Thursday, November 19, 2009

Global Depression in Full Swing

In July of 2007, when the Dow hit 14,000 for the first time, I forecast that all 6 of the "Big 3" airlines and "Big 3" automakers would be out of business within 5 years.

While it may be technically a little early, and I still have a few years left, I'm going to declare victory on 4 of the 6 right now, based on the insignificance of what little business remains. At this point, none of these corporations are remotely significant to the US economy, nor are they capable of generating significant income, employment, or tax revenue. They are operating in a state of chaos, hemorrhaging red ink, and have gone bust but for a shell and a name. The remaining 2 are close on their heals.

Yes, it is probable the US government will put some of them on perpetual, debt-raising life support, to generate unlimited profits exclusively for the non-US-citizens who own the privately held Federal Reserve Corporation, who in turn own our Congress and the President. I'll count those as double-wins in terms of forecast accuracy, since that's far worse for Americans than if the companies simply disappeared. Under the foreign-owned-Fed's plan, they get transformed into conduits designed to export our wealth to super-rich non-citizens. GM and Chrysler already fit that characterization, generating some $20B in annual interest payments to foreign interests, in the form of US taxpayer guaranteed loans.

Gone, but for a name:
  • United @ $1B Market Capitalization
  • Delta @ $5B Market Capitalization
  • GM @ $0.5B Market Capitalization
  • Chrysler @ est. $0.4B Market Capitalization
Compare to Facebook @ $40B Market Capitalization. Facebook, alone, is 16x larger than the 4 listed above, and 2x larger than all 6, combined.

...and the Global Depression is just getting rolling.


  1. Facebook at $40 billion market cap? Where did you get that?

  2. It's a ballpark estimate from a $25B reported market cap in 2007 conservatively increased by reported growth from 20M users in '07 to 42M in '09.

  3. i think the highest valuation it ever had was $15B by Microsoft and I would have to guess Microsoft did that so no one else would try to buy Facebook.

  4. FDR, I know you mentioned this before, short term treasuries (1 and 3 month) are close to going negative again.

  5. Last I heard, Facebook was being valued at somewhere around $3 billion as of a month ago. that would fall somewhere below Delta which seems about right. Can you touch on the whole dollar carry trade if you have time. How does the FED printing and loaning those dollars via the carry trade not devalue the currency. Why can't the FED destroy another 90% of the value of the dollar's value over the next 10 years? Why now must it reverse it's 97 year slide

  6. msft did an investment round at $15B valuation i believe, but that was the peak. they're nowhere near $40B right now.

  7. They're about 250% larger than they were at the late 2006 $15B valuation. Regardless of how you estimate, a rather ridiculous dot-com dwarfs the "big" 6, which have a cumulative negative valuation of around $100B in total debt, before obligated pensions and benefits.

  8. Of course, if you look at net worth, any bum on the street is worth about $100B more than United + American + Delta + GM + Ford + Chrysler.

    The worst depression in human history unfolds...

  9. "The worst depression unfolds"

    Job out sorcing was like throwing gas on the fire.

    I went to Target today and i bought a couple pairs of underwear. Not one pair made in the USA.

    It is mind boggling that when ever there is a discussion on unemployment or new jobs, there is not one mention of the outsorcing.

  10. What about your audited return of -11.44%?

  11. "What about your audited return of -11.44%?"

    +12 two weeks ago, -12 today. It's a volatile market; give it a year.

  12. I hope american airlines isnt on your list of airlines going bust?????
    Im in Tulsa where there man maintance base is that employees OVER 7,000 people, if it goes bust Tulsa is going to become a detroit! Im not kidding either. Tulsa is already laying off and have furloughs.
    Thanks, Magnumpi28

  13. "I hope american airlines isnt on your list of airlines going bust?????"

    I fly a lot. There are still crowds due to cutbacks in flights, but the stress of the major and minor airlines is palpable.

    American seems to be emerging, temporarily at least, as the only one that isn't bankrupt right now.

    I think that will change over the next 10-20 years, as the general public no longer has the means to fly in the previously government subsidized, over-expanded, infrastructure heavy, air travel system we developed during the boom and are now struggling to maintain and operate.

    Add 3 TSA employees standing around harassing customers for every airline employee running between the pilot seat and the ticket counter, and you can read the writing on the wall.


The USA's political-economc system is best described as:

On Nov 2, 2010, I plan to vote (FOR or AGAINST) my incumbent congressman

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