Sunday, November 16, 2008

What would an Economic Collapse Look Like?

Good Afternoon Folks!

I hope everyone is having a great weekend. Many us are beginning to ask ourselves this question. As each day passes, the chances that this whole economy collapses becomes more and more of a distinct possibility.

So what would an economic collapse look like?

I wanted to share a great speech from a well respected author named Dmitry Orloff. What gives Dmitry so much credibility is he knows what an economic collapse looks like because he lived through one after witnessing the USSR collapse in the 80's and 90's.

I think its time that all of us start to ponder the possibility that this could happen here.

I have been recently horrified watching the government spend trillions of dollars bailing out everyone under the sun. We can't possibly have the money to pay back this debt and eventually the world will smarten up and come to the same realization and stop buying our treasuries.

Dmitry discusses this topic and offers many tips on what an economic collapse looks like and offers some great ideas on how to survive one. The link below is from a speech that he gave in November up in Michigan.

Here is the link to Dmitry

Enjoy!

17 comments:

johndaniels said...

I just cant help thinking this is all a sham to buy time until they can dump their dollars. It is obvious they wouldnt make ANY changes to the current system through a public announcement. They have to consider market reactions. So lets see if the dollar drops significantly over the next few weeks, if it does, then something if definately up.

jeff said...

JD

Great point.

This is going to end very badly.

By the way currencies flying tonight. Carry trade is getting pummeled. Dollar is strengthening again.

This does not bode well for equities tomorrow if it continues.

Its going to be another wild week in the markets. My guess is we visit the 2002 lows again by Friday. Just a hunch.

Many traders are predicting another dump next week in equities.

Nothing positive or news breaking came out of the G-20.

Avl Guy said...

I came across some of Dmitry's work last winter. very sobering...and yet 'focusing' at the same time.

I really don’t think anyone of consequence in Washington grasps this, though they may have deputies (who they do not listen to or do not empower) who do.

I had been saying that for about 4 months that 'local solutions for local survival and coping' will start at the Governor-level and on down; but not with all 50 governors. More on that later.

Technicals, Shechticals, only emotion-fueled psychology is keeping the S&P and Dow where they are...that plus the hyped-up ‘astrology’ known as chart-reading and 'technicals'.
So once again, another week where Wall Street looks up and realizes, ‘the recession is bad’, ‘consumers aren’t creditworthy’, ‘debt still unwinds’ and ‘banks rightfully distrust each other’s fibs’. And the market sinks some more after thrashing violently (aka ‘rallying’).

Jeff said...

avl

I see the same thing with where the market is heading. I totally agree with you on the technicals. To me its a bunch of hocus pocus.

I do pay attention to it when we reach serious technical resistance like when we get down around the 2002 lows.

One thing to take note of tomorrow is wee have opex this week. Many are expecting a red week.

Whats funny is the technicals actually look awful as well. I don't put a lot of faith into this crap, but here is what we face tomorrow from a technical basis"

The S&P futures point towards an red open. We are right underneath some support on the S&P which is around 854. If this level gets decisevely broken tomorrow at the open, things are going to get ugly according to the charts.

There is no support on the S&P until we get back to the 818 area which is the level where we bounced hard on Thursday.

If we break through there the 760 area is next.

The scenario's tomorrow are quite scary when you look at the techincals.

Avl, I am with you though. Investors sell when earnings and the fundemtals are bad. They aren't charting!

However, when both the fundementals and technicals look bad, the market usually heads lower.

That being said, this bi-polar market beats to its own drum so lets see what happens tomorrow.

Jeff said...

Here's a follow up to todays post:

I found another nice article in the Boston Globe on what a depression would look like here in the USA.

It will definately look different than the 30's if it happens:

http://www.boston.com/bostonglobe/ideas/articles/2008/11/16/depression_2009_what_would_it_look_like/?page=full

flipdippy said...

This guy? Really?

He has a very Russian centric view of the world. Russia is not and has never been a great place to draw comparisons against the USA. They are totally different, probably always will be.

This clown thinks political collapse here is inevitable. As a part of this crisis, I find that laughable.

Let's not forget that the US is an incredibly innovative country. Don't discount the unknown - whether it's to our benefit or our damage.

But assuming that this process as he's laid it out will finish simply because it started...come on.

And if he is correct, and it's that bad here, what do you think the rest of the world will look like?

Jeff said...

Flipdippy

I am just throwing it out there.

I bet a year ago most of us thought that the idea that Lehman, AIG, and Bear Stearns would all go down in flames in 2008 was laughable.

I never said I agreed with all of what he says.

However, these are unprecedented times and I think its time that we take a look at the "what if" scenarios that our out there.

I think we can come back strong as a nation if we stop the bailout crap and get more transparent.

Until I see signs that we are beginning to do this, options like the ones above are at least on the table.

Anonymous said...

get more transparent

Exactly, Jeff. You got it right again.

Avl Guy said...

Its common to say, "And if he is correct, and it's that bad here, what do you think the rest of the world will look like?"
And I reply, "...AND...the point is"?
Is it that if it's 80 below here, be glad cuz it's 100 below elsewhere? Or is it that if 3 murders/day happen in Chicago, be glad cuz it's 5/day elsewhere?
Huh????

Dmitry makes not only great points; he lays out actions that people can explore as well as constructive frames-of-mind. It's not simplistic doom-n-gloom and sit on ur @ss and whine and then slit ur throat.

However, I do wish he would use a more constructive label than ‘collapse’ or ‘meltdown’.

Finally, if one or one's parents lived in an upper-middle and/or suburban existence from the 60s-to-present, one likely will have no idea that all 5 ‘collapses’ already occurred within the US in multiple locations simultaneously, from the late 1960s thru the early-90s, in over 20 locales; just pick a dying urban area from that era populated by an ethnic group different from your own.
But that’s a whole 'nother story that might as well have happened in some place faraway like Russia even tho all 5 collapses happened in parts of inner-city Cleveland, Detroit, Chicago; in parts of Appalachia; in parts of AZ and NM, etc, etc.
Dmitry’s point is that this time the changes will likely be ‘equal-opportunity offenders’ that are widespread and harder to ignore (best example is today’s wide-spread housing collapse that crosses different price markets and ethnic neighborhoods, sparing none).

flipdippy said...

avl guy-

Read a couple books on Russian history. You'll find Russia has a rich and lengthy history of trying to emulate the West in how it governs and runs its markets going back to feudal times.

The problem is Russia always misses the mark, managing to put the appearance of emulating some economy elsewhere, but in fact only enriching the elite, which in turn led to an uprising/collapse, and further futility.

Dmitry seems to have an excellent grasp on how we got here but assumes we'll fall to the same flaws which are indigenous to Russia in the US.

Further, it is fair to make comparisons if it is armageddon here how bad it would be elsewhere.
If our currency collapsed tomorrow, we could still grow enough food to feed the country without importing. Our military could still be deployed to keep order.

We are not bordered by hostile nations, and we run little risk of being invaded or competing with resources from other countries, as is the case in Europe, Asia, and Africa.

A terrible crisis here would never involve widespread starvation, ethnic cleansing, war inside our borders, and so on. You can't say the same elsewhere, maybe except for England, but they don't have the means to provide domestically for their population.

Better comparisons to what the US potentially faces are Argentina in the 1990s and Germany in the 1920s. And as we're not Germans, I can't imagine a dictatorship replacing our representative democracy.

Rome didn't collapse in a day, and neither will the US.

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