Paul Ferrell delivers some tough predictions about the boom/bust cycle at MarketWatch. He foresees brutal ‘collateral damage’ that will follow the recovery.
He advises that we make the most of this new bull and then get out — before you’re the collateral damage. Ultimately, he sees a revolution by taxpayers against the Wall Street influence in Washington D.C.
Link: New bull, new bubble, new meltdown by 2012
New, bigger bubble — and a meltdown ahead
Yes, folks, a new bubble cycle is already in motion. You can feel the energy building, the kind that fueled the meltdowns of 1998, 2000 and 2007. We never resolved the problems fueling the dot-com insanity. We made matters worse feeding the subprime credit-derivatives disaster with cheap money, Reaganomics ideology and two costly wars. Lessons were never learned, nothing was resolved. Today matters continue deteriorating.
Behind the hoopla, the Wall Street conspiracy has dumped $23.7 trillion new bailout debt on taxpayers. The bill will come due. But for now, we’re getting their wish: A new bubble is accelerating, thanks to America’s “too-greedy-to-fail” Wall Street banks.
Folks, you can bet on it, sure as Regis is hosting “Who Wants to be a Millionaire?” The bull, a bubble, and another meltdown are virtually certain and accelerating faster than earlier cycles, coming by 2012. How to profit? Ride it up for a couple years, then pray you’ll have enough brain left to bail out in time before the crash (most don’t) because at that point the euphoria is blinding, like a cocaine addiction.
Want more proof of inevitability? Here are some visionaries who aren’t working for Wall Street’s hype machine: Michael Lewis, former Wall Street trader and author of “Panic: The Story of Modern Financial Insanity,” recently told Newsweek: “There’s a false sense that it’s over, that the crisis is passed.” The bailouts have merely postponed the inevitable. “We are in for another day of reckoning down the road.”
The next one will be bigger, “badder,” a real demolition derby. Several months ago, in a Vanity Fair article, “Wall Street Lays Another Egg,” Harvard financial historian Niall Ferguson sounded more like a shrink: “Markets are mirrors of the human psyche.” Like individuals “they can become depressed … even suffer complete breakdowns.”
The culprit? The Fed, Ferguson says: “Without easy credit creation a true bubble cannot occur. That is why so many bubbles have their origins in the sins of omission and commission of central banks.” So the next bubble (and meltdown) is virtually certain, thanks to Washington’s $23.7 trillion explosion in debt.
Revolution coming with next meltdown
Americans are not going to put up with the “Wall Street Conspiracy” ripping off investors and taxpayers much longer. Wall Street got rich sticking us with mountains of debt for generations to come.
Expect a major house-cleaning, a second American Revolution. We predicted the “Great Depression 2″ around 2012. Well, we doubt taxpayers will passively sit one more time, like in the 1930s, in 2000, and the past few years. Next time voters will take a page from the history books about past revolutions in the American Colonies, France and Russia. A perfect storm will erupt in a massive global credit meltdown, bringing down Wall Street and the clandestine $670 trillion shadow central banking system. And the collateral damage will be massive and widespread, in areas such as these:
- Lobbyists’ power is lethal to our values. Special interests are running and destroying American democracy, will self-destruct.
- Derivatives: Cap ‘n trade will crash worse than subprime. The Goldman Conspiracy’s spending millions lobbying for trillion-dollar derivatives.
- “Too-greedy-to-fail” big banks will trigger harsh backlash. Banks pay huge bonuses yet modify only 9% of 4 million stressed home loans.
- America’s wealth gap will trigger grass-roots rebellion. Wall Street’s greed is so pervasive, gluttonous and obvious the rest will rebel.
- The “Goldman Conspiracy” will be a target for retribution. Goldman’s hubris is most egregious and flagrant. Their arrogance will backfire.
- Wave of creative destruction will revive commercial banking. Investment bankers are killing commercial banking, Glass-Steagall will return.
- Secrecy protecting Wall Street’s unethical behavior to end. Wall Street’s control over Washington’s lawmaking will come to an end.
- The Fed’s shadow banking will collapse under excess debt. Central bank balance sheets overdrawn, feeding new bubble with cheap money.
- A “Black Swan” of huge unintended consequences. Next bubble, highly unpredictable, huge collateral damage on Wall Street.
Make the most of this new bull. Then get out — before you’re the collateral damage.