Finances

It feels like the summer of 1931. The world's two biggest financial institutions have had a heart attack. The global currency system is breaking down. The policy doctrines that got us into this mess are bankrupt. No world leader seems able to discern the problem, let alone forge a solution.

Fund managers across the world are dumping stocks and retreating to cash in a mood of extreme pessimism, fearing that the looming economic crunch is an even greater threat than inflation. The latest survey of investors by Merrill Lynch shows that an unprecedented 41pc now think that a world recession is either likely or very likely. The majority dismiss hopes of double-digit earnings growth next year as "fantasy".

Why is there no money? Not because too many people filed for earned benefits. It is because the money in the Social Security Trust Fund was used to finance handouts to the Welfare Generation from 1964 to 1994. In 30 years the Democrats, who used generational welfare to chain minorities to the feeding trough of the State and to the voting booth where they were forced to vote Democratic to keep their welfare checks coming, stole your retirement funds and replaced them with worthless IOUs.

Merrill Lynch has warned that the United States could face a foreign "financing crisis" within months as the full consequences of the Fannie Mae and Freddie Mac mortgage debacle spread through the world. The country depends on Asian, Russian and Middle Eastern investors to fund much of its $700bn (£350bn) current account deficit, leaving it far more vulnerable to a collapse of confidence than Japan in the early 1990s after the Nikkei bubble burst. Britain and other Anglo-Saxon deficit states could face a similar retreat by foreign investors.

Arthur Henning of the Chicago Tribune said back in 1935, "The New Deal will bring the Communist Party within striking distance of overthrow of the American form of government..." Mark Sullivan of the Buffalo Evening News also expressed alarm in 1935: "The New Deal is to America what the early phase of Nazism was to Germany... " The nation is awash in fear because they are coming to realize that while they've been buying all the hype from the cabal of gangsters in Washington for decades, reality is now setting in as poverty is slamming millions who used to belong to the middle class. From dangerous lending practices to the derivatives time bomb waiting to go off and inflation getting ready to launch into hyper inflation, the situation is more grim by the week. A financial catastrophe so many have been warning about for decades, it's all coming home to roost. The "perfect storm" as it's being called. The beast is now devouring itself and we the people are caught in their cross fire.

California based IndyMac Bank became the second largest bank failure in United States history Friday after a bank run straight out of “It’s a Wonderful Life” was triggered by publicity-seeking Senator Charles “Chuck” Schumer (D, NY). This is not merely my opinion, mind you, but the stated conclusion of John M. Reich, the Director of the federal Office of Thrift Supervision (OTS), who publicly declared Friday that the run was triggered in large part because “The senator made comments in his letter questioning the viability of the institution.” Adding, “When a member of the United States Senate makes such a statement, it frightens depositors.”

In 1999 when oil was $10 a barrel, I suggested that the price would ride fivefold to $50 a barrel in real terms over the next few years. This forecast was dismissed with incredulity at the time. Almost 10 years later with the price over $130 a barrel, my original forecast turned out to be rather timid - with mainstream commentators now forecasting $200 a barrel. My forecast was based on an analysis of long term future supply-demand trends, combined with a study of ultra-long term commodity cycles. What is striking about ultra-long term commodity cycles is how seemingly unrelated commodities appear to rise and fall together.

The system of credit in the United States is failing. With over 2.2 million home foreclosure filings in 2007 and a staggering $920 Billion of consumer credit card debt along with predictions of higher numbers to come, the words of Thomas Jefferson certainly resonate: “If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks...will deprive the people of all property until their children wake-up homeless on the continent their fathers conquered... The issuing power should be taken from the banks and restored to the people, to whom it properly belongs.”This was written in 1802 and stands as proof of the eternal wisdom and foresight of our founding fathers.

The Royal Bank of Scotland has advised clients to brace for a full-fledged crash in global stock and credit markets over the next three months as inflation paralyses the major central banks. A report by the bank's research team warns that the S&P 500 index of Wall Street equities is likely to fall by more than 300 points to around 1050 by September as "all the chickens come home to roost" from the excesses of the global boom, with contagion spreading across Europe and emerging markets.

Have people forgotten what happened to our fellow Americans who worked for ENRON? Everything they worked for all their lives, poof! Gone. Americans seem oblivious to the fact that these crooks and just plain ignorant members of Congress are playing with their future. Look at where we are now and while I wish I could say different, it is going to get much worse.