Duration? - - - "a paltry 15-20 years or so"

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for what it's worth:

Adam Smith interviewed Seth Glickenhaus on his program "Adam Smith's Money World" in Sep. 95; Seth was then 82 and had been on Wall Street for 62 years. He pointed out that from 1930 to 1954 (24 years), the DJIA went from 350 to 350 - and from 1966 to 1980 (14 years), the market went from 1000 to 1000 - thus, he concludes that when the next "settling-out-period" occurs, it will last for "a paltry 15 to 20 years; 10 to 15 minimum". I concur.

[transcript available from Journal Graphics 212-227-7323; video from Adam Smith's Money World, WNET, NY, NY; ask for the title : "The Old Masters #2" ; air date : Sep. 95; re-broadcast Spring 96]

Severity? far worse than the 29-38 Depression. Why?

too few Victory Gardens now; too few small farms; too many sheeple too dependant on the telcom/transport/finance infrastructure we've created for ourselves in the present world;

will it be Hell? Yes! Why? most people are not informed.

remember that those of us who post these notes are in a minority of the US populace; most do not have computers, nor access to them; many of those who do are not on the Net; and who (but we) read any more? newspaper sales are down; most get their daily dose of information from TV - and we all know what drivel and pabulum is dispensed there; thus, real-time information is available and absorbed by but a very small number of folks; if that were not true, i.e. - if there was a demand by the masses for more accurate information in real-time, there would be a run on computers (for access to the Net) and newspapers would be a growth industry; - they are not!

Additionally : those who lived through the 29-38 Depression and WWII were of a hardier breed - tougher; today, we have a generation or two of kids whose ethical and moral fibre is tied largely to the buck and instant gratification, not survival, - with little grounding in the lessons of history and valid philosophical principles; [no, I'm not knocking the current generation; I just comment on what I observe...]

how will that affect us? who might have been your ally in '32 may just be your enemy in 2001.

we should remember that the economic decline now in progress is a "systemic problem" brought about by basic flawed monetary and governmental philosophy and infrastructure i.e. : [see America's Great Depression, Murray Rothbard; Richardson & Snyder, 1963; pp 1-100]

1) I suggest that the so-called "Asian financial crisis" is, in fact, a "world financial crisis" brought about (in this country, at least) by the Federal Reserve Act of 1913 and the fiat currency and fractional-reserve banking carried on in most nations; (when you read a market report look for the phrase that says "the Fed pumped additional liquidity into the banking system"; translated, that means "the US government created money out of thin air and, the dollars in your wallet just lost purchasing power";)

2) Glickenhaus says that "for every trillion of government debt the market has risen a 1000 points or so"; thus, the market is financed by fiat money-inflated currency; the stock market is built on a house of cards-the "greater-fool" theory... the next crash will make the Tulip fiasco look tame...

Effect? all that debt accumulated over the past 50 years has to be worked off by being paid back, monetized or repudiated; that takes time, and there is so much debt in the world financial system to be worked off, that process may well take 15-20 years to accomplish; and it is this working-off of debt that will bring about diminution of extant living standards - which always happens not with pleasure, but with rancor and angst - and sometimes violence.

will that throw civilization back to the Dark Ages? probably not; - but many in the West might very well find their living standards on a par with Re-construction in the South after the Civil War - ca. 1865...

3) most money managers on Wall Street are too young to have a realistic perspective on how to manage other peoples money, and their system rewards them not for prudent investing but for sales "churning"; witness the volatility in the market : those kids have no idea what the hell they are doing from one day to the next with your pension and IRA funds!

4) thus, Y2K, while important in its own right, may be the event that catalyzes the other two (stock market crash and Asian crisis) and brings about that which has been festering for many, many years; this may be the one event that the politicians can't control; it's going to happen, there is a firm date, and they can't inflate the currency any more or legislate a fix to prevent it

Awareness? Recent published reports show firearms sales in the US DOWN from 24-55% from 94 to 96!!

"...the 1996 figure [for pistol production] is a 51 percent drop from the 1994 figure"; "Smith and Wesson 1996 pistol production was down 26% compared to 1995 and down 33 percent from 1994"; "Sturm, Ruger's pistol production dropped 32% in 1996 and was down 55 percent from 1994"; "Beretta posted a 44 percent drop in pistol production in 1996 and a minus 55 percent from 1995"; "Colt's Mfg. also posted a 44 percent reduction in pistol production in 1996, and had a 52 percent loss from 1994". Shooting Industry Magazine, pp 32...; July 1998

Additionally, USAToday three weeks ago reported that furniture sales are down 45% nationally! 24-55% sales decreases in almost any area of sales suggests an economic depression.

Point: The gun business is not hot now at all - and I read that to mean that the masses are not savvy to Y2K (nor the Asian crisis); they have always been hot to buy, customize and repair guns when other events of any kind were floating around: Desert Storm, Ruby Ridge, Waco, etc; not this time - nothing!!!

I talk with other businessmen in town all the time; they tell me the same thing :

"no one has any money to spend on Main Street because after they have paid their mortgage debt, credit card debt and car payments, they have nothing left to spend on a stroll down Main Street." I agree.

will it change? maybe, if people wake up, then there may be a run on firearms sales and services - but now - not yet... thus, I am forced to conclude that in the minds of most, Y2K is a non-event!

So, on Main Street, in some areas, there may already be a severe recession, if not a full blown Depression;

how do I think things will unfold?

continued, gradual economic malaise (decline) followed by some unforeseen stupid opportunistic event by some bit player on the fringes; followed by ever more governmental intervention in our lives (martial law, et al), followed by China devaluing the Yuan; followed by the collapse of "Japan Inc.", followed by an unwinding of the stock market (50% or so) capped off by the commencement of various random known and unknown y2k events; - or something like that - not necessarily in that order (that's a big script for just 17 months...and that's just to get things going!)

sleep tight, kiddies; tomorrow may be a very busy day!

[I apologize for the length - hope the content and detail justifies - pja]

Perry Arnett pjarnett@pdqnet.net www.pdqnet.net/pjarnett

-- Perry Arnett (pjarnett@pdqnet.net), August 12, 1998


Very good work here, on this post Perry. Not that it matters a hill of beans, BUT, I see similarly that Y2K will be but the ignition for what has been in motion for a long time. My little corner of the world does not reflect the so-called prosperity that talking heads insist on repeating verbatim from their sources, but then, I don't use credit and have not for about 10 years, only have my house, my food and utilities,...I am not a happy consumer. Do you suppose this means I am but a figment of the imagination of psychotic economists? De Cartes may have had it wrong,...perhaps should have postulated: "I spend therefore I am."

Rambling and sighing kookily, I stand, my attractive sheet slapping in the growing winds of change.

And thanks again, Perry.

-- Donna Barthuley (moment@pacbell.net), August 12, 1998.

Perry, well said and I concur with your assessment. I do so because I have keenly observed this development for many years as it was unfolding and have read thousands of books and articles. I have lived at the edge of hell and travelled around the world as well to learn about other cultures, mores, etc. I am fairly certain that our society will continue to deteriorate because in the past I have made predictions about our future that unfortunately have been only too correct.. When I escaped slavery I was penniless. I had to borrow $75 for the first month's rent and living expenses. At that time I thought I was very poor. Now I know two 20 year old men. Both have loans of over $20,000 for little 4WD pickups and other toys and own nothing. I was a lot better off. Out of time.

-- Former Slave (winners@magiclink.com), August 12, 1998.

Ditto's to the excellent post. I heard on the news today that bankruptcies are at an all time high and has even surpassed that of the Great Depression. I have always trained my children to pay cash for everthing, put money away for a rainy day, and work for everything they want. However, from what we are spoon fed through the news media, the economy is booming, employment is at an all time high, and everything is just ducky, or is it? We have a mortgage that we are paying on, but there's no difference in paying the bank or paying the landlord, except you hope you build equity in paying the bank. Not so here in California. Thousands have walked away from their homes because they owe more on them than what they are worth. When we sold our home 5 years ago, we were ahead of the game because we had lived in the house for 25 years. But we still had a paper loss of $20,000. But, when we purchased the home we are in now (it was a foreclosure), we doubled the $20,000 loss. Foreclosures are at an all time high, and when Silicon Valley takes a hit, thousands will be left homeless. The handwriting is on the wall.

-- Bardou (bardou@baloney.com), August 12, 1998.

Perry, thank you for an excellent post, and to the others that followed. I see a lot of houses on the market around here. Mostly those big tubs that stretch to the sky. I think people live in them and then decide they can't afford it. The economy is not all it is cracked up to be. Sometimes we are spoonfed such garbage. BTW... my insurance agent just left(covers home and cars). I asked him if they were covering Y2K losses. He said "I don't think we'll be covering any year 2000 losses." He said he "really could not think of much a homeowner could lose as a result of y2k but they were very very worried about the larger companies that they insured."

-- Dave (dave22@concentric.net), August 12, 1998.

We keep hearing about how wonderful the economy is, and how times are great all over. I think that a lot of people are wondering where, and when, they missed the boat. Unless you are one of the ones who are getting richer, most likely in the stock market, you may share the opinion of "Where is my share, I'm busting my ass just to stay even"

Stocks are trading at unheard of levels today, many times earnings more than one would find feasible, based on a purely dividend or equity standpoint, at the current level it would take some thirty years to recover the price paid for the stock, through it's dividends.

This has happened before, this unbridled confidence in the ability of the stock market to climb forever, upward and upward. The roaring 20s. Just a few years before the worst depression in U.S. history. Back in 1928, right before the big crash, America seemed to be on a roll. Everyone knew that the good times would just never end. Sure the market had ups and downs, but the big players were not swayed, they in fact borrowed more money to increase their 'margin' holdings

But, under the surface, there were some signs that not everything was quite so great. Income was being distributed very unevenly, with the wealthiest 5% of Americans earning more than the bottom half of the population combined.

The tremendous gains in productivity did not translate into higher wages for the average worker. In fact the average worker's wages were stagnant, or even decreased in real terms.

The advent of easy credit encouraged many Americans to get into debt over their heads, in order to have all of the latest things. Consume, and then consume some more. Before long these consumers were paying a very high portion of their income just to cover the payments on past purchases. Because of this, spending on consumer items began to drop off rapidly in the last two years of the 1920s

Food prices were low, and farmers were having a tough time just hanging on to the farm. Many farmers lost their farms because the income would not cover the debt and expenses. And still that market just went up and up.

Now, does any of this sound familiar? I know that I'm not the only one who can see what we would be in for, regardless of Y2K. Worse yet,in 1929 we did not have to contend with a highly leveraged derivatives market of trillions and trillions of dolars.

If Y2K does turn out to be just a bump in the road, I fear that the wheels are ready to fall off anyhow.

-- Uncle Deedah (oncebitten@twiceshy.com), August 12, 1998.

I believe all of the above have it figured out. I am a 53 year old lawyer, never thought it would end. Like most boomers, I have lived very well. I've been a gold bug for the past three years. Hasn't been a very good investment. Looks better every day. When you superimpose y2k over the economic picture painted by other postings, there is only one logical conclusion. We are definitely going into a major depression and a previously unkown transfer of wealth. Some would call it an elimination of wealth. It seems so counter-productive to move into a survivalist mode. Economies of scale made North America the economic powerhouse it is today. To think that all this prosperity is going into the toilet, such a waste. Our society reminds me of the last years of the Romans or Greeks. The U.S. has the most corrupt, deceitful President in their history. It will be very interesting what Slick says on August 17 at the Grand Jury. But he is only a mirror of U.S. society. The fiat currency of the U.S. dollar is at an all time high against other currencies, yet the country is burdened with debt, relies upon foreign purchases of T Bills to continue accumulating its trillions of debt. When this crash comes it will be brutal. Our life today is filled with violence. No one will come to knock on your door ala the dirty 30's to cut some firewood for a hot meal, no they will simply kick in the door and take what they want. This is the great reckoning. If you learn anything about this experience you will follow the advice of others above. Stop using your credit cards, get rid of your debt, stop consuming. Reflect on the issues. Whatever you do, your plan must also envisage a 2001 potential recovery. Change involves stress and most of us have enough of that in our everyday lifes without the burden of y2k. Good luck to you all.

-- Rick Reilly (rreilly@shaw.wave.ca), August 13, 1998.

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