Wednesday, February 10, 2010, 8:40AM ET - U.S. Markets open in 50 mins..

Are We On The Verge Of Total Global Economic Collapse?

Posted Nov 20, 2009 11:13am EST by Henry Blodget in Investing, Recession, Banking, Housing

Are we on the verge of total economic collapse?

Don't laugh.  The french firm Societe Generale thinks so.

The brokerage firm has put the fear of God in clients recently by predicting that developed economies and markets are going to collapse under a monster debt load and that gold is going to soar to $6,000 an ounce.

Fortunately, not everyone feels that way.  

Many on Wall Street, in fact, have suddenly gotten quite bullish after missing a lot of the extraordinary 65% rally we've had since the lows of March.  Hopefully, these folks--the "V-shaped recovery" crowd--are right, and the bad news of the last couple of years will soon be a distant memory.

Aaron and I are skeptical, though.  The aftermath of debt-fueled financial crises like the one we went through usually lasts for many years, if not decades.  Japan has been struggling to right its ship since its own bubble burst in 1990, and the country still isn't growing strongly again.  (Japan's stock market, meanwhile, trades at a fifth of its 1989 high).

With luck, we won't end up like Japan--or the SocGen scenario.  We doubt, however, that the economy and markets will just shrug off the last year as if nothing serious happened.

If you're curious, you can see highlights of the SocGen report here:

SocGen: Prepare Yourself For the Worst Case Scenario

184 Comments

Yahoo! Finance User
Yahoo! Finance User - Friday November 20, 2009 11:20AM EST

Outsourcing CEOs, greedy and heartless mortgage lenders, and all of you idiots who overextended themselves and didn't settle for a condo instead of a house, all of you can kiss my a__!.

Annette K
Annette K - Friday November 20, 2009 11:20AM EST

Answer to your question is Yes.

Yahoo! Finance User
Yahoo! Finance User - Friday November 20, 2009 11:22AM EST

YES.

D
D - Friday November 20, 2009 11:23AM EST

The arms of government: 1. Bankers, 2-Media,3-Politicians Vote in 2010 and get rid of incumbents. Start using Chinese banks and media outlets. Let's lower our costs and outsource all three! It is time for all those "dirty" wall street jobs to be sent overseas... hahhaha

D
D - Friday November 20, 2009 11:24AM EST

The 3 arms of government: 1. Bankers, 2-Media,3-Politicians Vote in 2010 and get rid of incumbents. Start using Chinese banks and media outlets. Let's lower our costs and outsource all three! It is time for all those "dirty" wall street jobs to be sent overseas... hahhaha

Yahoo! Finance User
Yahoo! Finance User - Friday November 20, 2009 11:27AM EST

Ignore the one party system and vote out incumbents in every election

BullyTheBear
BullyTheBear - Friday November 20, 2009 11:30AM EST

As usual, such claims do have a certain merit, yet also as usual the claimants have an own agenda, will it come to such scenario, I doubt it but hell...we might get reall really close! What I will do is short the markets, it is clear that this "rally" is long overdone, once dowon we can again re-assess and make new bets! Anything else is the usual propaganda!

chubby
chubby - Friday November 20, 2009 11:32AM EST

No. We aren't.

Yahoo! Finance User
Yahoo! Finance User - Friday November 20, 2009 11:32AM EST

In 2010, you will be able to rent the same house you could buy, for half the payment. You get to save or invest your downpayment cash, instead of handing it over to a lender (shark), with a frontload interest loan PLUS you get to watch your buddies squirm further as the price of their homes continue to crater. These are good times for savy renters my friends, and miserable times for so called "home owners".

Yahoo! Finance User
Yahoo! Finance User - Friday November 20, 2009 11:33AM EST

Why didn't you two warn Warren Buffet that the market is overvalued?

ʞɔɐɾ
ʞɔɐɾ - Friday November 20, 2009 11:34AM EST

Housing:... Just like the 1930's young people, unemployed and marginally employed are postponing major decisions like marriage, making babies and home buying until they feel more secure, and are truly more secure. Means one thing.....a pent up future demand for entry level homes, weddings and baby supplies.

Clive
Clive - Friday November 20, 2009 11:34AM EST

Its all a game of chicken and who can run the fastest with the money when the ball drops.

chubby
chubby - Friday November 20, 2009 11:35AM EST

Are we voting? So far it's 2-1 in favorite of collapse, not counting the spammers.

ChrisC
ChrisC - Friday November 20, 2009 11:37AM EST

I don't think anyone is laughing.

The Truth
The Truth - Friday November 20, 2009 11:40AM EST

Is it just me, or does reading Popoy's posts feel just like taking a huge bong hit?

san
san - Friday November 20, 2009 11:42AM EST

I think it's a joke did you read their soluion on how to survive it :D LOL

Yahoo! Finance User
Yahoo! Finance User - Friday November 20, 2009 11:43AM EST

Global collapse is ok, at least the all of he US welfare bums have thier new homes... Just ask Barney Frank and Harry Reid whats best for us..

MR.D
MR.D - Friday November 20, 2009 11:46AM EST

Yes, we are. Right now what we see is some late night party goers who are dancing until the music stops.

Annette K
Annette K - Friday November 20, 2009 11:49AM EST

The people during the depression only used cash, no credit. They were paid under the table and kept their cash in the matress, not the bank. Why? Same story different day. Barter and trade, cash and matresses. That is the future for now. Start today and be prepared. Stop paying off your credit cards and tell the banks to pound sand. Keep the money you would pay them with and put in the matress. You will be happy and secure.

BringBackCapitalism
BringBackCapitalism - Friday November 20, 2009 11:51AM EST

YES

Yahoo! reserves the right to refuse, or remove any comment that does not comply with the Yahoo! Terms of Service. The submission of spam, hateful, or obscene messages may result in the termination of your Yahoo! ID.
About Tech Ticker - Send FeedbackDisclaimer. Copyright © 2007 Yahoo! Inc. All rights reserved.
Copyright/IP Policy - Terms of Service - Privacy Policy - Help
Quotes delayed, except where indicated otherwise. Delay times are 15 mins for NASDAQ, NYSE and Amex. See also delay times for other exchanges.

Quotes and other information supplied by independent providers identified on the Yahoo! Finance partner page. Quotes are updated automatically, but will be turned off after 25 minutes of inactivity. Quotes are delayed at least 15 minutes for NASDAQ, NYSE and Amex. See also delay times for other exchanges. Real-Time continuous streaming quotes are available through our premium service. You may turn streaming quotes on or off. Fundamental company data provided by Capital IQ. Financials data provided by Edgar Online. Historical chart data and daily updates provided by Commodity Systems, Inc. (CSI). International historical chart data, daily updates, fund summary, fund performance, dividend data and Morningstar Index data provided by Morningstar, Inc. Analyst estimates data provided by Thomson Financial Network. All data provided by Thomson Financial Network is based solely upon research information provided by third party analysts. Yahoo! has not reviewed, and in no way endorses the validity of such data. Yahoo! and ThomsonFN shall not be liable for any actions taken in reliance thereon. All information provided "as is" for informational purposes only, not intended for trading purposes or advice. Neither Yahoo! nor any of independent providers is liable for any informational errors, incompleteness, or delays, or for any actions taken in reliance on information contained herein. By accessing the Yahoo! site, you agree not to redistribute the information found therein.