How to convince your loved ones that the economic crisis in the United States will have global consequences: be prepared

I recently received the following email:

“I am having a great deal of frustration trying to convince my Canadian family that our lives are in danger from US economic break down. They are … absorbed in this irrational world and always have faith that our government will assure our safety in time of great disaster. They fail to realize that this is not something that will just take care of itself… I was hoping if you could provide me with or point me to some articles that may shed some light on what will happen to Canada when the US dept bubble bursts.”

I can definitely sympathize with this problem. It has taken me years to be able to convince some of those that I love to begin to think about preparing for what appears to be a major restructuring of our present civilization. Not only will this change be an economic and political one, but will also require the rethinking of our health care system, how we treat the environment, and most important of all, our personal choice on what types of foods to consume.

Luckily though, the job is becoming easier as time progresses. Thanks to the choices that our “leaders” in governments and corporations are making, what the future is going to look like is becoming clearer and the script is writing itself.

The first phase of this restructuring is almost near completion. Since the economy affects everyone, it is an economic collapse that is triggering everything else. In January 2008, the International Monetary Fund released an update of their report for the World Economic Outlook. It states that “the global economic expansion has begun to moderate in response to continuing financial turbulence. Global growth is projected to decelerate from 4.9 percent in 2007 to 4.1 percent in 2008” and that “headline inflation has increased since mid-2007 in both advanced and emerging market economies. Core inflation has also drifted upward.”

That was the prediction in January, we are now in April, and in just four months the situation has deteriorated to a level where the IMF is openly stating that “America's mortgage crisis has spiralled into ‘the largest financial shock since the Great Depression’ and there is now a one-in-four chance of a full-blown global recession over the next 12 months.” And this is exactly what we are seeing with the US housing collapse spreading to the rest of the world, “with real estate prices down from the Irish countryside and the Spanish coast to Baltic seaports and even in parts of India.”

The simplest way to look at what is happening is to think of being the owner of a retail store. If your customers were having financial difficulties, then their problems would also affect you.

Let’s assume that energy consumption is a valid measure of how much of the world’s resources (products) a country consumes. The United States, with less than five percent of the world’s population, consumes approximately one fourth of the world’s energy resources. Now, since the year 2000, the US dollar has been devalued by approximately 50% relative to the euro (euro has gained more than 90%). This means that if an American citizen were able to buy one apple from your store with one dollar 8 years ago, then that same dollar would only purchase half an apple today. We know that wages in the United States have not doubled in the last 8 years, which means that at some point, your customer will have to start purchasing less from your business (They just don’t have the money to pay $2 per apple anymore). This will in turn require you to consume less and reduce the quantity of the products you carry in your store.

This is a domino effect. The United States is beginning to consume less, which means that manufacturers in other countries are starting to produce less, which requires less raw materials and less labor, which in turn is slowing down the global economy to a level where the IMF refers to it as “the largest financial shock since the Great Depression.” Keep in mind that the United States is officially bankrupt.

The situation in the US has become so desperate that American refugees are flooding into Canada to escape the economic collapse, as well as being displaced internally. If the American refugee crisis continues to grow as analysts predict, then the cost to Canadians will be astronomical, especially considering that the average processing time for a refugee claim in Canada is currently 14.2 months, “a period during which the applicant is eligible for financial and other support.”

Also consider this, if you are the owner of a retail store, then even a 10% reduction in sales may mean doom for your business. The United States consumes 25% of the worlds energy (30% of the worlds resources). If their dollar continues to tank, which there are very good indications that it is going to do, then their purchasing power will continue to deteriorate.

The positive side to all this is that it will force us to start consuming less which should slow down the global environmental catastrophe that we face. The downside, aside from the destabilization of our civilization, is that we may be faced with a new round of consolidations and centralization of power for the elite.

Canadian Financial Pundit Discusses New American Currency


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Posted in | Submitted by chycho on Tue, 2008-04-22 15:27.
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