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Global Economic Crisis Deepens

by Stephen Lendman Monday, Oct. 24, 2011 at 4:31 AM


Global Economic Crisis Deepens - by Stephen Lendman

Global Depression grips world economies. Destructive polices fueled today's crisis. Conditions are fast coming to a head.

Throwing good money after bad delays decision day at the price of far greater trouble on arrival. D-Day will shake world economies. It may, in fact, be months away, perhaps in 2012.

No one knows for sure, but things that can't go on forever won't, and when they end, watch out. Ordinary people will be hurt most, much more than already.

Perhaps Greece is the canary in the coal mine. The country's bankrupt. Only its obituary isn't written. Its citizens are being impoverished. Anger rages in Athens. Revolutionary sentiment may explode any time, sending shock waves across Europe.

Trends analyst Gerald Celente says when people lose everything and have nothing else to lose, they lose it.

Greek citizens are close to losing it. Others in troubled countries aren't far behind, including in America where growing thousands rage against a system destroying their livelihoods and futures.

Fixing it demands direct action. Focusing on core issues is key, and knowing bottom-up change only is possible, never the other way. Entrenched corporate and political interests don't yield.

Sustained pressure is crucial. Today's struggle is the mother of them all. Change won't come easily or quickly. Minimally it will take years to remake what's too corrupted and broken to fix.

Ripping it down and starting over is essential. American and Eurozone workers are on their own to do it. They're in for the fight of their lives. Odds are greatly stacked against them, but the stakes are too important to back down.

Money power in private hands must change. People must get back what's rightfully theirs. America's Constitution mandates it. Enforcing it is crucial. Doing so makes everything else possible. Without it, expect failure.

Over time, financialized economies deter economic prosperity. America's time is now. So aren't troubled Eurozone countries.

Responsibly created debt fuels economic growth. Too much of a good thing causes big trouble.

In 1934, Atlanta's Federal Reserve Bank credit manager Robert Hemphill said:

"We are completely dependent on the commercial Banks. Someone has to borrow every dollar we have in circulation, cash or credit. If the Banks create ample synthetic money we are prosperous; if not, we starve."

Replace the word "commercial" with public, or combine the two, and Hemphill got it right. Most circulating money originates through bank loans. Inflation free prosperity is sustainable if debt fuels real economic growth.

Casino capitalist excess and out-of-control bad debt levels are disastrous. The piper awaits his moment to be paid.

Interviewed on Pacifica Radio's Guns and Butter, Michael Hudson explained:

In recent years, "commercial banks have fueled an enormous asset-price inflation. The debt they have created imposes an interest burden that deflates the economy - even while adding to the cost of living and doing business."

Financial warfare rages. Governments and central banks sacrificed economic soundness to save banks. Debt deflation is shrinking economies. Poisonous bailouts crush them.

Obama and Eurozone leaders claim recovery depends on austerity. It hammers workers and stifles productive growth. As a result, global economies are getting worse, not better. Purchasing power is shrinking. Layoffs, defaults, foreclosures, and bankruptcies are rising.

The mother of all train wrecks approaches. When it hits home full force, it'll be too big to ignore and painful.

On October 16, the Global Europe Anticipation Bulletin (GEAB) headlined its latest economic assessment, "Global systemic crisis - First half of 2012: Decimation of the Western Banks," saying:

Second half 2011 has global economies heading for "unstoppable....geopolitical dislocation(s), characterized by the convergence of monetary, financial, economic, social, political and strategic crises."

Today's distressed financial environment "will cause the 'decimation....of Western banks' in the first half of 2012."

As a result, expect profit "freefall, balance sheets in disarray, with the disappearance of trillions of (dollar) assets," compounded by growing public anger, so now "the scaffold has been erected" to eliminate 10 - 20% of Western banks.

GEAB calls what's unfolding "an event of historic proportions." In 2008 and 2009, tens of thousands of banking jobs disappeared. Momentum is building for another wave.

Western banks look like troubled 1970s steel industry giants. Latter day "ironmasters" consolidated, moved abroad, or disappeared.

In 2008, Goldman Sachs, JPMorgan Chase, and Morgan Stanley became bank holding companies to survive. Big name firms Lehman Bros., Bear Stearns, Merrill Lynch and others disappeared or were swallowed in mergers at fractions of their peak valuations.

Britain nationalized big banks to save them. Taxpayers bore the cost. Everything that went around is back and then some once trouble peaks. GEAB expects "serial bankruptcies" and massive financial sector layoffs.

Progressive Radio News Hour contributor Bob Chapman calls debt problems "endemic worldwide. We are in a major financial crisis." Out-of-control debt is the problem. Much of it can't be repaid. More of it makes things worse. Serious trouble looms.

"It has been almost 300 years since the financial collapse of 1720 in England and France, and this episode today has all the trappings of a replay."

Daily rumors suggest plans to save Eurozone countries from crisis. "All are bogus to keep stock and bond markets from collapsing. There is no way out for Europe nor for the entire financial system."

No one will admit the system is broken. Sooner than expected perhaps it'll be too evident to deny. Even with US economic data manipulated to look better than reality, economist David Rosenberg said America's economy hit "stall speed" in Q I and Q II, 2011. Q III saw more stagnation, even contraction, he said.

Moreover, back-to-back declines in nonfarm business productivity occurred. Historically it happens 5% of the time around economic cycle inflection points. It was noticeable in 1981 and 2008.

Copper prices reflect economic prospects. On October 21, they hit a 2011 low. Since July, the Conference Board's coincident economic indicator held steady at 103.2 or 103.3. Every economic expansion ends shortly after it peaks. It reached 107.5 in December 2007. In 2008, economic conditions crumbled toward collapse.

In 2000, it peaked at 98.7. Recession began six months later. In 1990, it peaked at 75.0. Recession began the same month. In 1981, it peaked at 60.3 at the same time recession began. Since 1960, downturns coincided with peaks or shortly thereafter.

Many years of destructive US policies headed America for day of reckoning inevitability. Recent year excesses hastened its arrival.

In his article headlined, "The End of History," Paul Craig Roberts wonders how Washington will finance its growing empire given enormous budget deficit constraints. Only money printing provides it. Inflation inevitably results.

Based on how calculated decades earlier, economist John Williams has it at 11.5%. So far, money supply shrinkage, contracting credit, stagnant wages and declining house prices keep it from surging higher.

As 2012 approaches, only America's super-rich have prospered. Others have "been assigned to the trash can," said Roberts.

"Nothing whatsoever has been done for them since the financial crisis hit in December 2007." Only America's top 1% matters. Why else would mad as hell people be raging.

In the new millennium, political Washington destroyed rule of law standards, public accountability, and "every moral principle to achiev(e global) hegemony...."

At the same time, it showered Wall Street and other corporate favorites with trillions of handout dollars, wrecking America's economy in the process.

Has it also ended America's chance to rule the world, or will it engineer a last hurrah global war to try?

With lunatics running the asylum, don't bet they won't, at the risk of destroying humanity entirely.

Stephen Lendman lives in Chicago and can be reached at

Also visit his blog site at and listen to cutting-edge discussions with distinguished guests on the Progressive Radio News Hour on the Progressive Radio Network Thursdays at 10AM US Central time and Saturdays and Sundays at noon. All programs are archived for easy listening.

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