The Great Depression Online

Great Depression Online Archive Issue:

Dope Smokers to Bailout the Golden State

Great Depression Online
Long Beach, CA
March 30, 2010

Inside This Issue You Will Discover…

*** Debt Auction Flop
*** Stocks, Housing, and the Benefits of Crisis
*** Dope Smokers to Bailout the Golden State
*** And More

Debt Auction Flop

Last week something significant happened.  Proving we still live in a world with consequences, the U.S. Treasury Department’s debt auction flopped.

Following the weak demand on two year, five year, and seven year treasuries, yields on 10-year treasuries spiked up 15-basis points…the biggest increase since December and reaching their highest level in over nine months.

Alan Greenspan called it a “canary in a coal mine,” signaling investors may not be willing to fund the massive U.S. budget deficit.

“The message from the bond market to Washington is loud and clear,” said Mike Larson, an interest rate analyst at Weiss Research.  “Get your fiscal house in order or we’ll force you to do so.”

~~~~~~What’s Coming Next?~~~~~~

The shocking 1990 collapse of the Japanese Market.  The extraordinary U.S. economic boom of the ‘90s and early 2000s.  The devastating global recession that began in 2008.  These impacted everyone’s lives, investments, and fortunes.  The signs of their arrival were visible years and years in advance.  And yet…Almost No One Predicted Them.

The mainstream media didn’t.  The top economists didn’t.  The great financial advisers didn’t.  But One Man Did.

What’s coming Next?  When will it happen?  What should you do to Prepare for it?

Click Here for the Answers


“Bill Gross, manager of the world’s biggest bond fund,” reported Bloomberg, “said the almost three-decade bond rally may be ending.”

Could the world as we’ve known it for the last 30-years be over?

“Yes,” says the debt market.  Here at the GDO command center we’ll continue to monitor the situation for you.

Stocks, Housing, and the Benefit of Crisis

In the meantime, we’ll consider the consequences of rising rates on the stock market and housing market.

The DOW is now in spitting distance of 11,000.  We suspect it’ll make a run at this mile marker.  But even if it hits this target, what does it really mean?

The DOW’s up over 63 percent from its March 2009 low.  Yet the stock market never moves in a straight line.  After stocks go up for a while, they then go down.  Sometimes they go down a little, sometimes a lot.

If you lick your index finger and hold it up to the financial winds, you can feel a slight change in conditions.  The winds, like treasury yields, have shifted.  For rising treasury yields will put a stiff wind in the face of rising stocks.  The higher yields go, the more rewarding bonds will become…tempting money out of stocks and into bonds.

Regarding housing, rising treasury yields lead to rising mortgage rates.  As mortgage rates rise, housing becomes less affordable.  Prices must drop to make up the difference.

But there is one benefit to it all…

Fiscal crises, for all their drawbacks, have one extraordinarily rewarding benefit.  They expose the blunders and failings of political leaders like a pesky pimple on a beauty queen’s face.  For when the economy is booming the flood of rising revenues paper over the mistakes.  But when the money recedes the politicians are left high and dry, exposed for what they are…idiots, incompetents, fools, and morons.

Take California

Dope Smokers to Bailout the Golden State

The dimwits in Sacramento seem to be incapable of anything else than passing costly laws and spending other people’s money.  Yet none of the spending, as far as we can tell, has done a lick to make the state a better place.  We have no hard facts to support this assertion…its just good old fashioned opinion based on our own empirical observations.

You see, the state, once again, has found itself in a jam.  This year it’s attempting to spend $20 billion more than it taxes.  But unlike the Fed, the state cannot print up the dollars to cover the gap.  Rather, they must spend less or, somehow, tax more.

This is what some folks call a conundrum.  And this is what’s prompted the latest delusion: that dope smokers can bailout the state.

“Perhaps only in California could a group of marijuana smokers call themselves fiscal realists,” explains Jesse McKinley in the New York Times.

“And yet, faced with a $20 billion deficit, strained state services and regular legislative paralysis, voters in California are now set to consider a single-word solution to help ease some of the state’s money troubles: legalize.

“On Wednesday, the California secretary of state certified a November vote on a ballot measure that would legalize, tax and regulate marijuana, a plan that advocates say could raise $1.4 billion and save precious law enforcement and prison resources.”

You know what they say.  As California goes, so goes the nation… 

Legal pot could be coming to a store near you.


M.N. Gordon
Great Depression Online

P.S.  “We’ve seen the greatest credit bubble and greatest real estate bubble in modern history, which means we have inflated asset values and, more importantly, way too much debt in our system,” warned financial author and publisher Harry Dent recently to

Here’s what else he said.


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