OIL AT $150 THIS SUMMER?

Santelli's argument is not without merit. The last time oil got to this level the economy nearly collapsed. The difference between now and then is that we went into high fuel cost two years ago with a strong economy just beginning to enter a depression. If fuel costs skyrocket again we will be faced with costs going through the roof in the middle of a depression. Personal credit is exhausted and so many high paying jobs have been lost only to be replaced by minimum wage subsistence employment. Can somebody making $8.50 an hour afford to drive 15 miles to work when gas is $4 a gallon? If all of our money is being spent feeding our vehicles how can we buy anything else?

Say goodbye to any chance of recovery.

WELCOME TO MY WORLD

"There are two key types of match inefficiency. One is geographic mismatch. In 2008, the percentage of individuals living in a county or state different than the previous year was the lowest recorded in more than 50 years of data. People may be reluctant to relocate for a new job if the value of their house has declined. In addition, many who would like to move are under water in their mortgage or can't sell their homes.

The second inefficiency is skills mismatch. In simple terms, the skills people have don't match the jobs available. Coming out of this recession there may be a more or less permanent change in the composition of jobs.

Both of these mismatches are contributing to the long term unemployment problem - and the housing bubble was a direct cause of both. Usually people can move freely in the U.S. to pursue employment (geographic mobility), but many people are tied to an anchor (their home). And many workers went into the construction trades and acquired skills that are not easily transferable. Both of these issues make the long term unemployment problem a difficult challenge."
Business Insider

This is the absolute perfect description of the situation I find myself in today. The industry that I have worked in all my adult life, construction, will never return, at least in my lifetime, to the state of activity we've known over the last twenty or so years. Where I live the jobs have dried up and they're never coming back. I'd move if I thought I could get hired on somewhere else but doing that would require my wife to leave her job, too. Since she has a really good job with a really good company that wouldn't make any sense at all. Besides, I couldn't sell my house now even if I wanted to. Nothing is selling out where I live and I doubt I could get what it cost me to build it back out of it.

So we've decided that the best course of action is to find something outside construction. I'm not looking to make big money but it has to pay enough to at least be profitable. The deal is, the jobs that are out there are few and far between and most aren't full time. On top of it, the jobs that I do find are generally paying minimum wage and people are lined up around the block to apply for them. And most of the applicants are younger and thus more attractive to employers than I am.

I'm not writing this to whine or complain but just as a way of saying that there is a whole lot of people out here that are just like me. They are never going to be able to make the money they once did and consequently they won't be spending as they once did. All the happy talk and upbeat news of a recovery isn't fact. It can't be. Sure the guys on Wall Street are doing ok, playing around with the money the taxpayers gave them. And some of the white collar world has gotten through this relatively unscathed. But the reality of our current situation is that an awful lot of high paying blue collar jobs have disappeared. It is that part of the middle class that bought cars, boats, big screens and houses that aren't going to be spending money anymore.

For many of us the economic recovery will never happen. That's just a plain, cold fact. The rest of the economy will have to adjust to this, whether it wants to or not.

EVERYTHING OLD IS NEW AGAIN

These are just some of the news stories two years into the current depression:

"The Secret Service is investigating two Twitter users who, apparently angered by the passage of the health care reform bill, took to the Internet Sunday to call for the assassination of President Obama.

"ASSASSINATION! America, we survived the Assassinations and Lincoln & Kennedy. We'll surely get over a bullet to Barrack Obama's head," wrote one Twitter user, who goes by the handle Solly Forell, and identifies himself as a conservative blogger and "'authentic' African American."

Soon after the first post, Forell tweeted another message actively encouraging someone with a "clear shot" to kill the president."
ABC

"Authorities are trying to find out who threw bricks through windows and doors at two Democratic Party offices in western New York before Sunday's health care vote.

Monroe County Democratic Committee officials say a brick shattered glass doors at the party's headquarters in Rochester on Saturday or Sunday. No one was in the building at the time. Rochester police are investigating."
NY Times

"At least two people were seriously assaulted as hundreds of people gathered on South Street Saturday night during another flash mob.

Surveillance video shows hundreds of people invading the intersection of 8th and South Streets, filling the street and surrounding a vehicle at about 9 p.m."
CBS3

Now. let's go back in time to 1931, two years into the "Great Depression":

"January -- Texas congressman Wright Patman introduces legislation authorizing immediate payment of "bonus" funds to veterans of World War I. The "bonus bill" had been passed in 1924. It allotted bonuses, in the form of "adjusted service certificates," equaling $1 a day for each day of service in the U.S., and $1.25 for each day overseas. President Hoover was against payment of these funds, saying it would cost the Treasury $4 billion.

February -- "Food riots" begin to break out in parts of the U.S. In Minneapolis, several hundred men and women smashed the windows of a grocery market and made off with fruit, canned goods, bacon, and ham. One of the store's owners pulled out a gun to stop the looters, but was leapt upon and had his arm broken. The "riot" was brought under control by 100 policemen. Seven people were arrested.

Resentment of "foreign" workers increases along with unemployment rolls. In Los Angeles, California, Mexican Americans found themselves being accused of stealing jobs from "real" Americans. During the month, 6,024 of them were deported.

March -- Three thousand unemployed workers march on the Ford Motor Company's plant in River Rouge, Michigan. Dearborn police and Ford's company guards attack, killing four workers and injuring many more.

December -- New York's Bank of the United States collapses. At the time of the collapse, the bank had over $200 million in deposits, making it the largest single bank failure in the nation's history."
PBS

We are starting to see history repeat itself once again. Social unrest is rearing its ugly head across the country, mostly from the left but some from the right. I would say this is political in nature, just like the "bonus marches" in 1932 which were the result of Hoover's refusal to pay.

Food riots are becoming a distinct possibility. There is a bunch of credible evidence that we are going to see food shortages this year. This is because the government has manipulated the markets in an attempt control inflation. The other problem is that farmers depend on loans to get their crops in. The problems of the lack of available capital that are plaguing other small business could severely impact farmers.

"Early in 2009, the supply and demand in agricultural markets went badly out of balance. The world experienced a catastrophic fall in food production as a result of the financial crisis (low commodity prices and lack of credit) and adverse weather on a global scale. Meanwhile, China and other Asian exporters, in an effort to preserve their economic growth, were unleashing domestic consumption long constrained by inflation fears, and demand for raw materials, especially food staples, exploded as Chinese consumers worked their way towards American-style overconsumption, prodded on by a flood of cheap credit and easy loans from the government.

Normally food prices should have already shot higher months ago, leading to lower food consumption and bringing the global food supply/demand situation back into balance. This never happened because the United States Department of Agriculture (USDA), instead of adjusting production estimates down to reflect decreased production, adjusted estimates upwards to match increasing demand from china. In this way, the USDA has brought supply and demand back into balance (on paper) and temporarily delayed a rise in food prices by ensuring a catastrophe in 2010.

It is absolutely key to understand that the production of agricultural goods is a fixed, once a year cycle (or twice a year in the case of double crops). The wheat, corn, soybeans and other food staples are harvested in the fall/spring and then that is it for production. It doesn’t matter how high prices go or how desperate people get, no new supply can be brought online until the next harvest at the earliest. The supply must last until the next harvest, which is why it is critical that food is correctly priced to avoid overconsumption, otherwise food shortages occur."
Market Skeptics

Now we move onto jobs and immigrants. The unemployment rate in America is at or has surpassed 20%. And what is the next thing on the agenda for our President and the Congress?

"Our immigration system is badly broken. Although our borders have become far more secure in recent years, too many people seeking illegal entry get through. We have no way to track whether the millions who enter the United States on valid visas each year leave when they are supposed to. And employers are burdened by a complicated system for verifying workers' immigration status.

Last week we met with President Obama to discuss our draft framework for action on immigration. We expressed our belief that America's security and economic well-being depend on enacting sensible immigration policies.

...Our plan has four pillars: requiring biometric Social Security cards to ensure that illegal workers cannot get jobs; fulfilling and strengthening our commitments on border security and interior enforcement; creating a process for admitting temporary workers; and implementing a tough but fair path to legalization for those already here."
Washington Post

So now, not only are Americans faced with unemployment, social unrest and possible food shortages but our government wants to make it easier for foreign workers to come in and take the few remaining jobs left. And to make sure we're legal we'll be forced to carry biometric I.D. cards.

Soon those cards will be required to travel and to buy. Just like in those old black and white movies where the evil officer always asks, "Your papers, please." Not to mention, for all of you out there that actually still have faith and believe in the Bible (a shrinking minority) it conjures up the whole "mark of the beast" thing. WTF??!!

Just as in 1931 bank collapses are continuing to occur:

"Over the past two Fridays, 3/12 – 3/19/10, the FDIC announced the closings of 10 more banks, bringing this year’s total to 37. Collectively, the 10 banks had reported assets of about $4.4 billion and deposits of about $4.1 billion."
Commodity Online

Unlike 1931, we now have the FDIC to protect us:

"Federal Deposit Insurance Corp. Chairman Sheila Bair said the fund it uses to protect customer deposits at U.S. banks could dry up amid a surge in bank failures, as she responded to an industry outcry against new fees approved by the agency."
Bloomberg

Well, maybe not so much.

How long do you think it will be before we begin to see confrontations between workers and their employers reminiscent of the strikes at Ford in '31? The unions will make sure this happens.

I'm posting this because most people don't read history and don't see the cycles. History repeats and it is doing it again. Go back and look at what happened to our economy after 1931. We are heading down the same path, making the same mistakes yet we expect different outcomes. Well, they'll be different this time, alright. They're going to be worse, a lot worse.

So what I'm saying is, be prudent. Maybe we won't collapse. I pray we won't but the things I see around me say we will. So be prudent. Think in terms of the worst case. What are your plans? How do you protect your family and friends? What do you do if you lose everything? What if most of the people around you are losing everything, too? What does it cost you to at least spend some time thinking about this?

If you come to the conclusion, as I have, that collapse is imminent, then start to do something about it. Prepare yourself, your family and your friends. Even if all you can do is tell people and present an argument. Knowledge goes a long way towards preparation.

Get ready, guys. If history is any indication, the worst is yet to come and it's right around the corner.

LOOK TO THE EAST- CHINA AND THE FUTURE WAR

We are in a depression. It was caused by the bursting of bubbles and the creation of new bubbles to offset the effects of the last bubble's burst. Each bubble in succession has burst ratcheting our debt to unsustainable levels. We cannot pay down our debt so we have to make a choice; inflate our way out or collapse. To this point we have increased the money supply to affect Keynesian economic policies in the hopes that we could stimulate the economy back to life. It hasn't worked and will have the effect of causing massive inflation, ratcheting up the cost of goods as the deflationary pressures of a depression drive wages down.

A war would be just the thing to take our minds off the problem, wouldn't it? It would also be a dandy way to wash the excess capital out of the system while creating high paying manufacturing jobs. The only thing holding us back is that we are a Christian nation and the immorality of war started for economic reasons (most are anyway) still rubs us the wrong way.

I wonder if China would have the same qualms?

"While communist China’s growing hostility toward the free world (as represented by the United States) is becoming more and more difficult to conceal, the trade and financial ties between the two countries are nevertheless stronger than ever.

Some wonder why China, as resentful as it is toward the U.S., has spent so much on purchasing U.S. treasury bonds.

The question remains whether and when China will dump American bonds as an extreme financial weapon. Chinese military officers once threatened to do so in the aftermath of earlier threats to fire 200 nuclear bombs at the U.S.

Beijing’s think-tank and pro-communist overseas media believe that dumping a small portion of the $800 billion in American bonds would cause economic turmoil in the U.S.—a blow almost as great as a nuclear bomb. Should that happen, they have speculated that the U.S. would be brought to its knees."
Epoch Times

"China retained its spot as the biggest foreign holder of U.S. Treasury debt in January even as it trimmed its holdings for a third straight month. The string of declines underscored worries that the U.S. government could face much higher interest rates to finance soaring budget deficits."
AP News

"China has succumbed to hubris. It has mistaken the soft diplomacy of Barack Obama for weakness, mistaken the US credit crisis for decline, and mistaken its own mercantilist bubble for ascendancy. There are echoes of Anglo-German spats before the First World War, when Wilhelmine Berlin so badly misjudged the strategic balance of power and over-played its hand."
Telegraph

"Nervousness is growing in the financial markets about China, which might seem odd when there are so many other places to worry about.

There’s still Greece, for example, which is likely to be the focus of this week’s meetings of European finance ministers. There’s Germany, and its trade surplus. And there’s the U.S., the U.K. and all the other places with triple-A-rated debt that may not be rated triple-A for much longer.

So why the focus on China, where shares closed Monday at their lowest in five weeks, with the benchmark Shanghai Composite ending below 3000 at its weakest since Feb. 9? Well, as one bank put it on Monday: “Are we facing a ‘growth miracle’ or will China be the next bubble to burst?”

So far, it’s been widely assumed that the strength of the Chinese economy is a plus for the global economy as a whole. But fears of over-heating are growing and, after China’s failure to raise interest rates over the weekend, there’s inevitable concern that it might wait too long before tightening the screws.

What’s more, the rhetoric from China seems increasingly confrontational. Premier Wen Jiabao warned other countries not to pressure China over its exchange-rate policy during his news conference at the end of the country’s annual legislative session Sunday."
Wall Street Journal

"In China's zeal to keep their economy going, the government injected about 4 trillion yuan since 2008 (14 percent of GDP) as fiscal stimulus. It expects to have deficit spending equal to 1.5 trillion yuan this year. Since they believe in Keynesian stimulus, and since they still have a quasi-centrally planned economy (the ultimate Keynesian technocrats), they will keep doing this until the crisis passes. You see, there is one thing the Central Politburo fears: their own people. If the economy collapsed, you would see massive unrest, and I believe they fear for their lives."
Zerohedge

THE GREATEST FINANCIAL CRISIS EVER

So how long did the depression last in the '30's, when the government did almost exactly the same things it's doing now? Why should we believe any recovery is in sight if this crisis dwarfs that one?

"Former Federal Reserve Chairman Alan Greenspan said on Tuesday the U.S. economic recovery was "extremely unbalanced," driven largely by high earners benefiting from recovering stock markets and large corporations.

Small businesses and the jobless are still suffering from the aftermath of a credit crunch that was "by far the greatest financial crisis, globally, ever" -- including the 1930s Great Depression, said Greenspan in an address to a Credit Union National Association conference."
Reuters

THE PAST NEVER REALLY GOES AWAY

For those that say the War Between the States is ancient history and has no bearing on current affairs, welcome to Missouri!!

"City government leaders renewed their push to place the St. Louis Police Department under local control Monday at a lengthy hearing in Jefferson City.

Supporters of the legislation say returning control of the St. Louis police force to City Hall would increase transparency and accountability. Mayor Francis Slay, who has long campaigned for ending the state control, testified before the House Special Committee on Urban Issues in favor of the bill, saying returning the police department to local control would make for a better department...

The St. Louis Police Department Board of Commissioners has run the department since the Civil War, when pro-slavery officials in the capital wanted control of the anti-slavery city's armory. Kansas City is the only other American city of comparable size with a police department controlled by the state."

STL Today

The state was given authority over the St. Louis police by the Federal Government after the elected government of Missouri was driven from the state and a Union puppet government had been installed. The purpose was to protect the arsenal at St. Louis. However, this form of Police Board was common in the country at the time. Most had switched to local control by 1900. But not my beloved state of Missouri.

I really need to read up on this issue if I can find some good history about it. My guess is that since by the early 1880's Missouri politics were once again in firm command of the Southern Democrat interests, they may have found control useful since the real hotbeds of Unionism and Republican support could be found primarily in our two largest cities. Control of the police would have been useful in controlling the polls, along with the use of the local muscle, such as Egan's Rats and later on Harry Truman's benefactor, Boss Tom Pendergast.

Anyway, I just thought that it's interesting how history never really goes away. We are affected by it every day of our lives. Those that fail to pay attention to it do so at their own peril. Nearly everything that is happening today has happened before, to one extent or another. If you want to know what's coming you just have to look backwards to see what has happened.

Learn your history to prepare for our immediate future. We are doing nearly the same things that we did after the 1929 crash, things which deepened the depression and prolonged the pain. Why should it be any different this time around?

DON'T LISTEN TO THE MEDIA, OPEN YOUR EYES

As I watch the cheery assessments of our current economic state on the various business channels I just have to wonder if these people really believe what they say or if pressure is being applied by someone. The reality of the situation cannot be ignored. Yet, I talk to people all the time that are convinced that everything will return to the normal they have come to expect. As if saying it often enough will make it true. Fear is blinding Americans to the truth.

When the blinders finally come completely off there will be hell to pay. But of course those that have supported and driven this national insanity will by that time have secured themselves someplace far removed from the threat of danger. The people will lash out at each other, in blind rage, in the same way the poor in the inner city always seem to burn their own neighborhoods during riots.

So yes, this will end just like it did in the 30's. Except for one crucial difference. The people of the 1930's still retained a sense of morality. All most have today is a sense of entitlement. One leads to acceptance and resolve while the other leads to rage and destruction.

Pray for guidance and prepare yourselves and your family. There is only one way this can end.

"The labour force contracted by 661,000. This did not show up in the headline jobless rate because so many Americans dropped out of the system. The broad U6 category of unemployment rose to 17.3pc. That is the one that matters.

Wall Street rallied. Bulls hope that weak jobs data will postpone monetary tightening: a silver lining in every catastrophe, or perhaps a further exhibit of market infantilism.

The home foreclosure guillotine usually drops a year or so after people lose their job, and exhaust their savings. The local sheriff will escort them out of the door, often with some sympathy –– just like the police in 1932, mostly Irish Catholics who tithed 1pc of their pay for soup kitchens.

Realtytrac says defaults and repossessions have been running at over 300,000 a month since February. One million American families lost their homes in the fourth quarter. Moody's Economy.com expects another 2.4m homes to go this year. Taken together, this looks awfully like Steinbeck's Grapes of Wrath.

Judges are finding ways to block evictions. One magistrate in Minnesota halted a case calling the creditor "harsh, repugnant, shocking and repulsive". We are not far from a de facto moratorium in some areas.

This is how it ended between 1932 and 1934, when half the US states declared moratoria or "Farm Holidays". Such flexibility innoculated America's democracy against the appeal of Red Unions and Coughlin Fascists. The home siezures are occurring despite frantic efforts by the Obama administration to delay the process."

The Telegraph

CLAIMS FOR UNEMPLOYMENT RISE

I'm not sure why this would be unexpected since I have been reading about the retailers laying off Christmas help because sales are so bad. You can't spin this away. We are in a depression, and it is just beginning.

"The number of newly laid off workers filing claims for unemployment benefits unexpectedly rose last week as the recovery of the nation's battered labor market proceeds in fits and starts."

My Way

HYPERINFLATIONARY DEPRESSION LIKELY ACCORDING TO JOHN WILLIAMS

Read the entire article that this links to. I think it is important that people understand what is coming. It is coming with mathematical certainty. There are only two ways out for America; default and collapse or hyperinflate and collapse. This is the plain and simple truth. We can never pay the debt and shortly will not be able to service the interest. The Medicare and Social Security systems are about to be completely overwhelmed as the Baby Boomers retire. There are not enough people working to carry this load. Washington and Wall Street are doing whatever they can to suck every last bit of wealth out of the system before the turn off the lights and close the door. The middle/working class has already seen jobs disappear forever and the middle class/white collar employees are next.

Pray for guidance and prepare as prudently and quickly as you can. This process will accelerate quickly and supplies will become scarce rapidly. We are crossing into uncharted waters. This will be similar to what happened in Argentina with the extra added fun of taking the rest of the world down with us. Nothing like this has ever happened before.