The Face of Economic Collapse by James Reed

An article in The New York Post, “These are the Signs of an Economic Collapse,”  is one of many articles appearing in the mainstream media, speculating about the long-anticipated big economic breakdown, one to dwarf the last GFC. The article gives a check lists of the signs that a crash is coming:

“What does the beginning of an economic collapse look like? Do you see grocery stores closing? Do you see other retailers, like clothing stores and department stores, going out of business? Are there shuttered storefronts along your Main Street shopping district, where you bought a tool from the hardware store or dropped off your dry cleaning or bought fruits and vegetables?
Are you making as much money annually as you did 10 years ago? Do you see homes in neighborhoods becoming run down as the residents either were foreclosed upon, or the owner lost his or her job so he or she can’t afford to cut the grass or paint the house? Did that same house where the Joneses once lived now become a rental property, where new people come to live every few months?

Do you know one or two people who are looking for work? Maybe professionals, who you thought were safe in their jobs? Friday’s anemic jobs numbers tell that tale. Did your high school buddy take a job at the local convenience store because he could not find work in sales?
Is the pothole on your street getting larger instead of getting repaired? Is there more than one street light out in your town? Don’t be fooled into thinking that the stock market is any indication of the health of an economy. Is the town pool closed this summer much more than usual? Have you seen a situation — any situation — and said, “Jeez, it wouldn’t take much money to fix that” — but it hasn’t been fixed?
You may have witnessed many of these situations, but you tell yourself it can’t be an economic collapse because the stock market is at an all-time high.
Does that mean all is well? No, this is what a 21st century economic collapse looks like in the beginning.” Clearly, we can see these signs all around us.

This article goes on to point out that across the West the gap between the haves and have-nots is growing exponentially, and that there is a growing sense of fear in communities.
Indeed, in Germany savers are deserting the banks and buying safes to store cash at home. Burg-Waechter, Germany’s largest safe manufacturer has had a 25 percent jump in sales in the first half of 2016, compared to the same time last year. One reason is that the European Central Bank is attempting to control inflation by forcing interest rates below zero, so that saves will now be charged fees on deposits. But, as in Japan, this trend has been going on for a number of years, indicating that people are getting scared of the financial system.

Earlier in the year, an article detailed that the shipping industry has begun a great slow-down: “People are Afraid these 'Zombie Ships' are the First Sign of Global Economic Collapse”. The article says:

“The shipping industry is facing its worst crisis in living memory as years of rapid expansion fuelled by cheap debt have coincided with an economic slowdown in China.
"We are now at the stage where people are struggling to remember an era when it was this difficult, we've gone through what it was like in the '90s, the '80s and the '70s, so expressions like 'living memory' start to apply," said Jeremy Penn, the chief executive of the Baltic Exchange in London.
The Baltic Exchange has set shipping rates for more than 2 1/2 centuries, and the situation its members now face is grim.
"Ship owners are facing the tough decision of whether to just drop anchor and hope it gets better," Penn added.
Ship owners had financed fleets with 60 percent debt and 40 percent equity, and have found that the 40 percent equity is now worthless.

These elements, all put together, come to support the view that an economic crash of dimensions rivalling the Great Depression, is coming.
I have recently looked through one of the world’s leading global investment strategists, Barton Biggs (1932-2012), who in his book, Wealth, War, and Wisdom, (John Wiley, 2008), also predicted that a collapse would occur:

“People with wealth should assume that somewhere in the near or far future there will be another time of cholera when the four Horsemen will ride again and the barbarians unexpectedly will be at their gate. By definition, the next Black Swan will be some form of total breakdown of civilized society and the social and financial infrastructure as we know it.” (p. 331)

Biggs went on to adopt a survivalist approach to the coming collapse, writing:

“Another, much smaller part of your diversification strategy should be to have a farm or a ranch somewhere off the beaten track but which you can get to reasonably quickly and easily. Think of it as an insurance policy, and for rich people in the developed economies a farm is a fine diversifier and probably an excellent long-term investment.  … The control of food-producing land is a basic instinct of mankind, and landowners seem to find considerable psychic satisfaction just from the knowledge of possession. There are few things as fulfilling as having a drink in the sunset and looking at your fields and cows.’ (p. 332)

Now all I need is a farm!



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Thursday, 20 June 2024

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