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Opinon: in the email

A friend of mine who I haven’t talked to in a while emailed back and forth a bit about what is going on in the economy. He’s been pretty much out of the loop and just listening to MSM to know what’s going on. I couldn’t hold back and just piled on. After looking the email, I thought perhaps this could make a good post. May not be on the topic of “Where’s the Interest”, but it expresses my opinion. Right or wrong.

The Great Depression saw a 90% drop in stock prices. And it took 3 years to do it. One source I found says these things are completely planned and timed and all it takes is to figure out is the timing. He claims to have worked out the magic and now says to watch out for the Ides of March (March 15th). He also says dow 2800. So far he’s been correct in predicting the fall to the day in September (he said this in August), and also said the same for the Feb 9 date. Do I believe this? Not sure. But if you combine this along with the understanding on economic theory from the Austrian school (mises.org), then you can see this all happening. Again, combine the conspiracy theory with real economic theory and sprinkle in what goes on day to day, and it all spells doom. Just heard that the last 2 weeks alone represented 50% of ALL the outflows from the market last year. So, why is the market up? Market makes the opinion. They want you to put your money back in. Maybe your missing the bottom. Remember most the gains in the market are made in a very small number of days. You sit out, you lose. So, you better get back in before it is too late. Market makes the opinion. Also, why is retail spending up. Duh, people pulled 50% of all the outflows from the market last year in the last 2 weeks. People are flush with cash and are spending. Likewise as people get their severance check, they spend it. So, once people spend their 401k, IRA money, and their severance check, then they’ll result to their lines of credit (if they still have it.) How long until that all runs out? Don’t know, but wouldn’t that take some time? Again, the market took 3 years to fall 90% in the Great Depression. We entered the recession 18 months ago, maybe we’re half way there to the bottom.

All we need is a perfect storm or one big nail in the coffin to seal the deal. Derivatives. That’s the problem. The Bank for International Settlements (bis.org) or the central bank for central banks said that in last June 2008, there were $683 trillion dollars in derivatives. But this number was just a guess since there really isn’t any real accounting or value put on these things. How many banks do you know that post numbers “liberally”. They don’t. This $683 trillion may be low. What happens when this goes bust? The world’s GDP is $60 trillion. Our net assets are slightly more. There just isn’t enough money in the world to pay this stuff off. The answer. A new currency. A worldwide currency. If someone owns the currency, they own the financial system. If they own the financial system, they own you and your work. Is this tin-foil hat thinking? Perhaps. But nobody thought there was a thing as a black swan, until one day a black swan appeared. People had to suddenly rethink what they knew.