US, world headed for 25 year depression: Jim Rickards

US, world headed for 25 year depression: Jim Rickards

“When I use the phrase 25 year depression, it sounds extreme but it’s not. We had a 30 year depression in the United States from about 1870 to 1900…The Great Depression lasted from about 1929 to 1940. The U.S. is in a depression today.” Well, it's been in the works for

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Canadian banking haven myth exposed

Canadian banking haven myth exposed

"One of the reasons that Canadians (and international commentators, other finance ministers and global financial institutions) buy this Canadian banking fairy tale is the way the government accounts for the money borrowed to support the banks." The sorry spectacle of Conservat

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Get rid of your mortgage, loans, because interest rates set to rise

Get rid of your mortgage, loans, because interest rates set to rise

Get rid of your loans, guys and gals, because we are going into a high interest rate period. Very high. It will be the equivalent of going into the double digit interest rates we had in the 80s where many people threw their house keys at the bank and we had record numbers of ba

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E-cigarettes save lives, money

E-cigarettes save lives, money

"We know that cigarettes have thousands of chemicals in them and we know that they are killing us. They have been for over a hundred years. So now, the e-cig industry comes along with only one or two chemicals in their mixture and people are freaking out over these as well. Whe

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US inches closer to big bank charges

US inches closer to big bank charges

Federal prosecutors are nearing criminal charges against some of the world’s biggest banks, according to lawyers briefed on the matter, a development that could produce the first guilty plea from a major bank in more than two decades. In doing so, prosecutors are confronting

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Canada’s home sales top predictions; why a real estate crash is inevitable

Canada’s home sales top predictions; why a real estate crash is inevitable

“The assurance of relatively low borrowing costs has likely given home buyers confidence while rising home values have kept new listings at a healthy level. Stable employment has provided some assurance to owners and buyers alike.” Our website is back after many months of

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Comparing today’s recession/depression to the 1980 recession

Comparing today's recession/depression to the 1980 recession

"Much like today, Americans were concerned not only with high unemployment but increasing budget deficits in the early 1980s. A September 1983 Gallup poll found that three-fourths of the public agreed that the federal government's budget deficit was a great threat (42%) or some

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Why savers are getting screwed

Why savers are getting screwed

"Without the intervention of economic policymakers, interest rates would be naturally higher. That would increase the cost of borrowing for businesses and consumers, but there would be some offsetting economic benefits. Savers are getting screwed by the current monetary policy

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Geithner admits USA bankrupt to US Senate

Geithner admits USA bankrupt to US Senate

"Never in our history has Congress failed to increase the debt limit when necessary. Failure to raise the limit would precipitate a default by the United States. Default would effectively impose a significant and long-lasting tax on all Americans and all American businesses

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World economies on verge of currency revaluations to deal with debt

World economies on verge of currency revaluations to deal with debt

"It is well enough that people of the nation do not understand our banking and monetary system, for if they did, I believe there would be a revolution before tomorrow morning." -- Henry Ford Basically what the world central banks are doing is increasing their money by devaluin

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Is Obama the next Mugabe of Zimbabwe?

Is Obama the next Mugabe of Zimbabwe?

"America, Britain, Japan, Germany, France, Sweden, Holland, Norway, Canada and Australia make up the Fishmongers Group and their meeting on Tuesday will deliberate on the state of the inclusive government, debt relief, public finance administration and the controversial economi

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US raiding foreign countries with dollars, not soldiers

US raiding foreign countries with dollars, not soldiers

""The United States is going to China and saying: we want you to commit economic suicide, just like Japan did. We want you to follow the same thing: we want you to revalue your currency, we want you to squeeze your companies, we want you to go bankrupt,” says Michael Hudson,

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“The really big risk factors, be it in Iceland or the UK, the US or Ukraine, can no longer be easily factored into a spreadsheet.”

iceland debt default riots

The Financial Times is reporting …

“In recent months, some of the brightest minds at Moody’s rating agency have been mulling a fascinating question: should they introduce a formal rating of “social cohesion” into sovereign debt indices, when they judge whether a government is likely to default on its debt – or not?”

By social cohesion what they mean is will the natives get restless like they did in Iceland or Greece?  It is of course a business question not a moral concern when people start rioting and the social structure breaks down the risk of default increases.  FT again…

“In the past few years, when markets have tried to judge the risk attached to western government bonds, they have typically done so looking at hard macro-economic data, such as projected gross domestic product. Such data, of course, continue to be critically important, given the size of the western fiscal hole.

What is becoming clear is that hard numbers do not tell the entire tale. What will be equally crucial in the coming years is not the sheer scale of debt, but whether governments can implement a rational and effective way of cutting it – and potentially allocating pain – without unleashing (at best) political instability, or (at worst) full blown revolution.

Does a country, in other words, have enough political and social “cohesion” to take truly tough choices, or even rewrite the social contract?

The way I interpret this our debt is out of control.  Social Security is going broke sooner then expected another million jobs lost, consumer credit has plummeted to an all time record low. As Bill Bonner said “People without jobs can’t buy stuff – neither the kind of stuff you get at the grocery store…nor the kind of stuff you get from real estate agents. Since they don’t buy stuff, manufacturers don’t make stuff. And since they don’t make stuff, they don’t need the stuff that stuff is made of, nor the employees who turn the raw stuff into the finished stuff.

Result: the stuffing gets knocked out of the economy” and coupled with rapidly dwindling tax receipts when the time comes and they raise taxes after already looting the citizenry they fear revolt!

“However, in the US, the government has less experience of dividing up a shrinking pool of resources. Instead, in a land built by pioneers, Americans prefer to spend time thinking about how to make the pie bigger – or to find fresh frontiers – than about making shared sacrifices.

Thus it remains an open question whether Washington will be able to slash without real political or social upheaval. Signs of tension are already there: Bill Gross of Pimco, for example, this week warned that “our [American] government does not work any more; or perhaps more accurately, when it does it works for special interests and not for the American people”.  They even mention Iceland!

“Or will they do what Icelandic voters have done this week – and derail a government plan?”

“The really big risk factors, be it in Iceland or the UK, the US or Ukraine, can no longer be easily factored into a spreadsheet.”

I think they are right to be concerned like Gerald Celente famously said “Those who have nothing to lose, lose it!” and Americans from all political persuasions are waking up.  In addition to job loss $7 Trillion was lost in the stock market (401k’s,Pension Plans) and another $6 Trillion in the housing market.

Foreign countries are sick of funding our debt as a result the Fed has been monetizing it. “Monetizing” debt, by the way, is larceny on the grandest scale. Rather than honestly repaying what it has borrowed, a government merely prints up extra currency and uses it to pay its loans. The debt is “monetized”…transformed into an increase in the money supply, thereby lowering the purchasing power of everybody’s savings. Remember the citizens are still bailing out the banks.  Now I know why they wanted to brand the Americans who participated in Tea Party’s as Extremists.  If I were Moody’s I would price in the cost of Revolution!

Villagers with pitchforks

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This entry was posted on Saturday, January 9th, 2010 at 1:56 am and is filed under Europe. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

1 Comment

  1. January 9, 2010 @ 6:20 pm


    A revolution may be the tough medicine that is needed, indeed. We’re heading for an economic train wreck–and the consequences could very well be our liberties. What will we tell our children when liberty is an outlawed word with no meaning as we all become slaves on the federal plantation.

    Will some stand and fight and say not on my watch when they point the guns at us?

    God, I hope so.

    Posted by Ian

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