THE CRASH OF TODAY’S REAL ESTATE
AND STOCK MARKETS AND WHAT IT
WILL INEVITABLY MEAN POLITICALLY

MR. PONZI OF NEW YORK

In December 1919 a certain Mr. Charles Ponzi of New York initiated an "investment" scheme in which he put up $150 dollars and got ten friends to do the same. He promised his friends a 50% return on their "investment" in 90 days. He then got a second set of friends, many times larger than the first, to put up similar amounts and promised them the same "return on investment" that he had promised the original group of "investors." With the money he collected from the second set of "investors," he paid the first set back their $150 dollars plus the promised 50% "return" ($75 dollars). Naturally, the original investors were thrilled and enthusiastically began promoting the scheme. The process was quickly repeated with a third set of "investors" - and rapidly mushroomed from there.

The intrigue was simplicity itself: give Ponzi money and in 90 days (and usually much sooner than that) he would give you your money back plus 50%, plus 10% to the recruiter. There was only one problem with the scheme: while the originators and early participants were handsomely paid off from the cash flow of those they recruited, the last ones who were brought into the scheme found that there was no one left to be recruited, and the cash flow stopped - leaving them "holding the bag." Before the scheme broke down, however (in May of 1920 - six months after it began), Ponzi had made more than a million dollars. Whether Ponzi knew it or not, what he had done was formulate or give expression - so to speak - to much of the thinking which lies behind today’s New World Economic Order.

GREED

The driving motivation behind the scheme, from top to bottom, was greed. Everyone - from Ponzi on down to the last "investor" recruited - knew that in the end someone would be left "holding the bag;" that people would get hurt; and that some would be hurt very badly. They didn’t care! - just so long as it wasn’t them. Most who involved themselves in the scheme felt that they could get "in and out" of the pyramid before it collapsed - and "to hell" with those who were "dumb" enough to get caught.

Needless to say, it took very coldhearted people to push the scheme, and very greedy and selfish-minded ones to participate. The scheme Ponzi devised is today called a "Ponzi Pyramid." It’s called this because if one were to chart out the scheme on a piece of paper it would resemble a pyramid with the originator(s) perched atop the pyramid and the losers sitting at the bottom. Money flows from the bottom of the pyramid to the top.

Originally, most pyramid schemes involved the use of "chain letters." The originator would send out a letter to ten friends asking for a certain amount of money, say $10 dollars (for a total of $100 dollars). They were then told to make ten copies of the letter and send one each to ten of their friends. A second circle of "investors" was thus produced, creating a second step in the pyramid that consisted of 100 people. These 100 were told to "buy into" the scheme by producing $10 dollars each and "sending it up the pyramid" (total amount, $1,000 dollars) and then to recruit ten more "investors," making a third circle of "investors" consisting of 1000 people. The process was then repeated, with the new circle of "investors" contributing $10 dollars each ($10,000 total) to be "sent up" the pyramid making the new total "invested" in the pyramid $11,100 dollars ($10,000 dollars contributed by the third circle of investors plus the $1,000 dollars contributed by the second set of "investors" plus the $100 dollars contributed by the first set of "investors"). As the money is passed up the pyramid, each step (circle of "investors") takes out a portion of the "investment" according to a prearranged schedule as a "return" on his or her "investment." By the time the fifth step of the pyramid is reached (100,000 people, each contributing their $10 dollars ($1 million dollars) the total amount of money has become astronomical considering the small amount of money with which the scheme was initiated.

In 1923 the Supreme Court determined that this was fraud (Cunningham v Brown 44 SCt 424) - and since then such pyramid schemes have been known colloquially as "Ponzi Schemes." According to the Supreme Court, what made the scheme illegal was that there was no "product" involved in the scheme. Nothing was "bought and sold."

INTRODUCING "PRODUCT" TO THE SCHEME

What to do? - introduce a product around which the scheme could be reorganized. The product could be anything; that wasn’t important - what was important was the scheme remained the same.

The real money didn’t involve the product, it involved the scheme; that is to say, the creation of an "investment pyramid." The product was at best a contrivance - a subterfuge. At worst, it was a fiction. Recruits (i.e., "investors") were not sold on the hope of making money off legitimate sales of the product; rather they were sold on the hope of making money by speculating on the pyramid. Speculation was the name of the game; the product was only a device around which the speculation was organized.

MULTILEVEL MARKETING

The most well-known (but by far not the most widespread) form of such speculation in today’s world is multilevel marketing (MLM). Recruits to MLM schemes are enlisted in the hope of huge profits to be made on their "downline commissions," not on the sales of the product per se. They anticipate recruiting others to build "legs," thus creating a pyramid, with a pyramid’s law of averages. But like the original Ponzi Pyramid, success for everyone is impossible. There aren’t enough human beings in the world to recruit. Once new recruits stop coming into the multilevel pyramid, the scheme inevitably collapses. Ami Chen Mills writes concerning her experience with an MLM:

"My experience with multilevel marketing began with Mark, the classified sales rep in a small newspaper office where I once worked. After an unremarkable stint at an ad desk, Mark announced that he had struck gold - and was leaving us to make a fortune in his own business. He would work for the Boss Man no more, and we who stayed behind would regret our miserable lives when, in a few years, Mark tore himself away from the country club to visit, and paid for lunch with a tiny fraction of his $50,000-a-month salary.

"‘You’ll be sorry’, he said on strolls to and from the taqueria for our usual low-budget burritos. ‘You’ll see’. Mark was suffering from an acute case of the American Dream; it first surfaced, as he now tells it, at a recruiting meeting in Santa Cruz for Equinox distributors. For two months, the only language Mark could speak was the language of Equinox International, an ostensible environmental and health company which produces herbal supplements, water filters and other sucking and sifting gadgets to ward off air and water-borne toxins. Yet the miraculous Equinox products were not the main event for Mark. Rather, Equinox and its executive progeny had convinced Mark that if he did not sign up to become an Equinox distributor right away, he would be squashed flat by the thundering steam train they call the Opportunity of a Lifetime.

"When we coworkers learned that Mark had already maxed out two credit cards to fly to Equinox "training seminars" in Portland, Denver and Hawaii and when we further learned Mark was preparing to take out a $5,000 loan to buy into the company as a ‘manager’, we each decided to take our turn with Mark, to talk some sense into the boy.

"My own conversation with Mark took place in the office after hours, and went something along the lines of, ‘So, are you sure you can make all that money’? ‘Oh yeah, no problems’. Mark looked at me askance, considering something, then retrieved a magazine from his desk. ‘Look at this’, he said, flipping through pages filled with pictures of Equinox founder Bill Gouldd. (The extra "d" was added by Gouldd according to the advice of a ‘spiritual adviser’. Mark told me it stood for ‘dollars’.) There was Bill Gouldd next to his sports car collection. There was Bill Gouldd at his expansive mansion on a hill. There was Bill Gouldd with a buxom blonde at his side. According to the magazine, there was no doubt that Bill Gouldd was making money.

"My next approach was to question the fundamental premise of multilevel marketing, the sketchy business of selling not a product, but a dream. The conversation was making Mark uncomfortable. I saw a flash of panic in his eyes before they glazed over. Then he said this: ‘They told us there’d be ripe apples who are ready - who see it. They told us there’d be green apples that weren’t ripe yet. And they told us there’d be rotten apples ... You’re a rotten apple’, he said. There was an uncomfortable silence. I smiled thinly and suggested we both go home.

"‘What about the product? Does anyone pay attention to what the distributors are selling’? I wondered."

No, Ami! - no one pays attention to the product; it’s the scheme that counts! The pyramid!

You say, of course, that you’re too sophisticated to be caught up in a Ponzi or multilevel pyramid scheme. That’s for the common folk. You invest in real estate and the stock market. That’s different. No! - not really! - at least, not anymore! And those who bought real estate as an "investment" up until a few years ago, and are now trying to sell it for a profit have found out that it’s not.

THE REAL ESTATE MARKET

Now to be sure, the real estate boom (and inevitable bust) of recent years was not an organized Ponzi scheme. No one fiendishly devised it and pushed it on an "unsuspecting" public. There was no single "mastermind" behind the scheme; no lone Svengali planned and promoted it; no Bill Gouldd. But it was a Ponzi Pyramid nonetheless, at least in the sense that people bought and sold homes not to live in them, but to speculate on them.

Like all those who "invest" in Ponzi schemes, greed was what motivated them. "Easy money" was what enlivened and excited them. People came to expect that housing values would rise endlessly. No one really knew how or why - they just seemed to sense that they would, and that there was money to be made in all this. People could buy a house one year, hold it for a few years without putting any real cash into it to fix it up, and then sell it for a twenty or thirty percent profit. The house wasn’t what was important in the scheme. It was the speculation that was important! Like Equinox’s herbal supplements, water filters and "other sucking and sifting gadgets," houses were merely the "product" around which the speculation was organized. Speculation was the name of the game; building or rehabilitating homes had nothing really to do with what was going on.

As the speculation boom took off, houses which had sold for $100,000 dollars at the beginning of the 1990s were selling for $450,000 dollars by the end of 2006 - a run up of over 450 percent in less than fifteen years. The run-up in these values had nothing to do with the "real" value of the home - i.e., what it cost to originally build it (plus the costs of inflation and improvements). It resulted in speculation. Houses were incidental to the speculation. It was the "paper" (i.e., the mortgage) that was being "bought and sold." People were buying paper, they weren’t buying houses. People bought real estate sight unseen. So long as people could be found to buy the same house (i.e., the "paper" on the house) every two or three years at a twenty to thirty percent markup, the pyramid held and the speculation continued. Eventually, however, there were no more buyers. The price of the “paper” (i.e., the mortgage) had reached a point where it no longer had any real connection to the value of the house. Buyers quit coming into the market.

Those who had bought at the height of the speculation craze, found they couldn’t unload their purchases. The mortgage (i.e., the "paper" on the house) was technically worth more than the house itself. People found that when they sold their homes, they couldn’t get enough money to pay off the banks (i.e., liquidate the "paper"). The pyramid broke down, foreclosures ensued, and bankruptcies followed shortly thereafter. Today, thousands – even millions - of people have lost everything they have. And who has been at fault? - everybody! Both the big investors and the small investors. Greed - not a desire to find a place to live - had brought them into the market; and their own corruption and depravity had "sold them down the river."

And were there any innocent victims? You bet there were! - but they weren’t the investors who got left "holding the bag" when the pyramid collapsed; they deserved what they got! They speculated on the market and lost! The real victims were instead the families who legitimately needed a home to live in; "blue collar" families who needed a roof over their heads, not a device to speculate with. These people were left out in the cold through no fault of their own - and for the most part, they’re still there, left having to rent houses in run down neighborhoods from landlords that could "give a damn."

THE STOCK MARKET

And what about the stock market? More specifically, what about today’s stock market? It’s the same. The bull market that ended in October of last year was nothing more than a colossal Ponzi scheme - the same kind of scheme that undergirded and drove the real estate market that just ended. And the same kind of greed and avarice that animated and energized Ponzi in 1919 and the real estate "investors" of the 1990s and early to mid-2000s is the same avarice and greed that was energizing the bull market that ended on October 9, 2007, when the DOW reached an astounding 14,164 points.

It had reached this point from a low of 776 in August of 1982 (the beginning of the “Reagan Bull Market”) – reaching a high of a little less than 20 times its valuation in 1982 after a short-lived dive from 11723 to 7702 in July of 2002.

What’s that mean? – it means that if someone had invested $100,000 in a DOW stock in 1982 and sold that same stock in late September of 2007, he would have made $2,000,000. But the “gains” he would have realized from his investment would have resulted almost exclusively from speculation rather than a genuine rise in the value of the company itself, just as was the case in the real estate market.

WHAT STOCK IS REALLY ALL ABOUT

Stock represents ownership (usually partial ownership) in a business corporation. It gives the owner of the stock the right to participate in the profits (supposedly the legitimate profits) of the company. When the stock market is functioning properly, people buy stock (ownership) in a company in order to participate in its growth and reap the bona fide profits that are derived from the sale of the corporation’s product. Money is invested into the company in order to increase the corporation’s ability to produce more product.

The value of the company (and, ipso facto, its stock) rests in the value of the product the company produces. When the value of the aggregate product rises, the stock (or value of the company) rises in accordance. When the aggregate value of the company’s product falls, the value of the stock (or company) falls. The price of the company’s stock is supposed to be in equilibrium with the dividend (or profit) that investors can expect as a return on their investment. This is called the price / earnings ratio, a ratio which measures the value of a stock against the profits one can expect to derive from the sale of the company’s product.

THE PRICE / EARNINGS RATIO

When the price / earnings ratio favors the investor, the investor can expect to recover the price he originally paid for the stock within a relatively short period of time and from that point on live off the company’s profits (i.e., derive an income from the company’s quarterly dividends). When it doesn’t favor the investor, it takes a relatively larger amount of time for the investor to recover the money he originally paid for the stock. When the amount of time increases to an unreasonable length before an investor can expect to recover his original investment, the price / earnings ratio is said to be "out of equilibrium." If the price of the company’s stock continues to rise after that point is reached, then it is being speculated upon.

Before the collapse of yesterdays’ bull market, the price / earnings ratio of most of the stocks on the world’s exchanges had long ago reached the point where it could be said that what was driving the market was "speculation" rather than any legitimate form of real "investment."

Indeed, the price of most stocks on the New York Exchange prior to October 2007 was more out of equilibrium than it was just prior to the collapse of the market in 1929 which brought on the Great Depression. What that means is that the price of the stock on the world’s exchanges had no meaningful relationship to the profits that could have been expected from holding the stock (i.e., from the income that can be expected from the company’s quarterly dividends). People were buying stock not to derive an income from the stock’s dividends (which is the only real legitimate reason for buying stock); rather they were buying stock to speculate with it.

STOCK SPECULATION AND THE
CREATION OF A "STOCK PYRAMID"

Like those who had been “investing” in the real estate market, people were buying stock not to participate as owners in the company, but to hold the stock for a few years and sell it down the road. Like the participants in the real estate market who bought and sold "paper" (i.e., mortgages) without ever having seen the houses (or real estate) the mortgages were drawn upon, today’s stock market "investors" were buying and selling "paper" (in this case, stocks) without having any real idea about the company they were "buying into." Their "buy" and "sell" orders were based more on various bizarre mathematical models (and in some cases astrological charts) than on any real knowledge of the business activity of the companies the stocks were supposed to represent.

This is speculation - there’s no other word for it. And it makes no difference whether the stock is bought through one’s 401k account or through a mutual fund (the ultimate in speculation devices) and held "responsibly" to be sold in ten or twenty years in order to send one’s children to college, or whether it’s held for two or three months in order to finance a riotous drinking and sex binge in the Bahamas. If the stock is being held so that it can later be sold for a profit, this is speculation. It’s the same as owning a house not to live in it, but to sell it later for a profit. There’s no difference.

The truth of the matter is, people who were buying stock in yesterday’s bull market were not that much different from Mark who bought herbal supplements, water filters and "other sucking and sifting gadgets" from his MLM, Equinox. Stock market investors and holders of 401k accounts - in all their pompous arrogance and pride - would, of course, object to being compared with Mark. Still, there’s little difference. It’s the speculation that counts, not the product - i.e., not the company, not the real estate, and not the herbal supplements, water filters and "other sucking and sifting gadgets." It’s the speculation! It’s the investment pyramid! It’s the gamble of getting into and out of the market before it collapses - and damn those who do get caught and the innocent victims of the speculation – i.e., the countless numbers of employees who depend on employment from the companies whose stock is being speculated on (and manipulated) in the world’s exchanges.

THE STAGGERING AMOUNT
OF TODAY'S SPECULATION

And just how much speculation has there been in the stock market? It has been colossal – and the run-up of the stock market from 776 points in August of 1982 to 14,164 points in October of 2007 gives some idea of the amount of speculation that’s been going on. Think about it! - does anyone actually believe that the real value of American corporations has increased by this amount, especially when the GNP has only been increasing by a fraction of that figure? If one thinks so, he’s very, very naive or just a plain fool.

Even if one were to say that the nation’s GNP (GDP) has increased by an average of 5% a year over the last twenty-five years [which is way beyond the reality of the situation when the entire twenty-five year period is taken into account, even when one factors in inflation (the real figure is more like 2.3 percent a year)], that would only account for a rise of about 350% in the value of these corporations.

What’s to account for the other 1,650% (2,000 minus 350)? In other words, if the rise in GDP accounts for only seventeen and one-half percent of the surge in the so-called value of these stocks from 1982 to 2007, what’s to account for the other eighty-two and one-half per cent?

Consider for a moment: A 2,000 percent rise in the stock market! Think about what that means. Twenty times the money that was in the stock market in 1982 was in it in October 2007. If the rise in GNP (i.e., the normal growth of the economy) can account for only 17.5 percent of the funds that have flowed into the market since the Reagan Administration, where did the other 82.5 percent come from? We're taking about trillions and trillions and trillions of dollars here. And be clear! - the money didn’t materialize out of nowhere. The greatest amount of this growth came during a period of low inflation (during the Reagan, Bush I & II, and Clinton presidencies), so the government printing office didn’t "create" the money. We’re talking about REAL dollars.

WHERE DID THE MONEY COME FROM?

Obviously, the money has been diverted from elsewhere. Essentially, it came from two sources: one source was internal to the U.S. economy, and the other source was external to the U.S. economy,

Internally, the money was derived from -

1. Lowering the wages of average American workers and diverting the money thus saved into the market.

2. Opening up sources of funds which used to be "off-limits" for investment into the stock market [i.e., pension and retirement funds, public funds, funds held in trust (both public and private), etc.] and pouring this money into the market.

3. The creation of mutual funds and 401k accounts to expand the amount of people capable of participating in the market.

And

4. By creating a sub-prime real estate market and linking it to the stock market through the fabrication of new “investment instruments” such as CMOs (Collateralized Mortgage Obligations), CDOs (Collateralized Debt Obligations), and so forth.

Externally, the money was derived from “TRIBUTE” from America’s system of “client-states” (e.g., the E.U., Japan, Australia, Canada, New Zealand, Korea, etc.) and “slave-states” (e.g., Guatemala, Honduras, Nigeria, the Congo, Malaysia, Indonesia, etc.). [Please see Part 3 of XII, “U.S. Economic Supremacy,” for a description of how this tribute system works.]

THE STOCK MARKET VORTEX

As money poured into the stock market, the sheer volume of it pushed stock prices up. As stock prices soared, others joined in the stampede to "get in" on the "easy money," creating an upwardly spiraling vortex which, as it grew in size and strength, sucked in ever greater amounts of money which in turn pushed stocks that much higher reaching eventually into the absurd.

What kind of absurdity? - take, for example, the stock of one company with annual revenues of only $14-million which was bid up to the point where $52-billion had been dumped into it - and not just by wild-eyed crazies, but by "reputable" mutual fund managers of some of the most well-known mutual funds in the country. And this was an American company doing business in the American market where reporting procedures were considered to be quite strict in comparison to stocks offered on foreign exchanges - for instance, in Latin America and the so-called Pacific Rim where more and more American investment money was being dumped. God only knows the absurdities that were reached in those overheated exchanges.

In the end, the stock market became nothing more than a mammoth Ponzi Pyramid, and like all such pyramids, greater and greater amounts of money had to be found to feed into it in order to prevent its collapse. And the money that was fed into it came from the diverted wages of American workers, the pension and retirement funds of our senior citizens, trust funds, and the "savings" of ordinary Americans who had been persuaded to divert their savings from their bank accounts to mutual funds and 401k accounts – ALL THIS PLUS THE MASSIVE AMOUNT OF TRIBUTE MONEY THAT WAS POURING INTO THE PONZI PYRAMID FROM “LEVIES” MADE ON THE CLIENT-STATES AND SLAVE-STATES OF AMERICA’S OVERSEAS EMPIRE.

One would think, of course, that the "game" couldn’t go on forever; that eventually the funds that were required to feed into the pyramid would dry up. AND THAT’S EXACTLY WHAT’S BEEN HAPPENING NOW FOR THE LAST YEAR AND A HALF – AND IT’S BEEN A “DOUBLE WHAMMY,” because just as the Ponzi Pyramid in the stock market began to totter, the Ponzi Pyramid in the real estate market crashed as well. As we indicated above, both Ponzi Pyramids had been linked together – so that the collapse of one would precipitate the collapse of the other.

DR. ROBERT SHILLER OF YALE UNIVERSITY

Seven years ago, Dr. Robert Shiller, a professor of economics at Yale University, explained what the political consequences would probably be when the collapse finally occurred, as it is doing today. He wrote:

"... We are in the longest business expansion ever, with generally good news for years about inflation and unemployment rates ... But the U.S. stock market has soared ... to truly stratospheric levels ... [and] ... the gap between stock prices and their actual worth (i.e., the "price to earnings ratio") by any standard measure has never been greater.

"... Some retirees have sunk all of their savings into stocks. Investors have mortgaged houses to invest more deeply; after a major market correction, they risk losing not only their investments but their homes ... Those on Wall Street, and in the media, persist in talking about 'bull markets' and 'bear markets'. This perpetuates the mistaken notion that the market is either hot or it's not. If that were true, the question 'when will the bubble burst'? Would be not only rational, but crucial. It is neither. A gradual decline is a slow disaster; it can be just as devastating as a sudden shock. Either way, investors lose a lot of money. And a longtime erosion in market confidence reverberates throughout the economy.

“Consider the 'crash' of October 1929, which - contrary to popular perception - played out for several years. After the Standard & Poor's (S&P) Composite peaked on September 7 of that year, there were some spectacular one-day drops, but there were also spectacular one-day increases [just as is occurring today]. The drops of October 28-29 [1929] are widely remembered, but these big drops were almost entirely reversed by April 10, 1930. Then the decline resumed. The S&P Composite fell 86 percent between its top on September 7, 1929, and its bottom on June 1, 1932, and this cumulative decline was the result of 365 up days and 431 down days.”

NOTE: A similar drop in today’s stock market would mean a drop from 14,164 (the DOW’s high in October of 2007) to 1,983 in November of 2011 (assuming a similar time frame of about three years).

Shiller continues:

"Some investors aren't the least bit concerned about an end to the bubble. They see the recent 'false storms' and rebounds from market drops as proof that the bubble is here to stay. [Shiller was talking here of the temporary drop in the DOW in 2000] I couldn't disagree more. Sure, that's been the case in recent years. Surging investor confidence has helped the market rebound quickly as investors buy after each dip. But such unnatural confidence is itself evidence of the speculative bubble.

NOTE: In other words, Shiller was saying that the rebound that occurred in the DOW during the Bush II Administration could not possibly go on forever – and, naturally enough, he was right.

"... The tendency of bubbles to deflate through a long series of ups and downs, and not burst suddenly, is apparently connected to the persistence of the public's confidence in markets. That confidence is unlikely to change suddenly. But in reaction to a protracted period of market volatility, the feeling of confidence can begin to erode. [As it is beginning to do today – Antipas Editor.]

"Today's high investor confidence ... is not a natural, steady state. It is a sign that the market is likely to decline in coming years. The signal does not identify a sudden turning point. But there may never be a better warning."

THE COLLAPSE OF THE INVESTMENT PYRAMID
& WHAT IT PORTENDS FOR AMERICA

Obviously, the public’s confidence in the economy has now reached the breaking point – just as Shiller predicted it would seven years ago. It took a little longer than he thought it would, but it’s surely here now – and the wreckage of the collapse is beginning to accumulate all over the place on a massive basis.

Shiller predicted that when the collapse begins, it would play itself out in fourteen different steps pretty much in the following manner:

The First Nine Steps of the Collapse as Predicted by
Shiller; Steps That Have Occurred or Are Occurring Now

1. The volatility of the market will increase, with more "down" days than "up" days. The market begins to drop, drying up as a financing source for job-creating new companies. [This is already happening – editor.]

2. Consumer confidence begins to plummet; paper profits vaporize - say good-bye to the "wealth effect" high stock markets engender in the overall economy. Consumers begin to put off making major purchases. [This is already happening as well; consumer spending is plummeting – editor.]

3. Remember downsizing? As sales drop, big employers, from PC makers to car companies to retailers, are forced to make sweeping layoffs to cut costs. [Again, this is already happening; layoffs are beginning to occur on a truly massive basis.]

4. Retirees wake up to find that their pensions are essentially worthless; their 401k accounts not worth the paper they're written on. All that's left to them is cash in the bank, and there is not much of that because most of it had been "invested" in the stock market. Now there's nothing to pay the bills with. [Again, this is already happening as well – editor.]

5. Real-estate crashes: Houses go unsold and offices remain vacant. [This is happening now on a colossal basis – editor.]

6. As the economic slump spreads outward to encompass America's trading partners, these countries try to ameliorate their situation by "exporting their way out of the slump" - with most of their exports aimed at the American market - the so-called "market of last resort." [Once again, this is already beginning to occur; Europe, China and Japan are all trying to export their way out of the crisis threatening to bankrupt some of the best-known American companies, as this process is now threatening to do with General Motors and Chrysler – editor.]

7. The resulting flood of foreign imports into the United States - at levels never before seen or even contemplated - causes American workers to go "ballistic" and to begin demanding a stop to the flood of imports which is destroying what few jobs they have left. [Again, this is beginning to occur on a huge level – one has only to tune into the Lou Dobbs show on CNN to appreciate the vitriol that has been reached against “Free Trade” – editor.]

8. A new labor militancy takes hold with a vengeful "I-told-you-so" attitude from people on both the extreme right and the extreme left. Most of the militancy is aimed at elite institutions like the WTO, the IMF, the World Bank, NAFTA, etc. which both the Left and the Right blame for the depression. [Same as above – editor.]

The Next Two Steps – Steps #9 and #10

All eight of these steps have been reached and have been “passed by.” We have now reached the 9^th and 10^th steps of Shiller’s description of America’s descent into madness. These steps are occurring now, and they will be greatly catalyzed by an Obama win in the November election, failing the materialization of the so-called “Bradley Effect.”

NOTE: The Bradley Effect is a reference to the failed candidacy of a black candidate for the governorship of California: The polls had predicted the black candidate’s victory; instead the white candidate won. It is assumed that many of the white respondents who had said they would vote for the black candidate failed to do so; when they got in to the voting booth, they found that they just couldn’t do it, and instead voted for the white candidate.

Still, Obama’s victory next Tuesday seems assured; but Obama and the Left may very well rue the day they won because in the end what it may very well mean is that the Right has successfully shifted the blame for the collapse onto Obama and the Left. The fact is, there is simply no way that Obama can stave off the continuing collapse of the Ponzi Pyramid on which the wealth of America has been based – and, according to the evidence that Shiller has amassed - we are only about 50 percent into this decline; there’s still a long way to go.

How an Obama Victory Will
“Play Out” in the Developing Crisis

Now it’s very important at this point to consider exactly how an Obama victory would “play out” in Shiller’s scheme.

First, as the crisis deepens, Obama will undoubtedly be forced to move to the Left in order to satiate the “leftist” appetite of his constituencies in answer to the growing crisis – which will mean more and more government intervention in the market place – just as FDR was forced to move left in answer to his constituencies during the Great Depression.

Second, as Obama moves to the Left economically, he will also be forced to make a parallel jump to the Left insofar as the social and cultural concerns of his left-wing alliance is concerned – a move to the Left that could very well threaten to tear down America’s Euro-centric, Christian culture and “RECONSTRUCTING” the nation on a more multi-ethnic, multi-cultural basis.

In addition – and this is very important – given Obama’s stated reluctance to use military force and the predilection against the use of such by some of his most important constituencies, THE AMERICAN EMPIRE, WHICH IS BASED ON THE UNRESERVED AND BRUTISH USE OF AMERICA’S MILITARY POWER, WILL BEGIN TO CRUMBLE, OR AT LEAST FRACTURE ON THE EDGES, threatening America’s investments overseas.

ALL THIS WILL HAVE THE CUMULATIVE EFFECT OF ENRAGING THE BUSINESS COMMUNITY AND THE COUNTRY’S RELIGIOUS AND POLITICAL RIGHT CONSTITUENCIES.

According to Shiller, this will precipitate steps #9 and #10 in America’s descent into economic and cultural madness:

9. A flood of illegal immigrants fleeing from the disorder in the outside world will begin swamping the country - flooding over the Mexican border; arriving by ships from overseas; washing ashore on rafts from Cuba, Haiti, the Dominican Republic; and arriving from Africa, India, Pakistan, etc. through the nation's airports.

   NOTE: There is every reason to believe that – given Obama’s already stated position on admitting “illegal” residents into the country and giving them “legal” status – this flood of new immigrants will unfold on a truly massive basis under an Obama presidency.

   Most of the new immigrants will be "people of color," which will provoke majority whites into a red-hot fury against the country's minorities. This in turn will, according to Shiller, most likely lead to an unprecedented outbreak of racial rioting at levels the elites (and the police) may not be able to contain – given the very real fact that there will not be enough jobs to go around for everyone. During the Great Depression, millions of illegal (and even some legal) Mexican residents were rounded up and deported by an enraged white population who saw them “stealing” their jobs.

10. As a result, the elites, fearing (1) the loss of their overseas “investments,” (2) rioting in the streets of the “homeland” and (3) dreading the rise of left-wing radicalism far more than right-wing radicalism, will turn to the Right for help in surviving the debacle, and will begin to pour money into the populist right in order to insure its victory over the Left and secure their own survival.

Racial Chaos: This Is Exactly What the Liberals
Fear May Occur as the Result of an Obama Victory

The chaos that all this will produce – especially the ethnic and racial chaos - is EXACTLY what concerns Mark Potok of the liberal Southern Poverty Law Center; Potok worries that a "failed" Obama presidency - one that white racists could successfully portray to average whites as "ruining the America they love," (e.g., the "John Wayne," "Gary Cooper," "Father Knows Best," "Leave It to Beaver," "Mayberry" America of their mythology) - could ignite a colossal wave of white racism against blacks and Latinos in the country; Potok writes:

"With the nomination of Barack Obama as the Democratic presidential candidate clinched, large sections of the white supremacist movement are adopting a surprising attitude: Electing America’s first black president would be a very good thing.

"It’s not that the assortment of neo-Nazis, Klansmen, anti-Semites and others who make up this country’s radical right have suddenly discovered that a man should be judged based on the content of his character, not his skin. On the contrary. A GROWING NUMBER OF WHITE SUPREMACISTS … THINK THAT A BLACK MAN IN THE OVAL OFFICE WOULD SHOCK WHITE AMERICA, AND POSSIBLY DRIVE MILLIONS TO THEIR CAUSE, AND PERHAPS EVEN SET OFF A RACE WAR THAT, THEY HOPE, WOULD ULTIMATELY END IN AN ARYAN VICTORY."

And the attitude of white racists seems to confirm the fears of liberals like Potok. For example, Ron Doggett, a Virginian who has been a key activist in the Klan, the paramilitary White People’s Party and the neo-Nazi National Alliance, writes:

"He [i.e., Obama] will make things so bad for white people that hopefully they will finally realize how stupid they were for admiring these jigaboos [sic] all these years.”

Doggett continues:

"I hope Obama wins because in four years, white people just might be pissed off enough to actually do something … White people aren’t going to do a thing until their toys are taken away from them. So things have to be worse for things to be better."

Another racist, "Darthvader," writes on the neo-Nazi Vanguard News Network web forum:

"I believe in the motto ‘Worse is Better’ and Obama certainly fits that description."

"Centimanus" writes on the white nationalist Stormfront website:

"Oh man, I am gleefully, sadistically looking forward to Obama as president. … It will be a beautiful day when the masses look at the paper and truly realize they have lost their own country."

"Fulimnata" writes on the same website:

"To the average white man and woman, they could look at Obama and see plain as day that whites are not in control."

Another writes on "TheLastOfMyKind" website:

"Could it be that the nomination of Obama finally sparks a sense of unity in white voters? I would propose that this threat of black, Muslim rule may very well be the thing that finally scares some sense back into complacent whites throughout the nation."

Finally, there's David Duke, America's leading white racist; he writes:

"Obama is like that new big dark spot on your arm that finally sends you to the doctor for some real medicine … Obama is the pain that let’s your body know that something is dreadfully wrong. Obama will let the American people know that there is a real cancer eating away at the heart of our country and Republican aspirin [of the John McCain variety] will not only not cure it, but only masks the pain and makes you think you don’t need radical surgery … My bet is that whether Obama wins or loses in November, millions of European Americans will inevitably react with new awareness of their heritage and the need for them to defend and advance it."

The Final Descent into Madness

Steps #11 through #14 in Shiller’s scenario will then inevitably follow:

11. As a result, a right-wing, populist-based government ensues.

12. The churches join themselves to the new government and use their alliance with the Right to suppress their cultural enemies on the Left (i.e., the gay and lesbian community, social liberals of every stripe, radical feminists, etc.).

13. The Left fights back with all the strength it has left, but is crushed.

14. A dictatorship emerges to finally put an end to the civil strife! The nation embraces the new ruler! The world also prepares to embrace him and restore prosperity to the trading system and people in general - their souls for a little money and a renewed sense of security: that's the bargain.

DOES ALL THIS SOUND FAMILIAR?

Does all this sound familiar? Well, it's happened before; this is exactly the scenario that played out with regard to the rise of fascism and Hitler in Germany in 1933.

We may well be in for a very rough ride over the next few years! – and you had better get ready. WE URGE YOU TO DO SO BY INVOLVING YOURSELF IN OUR TRAINING (see below).

God bless you all!

S.R. Shearer
Antipas Ministries

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