When a Year Like This Exists

Smart or smart-alec? You decide.


If I hadn't predicted it, I'm not sure I would believe it. Have you seen the latest job figures? Have you been effected by the round after round of job losses in 2009?

The answer, even if you still have your job, is yes --- you have been effected by the huge tide of lost wages, lost hours, lost productivity, lost jobs, and lost businesses which either could not or would not survive THE GREATEST DEPRESSION.

Okay --- right there. I didn't expect this, and I admit it. This isn't the GLOBAL greatest depression. No, this is the worst depression in the 233-year history of the United States of America. That's because outside of the U.S. borders, it shows signs of being only a recession in countries like India, China, and in the U.K.

Back in the U.S. of A., things are not so rosy. Even I thought we'd start to bottom out by the end of the summer or early fall. Not so fast, I say. No --- this is going to last almost one more year as a major economic downtick. Yeah --- 2010 isn't looking very promising yet. There are some signs that it could be returning strength in the summer of 2010, but even saying that things will be getting better is not exactly what I'm seeing and thinking at this point. But why???


Banking and insurance are about to take a greater hit than even what the Federal Reserve can do to protect some of the largest players in history. Citigroup --- whoa, you don't think this big thing's gonna fail NOW, do ya? Well --- no, I can't say that it's going to fail. That's up to the big-whigs who want to keep it from failure. But even those guys cannot keep solvent a company or companies who are defaulting on their own terms. It appears that the Federal Reserve --- stands to lose for once.

How does this occur? I am not sure anyone will know that answer for another decade or twenty years. It will be another case of hindsight being better than current focus.

But --- back to the realities of 2010. Banks and insurance companies have been failing for the past two years. Quietly, insurance companies raise rates, re-invest in nothing --- just cut jobs, and hope that they can continue to be covered (um, these are insurance companies hoping that banks cover their assets/asses) by the same banks and Wall Street numbers that they have historically been able to count upon for security. However, security of banks is waning. And insurance companies are counted on by Wall Street investors to cover some of the assets on the books of the banks which are failing. The bigger banks are buying up the assets of the failing banks. The insurance companies, faced with competition of other companies willing to give coverage to the big banks, keep lowering their rates but not their expectations that the banks will be able to continue profits. But that's not the way it's working out sometimes. Yes, we're saying that --- oops --- banks are unable to cover what they are saying they'll cover. That leads to --- insurance claims. Which leads to losses on the bottom line of the insurance companies. Which leads to banks putting more debts on the books. Mathematical calculations need not be large. Simple math is closer to the reality.

Explaining this is okay to anyone who has been to 9th grade math classes over the past 30 years. Insurance companies are taking in less money in order to keep the banks as clients *** income drops...that's an overall minus sign - ***, while banks are taking on more debt from consumers and from investments into other banks (because they're all buying pieces of the bad assets from the failed banks) and not getting enough on their returns to justify the investments *** income drops...that's another overall minus sign - ***, while Wall Street investors see declines in revenue on their invested dollars (both insurance companies and bank stocks). I probably should stop here before I have negatives. I'd like to show you the end of the equation, but that hasn't happened yet. If I continued this math in just a moment you would probably see many more negatives than positives. But for now, a look at Wall Street and their place in the middle of this scenario.

The average on Wall Street has actually gone up overall because of overly optimistic expectations that the economy is coming out of the slump and because other stocks are doing well. And it is true that stocks outside of the United States are doing well, too. Many of the Wall Street investors are doing speculative buying of longer term and lesser leveraged companies' stocks and seeing a gradual increase in prices, although profits are widely varied. But the thing about Wall Street in all of this is that the market was up almost 30% from the lows of last year and early this year. All kinds of false positives were reported --- the recession will end soon (I'm even guilty of that one - at least I have been honest and called it a depression), reports of the demise of banks is too soon (well, actually...banks are worse off than a year ago --- you'll see next year), jobless rates will get better (um...were those guys drinking entire warehouses of liquor when they made those statements in early 2009, or what?), the bailouts will help the banks and credit card companies as well as major automakers become robust and thriving in mere months (you heard them say it...don't tell me you don't recall), and one that I loved hearing the most out of the mouths of two different parties' administrations mouths that I laugh about frequently --- the economic picture is righting itself already. Both the Bush and Obama administrations have had officials make this statement. To put it bluntly, the administrations should have kept their mouths shut until actual figures were reported each quarter. They've never been close to right yet...nope...they're months behind on reporting actual job loss figures, and don't bother to count those of us who have stopped reporting or never reported because of part-time income or lack of caring to report to the government. It must be heavenly for economics professors to write about this stuff!

So...Wall Street keeps investing in things which are less-likely to fail, right? Um, sure...they have a lot of stocks here on banks which will NEVER fail...which will NEVER see profit margins shrink...which will NEVER see losses because they're protected by wise money managers....which will NEVER be closed by the Federal Reserve or the U.S. Treasury because they cannot make their payments.

Where is this leading?

Greedy insurance companies are finally going to fail, too. They've been "protecting" banks with insurance for decades. Then Wall Street came along, buoyed by the fact that the investor can make stock prices rise (subtle bribery, perhaps) and asked the insurance industry for "protection" from losses, too. And what did the insurance companies provide Wall Street investors? Insurance from failures. Which makes about as much sense as investing all your money into one stock and/or company. Insurance companies did this out of greed. Insurance companies --- they look for a kill all the time. If they can raise rates to make fortunes bigger, they'll do it anywhere they can. American healthcare system anyone? Knocking regulators on their butts isn't enough for insurance companies in the 21st Century --- they want to knock out regulations which kept them safe from their own bad investments. Wall Street speculators simply wanted to be given some safety due to the volatile marketplace.

HOLD IT...STOP IT...WTF?????

Speculators wanted insurance. Huh???

Um...does this sound like the beggars who have been given silver coins by the bagful...does it sound like those beggars saying "well, you didn't give us real gold bars, and we're afraid if we cash in our coins, you'll give us gold-colored candles"?????? It doesn't make sense to give insurance to people who are gambling their money. But the insurance companies took the risk, too, by forcing regulators to allow this kind of behavior.

But Doc, can't I just use the lambskin condom a few dozen times with all my girlfriends? I promise I'll use it wisely...not just when I'm with my steady, but with all the dirty whores I can find, too!

That's the insurance companies' cries. That's the Wall Street investors' cries. That's the cry of the banks.

Greed and stupidity.


Which leads us to 2009 and 2010 --- when the banks start failing on an even grander scale than the U.S. government and the Federal Reserve have imagined. And the insurance companies fail to cover the losses by those banks. And then Wall Street begs the insurance companies for their due payments to cover their losses. And then the insurance companies, forced by the government because of regulations which are still somewhat comprehensive and legal, attempt to cover things, but eventually are forced to file for bankruptcy themselves because they cannot cover all the losses by the banks and the Wall Street speculators. Then, the Federal Reserve will take notice because they're coffers will be shrunken.

The question remains most likely WHEN will this happen, and not "if". Because it's only a matter of time that the failures add up to the point that the government and The Fed will no longer bail out the gigantic companies.


As things go --- this time, I cannot give a time. I thought about this six weeks ago and made a prediction of somewhere between March and September 2010. I have revised my thinking on this because it could be sooner, and it could be later than that time frame. It seems possible that this won't occur until next October or November --- eleven to twelve months away. I may write another column nine months from now and say "well, I guess it was gonna be sooner rather than later" --- or it may say "it's still coming...but we don't know when".

I'm just not sure I'll still be around six to nine to 12 months from now to be able to write this column.

Because, apparently like all the millions of others who are underemployed during a recession/depression --- I am irrelevant. And I am good at speaking out, so perhaps my irrelevance is only growing.

Maybe I should take my own advice and shut up until this is all over. That way I can say things like "I told you so" "off the record" instead of on the record where it gets me nothing. It only gives evidence to those out to get me. I can see the future, but cannot predict the future.

Hey, insurance companies. How about giving me this deal: you give my heirs and assignees money when I get killed by your hitman...I pay nothing up front.

Yeah. That's what I thought. Unless I have the money to buy their stocks at inflated prices, I will get to lie here under a grave marker which was paid for by someone who raised enough money to bury me.

Ahhh...the economic condition of 2009. It truly exists. And it sucks the life out of ya!


But remember...it's okay. The U.S. Government says there is no depression here.