The Signs are Consistent. Pay Close Attention Now.

Several blogs back I wrote a piece concerning the parallels between the Crash of 29 and now as it related to bank closures.  In that piece I had calculated that the FDIC would go broke by January 2010.  Look surprised now, today, the FDIC said at the current rate of closures it would be broke by JANUARY!

But what is more troubling is the fact they, the FDIC, also increased their list of troubled banks from 315 banks to 400 banks.  This last week we had several more failures including the third largest bank going down in this crisis, which brings the total number of branches closed very close to 3700. Remember the Crash of 29 was 4,000 total. Oh, BTW, the assets of that bank that went down last week, were sold to a Spanish bank.  So the US banking crisis is creating shopping opportunities for foreign investors.  Is that good?  Yeah, it must be or the FDIC wouldn’t do it, right?

Now comes the really insane part. AIG’s stock rose more than 214% in August ALONE!  Let me get this straight, AIG, in an economy that is in a nose dive, hits the government (read us here) for $150B, and then magically they DOUBLE their money in ONE month.  H.S. they are good!  For me it is more like “I don’t know about you sheriff, but something mighty fishy is going on here”.  How about you?

With the market being artificially pushed by all the happy talk, and the Fed printing money faster than hummingbirds can beat their wings, I think the Bank Holiday ought to come crashing in on us about say… two weeks before Christmas.  Merry Christmas!

The real signs of economic turn around just aren’t in the cards folks.  Imports and exports continue to contract, oil prices are reflecting a flat and still contracting economy, and the stimulus money simply isn’t reaching the street.  This coupled with the fact Real GDP decreased 1% for the second quarter of 2009 just doesn’t support any real turn around yet.  You have to understand that the GDP number is from one month to the next.  Real GDP had decreased more than 4.5% in the first quarter of 2009.  The “Cash for Clunkers” program may have reduced car inventories and removed some gas guzzlers from the highway, but it will be considered in a few months as a complete disaster because the government, in its slow pay method, has already cash strapped a lot of car dealers and sales will be absolutely flat for the next quarter.  Watch how Ford does in this aftermath.  Ford is now the canary in the mine.

I hope you are also watching how states are coping with this depression.  California has cut $1.2B from its K-12 educational program and Washington State has hacked $800M from the same budgets..the results are monster size classrooms and teacher strikes everywhere.  In Washington State, 5 districts are already or prepared to go on strike.  In California, unemployment in some counties, like Imperial County, for example, is more than 30%.  One of the hardest hit employers was the prison system, a primary employer in the county.  Some estimates say California will release more than 27,000 prisoners.

It has been a few months now since the predictive linguistics and other data points have converged on this and these recent events only re-enforce the correctness of these indicators.  Pay close attention now as events unfold as we are very close to some dramatic events occuring.  Be sure to have your runnin’ money, a few vittles stashed away, and some good water source.  If’n you do you can sit back and watch the OMG show for the next few months.  If you don’t know the OMG show, it is where every time you turn on the news you go OMG!

Here’s Uncle Willie’s thoughts for the day.



Author: redhawk500

International business consultant, author, blogger, and student of life. After 35 years in business, trying to wake the world to a new reality. One of prosperity, abundance, and most importantly equal opportunity. it's time to redistribute wealth and power.

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