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The Coming Economic Depression – October 2005 Update (pdf version) (will be made available soon)

This is the latest update to a series. Earlier sections appear here.

Chart Courtesy Babylon Today

Debts

This month’s update will look at scenarios for the future good and bad. What is in our future on the economic front? How will things shake out? What is the most likely chain of events that I see happening? Already we have seen millions lose their jobs, millions more lose their health care, and still millions more are in fear of losing their jobs in such bedrock industries as Airlines and the automotive industries. We have seen pension funds go belly up, people have had them essentially robbed from under them. We have seen financial and industrial behemoths have their bonds downgraded to junk. We have seen our venerable government cease to count long term unemployed and downplay the severely reduced wages many have had to take in order to sustain their lives and families. We have seen households go into enormous debt in order to make ends meet as they wait for that elusive higher paying job that never materialized. While some have written to me and asked me, ‘when will it all happen’ I always say, ‘It is happening right before your eyes’. If there are no bread lines on TV, go down to the local homeless shelter, there you will find people of every stripe and (former) walk of life. You will find entire families there, young and old. Many have made some bad choices yes, but many have just fallen on hard times. In short the Coming Economic Depression is already in its first stages. Those who are the most effected are marginalized and ignored by the government and its statistics. They are ignored by our major media and they are ignored and avoided by ordinary Americans who pass on the other side of the street when someone who doesn’t look like them is about to pass them on the sidewalk. They quickly avert their eyes and close their hearts to those less fortunate than themselves. The scene is repeated in every major American city as the first wave of depression victims has already come into being.

Overview

There are many scenario’s for the US debt/deficit bubble bursting. Some see a deflationary scenario, as the informative, successful and extremely experienced Bob Prechter does at Elliot Wave.

While others such as Jim Puplava at Financial Sense, whose Internet radio show is one of the best things on the web, is skeptical of this view. There are many divergent views on how things will finally break down. The one thing that most of these men have in common is the fact that they believe that a day of financial reckoning is coming, perhaps sooner rather than later. The main problems that all of these financial analysts see are three fold

1.     The unmanageable US Deficit (total US Debt, current account and household)

2.     Asset Bubbles (stock markets, housing)

3.     Political inertia/fiscal irresponsibility (dreamland mentality of our leaders)

Of all of these, the US debt is probably the most intractable. It is too large to fathom or control at its present size. While political leaders will grand stand and say they have the solution, the reality is that given the hard choice between giving up a great deal of its military capability and with it, its empire, and seriously readjusting national priorities towards domestic concerns, a financial disaster is assured. Social Security is another big issue, not because the nation could not afford it, but because it has been robbed to pay for an economic and military empire whose life expectancy will be very short lived if it cannot get its fiscal house in order. Thus, how the system comes apart is a question that many have asked and wonder about. While there are many scenario’s I will go over them, from the least likely to the most likely. Please bear in mind that these observations are purely personal and no investment decisions should be based on the writings in this series of articles.

Deflationary.

A deflationary scenario comes when asset prices decline. We would see housing prices and stock prices decline, everything that has been overvalued will decline in value as the months wore on. It would become more difficult to borrow, if interest rates rose as the Fed now seems determined to do. People would put off major purchase because they know the price would come down as time passed. This leaves retailers, car manufactures and even realtor's in a lurch because people would not be buying. Prices would descend further as inventory would not move fast enough and a vicious cycle ensued. Deflation is a far more economically devastating phenomenon than inflation, and any economist will tell you. Is this likely to happen here? Across the board price deflation, in my estimation is not likely, though deflation in some areas of the economy that have seen significant price inflation (bubbles) are likely to occur. This is particularly true in housing and certain sectors of the stock market (just about everything except key commodities). The kinds of jobs that many of Americans have been forced to take after the blowout of 2001-2001 will see cut backs, Car salesmen, retail clerks, temp agencies all will see a significant decline in payrolls as profits decline and inventory remains on the shelf. In this environment, corporate bankruptcies would become a daily story. Stocks would decline in value anywhere for 40-90%.

Given this scenario of horror one must ask, what would bring this about? In my estimation a serious misstep by the Fed is the only way this could really happen. The Fed has been extremely accommodative to credit markets up until now and a 180 degree change does not seem likely. However it must be noted that targeting asset bubbles such as housing seems to be high on the Fed’s agenda. Greenspan made this abundantly clear at the recent Jackson Hole meet. This means that he is going to try to use the blunt instruments of Fed policy to bring down or at least decelerate the rise in housing prices.  This is the only way I see this kind of scenario playing out. If the Fed raises interest rates too fast or too high, then deflation could set in. How?

·        Buyers could no longer qualify for homes as the interest rates would make payments unmanageable.

·        People could not afford to charge consumer good, interest rates would prevent it.

·        People would not be able to cash out refinance (rates would be too high), causing less disposable cash for Americans to make consumer purchases.

·        Business investment would suffer (interest too high)

Once these things begin to happen in earnest, deflation becomes more likely.

Deflation is everyone’s nightmare. Nobody wins except a person who is truly liquid (US savings accounts don’t count). Such a person can buy homes, cars, land, production plants, and retailers for pennies on the dollar. However such liquidity is very difficult to obtain. Some say owning gold or silver is the answer. I do not agree. If such a scenario were to transpire and seriously threaten the US economy, the Treasury Department would do what it did back in the 1930’s and make ownership of gold illegal, except for those who are politically connected. They would seize it and any other asset or ‘financial instrument’ in a time of national emergency. The facts are simple; any wealth that resides within the US or its territories can be and probably will be seized in a severe deflationary depression. This is where I have always differed from the ‘gold bug’ crowd. The metal is too manipulated by central banks to be anything of use as a 'dooms-day' investment vehicle. When owning it would have ordinarily done the ordinary person the most good, it will surely be seized by Uncle Sam and wind up in the coffers of Halliburton. I know many of you do not share this opinion and others will get upset with my personal opinion, but gold and silver and quite possibly platinum (which has important industrial uses) will not remain in the hands of the commoners when the rich and powerful decide they need it.

Charts courtesy Babylon Today

Thus, a person who has a great deal of money and had the foresight to place it outside of the reach of Uncle Sam and structured his holdings here in the US in such a way as to prevent or mitigate the risk of ‘compulsory collateralization’ (seizing assets here in lieu of the crime of having wealth stored aboard) may find himself in great shape. He can then purchase assets from abroad by a foreign proxy and thus circumvent Uncle Sam’s reckless larceny. In my view, foreigners will be given every opportunity to buy assets here in the US, including homes, cars, lands, and just about everything possible while the government will use all of its power to subjugate and control its own population as they become increasingly desperate to survive[1]. The governments and banking systems need for capital will make them extremely accommodative to foreigners who bring cold hard cash to the table to get Uncle Sam out of the mess he put America in.

Therefore, while many do worry about inflation, it is deflation that is the real enemy. It is far more destructive to people in the long term and once the cycle begins in earnest it is difficult to break the psychology of deflation. However, this is not the scenario I see as likely to transpire in the economy, unless the next fed Chief is a real idiot. Sadly, given the identity of person who will appoint him, the likelihood for this is within the realm of possibility.

Inflationary Scenario.

Charts courtesy Babylon Today

This is more likely than the first but still not as likely as many seem to think. The Fed’s money creation has continued in earnest for the past several years. This is extremely significant, but first let is discuss what inflation is and is not. It is not simply a rise in prices. Inflation is the rise in the money supply. It occurs when central bankers print too much money. The effect of this is rising prices. Thus, the rise in prices are the result of inflation, not its cause. Its cause lies in the excessive creation of money. However, today central banksters don’t actually have to print money. Instead, they can make credit easier to obtain. This is done via sophisticated transactions with banks that allow them to lend money out that they never actually possessed in the first place. It can also be done by loosening borrowing requirements, lowering the discount rates, turning a blind eye to certain practices in the banking sector, it can raise or lower margin requirements or reserve requirements or it can try to reassure the markets using its Fed-speak monologues designed to confuse obfuscate but reassure the markets.  It can be done by a variety of ways but the net result is the same, there is more credit in the system for people to borrow and thus people have more ‘money’ to spend. There are two major flaws in this system. The first is that there are always more debts than actual money in the system. The second is that the central government can never resist the temptation to print its way out of fiscal problems, usually of its own making.

The fact that the money supply has been increasing exponentially and the fact that this is likely to continue for the foreseeable future are all reasons to expect at least some price inflation in the days ahead. In fact this is what we have seen, especially inflation in stock prices and housing. Most people associate this type of inflation with prosperity. This has been the grand deception, if you will, of the Greenspan economy. Printing money and hiding the price inflation in ways that look like positive economic activity.

Thus inflation has already occurred but not in ways that most ordinary people understand. The problem now is controlling these inflation created bubbles from exploding and causing enormous economic damage. How or if the Fed is able to do this is beyond the purview of this paper. Suffice it to say that inflation is already here and has been for some time. It is only now beginning to really appear in other parts of the economy, most notably energy[2]. Energy prices and its rise could be particularly hard on the US economy and increase inflationary tendencies. Inflation seems to be the real threat that the Fed sees. One Fed governor (Yellen) made this clear to a group of UK parliamentarians in late September.

Rate Rises

Come Katrina, come Rita, come a planet threatening solar nova, the Fed will continue its anti-inflationary stance. Yet, in light of the coming demand for new federal borrowings in the wake of these two storms, continuing the rise in rates is probably prudent. This is the greater threat in the FED’s eyes and given its gargantuan monetary creation in the past 10 years, there is little wonder. So policy makers are very much aware of the threat to the system if inflation begins to show its face in the ordinary (i.e., what people buy every day) economy. I need not go into detail as to how inflation could destroy our economy. The dollar would in essence buy less and less not so much because things are more valuable (with the possible of exception of energy),but that the currency is worth less. Frankly this goes to the heart of the central banking/currency creation mechanism. The only way the central bank can create currency is because it is given the ‘right’ to do so by the Federal government. I will not belabor this most important point because a plethora of books and articles have been written about the Federal Reserve System and the way it operates. I will not bore you, but for those of you who are not aware the best book I have read on this subject is The Creature From Jekyll Island. Now we can understand the predicament. Alan Greenspan was extremely accommodating to the Clinton and Bush regimes. In order to win his reappointments and gain the praise of the Government and Wall Street all he had to do was open the currency spigot and this he did. Now we have a mass of capital that is trying to find a permanent home. Right now it resides in the housing market and financial sector. Taxing the money out of existence is one way the bubble could be destroyed (taxing income from these bloated sectors) however it would destroy investment in stocks and homeowners would raise hades if this were to be done and the real effects of this may make for an ugly economic scene, especially if it drives down the price of housing to the point the banks collateral becomes increasingly worth less precipitating another crisis. What is the solution? There isn’t an easy one. Either the Fed allows and tries to manage these bubbles by allowing for a managed deflation in prices of them without rocking the economy. This is probably not possible as any attempt to target these assets has too many variables in it to make one comfortable. This is probably why there has been so little done. The Fed is just trying to slowly, carefully bring the freight train to bear by raising rates hoping to cool the housing market, make credit card purchases too expensive for households to continue to spend recklessly and assist in a small way with our trade deficit as consumers will be forced to pay cash for goods rather than pay ever increasing interest on debt for foreign goods. A gradual cooling is what seems to be the Feds hope. Whether they can pull if off is another question entirely.

What do these things mean? They mean many things. First, they mean that inflation is a threat. The Fed has information sources no one else has and has the means to interpret and analyze them. If they say inflation is a threat, be assured that it is. This one primary reason that I think the inflationary scenario is a far greater threat than a deflationary one. Finally even if deflation were the more likely scenario the Fed would almost certainly inflate the money supply to prevent it from engulfing the economy. I just don’t see a prolonged deflationary scenario in the US economy; in certain sectors yes, overall, no.

Systemic Event

Here is a much more likely scenario that I see happening but not the most likely. A series of events that could lead to a crash type scenario in the markets either through a derivatives crisis or a series of bankruptcies by large well known corporations, rising oil prices halting global growth or even inflation could send a jolt into the system that it may not be able to recover from. Before many of you say that is cannot happen, lets take a look at what the Royal Bank of Australia is saying.

FURTHER rises in oil prices, the collapse of a major bank or an unexpected jump in inflation could be all it takes to send the increasingly fragile global financial system into meltdown. The Reserve Bank of Australia warned yesterday that the current calm in financial markets could be the prelude to a storm that could wreak havoc in the world economy. – The Australian 

Therefore, this view is not simply conclusion of non-establishment writers and analysts.  There is real danger. With the kinds of debts the US has and the frenzy that is taking place in hedge funds and derivatives, a meltdown is not only possible, in this authors estimation, it is probable. This kind of scenario is more likely in my estimation than a prolonged period of either inflation or deflation. There are too many variables under the surface of the economy. Lets just take a look At GM.

Fitch Ratings lowered General Motors Corp.'s credit rating further into "junk" status Monday, saying the automaker has made little progress in reducing its high costs and is vulnerable if gas prices remain high. - Detroit Free Press

The article goes on the warn the GM has made little progress in its restructuring talks with Delphi, the automotive parts maker, who looks on the verge of filing bankruptcy. Opinions differ if they actually will. But there is trouble at GM and Delphi's situation does not help matters. What happens to GM if it gets downgraded further? It is already much harder for it to borrow money with the new credit rating. This is just one of many stories one can find. Look at the airline industry. Both Delta and Northwest have filed for bankruptcy. The good news in the airline industry is the US Air has emerged from its bankruptcy and closed a merger with America-West, a low cost carrier. Simply put this is another industry that is being hit hard by higher fuel prices and the declining wages of most Americans. People who are barley making ends meet don't get on planes to fly to Hawaii or Paris. The scene of economic troubles is here in your newspapers business section. The stories are being told but usually not with a sense of urgency. There is trouble brewing under the surface of the US economy and with each successive shock the things just get a little more precarious. This is not to say that the US economy is not resilient. It most certainly is and I would be seriously remiss if I did not point this out to my readers. It seems to be able to absorb shock after shock and remain in fairly good outward shape. It is just when one looks at what lies beneath the shiny exterior that one can see where the trouble lies. This has led to a great deal of complacency and a population that, for the most part the people are not even vaguely aware of the huge risks that exist. This part of the problem in my estimation; that there is no political pressure on our leaders to fix some of these enormous problems before they really do engulf the entire economy. Inertia and avoidance are the words that describe how our leaders are ‘solving’ our fiscal problems.

The Most Likely

In my estimation it will be a current account crisis of a truly major magnitude that will ultimately sink the US and with it the global economy. This could come as early as next year, but probably not that soon. A current account crisis occurs when, in layman’s terms, the US cannot pay its bills (the federal budget). Because the need for capital is so massive this is becoming more and more of a likelihood. Even Greenspan has stated that the US has lost control of its deficits. This should be one of the most alarming things in the news and it should have been spread across the headlines of every US newspaper. This is a clear admission that we are headed towards a disaster that will destroy every American’s wealth and prosperity. The day of reckoning may not be just around the corner, as some have tried to run spin control for our budgetary profligacy to say ‘the US is not going Bankrupt’. No, such writers are right with 8 trillion dollars in federal in debt, US households with no savings and ridden with debt, a need for $700-800 billion in additional borrowings for this fiscal year (beginning 1 Oct) just to keep Uncle Sam in business; no the the US is not headed for bankruptcy because everything is just coming up roses, Hey, Pollyanna says so! While it may be true that many nations like China may once again step up to the plate and fund part of that deficit by purchasing our debt, this does not seem likely as recent statements by Chinese officials clearly indicate that their trade surplus and savings will go towards energy investment rather than T-bills. Now this does not mean that China cannot be persuaded to buy our paper… for a political price, they probably can be. But as you can see as our fiscal situation becomes more perilous, so are the risks. We become beholden to interests that are ideologically hostile to us. But the simple fact is that we need such an enormous amount of capital and others are beginning to wonder how wise an investment is in and over-indebted, bloated overextended violent and empire that appears to be waning in influence and power. Japan and China have already slowly sold off relatively small amounts of US debt recently. The UK has increased its holdings. I am at a loss to see which nations will step up to buy our debt this year. US consumers can’t do it, they simply do not have the savings for it.  This is the conundrum that I see as more perplexing than the others, as it is more immediate.

Global considerations could well compound the problem.  That’s because up until now the US has had free and easy access to the rest of the world’s pool of surplus saving.  That could be about to change.  Japan and Germany -- the second and third largest economies in the world, which collectively account for 56% of the world’s surplus saving -- both seem to be on the cusp of sustainable recoveries in domestic demand.  That would tend to draw down their current-account surpluses, which are running at 3.3% of GDP in Japan and 3.8 % in Germany -- thereby leaving less foreign capital available to fund America’s external deficit -  Morgan Stanley

Now many will point out that sales have been brisk of our debt and that the reintroduction of the 30 year note will assist the US. This is true but let us note as I did in last months update that the proliferation of new hedge funds in recent months is an important development for many reasons. These unregulated financial institutions are perfect vehicles for buying our debt without disclosing the real purchaser’s identity (like the Fed and US treasury buying our own debt and hiding it) so that financial news shows can say. 'foreign investors snapped up US T-bills in a frezny of activity yesterday. Hedge funds from the Caribbean made some rather hefty purchases as the added US debt to foreign investors portfolio's.”

In the bluntest terms possible let me say that either we get the billions needed in additional borrowings, we print the money (via buying our own debt which could and probably will lead to the inflationary scenario above) or we go bankrupt. The only other alternative for the US is to stop spending so much money, stop the war, reign in the GOP contracting scams, put real pressure on the drug companies to hold down prices (medicare), the same with the HMO’s, spend less on defense and exotic new lunatic weapons. These are the hard choices that the GOP and the Democrats will not make, in their minds national bankruptcy is a better alternative that facing hard facts. So bankrupt we will go.

Katrina

Katrina and Rita could be a tipping point in our deficit dilemma. Congress has thankfully decided to move in and help. This in and of itself is surprising since the majority of the victims are not in the GOP. Each of these storms hit us in two very important ways. One, it added to our fiscal woes because of the needed $60+ billion in additional spending. Two, it hit us pretty hard in the energy sector causing a significant rise in oil prices on the open market and at the gas pump. It is also having a seriously negative effect on the price of natural gas, which is hitting new all time highs. Many of you are aware (at least now) how strategic the Gulf of Mexico is to the US energy supply. Katrina and Rita were devastating. While a great deal of press was given to Katrina’s damage, over the longer term Rita’s damage was more significant. Though it did miss the main refineries it did manage to do significant damage to the more mature oil platforms in the gulf. Oil rigs are not easy or quick to replace. They take years to construct. Therefore those rigs that cannot be repaired will have to be replaced. This means that production capacity for those rigs that are damaged beyond repair, lost or sunk will not be replaced for years. Let us also keep in mind that these platforms are not cheap with some of the more expensive ones costing over half a billion dollars. As of this writing 99% of oil production in the Gulf is off line.

So the impact of these storms will be felt in the economy for years to come, despite the ‘feel good’ blather emanating from the boob-tube. This is a crisis that has only been exacerbated and brought to the forefront by these two storms. The US need for energy is quickly outstripping its supply and there is no easy, simple painless fix. The problems are enormous and the specter of actual supply shortages (as in no supply) is real especially for heating fuel this winter. Now here is where the big disconnect comes from; even if we get things up and running at 100% again sooner than expected, the problems remain as our demand for energy is ever growing. This is why I think that these storms could be have a silver lining in them, for if nothing else it will force the energy debate to the forefront of the political debate in the US.

I must digress here for just a moment. While many have suggested that price controls be put in place I could not disagree more. While it does seem clear that there may have been more than a little price gouging after the storm, to the degree that the state of New Jersey is suing some major oil companies, price controls are not the answer. Why? Simply put they do not reduce consumption which is exactly the purpose of high prices in a free market. High prices are a direct result of limited supply. American energy consumption must be reduced now with some pain or it will be reduced later with disastrous effect. High prices, while most inconvenient for many and a real financial strain for lower income Americans is simply an outgrowth of our over dependency on inefficient and foreign energy sources. It is also the result of a culture of waste that is still not cognizant of the fact that much of our energy use can be reduced by simply cutting out waste, turning off lights and appliances that are not in use, doing all your errands around town at once rather than making 5-6 unnecessary trips in a week. These are simple fixes that people will now be forced to contemplate because the price of energy is becoming a major household expense, thanks to higher energy prices. Thus, while the macroeconomic reality of higher prices may be derided by some, their existence is the result of a supply shortfall that is in no way going to abate. Simply put, with already tight supplies any shock can cause a serious spike in prices and this is what has happened with the latest Hurricanes.

In closing.

I will spare my readers any a long winded geopolitical observation this month (O.K., you may all breath a sigh of relief!). Yet, there are many things that bear watching. Venezuela is one as it, in my estimation, will one day become a very important power globally. On the last day of the US fiscal year just when the US was in need of its hundreds of billions in foreign debt, Venezuela pulled ALL of its central bank reserves out of the US. It may be successful in exporting its revolution if its economic model is capable of fulfilling the dreams of its people. Russia is another place that needs to be watched not least of which because of China and the strategic partnership that the two seem to be building. I also say keep your eye on India. If China and India can settle some of their differences and if India becomes a full fledged member of SCO, and if SCO solidifies into a more cohesive regional association, America’s dominance in the world will be seriously and probably permanently challenged. Yes, those are a lot of “if’s”, but they are being driven into existence by a mutually perceived threat that each of these nation are beginning to truly understand, that threat is the neo-liberal and neo-imperial economic and military policies of the US and UK. This is forcing these nations to patch up their differences and move ahead with cooperation that will counter that of the present global hegemon. The important and unwelcome result of this, is in my estimation, is that Europe, which is already quite dependent on Russia for her energy needs, will be driven into geo-political cooperation with this new alliance at the expense of its relationship with America. This would become the most important part of the ongoing geopolitical shift. Europe and the US are at odds in some important economic issues today. It is a question of which type of economy will engulf the globe. The American model of declining real wages, excessive non-productive consumption of the world’s resources, ecologic devastation, higher corporate profits and ballooning deficits or a model that toes the line on real wages, continues to export real goods, and at least attempts to control government debt.

This discipline from Europe is not an issue of left or right: center-right, center-left and left governments have all backed strong currencies. It is not only the Eurozone, as Great Britain and Switzerland show. Instead, it is about holding the line on falling real wages, and being willing to withstand the pressure from the Federal Reserve and United States. Europe has decided to maintain real wages, and not buckle. Either the US Federal Reserve wins, and Europe devalues, or the US runs out of money to borrow, and must dramatically cut expenditures.  - Collision Course

Charts Courtesy of BabylonToday.com

Folks, the stakes are enormous. Had America’s establishment chosen a different course and a different President to lead us, the world would be a very different and much more peaceful place. If we had leaders that had the real courage to face facts and deal with our deficits, we would not be teetering on national insolvency. Instead we are given cowardly draft dodgers, military deserters who start unnecessary wars and demand that you and I wave a flag that no longer has any of its old meaning. They demand a phony, manufactured patriotic fervor. The choice of Bush to lead us in this hour was a fatal and disastrous mistake that will destroy our nation as it has already destroyed its prestige and standing around the globe. I also see some ominous precedents being set with the latest storms and the Federal reaction to them. It is blueprint for tyranny and evil. The call for the federalization/militarization of all police is in my opinion a prelude to the real crisis all inside the beltway are aware of; National Bankruptcy and the federal reaction to control the anger Americans will feel when they realize that their lifestyle is gone, forever. The people may wish to blame their leaders, but America's leaders have only done exactly what the people asked for. They did not want to know what the Government was doing, so they were not told, they did not want leaders that told them the truth, so they don't have them. They wanted leaders who borrowed and borrowed to the point of national suicide, so that is what they have. The American people are suspect number one in the worlds 'most wanted list' of the global crime network that resides in Washington DC. There is no one else on Earth that is more to blame than the schizophrenic American people. They asked for, voted for and begged for leaders that will take them to hell, so to hell they will go.

Other News Items

The Oil situation in the gulf is not good. It will take quite a while to repair the damage and restore production.

Credit derivatives could case a serious row between the US and the EU as a large backlog of trades exist.

There are a lot of people not paying their Credit Cards on time and higher gas prices are probably to blame.

Mortgage Fraud is a huge industry and Illinois is leading the nation in it.

Natural Gas prices are up 80% for the quarter. How did you say you were going to heat your house this winter?

Delphi's suppliers are demanding cash and faster payments because some analysts think bankruptcy may be in its future. Its share did rally recently as it says it can and will pay suppliers on time. Keep an eye on this.

Fannie Mae's accounting violations seem to never end. New ones were found that will yet again delay a final restatement.

Calling the Invasion of Iraq the 'greatest strategic blunder in US History', Retired General Odom, former Director of the National Security Agency derided our war in Iraq. Meanwhile Bush's resident 'house-negro'³ applauds war as the only guarantee of stability.

Food4thot

The rich seem oblivious to the suffer of the poor as comments by some of our leaders indicate. They heap riches into their accounts through no bid contracts. They seek power and wealth and I am constantly amazed at the calloused and cold hearted reaction they have to the suffering their polices bring about. It reminds me of a verse in the book of James

Go to now, ye rich men, weep and howl for your miseries that shall come upon you. Your riches are corrupted, and your garments are motheaten. Your gold and silver is cankered; and the rust of them shall be a witness against you, and shall eat your flesh as it were fire. Ye have heaped treasure together for the last days. Behold, the hire of the labourers who have reaped down your fields, which is of you kept back by fraud, crieth: and the cries of them which have reaped are entered into the ears of the Lord of sabaoth. Ye have lived in pleasure on the earth, and been wanton; ye have nourished your hearts, as in a day of slaughter. Ye have condemned and killed the just; and he doth not resist you.

(Jam 5:1-6)

By,

Mark S. Watson

For a copy of Elliot Wave's Bob Precter latest book Prechter's Perspectives, write me at book at markswatson dot com It can be purchased for $10, post paid.