Great Depression Online Archive Issue:

Bubbles in the Midst of a Depression

Great Depression Online
Long Beach, CA
October 27, 2009

Inside This Issue You Will Discover…

*** What Does Wall Street Do?
*** The Most Extraordinary Business Model
*** Bubbles in the Midst of a Depression
*** And More

What Does Wall Street Do?

It really is a crazy and upside down world out there…

On the one hand, there’s bank failures, double digit unemployment, expiring unemployment benefits, a fading dollar, credit card and mortgage defaults…an overall economy that’s ‘on the ropes.’

On the other hand, there’s Wall Street, Goldman Sachs, JP Morgan Chase and billions of dollars in quarterly profits.

What gives?

Everyday we open our eyes and gawk at a world becoming increasingly at odds with itself.  We look around and ogle at the absurdities.

~~~~~~What’s Coming Next?~~~~~~

The shocking 1990 collapse of the Japanese Market.  The extraordinary U.S. economic boom of the ‘90s and early 2000s.  The devastating global recession that began in 2008.  These impacted everyone’s lives, investments, and fortunes.  The signs of their arrival were visible years and years in advance.  And yet…Almost No One Predicted Them.

The mainstream media didn’t.  The top economists didn’t.  The great financial advisers didn’t.  But Harry Dent Did.

What’s coming Next?  When will it happen?  What should you do to Prepare for it?

Click Here for the Answers 

~~~~~~~~~~~~~~~~~~~~~~~~~

For example…“This month,” reported Bob Greene for CNN, “Goldman announced that its profits in the last three months alone were $3 billion.”

“Goldman, and the other Wall Street giants, don’t manufacture anything, other than those profits.  What they do is, by definition, immensely lucrative.”

Still, this begs the question: Just what is it exactly that Goldman Sachs and the other big banks on Wall Street do?

Here, we’ll endeavor to offer an answer…

The Most Extraordinary Business Model

In a philosophical sense, Goldman and their cohorts do nature’s work: separate fools from their money.

Regrettably, in their work of nature, the fool is America.

“Paul Krugman, winner of the Nobel Prize in economics, wrote earlier this year: ‘Goldman is very good at what it does.  Unfortunately, what it does is bad for America.”

If you didn’t know, the big banks have the most extraordinary business model.  The Federal Reserve creates money from thin air and lends it to them for practically free – somewhere between 0 and 0.25 percent, at the moment.  The big banks then lend it to the U.S. Treasury for about 3.5 percent, last we checked.

The U.S. Treasury, remember, is funded by the taxpayers.  And for fiscal year 2009, the U.S. Treasury ran up $1.42 trillion in debt.  Part of that debt we the taxpayers are on the hook to the big banks for.  The other part we owe to foreigners.

But that’s not all the big banks do.  They also take some of the money the Federal Reserve lends them for practically free and use it to speculate on just about anything and everything.  Right now, that seems be gold, oil, and stocks…you name it, if it’s going up, the big banks are buying it.

Bubbles in the Midst of a Depression

The distortions created by this Federal Reserve induced speculation, via the big banks, in the real economy are dramatic and absurd…

…the demand for oil stagnates and there’s excess supply, yet the price of oil goes up.

…gold prices set record highs and the dollar plumbs 14-month lows, yet the Ten Year Note Yields just 3.5 percent.

…corporate earnings are weak and GDP contracts, yet the S&P500 rallies 60 percent.

…unemployment spikes up to double digits, yet Goldman Sachs hauls in a year-end bonus pool that exceeds $20 billion – enough to pay its 31,700 employees an average of $700,000.

…and not even the half of it.

In other words, in the midst of a depression we’re experiencing bubbles in oil, gold, stocks, and Goldman bonuses.

What does it mean?  How long will it last?

As to the second question, we believe it will last much longer than we could ever fathom.

As to the first question, we don’t know.  But we’ll venture a guess…

The depression will be longer, more destructive, and greater than anything that ever preceded it.

Sincerely,
M.N. Gordon

Great Depression Online

P.S.  “We’ve seen the greatest credit bubble and greatest real estate bubble in modern history, which means we have inflated asset values and, more importantly, way too much debt in our system,” said financial author and publisher Harry Dent last week to Moneynews.com

Here’s What Else Dent Says

 

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