Goldman Sachs thinks the market could fall another 20% before the stock market troughs if investors start to worry about deflation — falling prices for goods and services.

Analyst Peter Oppenheimer said: “We believe that falls of 20% are possible if the market prices in a short-lived deflation scenario. Barring sustained deflation, we would expect a 30%-50% rebound from the market low over 6 to 12 months, starting in the middle of 2009.”

“Expect the Unexpected”, words by Antal Fekete. I have to agree with Fekete and Jim Willie. Fekete has given us a classical understanding of GOLD as MONEY through the REAL BILLS DOCTRINE. He says when Gold went into Backwardation on Dec 2 for two weeks for the first time in history, it’s only a matter of time when it goes into PERMANENT BACKWARDATION. When gold goes into permanent backwardation, no one will sell gold at any paper price whatsover. This means the closing of the COMEX GOLD WINDOW and the world entering into a new DARK AGE.

Fekete has stated in many articles in the past that the GOVT’s of the world needed to go back to a gold backed standard. But now that Gold has gone into Backwardation….it is too late for this to take place. Gold is going into hiding at alarming rates. Just like it did during the end of the Western Roman Empire…which was the reason for the collapse and subsequent DARK AGES.

Jim Wille on the other hand is not talking about a Recession or Depression…..he is talking about the GREAT DISINTEGRATION. This is where not only all the wheels fall of the economy, but the engine dies as well. I believe most analysts are looking through a REAR VIEW MIRROR in forecasting the future. This is sure folly as they do not see the 100 foot STONE WALL dead ahead.

As for my predictions for 2009,

1) The United States US TREASURIES will IMPLODE along with the value of the US DOLLAR

2)Foreign countries now forced to SAVE THEIR OWN NECKS will pull out their money from the USA, and put it into GOLD, SILVER, OIL, COMMODITIES and Domestic stimulus plans

3)2009-2010 The US DOLLAR will lose its WORLD CURRENCY STATUS and drop into a BANANA REPUBLIC

4)The US STOCK MARKET AVERAGES will lose another 20-30%, unless Hyperinflation kicks in then its a whole different story

5)Either in 2009-2010, the United States will Lose a good percentage of its GOODS and OIL IMPORTS as it does not have the REAL MONEY to afford them.

6)Shortages and inflation of necessary goods will PLAGUE the American Citizen and once GREAT STOCKED SUPERMARKETS with thousands of food items, will grow increasing BARE.

7)2009-2010, All large Entities, including Govt’s will have an extremely difficult time surviving and many will go BANKRUPT or DISSOLVE to a much smaller size: WALMART, BEST BUY, TARGET, COSTCO, SEARS, OLIVE GARDEN, CHILI’s, and etc and etc and etc.

8)There will be a BREAK DOWN in local and state governments as REVENUES DRY UP and SERVICES are reduced.

9)There will be CIVIL RIOTS as unemployment reaches over 15-20% (not unsing the fake US GOVT numbers)

10)2009-2010 will see the BREAK UP of the US FEDERAL GOVT which will then be replaced by REGIONAL GOVTS in the West, Mid West, Texas, North East, and South….for example.

11)The US DOLLAR will no longer be trusted by Americans as was the Ruble by the Russians after the collapse of the Soviet Union 1989.

12)The military will be set up to control those in the big cities as a form of MARTIAL LAW. The Govt(s) will protect the Country and the farmlands as they realize this is the bread basket of America. Those in the BIG CITIES will suffer the worst.

13)The US Military will start to move back to the Western Hemisphere and the States, as the US GOVT can no longer afford its Global Empire.

14)Lastly, any thoughts of a Recession and Depression will be forgotten as citizens do whatever they can to get necessities and survive. The United States will DISINTEGRATE and will never return to its once GLORIOUS STATUS as the number 1 SUPERPOWER.

Comment 2. represents what might be called a ‘worst case scenario’. I have published it because this is the extreme case. However, my own observation is that all crises have a ‘worst case scenario’ but it is seldom experienced.

In the 1930’s Warren Buffett’s father (a very successful broker and congressman) bought a farm to prepare for the imminent collapse of the US dollar and the resumption of an agrarian society.

That this is now being spoken of again reflects the gravity of our circumstances – but it does not mean that it is actually going to happen! Crises have self-reversing mechanisms – lower interest rate, for example, and also wars which produce huge surges in demand. Besides economic crises are also purges of bad practice and in the long-run actually strengthen economies. It is all painful, nonetheless.

AMBROSE EVANS-PRITCHARD, international business editor, The Daily Telegraph:

We will stop talking about banks. Interest rates will flirt with zero across the world. This will not be enough to prevent debt deflation leading to a light global depression. Job losses will reach one million a month in the US. The damage will be slower in Europe, but last longer. The great surprise will be the ferocity of the downturn in China. By the middle of the year, the geopolitical landscape will look very different: those without a deep-rooted democracy and rule of law will lose legitimacy. In the eurozone, the markets will look closely at Spain, Italy, Greece, Austria, and Ireland. By late 2009, the emergency fiscal stimulus will feed through. Those first into recession will be first out, led by the US. Wall Street will anticipate a US rebound. Equities, oil and gold will rally. Bonds will be slaughtered.

Peter Cooper……My comments were somewhat DIRE….but we have to remember….THE GREAT WESTERN ROMAN EMPIRE did FALL and a wide spread DARK AGE did follow. So if one had ROSY COLLORED EYES back during the end of the ROMAN EMPIRE and the person said….”THE WORST CASE SCENARIO PROBABLY WON”T HAPPEN”, then in that case the person would have been DEAD WRONG.

Unless the world governments back their currencies with GOLD or OIL, world trade will contract. The difference between the ending of the ROMAN EMPIRE and TODAY, most of the rest of the world during 450-500 AD had silver and gold money. Today….NO COUNTRY HAS A GOLD or SILVER CURRENCY. ZIPPO. This indeed is the problem.

Constantinople, the EASTERN ROMAN EMPIRE lasted another 1,000 years as they kept their MINT opened to GOLD, whereas in the WESTERN ROMAN EMPIRE, gold went into HIDING in private hands….just as it is being done today.

LASTLY…..ANTAL FEKETE does not make forecasts lightly. He has been right for quite some time.

See, here we go again with speculation. It was speculation that drove the world economy in its current situation, with theories of “distributing risk until only the beta stands” and the “oil peak”, and a host of others forwarded by economist, finance wizards…speculators all. What about gold backing up the financial system, there is truth to that but only after a certain point, that is until speculation into the price path of precious metals jacks up the price into insane levels i.e. S147/barrel of crude, or 200% increase in the price per sq.m. of land in most cities around the world.

Unlike the dark ages when communication was nil, when production was limited to manual labor, and when the economies were limited to very few cross border trades that takes many months to complete, the world has changed so much now.

There is the very real chance the US economy will implode, but does anyone really think that the powers that be will let that happen?

I also agree that the engine could fail, and maybe it needs to fail. We have seen how free markets only fans speculation into absurd heights, and the ensuing market correction is nothing less than tragic for the whole world. There is clearly a need for a different set of operating principles for financial markets…commodites including. As soon as that happens, there are those who bet through hedge funds who will again be gainers.

Its much more complicated in the world now.

Oh, the dark ages was marked by the inquisition…could it be that if the dark ages happen now, it will be the investment bankers, the theoreticians of “risk distribution” and “oil peak” and “commodity backed currency” who will be burned at the stakes literally? Now thats a worst case scenarion