I don’t have to tell you things are bad. Everybody knows things are bad. It’s a depression. Everybody’s out of work or scared of losing their job. The dollar buys a nickel’s worth, banks are going bust, shopkeepers keep a gun under the counter. Punks are running wild in the street and there’s nobody anywhere who seems to know what to do, and there’s no end to it.

We know the air is unfit to breathe and our food is unfit to eat, and we sit watching our TV’s while some local newscaster tells us that today we had fifteen homicides and sixty-three violent crimes, as if that’s the way it’s supposed to be.

We know things are bad - worse than bad. They’re crazy. It’s like everything everywhere is going crazy, so we don’t go out anymore. We sit in the house, and slowly the world we are living in is getting smaller, and all we say is: ‘Please, at least leave us alone in our living rooms. Let me have my toaster and my TV and my steel-belted radials and I won’t say anything. Just leave us alone.’

Well, I’m not gonna leave you alone. I want you to get MAD! I don’t want you to protest. I don’t want you to riot - I don’t want you to write to your congressman because I wouldn’t know what to tell you to write. I don’t know what to do about the depression and the inflation and the Russians and the crime in the street. All I know is that first you’ve got to get mad. (shouting) You’ve got to say, ‘I’m a human being, god-dammit! My life has value!’

So I want you to get up now. I want all of you to get up out of your chairs. I want you to get up right now and go to the window. Open it, and stick your head out, and yell, ‘I’m as mad as hell, and I’m not going to take this anymore!’ I want you to get up right now, sit up, go to your windows, open them and stick your head out and yell - ‘I’m as mad as hell and I’m not going to take this anymore!’

Things have got to change. But first, you’ve gotta get mad!… Then we’ll figure out what to do about the depression and the inflation and the oil crisis. But first get up out of your chairs, open the window, stick your head out, and yell, and say it: ‘I’m as mad as hell, and I’m not going to take this anymore!’

Howard Beale, Network, 1976

For an excellent review of recent history and why the world is where it’s at, see Zeitgeist, The Movie.

Wait, There's More!

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Ron Paul on the Federal Reserve, gold standard and money market manipulation.

Watch the video…

Sensible comments.

This is a collection of news headlines and articles tracking the global economic recession slowly unfolding.

There are three points to keep in mind when scanning these:

1. The Financial Times, the main source, prides itself in non-sensationalist news - these articles are pretty sensationalist if one reads between the lines;
2. Over the past 200 years, the average length of time between depressions has been 22 years; it has been 24 years since the last depression in 1982 - See Brief History of Western Depressions;
3. Newspapers invariably report on events after they’ve occurred, and seldom report on trends. Neither do they predict outcomes. The real value of this collection is if you, dear reader, are able to identify the trend for yourself and postulate what the outcome may be. As a hint, here are a few concepts to keep in mind: The Great Depression of 1929; Zimbabwe in late 2000’s; China becomes world superpower in second decade of 21st Century.

Each link opens in a new window, and each is from 2007. Simply hovering your mouse over each link will give you a feel for what the article is about. (Note that the FT limits you to 5 articles per day without registration.)

Continue reading

Not that anyone needs further evidence of how quickly markets can tumble, here are a few YouTube videos of the US real estate crash, some from as early as mid 2007, proving that the value of American housing is down about 50% in many parts of the country … and in just a few months, too.

Continue reading

Whenever I write articles on the state of the economy, I receive a slew of emails asking the same question: “Should I sell my house?” Most people who write asking whether the time is right to sell their property, haven’t really thought all the issues through. Most are merely considering selling their house because money has become tight. Here’s a typical example:

My wife and I bought a £246,000 house on interest only mortgage with a high street lender for 3years. This period ended last month.

Over the last 4 months I have been unemployed and we have been struggling to pay this mortgage.We now have one and half month payment arrears.

We have also have debt about £46,000 on credit cards and loans to pay. This has also put a dent on our credit rating as we struggle to pay as well.

Our house is now valued at £350,000. Should we sell it to sort ourselves out of these debt or is there any way out of this hell? I don’t want the house repossessed but it is a matter of time. At the moment our monthly income is around £2,400 after tax.

The issue is not whether to sell the house, but how to manage their finances. Sadly, I receive way too many of these types of inquiry. However, I received the first sensibly written query yesterday:

My wife and I are concerned that this may be the top of the residential real estate market in our area. We have talked this over, and we think the equity in our home may be at a peak. We are both willing to rent. In fact, we have talked about moving to a region that has a much lower cost of housing. What do you think?

Such a note reflects a joint decision – which buying and selling a house ought to be. It reflects an awareness of economic options. It reflects an understanding that things are not as they seem. Here are a few reasons to consider selling your house now. Continue reading

I’ve received a number of questions about the significance of the US$ Index.

The US Dollar Index is an average of six foreign currencies, weighted in accordance with somebody’s perception of their relative importance in the year 1973, when the world’s major nations first let their currencies start to float “freely” against one another:

1. 1. Euro - 57.6%
2. Japanese Yen - 13.6%
3. British Pound - 11.9%
4. Canadian Dollar - 9.1%
5. Swedish Krona - 4.2%
6. Swiss Franc - 3.6%.

Continue reading

If, as I suspect, we are close to a global economic crash, it makes sense to ensure one is prepared.

When I published my first website in 2003, I included an extensive section on what can be done to prepare for any eventuality. This post takes a slightly more holistic view of how to prosper in a contractionary economy. Rest assured that economic contractions have happened many times before. Millions before us have lived through periods of depression. Almost all managed to survive and some of them really prospered. It was those with the right mindset that did particularly well.

Continue reading

The U.S. Senate today approved a bill to raise the national debt limit by 850 billion U.S. dollars to 9.815 trillion dollars.

The debt limit increase bill was passed in the Senate by a 53-42 vote, and has been sent to President George W. Bush who is expected to sign it by Oct. 1, when the new fiscal year starts and the government hits its current borrowing ceiling of 8.965 trillion dollars.

The House approved an increase in the national debt limit in May this year.

Earlier this month, U.S. Treasury Secretary Henry Paulson urged quick actions from the Democrats-controlled Congress to raise the national debt limit, saying the U.S. government will hit the current debt ceiling on Oct. 1.

The national debt is the total accumulation of annual budget deficits, which must be financed with borrowed money.

Continue reading

There are unconfirmed reports that Barclays could be in trouble, and that the much hyped purchase of ABN Amro doesn’t have a hope in hell of going ahead.

It started with the sudden resignation in late August of Edward Cahill, Barclays Capital’s Head of European Collateralised Debt Obligations.

See : Barclays’ CDO chief in Europe quits as sub-prime crisis hits funds

And another: Barclays falls to earth

Note particularly the paragraph which says:

“Barclays has not helped its own cause. Twice in just over a week it has been forced to borrow expensively a total of £1.9 billion from the Bank of England’s emergency reserves. Such loans are routine, but in the current fragile markets any hint of financial distress has prompted panic among investors. Barclays is looking distinctly accident-prone.”

Continue reading

I recently witnessed first-hand a bank run in the UK. While I’ve long believed the global economy cannot continue the way it is, I never thought I’d see a real life bank run.

A bank run is when customers withdraw their savings en masse because of fear a lender will become insolvent, which can cause it to go bankrupt.

A similar thing happened with Countrywide Bank in California on Friday 17 August. This after they were forced to draw the entire $11.5 billion line of credit available to them. Since then, Bank of America has bought $2 billion of Countrywide stock, effectively saving them. Continue reading