The fat lady was standing in the wings ready to sing while President Bush was speaking on July 15 to the American people attempting to assure them that the economy is sound and hoping they will not storm the banks to get their money. He was using his “bully pulpit” to cower us into submission. You will note that he will not use that “pulpit” on behalf of traditional marriage, immigration, protecting the unborn and other “hot” issues that a “compassionate conservative” should espouse. 

On the same day in Europe, the bears were growling and “blood” was flowing in the streets. England is now entering a recession, a little ahead of the U.S. Professor Tim Congdon from the London School of Economics said the United Kingdom was “lurching from boom to bust,” and “it is going to get worse.” Roger Bootle from Capital Economics said Britain could be facing a “real economic crisis and a financial collapse.” Ambrose Evans-Pritchard reported on June 27, that Barclays Capital has advised clients to “batten down the hatches for a worldwide financial storm.” That was worldwide!

The London Telegraph declared on July 17, “European recession looms as Spain crumbles.” Pedro Solbes, Spain’s finance minister admitted that Spain “faces the worst economic crisis in its history.” The story used such buzzwords as “spiralling,” “worst crisis,” and “dire straits.” Italy, France, Portugal, and Germany are also bleeding.

Much of this has stemmed from the massive problems with two major U.S. mortgage companies, Fannie Mae and Freddie Mac (not married cousins from Appalachia!)  having posted massive losses. Both are down more than 83% from a year ago! These two companies, the largest of their kind in the world, hold about half of the $12 trillion U.S. mortgage market! Note the “t” not “b” and it stands for trouble, right here in River City. The Wall Street Journal confirmed last week that the Fannie and Freddie problems are reverberating worldwide.  

This follows the bailout of IndyMac in California, the second largest bank failure in U.S. history. Now we learn that Merrill Lynch, the largest investment firm,  is facing a “global funding crisis,” and Citigroup, America’s largest bank, reported losses of $2.5 billion nearly $10 billion during the last three months of 2007! I’m afraid that major banks, insurance companies, and investment firms will topple like a row of dominoes within the next twelve months. today (July 17) after losing

The U.S. may not permit the largest banks and companies to fail or fall but can’t keep them from faltering. They are “too big to fail,” but what about the mid-sized companies and small businessmen? Who keeps them from falling? The banks that lent money to people (often without even doing a credit check!) should not be bailed out by taxpayers. Let them fail and if there is malfeasance then jail the CEOs. The CEOs sure don’t deserve a “golden parachute” to permit them to sip bourbon on some Caribbean Island for the next 20 years.   

When the next big bank or blue-chip company (like GM, Ford, or Sears) goes belly up, watch out because you will be crushed in the stampede as the big boys flee the market. The rush for the exits will probably be led by foreigners who hold a huge chunk of our mortgage debt.

Meanwhile, the dollar lies limp gasping on the floor of the world’s stock exchanges while gold and other precious metals soar into the stratosphere.

I wrote in a 1999 book that I am 100% convinced that a total collapse of the economy is in our future. I still believe it. The national economies of this world are ready to explode. They are like a boy standing up to his knees in gasoline, flicking a cigarette lighter.

In 1999, I advised my readers to get out of debt, develop a home-based business, get out of the stock market (except for gold and silver shares) and purchase rental property along with physical gold and silver. At the time, property values were extremely high and gold was selling for under $300 and now sells for $1,000.00.

While pessimism is not my nature, I see a dark cloud on the horizon. First, a major Depression followed by massive inflation. Informed Americans should make plans for some very difficult years ahead. Far worse than the Great Depression; maybe the Greatest Depression!

While Bush and the “hot shots” on television tell us that the financial “fundamentals” are still strong, the fat lady is clearing her throat and about to take to the stage. It may be her final appearance.

Copyright 2008
           

(Dr. Don Boys is a former member of the Indiana House of Representatives, author of 13 books, frequent guest on television and radio talk shows, and wrote columns for USA Today for 8 years His most recent book is ISLAM: America’s Trojan Horse!  These columns go to over 11,000 newspapers, television, and radio stations. His websites are www.cstnews.com  and www.Muslimfact.com.)

Tags: bubble, Bush, crash, economy, finances, government