Thursday, 31 January 2008

Trends for Downsizing the US: The Bright Side of the Panic of '08  by
Christopher Ketcham

Futurist and trends forecaster Gerald Celente, director of the Trends
Research Institute in Rhinebeck, NY, predicted the 1987 stock market
crash, the collapse of the Soviet Union in 1989, the Asian economic
implosion of '97, the decline of the dollar beginning in 2005, the
meteoric rise in gold prices in an age of currency volatility, and the
turn of events that may be the blessing of our era, the subprime mortgage
crisis.


Because of this habit of prescience, Celente has appeared regularly on CNN
and Fox and MSNBC, his "Trends Reports" widely quoted in newsprint, on
Oprah Winfrey, on Good Morning America.


Now in his Report for 2008, issued in mid-December, he carried the news
every thinking American already knows. "The United States of America,"
Celente pronounced, "has gone from first class to third rate." It's a
"nation on the skids and heading down."



Celente projects economic and political crisis in the coming year. "In
2008, Americans will wake up to the worst economic times that anyone alive
has ever seen," he wrote on December 17. "Just as they didn't see 9/11
coming and were frozen in shock when terror struck, [Americans] will be
frozen in shock when terror strikes again." He predicts "failing banks,
busted brokerages, toppled corporate giants, bankrupt cities, states in
default, foreign creditors cashing out of US securities.the stage is set,
the big one is on its way."

A similar wake-up call was issued last summer in a report by none other
than the chief investigator for the US Government Accountability Office,
comptroller general David Walker, who warned that US policy on energy,
education, the environment, health care, immigration, Iraq - pretty much
the gamut - was on an "unsustainable" course, bound for a maelstrom of
insolvency that could threaten to sink the ship.

According to the GAO chief, the fall of Rome seemed an apt historical
comparison:


* "[D]eclining moral values and political civility at home, an
over-confident and over-extended military in foreign lands, and fiscal
irresponsibility by the central government. Sound familiar? I'm trying to
sound an alarm."



When I called up Celente on Jan. 2 to see how the new year was taking
shape on the first day of trading, he fired back in an e-mail:


* "An attack in Nigeria (Africa's biggest oil producer) by anti-government
forces on the port city of Port Harcourt hit the futures markets hard. On
the New York Stock Exchange, trading conditions worsened on reports that
the Institute for Supply Management's manufacturing index dropped to 47.7,
the lowest reading since April 2003. Growth in European and Singapore
manufacturing also slowed in November, showing signs for all those that
were looking that the slowdown would be global."


By early afternoon, gold had surged $24 an ounce, crude oil climbed $3,
the dollar fell against all major currencies, and the Dow was down over
200 points. The next day, Jan. 3, oil hit a record $100 a barrel. And
indeed, as Celente warned, world markets were unraveling by the second
week of January, the Nikkei on its worse start to a new year since 1970,
the MSCI World Index dropping 6.9 percent, a loss of $2.1 trillion from
members' market capitalization, while Swiss world banking giant UBS posted
a $13 billion loss, and authorities in Britain reported the first run on a
British bank in a hundred years.

When on January 14 Celente sent out his weekly e-mail alert to
subscribers, the news was no better. The Dow registered its third
consecutive week of losses, one of its worst New Year starts in history,
losing in just the first week of 2008 half its gains from 2007.


* "Slumping retail sales, dire housing data, rising unemployment rates,
gloomy consumer confidence, spiking oil prices, a ballooning trade gap,
eroding wages, mounting credit card debt and delinquencies, mortgage
defaults, record foreclosures," said Celente. "The data floods the wires
and spreads the fear." It's telling that Tiffany's was off 11 percent in
sales, as even the very rich hide their cash under beds.


So is the subprime mortgage mess the catalyst for the Big One, what
Celente calls the Panic of '08? Stock guru Jim Cramer, host of CNBC's Mad
Money and co-founder of TheStreet.com, seems to think so.


* "There are a group of insurance companies that insure all these bad
mortgages," he told Chris Matthews on Jan. 18. "And I think they're all
about to go belly up. And that will cause the Dow Jones to decline 2,000
points. They have got to be shut down. This is going to happen in maybe
two, three weeks, Chris. It's going to be on the front of every paper. And
no one in Washington is even willing to admit it. I am telling you these
companies do not have the capital to make good. And, when they do fall - I
believe it is when - if the government doesn't have a plan in action, you
will not be able to open the stock market when they collapse.No one is
even talking about it."


>From panic, offers Gerald Celente, will arise almost overnight an era of
social and political upheaval and plain awfulness. Self storage will
finally "live up to the meaning of its name. Down and out, thrown onto the
streets, homeless Americans will empty out storage lockers of useless
junk.to store themselves."

He predicts wage riots and anti-government street protests and intensified
anti-immigration movements looking to scapegoat the "aliens" among us.

Toward the 1 percent of Americans who received 50 percent of all income
gains in recent years - those same 1 percenters, roughly 3 million people,
who took in 22 percent of all income in 2005 - there will be growing rage.


* "Kidnappings for ransom will become common, as they were in the
Depression and as the poor strike out against the rich," Celente predicts.
Lawlessness will be met, as in most third rate nations, with violence from
an increasingly sophisticated and brutal police state. A different type of
violence from the ground up, tax revolts, will also develop in strength,
targeting a tax-ravenous federal government that Celente charges has
failed "to protect food, win wars, clean the environment, upgrade
infrastructure, improve living standards, provide health services or
advance education."


Meanwhile, the dollar will bottom out at 10 cents to the euro sometime in
the next several years, perhaps by 2010. Newspapers report that even Third
World vendors are beginning to refuse payment in greenbacks, while foreign
governments and investors, mostly the Chinese, deploy the muscle of their
currencies to buy US property and businesses (proxies of the Chinese
government late last year snagged a 5 percent stake in Citibank, a 10
percent stake in Morgan Stanley).

Note that this is no fringer veering into conspiracist phantasm: Celente
consults for hundreds of large and small corporations, addresses
government bodies worldwide. Norway flew him to Europe in 2006 to address
a conference on innovation, while the International Council of Shopping
Centers hosted him as the key-note speaker at its 2007 convention - the
mall builders hoped to glean from Celente "what people want from malls."

It's notable, in the wake of the prognoses of his 2008 reports, that he is
no longer invited onto the TV and cable networks - "the first year in
decades," he says, "that they did not have me on and that USA Today did
not cover the Trends Report." When Celente sent out an e-mail alert to his
mailing list in mid-January, Jack Marks, the publisher and CEO of The Wall
Street Reporter, one of the oldest investment organs in New York, wrote
him back to say "You are a fucking retard motherfucker" and "Remove me
from this list, you fucking moron."

The local publishing group near Celente's home in Rhinebeck is perhaps
more typical in its spinelessness: The Taconic Press, which publishes six
newspapers in the Hudson Valley and upstate New York, told Celente in
December via e-mail that there was "a general uproar about the inclusion
of your Trends forecast [in 2007]. reader and advertiser reaction was
strong, and they made their feelings known to our publisher." Celente's
long relationship with Taconic Press is no more. Par for the course in the
nation of blinkered denial.

There is apparently an upside to the rottenness to come, according to
Celente - if Americans dare to reinvent for the 21st century the free
thinking and civic courage of their past. This good cheer as Rome burns is
buried somewhat in Celente's report for 2008, but what it suggests is
that, catalyzed by crisis, a fair number of Americans - a minority,
likely, but still to watch - will begin this year a transformation of
consciousness.


Celente predicts that the smaller communities, the smaller groups, the
smaller states, the more self-sustaining communities, will "weather the
crisis in style" as big cities and hypertrophic suburbias descend into
misery and conflict.


"Like Katrina's victims that knew the hurricane was coming but didn't flee
- and looked to Uncle Sam to save the day - those that don't take action
before panic strikes or wait for Washington to lend a hand, will suffer
the most from the calamity that follows," he writes.


Economically, the new consciousness will recapture Yankee frugality and
reject the lunatic behaviors that have been unsustainable since the Second
World War - big houses, big cars, big spending. Those who market and
embrace "products and services that focus on compact, smart, functional,
efficient, neat, clean, reusable, 'less is more' and 'small is
beautiful'," Celente writes, "will handsomely profit."

There will be a downsizing of expectations and perceived needs. There will
be a downsizing of giantist institutions to fit to human scale - the
center cannot hold, particularly as state's righters and tax rebels and
what Celente calls "the newly flourishing state secessionist movements"
begin to repudiate a $9 trillion-in-debt federal government that too often
practices the most offensive kind of taxation without representation.
Altogether, there will be a downsizing of America.

* "This could be the end of something really ignorant and stupid and
dark," Celente told me recently in a phone interview. "The end of a dark
age! The end of the age of what I call Bottom-Line Fascism, the ruthless
and dictatorial profit-only way of thinking that produces crap over
quality in all the major institutions, dopiness and blob-thinking, the
manipulations of an idiotic media and political establishment, the Cartoon
News Networks, the Greta Van Susterens and the Hillary Clintons uttering
the same pablum ad nauseum over and over. All the institutions are coming
apart - government, corporations, media, education, health care. They
present nothing less than a vacuum! Something has to fill it! The systems
that are in place? Things can only get worse if they stay in place. But
I'm an optimist. I'm gunning for something better to replace what we got."
He pauses. "A renaissance! I'm gunning for a renaissance: an era where
quality beats out the crap of quantity."