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Monday March 11, 2013 10:51

The 70-year K-Wave Smashes take Decades to Repair

In the United States Great Depression, it started with the 1926 Florida land crash, then the 1929-1930 stock market wreckage, then was followed by a 1933-1934 stock market bust, and was finally finished off with the 1937-1938 markets’ drop of -45%. Here we see four huge nasty events over several years that did not end until they were repaired by the ultimate jobs program: World War II.

The previous USA rolling recession-depression of 1872-1896 had some apparent years of healing sprinkled throughout over two decades of economic ruination. Our current world collapse is more of the same. It began in 2000 with the NASDAQ wipeout and is still in process probably extending out to 2018 or even 2024 before international credit can ever be revived.

Apparent Contradictions

On one hand, we have a record USA stock market blasting higher with suspect claims of falling unemployment and rising housing sales on higher corporate profits. On the other hand, we see the specter of a terrible, phantom international GDP, jobless claims, skidding exports, and failing currencies turning into money wars over trade, literally around the world. What are we to believe?

Reality Check Exposes the Truth 

 “European leaders grappling with political deadlock in Italy and spiraling unemployment in France will turn to a financial rescue for Cyprus in an effort to stave-off a return of market turmoil over the debt crisis. European Union leaders will meet for a March 14-15 (2013) summit in Brussels to discuss terms for Cyprus, including the island nation’s debt sustainability and possibly imposing losses on depositors. That comes as Italy struggles to form a government after an inconclusive February 24-25 (2013) election and as concern over the French economy mounts with unemployment at a 13-year high.”  - Patrick Donahue 3-10-13 Bloomberg.net

We said the Germans would try to exit Euro-land first. Here it comes.

Ratings service Fitch cut its Italian debt designation, as the nation has no apparent leadership.

Meanwhile, Britain’s Mr. Cameron, as we reported last week in Trader Tracks Newsletter, is running like rooster trying to do something to cover swift degradation of the skidding U.K. economy. (Do not forget it has been years since their famous Northern Rock bank smash.)

“In Germany, a new political party, the Alternative fur Duetschlan (AFD), says the ‘Euro has proved to be a fatal mistake and it threatens the welfare of us all. The old parties are used up. They stubbornly refuse to admit mistakes.’ There is now open discussion within this party to disavow Euro-land as splintering parties with no new elected leaders in Italy suggesting default on Italian debts.”  -Editor: All of the primary Euro-land nations are intertwined and are skidding together.

“We are watching joblessness go off the charts in France, and Spain’s is now so scary as to be beyond measure. From Lyon, France: Chef Joseph Viola says, ‘We have to make people forget their worries when they come to our restaurant. We have to make people forget austerity,’ he says. The French appear to be very good at forgetting, or at least ignoring, the dire economic state of their nation.

“Perhaps wishing the economic problems would just go away, voters turfed austerity-supporter Nicholas Sarkozy in last May’s election, replacing him with François Hollande, the country’s first socialist president since François Mitterrand. But Europe’s second-biggest economy is in crisis. The country is teetering on recession. Last month, the French government announced it would not meet its 0.8% growth target, meaning reducing its deficit is unlikely. And, it is aiming for €60 billion in spending cuts over the next five years. The financial holes can no longer be ignored.

“The €2-trillion French economy contracted in the last three months of 2012, government debt is nearly 90% of GDP and unemployment hovers at 10%.  Among young people, unemployment is nearly 25 per cent.”  (Trader Rog: That is the measure of a depression, not recession).

“Almost daily, the country is losing its competitive edge. The French industrial base is dominated by Germany’s steady growth and businesses are moving to Eastern Europe and Asia, where costs are lower. Many economists say Hollande has no choice but to reform France’s labor-friendly laws and reduce business taxes. If he doesn’t, the future recovery of the EU is at stake. France has helped prop-up other European nations in dire fiscal straits since world markets collapsed in 2008. As a result, the country is both too big to fail and too big to save. If France runs dry, the rest of the EU will suffer.”   - Tanya Talaga Global Economics Reporter Toronto Starr 3-10-13

Smart analysts and market observers are trying to determine which Black Swan will ruin global markets and when. Some say those identified as suspects cannot be called Black Swans as they are identified today. We suggest it could be either way. We’ll get an identified threatening suspect or in fact an unknown, or a real Black Swan could take us out. It really doesn’t matter as when this problem arrives, we will all probably get blind-sided and be generally un-prepared.

Our point in this discussion is that we must understand there is a political-banker-market-maker agenda and then there is the specter of reality. Pay attention and prepare for the worst while hoping for the best. Most of the global news is meant to bend your mind towards nirvana. If you fall for this stuff rather than do your own original thinking you are set up for big trouble.

We saw a report last week saying the billionaires with hard experience are telling us to save for a rainy day and live way below your means. That is the reason they are billionaires. They understand reality.

Our take says the markets breakdown in a vicious smash between September 16 and October 25 2013 with a Dow loss of -38% to -50% from the year’s high price.

Physical gold and silver owners with handheld possession win big.

It is obvious to us that hard assets are the answer. It all starts with physical gold and silver.

Somebody please tell us when global bond markets crash for good and we’ll tell you when this can all get better and we start over again, maybe with a gold-backed currency.– Trader Rog

By Roger Wiegand

Roger also is a regular contributor to The Korelin Economics Report (www.kereport.com) the highest rated daily Internet radio program listened to throughout the world, dealing with politics and hard assets. He is also a regular guest on the Weekend Edition of The Korelin Economics Report, which airs on radio stations across the USA on Saturdays and Sundays.

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in precious metal products, commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.

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