United States Heading towards a Depression?

Markets will collapse after we provoke, attack and face repercussions from Iran. This should take place in 2-3 months. Start growing gardens.

 

Everyone must grow their own food, and develop a vegetable garden.

I know a good website that I recommend. It'll give you a lot of basic info on growing vegetable gardens. You can also buy locally grown food from there.

 

Haha one of my neighbors got some chickens n roosters a few months ago. I guess you can tell they're lazy city-chickens since they don't start calling until about two hours after the sun comes up. We've got some space cleared for a garden but the sand is terrible for anything other than sweet onions and potatoes (which are extremely cheap to begin with). The potato and onion are headed in this weekend, but we're going to have to figure out what we can grow in the climate in pots. I was disappointed to learn the asparagus wouldn't like this much heat.

 

Gary North's article on Lew Rockwell today agrees with you. I'm not much of a fan of Gary's foreign policy analysis, but his financial analysis is spot on and has been for several months.

http://www.lewrockwell.com/north/north640.html

Excerpt

You can read the whole article to get the bad news. lol

 

Good article, I always enjoyed reading his stuff because he doesn't beat around the bush. The only difference between us though is, I know there'll be strikes on Iran and I know this is all staged, the whole game is set up waiting for time to play it. Maybe he knows that too?

 

Here is Ron Paul challenging Sec. of the Treasury Paulson (former Goldman-Sachs) on the dollar. Paulson has been talking strong dollar while the government has been haphazardly inflating the money supply, and begging China to decouple the Renminbi, which will absolutely destroy the USD. Jim Rogers jokes about this in the video I recently posted up thread.

http://www.youtube.com/watch?v=Ritv_YrCJak

At the end, Barney Frank, who didn't appreciate Ron Paul's admonition at the beginning of the video, says that Ron Paul's request to have a special hearing with Paulson and/or Bernanke to explain what the effect of the dollar debasement is on energy prices (oil) has been approved.

Very cool.

Here are Ron Paul's comments from the Campaign for Liberty.
http://www.youtube.com/watch?v=px9pW5M2sqw

Gary North is a pretty smart dude.

 

The Federal Reserve said it granted the Federal Reserve Bank of New York authority to lend to the two companies "should such lending prove necessary."

Secretary Henry Paulson said the Treasury is seeking authority to expand its current line of credit to the two companies should they need to tap it and to make an equity investment in the companies — if needed. Such moves will require congressional approval.

You need to improve the soil of your garden. Buy some top soil and cow manure from a local garden center. Also use organic material that you normally throw in the garbage to start a mulch pile that you can also add leaves and grass clippings.

Tomatoes and peppers should do well afterwards. Salad vegatables like chives, spinach, swiss chard are fast growers in the spring. With the cow manure and top soil squash should grow well and provide good output.

I think that the article is off the mark. We are more in a '1970s mode' and commodities are not going to go down. The Fed raising rates to 20% was what brought commodities and inflation down. The US had a serve recession in 1975 and inflation only got worse.

The last thirty years people have been provided for retirement and spending via the stock/housing bubbles. The crisis now is that we have topped out and people are not adjusting by reducing their expenses.

 

Well, the soil is really just sand - rain and drainage conditions are "swampy." I've tried to do this in the past but it ends up costing a ton in topsoil and some new soil needs to be re-applied semi-annually. Since there's a pottery wheel in the workshop and access to the university kiln, I'm wondering if it might me more cost-effective to do the peppers and tomatoes in big pots - and what else we could grow in this heat with better controlled soil and watering conditions.. Trying to find something green that isn't excessively leafy but more like brocolli and asparagus.

The only thing that grows naturally is tall weeds and insects so the only 'good use' for the land would be cows 'n chickens (jacksonville was originally called "cowford" because there was a low land-bridge you could use to walk your cattle across the river at low tide). Chickens seem like they might be a bit of a handful, and I don't think the house could ever get the right return on that without figuring out how to eat 20x as many eggs.

There's a '70s aspect, but there's a '30s aspect too.

In the '70s, there was a serious commodity bull run and I think it was in large part because of America's significant devaluation of the currency. When the dollar went off the gold standard and the specter of the perpetual budget deficit came into view on the horizon, there was a flight of capital away from paper and into harder resources.

The only reason that money came back to the USD was that by the early '80s there was no alternative in the world to the U.S. for investment. Reagan's screen-presence and the introduction of creative accounting at the BLS brought the money back to the U.S.

These days there are choices in India, China, and even Europe's somewhat stable currency looks pretty attractive. Its not like we ever really fixed the problems of the 1970s, we just played PR to remind everyone it was still the best game in town.

The lack of proper investment and bubble chasing that passed for financial wisdom for the last few decades is what gives us the 1930s problem....and the more we fight that problem with inflationary fiscal and monetary policies, we're agitating the 1970s side of the problem! We're headed toward default and the intervention can't really stop it at this point as much as it can marginally change what shape the collapse takes (inflation or deflation approaching nullification of debt either by inability to pay or by paying it back in name only with wholly worthless dollars)

 

On the commodity side there is increased demand from both China and India and a slight weakening in demand in the US will not cause a commodity crash. Ot really comes down to the twin bubbles of stock/housing. The effort to keep the bubbles inflated is in effect a devaluaton which risks a dollar crash. No economy has ever printed its way to prosperity.

The potatoes aren't that bad if you can't grow anything else. They are low maintenance. With the price of other staples like bread and rice going through the roof, your potato patch can help you bring down the grocery bills.

 

Great post Korr. Really super stuff.

I'd like to add that it wasn't just BLS but also the Military Keynesianism of the early 80s which helped bring the economy back into a positive direction. Deficit spending enables sunny macro economic statistics. GDP up! Unemployment, down!

That Laffer curve nonsense where cutting taxes increases nominal revenue (shhh, don't tell anyone we doubled the money supply!), it's mind blowing.

I'd like to add to your $6 prediction. DJIA below 10,000.

 

The danger with the S&P is that people are using stocks like cash with money market funds. A lot of the financials haven't reported their true losses and the problem is greater than mist people believe. One tactic that the banks are using is to not list foreclosures for sale at current market prices. As long as the house isn't sold at a loss, the banks keep the house on the books as an asset. In many areas 25% of houses for sale are vacant. When banks start selling houses at current market prices the downward spiral is going to accelerate.

If you don't have green fingers plant some platanos and bananas in the back yard. They grow like weeds especially when you have chickens to fertilize them.

 

Are you underestimating the Plunge Protection Team & Fed's ability to inflate the Markets?

 

Nope. I think the election will generate a little buzz, regardless who gets in. That's why a 1,000 point drop in 5 months is pretty conservative IMO.

 

The stock market is an entirely irrational game. People like Jim Cramer who are super bulls only look smart when it's a bull market and almost any idiot can make money by simply putting it into the market.

This was posted at LRC last night by Karen DeCoster.

She has an excellent follow up post on Sarbanes-Oxley here

 

*FREDDIE MAC SELLS $1 BILLION OF 6-MONTH BILLS

*FREDDIE MAC SELLS $2 BILLION OF 3-MONTH BILLS

*FREDDIE MAC SELLS 3-MONTH BILLS AT 2.309%
*FREDDIE MAC SELLS 6-MONTH BILLS AT 2.496%

Wasn't too bad of an auction actually, Paulson pumped enough I guess.

 

But what is the catch here? Will these bills be recognized by the FED later as appropriate for reserve purposes?

I can't understand why anyone would buy anything from Freddie Mac.

 

Paulson must have on the phone Sunday night and making enough calls to ensure that all the debt would be purchased.