June 17, 2009
By Douglas McIntosh

If I had to describe myself in this moment of economic chaos, I would say I am the grizzled sergeant, war weary, caught in the zone of instinctive awareness that combat veterans have. In order to survive you become a detached, cynical professional. In the sense of college degrees I am a rank amateur. However, over the last decade I have called the economic sphere pretty well. Perhaps the timing has been off, but I have nailed the trends perfectly. It takes a while for a two inch garden hose to fill a swimming pool, but it will fill it. Likewise, the endless debt, credit and bubbles of the last 25 years are finally reaching critical mass. It is no longer a matter of whether we have an economic collapse. No it is a matter of the scope, the intensity and the social chaos that economic collapse causes. My moniker over at Tree of Liberty is Doomer Doug, so I know what I am talking about. In a phrase, it is not coming: it is here.

Way back when Hurricane Andrew hit Florida, nobody took it seriously until Television stations starting showing the satellite pictures of a storm that stretched from North Carolina to the Bahamas. Only then did the so called Sheeple start to prepare. That is just the way things are in modern America. Since Shillovision is telling us fantasies about green shoots, economic recovery etc. etc. etc. the Sheeple, as evidenced by the rising consumer confidence numbers, are buying into the delusional euphoria stage. We are seeing green shoots all right, but they are the first plant tendrils from "Little Shop of Horrors."

Here is what I see coming in the economic sphere over the next few weeks and months. The first thing to understand that this debt soaked edifice, this leaning tower of endless debt is finished. One of the things I have hammered home repeatedly in my writings is the capacity to issue debt, by government at all levels; the capacity to borrow debt, by consumers, corporations et al, is kaput. We are on a cash and carry basis now. Have been for at least a year now. For an economy that is based upon endless credit and debt, regardless of the capacity to service that debt, or pay it back in plainer terms, this is fatal. It is not a shotgun blast to head, a quick, bloody death; instead, it is a shotgun blast to the stomach, a slow, painful bleeding out. The difference between slashing your Carotid artery in your neck and slashing your wrists. The result is the same, although the time frame is not. Bluntly put, we are now at that point in time when the fundamental economic reality, the fundamental government, corporate and consumer model no longer works.

Recent headlines tell us that credit card problems are on the rise. Recent headlines tell us that one in nine Americans are now on food stamps. Recent headlines tell us that record numbers are on unemployment insurance. Recent headlines tell us that government, at all levels, are being bled dry by declining tax revenues. Revenues that many states, counties and cities are trying to replace with a massive wave of tax increases. Up here in Oregon the legislature just passed a $1 Billion dollar tax increase, including a massive tax increase on hospitals to pay for low income health care. Well, all I can say is beating a dying horse only makes it die quicker. The taxpayer turnip is bled dry. There is no more money to be extorted from the long suffering American taxpayer. All that lies in the future on that front is a rapid governmental spending collapse.

California, it is said, leads the nation. In that case, the economic collapse I have long predicted is imminent. The Austrian weight trainer Arnold, married into the Kennedy/Shriver clan so he could presumably run for President someday, has now opened the lid on the economic version of Pandora's Box. I'm afraid once it is opened it will not be closed. Arnold may be playing a game of chicken with our other foreigner, Obama the Great, in order to get Federal bailout money to spray perfume on the rotting corpse called the California economy. Or Arnold may have decided to get tough with the liberal extremists masquerading as Democrats in California's legislature. At this point it really doesn't matter who intends what, or why they intend it, or even how they intend it. The simple economic reality is the money isn't there. While this seems clear to average people, this simple fact seems to bounce off politicians like tennis balls off an aircraft carrier.

What is going to happen, rapidly, very rapidly after July 1st, the beginning of fiscal year 2010, is the government is going to implode at state, city and county level. Not reduce. Not cut back. Not make "tough decisions." Not "tighten the belt." No, what is going to happen is the social net is going to look like a piece of paper after it has gone through a shredder. And when that happens, as it must, the level of social chaos will skyrocket. Does anyone think people will tolerate spending $106 Billion to keep the wars in Iraq and Afghanistan going when California ends welfare? Is anyone that naive? Is anyone that detached from the daily struggle of the urban mob to pay rent, utilities, buy food and the like. Because if they are, then they are going to be seriously surprised when East Los Angeles starts to resemble Beirut or Baghdad.

It is clear to me as the local government implodes the pressure on the Federal government to do something will be overwhelming. Absolutely overwhelming. Which will mean the Federales will seize even more control than they have already. The current headlines about wanting to give the Federal Reserve, that corrupt, venal banking oligarchy, even more powers come to mind. Give more powers to the very banks that have looted and pillaged with impunity the American Republic. This is not giving the fox control of the hen house, it is giving a pedophile control of an orphanage. At any rate, as the Feds attempt to stall the local collapse they will only hasten their own. Much as a drowning person pulls under their rescuer. Despite the unlimited use of the printing press by Braying Bernie, the foreigners smell a rat. The most significant economic story of the last month, in my opinion, was the fact Chinese students laughed, openly laughed, when Turbo Timmy told them the dollar was sound.

We are over the edge now. It matters not whether you believe me or not. The California treasurer says they will run out of money in 50 days, around July 30th or so. One month into the new fiscal year of 2010 California is going to crash and burn like a gasoline tanker on the freeway. The resulting fire will melt the asphalt, burn the median grass and raise a smoke plume high into the sky. Where California leads, other states, counties and cities will follow. After that, the desperate and increasingly befuddled Obama administration will also follow. And so, just as a group of mountain climbers, tied together for their ascent fall into a crevice, all levels of government will implode by years end. There is no other way to put it. The states, cities and counties are going down starting July 1st. The Feds will follow them starting on October 1st, the beginning of the new Federal fiscal year 2010. The one in which Obama will need to borrow another 2 TRILLION. Borrow it from foreigners who laughed at Turbo Timmy. Borrow it from Russians, Chinese and Arabs who know we are a debtaholic. Russians and Chinese who are even now meeting in Russia to replace the US fiat dollar as the global reserve currency.

The USA will end not with a bang, or even a whimper, it will end with a computer click, when the foreigners dump our fiat dollar, dump our worthless treasuries, but buy our hard assets; our farms, our bridges, our roads, our sea ports, our airports and our infrastructure. After all, they have bought off our politicians and elite classes for decades now. So why not spend their worthless, toxic paper on the real America?