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Author Topic: We're doomed, I say. Doomed  (Read 3455 times)

Offline the dude abides

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We're doomed, I say. Doomed
« on: October 27, 2008, 03:58:56 PM »
Financial Cycle and the Coming Collapse - Will we ever learn from the past?

No one really knows the future of the world’s economy. However, the Viennese investor Walter Eichelburg had an inkling during past years. In the beginning of 2007, he predicted the collapse of Fannie Mae and Freddie Mac during an interview with The Epoch Times.

Eichelburg looks pragmatically at today's situation and explains that we are at the end of a 50-70 year Kondratiev cycle [1]. The resulting consequences don't look rosy at all.

"Most of the countries and banks will be bankrupt by mid-2009," predicts Eichelburg. He is adamant about this.
He bases his prediction on the present "Kondratiev winter," the last phase of a financial cycle which began in Germany in the year 1948 with the end of the "Kondratiev spring."

The Kondratiev winter was already underway in 2000. During the final phase, as a last resort, hyperinflation will bring with it a massive change towards gold.

"When the financial Titanic sinks, one wants to be able to pay, under all circumstances, for the life boat," said Eichelburg emphatically. He also stated that an ounce of gold at $3,000 will be cheap.

The reason gold prices have not escalated is because central banks depress gold prices by selling off large quantities of gold and derivatives. In the end, central banks might also have to declare bankruptcy. Central banks’ rescue operations of banks will be based on this development, because they will print paper money in large quantities.

"The bailout operation will lead to the demise of the respective countries," said the convinced gold investor.
He predicts that after Iceland, Hungary will be the next country to declare bankruptcy, then Romania and the Baltic States. The Euro-zone will also face dark times.

"The Euro-Zone might fall completely apart," said Eichelburg.

Most likely, Germany and Austria will also be affected. At this time, the Austrian banks are having quite a problem. The reason is they handed out "unbelievable amounts of credit" to former Eastern bloc countries. Their high trade imbalance will affect Europe and will make them quite vulnerable during any crisis.

One only needs to remember 1931, when the credit subsidiary of an Austrian bank triggered the demise of European banks.

Based on Eichelburg's assumptions, since we all, politicians and economists included, did not learn from the past, we underpinned the recovery. At that time, the politicians' response was exactly as it is today. They nationalized the banks. Then they severely criticized high earnings and capped salaries. These are actions that were taken during the actual crisis in the United States, Great Britain and also to some extent by other national governments.

Eichelburg reasoned during the interview why we are at the end of the financial cycle and suggests to small investors, "Let go of your faith in the establishment and let your common sense govern."

He actually holds bank management in the system not quite as responsible as is commonly believed. He says, “They just don't know what to expect.”

Also, the media will get its just desserts. The most prevalent problem is the "Bubble media," that was responsible to a great extent for the emergence of the speculative bubble.

Notes
[1] The Kondratiev wave/cycle theory was discovered by Nikolai Dmitriyeivich Kondratiev (1892-1938), a Russian economist. Proponents of the Kondratiev wave theory note it successfully predicted the 1929 stock market crash based on the 1870 crash. The Kondratiev wave is also referred to as the Kondratiev cycle.
In the midst of winter, I finally learned that there was, in me, an invincible summer.

There’s no next time. It’s now or never.

iskoppa

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Re: We're doomed, I say. Doomed
« Reply #1 on: October 27, 2008, 08:00:26 PM »
The end is nigh and were all going to hell in a handcart!

Interesting post Dude, thanks for putting it up here!

It always amazes me how people, banks, Governments etc etc never learn by the mistakes of others in the past!

Offline the dude abides

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Re: We're doomed, I say. Doomed
« Reply #2 on: October 27, 2008, 11:37:08 PM »
I think, as things get worse in 2009 and 2010, we could well see a revolution.

I can't see western governments surviving this debacle.

If people lose their pensions (which will happen as hundreds of hedge funds start to collapse....note, 60 percent of pension funds in the UK are held in hedge funds) , then regular folks will have nothing left to lose.
In the midst of winter, I finally learned that there was, in me, an invincible summer.

There’s no next time. It’s now or never.