The Great Depression of 1999greenspun.com : LUSENET : TimeBomb 2000 (Y2000) : One Thread
If you can't beat them then...Eat your heart out Ed because here is the mother of all doomsday reports. The entire report is too long to post here and it isn't up on the web yet but here is the end of it:
Osiris Report: "The Great Depression of 1999"
"THE YEAR 2000
Beyond this year and next are more pressing concerns. Few are prepared for the millenium. The Y2K problems will be the Year 2000 version of the US dustbowl of the 1930's. Because the US is somewhat prepared should offer no solace. Most of Europe and nearly all of Asia is unprepared. The global economy will come to a standstill and the weakest government agencies (and nations) will reveal their sore spots. Americans will follow the Russian policy of failing to pay taxes and any budget surpluses, if any truly materialize, will vaporize within months.
Having abandoned gold, most investors will flock to gold coins and bullion in late 1999. A new currency will be forced upon us after 2001, probably re-pegged to the price of gold.
The U.S. Constitution will rattle off new amendments and a radically different tax collection system. Around the year 2019, the US will begin to slowly emerge out of its economic collapse. Remember this: historically, economic depressions only end after wars begin. For now, we have enough potential nuclear conflicts, India versus China, which would indirectly ruin the weather well into the next century. Imagine a new maniac emerging in Russia, Japan, Germany or elsewhere, reviving the totalitarian spirit.
During our lifetimes, we may see a world war to end all life on this planet. An economic collapse should be the furthest anxiety from your minds. You may have gotten your first taste of one this spring. Late summer should give you the opportunity for a final exit."
-- Reg Smith (email@example.com), June 01, 1998
I tend to lean toward your realism in all of this madness. I have a few computer buddies who liken me to Chicken Little screaming the sky is falling when I ask questions about this stuff. Another buddy of mine is a y2k consultant. He sees this as a real problem, but not an apocalyptic problem.
When reading through this site, I go from feeling unprepared and unsafe to paranoid. I hope, for my two babies sake, that I am paranoid. Readings like the one above are silly -- a lot like the report I pulled off of Gary North's site. Lets all hope they are considered ridiculous New Year's Day 2000.
-- bhayes (firstname.lastname@example.org), June 01, 1998.
Judging from the posted extract (?) I can't see what's so pessimistic about the first bit. Thinking that Y2K will be the trigger for the next world depression seems quite realistic. Note that the 1930s are history, and managed to happen without any such obvious trigger as Y2K, simply as the working out of economic forces that I believe are once again in the same pattern as they were in the late 20s. It's crashing already in the far east.
As for the rest: it's been possible since the 1950s when the USA and USSR produced insane quantities of nukes (equivalent to several tons of high explosive per person living on the planet). It hasn't happened yet. I'd like to see those excess nukes done away with, but in the meantime I comfort myself with the thought that self-preservation is a very powerful force and has worked so far. And in any case this sort of prediction is no longer anything to do with Y2K; it's to do with people and politics. All you can do is hope, and if you hear someone banging the war-drum, don't allow yourself to be his silent majority.
I've never bought the argument about wars being an intrinsic part of the long economic cycle -- it doesn't appear to stand detailed scrutiny, whereas the long-term cycle itself does.
-- Nigel Arnot (email@example.com), June 02, 1998.
I might as well post the rest of the report:
"The summer of 1998 may be lovingly remembered for that last great stock market rally, when the DJIA topped the 10,000 level, before its collapse, over the next 7 to 30 years, reaching below 2,200. Somehow in the New Paradigm of Wall Street, financial analysts and experts forgot about the seven-year business cycle and other basic economic lessons.It's no wonder because they must be taking their cues from the world's politicians who have savaged what slim hope there ever was in righting geo-socio-economic imbalances that we, in the North America more greatly enjoy than elsewhere.
In what bizarre mathematical equation can we expect a tsunami-like trade deficit to better our lives? The Strong US Dollar policy purported by Treasury Secretary Rubin has already created an economic collapse in Asia and Russia. Just as Wall Street believes the worst in Asia is just about over, the scenario gets darker. Only the British Pound Sterling, aside from the USD, could possibly weather the worsening global currency crisis and that is in question. So let's start there.
There will be NO peace in Northern Ireland. Scottish Protestant scorn and bullets will meet appeasement of the Catholics. Northern Ireland citizenry have enough weaponry and armament to invade most European countries. Further US interference in this peace process is generally unwelcome and President Clinton has been urged to not visit. That is your first clue that the cheery trio of Albright, Berger and Cohen have as much muscle in the International Community as the Three Stooges. Prime Minister Tony Blair's star has peaked and with his demise goes the Pound Sterling.
Your next clue comes as to how the Middle East peace talks have all but vaporized. At best, we have a truce until next spring when Palestine declares the peace talks dead. At worst, we envision armed conflict throughout the summer and worsening by year-end. That there might be a nuclear threat in the Middle East is already a given. The worry is how widely will it spread.
Peace between Pakistan and India? Completely out of the question! By the time you have digested this report, Pakistan may have already launched its nuclear test. Neither side is bluffing. The Hindu ultra-nationalists, whose goal is to show China and the US, that they have nuclear strike capability, backed India's current Prime Minister, Atal Behari Vajpayee, in the last election. Fanatical pressure, on both sides, will ultimately lead to a mini-nuclear war before the end of this century. Pakistan, tired of having assets seized and noses thumbed at them, is forced to retaliate. Americans in Karachi, having always been at some risk, should quickly flee.
US diplomats are getting to become as welcome in foreign affairs, as the British were earlier this century or the French during the 1960's. Most of the problems we face in Africa and Asia can be directly traced to 18th and 19th century British, Dutch and French imperialistic policies that failed. The USA carried on that tradition through the World Bank and the IMF, with less slavishly oriented methods, but will get the same results. Wars will erupt throughout the Muslim world and North Africa, as civilization steps back into the Dark Ages.
Indonesia will follow the route of Iran within the next 18-24 months, but not before the entire country erupts into the bloodiest civil war since Cambodia's Khmer Rouge brought new meaning to the word genocide. The Chinese who returned after the fall of Suharto might as well have been lemmings jumping into the sea. Turkey and Saudi Arabia will follow the Iranian path in less than five years. Russia's former Soviet Islamic states will side with the Middle East and denounce both Russia and the US"
-- Reg Smith (firstname.lastname@example.org), June 02, 1998.
Wednesday's announcement in Moscow that interest rates had been tripled to 150% raised hardly an eyebrow in the US financial markets, but it sent Germany into a tailspin. Russia's debt auction had failed for a THIRD straight week to attract buyers. At this geometrically increasing pace - from 30% to 50% to 150%, we might find Russia raising its interest rates above 1000% during June. Meanwhile, Russian salaried workers haven't been made for months! Last week, miners were blocking Russia's railways - they'd like to see last year's wages. Palladium prices soared since the first half of the year because Russia's incompetent bureaucracy hasn't figured out how to sell their palladium production. It has been reported that Russia depends on an oil price of US$17/barrel to keep its head above water. Many believe oil prices are headed below US$10/barrel during the next twelve months.
Who's on first? Yeltsin, Lebed, Zuyganov? No one is really quite sure who's running Russia right now. Yeltsin is an avowed alcoholic, who depends on his aides to "clarify" his statements to the media and prop him up for the cameras. He has NO clue whatsoever on how to resolve Russia's economic depression and recently appointed a young technocrat to bail him out of the country's current mess.
Before summer ends, the Russian rouble will begin devaluing like the Weimar Republic's Reichsmark. Comparisons have already been made between Yeltsin's Russia and that precursor to the Nazis.
Yeltsin's folly is on the brink of catastrophe. Mr. Yeltsin will either be dead or "retired" before Labor Day. Impeachment proceedings against Yeltsin are now in process. His rivals, former General Lebed and Zuyganov, will probably form an alliance and work with the ex-KGB gangster-billionaire barons and military to oust Yeltsin in August, reminiscent of the coup against Gorbachev in 1991. Russia will be swept into its worst crisis since 1917, this winter.
Critics will announce that "Capitalism failed" and Russia will regress to a new round of communism, similar to the 1919-1924 dark, unremembered period in Soviet history. Lebed comes to mind as the New Joe Stalin. Zuyganov could become Lebed's Trotsky.
Don't believe any propaganda that the IMF will bail out Russia. Russian workers refuse to pay taxes. Failed tax collection in Russia is the reason given for Russia's economic woes and no amount of IMF money thrown into Russia will ever be repaid. How can workers pay taxes when they aren't being paid?
The Eurodollar will fail. The Brits don't want it, having already announced a 10-year delay in accepting it. That's the first stall; there will be no need for a second postponement. The German and French, having failed to resolve two centuries of cultural differences, should engender enough divisiveness to bury the Euro. The rest of Europe, aside from the Italians, doesn't really want the Euro.
Russia has become Germany's Indonesia. To the degree, Japan's banks are exposed to Indonesia, Germany's financial markets are vulnerable to the unstable Russian economy and political scene. Millions of eastern German voters remain unemployed. Southern Germany has already begun to unravel and has aggressively denounced the current regime. Ultra-nationalists could bring this nation back into a 1930's socio-economic crisis within the next ten years.
Swiss politicians recently upset the resurgence of gold by announcing their intention to revise their constitution in order to sell off their gold reserves. The Swiss are living a national death wish. They want a weaker Swiss Franc. They want to unplug their franc from gold peg. Switzerland is rapidly removing itself from safe-haven status with its current un-capitalistic policies. So goes a bastion of the wealthy and corrupt regimes of the world. With the Swiss, so goes the price of gold. $US100/ounce? (Don't rule it out so quickly. Snap it up at those levels, though, if gold drops that low. And take physical delivery of the metal.)
France's recession continues. A week in Paris hardly costs what it used to. The French continue to amuse themselves by riling the Algerians. Recently, the state police rounded up Islamic militants. A summer in Paris should be the most remote vacation in anyone's mind. The Islamic terror should strike Paris throughout the summer.
The fuse has been lit in the southern Balkans. Another round of civil war should erupt this summer. Serbia's problems have already spread into Greece. That region should compete with other global hotspots for headlines on the evening news programs.
Not since the 1970's has Europe become such a potboiling mess for the American traveler. The strong US dollar will probably flood Europe with American tourists this summer. Tragedies are bound to happen.
CHINA, JAPAN, PACIFIC RIM
Unless you have been hibernating the past seven years, Japan's sky has been falling. Japan's Prime Minister was compared to President Herbert Hoover, in April, before announcing a re-hashed and internationally ignored fiscal stimulus package, which at best will stall an immediate economic collapse. Japan's banks are mostly insolvent. Nearly all of China's banks are bankrupt. There is no Lone Ranger to the rescue for the rest of Asia. Instead, we find well-funded hedge funds challenging the Hong Kong Dollar, the Yen and the Pound Sterling.
Politically, Japan has attempted to sidle up to the Russians while the US coddles the Chinese. The China card has already begun imploding and should lead to the devaluation of the Chinese Yuan, this autumn or earlier. That will be the straw that breaks Japan's back. Japan has permitted their Yen to collapse in order to save itself. This has pressured every nation down the Pacific Rim to struggle for survival. A further collapse of the Yen to the 150 Yen - $1 US level will arrive like a dead cat at a wedding. The weak Yen will decimate any hope of an Asian recovery. The Chinese devaluation will be the final nails in the coffin.
China will be forced to devalue after Hong Kong all but collapses. Hong Kong properties are already off 30% this year, down from the previous 30% last year. The Hang Seng index is off almost 50% from last summer. This index has seen its best days. China will likely use the near collapse of Hong Kong as the explanation as to why capitalism won't work.
The Yen will eventually replace the USD across the Pacific Rim. Japan's recent proposal at the Alberta Economic Summit, of this program, was poorly received by the rest of the G7 countries but welcomed by the rest. Americans will be no longer welcome in most Asian countries. The US stock markets have benefited from Asian buying - capital fleeing Asia in search of a safe landing. The double whammy of a US stock market crash following an Asian economic collapse should dry up orders for Mercedes. Tempers will flare toward American ex-pats and the entire region should explode with anti-Americanism by next summer.
We warned of the collapse of Australia's dollar and that Australia would become the next victim of the Asian crisis. Canada will follow in Australia's footsteps as the destructive tsunami spreads east through Russia, but west through Canada and southward through the western US.
The avalanche of cheap Asian imports will destroy the US expansion. Canada will collapse first."
-- Reg Smith (email@example.com), June 02, 1998.
On Wednesday, the futures prices of US beef dropped to their lowest point this year. Pork is not far behind. Wheat, corn, soybeans and oats prices are hovering BELOW the cost of production. One recent wire service story tonight quoted a senior commodity analyst, "U.S. farmers are throwing in the towel." A spokesman for the meat industry announced, a few weeks ago, "We are drowning in a sea of meat." The worst is on the horizon for agribusiness. Wheat exports from other producing companies have cut into US prices. The prolific Brazilian orange and coffee crops should send those commodity prices to multi-year lows.
Last month's severe drought in northern Mexico brought widespread fires that has sent a thick haze over Texas, which has now spread over the Gulf of Mexico. That drought is believed to be spreading northward through Texas and into the agricultural belt. The US farmer is expected to endure his worst summer since the 1930's. Caught between unprofitable crops and meats, drought should deliver the knockout punch, begging for political subsidies - in an age when welfare, of any kind, sounds distasteful.
Politicians comprehend the power of the American farmer each November. They will not be voting kindly toward the Democrats. Especially not the tobacco farmers. US farming may become a thing of the past within our lifetime.
CONGRESSIONAL ELECTIONS & CLINTON
Now that the American public understands that Clinton's policies have led to 15 (or more) nuclear warheads being pointed at major U.S. cities, Democrats will likely distance themselves from the President in a fight-for-their-political-lives, comes November. Expect a stock market crash, days before those elections, to seal Clinton's fate in 1999 - impeachment proceedings inducing Mr. Clinton to resign within the year. A politically battered Gore would inherit a worse mess than Warren Harding left Herbert Hoover, which is how the Republicans want to enter the new millenium.
A strong Republican Congress will lead to Clinton's impeachment proceedings. We expect a Ken Starr "bombshell" during July or August. But, serious congressional hearings won't be whipped into frenzy until next spring."
I should post this on the Y2K forum but I think Paul Milne would ridicule the report as being too optimistic.
-- Reg Smith (firstname.lastname@example.org), June 02, 1998.
Reg, It would be most helpful if you could supply us with the source of this report.
-- Dave Jones (email@example.com), June 02, 1998.
-- zerad (firstname.lastname@example.org), June 02, 1998.
Some of the assumptions listed above are possible. Too bad we don't know which ones will come to pass...
-- Nabi Davidson (email@example.com), June 02, 1998.
The most depressing article I've read in months---and not one mention of Y2K or Earthcrises. As an unreconstructed cataclysmist since childhood, I must say that you've really made my day. Jay Hanson (www.dieoff.org) would be proud of you, son. Please ref the source so I can clip it for my friends.
"I have yet to see any problem, however complicated, which, when you looked at it in the right way, did not become still more complicated." ---Poul Anderson
-- Hal (Hallyx@aol.com), June 03, 1998.
God is still God and Jesus Christ, His son, is Lord. That is who we look to for deliverance.
-- dac_1999 (DougCunningham@iname.com), June 03, 1998.
I got to the bit where he (?) says --"Northern Ireland citizenry have enough weaponry and armament to invade most European countries." -- and stopped reading.
After that statement his credibility factor is NIL. He sounds just like all the other no-clue bozos who are latching on to Y2k as the latest EOTW scenario.
And no -- I'm not a Pollyanna -- but infantile rants like those above do nothing to aid the cause of raising awareness -- we all get tarred with the same brush.
-- Murray (firstname.lastname@example.org), June 03, 1998.
Aww c'mon, Murray, can't you appreciate a little artistic hyperbole in your rants. While most of the Osiris points are blatantly overstated, it does give one food for thought---even if it is only Twinkies.
"If you want to connect with their conscious minds, smack them on the head with a two by four -- don't be subtle, write with a hammer."---Richard Reese
-- Hal (Hallyx@aol.com), June 03, 1998.
No Reg, as a matter of fact I agree with what was written. It was the precise reason that I packed myself off to the boonies four years ago. The collapse will most definitely be precipitated when China devalues the Yuan. I said so myself in a post in CSY2K not a week ago. That will be the trigger for the last round in the deflationary spiral.
It is surprising that you see any truth in this and pooh-pooh Y2K altogether. It is very schizoid of you.
And by the way, it is no necessary to continually measure yourself by what I may, or may not think of you.
-- Paul Milne (email@example.com), June 04, 1998.
Paul, what was your message during the cold war years?
"Run for the hills, the end of the world is near"
-- Reg Smith (firstname.lastname@example.org), June 04, 1998.
Come to Winnipeg, Manitoba , Canada . The houses are cheap. Life is simple. Crime is relatively low. Nobody even knows who the heck or where the heck this city is. Plus, the population is 600,000 which means you get the rough equivalent of the "big city" services.
-- joshua millstein (email@example.com), June 04, 1998.
Factors Contributing to Probability of Depression
1) On Black Monday, Oct, 1987, when the Stock Market dropped over several weeks by 30%, both the Wall Street Journal and Forbes editorially opined a run on the dollar had occurred. (It was stopped by the Fed Reserve creating more fiat money and possibly also by funding the market through S & P 500 options starting on Thursday.) We went off the international redemption of our currency for gold under Nixon. Since then our currency has lost 75% of its value. If you held a long term U.S. bond bought in 1970 in effect the U.S. has taken 75% bankruptcy. What might trigger another run on our dollar, perhaps a run that the Fed Reserve can't stop with more fiat money? On the other hand, it is possible that other currencies, for example the Yen, may look so weak that there would for a time be a run into the Dollar, causing it to rise yet more against some currencies. However, so long as the Swiss Franc is gold backed, I expect that currency to rise against the Dollar and it seems to me gold will. Gold has been unnaturally depressed for most of the this decade by first Russia selling massive amounts and then ECU countries selling gold to try to qualify for the EURO currency. Australia also dumped gold. POINT: If our international economic system is so fragile that in 1987 the Dollar sustained a serious and dangerous run, how might Y2k and confidence in your fiat currency interact?
2) According to many reports, we have excess production capacity in the world in many basic products, such as cars. Historically, this has always lead to the destruction of that excess capacity, either by bankruptcy or by destruction in war. Widespread bankruptcy seems more likely to me, might Y2K trigger widespread bankruptcy, leading to serious disruptions all around the world, whether or not Y2K of itself causes chaos?
3) We have massive debt inflation, not price inflation, in this world. Japan has been flooding the world with liquidity at 1/2 of one percent interest. In effect, money is free. The U.S. Fed Reserve has flooded the U.S. with almost unlimited consumer credit so that now fungible money is being put into the stock market through 401(k) s and otherwise, instead of paying off consumer debt. The Japanese credit inflation has had the observable impact on South East Asia that we see. Every debt inflation in history has always caused an inevitable hangover of severe recession or depression. Might this inevitable result be triggered by Y2K, whether or not Y2K itself causes chaos?
4) In the U.S. we lead the world with the lowest level of savings. Debate ranges from a savings rate of less than 4% to 6.5%. Canada with its sorry credit rating saves 15%, Mexico saves 17%, and most of the better third world nations on up the scale save 15% or substantially more. However, we have never paid for our negative trade balances, instead Japan has a bunch of our IOUs. It is one thing to owe a nation which depends on us for its defense. (Have we actually descended to the status of mercenary army to those nations which are our significant creditors?) It is another thing to have Red China as a significant creditor, holding a bunch of our IOUs. Two conclusions - (a) any nation with our low savings rate is like a farmer eating next year's seed corn, we are rapidly heading into the status of third world colony status to our creditors. (b) An enemy like Red China can destroy us without firing a shot, simply by dumping our IOUs on the world market, instigating a run on our currency. Don't forget we practice economic warfare called trade sanctions, which was the trigger for the Japanese attack on Pearl Harbor; the possibility of Red China instigating a run on our dollar and economic system is normal international behavior. Of course, Red China could instigate of policy of gradually eroding our Dollar with incremental sales. Either way, it seems to me that we are economically a colony which so far pretends it has no masters. Intermediate term and long term unless we radically reform our attitude towards savers starting with our tax policy, it seems to me we are due for a depression-like readjustment of our position in the world. Since the world has only been able to reduce its dependence on us as the major reserve currency to 50% from its 80% level a decade or more ago, the world is going to go through the readjustment with us. How might Y2K interact with our dismal debtor position?
For these four reasons, I expect a "normal" depression acerbated in unknown ways by Y2K, probably triggered by Y2K. If the west coast get its long awaited earthquake or Tennessee experiences an earthquake like approximately 1815, all bets are off, and rebuilding will take decades for those areas, probably with population crashes. See the correlation between earthquakes and El Nino - has the earthquake probability increased? Other natural disasters like the 1887 winter could likewise cause all bets to be off. We are living dangerously with absolutely no national reserves and in most cases no family reserves to handle anything except good times. Finally, if animal sacrifices are resumed on the Temple Mount in Jerusalem, followed by suspension, then we know clearly.
-- Red Hunter (firstname.lastname@example.org), June 08, 1998.