If You Get Depressed Easily, Don't Read This...

...because it's really depressing.  If, however, you'd rather go into potential bad times with as much knowledge and preparation as possible, read this post from NRO's Iain Murray:

Fans of Derb's We're All Doomed will be delighted depressed by Martin Hutchinson's latest column at the Prudent Bear website. Martin was business editor of UPI while John O'Sullivan was in charge, and was one of the few financial journalists to see the crash coming well in advance. The signals Martin is picking up from the price of gold are worrying, to say the least:

The rise in the gold price above $1,100 per ounce last week is a pretty good indicator that something has changed. For 18 months, the gold price had been in a trading range topping out around $1,000. It has now broken out decisively from that range. The opportunity for the world's central banks to change policy and affect the economic outcome has been lost. The world economy is now locked on to an undeviating track towards another train wreck...

As was demonstrated by the housing bubble of 2004-06, modest rises in interest rates are not sufficient to stop a bubble once it is well under way. Given the Fed's recent track record, it is most unlikely that we will get any more than modest and very reluctant interest-rate rises. Even if inflation is moving at a brisk pace by the latter part of next year, the price rises will be explained away, or possibly massaged out of the figures as happened in the early part of 2008. Hence the bubble will inexorably move to its denouement, at which point gold will probably be north of $3,000 an ounce and oil well north of $150 per barrel. Even though there will be no supply/demand reason why oil should get to those levels, and gold has almost no genuine demand at all, the weight of money behind those commodities in a speculative situation will push their prices inexorably upwards, beyond all reason until something intervenes to stop it.

At some point, probably before the end of 2010, the bubble will burst. The deflationary effect on the U.S. economy of $150 plus oil will overwhelm the modest forces of genuine economic expansion. The Treasury bond market will collapse, overwhelmed by the weight of deficit financing. Once again, the banking system will be in deep trouble. The industrial sector, beyond the largest and most liquid companies and the extractive industries, will in any case have remained in recession – it is notable that, in spite of the Fed's frenzy of activity, bank lending has fallen $600 billion in the last year. Unemployment, which will probably enter the second downturn at around current levels, will spike further upwards. The dollar will probably not collapse, but only because it will have been declining inexorably in the intervening year, to give a euro value of $2 and a yen value of 60 to 65 yen to the dollar...

The danger in those years will be that Ben Bernanke will attempt yet again to refloat the U.S. economy through inflation, buying government debt to fund the deficit and forcing short term rates well below the inflation rate. This danger is exacerbated by the Obama administration's insouciance about deficits. Ben Bernanke on his own (and his predecessor Alan Greenspan) bears a large share of responsibility for the 2008 crash, but the Bernanke/Obama combination is potentially even more dangerous. If expansionary monetary and fiscal policies are pursued regardless of market signals, the U.S. will head towards Weimar-style trillion-percent inflation. That would make the government's position easier as its mountain of Treasury debt became worthless, but devastate everybody else's savings and impoverish the American people as Weimar impoverished 1920s Germany. 

As I said, a train wreck. Probability of arrival: close to 100%. Time of arrival: around the end of 2010, or possibly a bit earlier. And at this stage, there's very little anyone can do about it; the definitive rise of gold above $1,000 marked the point of no return.

Those are just the edited highlights but, if Martin is right, we are, indeed, all doomed.

I'm no economist, and all I've done is read up as much as I can about our current economic situation from other genuinely smart people.  But, I think I've seen enough (even before this post) to be completely unsurprised if we are heading into an even more turbulent and difficult economic time in the near future.  We haven't yet seen the commercial real estate bubble burst -- and if you thought mass foreclosures on $250,000 homes was bad, just wait until you see mass foreclosures on multi-million dollar businesses -- nor does anyone really know the true ramifications of the historically unprecedented levels of spending and debt that Obama and the Dems have racked up.  It can't possibly be good, and given that they'll be in charge of policy for at least another full year, nothing is going to change in the near future.  And, even worse, that's not even considering the health care takeover and cap-n-tax policies that still may be implemented, both of which are pretty close to economically catastrophic on their own.  Throw those in, and we're virtually guaranteed a complete disaster.

On a related note, even the President is now agreeing with those of us who have been fighting his spending orgy all along:

"I think it is important to recognize that if we keep on adding to the debt, even in the midst of this recovery, at some point, people would lose confidence in the economy. That could lead to a double-dip recession," [Obama] told Fox News' Major Garrett.

Sure, now that the damage is done, he's a deficit hawk.  I'm guessing he just knows that people are upset about this, and therefore he needs to say the right things.   Don't look for any substantial policy changes.

Anyway, the point of this post is not to freak you out, but to inform you.  You're smart; you already know things aren't exactly rosy.  But, knowledge is half the battle.  Let's say Hutchinson is right, and that all the stuff he suggests actually does happen.  You still have a long time to get ready for it.  Pay off your debts, save up, diversify your savings and investments, and start making sound financial decisions.  We'll all experience the tough times, but some will get hit harder than others, and I'll wager my entire 401k (such as it is, thanks to Barack Obama) that those who are informed and plan well will be the ones to take the least amount of damage.

I hope you're on that train; I intend to be.

And, if these doom-and-gloom warnings are wrong, what's the worst that can happen?  When happy days are here again, you'll be way ahead of the game already, and you'll have good habits firmly established.

I believe you deserve to know the truth, and you're not getting that from the panting, genuflecting media.  What you choose to do with that knowledge is up to you.  But...now you know.

There's my two cents.