The government response to the financial crisis guarantees that part two will be far worse than part one. The propping up of bankrupt banks, Keynesian stimulus measures, toothless regulatory legislation, new massive healthcare plans, and unprecedented levels of government debt will not solve a problem caused by excessive leverage in 10 Too Big To Fail financial firms and thirty years of debt financed spending splurge by mindless consumers. Simon Johnson clearly lays out how these actions will play a large role in this Crisis:

“Our future could be one in which continued tumult feeds the looting of the financial system, and we talk more and more about exactly how our oligarchs became bandits and how the economy just can’t seem to get into gear.

The second scenario begins more bleakly, and might end that way too. But it does provide at least some hope that we’ll be shaken out of our torpor. It goes like this: the global economy continues to deteriorate, the banking system in east-central Europe collapses, and—because eastern Europe’s banks are mostly owned by western European banks—justifiable fears of government insolvency spread throughout the Continent. Creditors take further hits and confidence falls further. The Asian economies that export manufactured goods are devastated, and the commodity producers in Latin America and Africa are not much better off. A dramatic worsening of the global environment forces the U.S. economy, already staggering, down onto both knees. The baseline growth rates used in the administration’s current budget are increasingly seen as unrealistic, and the rosy “stress scenario” that the U.S. Treasury is currently using to evaluate banks’ balance sheets becomes a source of great embarrassment.
Under this kind of pressure, and faced with the prospect of a national and global collapse, minds may become more concentrated.

The conventional wisdom among the elite is still that the current slump “cannot be as bad as the Great Depression.” This view is wrong. What we face now could, in fact, be worse than the Great Depression—because the world is now so much more interconnected and because the banking sector is now so big. We face a synchronized downturn in almost all countries, a weakening of confidence among individuals and firms, and major problems for government finances.”

 An interesting development in the last year is the almost panic buying of guns and ammunition. The Washington Post detailed this development in a recent article:

“In a year of job losses, foreclosures and bag lunches, Americans have spent record-breaking amounts of money on guns and ammunition. The most obvious sign of their demand: empty ammunition shelves. At points during the past year, bullets have been selling faster than factories could make them. Gun owners have bought about 12 billion rounds of ammunition in the past year, industry officials estimate. That's up from 7 billion to 10 billion in a normal year. In the 12 months since last October, gun shops sold enough bullets to give every American 38 of them.
"I think it's Katrina. I think it's terrorism. I think it's crime. And I also think that it's people worrying about [whether] they'll be attacked by politicians," said Wayne LaPierre, executive vice president of the National Rifle Association. "They're suspicious, and justifiably so." But the most recent FBI crime statistics, from 2008, showed that rates of violent crime were the lowest since 1989.”

Wayne LaPierre is correct. American citizens are apprehensive and distrustful of their government. The government has taken over our financial system, our car industry, and now our healthcare system. The next logical step will be to take our guns. Americans that never considered owning a gun are now buying guns. The average middle class American knows they’ve been screwed by the ruling elite that have hijacked their country. The rage is palpable. Any effort by the Obama administration at gun control would produce an enormous backlash. Doug Casey recently assessed the risks in his essay Street Fighting Man:

“I’ve often wondered what would have happened in Germany after Kristallnacht if every Jew had been armed. None were, of course, because strict gun control had been imposed shortly after Hitler came to power, and like good little lambs, the population complied with the law. Bills are being discussed about things like a national firearms registry, reinstituting the so-called “assault weapons” ban, requiring secure locks on all weapons, prohibiting the import of ammunition, and levying a substantial tax on ammunition, among other things. No outright prohibition, because they know that would catalyze gun owners. But they keep dialing up the pressure, moving toward a de facto ban.

I’ll guess there are at least two to three million Americans who adhere to a couple of succinct mottos: 1. You can have my gun when you pry it from my cold, dead fingers, and 2. It’s better to be tried by twelve than carried by six. This is a group that could catch fire at some point.”

The Paul Krugmans, Nancy Pelosis, liberal MSNBC (owned by GE) talking heads and the Hollywood elite are troubled about potential violence. They should be worried. The American people are tired of being screwed. Strauss & Howe foresaw the disintegration of popular trust in government and financial institutions in the early stages of this Crisis:

“At some point, America’s short-term Crisis psychology will catch up to the long-term post-Unraveling fundamentals. This might result in a Great Devaluation, a severe drop in the market price of most financial and real assets. This devaluation could be a short but horrific panic, a free-falling price in a market with no buyers. Or it could be a series of downward ratchets linked to political events that sequentially knock the supports out from under the residual popular trust in the system. As assets devalue, trust will further disintegrate, which will cause assets to devalue further, and so on. Every slide in asset prices, employment, and production will give every generation cause to grow more alarmed. With savings worth less, the new elders will become more dependent on government, just as government becomes less able to pay benefits to them.

Before long, America’s old civic order will seem ruined beyond repair. People will feel like a magnet has passed over society’s disk drive, blanking out the social contract, wiping out old deals, clearing the books of vast un-payable promises to which people had once felt entitled. The economy could reach a trough that may look to be the start of a depression. With American weaknesses newly exposed, foreign dangers could erupt.”