October 2, 2008

Stock Market Craters After Senate Vote

Stock Market Craters After Senate Vote

"The boom can last only as long as the credit expansion progresses at an ever-accelerated pace. The credit expansion boom is built on the sands of banknotes and deposits. It must collapse. There is no means of avoiding the final collapse of a boom brought about by credit expansion." - Ludwig von Mises

I've been predicting deflation for years, and I believe we're finally here. Regardless of how Congress votes tomorrow, the stock market will continue to fall and fall and fall, simply because through the boom, prices lost all touch with reality. The final collapse is here.

Did you see the auto sales numbers yesterday? Ford's sales down 32%, Chrysler down 32%. Even the sales of mighty Toyota were down 24%. GM's sales fell "only" 15%. These are depression scale numbers, people!. And it is not just in autos. The poor economic numbers are everywhere.

Even if the government bailout bill passes, and they create $700,000 billion for the fatcat bankers and politically connected elites, how will that help the vaunted American consumer, that parasite that drives the global economy by eating the world out of house and home?

$700,000 billion is a drop in the bucket compared to the trillions in assets that is being destroyed. A featured story on Yahoo! today is of a house that sold on Ebay for $1.75! The house is near Detroit, where the once mighty American auto industry is imploding. Detroit is the future of America, at least for the short term, and no amount of government 'largess' can save it.

Today the market is bouncing around at the lows it set on Monday. The only thing preventing the crash is the hope that Congress will somehow be able to fix it.

It can't. Pass or no, the stock market will crash. The American economy will collapse. Like a junkie coming off a 30 year high, it will be painful.

This is not meant to scare, but to prepare. If you're psychologically prepared, you'll be 10 steps ahead of everyone else. This is not the end of the world. The world is just changing, as it always has and always will. In the midst of this tremendous turmoil, the most important thing to remember is who you are and who you are committed to being, no matter what happens. As inspiration in that department, we have an excellent role model in Ron Paul.

With a fundamental acceptance of what is happening, and a foundation of knowing yourself and who you are committed to being, you can go about confidently looking for opportunities in the emerging world: Opportunities to help, to lead, to serve and build a better world.

Resist the temptation to live in fear and worry. Above all, have fun. We're all just passing through here, and you have more power than you can ever imagine. In closing, remember this: People consistently overestimate what they can achieve in the short run, and underestimate what they can achieve in the long run.

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