The Illusion of Normalcy Fades to Black
Jan. 8, 2010 (Strike The Root) -- I wrote the first of these "Year Ahead" columns two years ago because I expected the coming collapse (described earlier in Destruction by Paradigm, March 2007) to begin in earnest during 2008. I saw epic debt levels, massive monetary inflation (not just in the U.S. but on a global scale for the first time in history), resource depletion (especially for oil, metals, and fresh water), government encroachment into almost every area of life, growing levels of corruption in and out of government, pollution of both freshwater sources and the oceans, and a host of other problems coalescing into an unprecedented storm – a dark tipping point poised to bring poverty, tyranny , hunger , and homelessness to millions of formerly middle class families. Just saying that out loud sounds extreme – things couldn't get that bad, could they? – but in fact that much has already happened and the storm has just begun.
Both the mainstream media (including their favored "experts" and commentators) and the general public saw things differently two years ago – and still do. Businessweek ran a story on December 29, 2009 titled U.S. Economy: Confidence Rises as Consumers See Brighter Future, which suggests (to me) that the combination of reinflation by the Fed (i.e., massive monetary creation) and its immediate effects – partial reinflation of stock prices and a slowing (in some places, a slight reversal) of the ongoing real estate crash – plus the constant assertion in the media that the worst is over – have worked their magic. Americans don't see the job picture improving much anytime soon (and they're right), but they have more confidence than they did a few months ago.
The Frankenstein Economy
That will change in the coming year, as the Frankenstein economy – long-dead but artificially reanimated using bizarre, harmful, and unsustainable means – goes into cardiac arrest. Propaganda, denial, and fiat money creation can only do so much, and as the old world crumbles, it will become ever-harder to sustain the illusion of normalcy.
Consider what we've already been through: Roughly $60 trillion in wealth evaporated in 2008 as stocks crashed, real estate prices tumbled, and huge banks and other financial institutions failed (including Lehman Brothers – the largest bankruptcy in history up to that time [edit 1/8/2010: actually, it's STILL the largest] – and the insolvent Bear Stearns, sold to J.P. Morgan for $2/share, down from $172/share in early 2007). A sobering 2.6 million American jobs disappeared in 2008, even using the heavily-massaged official numbers. Shadowstats.com shows a current unemployment rate of 22% versus the official rate of about 10% – see chart below, which also makes clear that unemployment continues to worsen, and very dramatically.
