Today, on the 11th day of the 11th month at precisely 11AM, London will fall silent. We will be asked to remember our war dead.

This moment marks the time 90 years ago when the guns ceased firing on the Western Front. Soldiers on both sides hesitated…wondering if it were really true. After four years of trying to kill each other - leaving 40 million dead - all of a sudden, the heads of state decided they'd had enough. Slowly, cautiously, the French "poilus"…the English "tommies"…the American "doughboys"…and the German "fritzes…huns…krauts" crawled out of their trenches. They walked across no-man's-land and greeted their opponents. They shook hands. They traded tobacco. It was over.

"What was that all about?" asked colleague Simon Nixon last night. "I've been reading about the war, trying to understand it. But no one seems to understand it at all. What caused the war? Who wanted war? No one can tell you."

Before the war began, Europe and America enjoyed the greatest burst of prosperity in human history. Thanks largely to the British Empire, trade had been globalized. A man of means, in London, Paris or New York, could order his shoes from a cobbler in Italy, his tea from India, his plates from China, his watch from Geneva, his whiskey from Scotland and his hunting rifle from Germany.

This trade meant that a war was in no one's commercial interest. A popular author and lecturer told audiences that war was a thing of the past; that it was impossible for modern countries to go to war with each other since they depended so much on each other's production.

But there's always more to the story.

As it turned out, the sky fell in 1914…and it kept coming down for the next 31 years. In last week's recitation of all the calamities that befell the generation of '14 - war, depression, influenza, bankruptcy, hyperinflation - we left out one, the Dust Bowl. The poor Okies got it all.

What can we learn from this? That bad things happen - even things you thought were impossible. And that when things do go bad…they can go bad in a big way.

What can go wrong now? A lot…things we can't even imagine.

But let's go from the future back to the past…well, at least back to yesterday. When the sun rose over Tokyo investors hope rose with it. China came out with a big bailout program of its own over the weekend - a plan called a "Social Stabilization" program, in which the government will spend more than half a trillion dollars to try to avoid a revolution. We're just guessing that that is what is disturbs policymakers' sleep in the Middle Kingdom - the horror of hundreds of millions of desperate, jobless Chinese.

Hope carried most of the day. Asian equity markets rallied - boosted by the Chinese bailout plan. But then, the bad news kept coming…and by first light in New York, hopes were already fading. At the end of trading, stocks ended mixed in Asia and the Dow fell 73 points in Manhattan. Oil closed at $62 yesterday, but seems to be slipping towards $60 this morning. Gold is trading at about $745 - after rising yesterday.

We've already seen things begin to go wrong. Unless the next 45 days bring a remarkable bounce, this year will be the worst year for the stock market since 1937. Trillions of dollars has been lost…which has already caused a major change in the way people think. In a matter of weeks, the dominant emotion has shifted from greed to fear.

You'll remember, the Bush administration worked hard to make people fearful. They came up with those preposterous "threat levels," trying to convince the mob that it was in constant danger.

Now, the mob actually feels in danger - in danger of losing its jobs and houses. Fake fear has given way to real fear. So, the new administration will turn away trying to create an atmosphere of fear to trying to give people confidence.

It's the "End of the National Nightmare," says TIME magazine. No more torture. No more 'threat levels.' No more suspected terrorists working behind the counter at Burger King. Terrorists? Who cares about them? The danger is now real…and right out in the open. Everyone is running scared.

And so, in the national narrative, one cockamamie bamboozle takes the place of the one that went before. What we had to fear before was a worldwide terrorist assault on our freedom. Now, we gladly give up our freedom, in the hope that it will keep us from losing any more money. Now, when the feds come a knockin', we all open the door and invite them in. Because we need them to give us money…to bankroll our banks…to bailout our auto industry…to provide financing for our homes…to save our economy… and our jobs…

Imagine that just a few short months ago we were naïve enough to think that people should look out for their own finances…that free market should decide which businesses survive and which fail…that buyers and sellers should set prices for assets…and that capitalists should finance their own banks and insurance companies with their own money.

Now, we're so much smarter! Now, we include the government in our prayers: may it be guided by wise and worthy men…may it keep the bread baking and the circuses performing. And why not count on the government? Remember, the only thing we have to fear is fear itself.

*** One thing is sure. Now, nobody likes George W. Bush…and nobody likes Wall Street. The two are probably going to be punished in the months ahead - with higher taxes and more restrictions on the rich…and a thorough cleanout of the Bush administration and all its works.

In that regard, we still have not heard our Sovereign Hotline phone ring. And we presume that it is all the world's heads of state who are not calling - George W. Bush included. Still, we offer some advice to poor George: watch your back. Some smart lawyer is probably working up a 'war crimes' case against you. Of course, you've got it coming… But remember what happened to Pinochet; he went to London for some medical work and they clamped him in prison. After Obama moves into the White House, you might want to go down to that ranch in Paraguay…pay off some of the local politicians…and stay there.

Meanwhile, we have some advice for Obama to cut taxes. Cut them so much it takes the world's breath away. And then, talk up your Big Bang Bailout as if it were equivalent to WWII. Next year, borrow $2 trillion to rebuild the nation's infrastructure…put in decent railroads, for example.

Here's what will happen: the average person is desperate for cash. And he's desperate to rebuild his balance sheet - paying off debt and adding savings. The tax cut will help him do that. And it will allow the savings rate to go back to where it was before Greenspan's bubble years - around 10%…or about $1.3 trillion. That cash will go mostly into U.S. Treasury debt…the only place where it is believed to be safe. In other words, if you cut taxes, the money will come back to the U.S. government, allowing the bailouts and spending to continue.

Of course, at some level the whole thing is just a massive humbug. All you're really doing is replacing private spending with government spending. But that's what you want to do anyway. This is just a way of gaining more government control over the economy while appearing to save people from a depression.

Will it actually stop a depression? Yes…and no. The key thing is that Americans' wealth…their standards of living…must come down. The president's objective should be to allow them to fall without revolution, or national despair. Under this plan, standards of living will fall - except for those few who are likely to get a sweetheart deal to build a train line…or actually ride a train to work. But the numbers will look fairly decent. There will be jobs. There will be economic activity. Confidence will be restored - albeit of a phony sort. It will look a bit like the U.S. economy during WWII…when living standards fell but savings increased. It will look good to most people. And you, Mr. Obama, will go down in history as one of our greatest presidents.

*** "Uniquely in this global age, it is now in our power to come together so that 2008 is remembered not just for the failure of a financial crash that engulfed the world but for the resilience and optimism with which we faced the storm, endured it and prevailed," said Gordon Brown in his speech on Monday evening.

"…And if we learn from our experience of turning unity of purpose into unity of action, we can together seize this moment of change in our world to create a truly global society."

"My message is that we must be: internationalist not protectionist; interventionist not neutral; progressive not reactive; and forward looking not frozen by events. We can seize the moment and in doing so build a truly global society."

Ai yi yi…

Bill Bonner is the President of Agora Publishing. For more on Bill Bonner, visit The Daily Reckoning.