The Final Phase Of The 2008 Crash Dead Ahead: Our Denial Of The Inevitable Is Creating The Inevitable. America Is Obsessed With Cheap Money, Bull Markets, Profits, Consumerism, Fiscal Cliffs. Washington Is Setting Up A New Crash And You’re Not “Going To Get Early Warning Signal When New Bank Meltdown Hits

Tuesday, January 1, 2013 18:13

 

 

 

 

 

 

 

     The “deal” calls for $43 in new taxes for every $1 in spending cuts. What a sellout by the senate republicans.

One can only hope the house republicans have more balls and kill this pathetic sellout.

NEW REPUBLICAN MATH: $1 IN CUTS FOR EVERY $41 IN TAXES

 

According to the Congressional Budget Office, the last-minute fiscal cliff deal reached by congressional leaders and President Barack Obama cuts only $15 billion in spending while increasing tax revenues by $620 billion—a 41:1 ratio of tax increases to spending cuts.

We ‘May’ Have A Spending Problem

One of those occasions when one picture really does speak a thousands words.

Houston, we may have a spending problem.

PAUL B. FARRELL: Stock market will blindside investors in 2013

Let’s look past the typical avalanche of noisy predictions into the insanity that’s ahead in 2013. First, the final phase of the 2008 crash that the Pessimist sees coming. Then, the  stock market’s surprising 2012 trouncing of the New Normal’s predicted single-digits returns.

Finally, we’ll examine four unpredictable black swans that can easily spoil Wall Street’s party in 2013.

Pessimist sees the final phase of the 2008 crash dead ahead

Remember, Wall Street’s disastrous 2008 credit crash cost investors over $10 trillion in losses and drove the federal debt above $16 trillion. Whatever the President and Congress do with the fiscal cliff, America’s debt will keep rising.

Bloomberg Market exposed this danger in an article about  bond investor Jeffrey Gundlach, who’s doing a flip-flop as we speak: “Bond guru buying stocks. Sees ‘Kaboom’ Ahead,” something overwhelming that will even dwarf the bizarre fiscal-cliff insanity: Yes, there’s a “financial catastrophe on the horizon.”

Gundlach, the CEO of DoubleLine Capital, who predicted the 2008 Wall Street credit meltdown, says it’s real damage is still to come. Earlier at TCW Group, he had a 7.9% annual average return for the 2000-2009 decade. He warns: “The first phase of the coming debacle consisted of a 27-year buildup of corporate, personal and sovereign debt. That lasted until 2008.”

Then all that cheap money “finally toppled banks and pushed the global economy into a recession, spurring governments and central banks to spend trillions of dollars to stimulate growth.” America piled on an estimated $29.7 trillion in debt in the shadow markets.

No early warning signal when new bank meltdown hits

Gundlach’s now predicting an “ominous third phase,” a bigger crash, one whose impact will far exceed the damage of 2008: “Deeply indebted countries and companies” won’t default till after 2013.” Meanwhile, Washington and the Fed will keep kicking the can down the fiscal road. “Central banks may forestall these defaults by pumping even more money into the economy,” but “at the risk of higher inflation in coming years.”

He admits he doesn’t really know exactly when this final phase will trigger, but warns you’re not “going to get some sort of an early warning” signal. He has “no faith” that any fiscal-cliff deal will resolve the deficit.

“Tax hikes on the wealthy wouldn’t bring in enough revenue” and politicians won’t “make major cuts in entitlement programs because the public overwhelmingly supports them.” Yes, Washington is setting up a new crash….

Read more at http://investmentwatchblog.com/the-final-phase-of-the-2008-crash-dead-ahead-our-denial-of-the-inevitable-is-creating-the-inevitable-america-is-obsessed-with-cheap-money-bull-markets-profits-consumerism-fiscal-cliffs-washingt/#XW4X8gKsxvIQOO8j.99

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