Wednesday, October 28, 2009

Keep Your Hands Inside the Coaster, We Are At The Top Of The Second Hill

It is becoming more and more evident, to the astute observer of realistic economics, that the second dip in the "W" global recession is coming up quickly. This is of course, identical to what took place between the 1929 collapse and the 1931 final landing. The world economy fell hard, bounced high and than fell into a deep black hole, that it took it thirty years to climb out of. This time will be worse, at least for the Anglos and more specifically the Americans.

The signs are everywhere: massive government stimulus (read money printing) whose only obvious effects have been on the stock markets around the world (again, just like in 1930), continued increases in global unemployment and thus a collapse in global goods demand, instability and a free fall in the shipping indexes. That is correct, it is not just the Baltic Dry Index, which is once again in a free fall, now that the Chinese have stopped hording iron ore, but also the various other indexes, including Chinese ones.

That is a sign of real doom, not only for China, but for many others. The fact that containers of goods are not moving out of China, in September and October, regardless that the Chinese stimulus has kept its factories producing as if nothing is wrong, means that the holiday shopping season will be empty and hallow, just like the Anglo mantra of recovery. Sure, France and Germany are out of recession and Russia and Italy are both heading out too, but that is because they have done the exact opposite of the Anglos, by cutting taxes, controlling spending, putting down real hard infrastructural investments and projects without tieing them in courts and hearings for years, cutting regulations while avoiding nationalizations, in other words the smart moves vs the Anglos dumb ones. The Anglos, specifically America and England and to a lesser degree, Canada, have done the opposite on all accounts, regardless of warnings. No amount of Hopy-Changy media Zombies will change the inevitable out come.

The British Police State got a rude wake up, this past week. The Bolshevik Labour and their Menshavik Tori allies were expecting to exit the recession with a +.2% GDP but instead had a further recession with a -.4% drop. Surely this must be the fault of those "evil" English Defense Leaguers, for not islamocizing like good little kaffer serfs. Go get them lads, show them that eve if no longer "Great" Britain is not dead either.

Oops, I guess this will now get me on the famous banned list to the British Police State, not that I have any plans on visiting that Orwellian prison camp.

As for the Russians, Germans, French and Italians, sure they will suffer in Europe too, but not nearly as much, as they are already on a much more solid foundation than the New Orleans financial foundation of the Anglos. Sinking and sinking and nothing else.

Now for the Yanks. The Americans, more so than any others are about to find out the shocking truth of their paper debt economy. Most prosperous nation on earth indeed. Biggest mooch and beggar and debtor to every third world country, does not make a nation "prosperous". Unlike 1929, America is not a loaner of cash, though it still gives it out to various puppets and fascists and Marxists around the world, oh my. Instead, it is the biggest debtor in all of history of human civilization. Furthermore, unlike 1929, it is not a net exporter of but an importer of everything short of the tanks, bombers (but not of the bullets and handguns) and heavy equipment. It must now import even food from China and Latin America.

With the holiday sales about to prove as absolute a flop as possible, we will know by mid November for sure, the US can look forward to mass unemployment come January/February 2010, that no amount of DC papering over can solve or hide.

To make things worse, by that point, the US will have Cap and Trade and thus skyrocketing energy costs and regulations and thus skyrocketing prices on everything. Jobs will not just hemorrhage, but will fountain out of the gaping neck wound where the head was just secured. Add to this the British modeled National Healthcare system that Americans will have by than and you get the image of a gang of pig headed little demons of regulation, chopping with their axes, at the headless and stumbling cadaver that was the US. economy.

A rush, no a stampede out of the dollar, will follow by the first half of 2010, followed by a police crack down, anarchy and possible civil war(s).

And all this is even before the bottom is ever reached.

Good night and good luck America, you are going to need it, in this very long winter night.


mrshester said...

I simply and humbly thank God Almighty that this world and all the hell it brings (and will bring) upon itself is not all I have to look forward to. There will be a brighter day, but I will not look for it on this side of eternity.

Looney said...

Look! No hands! Wheeeee!!!

Hopefully my kids will survive the landing.

Obama looks to accomplish for America what Geiseric did for Rome in the year 455. Thankfully life will continue after the barbarian invasion.

Mama Sue said...

While the economies of the West may have more bad news to contend with, we will manage to survive without the dire consequences you seem to salivate about. Having been to your glorious country, I hasten to remind you that Russia cannot 'go it alone' and will find that the recession/depression will hit you too. Do you really want the same consequences you predict for us?

Mama Sue said...

OH dear! I just noticed you will have to approve my most recent comment. Bet you don't!

jack said...

@Mama Sue

I could be wrong but Stanislav is an American that lives in the US and is descendant of Russian emigrant refugees from the western back and installed New York Marxist terrorist Bolshevik government mainly through Koen and Loab banker Jacob Schiff and his “Friend of Russian Freedom” front financing Trotsky and his gang and lobbying the US government to issue them passports to enter Russia to direct the “revolution” and become the bulk of the new government even killing the Tsar and his family.


I would not be so sure about Russia's security in the future Stan in fact Russia and the Eurasian sphere is facing its greatest threat since WW2.

Brezinski regime is preparing for war against Russia at an amazing rate. NATO bases in Eastern Europe are studying Russian and preparing for war, US forces are pushing Islamic militants into Central Asia and western backed Chechen terrorism has increased dramatically and there trying to destabilise Xinjing in China to cut off supply routes from Kazakhstan so to create a conflict between Russia and China as Soros and the globalists put there investment into China causing China to try to grab Siberian oil to support its economy through Chinese immigration into Siberia.
Classic Brezinski/UK Empire divide and conquer strategy.

So in perhaps the next 10 year period Russia will be in ruin due to Yugoslav style US backed Islamic civil and NATO confrontation either directly by getting a proxy state like Georgia or Ukraine to attack Russians causing Russia to intervene like the tried to with the Georgia war and claim Russian aggression and coordination with Islamic militants or get Islamic militants to launch major offensives and false flag attack getting US and NATO humanitarian assistance

Russia has blown numerous chances to expose that western governments sponsorship of terrorism in Russia and Central Asia first with 9/11, then Nord Ost, Beslan, Litvenenko Plutonium smuggling death and last years Georgia conflict.

Do you know if this is true Stan that the Tsars gold reserves where shipped abroad to help set up the Federal Reserve gold reserve in Fort Knox?

Stanislav said...

@Mama Sue

Russia does not go it alone, it goes it with its major trade partners: Germany, Italy, France, China and Japan. America is a very minor trade partner to Russia and is primarily a debtor to Russia to $400 billion.

Stanislav said...


Sorry but you are wrong. I do not live in America. I have been to America both on business and vacation...went to Detroit for business next, than brought family over and went to Florida and Disney World for vacation but in truth, it is a lot like Euro Disney.

Russia will survive the Islamics because if it has to, we will clear them from the face of the earth, to the last one.

Ukraine's elections is Jan 10, the Oranges will be gone. Georgia, we will eventually have to conquer and I was for that last year. Medvedev should not have stopped but kept going to reach Tbilisi. I wrote an article about that too.

No, I have no desire to live in US, not from areas I have seen and not from things I read. Russia is no paradise, but it is my homeland and that in itself is all I need.

MaggotAtBroad&Wall said...

You're obviously a very smart guy and I enjoy reading your blog.

3Q GDP came in at +3.5% today. +2% was auto production and 0.5% was housing construction, both of which "benefitted" from phony Keynesian stimulus programs. I'm not sure how you prove how much of that production would not have occurred in the absence of stimulus, but I've seen one estimate that almost 80% of the auto production would have occurred anyway.

At any rate, when GDP has gone from -6.5% in Q1 to +3.5% in Q3, that is a gigantic 10% swing which can only be considered a "V" recovery. You don't read much about it, but home prices are, on average, rising again, which will go along way to getting the banks healthy again and istill confidence in consumers. Also, roughly $4 trillion in stock market wealth has been created in the U.S. markets since the March 9 bottom, which is also making consumers more confident. Shopping mall traffic was up about 5% for the back to school season, and when back to school is strong that typically means a strong holiday season. Everybody is buying only stuff on sale, so retailer margins won't be the best, but at least they're moving inventory.

Jobs are ALWAYS a lagging indicator. Often the economy doesn't start creating new jobs until more than a year after the expansion phase has been underway. And after the last recession it took even longer.

The Federal Reserve Chairman studied the Great Depression for his Ph.D thesis. He is very well aware that a monetary policy mistake helped contribute to the brutal second leg of the "W" in the 1929-1932 episode. There is no way he will tighten monetary policy until he is certain the economy can sustain itself without excess policy accomodation.

I'm not saying your scenario won't play out. In fact, I thought a "W" was the most likely scenario as recently as June. Now it seems less likely.

jonathanseer said...

Stanislav - while I agree with the possibility of your prediction, I think you miss the dangers to Russia in all of this.
The dangers to Russia don't come from Islamists.
The danger to Russia comes from its possession of vast resources and open land and the need for that by the PRChina.
In the scenario you describe but with this taken into account, I do not see how Russia could survive as is territorially with a strong alliance.
The alliance I think of would successful in saving the parties involved would be a 2 party alliance, Russia and the USA (no role for Europe) This has only become thinkable/possible since Obama was elected, for he seems to be the first American leader not blinded by a Cold War mentality regarding all things Russian.
This relationship should it develop is the only one likely to be able to curb the soon to be insatiable hunger of the Chinese for land resources and most of all Justice motivated by a desire to right over 2 centuries of humiliation and degradation by other smaller, younger impudent nations of the world.
One of the greatest offenders of the Chinese over this time was Imperial Russia, for it sliced off huge swaths of territory of the Chinese Empire when it was crumbling.
It's only Russia's overwhelming nuclear deterrent that keeps China from demanding changes to restore these lands to her.
If you think the Chinese aren't thinking about that check out the current low level but enlightening border disputes being carried out by China against India.
China acts against India, because their forces are no match for the Chinese.
The most likely time for Chinese and Russian interests to fall out of sync and thus give good reason for the Chinese to start pressuring Russia to return lands taken from China during the reign last Emperor, border treaties be damned, would be during the sort of economic disaster you predict will happen.
Should such an economic meltdown occur as you describe, if Russia is alone without strong connections to any other strong nation, you can bet China will come calling, probably first exersizing it by ordering Chinese currently in the Russian Far East (in the millions) to declare the land they are on to be Chinese again.
In such a dispute, Russia's only option would be a full scale nuclear strike that would ultimately do as much damage to Russia thanks to wholesale environmental destruction as to her enemies.
The Chinese know this and the question would be is Russia willing to destroy itself to prevent losing?
If before such a time, Russia were able to forge strong equal, respectful links with the USA she'd have access to the conventional military we have, and we'd be there for one simple reason.
In such an economic meltdown we'd have more at stake in terms of wealth and power than any other nation.
Given the option of joining with Russia to curb the rise of China to absolute dominance, our leaders wouldn't hesitate, provided by then we as nation's had buried our animosity and in particular the USA abandoned all Cold War attitudes regarding the modern Russian state.

Stanislav said...


There are only a few problems with that: outside the fact that China is not very often invading other nations, nor does it very well (Vietnam destroyed a Chinese offensive in the late 70s), but for China to reach those resources there are 1,500km of mountains the height of the Rockies, with few north south roads and passes open only for a few months each year.

If the Chinese ever tried it, they would pay heavily.

Meanwhile, Russia has armed S.Korea, Kazakhstan and India, as well as Vietnam and Indonesia and offered weapons to Taiwan. Add in Japan, who would not sit idle while the Chinese did a resource grasp and the Chinese are neatly surrounded.

The problem with alliance to America is, America has spent 140 years trying to destroy Russia in one form or another and the English even longer. Hard to ally with the elites of America, as long as these are the one party two branch bastards in power.

Stanislav said...


You are correct to say "created" wealth, because the US government has printed up some $2 trillion in less than half a year and ran a deficit of an additional $1.8 trillion, incredible by any standards. If one pumps enough paper money into the stock market it will go up, just like it did in 1930 before the final crash in 1931.

Oil, for example, is at over $80, but there is no demand and the real price should be around $30, which is why the oil majors (I am in oil/gas business) are not investing, outside of our Gazprom and some Canadians. The demand is not there, the storage facilities are maximized out and no one needs it, as little, outside of China is being produced. Before rejoicing on the Chinese, no one is buying their stuff, they produce to keep their people working and not in the streets burning cities in riots. Shanghai Container index is continueing to sink...container as in the 6 meter containers used for goods shipping.

I read today that your cash for clunkers program cost $24,000 per car sold...what a bargan to the citizens who get to pay for that.

The banks are bankrupt, why are they not collapsed? Because, unlike in Europe, American banks are allowed to claim what ever value they want on their sinking assets instead of acknowleding their true values, which is nothing. Foreclosures are skyrocketing in America and housing is down on sales. If prices went up in some areas I am sure it is from the big credits that the US government gives.

This is really facinating to watch a major government waddle around with "free" money hand outs and "save" an economy to death, rather than let bad companies fold and better companies buy out their assets. To big to fail, like your mega banks, usually means anchor around the throat of the nation.

Monetary policy will have no choice but to tighten, or do you think foreigners will continue lending you money when better interest rates are everywhere? But you can always print and follow the loose monetary policies of the Weimer Republic. Big stacks of cash are good for warming a house.

You must be aware, if you studied the Great Depression that Hoover was a huge public works spender, that FDR confiscated everyone's gold and was a Stalin Lite, with the White House setting commodity prices not the markets.

You must also be aware that FDR's first secretary of the treasury, after 8 years of printing money stated that it was all a disaster.

A "W" is exactly what this will be, watch. You will know by mid November or late November, just 2-4 weeks to wait.

MaggotAtBroad&Wall said...

Stanislav: I agree with everything you wrote. Franklin Roosevelt is often ranked as one of the top presidents, mostly because the people who write the history books and those who teach it to our children are often marxist liberals, but he was the worst president in terms of his impact on destroying laissez-faire capitalism. And Obama makes Roosevelt look like an amateur chump in that regard.

Anyway, because of massive government interventions, the signals provided by market prices are being vastly distorted, which makes forecasting future demand perilous. That's why I'm reluctant to dismiss the "W" altogether. However, investment grade corporate bond issuance is breaking records in terms of new issuance, and demand is so strong that investors are driving credit spreads to very tight levels. In addition, equity markets remain near one year highs. If the second leg of the "W" were just around the corner, you'd expect corporate bond sales would be drying up, credit spreads to be widening, and the equity markets selling off. But again, there's so much government intervention distorting prices, I don't know how reliable these markets are in forecasting.

Also note the inventory cycle has been in liquidation mode for over a year. That means inventory production will now be a reliable tailwind, probably through 1Q 2010. The risk comes in the middle of next year. If the inventory production build that will occur the next couple of quarters isn't met with sufficient end user demand, then companies will be forced to curtail production which could cause the second leg down in the "W".

But next year is an election year. Never dismiss the desire of the idiots in Washington to spend other people's money as if it is magical pixie dust that when sprinkled on the economy it creates growth. They never learn, and they will do that again next year to try to buy votes to increase the chances the Marxist Democrats get re-elected, so it's hard for me to see the next leg down even then.

gromovnik said...

“After these things I saw another angel descending from heaven, with great authority; and the earth was lighted up from his glory. And he cried out with a strong voice, saying: ‘She has fallen! Babylon the Great has fallen, and she has become a dwelling place of demons and a lurking place of every unclean exhalation and a lurking place of every unclean and hated bird! For because of the wine of the anger of her fornication all the nations have fallen victim, and the kings of the earth committed fornication with her, and the traveling merchants of the earth became rich due to the power of her shameless luxury.’”

“Get out of her, my people, if you do not want to share with her in her sins, and if you do not want to receive part of her plagues.”

jack said...

I don't really see the problem with the economic downturn in regards to Russia in Siberia it has all the resources it needs open land mass, oil and gas and fresh water and with the Oligarchs losing there wealth this opportunity to develop new industries and not have a handful of Oligarchs own major industry left over from the Yetsin era.
And unlike the US is not burden with a relatively high population and growing among the minority classes blacks and Mexicans and as industry and technology develops less of a workforce is required. In the short term Russia will suffer but prosper in the long term as it will force the Russian government to enact long overdue reforms like corruption, bureaucracy, property rights, court reforms, etc.

If Russia could develop areas of Siberia encouraging Orthodox ethnic Russian migration and make alliances with Japan selling them oil and giving back there Islands with certain provisions and joint Japanese and Russian investment and development and buy up US companies on the cheap that it needs there know how and expertise then Russia should be okay.

Anonymous said...

I got here from the instapundit link and appreciated your economic rhetoric quite a bit, particularly the happy irony of a Russian criticizing the marxist colours in the American and British economic mistakes.

What really made my day was the words "British Police State". Now that's just plain irony.

Anonymous said...

I wonder what you might think of this article. I myself thought it was baloney. Certainly, America has much to answer for with respect to recent history with Russia; Harvard in particular.

petkov said...

If you are such a lover of history as you claim then you'd know USA will not just sit around and let itself fall to pieces. Do I have to point out the basics to you? I guess I do.
Wars are always profitable ever since Alexander "the great". WWII was what got USA butt outta the fire and they started having a war every decade to keep their economy going. Therefore if things get as bad as you claim USA will just start shit somewhere. Don't worry USA is NOT going down, what's gonna happen is a nice WW II. But hey that's what capitalism does best: wars, destruction and exploiting other nations or lands.

P.S. You STLL haven't bothered to take up my offer and explain how that silly term "Anglo-Marxism" you use relays to real communism.

Tor Hershman said...

My version of Amazing Grace

Stanislav said...


The problem with dealing with the likes of you is you define "real" communism as some ideological perfection while I define it as what it really is on earth: hell. For you, none of the communist regimes were communism, because as a true believer, to you only if it works it is "real" communism. It is pointless to argue with true believers of fantasy dead end ideologies, like yourself.

Anonymous said...

Interesting. A resonable approach to the the "unforseen" economic crisis is to print money and nationalise. This has the effect of both disrupting foreign lenders and creating a domestic command economy. Such a system is preferable in an age of conflict.

With regards the UK situation, it is indeed now an authoritarian state. The reaction to this has not been the EDL but the BNP. After first bragging abouts it's impartiality, the BBC presented a Stalinist show-trial style interview of the nationalist BNP party. The results show in the surge in the ranking of the BNP website. It is presently the largest political party website on the internet.

Looney said...

"With regards the UK situation, it is indeed now an authoritarian state."

Do the UK police no how to handle a gun?

Anonymous said...

An unarmed police force made the UK a uniquely civilised place to grow up in.

Unfortunately those times are now past.