Larry Burkett's final warnings

I recently read Larry Burkett's The Coming Economic Earthquake, published in 1991. I wanted see what his forecast was for the US economy and compare to how it has actually played out. Burkett was spot on in most areas and he gave many accurate indicators for "the earthquake" (the earthquake being a collapse of the economy bringing about hyperinflation, high unemployment and government bankruptcy).

However my greatest interest came from his "final warnings." In his view these are the final signs before the collapse:

1. A banking crisis
" Once the number of bad loans exceeds the statistical number necessary to repay the depositors' interest, the bank will fail..."
He goes on to explain that in an economy with unemployment exceeding 10%, many normally sound loans will default, and will swallow up hundreds of banks causing additional government subsidies. There are only 3 locations for the govt to subsidize public companies: new taxes, more loans, or printed money - pick your poison.

2. Business failures
"When the additional factors of mandatory health insurance, workmen's compensation, liability insurance, property taxes, inventory taxes, and eventually value-added taxes are dumped on small and medium sized businesses, we will see massive failures."

3. The denial syndrome
"The more vehement the denials, the bigger the potential crisis."
"Even if evidence indicates bank failures, business failures, and desperate efforts on the part of federal and state governments to raise funds, you can be sure the information coming out of Washington will be upbeat and positive."

And as Burkett frequently writes, our economy rises and falls on ultimately one factor: public confidence. Panic collapses, confidence builds; so it is so funny to here the positivity come from Washington when government, business, and private debt will bring us all down. Not a matter of if, but when.