A Mega-Crisis Waiting to Happen: Why Now?

The ongoing global financial crisis had been predicted for several decades. Many analysts believed the Carter depression of the late '70s would be the beginning of a decades-long collapse. But then Reagan happened. By reducing tax rates and ending price controls, Reagan allowed the economy to recover and to start growing again.

Unfortunately, the built-in time bombs and booby-traps inside the economies of North America and Europe were destined to grow along with the economy, creating dangerous and unstable bubbles of debt -- government, pension, corporate, and private debt. These bubbles have only just begun to burst, as they must. Had they burst earlier, the recovery would not be as difficult. Had the bubbles burst a few years later, the recovery would be even harder. Why are they in the process of bursting now? Why now? And why is the current US government putting all current and future resources of the US into patching up the bubbles -- instead of beginning the hard recovery from the necessary burstings?

Following, is some news from yet another bubble in the process of preparing to burst. Read it all to understand the breadth of the problem within the US alone:

A government retirement plan can’t go bankrupt, even if it’s insolvent; state treasuries must put up the money if a fund runs dry.

So we are now facing the first actual set of hard choices in several generations. Choices that increasing look like they can no longer be passed to the future. The future is here, it has arrived. Will states decide to pay their retirement obligations, pave roads, educate children, or feed the hungry? These are the choices that now sit before us and I remain skeptical that we will successfully borrow our way out of the predicament this time.

It would seem that decades of intellectually weak and fiscally negligent political leadership has finally caught up with us. _PensionDisaster

Everything seems to be falling apart at once. Is there a reason why the financials crashed when they did -- mid September 2008 -- and continued crashing at an accelerating rate as the winter of 2009 sank into cold, ice, and depression?

5) Uncertainty. Who is now our Commerce Secretary? Which cowards is the Attorney General talking about? What did Geithner mean about pernicious oil and gas companies? What is with this Solis, and card check? How hard is it to ensure a Richardson or Daschle is clean? In other words, market watchers see after five weeks chaos, and think there is no sure and steady paradigm in which they can make careful business decisions and anticipate with some surety future risk.

So the perfect storm forms, and millions of individuals come to millions of identical conclusions: “Cut your losses with these guys, and get your cash out before it gets worse” rather than “Wow, what bargains! I gotta get in before the window of profit opportunity closes.” _Obamafusion

It seems as if the new US administration has made all the wrong moves, with suitable false bravado, fully backed by US news and entertainment media, and burned out university faculties of the social sciences. "Dear Leader, The Messiah, cannot be allowed to fail -- he is too precious, the hope of the world." ;-)

Thinking like that can get the whole world flat busted. If ever there was a time to cut losses, allow corrupt losers to fail, and start to build the foundations for a new beginning, it is now. But the incompetent naifs at the top of the US government cannot let go of their grand dreams of social engineering -- they plan to do an "extreme makeover" of US society, US government, and even the US Constitution. They know what is best for all the rest of us, and they will save us even if we all end up impoverished, wet, cold, and starving. As legends in their own minds, they know best.

And that is why it is happening now. Why it is all happening now, at approximately one time. Many expected it to happen 30 years ago. Some expected it 16 years ago. But it is finally happening, because the big money -- finally, even Warren Buffett -- understands that the current US leadership does not know what in the focque it is doing. It does not know what it is doing, so it is following the maxim: "do anything! even if it's wrong." And since they have been waiting to do an extreme re-engineering of the US practically all their lives, that is what they have settled on.

Jim Rogers and Peter Schiff continue to have interesting commentary on current financial events. Simoleon Sense blog covers a wide range of financial, investment, and monetary news and views.

Bonus: Read how Obama supporter Jim Cramer has been savaged by the Obama administration along with the news and entertainment media, for making a few extremely timid criticisms of Obama's grandiose plans for a mega-makeover of the US in the middle of a depression.