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The Biggest Part of the Financial Market Crash Will NOT Come 9 in 2008, But in 2009 by Andrew Molchan (March 28th 2008) 2008 is an Election Year, and the US Governments (is) and will continue to throw hundreds of billions of dollars at the stock market. Things will go up and down in 2008, but the serious crash will come in 2009. Next year, 2009, will see the, "perfect storm." June 2006, that was the very top of the housing bubble. The Matrix of lies was saying that your house was going to make you rich. In the June 2006 issue of AFI, on page 11, I wrote, "A few people have asked me, ‘Shouldn't I borrow a lot of money on my house so I can pay it back with cheaper dollars?' …My answer is ‘no,' the real estate market collapses, and your home is only worth 70% of what it would now sell for. You already have an 80% mortgage based on 2005 valuations." THE 2009 PERFECT STORM (1) At the end of 2008, the current residential real estate bust will expand into the 2009 commercial real estate bust. This will put a lot of strain on the big insurance companies who are big holders of commercial real estate. (2) In late 2008, the credit card bust will state. Christmas 2008 sales will be bad, and January 2009 will see a tidal wave of small retailer closings. In the June 2006 issue of AFI, on page 12, I wrote, "It's morally degenerate for the government to let banks flood America with credit cards and get many people, who have no self-control, hooked on credit. Then, as soon as they are in trouble, the banks start charging 24% interest. Two years ago, a bank could borrow money from the Federal Reserve at 1%, and then charge all the people they had hooked on credit, and were now behind on payments, 24%.That's a 2300% difference between the bank's borrowing cost from the Fed, and what the banks are charging their card holder customers. When America was a more moral country than today, that was illegal, and called loan sharking and usury." (3) Transportation costs will continue to increase. Everything runs and uses oil and natural gas: cars, trucks, airplanes, rail roads, heating and cool of offices and factories, electrical generation, and so forth. A factory that produces 10,000 widgets a month, if their heating/cooling costs, electrical and transportation costs, go up by $500,000 a month. That $500,000 did NOT produce one extra widget. That's a massive fall in "productivity." Multply that by thousands of businesses all over America and what do you have for 2009? In the February 2006 issue of AFI (that's over two years ago), on page 30, I wrote, "Transportation costs are going to continue to increase. Oil will permanently be above $100 a barrel in a few years…The airlines still have low fairs because a third of them are in bankruptcy and are not servicing their long-term debts. Transportation costs will continue to climb. The US dollar will significantly decline related to gold and oil." The above was a first-rate prediction for over two years ago – right? Wall Street, or the Federal Government, should have hired me. (4) Unemployment will start to clime in late 2008, and become painfully serious in 2009. Now, March 2009, millions of people are still living off of their credit cards. That's not going to go on forever, and when it slows, than sales of almost everything will slow. (5) The home construction business is (was) enormous. However, 80% of the residential workers are "independent contracts." Many of them are only one or a few people.They are mainly out of work, but NOT showing up in the unemployment figures. Aside from that, the government lies.Who knows if the unemployment numbers have been, and are, being "cooked" like almost all the other numbers coming from the government? In the same February 2006 issue of AFI mentioned above, also on page 30, I wrote, "Massive debt of every kind, and at every level in America has become a mania.The next recession will be significant. Forty percent of all new jobs that have been created, in the last few years, are directly or indirectly connected to the real estate/building bubble. So what happens when the bubble breaks?" ANSWER – 40% fewer jobs. What happens is wide spread unemployment, massive credit card defaults, even more foreclosures in 2009, massive bankruptcy of small retailers and restaurants, and a deepening of the downward cycle. (6) The government's con game of falsifying the inflation data, and then selling US Treasure Bonds that only pay 4%, thus covering only 50% of America's real inflation of 8%, that de facto tax on all US Treasury Bond holders is going to start unraveling in 2009.Yes, the above game has worked for the US Treasury Department for decades, but 2009 will see the state of the end of that game. Former buyers of US Treasury Bonds are now buying oil fields, copper and iron mines, farmland, ports, banks, factories, shipping companies, and so forth. What's going to happen when the low bids for US Treasury Bonds are no lower are the real world inflation rate of 8%? In the same February 2006 issue mentioned above, also on page 30, I wrote, "Alan Greenspan retired this month. I think he decided to leave while the leaving was good." On page 7 of that same February 2006 issue I wrote, "A big percentage of American's current ‘living standards' are maintained via massive borrowing of every kind at every level. They want to believe that in some magical way all of the debts will either disappear, or magically be paid for by some other people living on the dark side of Mars." From the same February 2006 issue, on page 25, I wrote, "When Hillary runs for President in 2008, her campaign will be built around, vote for me and everything will go back to the way it used to be." Today, |