Bill Bonner

Nothing much from the markets yesterday. The Dow fell 72 points. Gold went down $5.

Meanwhile, the Occupy Wall Street (OWS) movement goes on in America. And 70,000 Greeks “clash with police,” say the news headlines.

People are upset. They know something is wrong. But they don’t know what. The real explanation is too complicated. They won’t sit still for it. So, they look for scapegoats — the rich…the banks…the Chinese.

There’s a joke making its way around the Internet. Goldman Sachs has decided to try to profit from the OWS protests. They’ve set up a “Rage Fund” that will invest in companies that make police batons, pepper spray, bandages, and glass windows.

It’s a joke. But it may turn out to be a good investment strategy.

We’ve made a number of big predictions here in The Daily Reckoning. Some of what we’ve foreseen has actually come to pass — the crash of the tech bubble…the collapse of the housing market…the Great Correction. Some of what we’ve forecast has not yet happened. Some never will.

But here is our most audacious forecast yet: the US is headed for ruin and revolution. The revolution will almost certainly be put down, violently. But the ruin cannot be stopped.

Yes, dear reader, the empire is following its natural course…with the zombies in control and the debt slaves whispering treason. It can’t afford enough bread to keep the popolo minuto (the little people) happy. It will be forced to get tough on them. It is only a matter of time before the secret police round up the ringleaders and disappear them. Heck, the Obama government has already decided that it has the power to kill citizens without any due process of law. What’s to stop it from killing lots of them?

A friend of ours in Argentina explains:

“Everybody is very critical of the generals in Argentina for putting down the radicals in the ’80s. But they had to do it. These guys were kidnapping people. Robbing banks. Murdering people. I was still at school then. I remember that the father of a friend of mine was kidnapped and killed. The police came to school and took the kid away to protect him. They had to do something. The country was sinking into chaos.”

The US will have to do something too. At least, that’s the way most people will see it. It will be “at war” with its malcontents. When you declare a state of war — as demonstrated by the Bush and Obama regimes — you can get away with anything.

The US will continue its program of circuses overseas too. It would make much more sense to bring the troops home and shore up the nation’s finances. But empires don’t back up. And they always manage to find some jackass to lead them where they need to go — to their own destruction. (More below…)

Today, the revolution is a simmering cauldron of greasy misunderstandings and unappetizing conceits. But the fire beneath it is real. It is the heat given off by a system that no longer works.

The New York Times reports that whole cities are now underwater. Millions of Americans are drowning:

The United States has a confidence problem: a nation long defined by irrational exuberance has turned gloomy about tomorrow. Consumers are holding back, businesses are suffering and the economy is barely growing.

There are good reasons for gloom — incomes have declined, many people cannot find jobs, few trust the government to make things better — but as Federal Reserve chairman, Ben S. Bernanke, noted earlier this year, those problems are not sufficient to explain the depth of the funk.

That has led a growing number of economists to argue that the collapse of housing prices, a defining feature of this downturn, is also a critical and underappreciated impediment to recovery. Americans have lost a vast amount of wealth, and they have lost faith in housing as an investment. They lack money, and they lack the confidence that they will have more money tomorrow.

…The latest data from the survey, released Friday by Thomson Reuters, shows that expectations for economic growth have fallen to the lowest level since May 1980.

In Orlando, a city that trades in upbeat fantasies, the housing crash has been particularly painful. The total value of area homes has fallen below the total mortgage debt on those homes, according to the real estate analytics firm CoreLogic. In the parlance of the real estate world, Orlando is underwater, a distinction matched by Las Vegas.

Meanwhile, the Zombie Metropolis, is doing fine. Here, we turn to Bloomberg:

Federal employees whose compensation averages more than $126,000 and the nation’s greatest concentration of lawyers helped Washington edge out San Jose as the wealthiest US metropolitan area, government data show.

The US capital has swapped top spots with Silicon Valley, according to recent Census Bureau figures, with the typical household in the Washington metro area earning $84,523 last year. The national median income for 2010 was $50,046.

The figures demonstrate how the nation’s political and financial classes are prospering as the economy struggles with unemployment above 9 percent and thousands of Americans protest in the streets against income disparity, said Kevin Zeese, director of Prosperity Agenda, a Baltimore-based advocacy group trying to narrow the divide between rich and poor.

“There’s a gap that’s isolating Washington from the reality of the rest of the country,” Zeese said. “They just get more and more out of touch.”

Total compensation for federal workers, including health care and other benefits, last year averaged $126,369, compared with $122,697 in 2009, according to Bloomberg News calculations of Commerce Department data. There were 170,467 federal employees in the District of Columbia as of June. The Washington area includes the District of Columbia, parts of Northern Virginia, eastern Maryland and eastern West Virginia.

In recent years Washington has attracted more lobbyists and firms with an interest in the health-care overhaul and financial regulations signed into law by President Barack Obama, according to local business leaders.

“Wall Street has moved to K Street,” said Barbara Lang, president and chief executive officer of the DC Chamber of Commerce, referring to the Washington street that’s home to prominent lobbying firms. “Those two industries clearly have grown in our city.”

Last year Washington also had the most lawyers per capita in the US compared with the 50 states, with one for every 12 city residents, according to figures from the American Bar Association and the Census Bureau. In New York State the figure was one out of every 123 residents, while in California the ratio was one in 243.


Bill Bonner
for The Daily Reckoning

Bill Bonner

Since founding Agora Inc. in 1979, Bill Bonner has found success in numerous industries. His unique writing style, philanthropic undertakings and preservationist activities have been recognized by some of America's most respected authorities. With his friend and colleague Addison Wiggin, he co-founded The Daily Reckoning in 1999, and together they co-wrote the New York Times best-selling books Financial Reckoning Day and Empire of Debt. His other works include Mobs, Messiahs and Markets (with Lila Rajiva), Dice Have No Memory, and most recently, Hormegeddon: How Too Much of a Good Thing Leads to Disaster. His most recent project is The Bill Bonner Letter.

  • David

    You guys at Daily Reckoning don’t see a coup d’état when our government goes belly up? Of course in America our supposed leaders don’t say what they truly mean. It might be called “The Peaceful Transitional Council” to restore American democracy or some other nonsense like that. Some will say this can’t happen. These are the same people that thought the United States losing its credit rating would never happen. I see a huge power grab and the smart money should be on the Military Industrial Complex. America will finally get its Caesar and we can go back to watching our reality TV programs.

  • kamran

    I know of another person like Bill who predicts end of the world coming. He is Nostradamus and year 2012.

    He might have just been talking about current financial crisis unfolding 500 years ago.

  • John

    Good post Bill and I agree with most of it. I’ve always thought America was no “melting pot” but more like a “powder keg” fixing to blow itself apart. I think that time may be coming soon.

    I think you’ve articulated the cause of the simmering anger. The average citizen feels they’ve been hoodwinked, cheated but they can’t figure out how and by whom. Their rage is likely to turn on just about any group they feel is to blame, the rich, the powerful, anyone calling himself a politician.

    All in all, 2012 is looking to be an “interesting” year

  • Scott Benson

    As long as the supermarkets and gas stations remain open, America will continue on as it always has — just a little poorer. Try to remember — no one wants the “apocalypse” (except for a crazy few), so it ain’t gonna happen. It benefits no one. There’s no money in it.

  • Tim

    The super markets and gas stations may not remain open if there is economic collapse. The president would have to declare a state of emergency or if there is insurrection & chaos, then he would declare martial law. He would have no choice.

  • Lyn Robison

    Scott, the “apocalypse” benefits no one, so it ain’t gonna happen? Since when do only beneficial things happen?

  • Allan

    Lyn is correct. See World War I. Nobody much benefited from it. It happened anyway.

  • HaroldT

    Come on Bill, enough of this zombie business. The “zombies” are merely minions and goons for the banskers that form the shadow government that rules the U.S. You can admit it publicly.

    Look just recently, the banksters shift their derivatives from BAC parent company to BAC depositor company in order to dump the coming losses on the public. Trillions!

    There’s good reason for a revolution to take place; the U.S. has long since lost its sovereignty to the stateless bankster overlords.

  • phelps

    Ruin yes. Paul Krugman will tell us that we need for the economy. NY is a big city. Think of all the people you can put to work restoring it. Through LA and Chicago and you hit the trifecta. The broken window theory and all that.

  • Scott

    Huxley said Rome fell because it ran out of bread and circuses,but a scientific dictatorship would have a never ending supply. Perhaps human nature won’t allow it.

  • emdfl

    Bill, what’s your thoughts on Goldman-Sachs offloading that $75 trillion worth of their derivatives(?) on the taxpayers today?

  • Bruce Walker

    Most revolutions are carried out by a very small band of zealots, while the vast majority simply ignore the situation out of apathy because of years of corruption by the ruling classes.

    To anyone who is underwater on their mortgage, unemployed, or has seen 40 years of savings wiped out by a minor medical problem, –the temptation to let the radicals take their course becomes not irresistible, but rather something predictible like a banana left to turn brown on the counter.

    The government can point guns at the radicals and kill a few off. But it will only generate more sympathy for their cause, and eventually the gallows and guilotine stocks will be added to the GS new index.

  • Ken

    If only the unemployment were really 9 pct!

  • Brennen

    The only thing Bill hasn’t yet come to grips with is that this is ultimately by design.

    Bill thinks the Overlords are bumblers. In reality THEIR overlords know where all this is going.

  • *Sparkie*

    BB if the national median income is 50k I’m sry folks,but home prices have 2 cum dn along with the tax base a whole lot more,wether u like it or not. But the powers2b will not let that happen! 111 yrs ago in my “gr8 Grand Dads Days.” A used/fairly new 2000sf home with the works in those days and the property sold 4 $1500. Now lets do some math, shall we? Lets take an inflation rate of 42% a yr cuz thats watt the real rate is. Wether were talkin bout watt a candy bar or a newpaper or anything 4 that matter used 2 cost 111yrs ago. Times 42% x 111yrs and add that 2 watt a house used 2 cost. And there u have it, the real “cost of bein screwed!!!” *S* PS Socrates,1 of the most God like creatures 2 ever have walked the earth in the early days of man-kind,had a saying. Professing 2 b a wise man. Only means that i don’t know!!! PPS “Some times its better 2 live life with eyes closed.”

  • Alistair B Wittingsworth

    We may have outright revolution, as Bill predicts, or we may just go gently into the night and become Belgium or the UK. Britain lost its empire in the 20th century, after all, but there weren’t riots in the streets.

    We Americans may eventually just get used to smaller incomes, smaller homes (in the UK they distinguish “detached homes” from others, whilst here in the US we just assume that every home is a free-standing structure), increased apartment living, and standard of living taking a slow nosedive.

    Will that bring revolution and blood in the streets? Or will it merely herald an age of becoming like Holland and France? Those people are still happy, last I checked, despite being poorer than us.

  • I See Crazy People

    We’ve been infiltrated by an occupier.

  • Kenny

    It’s becoming no fun to live in this multicultural powder keg. Maybe if Lincoln had allowed the South to secede (as was their right) we would be better off today. (Slavery would have fallen from its own weight without 600,000 dead). Wouldn’t it be nice to live in Switzerland? No empire to defend at all costs!

  • CT

    Here come the drones.

  • 2 funny

    have you not observed any quad-homes or condos while posted here in the Colonies?

  • Fred


    Bankers and arms manufacturers benefitted quite well from WW1

  • rico

    reading a book the other day thought it was resent doom and gloom. Went to the back page,writen 1975. Americans love this crap.

  • John

    The elite class has sold out the American people for cheaper labor and they have gotten their wish. Now the carcass of main street cannot support parasitic Wall Street. The Wall Street oligarchs have looted the treasury to cover their gambling losses and the people are being billed for their greed and corruption. The next step is to subjugate the serfs and crush dissent. It is already happening. When Obama says he is with the protesters he only fools himself. Most intelligent people see the face of evil before them because it no longer hides or even tries to make a claim to legitimacy. It merely offers corruption and the status quo or intimidation and death Kadaffi style. As peoples’ anger moves from being inward based to seeing the external source as the perpetrator they are pushed to the wall. Many will take a last fling at liberty before annihilation. Let’s hope they are victorious because a dark age and a thousand years of slavery await otherwise.

  • Lee

    Oh Bill, things are bad, but they were also pretty tough during the Carter years. Even though our mini-Marxist president and his radical friends are doing everything they can to cause trouble, I think there are still enough of us good old Americans that believe in free-enterprise to bring things back. Now if 0bummer gets reelected that’s another story….

  • Alistair B Wittingsworth

    Lee, what kind of Marxist is BO when he’s the best friend of Goldman Sachs? Last I checked, Marxists hate capitalism – they don’t try to suck its d!ck and their capitalist bros out of every jam imaginable.

    BO is an awful president. But a Marxist he is not.

  • melanie

    This is bad peoples….we’re headed for a MAJOR bloodpath I’m afraid.

  • Scott Walker being b***h slapped by a DMV clerk

    Marxists hate capitalism, unless they need to get elected.

  • Rodger

    Where I live the county has a very high unemployment rate like the rest of the country. The company I work for has hired a contractor to put up a wall to separate some of our desks and they brought in a crew of illegals to do the work. I coudn’t understand why so many people were flirting with communism in this country but now I understand. Capitalism is cutting its own throat.

  • Cliff B

    Hi Bill
    Do you know what my greatest fear is? That nothing will happen. People predict turnaround, and people predict collapse. I worry that neither will happen, look at Japan, 20 years of annual decline with no end in sight. Is this to be us? every year hoping that things will turn around and getting a little poorer each time?
    PS With regard to our current plight and the people that got us here, keep Hanlon”s Razor in mind…It reads: Never attribute to malice that which is adequately explained by stupidity.

  • The Observer

    Or better yet “Never attribute to malice that which can be adequately explained AWAY by stupidity”
    The Observer

  • The Observer

    Nobody is that stupid, but we have had a great teacher at the top, teaching anybody that wishes to use it to cover up their malice. What a great legacy to leave our children.

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