http://blog.american.com/?p=7572

Here is a very bearish case for the economy being made by Martin Hutchinson at prudentbear. You can read the whole piece here.

Here is the part where he lowers the boom…

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.

In the next downturn, the Fed will not be able to cut interest rates, because inflation will be spiraling, as in 1980. Instead it will need to raise them while dealing with a profound crisis in the bond markets. Capital in the U.S. will become still more difficult to come by, and unemployment will approach 15%. The U.S.’s only saving graces will be that the inflation will have prevented much further decline in the nominal prices of houses, while the decline in the dollar will have finally swung the payments deficit towards balance. U.S. real wages will be forced downwards by high unemployment, while banks’ relief on the home mortgage front will be balanced by a tsunami of collapsed credit card debt and other consumer debt.

2011 and 2012 will be very unpleasant years, as the Obama administration struggles to get closer to budget balance without pushing up taxes so far as to cause yet a third recession. Stock prices will be at or below their March 2009 lows, and will stay there even as earnings of export-oriented companies will be robust. (Conversely, retailers dealing in cheap imported goods, such as Wal-Mart, will be devastated.)  Wages will be generally declining relative to prices, although may show some growth in nominal terms as inflation will be considerable. Foreign goods and services will be inordinately expensive in dollar terms.

If he is right, and he certainly could be, then this is bad, real bad. Even if he is close, it is still incredibly bad. If true, it will also mean that Obama will be in deep trouble come 2012. Even the media might not be able to save him if this scenario plays out.

At this rate the DOW is going to be at 20,000! Sure, unemployment would be around 20%, but we would be really productive and efficient!

Do you realize that there has been a vote on a health care bill in the House of Representatives that will cost the country $2 Trillion that no one has read?

Does this make sense to you?

The media has lied to you about it, but oh well. The American people voted the Neo-Marxists in and now they are getting what they voted for, namely debt enslavement. 

So…Congratulations on enslaving your children to China! Years from now, I am sure they will thank you!

Here is a great chart that a blogger has been updating as the months pass. It illustrates what is happening vs what the White House predicted in light of their massive “stimulus” package.

You can see just how wrong the super geniuses in the White House have been. The problem is that this mistake cost us a trillion dollars in the failed stimulus bill alone.

Today the “official” unemployment rate has risen to 10.2%. It would be alot higher if it was not for the BLS using a smaller number for the labor force. They do this because so many have given up looking for jobs at all.

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I was out last night and I met a charming woman. We had a very friendly conversation and as it turned out she makes her living as a market analyst. After speaking for a bit, she asked me how I would describe the economy and stock market during the last 18 months or so. This is what I told her.

A car is speeding at 60 MPH toward the edge of a cliff. George W. Bush is driving and Hank Paulson is in the passenger seat. As they get closer to the cliff, they rig the steering wheel and gas pedal to keep going, and they jump out of the speeding car and roll to safety. They dust themselves off and go about their day.

Barack Obama and Tim Geithner emerge from the backseat of the still speeding car. They contort their positions and get into the front seats via the sunroof. Thinking quickly, Obama  and Geithner remove the rope from the steering wheel and the brick from the gas pedal. They let out a big sigh of relief.

Not wanting to waste time, Obama shifts gears, and pushes the gas pedal to the floor and accelerates to 120 MPH, still heading toward the cliff.

Makes sense, doesn’t it? She thought so too.