Economist Richard Duncan: Civilization May Not Survive 'Death Spiral'

Atlanta Journal Constitution ^ | August 10, 2012 | Terry Weiss, Money Morning

[Cincinatus' Wife]

Richard Duncan, formerly of the World Bank and chief economist at Blackhorse Asset Mgmt., says America's $16 trillion federal debt has escalated into a "death spiral, "as he told CNBC.

And it could result in a depression so severe that he doesn't "think our civilization could survive it."

And Duncan is not alone in warning that the U.S. economy may go into a "death spiral."

Since the recession, noted economists including Laurence Kotlikoff, a former member of President Reagan's Council of Economic Advisers, have come to similar conclusions.

Kotlikoff estimates the true fiscal gap is $211 trillion when unfunded entitlements like Social Security and Medicare are included.

However, while the debt crisis numbers are well known to most Americans, the economy hasn't suffered a major correction for almost 4 years.

So the questions remain: Is the threat of collapse for real? And if so, when?

A team of scientists, economists, and geopolitical analysts believes they have proof that the threat is indeed real - and the danger imminent.

One member of this team, Chris Martenson, a pathologist and former VP of a Fortune 300 company, explains their findings:

"We found an identical pattern in our debt, total credit market, and money supply that guarantees they're going to fail. This pattern is nearly the same as in any pyramid scheme, one that escalates exponentially fast before it collapses. Governments around the globe are chiefly responsible.

"And what's really disturbing about these findings is that the pattern isn't limited to our economy. We found the same catastrophic pattern in our energy, food, and water systems as well."

According to Martenson: "These systems could all implode at the same time. Food, water, energy, money. Everything."

[ichabod1]

Why should I believe that? I’ve been being told all my life that free trade is good for me, and my standard of living has been declining for the same amount of time. Free trade is not free if it’s not fair, and the FACT is that we do business with other countries that pay their workers a slave wage with no questions asked. We can’t compete with chinese slave labor, nor should we. We should not be trading with them period. But they and plenty of other countries are perfectly willing to protect THEIR markets against OUR goods, whether openly with the tariffs, or under the table by making agreements and then failing to honor them.

Oh, and let us not forget that if we get uppity and expect a living wage they just bring in a few million illegal migrants to replace us.

All the things you mentioned are problems, big ones, but if we don’t do something about trade, the 1% are going to continue to drink our milkshake until there’s nothing left but a giant sucking sound.

[OldEarlGray]

>>banks had to invent a new process for insuring such high-risk loans

The Sub-prime leader for some time was Ameriquest/Argent Mortgage.

They were not a bank.  They had no depositors.

http://www.ocregister.com/articles/subprime-14214-beach-mortgage.html

They existed only for the origination and securitization of subprime loans.

"Oops"  

That would be W with his Ambassador to the Netherlands - Roland Arnall, the "Godfather of Subprime"

 

 

>>Not so much fraud as doing government’s will under duress,

 

Baloney.

 

Argent Mortgage falsified  FICO scores for thousands of loan applications.  

I know that for a fact.

 

Other entities manipulated LIBOR, to which a significant portion of Argent's originations were tied. Not surprising, given that their primary warehouse lender was Deutchesbank.

 

Did the gooberment force them to do that?  Nope.

 

"The Merchant uses dishonest scales - he loves to defraud"

 

[ctdonath2]

Did the gooberment force them to do that? Nope.

The gooberment forced a no-win scenario on banks, which were thus happy to outsource their problems to someone who would accept responsibility. Concentrating no-win issues is ripe for abuse, both malicious and fearful.

OK, we know this and have been over it. Government demanded unrealistic requirements, "crony capitalists" abused it, stuff broke. Blame is both due and pointless. Some reason you're berating fellow FReepers with the subject?

[albionin]

“The producers stop producing and stand back to watch. I think it is hard to fix a flat tire while the car is moving.”

Yes and the looters surely have left themselves vulnerable. The producers don’t realize what power the looters have placed in their hands. When the top 10% pay 70% of the revenue to run the government, or at least the part that is not borrowed from future generations, then they have the looters by the balls but the looters know they would never stop producing. The producers just keep working a little harder and a little harder and keep the system going but every system has a breaking point.

[Freedom_Is_Not_Free]

I also no longer live in the USA. I live in California.

[agere_contra]

Well I’m back.

I see you’ve been busy: piling up teh crazy.

Random links, random pictures. A scatter-shot of irrelevant factoids like dots in a coloring book you expect others to join up for you.

But not a single coherent argument to advance your thesis that people who buy and sell without the intervention of Government are whores and traitors.

You really should have gone for that walk.

I’m off to watch the Olympics now. Feel free to spam the thread with noise.

[Road Glide]

“Economist Richard Duncan: Civilization May Not Survive ‘Death Spiral’”

“And what’s really disturbing about these findings is that the pattern isn’t limited to our economy. We found the same catastrophic pattern in our energy, food, and water systems as well.”
According to Martenson: “These systems could all implode at the same time. Food, water, energy, money. Everything.”

Well...
If that’s all there is,
If that’s all there is
If that’s all there is, my friend,
Then let’s keep dancing
Let’s break out the booze and have a ball...
If that’s all.... there is.

http://www.youtube.com/watch?v=3VscVP_Gt_s
(apologies to Peggy Lee)

[listenhillary]

This was published in 2009. It gives a broader understanding of how the banks and investment companies did end runs around the regulators. It is a long read and the author doesn’t always point at the right villain.

http://www.freerepublic.com/focus/news/2212576/posts?page=85#85

[OldEarlGray]

>>The gooberment forced a no-win scenario on banks,

 

 

That may be the RINO "Fiscaly Conservative" party line -- but the reality is there are smaller regional banks and credit unions who stayed completely out of the Subprime bidness; who never took a dime of TARP money, and who are still doing just fine.

 

Meanwhile, the FreeTraitors, the Merchants who love their Dishonest scales -- were operating under the assumption that the rules were thus:

 

"We didn't truly know the dangers of the market, because it was a dark market," says Brooksley Born, the head of an obscure federal regulatory agency -- the Commodity Futures Trading Commission [CFTC] -- who not only warned of the potential for economic meltdown in the late 1990s, but also tried to convince the country's key economic powerbrokers to take actions that could have helped avert the crisis. "They were totally opposed to it," Born says. "That puzzled me. What was it that was in this market that had to be hidden?"

http://www.pbs.org/wgbh/pages/frontline/warning/view/

 

 "crony capitalists" abused it

 

But CTDonath2 says there was no fraud.  Uhuh.

 

[OldEarlGray]

"As a 19 then 20 year old boy, my managers and handlers taught me the ins and outs of mortgage fraud, drugs, sex, and money, money, and more money. My friend and manager handed out crystal methamphetamine to loan officers in a bid to keep them up and at work longer hours. At any given moment inside the restrooms - cocaine and meth was being snorted by my estimates more than a third of the staff, and more than half the staff manipulating documents to get loans to fund and more then 75% just completely made falses tatements on 1003s regarding stated income etc to get loans funded. A typical welcome aboard gift was a pair of scissors, tape, and white out, three things a loan officer or financial professional should never need.."

---Fugitive financier arrested at U.S. border

http://www.freerepublic.com/focus/f-news/2184646/posts

Quack, Waddle - FRAUD.

And on the subject of "scissors, tape, and white out," -- tell us CT,  which branch of the evile gooberment forced folks in those "not" fraudulent enterprises to invent the behavior that's now known as ROBOSIGNING, hmmm?

http://www.google.com/#hl=en&sugexp=les%3Bcaqth&gs_nf=1&cp=6&gs_id=2y&xhr=t&q=Robosigning

Is robosigning Fraudulent? Does your NewSpeak Dictionary, 2012 edition, have some other word for Fraud?

Quack Quack Quack.

 

 

 

[ctdonath2]

While perhaps a topic worthy of discussion, your continued tone is quite distasteful. Kindly leave me out of it.

[supercat]

... much of the complex modeling and calculating has little predictive value and obscures the very fundamental issues that matter most.

Economics is fundamentally very simple. I think it can be summed up in a quote (source forgotten): "Any moron can show that 2+2=4. It takes a genius to show that 2+2=5." Much of the "complexity" exists for the purpose of obscuring what is really going on.

The real value of an asset is the probabalistic expected present cash value of everything good that will come from the asset, minus the probabalistic expected present cash value of everything that one will have to spend to achieve that good. The value of an asset may be affected by unexpected events, but is not affected by the prices for which people buy and sell it. If people trade an asset for prices which spiral upwards of $100 each, but the asset can only be expected to generate $25 of real value, a price correction to $25 will not represent a loss of value. Rather, in any transaction above $25 the buyer should be viewed as having given (price - $25) to the seller, and in transactions below $25, the seller should be viewed as having given ($25 - price) to the buyer. If someone buys for $95 and sells for $100, the person loses $70 on the purchase and gains $75 on the sale (at the expense of the buyer who loses $75).

That all sounds complicated, but the key point is this: a lot of people endeavor to make assets appear to be worth more than they are, and to convince people that, should the assets be discovered not be worth what people thought, it was that discovery that made the assets worthless (as opposed to the assets having been worthless all along). If the number of shares outstanding in a company, times the price of those shares, substantially exceeds any realistic expectation of the company's time-adjusted future profits and/or eventual liquidation value, the shares are not worth the market price. Efforts to keep the stock price elevated may benefit those who sell shares at elevated prices, but every extra dollar received by a seller represents a dollar lost by a buyer. The net effect of such efforts is that while one may spend an unlimited amount of money trying to maintain the illusion that the shares are worth more than they actually are, such spending will not generate real value.

[equaviator]

“The breaker became unusable”

Also unreliable

[Almondjoy]

You and i both know that 200T in unfunded is garbage. Either taxes will be raised or payouts of medicare and ss will be reduced or a combo of both. It’s my worry about how much of the US population will be dependent on the government when that has to happen and what their reaction will be when they find out there isnt enough taxes to be raised anymore.

[Almondjoy]

the current yields on treasury’s would disagree with you.

[equaviator]

“It is one reason that I no longer live in the USSA.”

Well then, you’re no help...

[blam]

We Are Doomed. (WAD)
(Bump)

[blam]

We Are Doomed. (WAD)
(Bump)