Here’s a good outline by Australian economist Steve Keen of Minsky’s theory and our current debt situation. Enjoy.

Harry Dent’s update from October 16 is below.  He’s looking for a top soon:

CNN says that “economists are predicting that the nation’s gross domestic product (GDP) rose 3.2% on an annualized basis in the third quarter. That would be the strongest level of growth in two years. The official number comes out Thursday.”  Could late Thursday be the time to sell this news?

Karl Denninger at Market Ticker, based on his on assessment, is hitting 13 of 25 economic predictions he made for 2009, with half a year to go for more of his predictions to come true.  Since he’s shooting pretty good…what else is he predicting?  It gets pretty gloomy:

At some point reality must be faced, and we may as well do it now while we still have civil order.  Those politicians, numbering nearly all of them from both parties, who argue that this can be “avoided” or that we can “support housing (and/or asset) prices” need to be run out of town on a rail.

There is no way to prevent the unwinding of leverage when the carrying costs exceed income and the more debt we as a society take on in trying to do so the worse things will get in the end, as we are simply adding to the pile of defaults that must occur.

I am quickly running out of possible scenarios to prevent a severe deflationary depression from taking place.  By “severe” I mean 20%+ U3 unemployment, GDP contraction of at least 25%, and a possible loss of federal funding capacity leading to the immediate destruction of Medicare, Medicaid and Social Security, a 50% reduction of defense spending and near-complete-elimination of all other Federal Programs due to a “sudden stop” in the ability to fund Treasury issuance.  Yes, it could get that bad, and it could happen a lot faster than you think.

I wish there was good news – “green shoots” – that I could honestly find and report.  There are not.  There is only more obfuscation and fraud, which I have and will continue to chronicle here in The Ticker, not so much in the belief that government gives a damn, but rather so that historians have it available later and, if the collapse I believe is possible does materialize, the angry proletariat with pitchfork and torch will know where to properly direct their wrath.

Government needs to lock up the psychopaths that have run the asylum for the last 20 years and let adults into the room to rationally discuss the inevitable and how to best deal with it.  They’re refusing now, just as they did when Bush was President.  This is not a partisan debate – even having lost badly in November the Republicans are wasting time with the same old canards about “Tax and Spend” instead of attacking the problem at the root: fraudulent credit issuance, much of which they championed and enabled themselves.

Swamp Report agrees that the government is a big cause of our problem and an even bigger reason why it’s getting worse.  The current despotic government needs major overhaul before many more of Karl Denninger’s predictions come true…

Garth Turner at

“Interest rates will continue to race to zero and stay there. Suckers will borrow. The media will report it. Fools will follow. ”

“So, no depression.  The GDP will likely be rising marginally a year from now, but that does not mean ugly days will be passing...Many people in their forties and fifties who lost work in 2009 will never work again…Capitalism’s cooked. This is now a government-run society. Irony of irony – free enterprise has moved East.”

So, we guess Garth is a little on the pessimistic side…

From Financial Times:

“The stunning news that [the FED] would buy $300bn (€222bn) in Treasury bonds (and spend a lot more on many other fixed-interest securities) also used another classic military strategy. It had the element of surprise…So why did the Fed do it? The theories are out there. With the AIG bonuses moving public opinion against bail-outs, this may be the only way to pump more public money into credit. Congress will not approve such a thing. Or the Fed may know something about the banking system that others do not.” 

FT’s Krishna Guha  says:

“one way to interpret the Fed decision to expand its balance sheet by $1,150bn at the meeting is that it is a commitment to keep rates at near zero for a long time – possibly up to two years.”

A two year period with zero bank rates….hmmm…..opportunity, crisis or both?


“What scares me the most and what makes me believe we are now becoming the U.S.S.A. is that many of those trying to fix the system are hopelessly undereducated when it comes to solving a once-in-a lifetime Global Economic Depression. This goes for all branches of Government and both sides of the aisles.”

In 1932, a popular slogan was “in Hoover we trusted, now we’re busted”.  The Obama Administration wants to characterize the president as FDR, and Bush as Hoover.   But, the change we can believe in is anything but.  An article by a realtor in Orange County before the election anticipated the fall in real estate and perhaps the next Hoover:

This next president (Obama or McCain, it doesn’t matter) will be equated with Herbert Hoover [] and will be defeated in a landslide in the 2012 election.”

We doubt it will be easy to defeat the Obama handout machine in 2012.  The 1936 re-election of FDR was a landslide due to that administration’s  massive vote buying with wealth transfers.  The same is true today.  However, while it is true that the Obama administration inherited the current mess we are in, it is also true that a slow drip of bailout funds to the banks without addressing the bad assets on their books is “a hope” that  the banks will heal themselves, a hope we can not possibly believe in and one much like Hoover’s.