New bull, new bubble, new meltdown by 2012

By Paul B. Farrell, MarketWatch

1. Displacement: "Some change in economic circumstances creates new and profitable opportunities." Last year's historic bailout, election, new ideology.

2. Euphoria or overtrading: "A feedback process sets in whereby expectation of rising profits leads to rapid growth in asset prices." Goldman is proof.

3. Mania and bubble: Prospects of "easy capital gains attract first-time investors and swindlers eager to mulct them of their money." More bubbles: 2010-2011.

4. Distress: "Insiders discern that profits cannot possibly justify the now exorbitant price of the assets and begin to take profits." Wall Street replays 2007-2008.

5. Revulsion or discredit: "Asset prices fall, the outsiders stampede for the exits, causing the bubble to burst." Yes, 2008's brutal meltdown repeats in 2012.

The culprit? The Fed, Ferguson says: "Without easy credit creation a true bubble cannot occur. That is why so many bubbles have their origins in the sins of omission and commission of central banks." So the next bubble (and meltdown) is virtually certain, thanks to Washington's $23.7 trillion explosion in debt.

Revolution coming with next meltdown

Americans are not going to put up with the "Wall Street Conspiracy" ripping off investors and taxpayers much longer. Wall Street got rich sticking us with mountains of debt for generations to come.

Expect a major house-cleaning, a second American Revolution. We predicted the "Great Depression 2" around 2012. Well, we doubt taxpayers will passively sit one more time, like in the 1930s, in 2000, and the past few years. Next time voters will take a page from the history books about past revolutions in the American Colonies, France and Russia. A perfect storm will erupt in a massive global credit meltdown, bringing down Wall Street and the clandestine $670 trillion shadow central banking system. And the collateral damage will be massive and widespread, in areas such as these:

• Lobbyists' power is lethal to our values. Special interests are running and destroying American democracy, will self-destruct.

• Derivatives: Cap 'n trade will crash worse than subprime. The Goldman Conspiracy's spending millions lobbying for trillion-dollar derivatives.

• "Too-greedy-to-fail" big banks will trigger harsh backlash. Banks pay huge bonuses yet modify only 9% of 4 million stressed home loans.

• America's wealth gap will trigger grass-roots rebellion. Wall Street's greed is so pervasive, gluttonous and obvious the rest will rebel.

• The "Goldman Conspiracy" will be a target for retribution. Goldman's hubris is most egregious and flagrant. Their arrogance will backfire.

• Wave of creative destruction will revive commercial banking. Investment bankers are killing commercial banking, Glass-Steagall will return.

• Secrecy protecting Wall Street's unethical behavior to end. Wall Street's control over Washington's lawmaking will come to an end.

• The Fed's shadow banking will collapse under excess debt. Central bank balance sheets overdrawn, feeding new bubble with cheap money.

• A "Black Swan" of huge unintended consequences. Next bubble, highly unpredictable, huge collateral damage on Wall Street.

Make the most of this new bull. Then get out -- before you're the collateral damage.