The Discerning Texan

All that is necessary for evil to triumph, is for good men to do nothing.
-- Edmund Burke
Thursday, May 14, 2009

The Nightmare Scenario -- is it so far-fetched?

A great economic wake-up call in this morning's Big Jake of the Financial site Seeking Alpha paints a worst-case scenario for the economy; a scenario that does not seem to be that unlikely, short of someone putting something "mind altering" in the water at the White House and Capitol Hill that would suddenly bring on a bout of sudden economic sanity (my guess is that most of these people have already had their minds altered...):

As late as June 2008, mainstream consensus held that the U.S. was heading for a “soft landing” and would avoid recession. Several months later, the slump was acknowledged to have started in January 2008, but we were supposed to see renewed growth by mid-2009, with unemployment peaking in the eight-to-nine percent range. A quick “shovel-ready” stimulus bag was supposed to set us back on the road to prosperity.

In January, recovery projections were pushed forward to late 2009. Today, the consensus is for a mid-2010 recovery, with unemployment peaking at just over 10 percent. Clearly, the mainstream has struggled to catch up to reality for well over one year. What are the chances that they finally have it right this time?

Moreover, the mainstream continues to see what is going on as a plain-vanilla recession that will be quelled with some on-the-fly monetary and fiscal tinkering. Washington, we are told, will pull us out of this slump—as soon as the masses can be enticed back to the shopping malls. Then things will return to how they were before. But what if the experts and politicians are wrong not only on their ever-changing recovery timeline, but also on the nature—nay, the very existence—of a recovery?

America’s reigning political-economic ideology has demonstrably failed. Given that its government is obviously fumbling along without a clue, its foreign and domestic credit is tapped out, and its 300 million people are discovering that their hopes for continuous material improvement will never be met, could the U.S. be headed the way of the USSR?

Instead of a recovery as the mainstream envisions it, what if America permanently bankrupts, impoverishes, and marginalizes itself? What if its cherished institutions fail across the board? For example, what happens when the police realize that their under-funded pension plans cannot support a decent retirement? Will they stay honest, or will they opt to survive by any means necessary? These are questions that the mainstream does not even begin to contemplate.

In the interests of providing you with an alternate vision—something outside the mainstream—below are ten predictions for America through the year 2012. This is not boilerplate doom-saying. Rather, I am laying out in highly specific terms what will happen over the next three-odd years. Others have thrown around the term “Depression”, but I am going to tell you precisely what it means for you, your investments, and your community.

When these predictions come true, I expect to be rewarded with a seven-figure consulting gig, a book contract, or a high-level position in whatever administration succeeds the doomed Obama team—that is, if anyone succeeds it at all.

Read all ten of Big Jake's predictions; and then consider the following:

Note that the predictions not even take into account foreign policy, e.g. what would happen to the price of oil if a war breaks out with Iran and/or its surrogates, and as a result the Straits of Hormuz or Suez Canal closes temporarily or indefinitely; remember the gas lines after the inane, self-defeating attempt by the Federal government to ration gas in the 1970's? If the situation with Iran were to blow up, Oil prices could skyrocket to 3-4 times what they were last year, especially given that Obama is leaving the rest of us holding the bag in the name of Green/Marxist "mythology", having gone out of his way to stifle, rather than encourage, domestic exploration. This will result in much higher costs for every single citizen, in addition to the onerous tax rates that Obama wants to institute for a taxpayer-funded Government Health Care Rationing program.

Nor do Big Jake's predictions take into account a devastating terror attack that takes out a city or a bio attack that shuts down businesses and quarantines millions nationwide in their own homes (and you thought the Swine Flu was bad...). The article does not take into account what happens if a rogue Iran or North Korea (or Russia) sells a nuke the the highest Islamist terror cell bidder--and then they use that weapon either to kill hundreds of thousands in the West (thanks to relaxed enforcement at our borders and rampant political correctness towards extremists)--or worse, an EMP attack that takes out the grid for a large section of the country for months or years (read the linked article, estimates are that casualties would be as high as 90% in such a scenario).

Finally, Big Jake does briefly discuss the biggest ticking time bomb of all--hyperinflation. When the 2010 tax increases go into effect, along with Obama's protectionist insanity discussed earlier, take a wild guess what will happen when all this monopoly money the Fed has been printing up (which is currently being held by the Federalized banks) actually gets into circulation? Suddenly the worth of your dollars will be reduced to, what: dimes? nickels? pennies?

Remember 1923 Germany?

And even if NONE of these "additional" things come to pass in the next 4 years--there is still the remainder of Big Jake's highly plausible scenario.

Hope and Change. Welcome to it. Batten down the hatches and keep your ammo dry. You may need both.

UPDATE: More rosiness from Hot Air--The Road to Weimar America
DiscerningTexan, 5/14/2009 09:24:00 AM |