A Timely Apocalypse Could ‘Save’ Debtors

If nothing else can stop a runaway stock market, there’s always the astrologers. Pick any day of the year, and odds are it’s circled in red on some star-gazing guru’s End of Days calendar. The higher stocks go, the louder their predictions of disaster. Not that we haven’t joined the chorus of despair ourselves from time to time. How else is a guru supposed to gin up business during the dog days of summer? At the moment, the sexiest prediction out there is the Mayan apocalypse slated in 2012.  Perhaps the Mayans would have pushed that date back a few years, giving themselves a little extra room, if they’d known that Goldman Sachs – the antichrist at the moment — would be running the world.

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Some of you will already know that the date December 21, 2012, marks the final 24 hours of a Mayan calendar that for thousands of years has been counting down a 5,126-year span. The bookstores have at least a dozen titles on this subject, and it seems to have captured the popular imagination in the same way the Y2K scare did. Mind you, this isn’t a cycle that’s supposed to begin anew; rather, it is simply the end of time. Assuming December 22, 2012 never arrives, then, do we infer that that will suffice to keep mortgage lenders at bay? Or will they be waiting to dun us as soon as the next Big Bang starts to cool?  

Looking on the Bright Side

Whatever happens, we shouldn’t count too heavily on debt forgiveness, since debt collectors are probably even hardier than cockroaches. But there may be a bright side: Spiritual healer Andrew Smith, for one, thinks 2012 will usher in a “true balance between Divine Feminine and Masculine.” If so, at least a couple of the world’s Great Religions are going to have some serious explaining to do. But Smith is the outlier, since most of the books envision something like Ghostbusters with an unhappy ending. But don’t be surprised if the Dow Average initially shrugs off the mayhem, even as flames lap at the stone walls of the New York Stock Exchange.

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  • Larry August 27, 2009, 6:09 am

    My friend Rick,
    I would have lost alot of money. But I alway’s read between the lines on your post’s. IMO the BDI index predict’s a lower stock market! The banksters’s IMO want to suck any newbee’s to their spider webb of evil !!!

  • Junior August 27, 2009, 1:28 am

    Any reverse split dollar devaluation will not help debtors. You’ll owe 10 “new” dollars for every “old” dollar of debt. You really don’t believe the bankers are going to take it on the chin do you? Come now, you really don’t believe that the government is going to help the working class joe do you?

  • Richard R August 26, 2009, 7:08 pm

    Re: Considering the effects of hyperinflation on savers, bonds, etc.
    Rick, I do not understand your concern here, if you consider your short hyperinflation thesis. How much hyperinflation are you considering? Would a 50% drop in the value of the dollar be enough to create a viable, self-sustaining economy, assuming the rest of the world would not follow suit?
    I certainly do not believe that the people in control of the Fed and Treasury have any compassion about wiping out social security, bond holders, savers, etc. other than how this might impact themand their ability to continue in some form. The derivative peddlers and their regulators had to know they were selling unfunded flood insurance that was bound to go wrong. The Feds mandate includes preventing exactly what their member banks were doing.
    When and if this mess clears, the holders of US debt are going to angry along with

    &&&&

    See Alex’s comments (below) to understand who will lose. (The short answer: everyone.) Regarding a 50% drop in the dollar, that is not in the cards. The deflationary overhang aggregates into the hundreds of trillions of dollars of uncollateralized, unpayable debt, and only hyperinflation, not mere inflation, can succeed in wiping it off the books. RA

  • Richard R August 26, 2009, 6:51 pm

    If you look at where the Mayans lived and agree that the primary end time concern (for them) is water (flood, hurricane etc) then you can understand their concerns as they would be very vulnerable to an increase in hurricane/tidal/tsunami events. We pass through the centre of the galaxy in 2012. How they figured this out, who knows? Maybe they were pretty good chartists, they had determined drought cycles spanning hundreds of years.

  • Alex Bond August 26, 2009, 5:19 pm

    Those who believe inflation or hyper-inflation will save our debt ridden economy are either delusional or severely lacking economic education (or both!). While a bout of hyper-inflation would indeed render worthless the debts of our society, it would also destroy the capital necessary to rebuild once the slate was “wiped clean” of our excessive debt.

    Hyper-inflation would indeed relieve you of your crushing debt; it would also relieve you of your job, your ability to purchase gasoline, pay for utilities and to buy food. Additionally, in a sustained inflationary environment, real wages (i.e. the actual purchasing power) always lag the increased prices for goods and services – virtually ensuring that you will continually become poorer and enjoy a much lower quality of life until the inflation is brought under control – and even then, it will take the better part of a decade to catch up with what your living standard used to be before the inflationary event.

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    Thanks for making this point so well, Alex. RA

  • joe sixpack August 26, 2009, 4:36 pm

    Cans of beans and boxes of bullets and we’ll all just kill each other

  • FranSix August 26, 2009, 4:11 pm

    If I may suggest, a currency devaluation does not necessarily imply higher commodity prices, either. As it stands right now, there are very few commodities where the demand outstrips the supply leading up to an eventual currency devaluation. And which of those commodities would you be permitted to hold in a bank as a practicable asset?

    If one had taken the time to invest in bullion when the Icelandic Krona was strong, then when the sudden devaluation of the currency occurred, your bullion would not take the devaluation. Anybody got time for debentures in Kaupthing Bank? Or anxious to buy Latvian sovereign debt?

  • D G August 26, 2009, 3:59 pm

    Maya timeline forecasting credibility is more than questionable. They were off on the end of time (for them) by about 1200 years.

    Regarding devaluation saving debtors…how did that work out for Argentina? Seems to me that I remember it being pretty destructive for folks that owned property as the economy was el stinko, high unemployment, tough to raise rents fast enough, etc…… Anybody with any data here?

  • Joseph August 26, 2009, 2:32 pm

    Ha Ha Rick. Good one. If you look real close you can see a faded bent over street sign for Broad and Wall in that painting.

  • Ryan August 26, 2009, 2:16 pm

    A severe devaluation of the dollar could help debtors, as you can pay back the old cheaper dollars with new, more expensive ones. Ultimately I think that’s what will “save” real estate, depending on how soon and how fast the dollar devalues. Of course, RE inventory levels will have to decline markedly before inflation could affect home values.

    &&&&

    Congratulation, Ryan. You are the one-thousandth person to post here who failed to consider what a deliberate hyperinflation would do to savers, lenders, banks and bond markets. RA

  • Rich August 26, 2009, 2:04 am

    This ominous silence may suggest a market trend change.
    Check out the Millerites some time. They had a date for the return of Christ.
    Some sold all their possessions. Some piled up debts. The date came and went.
    Those that sold and those that went into deep debt were ruined. But people continued to believe, forming the basis for several churches still active today…

  • TahoeBilly August 26, 2009, 2:00 am

    Rick,

    Hey I just received a $3,600 order for my Spray-Stone Limestone Plaster from a fancy chalet in Aspen, maybe things are getting better! Actually most of my contractor customers and screaming bloody murder as one would expect. Things better bounce soon for us in the high end construction biz, or we may start following the Mayan calendar!

    TahoeBilly