The Bailout Bubble – the Bubble to End All Bubbles

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The biggest
financial bubble in history is being inflated in plain sight.
This is the Mother of All Bubbles, and when it explodes, it will
signal the end to the boom/bust cycle that has characterized economic
activity throughout the developed world. Either unwilling or unable
to call the bubble by its proper name, the media, Washington,
and Wall Street describe the stupendous government expenditures
on rescue packages, stimulus plans, buyouts, and takeovers as
emergency measures needed to salvage the severely damaged economy.

All of this
terminology is econo-jargon. It’s like calling torture "enhanced
interrogation techniques." Washington is inflating the biggest
bubble ever: the Bailout Bubble. This is much bigger than the
Dot-com and Real Estate bubbles which hit speculators, investors,
and financiers the hardest. However destructive the effects of
these busts on employment, savings and productivity, the Free
Market Capitalist framework was left intact. But when the Bailout
Bubble explodes, the system goes with it.

The economic
framework of the United States has been restructured. Federal
interventionist policies have given the government equity stakes,
executive powers and management control of what was once private
enterprise. To finance these buyouts, rescue and stimulus packages
— instead of letting failed businesses fail and bankrupt banks
and bandit brokerages go bankrupt — trillions of dollars are being
injected into the stricken economy.

Phantom dollars,
printed out of thin air, backed by nothing … and producing next
to nothing … defines the Bailout Bubble. Just as with the other
bubbles, so too will this one burst. But unlike Dot-com and Real
Estate, when the Bailout Bubble pops, neither the President nor
the Federal Reserve will have the fiscal fixes or monetary policies
available to inflate another. With no more massive economic bubbles
left to blow up, they’ll set their sights on bigger targets. Given
the pattern of governments to parlay egregious failures into mega-failures,
the classic trend they follow, when all else fails, is to take
their nation to war. Since the Bailout Bubble is neither called
nor recognized as a bubble, its sudden and spectacular explosion
will create chaos. A panicked public will readily accept any Washington/Wall
Street/Main Stream Media alibi that shifts the blame for the catastrophe
away from the policy makers and onto some scapegoat.

At this time
we are not forecasting a war. However, the trends in play are
ominous. While we cannot pinpoint precisely when the Bailout Bubble
will burst, we are certain it will. When it does, it should be
understood that a major war could follow.

May
15, 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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