Signup for our free newsletter:

Trouble Ahead

Written By Brian Hicks

Posted May 25, 2011

In the end, it was hubris that sent her to the bottom.

Steaming along the North Atlantic, it was the unsinkable fantasy that doomed the Titanic to her watery fate.  

The nasty hole gashed in the ship’s side by the iceberg was just one of the consequences of the orders given by “the smartest guys in the room”.

Instead of slowing down — despite the many warnings on that cold April night — the great ship plowed on full steam ahead as overconfidence, pride, and arrogance all took turns in the bridge that night.

After all, why would they ever need to worry about icebergs if the ship was so massive and constructed to stay afloat under any circumstances

Not long after the ship hit the iceberg, those same beliefs were turned on their heads as the emotions of passengers and crew quickly turned to grief.

The water pouring through gaping holes created by the iceberg was far greater than any feat imagined by its designers.

In the end, those aboard learned the same hard lesson that had been handed out to the thousands of ships that sailed before the great Titanic

Every ship that sails is in danger of being sunk.

The Dangers Beneath the Ship of State

The same can be said for ships of state that believe themselves to be similarly invincible — especially when they ignore all the warning signs and plot a course full steam ahead.

At some point, it ends in a dislocation as the fantasy eventually succumbs the weight of the iceberg. It’s in that brief instance, dear reader, that faith in “the system” evaporates and the status quo is sent to a watery grave of its own.

From Greece to Spain to the exploding Middle East, it’s happening around the globe as I type.

As for the overconfidence, pride, and arrogance behind our own national hubris, you can find it nearly everywhere you look.

Take, for instance, the burgeoning national debt and deficit. Within it lie the seeds of our own destruction.

According to David M. Walker, former chief of the U.S. Government Accountability Office and current head of the Comeback America Initiative, the United States is in worse shape from a fiscal standpoint than debt-plagued nations like Italy or Spain are.

“The financial condition of the United States is much worse than advertised,” he says. As the former chief number cruncher, he ought to know. This is a crusade Walker has been on for some time now…

Testifying before a Senate Budget Committee in 2006, long before the meltdown, Walker proclaimed:

Continuing on this unsustainable fiscal path will gradually erode, if not suddenly damage, our economy, our standard of living, and ultimately our national security.

Now, some five years later, what was an unsustainable path then has gotten considerably worse.

Today, the mammoth U.S. Government spends $6 billion a day more than it brings in, causing the nation to slam into the $14.294 trillion debt ceiling. That’s over $45,000 for every man, woman, and child in America. By comparison, the Federal debt in 2006 was a measly $8.5 trillion — 40% less than it is today.

Damn the Icebergs — Full Steam Ahead!

Yet despite the obvious dangers lurking beneath the surface, the game goes on… and on… and on…

Even though, as Walker points out, “The status quo is not an option.”

Continuing along this path, the government will enter a “danger zone” in the next two to three years in which a potential debt crisis would trigger dramatic increases in interest rates, a bigger free fall by the dollar, higher inflation, and wildly adverse effects for not only our own economy, but others around the world.

“And unlike Greece,” Walker says, “nobody’s going to bail out America.” This ship, in other words, is one that can be easily sunk.

There’s an iceberg looming dead ahead — one that Luke Burgess warns could change the world as you know it, beginning on June 30th. Prepare yourselves. Read his latest report.

We have a “here and now” problem with our massive need to fund new debt. As Bill Gross has pointed out time and time again, our spending habits are currently being funded/bought by the Fed and other central banks.

The problem is the Fed is going to step away from the table in June, and no one knows who will fill the void.

After all, the traditional buyers like China and Japan are either already buying less debt, or are too burdened by problems of their own to send us the hundreds of billions we need to keep it all afloat. 

That leaves a giant funding hole that will have to be picked up by real investors — not central banks.


It’s like sailing into a great unknown sea… Nobody knows for sure what will happen when this supposed handoff takes place.

In the meantime, here’s what we do know: QE2 has failed. Economic growth is slower and inflation has jumped from 1.2% before QE2 to 3.1% now. And the housing market is making a double dip, despite every effort to keep it stable.

This leaves us between a rock (more destructive money printing) and an equally hard place (deflation).

That’s why the Fed recently announced it was prepared to inject another $11 trillion into the system.

Damn the icebergs, full speed ahead!

Unfortunately, it seems as if 99.9% of citizens don’t realize this crash has already started. Either that, or they’re in complete denial — living as though we can keep adding to our debt and printing money without consequence. And as it escalates, they’ll be struck in complete disbelief. 

When the ill-fated Titanic began to take on water, the next two hours defined three types of people:

1. The few who took action, and either jumped on the lifeboats or made their own.

2. Those who knew they had to do something, but instead panicked and did nothing.

3. The majority, who continued on with their evening plans despite the gaping holes, keeping full faith in the boat’s ability to stay afloat.

Today, many people — on faith alone in the dollar and the U.S. economy — don’t think it could fail.

Their mistake is that they think we’re unsinkable.

But just like the holes in the Titanic‘s hull, the writing is already on the wall.

That’s why the price of gold and other commodities are edging higher, as savvy investors work to hedge themselves against these characters, their grand plans, and their printing presses.

As it turns out, hubris is more dangerous than the icebergs themselves.

Your bargain-hunting analyst,

 steve sig

Steve Christ
Editor, Wealth Daily

Wealth Daily Crowdsourcing

Let us know where you stand by responding to the poll below. (Just click on your response)

What will gold trade for a year from now?

Under $1,000
$1,000 to $2,000
$2,000 to $3,000
Above $3,000