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"Act As If" - Greece vs America Edition

Tyler Durden's picture




 

The most memorable scene from the movie Boiler Room is when the
character of Ben Afleck tells the room full of wannabe brokers to "Act As If"
(and in the tangent regarding male genitalia, the head of the IMF would
have been wise to take the advice instead of opening his fly and
disproving it). Who would have thought that a few short years later, it
would be none other than insolvent countries taking this advice: specifically,
America acting as if it wasn't insolvent, and Greece acting as if it was
beyond saving. The irony, as William Buckler observes in his latest
edition of the Privateer, is that while US debt continues to trade (if
no longer be accepted) as the "Rock of Gibraltar" and Greek paper is
trading with a certainty of bankruptcy, it is Greece that has taken
proactive steps in taxing and spending policy, while the US has merely
retrenched its profligate ways, and while much political theater takes
place, nothing ever really changes. For some of the more perverse
consequences of this bizarro world inversion, read below.

“Let’s Pretend” Has Run Amok, from Bill Buckler

In Greece, which has been subject to the not so tender ministrations of the US debt ratings agencies and the global “risk” markets for the past eighteen months, government two-year rates soared above 25 percent this week. The rate for two-year US Treasury paper is hovering just above the 0.50 percent level. Plug these two numbers into the “algorithms” by which computers control  most financial trading these days and the result is obvious. The Greek government will be seen as a financial pariah and treated accordingly. The US government will be seen as the fiscal Rock of Gibraltar. But even the US would pale in comparison to Japan, where two-year rates on government debt are below 0.20 percent.

In terms of funded debt, Japan has by far the biggest government debt to GDP ratio in the world. Greece is ahead of the US in that respect, but not by much. On the “markets”, Greek rates indicate a HUGE perceived risk in holding their paper. US and Japanese rates indicate no risk whatsoever.

Of the three nations in question here, only one has made any discernible change in their taxing and spending policies over recent years. That nation is Greece, the European pariah. As a reward, anyone in Greece who is NOT a debtor is sitting pretty, pulling in a HUGE return on investment. The plight of genuine savers in the US and Japan is horrible to contemplate. There is no return on savings whatsoever in either nation. In the US in particular, rates for savers are NEGATIVE to an extent never before seen. Up until the Bin Laden-induced rebound of the US Dollar, Americans were losing quickly in terms of international purchasing power and watching REAL price rises outstrip the “earnings” on their savings by HUGE multiples. Everyone “knows” that in the international financial scheme of things, the US (and Japan) are too big to fail while Greece is not. As a result, anyone in the US or Japan who produces more than he consumes and saves the difference is being skinned alive while his Greek counterpart is reaping an interest rate bonanza. The real risks are not being taken by Greek investors, they are being taken by US and Japanese investors desperate to offset their inability to earn a rate of return from savings.

All this to pretend that US (and Japanese) full faith and credit can still be relied on. The damage mounts.

 

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Sun, 05/15/2011 - 20:18 | 1277553 ursus.peracto
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We aren't Greece yet....

 

10 more years and then......

Sun, 05/15/2011 - 20:19 | 1277560 Rynak
Rynak's picture

Actually, the US is a few hundred times greece already...... but it's a bit like that saying "kill a man and it is a tragedy. Kill one million men, and it is a statistic".... or alternatively "Fuckup little and you're broke, fuckup big and you're too-big-to-fail".

Sun, 05/15/2011 - 20:35 | 1277592 topcallingtroll
topcallingtroll's picture

FYI...that saying has always been attributed to Stalin.

Sun, 05/15/2011 - 20:25 | 1277575 DonutBoy
DonutBoy's picture

10 Years!  Oh no my friend, no longer than through the next presidential election cycle.  There's no one left to take the debt; not Japan, not the EU, not the IMF, and China has had it's fill.  The BRICS are not stupid and the few Americans who are saving are not buying treasuries.

Sun, 05/15/2011 - 23:04 | 1277969 Blank Reg
Blank Reg's picture

I am in thunderous agreement. Our debt is growing at a frightening rate.

Sun, 05/15/2011 - 21:38 | 1277744 Weisbrot
Weisbrot's picture

 

Just when I start to think that perhaps the government may be doing a better job than it get credit for, something like this pops up, and I start to think worse instead of better. Quite a ping pong game of information, disinformation, and misinformation.

Mon, 05/16/2011 - 02:18 | 1278302 LudwigVon
LudwigVon's picture

a better job than it get credit for

If all of the conflicting information makes it hard to decide where you think the US is at... just focus on the deficit. And GDP growth ex-government spending.

Sun, 05/15/2011 - 23:19 | 1278012 Luke 21
Luke 21's picture

you must have got the memo from kyle bass

Sun, 05/15/2011 - 20:16 | 1277555 hognutz
hognutz's picture

Theres nothing to see here folks ,,,, move on..

Sun, 05/15/2011 - 20:25 | 1277570 Dan The Man
Dan The Man's picture

 

How is the world still turning?

Sun, 05/15/2011 - 22:45 | 1277916 Scipionz
Scipionz's picture

Whit credit....

Sun, 05/15/2011 - 20:27 | 1277574 gkm
gkm's picture

From Reuters:  "Republican leaders, who have said they agree the limit must be raised, say they will not approve a further increase in borrowing authority without steps to keep debt under control."

So what exactly was the debt limit meant to control?  Let's circumvent a control once there's another curb in place?  I think I split a gut laughing - seriously.

Sun, 05/15/2011 - 20:43 | 1277616 rocker
rocker's picture

Grand Theater.  Welcome to the Greatest Show on Earth.  LOL   My spending O.K.    Your spending Bad.   WAF Joke.

Sun, 05/15/2011 - 22:21 | 1277780 Al Gorerhythm
Al Gorerhythm's picture

From Reuters:  "Republican leaders, who have said they agree the limit must be raised, say they will not approve a further increase in borrowing authority without steps to keep debt under control."

At a press conference today, a White House spokesman stated; "We have the authority to raise the debt ceiling beyond our last agreement, as long as we spend within our budget. Raising the debt limit ensures that we pay our creditors on time. This is no way that we will jeopardize the integrity of the government, or the strength of the dollar through default."

The spokesman added, "Congress has the authority to raise the debt limit, but we won't raise it unless it is absolutely necessary to do so. As a further measure of budgetary innovation, one that ensures the safety of the tax payers money, we will not raise the debt limit until there is an authority that has the backing of the law, which will oversee that each government department operates within budgetary constraints.'

He parroted: "Congress needs to establish a committee to investigate the formation of this board, that will have the authority to regulate the Budgetary Oversight Committee. This added level of vigilance will overcome the lack of oversight currently missing and this should promote confidence in the dollar and demonstrate to our creditors that we can be trusted with the safe keeping of their loans. We will, however, need to raise the debt limit in order to fund to this new authority, but it will be money well spent because the the ability to constrain debt is paramount."

He blathered: 'These cost saving measures should ensure that we don't go beyond our debt limit again, unless it is absolutely necessary. We are confident that the new authority will pursue an agenda that will keep the dollar strong and thereby create a strong America. We are confident that the will of congress will be implemented with this oversight committee and we can categorically state that more jobs will be created because of it."

The press gallery was assured that the press release was sound in logic and hurried to meet their deadlines.

 

 

 

Mon, 05/16/2011 - 00:15 | 1278139 knukles
knukles's picture

Is this from pseudo-Psalms or Parables?

Mon, 05/16/2011 - 03:16 | 1278348 Al Gorerhythm
Al Gorerhythm's picture

I believe I found it in the Book of Job. That's the one that describes pure evil.

Sun, 05/15/2011 - 20:32 | 1277583 Caviar Emptor
Caviar Emptor's picture

The trend is intact: crushing the buying power of the USD and USD denominated securities (stocks, bonds). Wealth and savings are being confiscated, earned income is being degraded. And unfortunately, the trend can't be reversed without years of economic retrenchment ('austerity') or, put less politely, years of economic depression and deflation. 

The magnitude of monetary policy mistakes of the last 40 years can;t be easily erased and the Fed and TPTB know it. So they're going on, "acting as if" and pretending that they can reflate a bubble the size of the moon. But what they're producing is worse than if they just let nature take its course through creative destruction which would reset the economy and allow new competitors, new ideas and new corporations to take root. And the byproduct of their work is the new monster: biflation, of which they deny the very existence. And yet all the facts are there for everyone to see: deflating real incomes, real estate values and individual net worth, retirement benefits, corporate and government revenues and the entire real economy aka Main Street. The only thing inflating are things that excessive dollars can chase aka The Paper Economy aka Wall Street. However that also means that all those increasingly numerous and worthless dollars are being exchanged for commodities, gold and PMs. And since there's an ocean of dollars in foreign hands and in countries that are thirsty for growth and resources, the process will accelerate. There will be an impending risk of a run on the dollar hanging over the global economy for as far as the eye can see. No wonder people seek gold. Any temporary rises in the dollar will be fleeting and so far have not reversed the trend in place since 1971, the year the gold window was shut and dollar printing became a substitute for debt repayment and organic growth. 

Sun, 05/15/2011 - 20:37 | 1277597 topcallingtroll
topcallingtroll's picture

To sum up your first paragraph "pick your poison."  We will go through a lot of pain no matter which choice we make.  However one choice is perhaps less cynical and less disincentivizing of productivity.

Sun, 05/15/2011 - 20:50 | 1277634 Caviar Emptor
Caviar Emptor's picture

If we go the rout of letting nature take its course and letting things that failed fail, there would be pain. But there would be a huge opportunity for growth in the future as new entrants reinvigorate the economy. And free market capitalism would have a chance to survive. The other way, ie the way we;re going now, there's only one choice: increasingly centralized control over the economy. It's already started: QE is intervention in the bond market. And a side-deal has been intervention in the stock market. And now we have intervention in commodities markets. The next steps are just around the corner: wage and price controls, protective tariffs and trade control, capital adn currency control. It can go all the way to a China-style economy. Ironic. 

Sun, 05/15/2011 - 21:01 | 1277662 akak
akak's picture

What the mass of zombified sheep refuse to acknowledge, and will NEVER accept, is that there is NO "no-pain" possible outcome left to us ---- the choice lies only in some pain now, or greater pain down the road.  Given the terminally short-term mentality prevailing in the USA and most of the Western world today, it is abundantly clear that the latter option will be chosen, as irrational and counterproductive as it may be.

Sun, 05/15/2011 - 21:44 | 1277762 Vic Vinegar
Vic Vinegar's picture

Ah, the latter option is so much more pleasant.

http://www.youtube.com/watch?v=hnFZsrs32Co

Sun, 05/15/2011 - 20:35 | 1277598 Muir
Muir's picture

@Caviar

Very well thought out and written.

Congrats.

 

Sun, 05/15/2011 - 21:41 | 1277747 rocker
rocker's picture

+2   In the 70's we had a Dow high of 1047 followed by a low of 577. Went back to over a 1000 again followed by a low in the 700s think of that for volatility.  Market broke out in the 80s and never looked back. But the volatility remained with swings as much as 900 points.

My point is I think we may be in for the same kind of ride again.  Just much more extreme. TPTB will rape most investors.  How low can they go and how high can they go.  TBTF are TPTB.

Sun, 05/15/2011 - 20:35 | 1277599 quantum dines
quantum dines's picture

owe the bank a million dollars and you have a problem, owe the bank a billion dollars and its their problem

Sun, 05/15/2011 - 20:37 | 1277602 Monedas
Monedas's picture

I went to a Greek buffet ! How exotic the menu....stuffed grape leaves ? Soggy, unsalted rice steamed in a soggy grape leaf ! I hope Greece, Bernanke and O'bama fail ! Monedas 2011 Let them eat Corfu !

Sun, 05/15/2011 - 22:06 | 1277823 rocker
rocker's picture

It won't matter. Look at the entrails. Bernanke is a hangover from the Bush and Paulson era. The pukes are defending the TBTFs already. Great, nobody to break them up. It's a disease I tell you. TPTB are for the elite Billion dollar club. That's how they think now. Billions, a million is chump change to them.

Sun, 05/15/2011 - 20:37 | 1277604 BlackholeDivestment
BlackholeDivestment's picture

Everyone just sounds either corrupt or delusional at this point. 10 Years? We will not make it past another 5 years without a massive big badda boom. http://www.youtube.com/watch?v=CLamhmCYwX4

Sun, 05/15/2011 - 20:41 | 1277618 silvertrain
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I think 5 years is very generous..The boat is taking on water now, its a big boat and will be awhile before the folks on the upper deck know that we are sinking..It will take a bit longer but it is a guarantee to go down..There are a few of us{all of zerohedge} that know whats going on and are preparing or are prepared, for the ones that are not it will be epic and tragic....

Sun, 05/15/2011 - 20:52 | 1277637 Caviar Emptor
Caviar Emptor's picture

You're mistaken sir. This ship is unsinkable!

Sun, 05/15/2011 - 20:55 | 1277652 silvertrain
silvertrain's picture

And the band plays on.....

Mon, 05/16/2011 - 00:02 | 1278106 RockyRacoon
RockyRacoon's picture

Too bad most of us here are in steerage.

Sun, 05/15/2011 - 21:09 | 1277673 KinorSensase
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I've got ZH bias.  It boggles the mind to talk to anyone about this stuff and find out how far behind the times they are...and the information is everywhere! 

I managed to convince a few of my friends to pick up physical on the premise of the collapsing dollar.  They are my only source of solace regarding these events, but even most of them don't see beyond the horizon of a simple currency collapse.  No thoughts on global collapse, MENA, EU debt crisis, Fukushima, midwest flooding and most definitely no thoughts on post-peak oil cultural and paradigm shifts...nada.

I have no solid data to support this but my gut tells me shit hits the fan this summer.  There's been so much pressure building up since the beginning of the year, it just feels like it's gonna pop soon, and then a real chain reaction begins.

Sun, 05/15/2011 - 23:14 | 1277998 samsara
samsara's picture

Yes, Timing is everything.  I know how you feel about friends only being able to see only so far.  No Post Peak Oil reality world views at all....

Careful with the predictions. 

Love these quotes from Doug Casey.

 "Just because something is inevitable doesn’t make it imminent”?

and

"The nasty things that you think are coming always take longer to arrive than you think they will, but once they get here, they make up for their tardiness by being worse than you thought they’d be."

Good Luck. 

 

Mon, 05/16/2011 - 02:11 | 1278296 rocker
rocker's picture

The sheeple are sleeping well. Stock market is back up. Bin Laden gone. It's all good. (sarcasm intended) Hell, even Robo thinks retails going up another 100% with AMZN, PCLN and ANF leading the way. Buy, Buy, Buy. LOL

Sun, 05/15/2011 - 20:46 | 1277624 SOLnow
Sun, 05/15/2011 - 20:39 | 1277606 DollarDive
DollarDive's picture

The time has come for the USA to stop kicking the can down the road.  We're broke as a nation.  Let's start to face up to the facts by dealing with the problem.  How about we start by reducing the headcount of the goverment by 20%.   That would be a good start.  Then we can talk more about raising the debt ceiling.

Citzens should demand an immediate 20% across the board cut before they agree to any rise in the debt ceiling.  The cuts must be finalized by June 1st.  The 20% cut will be followed by an additional 10% cut by August 31st.  

We should seek to impeach any politicians that vote to raise the debt ceiling.  (how about it Tyler ? )

It's wrong and as a nation we should demand that our politicians hold the line.

 

 

 

 

Sun, 05/15/2011 - 20:40 | 1277615 Diatribe
Diatribe's picture

No protesting yet, we haven't found out who wins Season 10 of American Idol...

Sun, 05/15/2011 - 22:37 | 1277893 Vic Vinegar
Vic Vinegar's picture

The end of Idol rolls nicely into the start of Big Brother.  After that, it's fall and football might be back.  So maybe the protests can start in Feb 2012?

Sun, 05/15/2011 - 23:14 | 1278006 cosmictrainwreck
cosmictrainwreck's picture

I thought the NFL/players were in contract dispute; what's up with dat, btw? Or, I guess you mean HS & college... yeah, that'll lull 'em all right - they just luv that shit; can't get enough (besides-it's "patriotic")

Sun, 05/15/2011 - 20:43 | 1277622 silvertrain
silvertrain's picture

I say we should have 2 year term limits across the fucking board for everybody including the Prez..These life longers have fucked the system up..

Sun, 05/15/2011 - 22:39 | 1277899 Vic Vinegar
Vic Vinegar's picture

On a somewhat serious note, I think that if we are actually going to try and have a government, then it should be mandated that public servants kill themselves after serving.  Coupled with term limits, that's the best way to assure the people they don't sell out.

Sun, 05/15/2011 - 23:05 | 1277980 samsara
samsara's picture

If it's still between the two pseudo parties(ie one party, two faces),  it still won't matter.

Sun, 05/15/2011 - 23:14 | 1277999 Vic Vinegar
Vic Vinegar's picture

Carroll Quigley, bitches:

The argument that the two parties should represent opposed ideals and policies, one, perhaps, of the Right and the other of the Left, is a foolish idea acceptable only to the doctrinaire and academic thinkers. Instead, the two parties should be almost identical, so that the American people can "throw the rascals out" at any election without leading to any profound or extreme shifts in policy.

Sun, 05/15/2011 - 23:25 | 1278027 samsara
samsara's picture

Very good.  and great avatar

Carroll Quiqley on the Two Party System

-- Carroll Quigley, "Tragedy and Hope", 1966, p. 1247-48

Sun, 05/15/2011 - 21:59 | 1277794 Al Gorerhythm
Al Gorerhythm's picture

As if!

Sun, 05/15/2011 - 23:23 | 1277975 samsara
samsara's picture

We should seek to impeach any politicians that vote to raise the debt ceiling.

A few years ago,  I thought it would be good to impeach a president that knowingly Lied to a whole nation to commit our sons and daughters to war claiming that we had to 'Preemptively'  striking a country that 'we'  KNOW has Weapons of Mass Destruction.  (using for example forged  10 year old documents by the Mossad, funneled thru Italian boys about some bogus yellow cake)

"Ah, but I was so much older then,  I am younger than that now. "

Sun, 05/15/2011 - 23:41 | 1278055 Vic Vinegar
Vic Vinegar's picture

Agreed.  Those words from Bobby D are eternnally relevant.

Sun, 05/15/2011 - 20:41 | 1277608 Diatribe
Diatribe's picture

When in Rome...

Sun, 05/15/2011 - 22:27 | 1277864 Al Gorerhythm
Al Gorerhythm's picture

I can't seem to scroll down.... or up, for that matter.

Sun, 05/15/2011 - 20:39 | 1277611 sabra1
sabra1's picture

Market-Ticker:

 

Tim Geithner just admitted in writing that there is no trust fund - there is no money - the Government in fact blew every last penny of it. 

You, America, have been serially lied to about these so-called "trust funds."

THEY DO NOT EXIST.

Anyone - and I repeat anyone - who believes there is a "trust fund" or that there is one thin dime set aside by the government to cover Social Security and Medicare after you were just told, in black ink by the Secretary of the Treasury that there is not deserves exactly what they get.

You, the American people, have been robbed.  I and a few others have been trying to warn you of this for years and have been laughed at. 

Tim Geithner has now admitted in black letters that what I've been saying for years is, in fact, correct.

 

Sun, 05/15/2011 - 20:46 | 1277623 trav7777
trav7777's picture

He thinks Geithner is the first to say this?

It's been said so many times it is ridiculous.  I marvel that anyone thinks SS has any money in it at all.

If you explain to a moron about how SS works, they just get so scared that they on that basis alone refuse to accept what you say as truth.

It's kinda like that when you venture onto politically incorrect topics about equality.  A reality of inequality is just too scary to contemplate.

Sun, 05/15/2011 - 20:52 | 1277638 SOLnow
SOLnow's picture

Isn't this common knowledge?

Sun, 05/15/2011 - 21:40 | 1277750 swmnguy
swmnguy's picture

Yes.  It is common knowledge.  Has been since Social Security and Medicare were created.  We can object to these programs, how they are funded, how they are run, whatever; but it would help a lot of we paid enough attention to understand how they work.

Sun, 05/15/2011 - 21:46 | 1277767 SoNH80
SoNH80's picture

The "Social Security Trust Fund" is the Easter Bunny for adults. 

Sun, 05/15/2011 - 22:18 | 1277850 Al Gorerhythm
Al Gorerhythm's picture

And each Amerikan shud prepar accordianly. Hic.

Mon, 05/16/2011 - 00:19 | 1278141 RockyRacoon
RockyRacoon's picture

Ash rat.

Mon, 05/16/2011 - 00:20 | 1278150 knukles
knukles's picture

At least Al Gore was gonna put it in a lock box.

(snigger)

Mon, 05/16/2011 - 03:23 | 1278350 Al Gorerhythm
Al Gorerhythm's picture

Keep outta my Lock Box. Got my eyes on you.

Mon, 05/16/2011 - 00:22 | 1278146 Monedas
Monedas's picture

I'm always thanking the young(er), hard working couple next door for letting me spend their Social Suck (well, with them I say Social Security) Trust Fund ! It would ruin the joke If I told them there was no TRUST FUND ! Monedas 2011 Compassionate Conservative Comedy Tour

Mon, 05/16/2011 - 03:02 | 1278337 natty light
natty light's picture

Ever see one of those bumper stickers on some huge RV that says, oh so humorous, "We're spending our kids inheritance,"? I always wanted to write on it with black marker "and their Social Security!".

Sun, 05/15/2011 - 20:40 | 1277617 Dan The Man
Dan The Man's picture

when does the dollar fall off the cliff?  69c?  59c?   A new reality at 55.5c?

Sun, 05/15/2011 - 20:49 | 1277633 Cleanclog
Cleanclog's picture

US$ gonna keep going down (with some up weeks to keep things interesting) cuz the Fed is using the dollar as a reflationary tool.  They know the fiscal drag is coming and they don't want deflation or further trade difficulties.  That's where game over really lives. Think China!

Sun, 05/15/2011 - 20:47 | 1277625 Ricky Bobby
Ricky Bobby's picture

Act as if you have hit squads on 24/7 stand bye, act as if you can call a drone strike with a mouse click, act as if your citizens have no rights, act as if you have a carrier strike force, act as if your legions span the globe, act as if you are Gods.

Res publica mortuus est, vivat imperium 

Sun, 05/15/2011 - 20:53 | 1277630 Justaman
Justaman's picture

The downfall of the dollar will probably take a while as the big money is still paper focused and consider only investments that pay income or has the potential for capital appreciation.  I know I am generalizing but go and show a relative dollar chart (to gold for s**ts and giggles) to a professional investor.  Talk about economic growth without debt accumulation and they think YOU are the downer, pessimist, conspirist, ahole, whatever.  Ask how a population can lever when it hasn't delevered yet? 

What do professionals tell their clients?  Can they be truthful and say the dollar's decline HAS been the market's performance driver? Or, do they shill for the powers that be telling them that the market's rise is due to investor's pricing in a recovery?  

It is pretty obvious that the international community will be the ones to wake the US up.  So, the drive to the cliff may take a little longer than some suspect.  Prepare now.

Sun, 05/15/2011 - 20:56 | 1277646 Caviar Emptor
Caviar Emptor's picture

Big money is still paper focused. Smart money has already started moving to higher ground. 

Sun, 05/15/2011 - 21:17 | 1277688 KinorSensase
KinorSensase's picture

By higher ground do you mean physical assets in general?

I'm betting on a barter economy for a while, with decreased transportation of goods (reduced to regional levels at best) and thinking that good ole self-reliance and clever entrepreneurship is the ultimate answer to this situation.

I'm curious if the meaning of your post is talking about "higher ground" in this sense (system breaks down to barter level) or "higher ground" in an economic system that still has globally integrated markets.

Sun, 05/15/2011 - 21:49 | 1277768 Caviar Emptor
Caviar Emptor's picture

I mean that people with wealth to protect have moved some over to gold, and bonds and currency from nations that produce physical commodities. So yes, there's a move away from debt and other paper tied to finance and non-physical endeavors, and paper tied to the dollar and from the developed economies in general. What you're talking about would be a step beyond that, which few wealthy people (if any) have taken: anticipating a complete breakdown in the global financial system. But that don't mean it can't happen. It's as much in the cards as it is in the minds of TPTB

Sun, 05/15/2011 - 23:45 | 1278073 KinorSensase
KinorSensase's picture

right on, thanks for the explanation.

Sun, 05/15/2011 - 20:50 | 1277635 Atomizer
Atomizer's picture

This is the official video for New World Order by Ministry as seen on MTV

http://www.youtube.com/watch?v=zhthPDycHB0

Sun, 05/15/2011 - 20:54 | 1277650 TexDenim
TexDenim's picture

The "as if" notion is so true. It brings to mind Keynes theory that what was needed in equity management was not a selection of "the best looking woman in London," but rather, the woman a majority of middle-class Londoners think is the best-looking woman in London. So you have to put aside your own intelligence and critical judgement and substitute for it a guessing game about what "others" think -- others whose minds you cannot possibly enter or know. So fundamentals go out the window and psychology rules supreme.

Sun, 05/15/2011 - 21:19 | 1277687 HRH Gearoid
HRH Gearoid's picture

ta mo croi briste! Ta Eireann in coladh? ta na daoine as Eireann ina coladh! Tiocaidh ar la! 

Sun, 05/15/2011 - 21:32 | 1277723 SoNH80
SoNH80's picture

The animal spirits in the U.S. economy are weak these days.  We always heard of "economic reform" in other countries, but never here.  The U.S. needs economic reform-- lower, simpler taxes, simplified, common-sense regs, not Byzantine rat mazes, balanced budgets.  Don't wait for it, though, that might involve thought, or effort, or refusal of political featherbedding, or questioning of decade-long wars, or other unpleasantness.  Hell, if we were stuck with fiat due to Gresham's Law, at least it doesn't have to be debauched quite as ZESTFULLY by our government...

Sun, 05/15/2011 - 22:11 | 1277836 cognus
cognus's picture

I'll ask an honest question:  How did the Japanese do it?  The implication is that "yeah, they went bust ages ago... so 205...".  Yet, they remain a "viable" economy [in the grand scheme of things... you know what I mean].  I am guessing/assuming that some smart guys there figured out an equation that would yield a "maximum Debt ratio without the entire financial world throwing in the towel vis Japan's ability to pay".   Why isn't there a panic re: Jap debt instruments?  Their "market" interest rate on sovereign debt should be spectacular...   What am I missing?

Sun, 05/15/2011 - 22:25 | 1277862 mt paul
mt paul's picture

Japan borrowed from it's own citizens ..

amerika borrowed from the world ..

Sun, 05/15/2011 - 22:30 | 1277873 Al Gorerhythm
Al Gorerhythm's picture

Come the social security debacle, it will be seen that the Government borrowed from everybody. When we dig a hole, we dig 'em deep. Gotta say that much about us!

Sun, 05/15/2011 - 22:39 | 1277882 Al Gorerhythm
Al Gorerhythm's picture

What are you missing? The final chapter. Contemplating the alternative has been too much to bear. Foot/can or Tar/feathers. What would be your choice?

Mon, 05/16/2011 - 00:32 | 1278172 RockyRacoon
RockyRacoon's picture

There are huge advantages to having the world's reserve currency.  But the downside is that deficits must be run.  If other countries are building reserves of said currency, then the country sporting the currency must have a deficit, by definition.   That situation can only exist for a certain period of time -- like now.

Sun, 05/15/2011 - 22:38 | 1277902 Al Gorerhythm
Al Gorerhythm's picture

Contingency plans raised in Aussie Senate in case US goes belly up:

http://barnabyisright.com/2011/05/14/us-treasury-augus-2-deadline-to-avo...

Going viral.

Sun, 05/15/2011 - 22:49 | 1277936 gosseyn
gosseyn's picture

Yes, Japan borrowed from its citizens and thus bought time.  But their xenophobia and their demographic timebomb are about to exact the ultimate toll.  The sun is setting on the nation of the rising sun and the lower it goes the faster it approaches the horizon.

Sun, 05/15/2011 - 23:09 | 1277991 Oracle of Kypseli
Oracle of Kypseli's picture

The youger generation is not likely to be as sheepish as the old. Work part time, travel, runout of money, work again, postpone marriage, have fewer kids and so on. The ratio of working people to pensioners is very low.

Every year pension payments decrease, co-pay on insurance increases. Other benefits are no longer available for the newly retired. Something is got to give.

  

Mon, 05/16/2011 - 09:17 | 1278772 Dr. Impossible
Dr. Impossible's picture

you are correct....the younger generations are more or less...ON STRIKE!...gathering steam, and it won't end soon, its been building for years, and as they mature, watch TSHTF because of it. I was just in a lengthy meeting last week about it. Ask any working* under 45(now) how they feel about their paycheck. Ask how much they get to keep by the end of the year, and what the value left @EOY. It's devastating, as they don't have any time daily to protect/manage this asset. So they get raped for it. This isn't new.Why work to support someone else's debts/bad investments, and  higher living standards? They told us that taking onto a national debt was for our em betterment with fancy roads, schools/educations, awesome parking garages, bridges to no where, safe banker/banking/political/judicial/legal/CONSTITIONAL system.

Times seem different now.

When i squint my eyes, i can almost see groups of them beginning to implement their own forms of self imposed austerity measures. And collectively this will destroy the "smart ones".HAHHAHAHHAHAH...so grab the popcorn bitchez...and watch the wealth(debt) melt ....cometh(cuz its really is just getting started.)

I'm just glad there are soooo many edgeemakaded people who know how to unwillingly put me, and my family, into generational debt for my own safety, security, and just cuz they b smarterz then me, ands dey gots a paper dat sez so.

...what a farce, glad i figured this out years ago...now i qualify employers/clients...fuck'em i really don't even need to work.

.....AMERICA!!! complete with the guaranteed "Iron Bar" retirement policies...FOR EVERYONE!!!

Sun, 05/15/2011 - 22:53 | 1277948 I am Jobe
I am Jobe's picture

You don't own yourself -- the Federal Reserve does.

http://www.viewzone.com/collateralx.html

Mon, 05/16/2011 - 10:01 | 1278949 Dr. Impossible
Dr. Impossible's picture

this is interesting. however, having been an "adopted at birth child"

A. i have never seen my original BC, nor do i know my name given by biological mother, nor her name or his.

B. I have the receipt issued(at birth, denominated in FRNs, filed with the IRS) to my "adopted parents", it was given to me as a gift years ago. This "receipt" looks much different then a BC long or short form.

so if i own this "receipt"....are you attempting to tell me...

Sun, 05/15/2011 - 23:03 | 1277967 Blank Reg
Blank Reg's picture

I am in thunderous agreement. Our debt is growing at a frightening rate.

Sun, 05/15/2011 - 23:02 | 1277971 I am Jobe
I am Jobe's picture

Must concur. The velocity is now faster than ever was. Scary and time to pack up leave the USA and dump the greenback. Buying Physical Silver and Gold and enough of the 401K crap and other retirment crap the Govt wants you to have.

Mon, 05/16/2011 - 00:15 | 1278138 Federal Reserf
Federal Reserf's picture

Great times to have a fiat IRA!  I guess I should cash it in and buy a damned boat ballasted with a little PM.

Mon, 05/16/2011 - 03:15 | 1278347 TwoShortPlanks
TwoShortPlanks's picture

"Act as if"...WTF?!

Just CLOSE!!!!!!!!!

http://www.youtube.com/watch?v=4zakyg3thfY&NR=1

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