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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Real reason for electricity blackouts hitting southern US

Real reason for electricity blackouts hitting southern US

“Large oil companies have for a decade artificially shorted the gasoline market to drive up prices,” said FTCR president Jamie Court. “Oil companies know they can make more money by making less gasoline.” The following article was written by Paul Joseph Watson. He is t

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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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FDIC wants your retirement cash to save banks: Bloomberg

FDIC wants your retirement cash to save banks: Bloomberg

“The FDIC is constantly looking at structures where we can get the greatest opportunity to tap into capital that we have not had the success reaching through previous disposition methods,” FDIC spokeswoman Michele Heller said in an e-mailed statement. “We welcome and work

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Canadian government admits recovery never happened

Canadian government admits recovery never happened

“Not only did their stimulus fail to create the jobs of tomorrow, it also failed to protect the jobs of today,” Scott Brison, the opposition Liberal Party’s spokesman for finance issues, said by telephone. "Most of us were shaking our heads in disbelief early last year w

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How Western society is brainwashed and crumbling

How Western society is brainwashed and crumbling

"The cultural embrace of illusion, and the celebrity culture that has risen up around it, have accompanied a growing system of casino capitalism, with its complicated and unregulated deals of turning debt into magical assets, to create fictional wealth for us, and vast wealth f

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Will we see double digit interest rates from the 1980s?

Will we see double digit interest rates from the 1980s?

"And I sincerely believe, with you, that banking establishments are more dangerous than standing armies; and that the principle of spending money to be paid by posterity, under the name of funding, is but swindling futurity on a large scale." -- Thomas Jefferson Spending is

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Greenspan: credit crunch “by far the greatest financial crisis”

Greenspan: credit crunch by far the greatest financial crisis

Greenspan said that while the economy was in worse shape in the Great Depression, the recent financial crisis was potentially more harmful than that in the 1930s because “never had short-term credit literally withdrawn.” Greenspan just said that the current credit crunch

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deflation recession cartoon

“Inflation is the number one threat to the US economy? Ask the mainstream experts, and this statement is in no way a fabrication of the truth; it is truth itself.”

In the U.S., this is but stage two of the depression. As you may recall, stage one was where smart people bet against the mortgage system and won. Thier winnings were huge and is better known as Asset Default Swap, while in reality it is Legalized Gambling permitted by the recision of Glass-Steagall act (Clinton 1999).

Enter Stage two; Foreclosures brought about by eroded values to loan, abandonment and lost wages/jobs. Upon these losses, smart people brought the world to its knees. At the moment, “Sales of existing homes are up! Prices have stabilized but we are very near the bottom” are statements heard everywhere. The truth here is that foreclosed homes are being sold out as was to be expected. Since the price of the majority of these units is far below market, they are responsible for bringing down the average price. Job losses continue and we are in for the long haul before they return.

Stage three is yet to come, but it will be quiet. Delaying foreclosure activity had the net result of permitting ‘closings’ till late FY09, thus reports for losses on these transactions won’t appear until the end of FY10, but they will appear nonetheless. These losses will result in lower earnings and write-offs which will reduce tax revenues (if there was any due anyway for the insiders for making these deals) and ultimately require additional taxes to bolster all the expenses and costs incurred by this horrible administration.

Stage four will follow the flurry of tax revolts and come pending the outcome of the 2010 midterm election. I’ll leave that to the voters who should all be awake.

Market Myths Exposed: Inflation Is Not A Threat, Deflation Is

Most people are confident they can recognize a myth when they hear one: Wearing a hat causes baldness; eating a bunch of carrots gives you perfect vision; ‘light’ cigarettes are better for your health than the regular kind.

But what about this sentence: Inflation is the number one threat to the US economy? Ask the mainstream experts, and this statement is in no way a fabrication of the truth; it is truth itself. Case in point, this recent insight from a reputable news source:

“Given the extraordinary amounts of government spending, we believe inflation is likely to rear its ugly head.” (CNBC)

It looks reliable. It sounds reliable. But the reality is different. That fact is the subject of Chapter Three in Club EWI’s free educational eBook Market Myths Exposed, aptly titled “Myth No. 3: Worry About Inflation Rather Than Deflation.”

With groundbreaking insight from EWI’s president Bob Prechter, this chapter reveals how the most vital financial players have been led right up to the water of easy money. Yet, like the saying goes, no amount of incentive — be it record low interest rates or trillions of dollars in federal bailouts — has gotten them to “drink.” Here, the “Market Myths” chapter sheds light on this global leverage fast:

  • Banks: The premier dispensers of credit are about “95% invested in mortgages,” which can fall in dollar value at the start of a crisis. Also, a chart of Credit Standards At All Banks since 1997 reveals a new trend of tighter lending criterion. Both are deflationary.
  • Consumers: The premier devourers of credit are paying off their balances. See: chart of Total Consumer Credit (Annual Rate of Change) since 2000. This is deflationary.
  • Private Equity: “Of the ten largest leveraged buyout deals since 2007, four have defaulted and two are in distress. Just in this small group, there is nearly one-half a trillion dollars worth of loans headed for the dump.”
  • Small Businesses are self-liquidating; meaning, they create profits to pay back loans versus consumers. YET, “Market Myths” Chart of Bank Loan Availability to these small Enterprises contains a big, black arrow pointing DOWN. This is deflationary.
  • Home owners: Real estate values continue to fall, foreclosures continue to soar. Mortgage delinquencies are rising, and more and more people are walking away from their properties. All of these conditions are deflationary.

Six pages of riveting charts and commentary later and there’s no putting the pieces of this shattered myth back together: One by one, the key players in the creation and expansion of credit are adopting a stance of conservation and conservatism. This ultimately leads to a decline in the value of outstanding debt — a precondition of deflation, not inflation.

Believe it or not, this is just the beginning. In all, Market Myths Exposed throws light on the TEN most common financial misconceptions via excerpts and charts from EWI’s most popular editorial material of the last decade. Such as:

  • Myth No. 1: Earnings Drive Stock Prices
  • Myth No. 5: To Do Well In Investing, You Have To Diversify
  • Myth No. 8: Bubbles Can Unwind Slowly

The complete, NO-COST report is just a Club EWI sign-up away. Simply click here to get started.

Nico Isaac writes for Elliott Wave International, a market forecasting and technical analysis firm.

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