Canada and Australia are rolling over along with China

As expected, China is rolling over with Australia and now Canada close on its heels.   It's no secret to those who are paying attention and who know the real score.

In short, China created a global commodities boom which they used to build skyscrapers, shopping malls, and entire cities that none of its citizens could afford.  So now they are rotting where they stand.  The commodities exporters, which include Australia and Canada, got an economic boom because of China.  As a result their real estate prices went sky high, dwarfing the US property bubble relative to the size of their respective economies. 

Mish writes:

“Economists never envision a meltdown. But a massive meltdown is coming anyway. I must admit the pool of greater fools in Vancouver and Toronto was far, far bigger than I thought possible, but at long last the pool seems to have dried up. A crash awaits.”

http://globaleconomicanalysis.blogspot.com/2012/11/canada-bleeding-private-jobs-vancouver.html

 
Anyone who thinks the economic problems are near an end is either ill-informed or dreaming.  IMO, Bernanke just kicked the can down the road for a few years.  He will run out of the ability to stimulate at some point.  The US will be unable to borrow more money cheaply at some point.  There are two ways this might happen:

1.       Americans rise up against it and attack anyone in office who tries to add to the debt.  I give this a 20% chance of happening.

2.       For every borrower there must be a lender who has excess cash to lend.  As the marginal economies collapse they will have less and less cash, goods, products and services for themselves, much less to lend to the US.  In other words, the patsies in the debt Ponzi simply get fleeced so badly that they have nothing left to lend.  This is where the 80% odds live IMO.

The end game starts when US interest rates can no longer be manipulated down by Bernanke.  When rates begin to go up it will mean that for whatever reason there are not enough lenders willing to buy US debt at ridiculously low rates of return.  The result is that interest rates will have to rise in order to entice the remaining lenders.  As the interest rates rise, the debt service will increase dramatically.  When that happens the US will have to take on more debt just to service the existing debt.  It’s called the debt spiral. 

A debt spiral in the global reserve fiat currency signals the end of US ownership of it.  Sometime in the future there will be a so called “currency event” for the US dollar.  What it really means is a sudden and massive devaluation in the buying power of the dollar.  It will take most people by surprise because collapsing Ponzi schemes always do.  People who thought themselves well off because they have a lot of money in a 401k account or pension will find out the hard way that they really have no savings at all.  The wealth they think they have is no different than the wealth that Madoff victims thought they had before his multibillion dollar Ponzi collapsed. 

 

It doesn't matter who the president is, who is in congress, etc.  The damage has already been done and now the outcome is certain although the time frame is far from certain:

• Stock markets will crash and they will stay down for a long time.
• The buying power of government controlled retirement accounts will either collapse or be confiscated.
• Pensions will go bankrupt.
• The banking system will suffer a major collapse.
• Expensive infrastructure will be unmaintainable.
• There will likely be significant suffering and perhaps even significant war.

 

These are the wages of being economically ignorant folks.  These are the rewards for ignoring sound council of the honest and fair and historically informed like Ron Paul.  When it happens, go find a mirror to see whose fault all of this really is: the foolish, arrogant people who wanted something for nothing at the expense of their neighbor.