laid off and still can't find a job.

[Tauzero]

"Well I do know this, whenever there is a concensus in the market thats the time to turn contrarian."

Not always. It is true that at any major market turn the consensus expectation of future prices is wrong by definition. But in the middle part of a trend, the consensus is right. The great mass of average investors does learn, but it never anticipates.

[woofie]

Based on my reading the world ended 3 weeks ago

[sourcery]

Based on my reading the world ended 3 weeks ago

Reminds of a friend of mine who started a cult. It was called the "Cult of Next Wednesday." To be a member of the cult, you had to believe that the world would not be created until the following Wednesday :-)

My friend was obviously rather whimsical, and was fascinated by paradoxes and self-referential systems.

[Dec31,1999]

The body of the essay was too long and the conclusion too short. I'd like to hear more about the good news.

[Dec31,1999]

I must say, I'm kind of pi$$ed we didn't take out that reactor before they fired it up. If we do it now, we face a Chernoble situation.

One question: who initiated this idiotic venture to give a Commie regime a nuke they wouldnt otherwise have had?

Ain't the "Atoms For Peace" program great? I'm FReepin' overjoyed!

[nopardons]

This is utter garbage, in so many respects. When deflation occurs, as in his GREAT DEPRESSION anaylisis, the cost of products actually fell. This is NOT the case now; not for food, clothes, gas, or anything else. Another point, also omitted, is that the GREAT DEPRESSION wasn't based solely on the GREAT CRASH of '29 ; it was a world wide depression, caused by many variables, which don't now exist. Germany and the reest of the defeated WW I allies, were so devistated, by the TREATY of Versailles, that their economies were broken from the cost of war, the reparations, and their own failing economies, that it was a domino effect.

The boom of the 20's ( well, not ALL of the 20s, 1921 was bad, economically and for the market )was a BUBBLE. Bubbles burst. Kennedy and the other sellers, tried and failed, to drop the market, in '29. The market acually recovered. Other things/ events , AFTER the CRASH, sent the markets downwards. The article talks about knowing Wall Street history, yet, the author doesn't appear to know it too well.

There are now and have been, for decades, certain stop gaps / laws / saftey-nets, which preclude the kind of depression he's talking about.

When this much doom & gloom , is posted to FR, it can only mean that we're probably out of the woods and things will get better. And NO, I was NOT one of those, who thought that the market would jsut keep on going up and up and up forever. As a matter of fact, I was one of those, who kept waiting for the Bubble to burst and said that it was going to do so.

[dinodino]

Buffett is correct to eschew tech stocks.

[weikel]

Good analysis, the worst economically has already past I actually have a couple job prospects this summer.

[waterstraat]

The greatest depression IS coming, but it will not be a world wide depression.

It will only be a great depression in the United States.

Furthermore, calling it a great depression is a mis-nomer, since it will last forever.

After all of our factories have closed and moved to china, mexico, etc, after all of our high tech jobs have been outsourced to asia and eastern europe, there will be no jobs here.

After years and years of letting in another 100,000 more immigrants each week for the remainder of whatever jobs are left, and after our population grows to 400 million by 2050, and near a billion by the end of the century, all of your kids will be living in a depressed, poor, overpopulated third world country.

All of the policies. trade agreements, immigration quotas, and lack of tarriffs are all in place to make this happen. There is no other scenario as long as we eliminate all jobs, and close all factories, and let in 100,000 more people each week.

As the United States becomes jobless, we will run out of money, we will run out of welfare, social security will go bankrupt, and the dollar will become worthless on the world market. Our exports will be near zero, and few americans will be able to afford any imports.

[Puppage]

LOL. It would appear so.

[american spirit]

Well let's see we have two of the major icons of the airline industry just about ready to go down the tubes, budget and trade deficits are stratospheric, debt at the personal/ coporate/ gov't. levels are at all time highs, the fedgov owes Social Security over 25 TRILLION $ to pay for all the borrwoing it's done to mask earlier deficits, whole industries like telecom have been in a virtual meltdown (and I know that for a fact because I sell to that industry) yet according to you anyone who tries to tell the public fools that we have major problems is full of crap. Someone's full of crap all right and it's not the author.