What I wrote on IsraelOutlook today was so positive… what I’m going to say next will dash cold water over everything… and, I hate that.
In case you haven’t heard, 2012 is going to be a bad year. No, make that catastrophic. Twenty twelve is going to be a CATASTROPHIC year. The only thing that will save 2012 is if the ‘powers that be’ choose to continue kicking the can down the road. Twenty twelve will only be a good year if governments world-wide choose to borrow even more and push debt to even more insane levels – which will take a catastrophic situation and make it truly horrifying.
Now, you might like the idea of putting off a financial Armageddon to next year, but every year we put it off, the worse that it’s going to get. If we had allowed the markets to correct themselves back in 2008, we would have been hurting, but it wouldn’t have been nearly as bad. Not even close.
Having said that, some of us who are trying to prepare for what’s coming will welcome the chance to prepare a little more – to have yet another chance to warn friends and family that disaster is headed straight at them.
Please don’t wait until the last minute.
Mac Slavo, January 3rd, 2012, SHTFplan.com
As with every New Year there’s no shortage of forecasts for what’s to come. This year we, too, will attempt to interpret the crystal ball and share some items for consideration and a road map of events to keep an eye out for. We don’t like to make time-sensitive forecasts, because if there’s one thing we should have learned from the last three years, it’s that the expedient and self serving actions of governments, corporate conglomerates, and politicians are anything but predictable and often supersede any timetable we can come up with. In an environment based on incomplete information it is difficult to conclude, with any degree of certainty, which events will play out, when, how and what their consequences will be.
Who could have accurately predicted that governments would undertake the largest tax-payer funded bailout in history after the collapse of the financial system in 2008, further expanding the multi-trillion dollar global debt bubble, instead of letting it correct itself naturally? How many actually believed, amid protests from millions of Americans, that Congress would follow through with the passage of socialized health care in what it supposed to be the world’s bastion of free market capitalism? Who truly believed that American citizens would be, in one sweeping broad stroke, marked as persons-of-interest and domestic extremists for seemingly innocent behavior that can now land them in a detention facility for life without charge or trial? Did anyone foresee a complete collapse of the middle class, the wipe-out of trillions of dollars in retirement and pension savings through stock losses and inflation, the decimation of the domestic job market and wages, or the record levels of poverty stricken Americans requesting food assistance and unemployment insurance?
Actually, there were plenty of awake and aware Americans out there that saw it coming – many wrote about it on their blogs, spoke to us in videos, shared on their social media pages, or started discussions in community forums across the internet. Some of the forecasts may not have happened within a specified time frame or exactly how we may have expected, but many happened as predicted, and in some cases were much more extreme than we could have ever imagined.
As you read the following items for consideration going into 2012, keep in mind that nothing is set in stone, and events may play out very rapidly once they have been catalyzed, as we saw with the Occupy protests and European riots in 2011, or at a slow but progressively worsening pace, as we’re seeing with the globalization of war in the middle east and elsewhere.
The following forecasts are based on trends that are and have been developing for months and years. Some are more likely than others. Some may never come to pass. Others are events that have a high probability of coming to pass, perhaps in 2012 or in the next few years. Whatever the case, they are scenarios that are, in many cases, interrelated . So, if you see one come to fruition, the chance that another will take place grows exponentially.
1. Europe Is Going Down
We don’t need to explain the seriousness of the situation in Europe other than to point out that Greece’s economic problems are nothing compared to Spain, Portugal, Italy and the combined eastern European nations. The entire European Union is under threat and we’ve heard talk of a potential break up of the currency, and even the possibility of countries exiting the EU altogether. Even Germany has discussed this possibility. The situation is dire and the only thing holding it up at this point is the same thing holding up the U.S. economy: monetary machinations. But, as Horace said (65 – 8 BC), “you can drive nature out with a pitchfork, she will nevertheless come back.“ The collapse of Europe is inevitable. It will not be stopped by more centralization. The Euro will be destroyed, and it may very well happen in 2012. In anticipation of the coming currency meltdown, the world’s largest lenders and investment firms are already pulling their money out of the European financial system and transferring those assets to perceived safety in US Treasuries and other instruments. We’re so close to a serious collapse in Europe that Britain has taken the unprecedented step of preparing evacuation plans for their citizens living in EU countries in case they are rendered penniless and without means to return to the UK when the Euro crashes. Other European governments are making contingency plans to deal with riots, violence and uprisings when the system goes critical.
2. Stocks Crash and Dollar Strengthens
You’ll know the European Union is in the midst of a waterfall collapse by watching stock markets, which will react violently and likely with unprecedented speed in their meltdown. While the big lenders and insiders may be exiting European investments, the general population, like Americans here at home, have no idea how bad the situation really is. It’ll happen when smaller investment houses and large individual investors start pulling out. This will cause a sell off of European debt, and subsequently European markets. As the money flows back into US dollars and the safety of treasuries, it will strengthen, possibly to multi-year highs. For a time we may see a repeat of 2008, where stocks and commodities collapse. The panic will build on itself, and investors who lost 40% or more of their money in 2008 will rush to exit in an attempt to avoid similar losses this time around. The negative feedback loop could send stock markets back to 2008 lows or lower. If it happens, it will be a panic unlike anything we’ve seen since 1929. Remember when stocks crashed 1000 points in a single day back in the 2010? Imagine that, but for real and for several days without reprieve.
3. Precious Metals Sell Off
They may be the safe haven asset of last resort, but if Europe crashes then precious metals priced in dollars may see a significant fall. This effect will be more of an issue with a strengthening dollar and companies selling anything they can to raise capital, than a bursting of the gold and silver bubble, though many mainstream financial pundits may make these claims as they did in 2008. The bubble will not be bursting anytime soon and such an event is probably many years of at this point. What we have seen over the last few years is that central banks, whether they’re in Asia, the middle east, or South America, are increasing their precious metals holdings significantly. While we will not rule out a price collapse of 30% here, we maintain that a price drop in metals will hit resistance around $1200 which is around the point central banks like China and India will move in with large quantity purchases. If and when this happens it will be the start of the great precious metals decoupling we’ve discussed previously, which is when gold/silver will no longer move in tandem with equities and other commodities. Keep an eye out for this opportunity. It may be the last time precious metals prices take a significant dive for a while, so stock up if you can.
4. The Economic Depression of the 21st Century Goes Mainstream
The economy has been battered for years. Only those who are ignorant or refuse to pay attention don’t see that we are already in the midst of collapse. It’s happening right here and now. Most would still write-off a European collapse as “just a problem over there,” but since U.S. stock markets will collapse along with it, and this is how most people gauge economic health, it won’t be until Americans see their personal retirement savings destroyed that they start realizing there is no easy way out of this mess. Until the stock markets crashed in 2008 no one was talking about the recession that had already taken hold for three quarters prior to the Presidential election. This time, unlike 2008 where Americans figured it was just a typical eighteen month recession, millions who have lost their homes and livelihoods, and even those who still have shelter and gainful employment, will finally realize this is the real deal. The people will lose confidence in our government’s ability to mitigate the crisis and the depression will be apparent to everyone – even corporate media.
Brace for impact!