15 July 2008



RHINEBECK, NY 14 July 2008 -- The "Panic of '08" that we had predicted is "ON." Only the blind can't see it, the deaf don't hear it and those in denial won't admit it. America's economy has taken a direct hit. The nation's financial superstructure is collapsing. Those waiting for the "official word" and hesitating to take survival measures will go down with the sinking ship of state.
The Economic 9/11 that we had warned would "topple corporate giants" and "crush the man on the street" hit on Friday. (See "Economic 9/11," Trend Alert, 12 November 2007; "Economic 9/11" Top Trends 2008, Trends Journal, Winter 2008.) While an economic terror strike was long in the making and the devastation long predicted, the financial markets melted down and panic hit the Street on the news that the nation's two largest mortgage finance companies, Freddie Mac and Fannie Mae, were on the brink of failing.

The dollar resumed its downward slide, gold sharply reversed its three month slump and oil rose to record highs on the threatening economic news and word that Israel was practicing bombing runs over Iraq in preparation to attack Iran. The Dow - before paring some of its losses on a late in the trading day rumor that the Fed would open its discount window to keep feeding Mac and Mae with needed cash to stay afloat - had fallen to a two year low on Friday.

Hours after the markets closed on the East Coast, and with the nation gearing up for another summer weekend, most people were tuned out when IndyMac Bancorp officially went belly up at 3 PM PST. Had the news hit while Wall Street was in session that the second biggest bank failure in US history was under way, calamity would have ensued. Instead, the out-of-touch missed the news and the ever-hopeful believed Uncle Sam would save the day.

Baby Talk

Despite calls from the business media and politicians from both parties for government intervention to rescue the failing institutions, there are no bailouts, buyouts, quick fixes or magic remedies that will save America's economy from going under. The formula is simple and the outcome predictable: The more money the government prints to cover the multi-trillion dollar losses, the weaker the dollar gets. The weaker the dollar gets, the higher inflation goes. The higher the rate of inflation, the more it costs to live. With wages going down and unemployment going up, the poorer the nation becomes. Americans will be facing the worst economic times in living history, and so too will much of the world.
There is NO WAY OUT. While Washington may devise some tricky monetary maneuvers to temporarily stop the bleeding, as they did to keep Bear Stearns from going bankrupt this past March, there is nothing that anyone can do that will stop the economic hemorrhaging.

Editor's note: Claims by market analysts, politicians, special interests and the generally interested that media and pundit "hysteria" is "unnecessarily inflaming market fears" are overstating the power of persuasion and understating the causes and effects that have created the current economic climate. More than homegrown pessimism and personal negativity, it took decades of destructive business and government policies and years of greed and corruption to destroy the world's largest economy.

Trendpost to Profit: Some $1 billion of uninsured deposits held by 10,000 IndyMac customers are now trapped and federally seized. Since FDIC only insures deposits of up to $100,000, holders of accounts with larger amounts under one social security number (business and/or personal) may consider dispersing funds to safer havens.

We predict a continuing spate of banks, businesses, and brokerages going bust (See "Panic of '08," Top Trends 2008, Trends Journal, Winter 2008). As events continue to spin out of control - and considering draconian measures that have abrogated constitutional rights under the guise of fighting terror - we forecast that the "little people" will be forced to pay for costly government rescue plans to save the "too big to fail." A dollar devaluation, a repatriation of gold coins, bullion, stocks, ETFs, etc, bank withdrawal limitations and other government restrictions will be put in place to prevent the general public from taking steps to secure their liquid assets.

Forewarned is forearmed. For those that proceed into the future unprepared, the outcome could be ruinous. For those searching for fresh opportunities and new directions, we can provide trend-based solutions to put you on the path to profit in the midst of confusion, panic, fear and loss. For more information, please contact our Professional Services Department at 845.876.6700 or go to www.trendsresearch.com for the full range of Trends Research Institute services.

Gerald Celente
The Trends Research Institute
Website: www.trendsresearch.com
Email: gcelente@trendsresearch.com

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