The Collapse of '09

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The "Panic
of ’08" will be followed by "The Collapse of ’09."
In 2008, when the world’s largest financial firms and equity
markets crumbled, Wall Street’s woes preoccupied the media.

In 2009, the
focus will broaden to include a range of calamities that will leave
no sector unscathed. Next in line is retail, which accounts for
some 70 percent of consumer spending, 26 percent of which is holiday
sales.

After the numbers
are tallied to reveal a dismal retail Christmas, more big chain
bankruptcies will follow. Besides leaving masses unemployed, defunct
retailers will leave behind thousands of empty stores. Who will
rent them? Nobody!

Add to these
empties commercial space vacated by defunct financial firms and
an array of troubled businesses, from restaurants to architectural
firms, to high-tech operations, to offset printers, etc., etc. The
inescapable result (that we predicted over a year ago and is only
now being discussed in the business media) is a commercial real
estate bust that will be costlier, wreak greater havoc and prove
more intractable than the residential market decline.

Because most
people don’t live and shop on Wall Street, the "Panic
of ’08" was viewed by Main Street as if from afar –
even though many were losing money. But when commercial real estate
crashes, it will hit much closer to home. The depressive atmosphere
of thinly shopped, half-vacant malls will strike emotional chords
and all the senses.

In office buildings,
vacant floors and empty cubicles will dampen the workday spirit
of the still-employed; ever-present reminders of laid-off friends
and colleagues and of the fragility of employment.

Abandoned,
untended business and industrial parks will highlight the already
mournful scene. In cities studded with soaring towers and new construction
predicated on eternal economic growth, streets lined with "For
Rent/For Sale" signs will complement stilled cranes and uncompleted
buildings.

As retail and
commercial real estate collapse, the credit card sector and all
its interrelated processing and back office support businesses will
suffer and be forced to scale back. Hordes of consumers who have
been living off credit cards and racking up debt to the limit will
lack the funds to service their debt… much less pay it off,
and they will be forced to default. Given the nearly $3 trillion
in consumer debt at risk (excluding auto and mortgage) an inevitable
default snowball will add momentum to the in-progress Collapse of
’09.

While we alone
predicted the "Panic of ’08" (and even took out the
domain name "Panicof08.com" on 7 November 2007), we are
not alone in predicting a Depression.

The "D"
word is being uttered – in some cases by those who have the most
to lose and whose best interests are not served by spreading gloom
and doom. "The world and country are in a depression,"
said celebrity tycoon Donald Trump. He then later softened the blow,
downgrading it to a "virtual depression."

"Virtual"
to the few who will never have to worry where the next dollar will
come from, it will be painfully real and hardly virtual to the multitudes
who are and will be worrying. The virally proliferating Greatest
Depression is the Trend of Trends for 2009.

Even so, beware!
Over the course of free-falling 2009, the word from most official
sources will be "recession," and from the few mainstream
trophy pessimists, "deep recession."

For example,
the oft-quoted naysayer, Nouriel Roubini, New York University professor
of economics, forecasts a two-year recession … not Depression.
On the sunnier side of Wall Street, the Federal Reserve predicts
the US economy will contract only through the middle of 2009 and
pledged, "In any event, the Committee agreed to take whatever
steps were necessary to support the recovery."

What "steps"?
The Bernanke Two-Step? Adjust interest rates or print more money?
Neither stopped the credit crisis from worsening, the real estate
market from tanking or the stock markets from crashing.

It was Fed
finagling, Washington deregulation and Wall Street’s compulsive
gambling that created the crisis. To trust or to seriously consider
pronouncements, analyses and predictions made by any of these sources
is an exercise in willful self-deception. Yet, with pensions, IRAs,
401ks, stocks and mutual funds evaporating, many of those most affected
deny reality and take hope that forecasts made by proven incompetents
will miraculously restore their losses.

Throughout
the many years leading up to what we term the "Greatest Depression,"
The Trends Research Institute provided copious data and Globalnomic
analysis to support our forecasts of economic upheaval. In the past
year alone, we have provided so much hard evidence (housings starts,
home sales, foreclosures, bankruptcies, bank failures, unemployment
figures, stock indices, leading economic indicators, retail sales,
etc.) that further elaboration should be superfluous.

Those waiting
to hear the "D" word from economic experts, talking heads
and TV anchors before taking action will most certainly regret their
indecisiveness.

Absent from
the economic scenarios ranging from second quarter recovery, deep
recession and "virtual" depression are the multiplicity
of social, environmental, health, political, emotional/psychological
and geopolitical factors that point beyond just Depression. They
point to The Decline and Fall of Empire America.

Well before
Inauguration Day, Barack Obama was cast as the next Franklin Delano
Roosevelt. If he follows in FDR’s footsteps, he could freeze
deposits by declaring a "holiday" to stop a run on the
banks. While FDIC insurance may cover deposits, even after banks
reopen, withdrawal amounts may be restricted. (As the Argentine
government did in 2001–2002.)

Author’s
Note: Suspicious of the soundness of the banking system, I requested
to withdraw a substantial sum from our Key Bank account, leaving
funds sufficient to cover ongoing business operations. First they
tried to dissuade me, then they stonewalled me, and finally they
turned openly hostile.

I was forced
to sign a series of documents, including one acknowledging that
since I was carrying a large sum, I could be the target of a robbery.
To enhance that possibility, the teller slammed down the bag of
cash on the counter and publicly announced the sum.

Despite repeated
requests in the days preceding my withdrawal to get the cash in
hundreds, they gave it to me in twenties, making for a bag five
times the size and more robber-friendly. When I complained to the
bank manager who had processed the request, the response amounted
to "take it or leave it."

This will not
be an isolated event. If you attempt to withdraw a large chunk of
money from your account, negotiate the details in advance and anticipate
possible hassle and obstruction.

We’ve
heard similar accounts from clients and Trends Journal subscribers
who, over the past several months, tried to close out mutual funds,
401ks and assorted sinking equities. They were dissuaded, cajoled,
belittled and arm-twisted by brokers desperate to keep their accounts.
Many caved in under the pressure, didn’t close them and lost
most of what they had.

So, we leave
you with a Greatest Depression consideration: How safe is your money?
How sound is your bank? At the end of November, Citigroup, once
America’s largest bank, was on the rocks. Fifty-two thousand
employees were laid off. In just three days, its stock lost more
than half its value. Rumors swirled that Citi was so desperate they
were looking to sell or split up the company.

Is your money
deposited in a local bank whose reputation you can bank on? Are
you with a teetering giant or a poorly-managed regional? If either
of the latter, it would be in your best interest to assess the risks.

Take some out
if you think there is risk; take it all out if you think there’s
high risk. You may consider spreading it around and even banking
abroad … after all, this is the Global Age.

March
22, 2009

Gerald Celente
is founder and director of The Trends Research Institute, author
of Trends
2000
and Trend
Tracking
(Warner Books), and publisher of The Trends
Journal. He has been forecasting trends since 1980, and recently
called “The Collapse of '09.”

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