Thursday, January 20, 2011

Year End Review Part 2

Without further delay, part 2 -

401K Collapse
Real Effect -
Banks will start to claim ownership of 401k and pension funds (private and public) and begin "looting" them. (Read as taking your cash and continue to "invest" as they double-double down) and the government moves to “protect” them by seizing them. I would assume they would be placed in a new 'secure conservatorship'.
Evidence -
  • Banks will start to claim ownership of 401k
  • and pension funds (private 
  • and public) Achieved in Review I

While it is possible to make an argument that on paper the institutions are not seizing assets outright, they are defacto taking control of these assets via their insolvency. However, to argue that they have been seized completely is another matter entirely. 

Points (2 of 3)

Annuities Collapse
Real Effect -
Annuities will begin to default and the state insurance funds will become a backer of last resort, which will bankrupt many of them. Many if not most insurance companies will go belly up. This will cause the rates at the surviving institutions to go through the roof.
Evidence - 
Nope, big miss on this one.

Points (0 of 1)

Municipalities Collapse
Real Effect - Unfortunately, I didn't specify much beyond the title.

Evidence - Achieved in Review I

Points (1 of 1)

Real Effect -
As companies take these blows, the FDIC will frantically try to raise capital to cover the losses but will eventually be unable to cover and the first wave of defaults will take place.
Evidence - 
Boy this is a tough one to call. The FDIC did raise a lot of capital this year, yet the losses slowed down somewhat. What did happen was QE. Alas, we will rate this 0.

Points (0 of 1)

Bond Market Collapse
Real Effect -
Within the next 2 years, the United States will default on their debt for the first time in their history. This will cause not only domestic, but major international geopolitical issues as well.
Evidence - I would argue that the US is in a state of technical default seeing as the only way to sell their debt is through the Federal Reserve and POMO manipulation.

Points (1 of 2 - Pending 1)

Tax Protests
Real Effect -
If the institutions don't have to pay their bills, why should I? This could get very ugly.
Receipts will plummet and to cover governments will begin the implementation of new taxes, most notably a VAT AND a National Sales Tax in one name/form or another.

There will begin a reduction and repeal of some Social Programs - most notably Medicare, Social Security and reductions in food stamps.
Evidence -
Achieved in Review I

Points (3 of 3)

Dollar Collapse
Real Effect
This will be the pivotal event that if it occurs, will destroy much of the wealth that the people of this nation possesses.
Evidence -

The story of October was the massive currency wars waged, with China and Russia taking aggressive stances to dump the dollar. To hold that it has collapsed would be premature, but it is possible to argue that it is collapsing. Half point.

Points (.5 of 1 - Pending 1)

Total Points for Part 2:  ( 7.5 of 12 with 1.5 outstanding - 63%)

Total Points for Parts 1 & 2:  ( 12.5 of 18 with 6 outstanding - 70%) 

Impressions -
Wow, 2010 was a hard year to call. It was akin to trying to guess exactly when a teetering object will fall off a ledge when there is an independent entity intervening at random points. Indeed, it could be argued that some of the biggest stories of 2010 were the interventions of the Fed not only into the stock, but also the bond markets as well. 

While the interventions made calling the top difficult, they only further ensured a larger drop to the bottom when its time comes.

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