Part 2 of the 2008 recession

Today's economy is looking more and more like a resumption of what happened in September 2008 with the collapse of AIG, Lehman Brothers, Fannie Mae, Freddie Mac, etc. Gold and silver got hammered in 2008 in a very similar manner as we are seeing this past week. Then the prices shot up to the sky. Are we seeing the same pattern again in 2011? Is this the resumption of the 2008 recession?

See what The Midas Letter has to say:

http://www.kitco.com/ind/West/sep262011.html

The hammering of commodities is a result of the same sequence of events that caused commodities to get nailed ahead of equities bottoming in 2008, as deteriorating asset values trigger margin calls and general fear on a grand scale, and so the things that still have value get sold at auction to pay for the things with no value, yet are owned on leverage.

This time, it’s the hedge funds and ETF’s that will lead the de-leveraging stampede, and at the end of the day, that’s good news for precious metals....

Make no mistake. This is a resumption of the crash that started at the end of 2008. Be ready to buy gold and silver when those markets turn, which they certainly will. The next peak in the gold price should be above $2200, and if the pattern of the last decade holds, that should be within the next 12 months.

I find this statement most interesting:

I think its safe to say the rest of the world is starting to looking beyond the looming collapse of the global economy at how we reinvent the system without the U.S. dollar and the Euro and Yen. In the meantime, the United States is going to keep trying to drag Europe into the same kind of un-repayable debt swamp the U.S. is in so that when the national defaults start happening, the misery will be shared, and every government will be on the same hot seat.

It is becoming quite clear that the West's economic system will have to be reinvented. In other words, it is unsustainable as is. The debt-based system worked as long as the nations and people could pay their monthly debts. But when we sent most of the jobs out of the country, the recession caught us without the ability to repay. The bankers are hoping that the army and police will enforce their eviction notices and force people to repay all debt. But that is simply not going to happen, because too many now know that the whole system is based upon fraud--money created out of nothing with the stroke of a pen, and loaned to us at interest.

They loaned us nothing, and ultimately they will be repaid in kind.