America By 2012: 10 Dire Predictions

If this doesn’t make you think–make you want to prepare–I don’t know what will. From “Big Jake” on SeekingAlpha, “The Worst Case Scenario (Someone Has to Say It)” [edited for length]

Since the economy began sliding downhill in late 2007, mainstream economic and market experts have consistently erred on the sunny side.

As late as June 2008, mainstream consensus held that the U.S. was heading for a “soft landing” and would avoid recession.

Several months later, the slump was acknowledged to have started in January 2008, but we were supposed to see renewed growth by mid-2009, with unemployment peaking in the eight-to-nine percent range. A quick “shovel-ready” stimulus bag was supposed to set us back on the road to prosperity.

In January, recovery projections were pushed forward to late 2009. Today, the consensus is for a mid-2010 recovery, with unemployment peaking at just over 10 percent. Clearly, the mainstream has struggled to catch up to reality for well over one year. What are the chances that they finally have it right this time?

In the interests of providing you with an alternate vision—something outside the mainstream—below are ten predictions for America through the year 2012. This is not boilerplate doom-saying. Rather, I am laying out in highly specific terms what will happen over the next three-odd years. Others have thrown around the term “Depression”, but I am going to tell you precisely what it means for you, your investments, and your community.

economy shipwreck_140x103Prediction one.
The twenty-five-year equities bubble pops in 2009: the S&P 500 will sink below 500. In a bid to stem the panic, the government will enforce periodic “stock market holidays”, and will vastly expand the scope of its short-selling prohibitions—eventually banning short-selling altogether.

Prediction two.
401K was a pot of gold_140x112With public pension systems and tens of millions of 401k holders virtually wiped out—and with the Baby Boomers retiring en masse—there will be tremendous pressure on the government to get into the stock market in order to bid up prices.

Therefore, sometime in 2010, the Federal Reserve will create and loan out hundreds of billions of fresh dollars to the usual well-connected suspects, instructing them to buy up stocks on the public’s behalf. This scheme will have a fancy but meaningless name—something like the “Taxpayer Assurance Equities Facility”. It will have no effect other than to serve as buyer of last resort for capitulating smart-money types who want to get out of stocks entirely.

eviction notice_140x108Prediction three.
Millions of new retirees—including white-collar people with high expectations for a Golden Retirement—will be left virtually penniless. Thousands will starve or freeze to death in their own homes. Hundreds of thousands will find themselves evicted and homeless, or will have to move in with their less-than-enthusiastic children. Already strained by the rising tide of the working-age unemployed, state and local welfare services will be overwhelmed, and by 2012 will have largely collapsed and ceased to function in many parts of the country.

PDollar Reaches for HELP_140x172rediction four.
“Quantitative easing” will fail to restart previous patterns of lending and consumption. As the government sends out additional “rebate” checks and takes ever-more drastic measures to force banks to lend, hyperinflation could take hold. However, comprehensive debt relief via a devaluation of the dollar is even more likely. This would entail the government issuing one “new” dollar for some greater number of “old” dollars—thus reducing both debts and savings simultaneously.

Prediction five.
The government will stop pretending that it can finance continuous multi-trillion-dollar deficits on the private market. By late 2010, the sole buyers of new U.S. Treasury and agency bonds will be the Federal Reserve and a few derelict financial institutions under government control. This may or may not lead to hyperinflation. (See prediction four).

will code HTML for food_140x141Prediction six.
The government’s narrow unemployment figure (U3) will rise into the high teens by late 2010. The government’s broader unemployment figure (U6) will cease to be reported when it reaches 25 percent—it will simply be too embarrassing. Ultimately, one in three work-eligible Americans will be unemployed, underemployed, or never-employed (e.g. college grads permanently unable to find suitable work).

corruption_140x138Prediction seven.
With their pension dreams squashed, and their salaries frozen or cut, police and other local government workers will turn to wholesale corruption in order to survive. America’s ideal of honest, courteous, and impartial cops, teachers, and small-time local functionaries will have come to an end.

Prediction eight.
Commercial overcapacity will strike with a vengeance. By 2012, thousands of enclosed malls, strip malls, unfinished residential developments, motels, truck stops, distribution centers, middle-of-nowhere resorts and casinos, and small-city airports across America will turn into dilapidated, unwanted, and dangerous ghost towns. With no economic incentive for their maintenance or repair, they will crumble into overgrown, plywood-and-sheet-rock ruins.

trapped by mortgage_140x103Prediction nine.
By the end of 2010, tens of millions of households will have fallen behind on their mortgages or stopped paying altogether. Many banks will be unable to process the massive volume of foreclosure paperwork, much less actually seize and resell the homes.

Devaluation (as mentioned in prediction four) could ease the situation for those mortgage holders still afloat, but it would also eliminate any incentive for most banks to stay in the mortgage business. In any case, the housing market in many parts of the country will lock up completely—nothing bought or sold.

With virtually no loans being made, even the government will finally acknowledge that most banks are fundamentally insolvent. A general bank run will only be averted through a roughly one trillion-dollar recapitalization of the FDIC, courtesy of new money from the Federal Reserve.

Prediction ten.
As an economy is never independent of the society within which it functions, the next few paragraphs will focus on social and political factors. These factors will have as much of an impact on market and consumer confidence as any developments in the financial sector.

1992_LA Riots_140x126Whether rightly or not, President Obama, having come to power at the dawn of this crisis, will be blamed for it by over 50 percent of the population. He will be a one-term president. In response to his perceived socialization of America, there will be a swarm of secessionist and extremist activity, much of it violent. Militias and armed sects will be more prominent than in the early 1990s. Stand-off dramas, violent score-settlings, and going-out-with-a-bang attacks by laid-off workers and bankrupted investors—already a national plague—will become an everyday occurrence.

For both economic and social reasons, millions of immigrants and guest workers will return to their home countries, taking their assets and skills with them. The flow of skilled immigrants will slow to a trickle. Birth rates will plummet as families struggle with uncertainty and reduced (or no) income.

Property crime will explode as citizens bitter over their own shattered dreams attempt to comfort themselves by taking what is not theirs. Mutinies and desertions will proliferate in an increasingly demoralized, over-stretched military, especially when states can no longer provide the educational and other benefits promised to their National Guard troops.

IRS shakedown_140x212There will be widespread tax collection issues, and a huge backlash against Federal and state bureaucrats who demand three-percent annual pay raises while private sector wages remain frozen or worse. In short, the “Tea Parties” of tomorrow will likely not be so restrained.

Finally, between now and 2012, we are likely to see another earth-shaking national embarrassment on the scale of the 9/11 attacks or Hurricane Katrina and its aftermath. This will demonstrate conclusively to all Americans that their government, even under a savior-figure like Obama, cannot, in fact, save them.

By 2012, there will be a general feeling that the nation is in immediate danger of blowing up or coming apart at the seams. This fear will be justified, given that the U.S. has always been held together by the promise of a continuously rising material standard of living—the famous “pursuit of happiness”—rather than any ethnic or religious ties. If that goes, so could everything else. We were lucky in the 1930s—we may not be so lucky again.

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120 Responses

  1. the problem with this kind of information is what we are not hearing, and that is how to solve it. All of us should be self reliant, have guns(at least shotguns) and a fall back plan if this happens. If we had listened to our parents and saved our money instead of spending more than we had, we wouldn’t accept this from our gov’t. Get ready fellow oldsters bad moon is rising!! I see a return to a semifeudal society in the next 30 years unless we take the reins. Raise your kids the right way, so that they may understand that not everything is theirs by right of birth , but hard work and stint.

  2. The remark about welfare will fall apart due to
    The demand. I believe our government
    Could save billions of $by kicking all the
    Illegal’s of the system. I can’t go to another
    Country and get welfare or get money for
    Having babies. Why the hell should they.
    Come to America legal and get a job and not
    Go on welfare.

  3. The timing is off, but the fundamentals of this article are on target. You see much of this in California and many US cities. Some police pensions have gone bankrupt. Many malls in Las Vegas are virtually empty; construction has stopped half-way on other malls/residential/business sites. Baby boomer spending will sink like a rock in the next few years, and Gen Xers and younger will not have the cash & credit to maintain spending at the higher levels we were accustomed to. Companies that do stay in business will have to greatly downsize/adapt to the economic re-set. I see people at my workplace who will not listen to all this; yet they panic when their hours are suddenly reduced. Unfortunately, people won’t listen until they have food taken off their table, and by then, there isn’t much they can do.

  4. Bwahaha! You all gotta stop watching so much late night tv. I cant wait for 2013,and the next big paranoia circle jerk. Soooo intertaining! Put the AKs down and get some lives, ya damned CLOWNS! Nothing will change in this country except the predictablity of human mass hysteria and jackassed-ness.

    • If you have zero facts, evidence, compassion and vocabulary,
      your chances of convincing anyone of anything are minuscule.
      There are many, many different websites on the internet where you might find more camaradarie, such as Fox News, naive.com,
      or any site with info from Karl Rove. Enjoy!

  5. I have purchased 2 Colt M4 carbines, 4 cases of M855 green tip, 6 cases of MRE’s. We live fire as a family frequently, keep our field craft
    skills honed to a sharp edge. Our go bags are packed 24/7. Thanks for the heads up!!

    Hanna & family

  6. The taxpayers of the USA have had enough.
    The banksters have robbed us, our children and grandchildren
    long enough. They belong in jail, and that’s why tax paying Americans
    are saying enough and protesting all across the country.
    “Whose streets are these? Ours!”

  7. Yes, need to save money, after the long time, we are growing but, still required to settle down for everything.

  8. Those of you that don’t think nothing will happen, will be the ones left not prepared. So get prepared
    food, water and the daily necessities to survive. Wake you people.

  9. The govt needs to get out of our way,so we can fix
    the mess the’ve put us in. Keep the faith that America will survive .Don’t be led by the fear mongers.Become self-reliant (if not already)
    Instill personal responsibility in our children.Always
    remember we will beome what we fear the most.
    God Bless The USA

  10. This is scary and bad times are coming…..we should all prepare.

  11. You clowns are so full of shit! None of you KNOW what is wrong! You are so busy “blaming” someone else that you do not know what the real problem is.

    YOU are the problem. YOU and your ignorance. Look at your posts. You are rambling. You cannot spell. You cannot express yourselves well nor can you compose a complete sentence.

    You’re a bunch of ignorant “Bubas” and you deserve your misery.

    • Ask one question. How is his track record. Regardless of his spelling/grammar, his timing may be a bit short one side or the other, but the ones that have passed are CORRECT! Therefore, take at least some measure of precaution and prepare for the potential. An ounce of prevention, means you don’t go hungry.

    • You do not live in the real world Bubba.

    • You dont live in the real world bubba

    • Mr. Elliott,

      I disagree with your assertion “we deserve our misery”. I am acutely aware of our current condition as a nation. I practice with my Glock 9mm frequently both day and night tactical shooting scenarios.
      Judo and Kung fu are the norm for my family. We are not “all asleep” nor have we taken the red pill. Please calm down and try to embrace
      your inner anger for positive action. Help to encourage others to do more for preparing mentally and physically for this disaster. Host combat training for your local neighbors, small arms classes, CPR
      etc… Good luck my friend!

      Hanna Button

    • Elliott,

      Your arrogance will be your down fall. These are the very people that will reach a hand to help you, feed you, and forgive your arrogance. You have been educated by people who took your mind and planted their beliefs in it. Did you think for yourself or like the pack of people who found your mind easy to dominate? Did you every ask to respectively disagree with what you are being taught? Ask yourself, are you sure about how you believe? I am.

    • If your not a part of the solution,you are part of the problem.

  12. Our government has forced me to stop purchasing products from supplyers and The mechanic no longer has a job. The motorcycle shop is closed. I can not sell the motorcycles because the back fees penaltys and tax to the state of California prevent a profet margin.Revenue for the State will not be collected. The public will be denied this cheep transfortation and freedom. The resourses for the manufactoring of these products have been wasted.

    • emmett: Please be more specific. Exactly how has the government forced you to stop purchasing products from suppliers?

      • He is specific. Because of the “hidden” taxes, it is unwise for him to sell anything at a price that people will buy them, thus “forcing(probably not the word he wanted)” him to stop buying from suppliers, because he can’t afford it. A better way of saying it is, The government has set up a tax structure that makes it almost impossible for me to run a viable business in CA.

  13. Its decades past time that we ‘true’ Americans retake our nation at every cost. As a 23 year military retired veteran, I swore an oath to protect this nation from enemies BOTH FOREIGN AND DOMESTIC. I am an oath keeper. SIC SEMPER TYRRANUS!!!

    • AMEN Leo Bruce,

      One of our problems though is our government in office now is anti American. They have been working up to this for a long time, if something doesn’t change soon, this will end up a Muslim, Mexican country. Heck they are already trying to make it mandatory in some elementary schools in Texas that Arabic be taught MANDATORY! What about making it mandatory that they teach the truth about the past of this great country, instead of re-writing the history books so their socialist agenda looks good. Bloody tired of all of this anti Americanism, anti business, anti entrepreneur ship, just plain tired of the attitude of the government.

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