HERE IT COMES

Falling oil, volatility in China, shrinking world trade, rising debt, weak corporate loans and deflation.

Germany’s liberal Chancellor Merkel has invited in 800,000 Midde-East refugees, mostly from Syria. Why? Same reason so many are pouring into the rest of Europe. The birth rate for Germany and most of Europe has been in reverse for years, people just aren’t having many children, but keep living longer. This means less and less workers for the factories, which is why E.U. nations keep bringing in unskilled labor. This is also why our interference in Syria is only prolonging and worsening the situation for the people there, it causes them to become refugees headed for Europe.

The fact that Europe needs increasing numbers of workers lately is because China is foundering. Their economy is in crisis as their exports decrease both because of the worsening global economy and and their poor management. Their one child per couple policy stabilized their population, even as they continued to build entire cities on farmland that no one moved into. The Chinese went overboard with their new wealth and squandered much of it while the global economy went into a downturn and everyone began buying less goods. Chinese goods.

Now oil has gone from over $90 a barrel down to $30 a barrel and some who should know predict that it will drop to as low as $10 a barrel, which is cheaper than bottled water. It is expected to drop to $20 a barrel.
The world’s stock markets are falling and have been for the past two weeks with no end in sight, over concerns with China and the declining price of oil.
Monetary deflation is happening now. The Dollar and the Euro are increasing in value compared to other currencies such as China and Russia. Russia is being hard-hit because their economy is based on oil. Ours is not. China should be profiting by the cheaper energy but they created an economy based on continued manufacturing growth, with ever higher wages, and the manufacturing has been slowly moving back to the West, once again explaining the need for more imported cheap labor in Europe. Factories can’t pay high wages to make stuff that keeps selling cheaper and cheaper.

The cost of energy is a major factor in the price of goods including food. Food (and rent or mortgage payment) are the two largest expenses for the average person, and when the price of oil goes down, the cost of food and other goods goes down as well for the consumer. This means that the buying power, or value, of the Dollar or Euro goes up accordingly. Deflation.

It’s primarily very wealthy people who own stocks. The poor and middle classes don’t have the money to buy large amounts of stocks in big companies, so when the stock market takes a major drop and the value of stocks goes way down, those rich people lose a lot of money. This, by the way, is why investing in the stock market is always a gamble. If you can’t afford to lose it all, don’t join the game.

Rich people have huge expenses in the support of their lifestyles, and when the stock market crashes, that takes away their income. So they shut down or sell off cheaply any businesses they own where the stock values have crashed, putting people out of work. Stocks don’t crash evenly, some businesses are unaffected, primarily those that manufacture needed goods. Clothing, food, or provide vital services. But other non-essential businesses like beauty products, brokerage houses, manufacturers and dealers in luxury items, and so forth, close down for lack of sales as their stock values drop to zero. When enough businesses shut down and enough people are out of work, we have an Economic Depression.

In a Depression there are two classes, the rich and the poor. Poverty is the rule and starvation becomes common. Greece was the first Western European nation to be hit by the Depression, as it had the most socialist government and the most giveaway programs. Their economy has collapsed, many of their banks have closed, wiping out what little wealth the people still had, and people are starting to starve. Importing millions of “refugee” workers for cheap labor is only making things worse for native Europeans. They’re starving in Spain with over 50% unemployment among young people now, who are the primary work force. Europe is steadily collapsing.

Right now, the US poverty rate is about 18% of the total population, or around 50 million Americans. That’s the Government figure. In reality, it’s more like 100 million Americans or roughly one third of our population. What will that be as the stock market continues to decline?

Greece and Spain are socialist nations with socialist welfare programs much like the ones Obama has initiated or expanded here. These programs are paid for out of taxes, and when the economy collapses and the tax revenue goes with it, the money for the programs dries up even as millions more people apply for welfare. The only alternative then is to print more money, making it worth less and worsening the problem, or cutting the programs. Cutting the programs results in starvation of the people, like in Spain and Greece and as they did here and all over Europe during the Great Depression.

As national debts increase, so do the interest payments. The interest payments on our debt are so high that we can’t afford to pay anything on the principle. In fact, we’re borrowing more money to pay the interest. How long do you think we can keep doing that?

The way the world managed to come out of the Great Depression was by going to war. Wars put everyone to work at the same time that they get rid of a lot of excess people. Manufacturing fires back up as governments strip their wealthy of their riches to finance the war, even taking over factories if the owners won’t comply. National debts are canceled as nations repudiate them as a necessary wartime emergency, and after all the winners and losers are sorted out, the winners demand reparations from the losers and help them prosper again so they can pay their war debts, as we did with Germany and Japan.

Certainly the Russians aren’t going to sit back and watch as their economy crumbles, not when they’ve built up such a powerful war machine. Nor China with their massive army. The faster the global economy collapses, the sooner we can expect global war. The easiest nations for them to attack are India and each other and I’d expect that. The US and Mexico have been strengthening their military bonds lately, which is no coincidence.

In the coming days, the best thing to own is a farm. You can grow your own food as well as have food to sell for other things. If I were a computer whiz, I’d start a barter website where people can trade goods for other goods or services and make it a community-oriented thing like Craig’s List. Even in depressions, there’s fortunes to be made.

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