(The article below is a must read from a respected investor and economist. Get ready USA. Sounds like you will soon resemble the DR)

The Worst Case Scenario (Someone Has to Say It) USA DOOMED!


Since the economy began sliding downhill in late 2007, mainstream economic and market experts have consistently erred on the sunny side.

As late as June 2008, mainstream consensus held that the U.S. was heading for a “soft landing” and would avoid recession. Several months later, the slump was acknowledged to have started in January 2008, but we were supposed to see renewed growth by mid-2009, with unemployment peaking in the eight-to-nine percent range. A quick “shovel-ready” stimulus bag was supposed to set us back on the road to prosperity.

In January, recovery projections were pushed forward to late 2009. Today, the consensus is for a mid-2010 recovery, with unemployment peaking at just over 10 percent. Clearly, the mainstream has struggled to catch up to reality for well over one year. What are the chances that they finally have it right this time?

Moreover, the mainstream continues to see what is going on as a plain-vanilla recession that will be quelled with some on-the-fly monetary and fiscal tinkering. Washington, we are told, will pull us out of this slump—as soon as the masses can be enticed back to the shopping malls. Then things will return to how they were before. But what if the experts and politicians are wrong not only on their ever-changing recovery timeline, but also on the nature—nay, the very existence—of a recovery?

America’s reigning political-economic ideology has demonstrably failed. Given that its government is obviously fumbling along without a clue, its foreign and domestic credit is tapped out, and its 300 million people are discovering that their hopes for continuous material improvement will never be met, could the U.S. be headed the way of the USSR?

Instead of a recovery as the mainstream envisions it, what if America permanently bankrupts, impoverishes, and marginalizes itself? What if its cherished institutions fail across the board? For example, what happens when the police realize that their under-funded pension plans cannot support a decent retirement? Will they stay honest, or will they opt to survive by any means necessary? These are questions that the mainstream does not even begin to contemplate.

In the interests of providing you with an alternate vision—something outside the mainstream—below are ten predictions for America through the year 2012. This is not boilerplate doom-saying. Rather, I am laying out in highly specific terms what will happen over the next three-odd years. Others have thrown around the term “Depression”, but I am going to tell you precisely what it means for you, your investments, and your community.

When these predictions come true, I expect to be rewarded with a seven-figure consulting gig, a book contract, or a high-level position in whatever administration succeeds the doomed Obama team—that is, if anyone succeeds it at all.

Prediction one. The twenty-five-year equities bubble pops in 2009. U.S. and foreign equities markets will stop treading water and realign with economic reality. Stock prices will cease to reflect the “greater fool” mentality and will return to being a function of dividend yields, which have long been miserable. The S&P 500 will sink below 500. In a bid to stem the panic, the government will enforce periodic “stock market holidays”, and will vastly expand the scope of its short-selling prohibitions—eventually banning short-selling altogether.

Prediction two. With public pension systems and tens of millions of 401k holders virtually wiped out—and with the Baby Boomers retiring en masse—there will be tremendous pressure on the government to get into the stock market in order to bid up prices.

Therefore, sometime in 2010, the Federal Reserve will create and loan out hundreds of billions of fresh dollars to the usual well-connected suspects, instructing them to buy up stocks on the public’s behalf. This scheme will have a fancy but meaningless name—something like the “Taxpayer Assurance Equities Facility”. It will have no effect other than to serve as buyer of last resort for capitulating smart-money types who want to get out of stocks entirely.

Prediction three. Millions of new retirees—including white-collar people with high expectations for a Golden Retirement—will be left virtually penniless. Thousands will starve or freeze to death in their own homes. Hundreds of thousands will find themselves evicted and homeless, or will have to move in with their less-than-enthusiastic children. Already strained by the rising tide of the working-age unemployed, state and local welfare services will be overwhelmed, and by 2012 will have largely collapsed and ceased to function in many parts of the country.

Prediction four. “Quantitative easing” will fail to restart previous patterns of lending and consumption. As the government sends out additional “rebate” checks and takes ever-more drastic measures to force banks to lend, hyperinflation could take hold. However, comprehensive debt relief via a devaluation of the dollar is even more likely. This would entail the government issuing one “new” dollar for some greater number of “old” dollars—thus reducing both debts and savings simultaneously. This would make for a clean slate a la Fight Club.

As there are many more debtors than savers in the U.S., the vast majority would support devaluation. The Chinese and other foreign holders of our bonds would be screaming mad, but unable to do anything. Every country that has not found a way out of dollar-denominated reserve assets by 2012 will see its reserves eliminated.

Prediction five. The government will stop pretending that it can finance continuous multi-trillion-dollar deficits on the private market. By late 2010, the sole buyers of new U.S. Treasury and agency bonds will be the Federal Reserve and a few derelict financial institutions under government control. This may or may not lead to hyperinflation. (See prediction four).

Prediction six. As the need for financial industry paper-pushers declines and people have less money to spend on lawyers and Starbucks (SBUX), unemployment will rise until the private sector has eliminated all of its excess capacity and superfluous or socially needless jobs. The government’s narrow unemployment figure (U3) will rise into the high teens by late 2010. The government’s broader unemployment figure (U6) will cease to be reported when it reaches 25 percent—it will simply be too embarrassing. Ultimately, one in three work-eligible Americans will be unemployed, underemployed, or never-employed (e.g. college grads permanently unable to find suitable work).

Prediction seven. With their pension dreams squashed, and their salaries frozen or cut, police and other local government workers will turn to wholesale corruption in order to survive. America’s ideal of honest, courteous, and impartial cops, teachers, and small-time local functionaries will have come to an end.

Prediction eight. Commercial overcapacity will strike with a vengeance. By 2012, thousands of enclosed malls, strip malls, unfinished residential developments, motels, truck stops, distribution centers, middle-of-nowhere resorts and casinos, and small-city airports across America will turn into dilapidated, unwanted, and dangerous ghost towns. With no economic incentive for their maintenance or repair, they will crumble into overgrown, plywood-and-sheet-rock ruins.

Prediction nine. By the end of 2010, tens of millions of households will have fallen behind on their mortgages or stopped paying altogether. Many banks will be unable to process the massive volume of foreclosure paperwork, much less actually seize and resell the homes.

Devaluation (as mentioned in prediction four) could ease the situation for those mortgage holders still afloat, but it would also eliminate any incentive for most banks to stay in the mortgage business. In any case, the housing market in many parts of the country will lock up completely—nothing bought or sold.

With virtually no loans being made, even the government will finally acknowledge that most banks are fundamentally insolvent. A general bank run will only be averted through a roughly one trillion-dollar recapitalization of the FDIC, courtesy of new money from the Federal Reserve.

Prediction ten. As an economy is never independent of the society within which it functions, the next few paragraphs will focus on social and political factors. These factors will have as much of an impact on market and consumer confidence as any developments in the financial sector.

Whether rightly or not, President Obama, having come to power at the dawn of this crisis, will be blamed for it by over 50 percent of the population. He will be a one-term president. In response to his perceived socialization of America, there will be a swarm of secessionist and extremist activity, much of it violent. Militias and armed sects will be more prominent than in the early 1990s. Stand-off dramas, violent score-settlings, and going-out-with-a-bang attacks by laid-off workers and bankrupted investors—already a national plague—will become an everyday occurrence.

For both economic and social reasons, millions of immigrants and guest workers will return to their home countries, taking their assets and skills with them. The flow of skilled immigrants will slow to a trickle. Birth rates will plummet as families struggle with uncertainty and reduced (or no) income.

Property crime will explode as citizens bitter over their own shattered dreams attempt to comfort themselves by taking what is not theirs. Mutinies and desertions will proliferate in an increasingly demoralized, over-stretched military, especially when states can no longer provide the educational and other benefits promised to their National Guard troops.

There will be widespread tax collection issues, and a huge backlash against Federal and state bureaucrats who demand three-percent annual pay raises while private sector wages remain frozen or worse. In short, the “Tea Parties” of tomorrow will likely not be so restrained.

Finally, between now and 2012, we are likely to see another earth-shaking national embarrassment on the scale of the 9/11 attacks or Hurricane Katrina and its aftermath. This will demonstrate conclusively to all Americans that their government, even under a savior-figure like Obama, cannot, in fact, save them.

By 2012, there will be a general feeling that the nation is in immediate danger of blowing up or coming apart at the seams. This fear will be justified, given that the U.S. has always been held together by the promise of a continuously rising material standard of living—the famous “pursuit of happiness”—rather than any ethnic or religious ties. If that goes, so could everything else. We were lucky in the 1930s—we may not be so lucky again.

http://seekingalpha.com/article/134820-the-worst-case-scenario-someone-has-to-say-it?source=article_sb_popular

What all these forecasts fail to take into account is the metal of the American people, something that cannot be gauged or even learned by living for a few years in Michigan or what not. This country has faced greater challenges than those it currently faces to only emerge stronger than before and I'm 100% certain that it will again.

Condo Willi remember Canada goes down the shoot with it of that there is no denying If the USA is doomed Canada will disintegrate

To some extent you are right. The elephant farts and the mouse gets blown away

The diff. is Canada has a huge natural resource base, a conservative gov. and way less nationl debt. Whenoil was at $147 a barrel the CAD was above the USD.

Yeah Venezuela was living hi on the hog so to speak as well ..... No USA economy no world economy for a long long time

I totally hope you are right. There are fuindamental elements that are diff. in terms of history.

1. The previous generations had a Christian work ethic and morals. The present me generation does not.

2, The previous generations went through the great depression and WWII. They were savers. This generation is buy now pay later, started in the 60's.

3. This generation believes they are ENTITLED to everything - and the gov. will deliver. It will not and Obama has brought the final date of USA bankruptcy forward by ten years.

I hope there enough of the hard working old school people around - but I doubt it.

....This explains why I am standing in the woods with a Remington .300 magnum and a copy of the US Constitution. I'm glad someone is "saying it" (finally)...but, there are those of us who will "do it" ...and you are all right about the "metal of an American" and the "Old School" mentality of a decent days pay for a decent days work... ethics are not lost on us "ME GENERATION"" types..... I am "Generation X" they called us... I bought a $425 set of tires for my work truck on a credit card 5 years ago..... I now owe over $1300 bucks I will never pay. Way I see it, those tires were paid for long ago.... so, being a contractor myself, I'd say, you are beat. So....yeah, if "THAT" describes your quantifying measure of the "ME GENERATION"...you are welcome to add me to that stereotype also... I like to think more of myself as the "I F#@&*iNG DARE YOU Generation"
I am one of several million fathers who end up on a list of "deadbeat dads" because of a simple thing we all like to call "Gettin on with life" ....like starting another family, and business...and making a new life after the one that failed blew apart and Daddy got stuck footin the bill for mommy's "Me Generation" party....after five years of paying that mess down, they switch the rules, start me all over as behind again... and this time wreck two families... a business meant for the boys....and any hopes of recovery... Biblical ...pitting Father against Sons...
The system is designed to denigrate a certain type of people. These type of people are like a wildcard in a game of poker to guys who never use them.... (pissed off Daddys, angry vets, ex cons, and survivalist types) hard to figure what we are likely to do. (Millions of us) your "plague" ?

...I got a prediction...... and you guys can keep the seven figure book deal and the public appearances on Leno... I predict CIVIL WAR. ...and the reasons I think it more likely than laughable is simple....along with all your predictions, Confidence in the government to manage domestic and world affairs in a world where people want to kill us is dwindling with each new threat. The normal reaction to people seeing a low flying plane over New York is to call someone who might know what is going on.... The "ACTUAL" reaction was a jump to conclusions and mass evacuations. Old people, kids and pregnant women being trampled and mass hysteria all over again.....mob mentality in action. Makes no difference it was Air Force one with a military escort. That incident, along with economic failures, threat of invasion and swine flu, these are all a WAKE UP CALL. Quit complaining about being smacked in the forehead with a hammer and wake the hell up...its why you are getting smacked in the head with a hammer. The second amendment is next.... Stupid.... There are millions of shiny new black plastic coffins parked in strategic locations all over the country. FEMA is about riot control...not evacuating Katrina victims... DHS is about domestic terrorism...(from within) If you wanted humanitarian help with Katrina, you should have called in the United Nations. First thing government made happen in Katrina was disarmament...not evacuation. Iraq was hard to take because everybody owns a gun....America will fall much quicker and easier.
Economic problems make four things more valuable than your precious stock markets and property values..... Food, Fuel, Ammo ..and hard currency (Gold or Gems) When the food riots start... the guys in the third floor windows with the .300's will be guarding what they have stockpiled. The guys in the woods will be striking camp and marching on your towns, and the fuel, ammo and food stores will be secured for those that will fight... the rest of you can burn with the cockroaches.
....you want a snowballs chance in hell of surviving any of it, you better be about securing your weapons, ammo, food, fuel for mobility, and your connections with militia cells who activate in response to certain key events. If you want to remain local, join the local militia... but beware... if you do, you go on a list of government targets.. if you dont, you get mowed down by both the government or the militia...depending on which one you say "no" to first. Otherwise...step aside or bend over. Safest bet...Join a private militia. Connect with other private militias...form networks. Do NOT communicate using cell phones or internet. Joining is a matter of finding one. (Good Luck).
You are one phone call away from Martial law... One incident..... One emergency house session..... They have already attacked the first amendment and won. They already told you they are coming for the second...
....so...my question really isn't contentious.....I agree with your prediction....my question is...WHAT ARE YOU DOING ABOUT IT ???? its COMING ..... are you ready? REALLY?

Corruption in the federal government goes much farther than anyone is saying.... Why not start there? Lets start with Hillary Clinton ordering the hit on Vince Foster... Lets start with how she got a ticket to ride after the campaign that just put a Chi Town slicky bob in office...the man isn't even a legal citizen... Blago wants a reality TV spot to pay bills while serving out his penalty for TREASON. Bernie Madoff pulls off the biggest investment scam in Human history. Ted Kennedy is a murderer in office for 45 years....
Y'all know Blago was going to sell the seat to JJ Jr. right?... and one of his biggest contributors is long tooth Louie right? Nation of Islam... Ready for slavery reparations?
Jeremiah Wright or Jeremiah Johnson? ...better pay attention....you got a choice....sleep too long and you will lose that too...

Worst case scenario.... " Nobody listens except the bad guys.... " -Why we are falling as a nation. Why you have nobody else to blame but you. You have been told. You were warned many times. Keep a strong Army and an armed population that is meant to be able to put that army down if need be. ...too late....now you better hope you can wait em out til they get their asses kicked by a country that isn't hell bent on your death. ...oops ..too late again...they just picked a fight with people who declared a holy war on your ass..now you will die by their hand or ours....either way... America is doomed.....at least what you were taught America was about is doomed. Obama was never taught values he could personalize as an American...Hes not American. He could not understand what an American fights for. Let him fight for Indonesia...or restore Hawaii to its overthrown sovereignty . Maybe he can fight for Kenya. I hear they are starving to death.

.....TIP OF THE DAY .....Deburring bullets helps with accuracy over long distances, Getting lost in a crowd is no longer an option, and when income versus payout is a NET LOSS, it is not called a "recession", it is called a symptom.

There was a day when the Persian Empire was the most powerful empire on Earth.
There was a day when the Greek were the most powerful on Earth.
There was a day when the Roman Empire was the most powerful empire on Earth.
There was a day when Spain was the most powerful nation on Earth.
There was a day when the United Kingdom was the most powerful nation on Earth.
There was a day when France was the most powerful nation on Earth.
Nowadays the United States of America (after a great work and two world wars in the other side of the planet and with no powerful enemies around them) are the most powerful nation on Earth.
What is going to happen tomorrow? Nobody knows but all of you can be sure of this: in any case we will have other new days and even other brilliant days.

By the way, this is the multi-polar world of the future (and “future” means 2050): The United States of America, European Union, Japan, China, Russia and India. So take your seat and make yourself comfortable. The United States are not going anywhere, the fact is that more players are coming. We are going to see a lot of things in this change from a bi-polar to an uni-polar world and now to a multi-polar world.