October 2nd, 2008 by Michael Nystrom

"The boom can last only as long as the credit expansion progresses at an ever-accelerated pace. The credit expansion boom is built on the sands of banknotes and deposits. It must collapse. There is no means of avoiding the final collapse of a boom brought about by credit expansion." - Ludwig von Mises

I've been predicting deflation for years, and I believe we're finally here. Regardless of how Congress votes tomorrow, the stock market will continue to fall and fall and fall, simply because through the boom, prices lost all touch with reality. The final collapse is here.

Did you see the auto sales numbers yesterday? Ford's sales down 32%, Chrysler down 32%. Even the sales of mighty Toyota were down 24%. GM's sales fell "only" 15%. These are depression scale numbers, people!. And it is not just in autos. The poor economic numbers are everywhere.

Even if the government bailout bill passes, and they create $700 billion for the fatcat bankers and politically connected elites, how will that help the vaunted American consumer, that parasite that drives the global economy by eating the world out of house and home?

$700 billion is a drop in the bucket compared to the trillions in assets that is being destroyed. A featured story on Yahoo! today is of a house that sold on Ebay for $1.75! The house is near Detroit, where the once mighty American auto industry is imploding. Detroit is the future of America, at least for the short term, and no amount of government 'largess' can save it.

Today the market is bouncing around at the lows it set on Monday. The only thing preventing the crash is the hope that Congress will somehow be able to fix it.

It can't. Pass or no, the stock market will crash. The American economy will collapse. Like a junkie coming off a 30 year high, it will be painful.

This is not meant to scare, but to prepare. If you're psychologically prepared, you'll be 10 steps ahead of everyone else. This is not the end of the world. The world is just changing, as it always has and always will. In the midst of this tremendous turmoil, the most important thing to remember is who you are and who you are committed to being, no matter what happens. As inspiration in that department, we have an excellent role model in Ron Paul.

With a fundamental acceptance of what is happening, and a foundation of knowing yourself and who you are committed to being, you can go about confidently looking for opportunities in the emerging world: Opportunities to help, to lead, to serve and build a better world.

Resist the temptation to live in fear and worry. Above all, have fun. We're all just passing through here, and you have more power than you can ever imagine. In closing, remember this: People consistently overestimate what they can achieve in the short run, and underestimate what they can achieve in the long run.

http://www.dailypaul.com/node/66170

I find this all very true. There are a lot of people that buy and spent during the boom on all credit. They are all going to have a hard fall.

My grandmother has told me stories about the great depression when she was a child... about rationing tickets and how with them living on the farm it was tough but probably not as bad as some other people.

I am poorer than poor. I am one of the working poor in America. I am already feeling the pinch. Financial aid for my class has been cut. I worry about how I will pay bills every single day. And I have been saying for a while, that at the very least we will be going into a bad recession. First thing that you learn in economics the market ebbs and flows.... you can only go so high before it will drop!

My heart goes out to all of those that have lost their homes, car, or whatever they had on 'easy' credit. Michigan has been bad for a while now and I can tell rapidly things will get worse. Michigan (as of the last report I looked at) has the highest unemployment rate in the country.

It has been coming for Michigan, auto plants have been closing slowly all over Michigan. Flint use to be a vibrate auto town and is now a desolate slum. Michigan has relied too long on the auto industry for its income. And no one has really stepped it up to move in new industries to make Michigan a viable and vibrant state.

I feel that the unions have done the auto industry and Michigan workers a disservice! They screamed 'gimme gimme gimme' too long and asked for too much for the auto industry to be able to flex with the market. Now don't get me wrong, I think that the auto industry got greedy too! They are at fault also with riding the wave of the good economy when they should have back down a long time ago. For Pete’s sake, how many different cars do we need that all look the same!



Sorry about the long rant, but this all if definitely something on my mind. And when warmachine posted something that directly mentioned Detroit I had to say something.

Comments and debate most defiantly welcome on what I wrote above.

In my humble opinion.

Tanya

No debate from my end, What wasn't a statement of personal experience is documented fact.

By the way, when talking about the auto industry, I love the fact that the first thing "detroit" did was take the hybrid engine and slap it in a SUV...

Idiots.

I know the reason... its b/c it cost so much to begin with and the only people that could afford it were the people that were already driving SUV's. Go figure!

A society built on spending cannot continue to grow as if the money for spending is an unlimited supply. It is not.

An economy built on credit is going to crumble as more and more of the money gets sucked upward, as long as wages do not keep pace with cost of living, and as long as favoritism is given to the rich and to big business at the expense of everyone else.

I've been saying this was going to happen since shortly after Bush invaded Iraq. I'm not at all shocked now. Most people I talked with saw a second Great Depression in the works.

The only people that didn't seem to see it coming were the people with all the money. Which is where most of the people running things seem to come from.