CONTINUING BOURSE PLUNGE DOWN NEAR DEPRESSION LEVEL


Erle Frayne Argonza

Good afternoon, Fellows of Planet Earth!

The planet’s bourses are still plunging as of yesterday (Friday), a day that was dabbed as ‘black Friday’ in Japan which saw the Nikkei plunge by 10%. ‘Bloody Friday’ may be a better term, as the word ‘black’ in ‘black Friday’ could be construed as a racial slur.

This gentleman is among the economists/social scientists in Manila who forecast, way back in the late 1980s yet, that the Western economies led by the USA will experience another horrific depression this decade. We were then following the trends of a yawning gap between the ‘financial economy’ or ‘virtual economy’ and the ‘real economy’ based on the GDP statistics. The American economist Lyndon LaRouche devised a very potent graph of the event which he termed as ‘collapse function’.

As of late 2007, debts in the USA already exceeded the GDP by four (4) times. That means that, in the event of a bubble burst (which came from the realty markets), the economy will come crashing down. It is simply impossible for a $13 Trillion GDP to pay up for debts approximating $50 Trillion last year. In the secondary debt markets, financial derivatives exposures breached the $120 Billion mark in the USA last year, and that all the more exacerbates the weakness and fragility of a $13Trillion economy that simply doesn’t have the money to pay up for ballooning private and public debts.

My own forecast is that the stock market plunge across the globe, which is now in the vogue of a ‘freefall’, will continue till next year yet. At its best, the Dow Jones index reached past 13,000 points about less than a couple of years ago. The same index had already shrunk below 10,000 points at its worst. By next year, the Dow will further shrink by as low as 8,000-8,500 points, the range that actually represents the real value of the entire US economy.

1 Point in the US bourse is equivalent to $1.5 Billion more or less, at its best. A shrunken size would deflate the value to around $1 Billion. At 13,300 points, the Dow index represents a value worth $20 Trillion, which seemingly exceeds the GDP of the entire federation. But that amount is largely speculation, the speculative value exceeding beyond 50% of the real value of the commodity lines traded.

8,500 points in the Dow index would yield, at deflated value, around $8.5 Trilion dollars. That same estimate is the real value of the US economy in GDP terms, per year, as of today. The value of $13 Trillion includes the value of speculation and fiction, on account of the predominance of the ‘virtual economy’.

As I’ve already explained in a previous article, the Bush-Paulson bailout, allocated an amount of $700 Trillion, is a faulty measure to salve the financial ailments of the USA. It follows from the flawed Japanese ‘crisis management’ bailout of huge banks that went in the red last decade, a tragic measure that flattened Japan’s growth to almost zero for around ten years at least. It is a band aid solution to a gargantuan problem that is equivalent to cancer, and everybody knows that band aid doesn’t cure cancer.

That explains the jittery situation of the post-bailout law scenario. Financial traders and investors who still recall well the Japanese fiasco just couldn’t be appeased by a repeat of the same band aid solution, this time to an economy almost three times bigger than Japan’s (in real value). For as long as no strategic solution to the global financial crash is in site, the stock markets will be jittery till next year, and before long we would see both the USA and Europe plunge back to the depression years of the mid-1920s to early 1930s.

Let’s see what will happen to the election fever in the USA. Some liquidity will be produced by the election spending there, and the optimistic pitch created by the electoral situation may somehow drive back the bourses up a bit. That is just a temporary respite from the blazing flames of the crash, rest assured.

[Writ 11 October, 2008, Quezon City, MetroManila]

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One Comment on “CONTINUING BOURSE PLUNGE DOWN NEAR DEPRESSION LEVEL”

  1. Lyn Marcus Says:

    “The American economist Lyndon LaRouche devised a very potent graph of the event which he termed as ‘collapse function’.”

    Nope. Larouche runs a cult where every few years naive college students with some problems are urged to drop out and join his cult. Laruche has been “predicting” economic crashes for 4 decades in an Apoclyptic “New Dark Ages” to save the globe from the Rockefellers, the Russians, The Queen of England, Satan and a massive myriad of delusionary enemies in his head.

    What you are referring to is something called ‘The Triple Curve” function which is based on selectively inputing data to create the function, What you do not know is that in the cult, when real data was used in a few variations of this by members, it never came out with what Larouche was predicting. The whoile thing is a joke and cult which has taken in almost 300 million dollars over 40 years for him to use in his delusion.

    If the cult can’t recruit you, then they will be rasing money from you and trying to find the next group of people to hoodwink. Larouche’s own life is based on the massive exploitation of his members by avoiding things like the minimum wage, OT, OVERHEAD COSTS, SCREWING LENDERS and servng prison time for massive thefts from their supporters.

    You can read a lot about this cult world at

    laroucheplanet.info

    The economic traps to recruit into the cult are covered here.

    http://laroucheplanet.info/pmwiki/pmwiki.php?n=Cult.FcrasH

    You can see how he screws his followeres here.

    http://laroucheplanet.info/pmwiki/pmwiki.php?n=Money.LaroucheSchacht

    you can read about how Laoruche and the cult were a bunch of deadbeats who lost millions in real estate here.

    http://laroucheplanet.info/pmwiki/pmwiki.php?n=Money.FriendlyTourGuide1

    Larouche is running a cult and functioning more as a con maan to those who do not what is behind the facade when you get their phone calls


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