400 is roughly where the S&P was before the "great bull market of fraud" began in 1995. To think we can't return there when the fraud collapses is utter folly. We not only can, we probably will.
But instead of putting a stop to the games we choose to allow crazy derivative schemes, balance sheets that do not reflect reality and the repeated asset-stripping from savers and productive members of society, all to protect the "gilded ones" on Wall Street from the just consequences of their own 30-year old foibles and scams.
Now let me explain what happens "down there", because it is my unbroken opinion, going back to 2007, that's where we're headed irrespective of attempts to stop it (and we've already seen how fast those attempts unwind when they fail, haven't we?)
Every pension fund blows up. All of them. Many doubled into the decline and will be utterly destroyed. Chief among them will be big municipal funds like CALPERs. If you have a pension of some sort, ask the pension administrator what happens to your pension if the S&P goes to 400 and stays there. He'll poo-poo your question - but I bet he won't answer it.
Annuities and insurance companies blow up. You don't think they can pay when they're figuring on an 8% annualized return, do you? Well, no they can't. Oh yeah, your state insurance on those is $100,000 in most states - the rest of your principal is "at risk." This, of course, assumes the State has the $100,000 too. Did you know this in advance or are you learning it now (let's not hope the latter is true!)
The FDIC has no prayer of covering it. The good news is that if they act now they can shut the banks that are exposed and cram down debt to equity. The bad news is that they have a horrible record in doing that in a timely manner and of late the losses have been anywhere from 20-40% of assets, which is both a violation of the law ("Prompt Corrective Action" is supposed to prevent this from happening) and they have no way to cover it should it become a widespread problem. It will. Oh yeah, you can't sue the government either. Have a nice day.
The government Ponzi blows up. Unemployment will reach 20% or more. Tax receipts will get cut in half. Deficit spending will be impossible. Instead of a 40% "draconian" cut in government spending we will have to cut spending by 60% or more. Entitlements will be decimated; retirement entitlements will go last, but go they will. Food stamps, Section 8, Medicaid, all gone. Bet on it.
All the other things that depend on the government Ponzi blow up. Medical care as we know it, education, state programs, all gone. We will return to a simpler time whether we like it or not, and we won't like it. That much I'm sure of.
Best guess on whether civil order is lost. In some places I'm sure things will be fine in that regard, likely in places where self-defense is recognized as the unalienable right that it is. In others? Not so much. If you live in a big city - or an "unfriendly" place in regards to self-defense, you need to be thinking about this quite-seriously. Yesterday would have been a good time to consider it and figure out what you're going to do about it.
Short-term and minor to moderate disruptions in what would be considered "essential" goods and services are likely. Go down the list and figure out what you must have and what you can do without. Be realistic. Most people won't be, which will put you one step in front of them.
The world will recognize the Depression we have tried to cover up.
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