I've been forecasting bad times to come, and as long as the stock market was higher, it was easy for the public to ignore the warning signs.

As expected, real world events have overwhelmed the stock market's pollyanna syndrome and the depth of financial trouble that we are in is now becoming widely apparent.

I must stress that this crash is NOT like the crash of 1987, which while severe at the time, was merely a temporary dip in an ongoing, overall bull market that didn't reach its ultimate peak until 13 years later.

This crash is altogether different.

Right after the 1987 crash, Alan Greenspan embarked upon his method of "solving" problems in the financial arena: more "liquidity."

This was the beginning of the road to perdition.

John Maynard Keynes once quipped in response to criticisms about the long term effects of his economic policies, "In the long run we're all dead."

Well, it's been a "long run" of 21 years of destructive economic policy put forth by the "maestro."

21 years of ever increasing "liquidity."

21 years of ever increasing debt.

21 years of benefits bestowed upon the financial sector at the expense of the productive sector.

The imbalances in the financial system have reached epic proportions.

The process of correcting those imbalances will take years.

They will not be pleasant years, they will be painful years.

I wish it were not so. But it is what it is.

In Elliot Wave terminology, the crash we just experienced was Wave 3 of Wave 3 of Primary Wave 1 down.

We still have some waves down ahead of us before we reach the ultimate bottom of Primary Wave 1 down (which I expect to occur early next year.)

Then we will have a many month rally for Primary Wave 2 up.

The world will think the worst is over. Once again, the world will be wrong.

The worst market crash that any of us have ever seen will be Primary Wave 3 down. It will be far worse than the one we just experienced.

But the good news is that the beginning of Primary Wave 3 is still more than a year away.

There will be a lot of "happy talk" between now and then, which is common for Wave 2.

Of course, the stock market rallying strongly after the final bottom of Primary Wave 1 will aid the spin-masters as they try to proclaim that the problems are solved and good times are ahead.

It will certainly appear like they are correct, but they won't be. It will just be Primary Wave 2.

God help us all when we have to deal with Primary Wave 3 down.

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