I've Got That 2008 Feeling Again

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Originally published at: https://peakprosperity.com/ive-got-that-2008-feeling-again/

I’ve got that sinking feeling from 2008 all over again. The financial markets are showing signs of distress, much like they did back then. The core issue, as it was in 2008, is a breakdown in trust. Trust is the bedrock of our financial system, and when it erodes, the system can freeze up, leading to catastrophic outcomes.

The signs are unmistakable. The Bank of Japan’s recent struggles with controlling the yield on Japanese government bonds signal a massive loss of faith in their financial management.

This isn’t just a local issue; it’s a global one because our financial systems are interconnected like never before. There are no firewalls or bulkheads to contain the damage if one part fails. It’s all one gigantic blob now, and failure in one area means emergency capital controls will be necessary to contain the damage.

The U.S. dollar is weakening significantly, which could spell trouble if it drops below key support levels.

Amidst this, we’re seeing global economic tensions with Trump’s administration trying to renegotiate tariffs and economic policies, which adds another layer of complexity and potential instability.

The derivatives market, which Warren Buffett once called financial weapons of mass destruction, is at the heart of this. Derivatives are essentially insurance contracts, but if everyone tries to cash in at once, the system can’t handle it. This market is massive, with trillions of dollars changing hands daily, and if trust breaks down here, the whole financial plumbing could seize up.

Gold, often seen as a safe haven, is up significantly this year, signaling that smart money is moving into assets that can weather a financial storm.

This is a clear indicator that something powerful is brewing deep in the bowels of the monetary system.

Disturbingly, the Trump administration has just pivoted back to out-of-control deficit spending, with the Big Beautiful Bill promising to tack on another ~$25 trillion over the next ten years, bringing the total pile to ~$60 trillion by 2035….that’s if something doesn’t break before then.

We’re at a crossroads with our economic policy. We could choose austerity, living within our means, or continue down the path of increasing debt, which seems to be the direction we’re heading with recent budget decisions. This path promises a financial accident, potentially adding trillions more in debt over the next decade.

In summary, the creaking and popping sounds we’re hearing from the bond markets and the global financial system are warning signs. We might be in the final stages of this financial saga. I’m urging everyone to prepare for what might come. This isn’t just about watching numbers on a screen; it’s about understanding the underlying health of our global financial system, which right now, looks pretty sick. Stay tuned, stay informed, and let’s navigate these turbulent times together.

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Debt doubles every 8-9 years… which, if you take your est 39T of current debt, we’ll be closer to 80T. There’s a couple of other wild cards missing from BBB. One is the huge increase in debt interest payments this year. Second is the govt is going to have to begin paying back to SSI in the very near future.

Is it possible to overlay inverse dollar over gold chart?

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Mr. Smith goes to Washington!

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Egon Von Greyers called it many years ago when he said that debt levels in the US would grow exponentially and here we are. They are unsustainable and there was an article on ZeroHedge where Scott Bessent said we are on the path to insolvency. We already are, we just pretend we’re not.

Maybe this was the article ZH linked but here it is when the US Sec of the Treasury says, “Houston we have a problem”.

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“$22 trillion in deficits on the way … and that’s without anything extra … like a war, a recession or a depression.” Those are extras! If I wasn’t feeling so pissy this morning, I’d be laughing out loud.

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I agree with most of this analysis except around 13:00 where it’s explained that we are in this predicament because we lived beyond our means for too long. No, this is typical Austrian economics thinking and it isn’t correct. The real reason is because we have been enslaved by a predatory debt based financial system for too long which can’t grow in the real world any more, it’s failing and needs liquidity and assets, and has now finished looting everything it can find as the majority of the population enters poverty and reaches personal debt saturation levels just to get by. Wealth disparity is now at about the maximum that a society can sustain before entering into a medieval style serfdom. I never hear here any suggestions on how to bring that wealth disparity gap back to sane levels. We complain about it, but just assume that free markets (whatever they are) will magically fix the problem, through some mechanism that isn’t clear to me.

How could it be that we are living beyond our means when so many are in poverty? Do we consume too much fossil fuel? Yes, and that will drop one way or another in the future, but that hasn’t yet reached a criticality which causes the whole system to collapse.

To suggest that medicare and other social programs are the reason for this and they are the ones that need to be cut is disingenuous. People paid into medicare for decades, and they have every right to use it. Just because the government and corporations looted the system to death, blew through trillions elsewhere on the military industrial complex, turned all public assets ino a corporo-fascist public private partnership and destroyed the underlying financial system that our public assets are stored in doesn’t mean that granny expecting adequate medical care in her retirement is living beyond her means.

Now, whether one believes in medicare as the best model to run a health care system, that’s another issue, but people paid into that system and there’s no reason to believe that average people are living beyond their means, except for fossil fuel consumption and I guess the trade deficit too, enabling cheap flat screen tv’s. But that’s not their fault.

As I say, “everything good that people make eventually gets corrupted and destroyed”. It’s a law of nature since everything we build or own represents resources which all species try to maximize. Every society has bad actors who try to steal public assets for their own control and distribution, and it’s when society isn’t vigilant that these weasels can get themselves in and eventually destroy it from within. Blame the looters of the system, not the users of the system.

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I have also felt strong 2008 all over again vibes.

This brought about a hard decision recently. I bought some land when a CD matured. I took a hit in income in the short term because the principal is losing twice or more than the interest to inflation. Having kids grown up and paying for their own phones and insurance etc was part of the equation.

The 2008 part put me in a state of indecision because of fear the real estate market might drop. I pondered whether I am foolishly buying on a high market and missing out on a bargain around the corner.

I watched the market a bit longer, and continue to see things getting grabbed up as soon as they list and getting 10-12 contacts a week on other property I own. Then I remembered that in 2008 things where I am now remained stable in price only rising much later and not proportionately as much as elsewhere. They never crashed here because the never rose quickly.

Compared to other areas this seems to be 2008 all over again in more ways than one, so I took the plunge.

Remembering 2008, the real estate crash was followed by a ton of unemployment and high gas prices there for a while. There was a glut if housing on the market that sat for years because people were upside down and could not lower the prices to move it. Foreclosures followed.

I was able to buy two old homes where people borrowed with a second or equity loan, make large improvements unwisely, then lost the home in a foreclosure. The homes were no longer mortagable because the roofs and other features were not yet updated. One had new central ac, kitchen, windows, siding, freshly refinished 1930s hardwood floors through out, but needed a roof and rewiring. The other was similar. Both have almost tripled since, even while I made rental income and continued to improve them making them mortagable so that profit can be taken more readily in a sale.

So on the bright side 2008 might mean bargains and opportunities once again. The cities in the South Eastern USA are busting with growth. Somewhat depressed properties just on the outskirts or county areas around them offer opportunity.

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For personal financial reasons I have been watching closely the efforts to cut entitlements in the federal workforce. There were proposals to delay and cut benefits, including decreasing future pension benefits by using the top 5 earning years to establish payments rather than the top three earning years, making early retirement almost impossible, and so on. Within the group of federal employees it has been all screaming and bedlam. Whether you were for or against the cuts, the Trump administration was acting like they took their fiscal responsibilities seriously.

But all that has changed in the last few days: most of these proposals have been dropped, with the few that may still be implemented occurring at a later time.

Part of this is how Trump rolls. He threatens massive tariffs, get concessions and rolls back a draconian plan, so that those impacted are ecstatic that the change is small rather than catastrophic. And people are happy about things they would have fought tooth and nail to protest if the first proposal hadn’t been so much worse.

So part of this approach appears to be stratgey. But scarily, some of it seems to really be just throwing in the towel and skipping back down the road to financial ruin.

It reminds me of this scene from GOT, you can start at minute 1:40. Why does someone do something with very bad consequences? Because (spoiler alert!) they don’t think they will have to reap those consequences…

https://www.youtube.com/watch?v=P3EDvBmI_lA

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This predicament is what caused me to brace for impact and stay that way. When I first watched the crash course, I knew that the three options out of the debt trap spelled doom, no matter which option we choose.

Austerity: Nope

Anyone who understands human nature and government programs knows that austerity will never be in the cards for the United States. There are too many interest groups and too many systems that depend on the constant flow of money. Say nothing of what it would take to live be beneath our means and make “payments” on the national debt. It’s comical.

Default: Nope

We cannot sacrifice the bond market with a traditional default. Too many powerful people, and too many citizens of the United States own our treasuries. Default is not an option. Plus, we need to keep borrowing.

Inflation: the least painful path for the Elite. You don’t need to know more. We are going to destroy the currency.

There is literally no way out.

Rector

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My use of this site is greatly diminished by the fact I have to LOG IN each time - despite the “remember me” box being checked. And every other site with my same browser remembers logins. Is this excessive security and if so, why can’t you just tell us?
Sorry to complain, but it’s the little things.

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I have always been of the opinion that it is irrelevant whether any country adopts a private or a public structure, the key is in the productivity, planning, controls, and sound budgeting.

The slippery slope is always the abuse of either the profits, or the taxpayer’s wealth.

The gold standard of essential monopolies like roads and water supply best being publically controlled, and businesses like cars, entertainment, and investement best being private; is a belief of mine.

I am surprised at the lack of likes for your well worded post.

In short, stop arguing on either side of the shop over daft politics and sort the show out.

:slight_smile:

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If you clear your browser history or clear cookies it will remove the cookie that lets the site know you are supposed to stay logged in.

Additionally some privacy browsers remove them every time you close out.

I have a box of most visited sites that comes up when I clear out my history. I am able to white list some sites to stay logged into them.

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I don’t clear my cookies and don’t use a privacy browser (although probably I should).

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I noticed recently that when I came to the site using a bookmark I needed to sign in. Everytime, however if typed “peak prosperity” in the search and came that way It would leave me logged in until I closed all the tabs.

I removed the book mark and made a new one. Perhaps my old one was for a page that does not exist any more or had something imbedded in it.

Other times ai notice when ai log in from my computer and come back to the phone, I need to log in again.

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