04.11.08
An “interersting” Search Result
Thank you Google Trends research….for the phrase “economic depression”….
Wow.
04.08.08
Something just went “bump” in the night….Dollar tanking
Gang, I do not know what went bump in the night but in less than one hour the dollar went DOWN 25 points and STRAIGHT DOWn…something just happened. As I get details, beyond the surge in the Euro, I’ll update everyone…
04.04.08
The Big Story for 4/4/08
Besides the unemployment numbers, which if honestly reported will show a massive drop in addition to substantial revision downwards for February, there was one story which stood out and grabbed my attention last night:
Moody’s cuts Countrywide Bank rating to “D”
This story ( located here ) could be the news Bank of America has been looking for to walk away and leave the taxpayer with this dog. Stay tuned gang as life is about to get one heck of a lot more interesting in our markets as the big hits, the CMBS problems are about to explode like a cow that fell asleep on the railroad tracks of a bullet train.
It’s a good thing the analysts have not put a “SELL” recommendation on this stock yet. Heck, it might rally above 7 with this news……(Check out one of the analyst summaries here at Yahoo Financial page).
04.02.08
ABBAnomics
ABBAnomics
By John Galt
Dancing Queen
You can dance, you can jive, having the time of your life
See that girl, watch that scene, dig in the dancing queen
Friday night and the lights are low
Looking out for the place to go
Where they play the right music, getting in the swing
You come in to look for a king
Anybody could be that guy
Night is young and the musics high
With a bit of rock music, everything is fine
Youre in the mood for a dance
And when you get the chance…
You are the dancing queen, young and sweet, only seventeen
Dancing queen, feel the beat from the tambourine
You can dance, you can jive, having the time of your life
See that girl, watch that scene, dig in the dancing queen
Youre a teaser, you turn em on
Leave them burning and then youre gone
Looking out for another, anyone will do
Youre in the mood for a dance
And when you get the chance…
You are the dancing queen, young and sweet, only seventeen
Dancing queen, feel the beat from the tambourine
You can dance, you can jive, having the time of your life
See that girl, watch that scene, dig in the dancing queen
East of the Rockies, this is your host Art…er, never mind. Time for the “Dancing Queen” Benron Bernanke to explain why he is allowed with his other twelve cronies to circumvent the laws of the land and partake with their co-conspirator, Hanky Panky Paulson.. But to do this first, let’s do a quick and dirty tour of history, going back in time first to our childhood to bring this down to basics and moving into the music of the 1970’s with my dedication and personal nomination of our new economic system:
ABBAnomics
Marbles
Ah the great game of marbles. Remember how that used to work for all you old timers out there? Most of us would “lose our marbles” (well, my wife would endorse that) to the geeky kid with the glasses who always won. Then one day you and a few friends would get on a hot streak and start to win. The kid would get more and more upset as he lost more and more of those marbles and get furious at all of you. He would try more dramatic strategies and then try to pull other players aside to convince them to team up against the winning sides. Just as it looks as if you’re going to get your marbles back and some of his, what happens?
That’s right, the geeky kid gets pissed off and takes his marbles and goes home, ending the game. This ancient, well at least to the video game generation, parable about a game long past might seem like an irrelevant analogy to our modern markets. Sadly, it is about spot on. The failure to understand that the geeky kid is losing and thus he’s ending the game right when it gets good is one thing. The failure to actually endorse the concept of laissez-faire capitalism and the risks to reward ration that engenders is another. America was a risk and has paid a hearty reward to those who founded this nation and those fortunate enough to be born or emigrate here.
Unfortunately, America is turning into the biggest whiny sissy on the block. And a whiner who can not lose with grace and dignity in the market place of finance and ideas is not only dangerous but pathetic. The mass interventionism by our government agencies and private banking institutions is an indication that the marbles are being removed and soon will be played with by only their direction and a new set of rules.
What will soon end up occurring is that as the rules are changed to prevent “cheating” as the powers that be will call it, they will also modify them so that certain players can never lose. This modification in the middle of the game often results in the end of the game as the players walk away to preserve what marbles they have. We are on the brink of witnessing the same event in our markets on a scale far beyond the scope or imagination of our friend Benron Bernanke. And the consequences will change our society for at least three generations if they are not stopped immediately.
The World War I Market Holiday Experience and Inflation
As I discussed in the op-ed below titled “Birth of a Nation” the markets closed in 1914 thanks to an act of Islamic terror and prevented a massive exodus of European capital. While unprecedented, to insure that the coming capital flight does not occur, the simple numerical identifier of “1914” is all it will take to destroy your retirement program, and insure you are sitting there going “DOH” while banging your head into a bloody pulp against the wall because you trusted the same morons who determined “subprime” was a great idea. The most amazing thing that I have ever witnessed in my years of watching this nonsense since the late 1970’s is that for the first time ever, the rules can be changed before any trader, any investor or any foreign government can make substantial changes to their portfolios or strategies. To make matters worse, the rules can be changed outside of the scope of the regulator and legal powers of those doing so and without Congressional action. So as the markets continue to deteriorate while the mortgage problems are imploding further and further the valuations will be changed by the markets on the various bond instruments constructed to enable this problem to occur in the first place. That leaves foreign investors little if any choice as the US Dollar declines in value and the inflationary pressures increase in our economy, eroding earnings on dollar denominated investments. The nonsense we are seeing in our markets has infected almost every equity and credit market worldwide, and that is a very dangerous problem that will impact all fiat currencies and force a flood of paper on to the markets in a desperate final attempt to salvage economic stability which will instead trigger the inflationary death spiral all Fiatocracies are destined to experience. Presuming that we continue to dilute the value of the U.S. Dollar at a faster pace than other nations to stabilize our banking system, the inflationary specter shall hang over economic growth in the U.S. like an executioner swinging a large heavy ax.
The Art of Socialist Nationalization Practices by “Free Market” Economies
The big lie has begun to spread. All of our lives we have had it drilled into our head per airheads like Kudlow:
“We Believe that Free Market Capitalism is the best path to prosperity”
The unsaid caveat which will never be heard on Bubblevision or any of the MSM?
“We believe that until our portfolios go into the crapper and create massive losses causing us to sell one of our vacation homes in St. Kitts.”
You see the rules are different when failure due to horrid decision making comes into play. Free markets are supposed to reward the intelligent companies by driving their valuations higher while punishing the gamblers and the foolish by taking their values to a very low price or “zero” as they should be. In this modern world however, we can not have winners or losers in little league games and that educational model has been expanded to include Wall Street. The major banksters have all got issues beyond any comprehension with losses yet to be declared and in all probability beyond the capability of the entire U.S. economic structure to absorb. So what does a supposedly quasi-capitalist economy do when free market rules indicate failure is imminent? Change the rules.
Paulson’s folly on Monday was a very dangerous venture into the elimination of freedom via the circumvention of the U.S. Constitution. There is nothing in the primary legal foundation of our country which allows a private institution regulatory powers over other private institutions but thanks to decades of ignoring the works of our Founding Fathers, the Constitution is no longer relevant and thus the discussion of the so-called “Nordic” model has entered into the conversation. The fallacies of fiat currencies have been discussed numerous times by this writer, but he fallacies of attempts to merge socialism with capitalism are going to be the destruction of our nation leading to further declines in our standard of living. With that warning in mind, let’s review the Nordic model and the history of the central bankster bailout in Sweden that our Fed appears to eager to undertake.
ABBA Banksterism
“Fed eyes Nordic-style nationalisation of US banks” was the story on March 31, 2008 by Ambrose Evans-Pritchard from the U.K. Telegraph which caught my eye. He was the first reporter, as usual, to find the perfect analogy for the actions that the Federal Reserve is undertaking and where they got the idea for this outrageous activist banking system operating outside of our Constitution. So what happened in Sweden in the early 1990’s which created a model for the central banksters of the world to follow? Let’s get into our way back machines and visit the land of ABBA to get some idea.
To get some idea, I’m going to extract some quotes from a speech by the Governor of the Riksbank of Sweden, Urban Bäckström, of that time at a Federal Reserve Symposium in Kansas City on August 29, 1997 (Titled: “The Swedish Experience” ) to give everyone some perspective on the problem from the view of their central bank and how they dealt with it. The first thing that grabbed my attention in this speech was this paragraph:
“The expansion of credit was also associated with increased real economic demand. Private financial saving dropped by as much as 7 percentage points of GDP and turned negative. The economy became overheated and inflation accelerated. Sizeable current-account deficits, accompanied by large outflows of direct-investment and other long-term capital (once exchange control had been finally abandoned in the late 1980s), led to a growing stock of private sector short-term debt in foreign currency.”
Sound familiar? The primary difference has been obvious with the inflationary overheating not a factor thanks to the factors of foreign economies willing to accept the export of U.S. inflation into their economies to stave off a problem in our system plus the manipulation of data structure by our reporting agencies to maintain permanent distortions in the records thus preventing traditional application of existing economic modeling. These two factors prevented the inflationary spike from impacting the U.S. economy for over almost two decades until 2006 when the questions were being asked how the reporting system claimed no inflation in the housing numbers despite firm data suggesting twenty plus percent increases in prices across the nation. Add in the sudden increase in costs of precious metals, base metals and a steady but not dramatic surge in energy prices(until 2007) and doubts about the statistical reporting methodology from the U.S. began to spread. Those mitigating factors appear to be coming to an end as the lack of savings in the U.S. economy are paralleling the Swedish experience of the early 1990’s and as the Riksbank chief illustrates, the crisis starts to accelerate.
“Step by step the Swedish economy became increasingly vulnerable to shocks. During 1990 matters came to a head. Competitiveness had been eroded by the relatively high inflation in the late 1980s, resulting in an overvalued currency.”
Sound familiar again? Our currency by all models was extremely overvalued in 2005 as valuations were not realistic for many of the underlying assets in our nation. If anyone needs proof of this fact, please go hug the closest Realtor sign with the words “Short Sale” or “Foreclosure Sale” hanging on it. This was realized by many as the flight to nations with more stable fiat currencies(sorry for the oxymoron) began in earnest yet was not realized by many U.S. investors until 2007. The rest of the world realized that by basing our economy on consumerism instead of actual productivity was a formula for disaster as all nations who are in debt beyond their capabilities to repay eventually defaulted. The Swedes realized that the problems they had in attempting to use their managed quasi-capitalist socialist economic model with a fixed currency exchange rate would result in failures within their finance system. This was borne out as the chief continues to illustrate here:
“Asset prices began to fall and economic activity turned downwards. Between the summers of 1990 and 1993 GDP dropped by a total of 6 per cent. Aggregate unemployment shot up from 3 to 12 per cent of the labour force and the public sector deficit worsened to as much as 12 per cent of GDP. A tidal wave of bankruptcies was a heavy blow to the banking sector, which in this period had to make provisions for loan losses totalling the equivalent of 12 per cent of annual GDP.”
Notice any parallels? This one quote should indicate to everyone why the Fed is contemplating the Swedish or “Nordic” model for management of the financial crisis. Here is the key part of the Riksbank Governor’s speech, in my opinion, that indicates why Bernanke will apply a mix of his anti-deflationary Great Depression model in addition to the ABBA Banksterism model:
“In the early stages of the crisis, monetary policy was directed to maintain the fixed exchange rate. This line had broad support among the general public as well as in the political system. The aim was to establish a low-inflation policy once and for all. But in spite of major efforts, both political and economic, the international currency unrest in November 1992 meant that the fixed exchange rate had to be abandoned. It was replaced by a flexible exchange rate and an explicit inflation target. This resulted in a considerable depreciation of Sweden’s currency but during 1993 the continued fall in international bond rates meant that Swedish interest rates also moved down to levels that were comparatively low. Together with the Riksbank’s reduction of its instrumental rate, this gave the monetary conditions a stimulatory turn. It also helped to stabilise both the economy and the banking system. Lower market rates eased the fall in asset prices, lightened the burden of servicing private sector debt and mitigated the negative impact on the financial system.
Rescuing the banking sector was necessary to avoid a collapse of the real economy. There is no evidence that a credit crunch developed, though anecdotal information did suggest that creditors became more restrictive. I shall be returning shortly and in more detail to how the banking problems were tackled.”
While this is nice in theory, it has never been applied to the largest debtor nation in the history of capitalism and thus why I have grave concerns about the implementation of such policies by our cronies at the Fed. In this context, here is the reason we see a massive Fed bailout of our system at this time as the Swedish banking chief discusses their past which is becoming our reality:
“Looking back, one can see that in the course of the crisis the seven largest banks, with 90 per cent of the market, all suffered heavy losses. In these years their aggregate loan losses amounted to the equivalent of 12 per cent of Sweden’s annual GDP. The stock of non-performing loans was much larger than the banking sector’s total equity capital and five of the seven largest banks were obliged to obtain capital contributions from either the State or their owners. It was thus truly a matter of a systemic crisis.
In connection with a serious financial crisis it is important first and foremost to maintain the banking system’s liquidity. It is a matter of preventing large segments of the banking system from failing on account of acute financing problems.”
Thus it is quite obvious that while Bernanke would like to apply traditional solutions to our banking crisis, the ideal of an illegal and blatantly unconstitutional socialist model being applied is the only immediate method which would stave off an economic collapse. To justify the actions after they have been taken, the U.S. government trotted out Paulson to speak to what needs to change to allow the Fed to continue this course of action even though there is nothing in the original Federal Reserve Act which allows expansion of these powers nor other actions outside of their scope to be taken. The Riksbank chief continues:
“The bank guarantee provided protection from losses for all creditors except shareholders.”
Yet the shareholders in our nation are too stupid to realize they are being given the ABBA DDD treatment:
Duped. Diluted. Dumped.
Ah well, maybe the shareholders will all get a free toaster oven and copy of “Dancing Queen” as compensation. Bernanke could care less about free market capitalism and when the American public becomes aware of this, they will flee for the exits as more actions are being undertaken which are very unfriendly to shareholders and speculators as I shall discuss later in the article. So back to the Swedish crisis and the course of action the Riksbank took to stave off a financial system collapse. So why the urgency to bail out the Swedish system and change the rules? This should give you a clue why and start to think about the parallels boys and girls:
“The political system concluded that in the event of widespread failures in the banking system, the national economy would suffer major repercussions. The direct outlays in connection with the capital injection into the banking sector added up to just over 4 per cent of GDP. However, it is now calculated that most of this can be recovered.
One way of limiting moral hazard problems was to engage in tough negotiations with the banks that needed support and to enforce the principle that losses were to be covered in the first place with the capital provided by shareholders.
A separate authority was set up to administer the bank guarantee and manage the banks that landed in a crisis and faced problems with solvency, though the crucial decisions about the provision of support were ultimately a matter for the Government. A clear separation of roles was achieved between the political level and the authorities, as well as between different authorities. Naturally this did not preclude very close cooperation between the Ministry of Finance, the Bank Support Authority, the Financial Supervisory Authority and the Riksbank.
It was up to the Riksbank to supply liquidity on a relatively large scale at normal interest and repayment terms but not to solve problems of bank solvency. Collateral was not required for the loans to banks, neither intraday nor overnight. The banking system was free to obtain unlimited liquidity by drawing on its accounts with the central bank. The bank guarantee meant that the solvency of the Riksbank was not at risk. In order to offset the loss of foreign credit lines to Swedish banks, during the height of the crisis the Riksbank also lent large amounts in foreign currency.”
Notice the sections that I put into bold print. Notice the sense of urgency in their decision making process. Notice the ominous parallels. Now start thinking about the events of the last month. The Treasury Department today gave unqualified guarantees to the Federal Reserve a private unregulated institution to support the Federal Reserve Bank of New York(FRBNY) should any losses be incurred in the Bear Stearns bailout. Translation? The $29 billion in bonds can be added to the FRBNY’s balance sheet because the taxpayers will eat it. Thank you for letting me vote on that. In the mean time the bond holders and derivative holders of Bear’s garbage might get to skate with relatively minor losses compared to the equity holders. This model of rescue will be repeated over and over again, adding huge liabilities to an already over-extended government debt load. But is this the end? Oh no, there’s more to come. If you notice above a new authority was created in Sweden and that proposal and search for a new RTC type agency is being sought out. The Congresscritters are already thinking about creating a massive mortgage rescue plan for consumers to prevent deteriorating property values from falling further and creating a municipal bond default wave. What they fail to realize is that by copying the Swedish model, you have to create an entirely new welfare state including the creation of a government managed industrial base to sustain employment levels to collect the taxes necessary to support such an idea. So what fool would invest in a US Government Bond if that prospect was around the corner unless the yield was north of 15%???????
So what did the Swedes do to save their banking system? More from the Governor:
The Swedish Bank Support Authority had to choose between two alternative strategies. The first method involves deferring the reporting of losses for as long as is legally possible and using the bank’s current income for a gradual write-down of the loss making assets. One advantage of this method is that it helps to avoid the bank being forced to massive sales of assets at prices below long run market values. A serious disadvantage is that the method presupposes that the bank problems can be resolved relatively quickly; otherwise the difficulties compound, leading to much greater problems when they ultimately materialise. The handling of problems among savings and loan institution in the United States in the 1980s is a case in point. With the other method, an open account of all expected losses and writedowns is presented at an early stage. This clarifies the extent of the problems and the support that is required. Provided the authorities and the banks make it credible that no additional problems have been concealed, this procedure also promotes confidence. It entails a risk of creating an exaggerated perception of the magnitude of the problems, for instance if real estate that has been taken over at unduly cautiously estimated values in a market that is temporarily depressed. This can lead, for instance, to borrowers in temporary difficulties being forced to accept harsher terms, which in turn can result in payments being suspended.
The Swedish authorities opted for the second method: disclose expected loan losses and assign realistic values to real estate and other assets. This method was consistent with other basic principles for the bank support, such as the need to restore confidence. Looking back, it can be said that in general the level of valuation was realistic.
While the solution sounds realistic, sound and decisive, this is where I think Ben and the oligarchy of the twelve will run into issues. The easy part would be to assign realistic values to real estate, that’s fair enough, as there are decades of appraisals and measurements in any market in the United States to determine such valuations. But the problem that they will run into is the determination of values on “other assets” because the concept of “mark to market” was never applied until an institution was about to enter into a crisis. If Bear Stearns had defaulted and the associated paper had been marked to market this would have triggered a series of similar asset valuations at other institutions world wide and without the liquidity necessary to maintain these valuations, instead of an inflationary rescue of the banksters, we would have experienced a 1929 deflationary spiral that would have been out of the control of the entire financial system because the phrase “no bid” would once again enter into the vocabulary of the investing public. Sadly, if you ask the average investor what the definitions of the terms “bid” and “ask” actually mean, most would give you a blank stare, not realizing that the basic fundamentals of all capitalist economies returns to those two words. The markets could never assign an asking price to something that has a fictional valuation such as some of the mortgage backed derivative instruments because the history of the prices is considered a “Level III” secret to be determined by an institution and the self-associated hedge funds they owned and ordered to buy the products. Since Ben and the boys have no idea how to deal with these alleged assets, they have to allow other institutions to assign valuations to these instruments and then absorb or bury them into their balance sheets under the Level III heading. This is no way to run a free market economy and as the Swedes demonstrate, the hybrid model leads to stagnation and a lack of the explosive expansion as we have experienced throughout our history.
Let’s continue to review the Governor’s speech:
Allow me now to summarise what I consider to be the most important lessons from Sweden’s financial crisis:
1. Prevent the conditions for a financial crisis
The primary conclusion from our experience of Sweden’s financial crisis is that various steps should be taken to ensure that the conditions for a financial crisis do not arise.
- Fundamentally it is a matter of conducting a credible economic policy focused on price stability. This provides the prerequisites for a monetary policy reaction to excessive increases in asset prices and credit stocks that would be liable to boost inflation and create the type of speculative climate that paves the way to a financial crisis.
- Looking back, it can be said that if various indicators that commonly form the background to a financial crisis had been followed systematically, then incipient problems could have been detected early on. That in turn could have influenced the conduct of fiscal and monetary policy so that Sweden’s financial crisis was contained or even prevented. In spite of the evident signs, few if any in the public discussion warned of what might happen. Martin Feldstein offers an interesting explanation in his introduction to The Risk of Economic Crisis from 1991. At that time the industrialised world had not experienced an outright financial crisis since the 1930s. As a result, economists had devoted relatively little work to the analysis of this subject, being more concerned to understand the more normal economic world. This symposium is a positive sign that matters have changed in that respect. The conclusion drawn by the Riksbank is that various indicators must be followed systematically with the aim of detecting any signs of potential financial problems and systemic risks.
- In Sweden’s case the supervisory authority was not prepared for the new environment that emerged after credit market deregulation. This meant that during the 1980s the banks were able to grant loans on doubtful and sometimes even directly unsound grounds without any supervisory intervention. In addition, in many cases the loans were poorly documented. The lesson from this is that much must be required of a supervisor operating in an environment characterised by deregulated markets.
Notice the sections I have put into bold for this discussion. The Swedish banking system was not ready for new loan structures provided and created(translation to the U.S. problems: Subprime) and elected to depend on price stability to maintain equilibrium instead of maintaining regulatory authority as originally intended after the last crisis in the 1930’s. With the repeal of the Glass-Steagall Act by the Gramm-Leach-Bliley Act in 1999, the wall which prevented a lot of the creative instability in the banking system was torn down and allowed the bubbles in both equity and real estate markets to accelerate to excesses for which the problems of today have been exacerbated. The failure to maintain price stability in equity markets and honest reporting in the financial statements of corporations (much less the government) have allowed the instability to spread into commodities and begin the much feared inflationary death spiral which has resulted in a decline in the U.S. dollar in an attempt to monetize part of the American government and private debt.
(Dollar chart from www.shadowstats.com )
The now inherent currency instability introduced into the U.S. Dollar will eventually accelerate the capital flight from our shores which will increase the magnitude of the problems instead of allowing a stable system to manage the orderly deleveraging of these overvalued assets. The “Nordic Way” might sound applicable until one realizes that Sweden did not owe the entire world trillions of dollars in government and corporate debt. Add in the trillions in securitized debt obligations which our institutions created and sold based on the concept that “real estate never declines” and the “American consumer rarely defaults” and it does not take much to imagine just how a nationalization of our banking system could blow up in our face. The necessary monetization of our Treasury Debt would create a capital flight unseen since the Weimar Republic of Germany gave wheelbarrows to banking customers instead of toasters.
The final section from the speech by the Governor:
2. If a financial crisis does occur
In a sense all major financial crises are unique and therefore difficult to prepare for and avoid. Once a crisis is about to develop there are some important lessons concerning its handling that can be learnt.
- If an economy is hit by a financial crisis, the first important step is to maintain liquidity in the banking system and prevent the banking system from collapsing. For the management of Sweden’s banking crisis the political consensus was of major importance for the payment system’s credibility among the Swedish public as well as among the banking system’s creditors throughout the world. The transparent approach to the banking problems and the various projects for spreading information no doubt had a positive effect, too.
- The prompt and transparent handling of the banking sector problems in also important. The terms for recapitalisation should be such as to avoid moral hazard problems.
- Automatic stabilisers in the government budget and stimulatory monetary conditions can help to mitigate the economy’s depressive tendencies but they also entail risks. Economic policy has to strike a fine balance so that inflation expectations do not rise, the exchange rate weakens and interest rates move up, which could do more harm than good. In this respect a small, open economy has less freedom of action than a larger economy.
- It is important both to avoid a widespread failure of banks and to bring about a macroeconomic stabilisation. The two are interdependent. The collapse of much of the banking system would aggravate the macroeconomic weaknesses, just as failure to stabilise the economy would accentuate the banking crisis.
While Governor Bäckström’s point about a small open economy having less freedom of action is applicable to Sweden, this theory is full of holes when applied to a debtor nation which owes in excess of four times of it’s annual GDP in debt and committed future liabilities. The flexibility is applicable when a nation is a creditor nation or has the ability to back it’s currency something other than “faith” or an IOU. The American currency was the strongest in the world for decades but the failure to escape the consumerism mentality has allowed the degradation of not just the respect for the dollar, but the nation as a whole. There is no longer a hegemony of the dollar as other nations have started to shy away from accepting the currency or the debt created by the U.S. The most recent Treasury auction had a whopping approximately 3% foreign participation and still to this day the ever evasive and mysterious “Caribbean Banking Centers” are still large holders of our bonds, yet providing no level of foreign trade or commerce beyond being a Laundromat for our currency holding just over $108 billion in Treasuries. The desire to bring stabilization first, and deal with the inflationary consequences later appears to be Mr. Bernanke’s solution. And this solution is what should terrify every sane American.
ABBAnomics
The new term I have coined is not meant to be an insult to one of Sweden’s foremost musical talents, but it is so appropriate as to the solution. You see the Dancing Queen we have as a Fed chairman is trying desperately to put lipstick on a pig and call it something we should all behold. In reality that pig is now eight years bloated and should have been slaughtered and slow cooked instead of waiting on it to explode. Instead of a slow, orderly deflating of over-valued assets, the risk of a sudden crash only expand week by week as the foreign investors realize this dance will not last much longer. This Bubblenomics economy created by Greenspan to inflate asset class after asset class in an attempt to maintain political favor and keep economic discomfort as something that was eliminated along with the business cycle is a myth of epic proportions. Unfortunately the basic rules of economics, excess demand and diminished supply creates price pressures and vice versa still apply. And we have been in a period of excess supply for almost a decade now. The excess I am referring to is EXCESSIVE GOVERNMENT. By allowing the government to expand far beyond what has ever been needed be it in the arena of macroeconomic management or individual behavior supervision, the American people have opened the door to the ABBAnomic solution. And that’s a solution which can be summed up as the new cradle to grave nanny state mentality which most Americans seem perfectly willing to accept. Karl Marx said it best in the Communist Manifesto:
“The weapons with which the bourgeoisie felled feudalism to the ground are now turned against the bourgeoisie itself.”
The idealism of free market capitalism have been buried and shamed by the socialist agenda as a new corporatist elite have elected to encourage the stifling of competition and invite the government into a new working relationship to prevent older institutions from failing and essentially destroying the investing public’s monies to create a new dependency class. Instead of accepting personal responsibility at every level, be it corporate or individual, a new government feudalism has been determined to be an acceptable solution for the average soul. America works best in their minds when the citizenry has a level of enslavement to the government trough and with over fifty-five percent of the American public accepting some sort of largess, there is no reason to doubt that this will only increase as pension funds and investment plans are devalued to adjust balance sheets and maintain the banking system’s status quo. The investor who worked his entire life, played by the rules, never cheated and worked within the system to achieve a comfortable standard of living in his or hers twilight years will now be forced into the government system as their savings are destroyed and investments revalued. The theories of the “Nordic Solution” are wonderful if we are talking about a small, young and growing population such as that of the early 1990’s in Sweden. But we are a retiring, aging population with an exodus of our manufacturing base and an import based consumerist economy. Socialism will work here, but it will be a disaster. And Bernanke’s legacy of creating ABBAnomics, the economic model where hybrid government agencies working with a private group of banksters will forever hijack the free market until the citizens take a stand and demand their both personal and economic freedoms be returned without prejudice. The time to take a stand is at hand. It’s freedom or polyester bell bottoms with a government handout.
The choice is yours.
04.01.08
Dr. Copper Says….
So don’t panic boys and girls, you’re precious metals are still precious…..
Jerichonomics Barter Chart Printable Size…with instructions
Ok, I guess I should have posted an explanation (my bad) on how this works and thought I would add a “printable size” for everyone to read which is easier on the eyes.
Going vertically (column 1 for example) 1 oz. of gold = approximately 230 gallons of diesel, 154 bushels of corn, or 260 10 lb bags of flour.
Going horizontally (column 2 for example) 1 oz. of silver = approximately 2 haircuts (or 1/2 oz. =1), 1 750 ml bottle of bourbon but takes over 7 oz.’s to get a filling at the dentist.
The pricing is just as an example and designed to illustrate a basis for haggling back and forth. Hope this helps gang and this printable view is easier to follow! If you right click on the image and see the drop down window which states “view image” (depends on your browser) you can see it clearly….-John
Well, my job is done(not)
Since the wording is too small to read, here it is:
Food stamps are the symbol of poverty in the US. In the era of the credit crunch, a record 28 million Americans are now relying on them to survive – a sure sign the world’s richest country faces economic crisis
