I hope not, because I am about to retire, and I want to have the comfortable retirement that I should be able to afford, providing my super fund doesn't crash to zero.

Limits To Keynesianism

While Keynesianism appears to have a benevolent, humanistic intent it is greatly disappointing that so many of its advocates do not also recognize its destructive aspects. Yes, free markets misallocate capital routinely. But Keynesianism as a policy also distributes capital unevenly, and unfairly. First receivers of government capital gain competitive advantages. First receivers of easy monetary policy also gain, and become predatory. The housing bubble was perhaps the most spectacular example of the destructive force of easy money, which resulted in a huge transfer of risk and wealth, recycled through society.

But the greatest flaw with Keynesianism now is that, like the economy itself, it has run squarely into the energy limit. As the most recently updated data shows, 2011 will be the 6th year that world production of crude oil was unable to increase beyond the ceiling established in 2005.

Oil remains the primary energy input to OECD economies. OECD economies are of course where the Keynesian experiment has flourished longest, first in Japan, then the United States and now Europe. It is hardly, hardly the case that the current financial crisis in the OECD is “simply a matter of accounting.” Instead, the crisis is one of systemic, structural growth now permanently limited by energy costs as OECD economies try to service debt loads that have escaped their ability to manage. Change all the digits, and the energy limit remains.

The redoubling of government efforts to distribute paper capital to society will not bring forth the cheap energy required to spur the growth Keynesians either assume, or have failed to even consider.

Link -
http://seekingalpha.com/article/293689-limits-to-keynesianism?source=email_macro...
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There are other problems with the Keynesian model, as there is with the Austrian model, but Peak Energy is certainly one of the major stumbling blocks, as are the Demographic issues currently going thru the system!

That said, this graph makes it clear that we are now at Hubbert's Oil Peak plateau and have been since 2005 and that creates an enormous array of problems, Economic & otherwise!

11272.00

-237.09 (-2.06%)

http://chart.finance.yahoo.com/zs=%5eDJI&t=1d&q=l&l=on&z=l&a=v&p=s&lang=en-AU&region=AU

Seems like another long session ahead!

The DOW is already down well over 200 points and it has only been open for 20 minutes!

Nervous Breakdown? 21 Signs That Something Big Is About To Happen In The Financial World

My summary of article -
1. Astounding number of put contracts for S&P500 in October
2. Investors pulling money out of stocks faster than after Lehman bankruptcy.
3. Siemens moving 500B euros from French banks to ECB
4. Italy downgraded on Monday from A+ to A.
5. ECB buying Italian and Spanish debt to prop up the market.
6. Major central banks to make unlimited funds available for Q4 borrowing
7. Top Italian bank down over half this year and the 2nd largest is down 44%.
8. 82% of Germans think the government is doing a bad job.
9. Greece in full blown economic collapse
10. Greek finances continue to deteriorate despite austerity programs.
11. Greek interest rates on one year bond at 129%.
12. Greek government has only enough cash to operate for one month.
13. Italy now has a debt to GDP ratio of about 120% and their economy is far, far larger than the economy of Greece.
14. 2 year Portuguese bonds go from 4% to 17% in last year.
15. China has stopped swaps and forwards trading with several European banks.
16. Central banks in Europe going for gold.
17. IMF head says world is in a dangerous new phase.
18. Russia has dumped 95% of its US treasuries and Israel has dumped 46%.
19. Fed expected to buy more bonds (Operation Twist).
20. Obama tax plan incentivizes dumping of stocks before 2012.
21. Merrill Lynch estimates 80% chance of double dip recession.

Link -
http://theeconomiccollapseblog.com/archives/nervous-breakdown-21-signs-that-some...
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The name of the site where the article appears is "The Economic Collapse", so it would seem likely they are pre-disposed to the conclusion of this article.

That said, most of the 21 "signs" would seem to be accurate AND I would agree that all indications suggest that it is likely that very torrid times are ahead!

U.S. Stocks Drop on Fed’s Plan to ‘Twist’

U.S. stocks slid, while Treasuries and the dollar rallied, after the Federal Reserve announced plans to buy $400 billion of long-term debt in an effort to combat “significant downside risks” to the economy.

The Standard & Poor’s 500 Index tumbled the most in a month, losing 2.9 percent to 1,166.76 at the 4 p.m. close in New York and extending a three-day drop to 4.1 percent. Ten-year Treasury yields dropped to a record low and 30-year bond rates slid to the lowest since January 2009, while two-year yields rose. The Dollar Index climbed 1 percent to a seven-month high of 77.802. Lead, nickel and sugar fell more than 3 percent to lead the S&P GSCI Index to a one-month low.

Financial shares in the S&P 500 led losses and sank to a two-year low after Moody’s Investors Service cut credit ratings on three banks and the Fed said “strains in global financial markets” were among risks to the economic outlook. The Fed will replace some shorter-term debt in its portfolio with longer-term Treasuries in an effort to further reduce borrowing costs and keep the economy from relapsing into a recession, confirming market speculation that policy makers were planning an “Operation Twist” similar to a program in 1961.

“Markets took note of the Fed’s downward revision of the economic outlook and upgrading of downside financial risks,” Mohamed A. El-Erian, chief executive officer at Pacific Investment Management Co. in Newport Beach, California, wrote in an e-mail.

Fed’s Plan
The central bank will buy $400 billion of bonds with maturities of six to 30 years through June while selling an equal amount of debt maturing in three years or less. The Fed’s plan to replace short-term Treasuries in its $1.65 trillion portfolio with long-term debt will probably fail to lower the 9.1 percent unemployment rate, according to 61 percent of economists surveyed by Bloomberg before the announcement. The Fed also said today it will reinvest maturing housing debt into mortgage-backed securities instead of Treasuries.

The Dow Jones Industrial Average sank 283.82 points, or 2.5 percent, to 11,124.84

“The markets apparently were hoping for a large, magic pill for an anemic economy that feels like it’s catching the flu,” Barton Biggs, managing partner and co-founder of hedge fund Traxis Partners LP in New York, said in an e-mail.

Financials Plunge
The S&P 500 Financials Index (S5FINL) fell to the lowest level since July 2009. Bank of America Corp. tumbled 7.5 percent after Moody’s Investors Service downgraded the bank’s long-term debt rating. Wells Fargo & Co. also had its long-term rating cut, wiping out an earlier gain and dragging the stock down 3.9 percent. Citigroup Inc. (C) fell 5.2 percent as Moody’s cut its short-term debt rating. Goldman Sachs Group Inc. closed below $100 for the first time since March 2009.

Coal and Train Stocks
Commodity producers in the S&P 500 sank 4.5 percent as a group for the second-biggest slide after financial shares. Alpha Natural Resources Inc. and Walter Energy Inc., two U.S. producers of coal used in steelmaking, tumbled at least 12 percent after they cut output and sales forecasts respectively. Railroad companies slumped following the forecasts, with CSX Corp. and Norfolk Southern Corp. sliding more than 8 percent.

Oil lost 1.2 percent to $85.92 a barrel, erasing earlier gains which were triggered by a U.S. Department of Energy report that crude inventories fell by 7.34 million barrels to an eight- month low of 339 million last week.

Link -
http://www.bloomberg.com/news/2011-09-21/most-asian-stocks-oil-fall-as-yen-climb...
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A few observations -
1) There is "NO magic pill" in the FED's bag of ammunition!
2) Financials & Commodities have the largest downside exposure.

U.S. Stock Futures Drop as Global Risks Grow

U.S. stock-index futures dropped, signaling the Standard & Poor’s 500 Index may fall for a fourth day, amid concern global economic growth is slowing and that banks may find it increasingly difficult to obtain funding.

Futures

on the S&P 500 expiring in December dropped 2.5 percent to 1,126.6 at 7:21 a.m. in New York, reversing an earlier gain.

Contracts on the Dow Jones Industrial Average retreated 242 points, or 2.2 percent, to 10,765

.

U.S. futures accelerated their declines as a report showed China’s manufacturing may contract for a third month in September as measures of export orders and output decline.

“There are significant downside risks to the economic outlook, including strains in global financial markets,” the Fed statement said. Chairman Ben S. Bernanke expanded use of unconventional monetary tools for a second straight meeting after job gains stalled and the government lowered its estimate of second-quarter economic growth.

“The Fed’s action will support the overall U.S. economy, but that’s not enough to dramatically improve its unemployment rate, and it will be difficult to get the recovery back on track again in the near future,” said Warit Kathong, a Tokyo-based fund manager at United Investments Co., which manages about $1.8 billion globally. “Markets are still in a risk-off mode. China’s manufacturing figure is also showing it will not help the global economic recovery.”

Link -
http://www.bloomberg.com/news/2011-09-22/u-s-stock-futures-drop-on-signs-global-...
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I just knew, I'd picked the wrong day, to give up drinking?

The DOW Futures are still off some 226 points now and if that were to be that way the DOW finishes its Thursday trading, then the DOW may be heading for a 510 point loss, in 2 days trading?

Of course, currently volatility means anything is possible? TPTB may come up with another "magic bullett" (read hair brained scheme), which may send the market sky-rocketing (temporarily) OR send it even further down than where DOW Futures are currently pointing?

And, the later may be the case as DOW futures have fallen further since I typed in down 226 AND it is now down 254!

Yet another interesting session ahead?

Unfortunately, there is a very real risk that: one day soon we may wake up to find trade suspended in all global stockmarkets and all of our electronic banking accounts inaccessible - and security guards stationed at the locked doors of our banks...

How long before total anarchy would erupt!?

Hmmnnn....is it time to start stocking up on some extra groceries!?