Thanks to a couple long-time readers for attending today’s panel discussion, which I described briefly a couple days ago. One of you asked me to post the transcript, so I’ve cleaned up my notes and posted them below.
While I’m developing a post about the ongoing decline into negative territory beyond Hubbert’s Peak, today’s brief post satisfies two purposes: (1) shameless self-promotion, and (2) short-term prediction.
It’s rally time on Wall Street. The Dow Jones Industrial Average eked out a positive day for the eighth day in a row to hit a year-long high amidst the longest streak since April of 2007. Before you get too excited about this bit of green-shoots news from the boys on murderer’s row, let’s consider the cause and consequences.
Occasionally when people talk to me about my new life in and around the mud hut, their conclusions include one of the following statements: (1) You’re selfishly wasting your talent as an excellent and inspiring teacher. You should be teaching at the university, saving students, instead of preparing for economic collapse. (2) Don’t be silly. The United States cannot suffer economic collapse.
My responses go something like this:
I used to believe the bankruptcy of the Federal Deposit Insurance Corporation would have substantial implications. The FDIC officially ran out of money last Friday when they shuttered the usual handful of banks. When they close another handful this Friday — conveniently out of the media’s not-so-watchful eye — they’ll have exactly nothing with which to back up the deposits. Since backing up deposits in failed banks is the FDIC’s entire mission, this should cause the financial system to fail overnight. The FDIC claims to be working magic to solve this problem, but they’re simply trying to gloss over a monumental problem, as even the Wall Street Journal seems to notice.