Like Dominoes we world wide fall !!!!
Bare with me. I talk in pictures. I told you last month we had reach the tipping point. The world is broke. Some more than others. China will fare worse than we will because they depend on us buying products from them. OK So picture this. BP dividends for the pensions. England contracts. They tighten belts. Greece is tightening belt. Spain and the European union. Tightening belt. China tightening belt. India is also tightening belt. USA citizens tighten belt. China is going to start a property tax. More belt tightening on the Chinese people. Some with South America. Ok so it the belt tight enough? No walmat will lower prices. Yea !!!! It will help my hyper inflation because I do not earn 20 bucks an hour only 11.00. Gasoline needs to go back to 79 cents a gallon like in the late 80's early 90's. Ok so back to the Dominoes. Picture this. Mississippi Louisiana and Florida taken out of the world economy. China is like taking out Cal. India is like taking out Texas in the world economy. The European union is like taking out the East Coast from the picture. Hedge Funds leverages are about 17 times what cash they actually have. When the market hits certain amount they have to dump commodes. Taxes going up world wide more people spending less and the dominoes will continue to fall and the Fed can do nothing about it. Last year will look so much better than this new sell off. I love the Rick Santally analogy of taking a car in for a tune up and going back to find the whole engine on the floor. I can just picture that of our Constitution. Between the FED buying the banks and Insurance CO. and Car co. and congress passing health care finance reform soon what is next? Who knows and I do not care. I am not afraid. I believe we will see the stock market at half of what the low's were the last time the Market went down. This is not a correction IMO. Look to the past. We did not have Social Security and Medicare. Now add this into the Picture. We are now only 15 thousand away from 27 million people being out of work or under employed. Then add in Mississippi Louisiana and Florida. What will it be then? 30 40 thousand unemployed? 3 months from now? I know the Fed would not lie to us and they tell us it is 10% more or less but we know it is about 18 to 20 %. We see New Feature on the US Debt clock debt to GDP.
What are Congress and the Fed going to do next? Bail out the Banks or Fannie or Freddie again and again and again? Well Lets now look at some figures.
Public External Total Dept To GDP I added Public and External to arrive at the total.
Japan 200% 43.45% 243.45%
Greece 122.5% 166.51% 289%
Portugal 79.21% 242% 321%
USA 59.8% 94.31% 154%
China 18.9% 8.15% 27%
No this is not a correction. This is the next total break down. On Social Security we have unfunded 108 Trillion and so far we can cover 72 trillion. That leaves us 36 trillion short. No I do not see a good out come of this next step in contractions of the Money Supply. I guess good old Bernackee will just print money out of thin air. This is going to be a good next week.