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Albert Edwards: At 500% Net Liabilities To GDP, It Is Too Late To Prevent The Collapse Of The G-7; Greece Is Irrelevant, We Are All Now Insolvent

Tyler Durden's picture


For Greece, with on and off balance sheet liabilities at over 800%, it's game over. For the Eurozone, with the same ratio at about 500%, it is also game over. For the US, at 500%+, it is, you guessed it (sorry Joseph Stiglitz), game over, but since we have the printers, it will simply take a little longer. Following up on yesterday's popular post on prevailing delusions as captured by Albert Edwards' colleague Dylan Grice, we present Albert's latest outlook. Please don't read this if you want to keep believing there is any hope left for the (developed) world.

But first some aeral photography from Dylan Grice, indicating just how far the US government is willing to go to get the population stoked about owning fixed (shouldn't it be called broken really?) income. With British QE over, and the country still to implement the same criminal annuitizing of 401(k)s that Uncle Sam is contempltating in order to make "Buy Bonds" a "voluntary" option one can't really decline, maybe letters on modern architecture building blocks is all that would works. As Edwards says: "I'm not sure leaving man-sized building blocks around the City of London is really going to make an awful lot of difference, but I suppose when your public sector deficit is around 13% of GDP, every little bit helps!"

So back to Greece, the Eurozone, and policy response in general, Edwards places the causes (and "solutions") of the escalating problem precisely where it belongs: at the core of the Keynesian systemic outlook flaw.

A major divergence of views in the market at the moment concerns what governments should be doing with their outsized fiscal deficits. Economists seem to be polarised between those who think governments should be rapidly cutting fiscal deficits to avoid impending insolvency and/or a surge in bond yields, and those who believe this will be totally counterproductive and that deficits should stay very large. Behind this controversy probably lies the key to the economic outlook.

To Edwards, and to ever more hedge fund investors judging by the jump back in Greece Bund spreads which just broke the most recent technical resistance level of 300 bps, Greece is nothing more than Russia and LTCM (or Bear Stearns as the case may be).

The situation in Greece following hard on the heels of similar solvency issues in Dubai feels to me very much like the Russian default and LTCM blow-up in 1998. For the blow-ups that year were a direct follow-on from the Asian crisis a year earlier a different chapter in the same book. There will be more crises to follow Greece, both inside and outside of the eurozone.

The outcome of broken Keynesian policy (by definition) will be ugly, and will destroy the eurozone. We said it some time ago, and SocGen has now also confirmed this bearish perspective.

My own view of developments, for what it is worth, is that any "help" given to Greece merely delays the inevitable break-up of the eurozone. But, for me, the problem is not the size of the government deficit and the solvency or otherwise of the governments in the PIGS (Portugal, Ireland, Greece and Spain - we deliberately exclude Italy).

The problem for the PIGS is that years of inappropriately low interest rates resulted in overheating and rapid inflation, even though interest rates might well have been appropriate for the eurozone as a whole. Rapid inflation has led to overvalued bilateral real exchange rates (they do still notionally exist) for the PIGS and in most cases yawning double-digit current account deficits. With most trade done with other eurozone countries, the root problem for the PIGS is lack of competitiveness within the eurozone – an inevitable consequence of the one size fits all interest rate policy. Even if the PIGS governments could slash their fiscal deficits, as Ireland is attempting, to maintain credibility with the markets in the short term, the lack of competitiveness within the eurozone needs years of relative (and probably given the outlook elsewhere, absolute) deflation. Hence the PIGS public sector deficit will inevitably remain large as a direct consequence of this weak growth outlook.

As noted earlier on Zero Hedge, in Europe the population is a little less brainwashed by the moronic happenings on prime time TV, so while in America the destruction of the economic system, as trillions are transferred to the kleptocracy which knows fully well the end game is nigh, results in some sighs of desperation at best, in Europe the outcome will be somewhat more violent.

In my opinion this will not be tolerated by the electorates in these countries. Unlike Japan or the US, Europe has an unfortunate tendency towards civil unrest when subjected to extreme economic pain. Consigning the PIGS to a prolonged period of deflation is most likely to impose too severe a test on these nations. And the political "consensus" within the PIGS to remain in the eurozone could falter in the face of another of Europe's unfortunate tendencies -the emergence of small extreme parties to take advantage of any unrest. My own view is that there is little "help" that can be offered by the other eurozone nations other than temporary confidence-giving "sticking plasters" before the ultimate denouement: the break-up of the eurozone.

And in case you were wondering why all European leaders are powerless to provide a bailout proposal that actually has a snowball's chance in hell of doing something/anything to help Greece, read on. Alternatively, if you want to find out why any plan suggested on Monday will be thoroughly useless and once digested by the market will cause another major crash, read on as well.

The pressure to tighten fiscal policy from current nose-bleed levels of deficits is not just an issue for crisis hit Greece. It is an issue for virtually all economies. It is a particular issue for the US and UK with structural (cyclically adjusted) general government deficits of almost 10% of GDP (according to the OECD)! There is a ferocious debate ongoing between those who believe there needs to be a rapid reduction in these deficits to avoid some combination of insolvency/default/rapid inflation and those who believe that there should be even more fiscal stimulus. The debate is loud and opinions are tending to be polarised.

My own view on this is that obviously we should never have got into this wholly avoidable mess in the first place. But having got here, there really is no way out that does not trigger a major market-moving upheaval. Ultimately economic prosperity over the past decade has been a sham: a totally unsustainable Ponzi scheme built on a mountain of private sector debt.GDP has simply been brought forward from the future and now it's payback time. The trouble is that, as the private sector debt unwinds, there is no political appetite to allow GDP to decline to its "correct" level as this would involve a depression. So burgeoning public sector deficits and Quantitative Easing are required to maintain the fig-leaf of continued prosperity.

And here is the topic that will dominate over all pundit round table discussions in the next weeks: the entire world is insolvent, although some are more insolvent than others. Greek total net liabilities (on and off balance sheet) to GDP are 800%! EU: at 470%, the US, at over 500%. There is no way out but default.

Edwards' poignant summation.

I am persuaded by my colleague Dylan Grice's analysis that, including unfunded liabilities, most governments are already insolvent with debt to GDP ratios closer to 500% of GDP instead of around 100% for most G7 countries . It is too late.

Nor were Dylan and I persuaded by recent comments from Nobel Prize Winner Joseph Stiglitz that it is absurd to suggest that the US and UK governments might default on their debts as they could just print money. Indeed. But a client pointed out to us that Weimar Germany did not default on its debts during its hyper-inflation. How reassuring!

I am persuaded though by Richard Koo's book about the lessons from Japan's balance sheet recession. The crux of his analysis is that governments have no option but to stimulate aggressively all the while the private sector is de-leveraging. ANY attempt at fiscal cuts simply results in renewed recession and a further loss of confidence, thus making it even harder and more costly to sustain any subsequent recovery - and hence the budget deficit ends up bigger than before (e.g. see chart below). This is exactly the outcome I expect.

The take home is very, very simple: we can delude ourselves that the game can be won (it can't), or we can prepare for the imminent collapse when delusion finally fails.


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Fri, 02/12/2010 - 12:02 | 228444 Cognitive Dissonance
Cognitive Dissonance's picture

"My own view of developments, for what it is worth, is that any "help" given to Greece merely delays the inevitable break-up of the eurozone."

Everything else after this statement is simply an explanation of how the delay will (or will not) be implemented, where the problems are, who will and will not resist etc.

The fat lady has already sung. The game is over. The only question is who will recognize this first, second, third etc and how will they (we) deal with this reality? The article ends very nicely with the following.

"The take home is very, very simple: we can delude ourselves that the game can be won (it can't), or we can prepare for the imminent collapse when delusion finally fails."

Fri, 02/12/2010 - 12:38 | 228522 walküre
walküre's picture

The "game" cannot work.

The disease is socialism. The symptoms are government intervention.

A government cannot run health care, social security, education and so on.

Those are all bottomless pits.

The bankers just found "magic" to keep the show alive so governments could be "free".

Behind the scenes the actors are fighting who exactly is promising what to whom.

Mistakes were made throughout. We're now just realizing that the "magic" is ending and that the systems will collapse eventually.

Greece's problem is so much socialism that it will inevitably fail first. The 40 years of uber-socialism in the East Bloc were just setting the stage.

Fri, 02/12/2010 - 12:57 | 228568 Miramanee
Miramanee's picture


I think that the term *Socialism* misses the mark.
It ascribes a political and socio-econ construct that
does not fully apply in the case of the Global
Financial Crisis. The failure isn't Socialism, it is
Monetarism. More succinctly, the collapse of
civilization as we have come to recognize it---which
WILL occur within the next several decades---is the
direct result of international standards of currency
NOT being tied to a finite commodity (gold i.e.) and
the innately human "flaw" ( to use Greenspan's words)
of unbounded avarice. Greedy, power hungry men, all
of whom possess the ability to "print" money in an
effort to grow their wealth and retain their power,
have destroyed the least this iteration
of the world.

Fri, 02/12/2010 - 13:45 | 228680 WaterWings
WaterWings's picture

I think that the term *Socialism* misses the mark.
It ascribes a political and socio-econ construct that
does not fully apply in the case of the Global
Financial Crisis. The failure isn't Socialism, it is
[avarice]. More succinctly, the collapse of
civilization as we have come to recognize it---which
WILL occur within the next several decades---is the
direct result of international standards of currency
NOT being tied to a finite commodity (gold i.e.) and
the innately human "flaw" ( to use Greenspan's words)
of unbounded [monetarism]. Greedy, power hungry men, all
of whom possess the ability to "print" money in an
effort to grow their wealth and retain their power,
have destroyed the least this iteration
of the world.

There. Much better. Can't help you with the decades thing.


Fri, 02/12/2010 - 21:06 | 229337 dnarby
dnarby's picture

Decades?  Two years on the outside.

Fri, 02/12/2010 - 23:47 | 229489 steve from virginia
steve from virginia's picture

The failure isn't socialism or avarice per se but financeialism, which is the substitution of paper claims for real work leading to excess claims on future labor.

Labor is leveraged with petroleum that has risen in price five- fold in ten years. $20 oil and there is no financial crisis anywhere.

Financialism is a hedge. It can only fail as it is a fantasy against resource depletion reality. The ultimate outcome outside of choosing to live within one's means is repudiation of claims and the breakdown of trust. Without trust there is no modern economy.

Sun, 02/14/2010 - 09:55 | 230539 Anonymous
Anonymous's picture

Best comment so far. Thank you!

Oil gave us a very big lever to play with and for the last decades it has grown always longer.

Now it grows shorter. Even if we can keep up production for a while, the EROEI is getting worse. Problem is, our whole economy relies on growth and that growth relies on expanding use of natural resources.

Until fusion energy gets large-scale economically viable, we are stuck now with a shrinking resource base. In the end that means the world population has to be reduced by a few billion people.

The coming decades won't be very pretty and aside from being a genius and finding us a new energy resource we can grow upon, there is exactly nothing anybody of us can do against this.

Mon, 02/15/2010 - 15:44 | 231671 Anonymous
Anonymous's picture

However, you fail to understand that the "level" of natural resources is itself, a fantasy created to limit production and encourage power-grabbing.

We have hundreds of years of natural resources (oil, coal, nuclear) that we can access now... if environmentalists didn't keep us from accessing them.

Fri, 02/12/2010 - 13:50 | 228687 Anonymous
Anonymous's picture

Well Done

Fri, 02/12/2010 - 14:37 | 228790 walküre
walküre's picture

Excuse me.. when the very notion that government can guarantee health care, pensions or other social security, welfare and public education IS socialism.

We are not an equal society. Some have it and some don't. Some CAN really make it and some don't. It's always been that way.

Nothing wrong with private entities or individuals stepping up to the task and offering sponsorship.

BUT we have created a government for the people, no matter where the people come from whether they can hold a job, have education, have what it takes or will ever be able to support themselves.


Government is the problem. It is too big, it is too intrusive and it has created a nation of irresponsible junkies that look for assistance from government any which way they turn.

California is OUR basketcase and prime example of how stupid it can get when government is out of control and self serving.

Reduce 50% of all government across the board, close schools and cut welfare.

Watch and see what happens when people HAVE no choice but to fend for themselves and that includes providing education for their kids.

Maybe just maybe then we as a nation have a chance.

FYI .. I have seen the destruction of a people with too much government dependency first hand in several East Bloc countries. 40 years of propaganda and mismanagement have left those places in shambles until the West picked up the pieces.

The West however is suffering the same disease because popular promises were made that CANNOT BE AFFORDED.

Fri, 02/12/2010 - 15:48 | 228940 Anonymous
Anonymous's picture

Is Cuba running deficits? What about Norway? Are you sure it is socialism? If you want 'freedom' and don't want to live third-world-like, then YOU HAVE TO PAY YOUR FUCKING DUE. Do you like things like relatively 'honest' police? Ask people in Singapore if they would rather live in the 3rd world conditions like the Malaysians or would they rather have social control and pay their taxes. This group is way too sheltered.

Fri, 02/12/2010 - 17:02 | 229058 Thomas
Thomas's picture

It's fascism, not socialism--centralization of power.

Fri, 02/12/2010 - 18:55 | 229203 merehuman
merehuman's picture

A Rose by any other name..lala fill in the blanks.  Naming it aint gonna help. Helping the populace that would be a good thing. Anybody here done a good thing lately? (not for profit).

Am educating neighbors, got armed and enuff rice and beans to cover myself and neighbors.

Meanwhile as a cons. cont. i still do the few jobs that come my way. Been giving away a silver round now and then to entice them to educate themselves. The garden is doing fine leaving a peaceful comfort in my heart.

Some of us have PMs . That will be the seed money for the unknown future, to re establish our community.

Healers, traders and transporters will have a fair future as well as farmers and second hand stores. I see the new world as a better, simpler life style. Too bad so many have to suffer betwixt now and then.

When the semis quit coming, its too late.

Fri, 02/12/2010 - 20:24 | 229294 perchprism
perchprism's picture


Here's a link to the top 100 things you need when TSHTF, and that run out first:

Get some rice, beans, powdered milk, and can goods.  Canning jars and a canner.  Extra garden tools, seeds, 12-gauge shotgun, .22, .223, .357 (or 9mm handgun), and plenty of ammo.  Gold and silver.

Fri, 02/12/2010 - 22:43 | 229400 Master Bates
Master Bates's picture

You're a biotch.  How dare you make any threat whatsoever to me.  I'm not going to forget what you said yesterday, and you're lucky that it was on the computer and not face to face...

Now go hide behind your anonymousness, and just know that you're probably as weak as the man in your avatar.

Fri, 02/12/2010 - 22:58 | 229436 perchprism
perchprism's picture


Tough titty, punk.  Why don't you do us all a favor and eat a bullet, you miserable peckerhead.

Fri, 02/12/2010 - 23:27 | 229467 Master Bates
Master Bates's picture

Well, you're just lucky that you're hiding behind a computer is all, believe me.

Fri, 02/12/2010 - 23:39 | 229479 jomama
jomama's picture

can i have your autograph, tough guy?

Sat, 02/13/2010 - 04:25 | 229652 Master Bates
Master Bates's picture

If you ask real nice and pay me a dollar.

Wed, 02/17/2010 - 23:27 | 235045 Anonymous
Anonymous's picture

It's not as if a dollar is going to mean much a in a couple of years.-

Sat, 02/13/2010 - 00:36 | 229543 Anonymous
Anonymous's picture

i would pay to see master bater rip your head off and shit down your neck!

Sat, 02/13/2010 - 04:26 | 229653 Master Bates
Master Bates's picture

If you ask real nice and give me a dollar... LOL.

Or some of that GOLD BITCHEZ!

Wed, 02/17/2010 - 23:28 | 235046 Anonymous
Anonymous's picture

Enjoy your worthless dollars.

Mon, 02/15/2010 - 00:31 | 231166 Anonymous
Anonymous's picture

Good link, thanks!

Fri, 02/12/2010 - 18:55 | 229202 Anonymous
Anonymous's picture

Agree. Pay your due (taxes) or live behind barbed wires fences and always carry lots of ammunition. Ever been to a third-world country?

Americans are indeed too sheltered (and spoiled...oh...did I mention IGNORANT?).

Fri, 02/12/2010 - 21:45 | 229367 walküre
walküre's picture

Another myth that the great US public education system fabricates.

The rich pay taxes.

Guess what. The rich could pay 100% taxes and your shit still wouldn't get paid for.

There's too much government body and not enough support from ALL Americans.

You think you're $15.95 income tax per month makes a dent?


Sat, 02/13/2010 - 05:28 | 229673 Anonymous
Anonymous's picture

Shift the decimal point two spots to the right. And yeah it does make a dent in my checkbook. You are right about the rich paying taxes and the public re-education system.

Fri, 02/12/2010 - 23:55 | 229498 Anonymous
Anonymous's picture

what a fucktard.....thanks for proving your

Sat, 02/13/2010 - 01:50 | 229594 Anonymous
Anonymous's picture

wow.. so let me get this straight.. if all those GREEDY SCUMBAGS in haiti or cuba or somalia would JUST PAY TAXES, they could be a first world country? why those greedy bastards

Sat, 02/13/2010 - 00:34 | 229540 mouser98
mouser98's picture

you presume that we actually have to have government to stave off "3rd world conditions."  however, last time i looked, all the 3rd world countries had governments also.  perhaps it is not an overpriced government that is needed after all.

Sat, 02/13/2010 - 22:46 | 230305 Anonymous
Anonymous's picture

Malaysia 3rd World....that's a bit much

Fri, 02/12/2010 - 16:04 | 228971 kurt_cagle
kurt_cagle's picture

In the US, the budget for the Dept. of Defense is roughly the same as the budget for all other departments combined. Most of the R&D investment in the country - from education to the national science foundation to efforts with Ag, Energy and others - makes up perhaps 1/100th of the total expenditures for the military/security sector. The R&D investments insure a qualified work force, competitive leads in business and technology, and similar dividends. The DoD and related work forces insure only the ability to project US dominance in the rest of the world, protecting the power of the oligarchy. Tell me in what way the US can be considered to be even vaguely socialist when we farm out health care to the private sector then wonder why no one can afford health insurance.

Now, slash the budget of the military by 90%, bring home the troops, build a sensible defense posture for a country with two friendly adjacent neighbors and a buffer of two oceans on either side, and maybe, just maybe, those budget deficits would very quickly become surpluses. So before you get on your high horse about slashing schools and cutting welfare, ask whether we need to have an arsenal of tens of thousands of nuclear missiles, thousands of ships, a standing army of more than 3 million and the largest air force in the world.

Fri, 02/12/2010 - 16:27 | 229012 baldski
baldski's picture

Right on kurt-cagle.


The military-industrial complex that Eisenhower warned about runs congress and the President along with the bankers. They are afraid to slash anything.Why do we need 120+ military bases around the world? Ridiculous expense! Let's start turning swords into plowshares and maybe we can save our democracy.



Fri, 02/12/2010 - 19:44 | 229247 Anonymous
Anonymous's picture

120 in 1959 perhaps. It's over 700 now.

Sat, 02/13/2010 - 00:43 | 229549 Anonymous
Anonymous's picture

Not disagreeing that we are in too many countries, but seriously we don't have 700 based or event 120 bases around the world. Name them, give me a link. If you are counting the Marines at our embassies or a military attache, then you might get to 700 locations.

We have troops in large numbers in Iraq, Afghanistan, Japan, Italy, Germany, South Korea, and maybe a few more.

That being said, we subsides other countries safety. We should scale back and let other countries take some of the cost.

Sat, 02/13/2010 - 08:17 | 229700 kurt_cagle
kurt_cagle's picture

Actually, we have bases in most countries in Europe, Japan, the Philipines, India, several African countries, Panama, Nicaragua, Paraguay, Mexico, Canada, Israel, and so forth. Admittedly, many are small outposts, but it's actually surprisingly difficult to find countries that don't have US forces deployed somewhere.

The question about subsidizing other countries' safety is an intriguing one and difficult to either confirm or refute. Do US troops in S. Korea deter the N. Koreans? In many cases bases were established to provide staging during early conflicts and never fully decommisioned after the conflicts ended.

Sat, 02/13/2010 - 10:03 | 229731 SABTrader
SABTrader's picture

I doubt you'll find a list of all US military bases in the world on the internet. I know we have one here in NW western australia.

Thu, 02/18/2010 - 23:01 | 236987 Anonymous
Fri, 02/12/2010 - 16:43 | 229037 SWRichmond
SWRichmond's picture

I don't want the MIC or nationalsocialist health care.

Fri, 02/12/2010 - 17:37 | 229111 Anonymous
Anonymous's picture

Then you can start a business that allows people to buy additional insurance for Cadallic coverage. There are plenty who need it and plenty to fund it.

Sat, 02/13/2010 - 10:32 | 229746 Anonymous
Anonymous's picture

You know, I have said the same exact thing, I'm not sure what the problem is with that? Then companies have only low risk/rich people pools that get their own rooms and other benefits, and they pay more for it.

Seems ok to me to provide a baseline standard service and expect companies to innovate and find new products to build on top of it.

Fri, 02/12/2010 - 16:58 | 229055 BS Inc.
BS Inc.'s picture

Oh for crying out loud, you want to add some facts to that rant?

When you factor in the spending at the local and state level, hardly any of which is military related, the government spends probably about 10% of its yearly budget on military-related items.

Fri, 02/12/2010 - 17:25 | 229093 Anonymous
Anonymous's picture

Why are you factoring in local and state? Jerk-off.

Fri, 02/12/2010 - 18:08 | 229157 WaterWings
WaterWings's picture

The military-industrial complex dominates wikipedia!

Sat, 02/13/2010 - 08:23 | 229704 kurt_cagle
kurt_cagle's picture

How much of local and state goes towards police forces? For that matter, how much of the federal budget goes into national guard units? Or the Army Corps of Engineers?

I'm not trying to wave a large liberal flag here - I'm former military and come from a military family; I'm just of the opinion that the military/security infrastructure is far larger or more costly than it needs to be given a purely defensive rather than offensive stance. The organization has placed too much emphasis on expensive technological gadgets to provide "the edge", and many of those, once field tested in most of the likely theatre of campaign, generally don't prove themselves.

Fri, 02/12/2010 - 18:27 | 229177 ConfederateH
ConfederateH's picture

Well said walküre, but I don't think that it is possible to put the toothpaste back into the tube.

The European socialists bought their elections since the end of WWII by borrowing from the future to buy votes and accuse anyone who was more prudent of being a greedy capitalist.  For decades the Democrats have pointed to Europe and claimed that those greedy, capitalist Republicans just wanted to rob the poor and middle classes and that all we had to do was ignore the constitution and give free health care, free universities, free abortions and free retirements to everyone and the US would reach nirvana just like Europe.

Well anyone with any sense can see that the parasites have finally killed the host.

Fri, 02/12/2010 - 19:12 | 229220 Boop
Fri, 02/12/2010 - 16:27 | 229010 No More Bubbles
No More Bubbles's picture

Yes, the collapse WILL occur, but it will be in the next few years, not decades........

Fri, 02/12/2010 - 17:53 | 229141 Ripped Chunk
Ripped Chunk's picture

"Greedy, power hungry men, all
of whom possess the ability to "print" money in an
effort to grow their wealth and retain their power,
have destroyed the least this iteration
of the world."


Could not agree more with your statement.  I just want to know when we get to start killing them?

Mon, 02/15/2010 - 01:10 | 231184 Anonymous
Anonymous's picture

> NOT being tied to a finite commodity (gold i.e.)

We are not in a manufacturing/industrial economy any longer. The valuation of IP and services, the basis for all future growth in "the developed nations" is far more inchoate and not easily understood (and certainly not currently understood), and this fact lies at the heart of the current issues, just as failure to understand the nature of an industrial economy led to the Depression in the 1930s.

Money is a defacto substitute -- a proxy -- for the real goods it represents. Hence money "production" (i.e., the amount in circulation, both real and virtual via electronic form) needs to be tied to the actual worth of new production less consumption. This cannot be effectively done by tying it to some ridiculous fixed quantity like gold, which inevitably leads to constant inflation as the relatively fixed quantity of gold comes to represent a continually increasing quantity of goods -- assets (IP as well as real physical properties).

"The Gold Standard" is hence a really, really stupid idea for a dynamically and rapidly increasing economy such as that which has existed since the 1940s, if not the 1920s.

There does need to be some realistic metrics and correctional mechanisms tied to the "quantity of money available", as well as rules to rein in both government spending (which any damnfool would know should long since have been REQUIRED to submit itself to GAAP, and one could easily argue this is a major source of the inherent problems from the government's end, at least), as well as any tendency to resort to the printing press to "make" more money than actually is being produced. But The Gold Standard is a flat out stupid idea of a means for doing so.

Fri, 02/12/2010 - 12:59 | 228577 phaesed
phaesed's picture

The disease is socialism. The symptoms are government intervention.

ROFL, what a crock of ignorance that statement is.

Socialism would already HAVE universal healthcare and free education through college years. Even fucking Cuba has that shit. What we have is a CORPORATOCRACY. Where corporations are bailed out with "tax credits" and "Buyer Incentives" to have people buy shit that they don't need to give their money to the banks and to the corporations. We have banks selling the toxic assets to the taxpayer, we have corporations firing workers, paying less and demanding more hours and harder work from their current employees or they'll get sacked.

You bitch out the banks and you claim it's SOCIALISM? You're ignorant to say the least, the corporations and banks fucked it up and the government is trying to save this shit and doing it in the most ignorant way because the corporations are paying the people who advise them and pay the politicians off themselves.... this is a huge shell game with corporate leaders behind the Obama and Volcker mask.... instead of listening to Fox News, pick up a fucking book and read some history. Goddamn these ignorant claims are the worst... the disease is the idea that MONOPOLISTIC AND CORPORATE INTERVENTIONISM IN A FALSE CAPITALIST SOCIETY are the same damn thing as FREE MARKETS. They are NOT. I suggest you stop listening to the pundits and start picking up history books.

They knew this in the 70's with the movie Network but yet you ignorant shills still don't recognize the false system you preach to.

Arthur Jensen: [bellowing] You have meddled with the primal forces of nature, Mr. Beale, and I won't have it! Is that clear? You think you've merely stopped a business deal. That is not the case! The Arabs have taken billions of dollars out of this country, and now they must put it back! It is ebb and flow, tidal gravity! It is ecological balance! You are an old man who thinks in terms of nations and peoples. There are no nations. There are no peoples. There are no Russians. There are no Arabs. There are no third worlds. There is no West. There is only one holistic system of systems, one vast and immane, interwoven, interacting, multivariate, multinational dominion of dollars. Petro-dollars, electro-dollars, multi-dollars, reichmarks, rins, rubles, pounds, and shekels. It is the international system of currency which determines the totality of life on this planet. That is the natural order of things today. That is the atomic and subatomic and galactic structure of things today! And YOU have meddled with the primal forces of nature, and YOU...WILL...ATONE!
Arthur Jensen: [calmly] Am I getting through to you, Mr. Beale? You get up on your little twenty-one inch screen and howl about America and democracy. There is no America. There is no democracy. There is only IBM, and ITT, and AT&T, and DuPont, Dow, Union Carbide, and Exxon. Those *are* the nations of the world today. What do you think the Russians talk about in their councils of state, Karl Marx? They get out their linear programming charts, statistical decision theories, minimax solutions, and compute the price-cost probabilities of their transactions and investments, just like we do. We no longer live in a world of nations and ideologies, Mr. Beale. The world is a college of corporations, inexorably determined by the immutable bylaws of business. The world is a business, Mr. Beale. It has been since man crawled out of the slime. And our children will live, Mr. Beale, to see that . . . perfect world . . . in which there's no war or famine, oppression or brutality. One vast and ecumenical holding company, for whom all men will work to serve a common profit, in which all men will hold a share of stock. All necessities provided, all anxieties tranquilized, all boredom amused. And I have chosen you, Mr. Beale, to preach this evangel.


What Mr. Jensen left out is that when these great "Nations" fail.... it is the people who pay.

Fri, 02/12/2010 - 13:04 | 228590 Miramanee
Miramanee's picture

Great film...Ned Beatty's 2nd-best role, "behind"
Deliverance...if you get my drift.

Fri, 02/12/2010 - 13:58 | 228705 IKEA Is Swedish
IKEA Is Swedish's picture

Squeal like a PIIGS.

Fri, 02/12/2010 - 13:08 | 228606 Anonymous
Anonymous's picture

It's odd, but that movie ran on AMC just the other night. I'm skeptical that it was all that forward looking. I agree we have corporatocracy and regulatory capture, but the rest is just too much drama for me, sorry.

Fri, 02/12/2010 - 13:55 | 228697 IKEA Is Swedish
IKEA Is Swedish's picture

Great rant.


Fri, 02/12/2010 - 14:05 | 228721 Anonymous
Anonymous's picture

Exactly. It's NOT "free enterprise" it's crony capitalism where it's "heads I win, tails you lose" courtesy of bought and paid for governments hidden behind a thin facade of phony, so-called "representative democracy." The ignorati only have their illusion of participation:

Where the People Don't Rule
by Fred Reed

Fri, 02/12/2010 - 17:35 | 229107 Ned Zeppelin
Ned Zeppelin's picture

whew - for a minute there I thought you were sending me to


Fri, 02/12/2010 - 14:21 | 228758 Anonymous
Anonymous's picture

What Mr. Jensen left out is that when these great "Nations" fail.... it is the people who pay.
The people always pay for failed Keynesian economics and socialism.

Fri, 02/12/2010 - 15:35 | 228885 phaesed
phaesed's picture

lol, if you've ever actually studied keynes and understood mathematics you'd learn that the key to keynes theory is contained in his publications in the Economic Journal in 1937 in a three part series, the final piece called the ex-post ante theory of interest. The third part was contained on page 666. Essentially what is contained is that if people don't buy the treasury bonds at the low yields and accept the mix of assets to garner the total return, the recovery will fail, like it did in the 70's and instead we had a pack of lies and a re-engineered CPI calculation thanks to Volcker.... but then again, people learn from cliff notes, not the reading of the actual theories.... at least in America.

I suggest those who follow my posts research what I just wrote there, then you'll learn the basis behind the Post-Keynesian branch of economic theory and the difference between exogenous and endogenous monetary sources... these tenants were outlined by Irving Fisher almost 20 years before. Unfortunately to find part c of the Ex-post ante theory of interest you'll need to be located near a good university library or have access to JSTOR as this work is not freely available online....

You wonder why.

And btw Anonymous... you and your ilk are jackasses who spout nothing but what they are fed. Research, learn, and then pass on knowledge.

Fri, 02/12/2010 - 17:15 | 229075 Thomas
Thomas's picture

Keynes is rolling in his grave as his theories get twisted around. With that said, the spouting about what we are Fed part applies to pretty much everybody because we are all Fed at the big buffet table. I guess it is what you chose to eat that matters. The economists at my university seem to be rather dreadful chefs, so I could imagine our students spouting some gibberish.


Best regards from Cornell University

Sat, 02/13/2010 - 04:03 | 229590 phaesed
phaesed's picture

that he is... but I think he knew he would be misinterpreted... the funny thing is that the "greenspan talk" quote

I guess I should warn you, if I turn out to be particularly clear, you've probably misunderstood what I said. Greenspan

Wasn't from Greenspan, it was from Keynes.... I can't find the exact quote at the moment but here is Krugman on Keynes:

Before I get there, however, let me talk about an alternative view. This view agrees with those who say that modern macroeconomics owes little to Keynes. But rather than arguing that we have superseded Keynes, this view says that we have misunderstood him. That is, some economists insist that we’ve lost the true Keynesian path – that modern macroeconomic theory, which reduces Keynes to a static equilibrium model, and tries to base as much of that model as possible on rational choice, is a betrayal of Keynesian thinking. Krugman on Keynes

But let's look at some Keynes quotes so you guys understand that most of the shit the masses spout came from HIS mouth first:

“By a continuing process of inflation, government can confiscate, secretly and unobserved, an important part of the wealth of their citizens.”

“Capitalism is the astounding belief that the most wickedest of men will do the most wickedest of things for the greatest good of everyone.”

“The ideas of economists and political philosophers, both when they are right and when they are wrong, are more powerful than is commonly understood. Indeed the world is ruled by little else. Practical men, who believe themselves to be quite exempt from any intellectual influence, are usually the slaves of some defunct economist.”

“The avoidance of taxes is the only intellectual pursuit that still carries any reward.”

“I do not know which makes a man more conservative to know nothing but the present, or nothing but the past”

“The difficulty lies, not in the new ideas, but in escaping the old ones, which ramify, for those brought up as most of us have been, into every corner of our minds.”

“There is no harm in being sometimes wrong- especially if one is promptly found out.”

NOW.... there are two important quotes:

“The importance of money flows from it being a link between the present and the future.”

Now this is what you must focus on: The Value of the Dollar does not depend on international trade flows.... it involves the intertemporal POSITIONING of CAPITAL. I write that.... I already understand this, I just haven't made it public yet and am not sure if this society deserves this knowledge or if it is even capable of understanding this.

And lastly:

"When the accumulation of wealth is no longer of high social importance, there will be great changes in the code of morals. We shall be able to rid ourselves of many of the pseudo-moral principles which have hag-ridden us for two hundred years, by which we have exalted some of the most distasteful of human qualities into the position of the highest virtues. We shall be able to afford to dare to assess the money-motive at its true value. The love of money as a possession — as distinguished from the love of money as a means to the enjoyments and realities of life — will be recognised for what it is, a somewhat disgusting morbidity, one of those semi-criminal, semi-pathological propensities which one hands over with a shudder to the specialists in mental disease ... But beware! The time for all this is not yet. For at least another hundred years we must pretend to ourselves and to everyone that fair is foul and foul is fair; for foul is useful and fair is not. Avarice and usury and precaution must be our gods for a little longer still. For only they can lead us out of the tunnel of economic necessity into daylight.:

I hope someone catches on to what I am saying here. But too many haves Keynes dead WRONG. But then again I'm a neo-austrian post-keynesian... or another way to say it is that I'm probably the only living Fisherian. But hey, nothing remains unique forever.

Sat, 02/13/2010 - 04:47 | 229662 Miles Kendig
Miles Kendig's picture

As one of ZH's resident autodidacts I thank you for the source of ignition.  Beware of the Anonymous Gerbervores.

Sat, 02/13/2010 - 12:56 | 229855 phaesed
phaesed's picture

hehe, thanks MK :)

Sat, 02/13/2010 - 18:37 | 230152 Anonymous
Anonymous's picture

@phaesed, I don't have access to search system that is giving up to me the source material of the last keynes quote above, can you point me in the right direction?

Sun, 02/14/2010 - 14:40 | 230746 phaesed
phaesed's picture

"The Future", Essays in Persuasion (1931) Ch. 5, JMK, CW, IX, pp.329 - 331, Economic Possibilities for our Grandchildren (1930); as quoted in "Keynes and the Ethics of Capitalism" by Robert Skidelsy

Fri, 02/12/2010 - 15:49 | 228942 Assetman
Assetman's picture

Except that the people know it upfront with socialism.

Fri, 02/12/2010 - 18:09 | 229159 WaterWings
WaterWings's picture

+Yes We Can

Fri, 02/12/2010 - 14:35 | 228784 Anonymous
Anonymous's picture

You come across as way too US-centric.
Please. Get out in the world. Read and reflect on the lessons of history.

Sat, 02/13/2010 - 01:49 | 229591 phaesed
phaesed's picture

bahhh, country based ideology is in the past, the true discrimination is all socioeconomic in nature.

Fri, 02/12/2010 - 14:43 | 228801 Dirtt
Dirtt's picture

"The disease is socialism. The symptoms are government intervention.

ROFL, what a crock of ignorance that statement is.

Socialism would already HAVE universal healthcare and free education through college years. Even fucking Cuba has that shit. What we have is a CORPORATOCRACY."


The Progressives are merely pawns yes.  And what an ugly ugly ugly movement.  Queer.  Fucking queer people.

Fri, 02/12/2010 - 19:50 | 229253 Anonymous
Anonymous's picture

"free education" is the tip-off of your world view.

You sadly don't know that nothing is free. Wow. You are the problem.

You and all those who voted for the current White House occupant and a large number of those who didn't, share your world view and think something that the government pays for is free. That is a simple and common, but misguided world view. That view is one of our country's biggest problems.

Pretty sure you can sneak into Cuba (but take some '57 Chevy spare parts with you). Safe travels. (How come all they send us are baseball players and no rocket scientists??)

Sat, 02/13/2010 - 02:03 | 229600 phaesed
phaesed's picture

at least those 57 chevy's can't be remote de-activated by our "free state" ;)

Fri, 02/12/2010 - 14:44 | 228803 walküre
walküre's picture

"Socialism would already HAVE universal healthcare and free education through college years. Even fucking Cuba has that shit."

You have unemployment benefits and welfare. You have public education.

You have emergency wards that will treat you so you don't die.

The system is broke. Now add universal health care and the country will soon look like Cuba.

Just wondering where the boat people from Miami will try and sail to next?

Fri, 02/12/2010 - 15:40 | 228923 phaesed
phaesed's picture

You have unemployment benefits and welfare....

- I've never collected unemployment and I personally hate welfare, but I will say it has it's merits because I grew up on it.

The emergency wards? Well gee, that's just cuz the rich don't like the dead on the street. Public education? Please man, public education is a joke..... teachers get salary cuts every year and wonder why they have trouble attracting quality teachers and the system continues down it's cycle of denigration. As for universal healthcare... we paid that shit out to the banks. Now we got a nude cosmo models as the new "Tea Bagger" revolution. I wonder how Scott Brown's nuts will look on the American forehead.

Fri, 02/12/2010 - 17:18 | 229081 Thomas
Thomas's picture

Phaesded: You are a wordsmith.

Sat, 02/13/2010 - 01:51 | 229597 phaesed
phaesed's picture

thank you Sir! I appreciate your kind words.... and for a juxtaposition, I've spent the past week working a minimum wage job in New Orleans... kinda my own version of 30 days. It's a f'n eye-opener :) (Dear God I don't want to do this forever, my feet are killing me! :P)

Sat, 02/13/2010 - 10:16 | 229739 blindfaith
blindfaith's picture

Yes, you are very correct...but,the only thing that is keep folks from being in the streets right now, are these programs. No one in our government wants pitchforks at the door,these program are THEIR safety nets not the peoples. Let's not forget that corporate American makes a fortune on all these programs. "CUT IN TEACHERS PAY"?...where do you live? Here in Florida, they have gotten an average of 8 to 15% pay increases compounded year over year. My taxes went up by 30% and it was ALLL education (yet we have kids that are dumb as dirt). Healthcare...the amount of money LOST and will not be repaid by the banks would have funded healthcare for almost ten years. As for politians, it will make NO difference until you get rid of the lobbist/lawers (who make 1 million bucks starting, fresh out of school, at the big firms in DC). NOTHING is going to change for the average American who looks down the barrel of a country in decline. If you don't think corporations worldwide will now be running "OUR" country, then you have not been paying attention to what Rupert Murdock has done over the last few years with FOX, the Wall Street Journal, Facebook, and lots more media under his control. It is the wealthy families and corporations of the world who are steering this world economy, this ship, and they DO know where they are taking it. THAT you can take to their banks!

Sat, 02/13/2010 - 12:54 | 229852 phaesed
phaesed's picture

have you read the news in California recently?

5 second google search. Florida teacher salary cuts

The NEA report notes that nationwide teacher salaries are expected to grow an average  just 1.9 percent this school year. But in Florida they are not expected to grow at all. In fact, the union projects a decline.

Though that expected decline is tiny, the Sunshine State is the only one of 50 where that’s predicted. So on that ranking we’re No. 1, it seems.

Nationwide, the NEA said, inflation in many places has outpaced growth in teachers salaries during the past decade, giving teachers a “pay cut” of sorts.


That's not even mentioning the firing rate which is taking place in CA.

Schools Chief Jack O'Connell Joins Educators in Recognition
of Record Number of Teachers Receiving Layoff Notices

PASADENA — State Superintendent of Public Instruction Jack O'Connell today joined educators at a news conference in Pasadena to acknowledge the growing the tally of teachers receiving pink slips or potential layoff notices. More than 26,590 teachers and other school staff have received the pink slips as of March 14, which is one day before the annual March 15 statutory deadline for districts to issue layoff notices for the coming school year.

Districts are handing out the notices of potential layoff to teachers and other staff in response to the state budget crisis. The recently enacted state budget included $11.6 billion in cuts to public education budget over the next 15 months.

"School districts up and down this state are sending out pink slips to tens of thousands of hard-working, dedicated teachers, administrators, and school staff," O'Connell said. "Cuts of this magnitude will have devastating effects in our classrooms across the state."

The recently enacted budget cuts come on top of several years of reduced   support in the state budget for public education. Last year, roughly 10,000 teachers received pink slips and an estimated 5,000 ultimately lost their jobs.

"Before the current cuts were enacted, California already ranked 47th in the nation in per-pupil spending," O'Connell said. "These current cuts are sure to push us further down the scale. Our future depends on our ability to prepare the next generation for success in the hyper-competitive global economy. The budget crisis and the teacher layoffs we are now witnessing makes that challenge much, much harder. In order to deliver the quality education our students need we must get off this budget roller coaster and find a stable, long-term solution to education funding. Our future depends on it."


I guess I get my information from the news sir and it's not Fox :) So I believe we're now in agreement in all aspects :P


Fri, 02/12/2010 - 19:41 | 229240 Anonymous
Anonymous's picture

Cuba would not have "prospered" to the degree it has without decades of funding from the USSR.

Socialism works in Norway because of oil $ and their moral heritage (oil more than morals).

Fri, 02/12/2010 - 14:52 | 228818 walküre
walküre's picture

"You bitch out the banks and you claim it's SOCIALISM? You're ignorant to say the least, the corporations and banks fucked it up and the government is trying to save this shit and doing it in the most ignorant way because the corporations are paying the people who advise them and pay the politicians off themselves.... this is a huge shell game with corporate leaders behind the Obama and Volcker mask..."


You actually get it right.

The governments are in on it because they know their popular promises (aka socialism) cannot be afforded unless the banks create ever more money out of thin air.

You know that. So why are you ranting at me? I've been saying the same!

The governments need this shit to go on or they cannot pay the bills. They cannot afford to support millions of people and keep the peace.

That has been going down for decades and now the end of the "magic" is near.

Socialism will fail eventually. Unfortunately for all of us, it will be a horrible experience when all the spoiled people who've taken everything for granted are waking up one day and have to learn to walk by themselves again.

It will be painful to say the least.

Fri, 02/12/2010 - 15:43 | 228889 phaesed
phaesed's picture

that isn't socialism.... that's corporatism. The country gave a blank $800 billion check to the banks... or rather the COST FOR THE ENTIRE HEALTHCARE PROGRAM. The banks gave this money to the corporations... not the people. You bitch about the pennies for human welfare but ignore the billions for corporate welfare.


And as for the day that will come? I hope for the day where the rich don't get rich from the backs of the slave workers or the poor. I want the day to come where those who consume and don't produce are whipped in the street and our dollars become worthless. I want the day to come where we see people hanging laundry in the middle of times square and our clothes are made of leather.

I think I finally want what Tyler wants.... to go back to Zero.

Fri, 02/12/2010 - 15:47 | 228936 faustian bargain
faustian bargain's picture

Forced redistribution of wealth is a form of socialism, no matter which direction the money goes. The government, in its 'wisdom', decides what is best for the country by taking its productive wealth and moving it around. And the poster's point was that printing money out of thin air is what the government depends on to pay for whatever programs they want, be it warfare or welfare. Without this system of easy money (eventually paid for via inflation), both socialist AND corporatist programs become much less politically popular, because they must be paid for directly by taxpayers or bond buyers.

Fri, 02/12/2010 - 15:53 | 228951 phaesed
phaesed's picture

then call it by what it really is.... corporatism or corporate redistributionism. By saying it's socialism you're subjecting one theory to the ignorance of the masses. Socialism is supposed to stand for actual healthcare, actual education paid for equally by all. Create a standard 40% flat tax for all and things change. Quit with the stupid tax laws that only benefit the rich and screw the middle classes. If you call something by a single title and ignore the subtleties, you get the masses rallying behind the wrong cause.

Kinda like Fox News.

Fri, 02/12/2010 - 16:13 | 228991 walküre
walküre's picture

How much have you personally given up or "redistributed" to a corporate entity.

Big words, no concept. 

Symptomatic for generations that were indoctrinated with marxism through the channels of public education.

Eat cake.


Sat, 02/13/2010 - 02:10 | 229604 phaesed
phaesed's picture

considering I play the markets and pay taxes every time I buy food or clothes? I'd say at least 8% of all consumption and 35% of all income.

Fri, 02/12/2010 - 17:16 | 229078 faustian bargain
faustian bargain's picture

I call it statism; and socialism, corporatism, fascism are all variants of the same authoritarian dynamic, where the state exerts authority over individuals. The difference between socialism and fascism is, in terms of the principles involved, one of degree, not kind. I.e. You Do Not Own Your Own Life.

The cause to rally behind is, in general umbrella terms, freedom. The fight is against centralized power and the curtailment of individual rights. The facilitator of that power, right now in the US, is the Federal Reserve. Get the government and quasi-government entities out of trying to manipulate and manage currency and the economy, and the rest becomes just quibbling. I would love it if the fundamental debate nowadays was simply capitalism versus socialism, but the fact is there is no capitalism now. All we've got now is massive government intervention and manipulation of the economy, and whether the intervention favors the rich or the poor, at this point doesn't matter because they're running on fumes, over the edge of a cliff. Getting back to a real and healthy economy means breaking the government's power to distort markets, especially the currency. Once we get back to that point (if ever), then I'm happy to talk capitalism versus socialism, and what can we afford to allow the government to provide, etc. But until then, to me all forms of state interference in the economy are part of the problem, not the solution.

Sat, 02/13/2010 - 00:45 | 229553 Anonymous
Anonymous's picture

Refreshing clarity... +1000

Sat, 02/13/2010 - 02:05 | 229602 phaesed
phaesed's picture

Faustian Bargain... you'd shit if you knew me in real life :)

You're a smart individual so why do you look only skin deep? Look another layer. Corporate intervention into the political system forces the government intervention into private society. It's the corporations which are calling the shots, not the political machine. Look at the builder and operator of the machine, not the engine which is running

Mon, 02/15/2010 - 01:22 | 231186 Anonymous
Anonymous's picture

You stupid nit, what do you think it's about? How does "corporate intervention into the political system" work?

Take away the power of the government to intervene in many of these things, and you take away the interventionism.

All laws, regulations, and so forth should be subject to challenge for being a mechanism to restrict the market to a narrow few for no valid reason, which is usually the case. If someone is stupid enough to go to a quack doctor, let them. Professional accreditation organizations, backed by insurance controls, will identify the capable, competent doctors from the quacks.

So too with most professions, so too with almost all "licensure" crap, most of which winds up chasing out the good people and boosting the profits for charlatans and crooks... mainly because the crooks and charlatans always get in charge of the licensure organizations and rules, then rig things for their benefit... i.e., they manipulate the government interventionism in their favor.


Fri, 02/12/2010 - 17:40 | 229116 Anonymous
Anonymous's picture

"Socialism is supposed to stand for actual healthcare, actual education paid for equally by all."


The healthcare reason d'etre is there are some, whether by choice or circumstance, can't/won't pay equally. It is this way for all government programs.

Fri, 02/12/2010 - 17:44 | 229128 Anonymous
Anonymous's picture

"Socialism is supposed to stand for actual healthcare, actual education paid for equally by all."


The healthcare reason d'etre is there are some, whether by choice or circumstance, can't/won't pay equally. It is this way for all government programs.

Fri, 02/12/2010 - 16:02 | 228968 Anonymous
Anonymous's picture

Unpopular for who? Socialism isn't a dirty word, don't you get it?

Have you ever heard of a beneficent dictator?
Simplest form of government. If he provides for his people, is he a socialist? If he pays doctors well an sets up hospitals, and sets up free trade for real goods in a market is he a capitalist? You're confused. If he taxes everyone 92 percent yet allows for a market where real goods can be traded legally, is he a socialist? The reality is that government costs money and government is necessary and governments don't need to go bankrupt, even 'socialist' ones. Whatever that means.

Fri, 02/12/2010 - 16:41 | 229033 baldski
baldski's picture

Yes, Lee Kuan Yew created modern Singapore and I would classify him as a beneficial dictator. Is their country socialist?

Fri, 02/12/2010 - 17:29 | 229099 faustian bargain
faustian bargain's picture

The reality is that governments always want to perpetuate and expand themselves, and no matter how 'benevolent' you think they are, there is always someone else who thinks they aren't. The solution is to always seek to minimize the damage government is capable of inflicting. We have not done that here in the US, and the results you see around you. Our government in its infinite beneficence created a monetary system of arbitrarily-defined paper currency, and the consequences of the inherent corruption are being felt 97 years later.

And yes, if a dictator 'provides for his people', whatever that means, he is a socialist. Until he runs out of money, and then he's a dead socialist. Where does he get all that money, anyway?

Any population that is taxed at 92 percent is by definition not living in a free market. So if you want to call that system something other than socialism, fine by me. Either way it's bad. But it's not capitalism.

Sat, 02/13/2010 - 02:53 | 229614 Anonymous
Anonymous's picture

Who would work for taxable income if it was taxed at 92%? I'd go to the beach if I could get there through the crowd.

Fri, 02/12/2010 - 16:00 | 228963 walküre
walküre's picture

you're a true marxist.

your kind has marched and protested many times.

go eat cake.

Sat, 02/13/2010 - 02:11 | 229606 phaesed
phaesed's picture

Sir, believe me... I am no marxist. I am something new or really, really, really old.

Fri, 02/12/2010 - 19:59 | 229262 Landrew
Landrew's picture

Bravo!Bravo! I personally don't think Keynes would not have approved of unemployment as we currently deploy it. I think Keynes would have used the old WPA rather then checks without work? I am also sure he would have used a mix of tax rebates in deficit spending. It is very hard to tell what that mix of deficit he would have preferred.

Fri, 02/12/2010 - 15:37 | 228918 WaterWings
WaterWings's picture

Plus, they have Cuban Cigars and Cuba Libres en Cuba!

Si yo fuera un bobo me iria manana:

Fri, 02/12/2010 - 16:05 | 228972 masterinchancery
masterinchancery's picture

On the contrary, government promises to provide "free" private goods to all comers constitute socialism at its finest, generally combined the with the idea that heavy taxation of producers is a free move.  The fact that such socialism is combined with crony capitalism merely makes it worse. The logical disconnect that sinks all such schemes is the belief that the cost doesn't matter, since it can always be financed somehow--then one day, it suddenly cannot.

Fri, 02/12/2010 - 17:43 | 229125 no cnbc cretin
no cnbc cretin's picture

Great comment! If this country had

more people like you, we wouldn't

be in the mess we are in.

Fri, 02/12/2010 - 18:04 | 229152 velobabe
velobabe's picture

i have a hunch my friend hunter s thompson just played out that movie.

"I'm as mad as hell, and I'm not going to take this anymore!"

Sat, 02/13/2010 - 02:06 | 229603 phaesed
phaesed's picture

HST was one of my heroes.

Sat, 02/13/2010 - 10:59 | 229766 velobabe
velobabe's picture

yeah i lived in the same 'hood for over 3 decades. i kinda feel like HST passed on his gonzo style journalism to HZ. his 5 yr elected demise on 02/20. ed bradley lived on my same road.

Fri, 02/12/2010 - 13:00 | 228582 Anonymous
Anonymous's picture

"But having got here, there really is no way out that does not trigger a major market-moving upheaval."

Nature of the age-old banker's Ponzi pyramid though is--they derive great wealth from all the "stones" beneath them in the trickle up as they build all the layers of debt, while they are the last to tumble in the downfall reaping windfalls in the steered downturn.

Why wouldn't you continually set up such a system when it work infallibly for your interests even if it destroys societies? Just move from nation to nation in cycles (like a farmer in his many field--crop-worn to fallow to fertile) exploiting the populations in different episodes of debt saturation? Pull the cream and move on.

Reminds me of the Who's song during American football superbowl with the lyric, "WE WON'T GET FOOLED AGAIN!"

Except we did, we REALLY did.

Fri, 02/12/2010 - 15:33 | 228910 Master Bates
Master Bates's picture

The funny thing is that the people who were all about social change for the better in the 60's and 70's are the same people that sold our country down the river in the 80's and 90's.

"WE WON'T GET FOOLED AGAIN."  LOL.  They're the ones doing the fooling!

They sell out our children, live off of a wall of debt, make a few bucks by firing hard working Americans and getting slave labor in Asia, run up massive bubbles to skim profits off of... and then when it all collapses, they'll bitch "WHERE'S OUR SOCIAL SECURITY AND MEDICARE?"

And their children will pay for years and years to come.
Not all of them got fooled.  Seems to me they were more complicit than anything.

Fri, 02/12/2010 - 16:07 | 228979 Anonymous
Anonymous's picture

The babyboomers, as a group, are morally bankrupt. Everyone knows that.

Fri, 02/12/2010 - 16:09 | 228983 walküre
walküre's picture

The 60's mindset has destroyed America.

You can't get something for nothing. No effort, no reward.

Sat, 02/13/2010 - 02:13 | 229608 phaesed
phaesed's picture

You can't get something for nothing?

Explain the banking system then and bank CEO pay.

Fri, 02/12/2010 - 13:10 | 228598 Daedal
Daedal's picture

When I was a kid, my parents emigrated from a socialist hell hole to the USA.  I brought with me a frame of reference. I've observed in my day-to-day interactions throughout the years that most people don't know what capitalism or socialism is. They just know that the communists are in russian and argentina and the capitalists are here. That's it. They have no other distinction in their minds. So, when it is mentioned that socialism is widespread throughout America (and getting progressively worse), people, like Obama, arrogantly laugh at even such a mention, while in the same breath they lay blame to our problems on capitalism and then further adopt social proposals as solutions!

I just don't understand how such deep-rooted ignorance is possible, but perhaps it has something to do with the education system which is one of the systems of propaganda. (the others, of course, are MSM, ignorant parrots, and Beaurocrats).

Fri, 02/12/2010 - 13:15 | 228610 phaesed
phaesed's picture

+ (1/0)

i.e. I cannot express how much I agree with that post Daedal. Although I would mention that while Obama might propose socialist measures, they end up in a far worse form.... such as our healthcare bill which has essentially become the worst form imaginable... a legal mandate to purchase a possible service from a private corporation.

I've also thought about another item recently.... If government measures are inefficient and destroy private corporations.... how is it we have private security forces and a police force? They exist perfectly fine. How do we have private military services and yet the largest government machine is undoubtedly the military force? They co-exist perfectly fine as well. Why not private & public education? Why not private & public health? They do not drown each other out, they can co-exist if you work on a way rather than bitching the entire time.

Fri, 02/12/2010 - 14:26 | 228742 Daedal
Daedal's picture

Why not private & public health?

We can have that... Just like we have soup kitchens. The problem is that when those on the Hill talk about public health, it is mandated that everyone gets the Same Quality of care. And when you have limited resources and high fixed costs, that's impossible to accomplish. We can, however, fairly cheaply offer "basic health" to poor people, as we do with soup kitchens and shelters. Further, such programs should be relegated to the state/local level, at best.

Fri, 02/12/2010 - 15:27 | 228896 phaesed
phaesed's picture

Further, such programs should be relegated to the state/local level, at best.

Bingo. I agree.

Fri, 02/12/2010 - 17:35 | 229108 Anonymous
Anonymous's picture

I disagree, I live in a state with good social programs that is near states with poor social programs.

The only thing that stops mass migration is the cold temperatures.

Poverty is a federal problem.

Fri, 02/12/2010 - 15:47 | 228928 WaterWings
WaterWings's picture


You're getting junked, which means they don't understand that none of this Healthcare debate should be at the Federal level. It's fucking tyranny when you don't recognize the right to be different. 

Let a free society decide what is best for its own citizens. Any government eventually opposes the right of people to volunteer their own time and resources. The government does not promote the vitality of the human spirit - it attempts to crush it, little by little.

"Government is not reason, it is not eloquence, it is force; like fire, a troublesome servant and a fearful master. Never for a moment should it be left to irresponsible action."

-- George Washington, in a speech of January 7, 1790

Fri, 02/12/2010 - 15:56 | 228953 faustian bargain
faustian bargain's picture

I would tentatively suggest that the cost:quality ratios of military, education, health, etc., are much higher now than they could be if the market had more of a say in it. Especially if these things are imposed from the federal level.

There is always an inherent distortion of the market when one player is the lawmaker and has all the guns (and this includes regulatory capture). In my opinion, that distortion hardly ever is to the usually results in either lower quality, higher cost, or both.

Fri, 02/12/2010 - 13:22 | 228637 Miramanee
Miramanee's picture

They can only "...adopt social proposals as solutions..."
because they can create the credit-money to spend on
these supposedly Socialist policies. But here's the deal---
and I taught history for 20 years: Socialism is a
temporal-political construct with an ideological
foundation---namely, though not in totem, the writings
of Marx. Today's *socialism* is not driven by 'statist'
ideology (as the uber-liar and idiot Rush Limbaugh
would have the populous masses believe). Today's
"welfarism' is driven by the demands of a consumptive
society---a society that demands goods and services,
and that tacitly allows ( and violently demands)
the government to provide those services through
loose monetary policy. THIS IS NOT SOCIALISM! The goal
is not centralized power---the goal is obfuscation
and 'kicking the can' with regard to fiscal realities...
the goal is individual wealth and individual power, not
State power.

Fri, 02/12/2010 - 14:24 | 228723 Daedal
Daedal's picture


I agree with the distinctions you discuss, but it is socialism -- we'd end up debating symantics. At the end of the day, wealth is being cyphoned and distributed arbitrarily (and in large part retained by those in power, as you aptly observe) -- whether it's done through taxation, direct control of capital resources, or inflation, the processes achieve the same ends.

the goal is individual wealth and individual power, not State power.

Agreed. Whether it's Stalin, Bush, or Chavez, state power comes from the enslavement of the masses, and its best acheived when your rob the masses to enrich yourself. Here, it's done 'peacefully' through inflation and taxation, in other countries it's done by outright force.

Edit: MUST SEE: (

Fri, 02/12/2010 - 15:16 | 228867 Eally Ucked
Eally Ucked's picture

You can see socialism in Sweden and I bet you average citizen is hundred times better off there than here. Word "socialism" here is used to scare sheeple and I don't think any Swede would see any similarities of the systems in USA and Sweden, probably you wouldn't too if you went there and look around for a while. 

Fri, 02/12/2010 - 16:06 | 228977 walküre
walküre's picture

Sweden's liabilities are somewhere between 500% and 800% of GDP.

Money doesn't stay in Sweden. Ask any Swiss banker.



Fri, 02/12/2010 - 17:27 | 229060 Eally Ucked
Eally Ucked's picture

Sweden’s National Debt Office (Riksgälden) said on Wednesday it expects the country’s budget deficit to balloon to 135 billion kronor ($14.7 billion) in 2009, just one year after posting a 135 billion kronor surplus.

That number is almost six times the previous forecast from November, owing to various state aid packages to combat the current economic slowdown.

For 2010, the budget deficit is expected to shrink back to 65 billion kronor, the debt office said.

In November, it had forecast deficits of 23 billion in 2009 and 35 billion in 2010, after several years of healthy budget surpluses.

"The deterioration in central government finances is mainly due to the lending and other support measures such as the capital contribution programme for banks, lower tax income and the fact that there will be no income from sales of state assets," the debt office said.

It added that it expected the Swedish economy to contract by 2.0 percent in 2009 before bouncing back to see growth of 2.0 percent in 2010.


AFP/The Local (


Hope that you study the case a bit deeper, for now a little article (above) about current affairs. Comparisons to make - left for you, just convince me I'm mistaken.

BTW, should I associate your nic more with Brunhilde or you just love Der Ring des Nibelungen music? 

Fri, 02/12/2010 - 15:45 | 228933 Eally Ucked
Eally Ucked's picture

You can see socialism in Sweden and I bet you average citizen is hundred times better off there than here. Word "socialism" here is used to scare sheeple and I don't think any Swede would see any similarities of the systems in USA and Sweden, probably you wouldn't too if you went there and look around for a while. 

Fri, 02/12/2010 - 20:37 | 229305 WaterWings
WaterWings's picture


Epic link. If only we could hack major broadcasting stations and play that instead. People would still be glued - more than ever.

That is reality TV.

Fri, 02/12/2010 - 14:25 | 228767 WaterWings
WaterWings's picture

Very interesting point about the context of a consumtive society - in my view is always the camel's nose in the tent. The Russians had a lot to say about it:

The Socialist Phenomenon

The foreword alone, by Solzhenitzen, is well worth a few minutes of your life:



While it makes use of a voluminous literature familiar to specialists throughout the world, there is an undeniable logic in the fact that it emerged from the country that has undergone (and is undergoing) the harshest and most prolonged socialist experience in modern history.




Shafarevich points out with great precision both the cause and the genesis of the first socialist doctrines, which he characterizes as reactions: Plato as a reaction to Greek culture, and the Gnostics as a reaction to Christianity. They sought to counteract the endeavor of the human spirit to stand erect, and strove to return to the earthbound existence of the primitive states of antiquity. The author also convincingly demonstrates the diametrical opposition between the concepts of man held by religion and by socialism. Socialism seeks to reduce human personality to its most primitive levels and to extinguish the highest, most complex, and "God-like" aspects of human individuality. And even equality itself, that powerful appeal and great promise of socialists throughout the ages, turns out to signify not equality of rights, of opportunities, and of external conditions, but equality qua identity, equality seen as the movement of variety toward uniformity.


Even though, as this book shows, socialism has always successfully avoided truly scientific analyses of its essence, Shafarevich's study challenges present-day theoreticians of socialism to demonstrate their arguments in a businesslike public discussion.

Fri, 02/12/2010 - 17:41 | 229117 JR
JR's picture

In a discussion of socialism or no socialism, the German reference in your article tends to bias the teaching point you want to make with us.  What we’re dealing with is not a governmental system demanded by the populace but a system rapidly being commandeered by private forces--namely the investment bankers.  What we have, regardless of the many names that it can be labeled, is clearly Statism where the State becomes the end all and the arbitrator of every dispute, and in the case of the group controlling the nation’s currency, the selector of winners and losers.   More and more we’re hearing the cries for solutions as extreme as secession from the central government.  And, frankly, you’ll never hear this from the aforementioned uber-liar Limbaugh, one of the establishment’s most cherished supporters of the two-party status quo.

I suppose your uber analysis would fit another on your enemies’ list, Pat Buchanan.  In an article today on secession, Buchanan says the anti-government movement is a “secession of the heart—a people who have come to believe the government is them and not us… 

“Their repeated reappearance on the national stage, in new incarnations, should be a fire bell in the night to the establishment of both parties.  For it testifies to their belief and that of millions more that the state they detest is at war with the country they love.”



Fri, 02/12/2010 - 13:25 | 228646 DaveyJones
DaveyJones's picture

"I just don't understand how such deep-rooted ignorance is possible, but perhaps it has something to do with the education system"

that's because were "the best" at everything. Funny how arrogance and ignorance sound so similar

Fri, 02/12/2010 - 14:27 | 228771 WaterWings
WaterWings's picture

They are both a severe hindrance to a free society.

Fri, 02/12/2010 - 14:05 | 228722 Anonymous
Anonymous's picture

Socialism is a taboo word in America, they are left
with the socialization of losses and crony "cow-boy
capitalism", boom gone bust.People are much happier in
Northern-European 'post-socialist'states

Fri, 02/12/2010 - 17:24 | 229089 Zina
Zina's picture

People are much happier here in Brazil, with sex, drugs, alcohol, and no cold, no snow, no need for home heating, you can live in a cardboard box and will not freeze in the winter, and you can always make a few bucks begging in the streets or robbing someone, to buy snacks and cachaça.

Fri, 02/12/2010 - 18:13 | 229162 WaterWings
WaterWings's picture

Amo pinga e as popozudas.

Fri, 02/12/2010 - 18:41 | 229193 velobabe
velobabe's picture

too bad the olympics are coming to ruin your paradise.

Fri, 02/12/2010 - 17:09 | 229066 Zina
Zina's picture

I can't believe it: George W. Bush was a socialist all the time! Of course!

George W. Bush was the president when Lehman collapsed... George W. Bush was the president at the time of the first bank bailout...

Comrade George W. Bush got us into this mess!

Mon, 02/15/2010 - 01:36 | 231187 Anonymous
Anonymous's picture

GWB certainly did not act to get us OUT of this mess. It's been going on for a long time, and under both the Dems and the GOP. One reason the GOP has been backsliding in their support for the last couple years is infiltration by RINOs as the Dems go further and further off into left field, and the left-moderates find the GOP's current leadership to be amenable to their left-leaning causes (in a stupid and pointless effort to "expand" their appeal while ignoring their base -- "what are you gonna do, vote for a dem?" -- so indeed, all too many sat it out and let the lefties win).

But as to what got us into this mess, it clearly ties to the CRA and the Clinton DoJ's efforts to bring "equality" (as defined by statistical numbers) into a place where it has no business, fiscal operations. It ties to the abuse of powers and the lack of GAAP usage and fiscal transparency by Fannie and Freddie which led the whole market into insanely stupid lending policies.

The Bush Admin attempted to do something about this to correct it. Not enough, which is their shame. Theirs, though, was an omission of determination, not one of direct failed action, unlike the Dems, who were blatantly obstructionist on Fannie/Freddie (Barney's on video saying, two years before the meltdown, that Fannie and Freddie were "doing just fine" and that he wanted to continue to "roll the dice" -- and rejecting the calls for reining in Fannie and Freddie's excesses much, much sooner).

The fact that blacks don't receive an "equal share" of the investment opportunities in terms of their population representation is not "racism" -- it's racism, in fact, to try and claim that race SHOULD be used as a basis for allocating such, when the historical rules for fiscal responsibility say otherwise. "Pro black decisions" are just as racist as "Anti black decisions". If race matters to a decision in some manner not relevant to it, then it's by definition racism, pure and simple.

Sat, 02/13/2010 - 02:21 | 229610 Frank Owen
Frank Owen's picture

Just so people know what socialism is about, and not the Fox News definition

From the Socialist Party USA:

"THE SOCIALIST PARTY strives to establish a radical democracy that places people's lives under their own control - a non-racist, classless, feminist socialist society... where working people own and control the means of production and distribution through democratically-controlled public agencies; where full employment is realized for everyone who wants to work; where workers have the right to form unions freely, and to strike and engage in other forms of job actions; and where the production of society is used for the benefit of all humanity, not for the private profit of a few. We believe socialism and democracy are one and indivisible. The working class is in a key and central position to fight back against the ruling capitalist class and its power. The working class is the major force worldwide that can lead the way to a socialist future - to a real radical democracy from below. The Socialist Party fights for progressive changes compatible with a socialist future. We support militant working class struggles and electoral action, independent of the capitalist controlled two-party system, to present socialist alternatives. We strive for democratic revolutions - radical and fundamental changes in the structure and quality of economic, political, and personal relations - to abolish the power now exercised by the few who control great wealth and the government. The Socialist Party is a democratic, multi-tendency organization, with structure and practices visible and accessible to all members. "

Sat, 02/13/2010 - 04:21 | 229651 Anonymous
Anonymous's picture

The Investment banking community can't run a derivatives portfolio without passing the losses on to the working class. Thats about as socialist as this environment is

Sat, 02/13/2010 - 10:52 | 229759 Anonymous
Anonymous's picture

See the problem isn't socialism...the sweds and other nordic countries have maintained a very low debt to gdp ratio compared to other euro countries. The disease is easy credit.

Fri, 02/12/2010 - 12:46 | 228534 mikla
mikla's picture


We are only held up through accounting fraud.  That's honest-to-gosh "go-to-jail" fraud.  However, even the government and regulatory agencies are committing this fraud, so true accounting will happen only through dragging all parties (debtors, creditors, governments, regulatory agencies) across the line into reality while they kick and scream.

It's in no one's interest to say, "The emperor has no clothes", and thus, no one says it.

But, the accounting *will* happen.  And Soon.

Fri, 02/12/2010 - 12:48 | 228540 SWRichmond
SWRichmond's picture

The only question is who will recognize this first, second, third etc and how will they (we) deal with this reality?

Yes.  Right now I am earnestly seeking to convince my state legislators that we need to slash the budget radically and deeply because there is no alternative.  We are currently borrowing to maintain our budget; fools.

Fri, 02/12/2010 - 12:54 | 228555 Anonymous
Anonymous's picture

Problem is that excesses must be plugged with surpluses, which is why political unions of disparate states became the fad du jour. Game players aka central bankers just use that as a pretext to make a run at other nation's public purse in beggar-thy-neighbor via bailout.

Individual level, savers are not compensated nor treated with reverence. Their surpluses must be accessed by authorities through multi-layered operations involving stimulus, policy incentives, dead-end targeted subsidies.

All these soften the decline but do so through currency debasement and the devaluation of surplus holders. Gov'ts consider these persons financial idiots to be milked to their purposes. Like Japanese postal bank savers.

Eventually though, the depredations become stark and the nationalization of wealth apparent. Savers move to hard assets, PMs, anything to get out of currency. Nations then must act swiftly (as the minute but accreting thefts are discovered) and seize all liquid assets or freeze them from use. Or issue larger volume of fiat to banks which can lever up to put these resources to state use, but destroy again currency in doing so.

We're there. This crisis will destroy creditors, debtors; indeed, all market participants.

Fri, 02/12/2010 - 13:30 | 228657 Sancho Ponzi
Sancho Ponzi's picture

I'm thinking Germany is out first. That's the only country in the 'zone that seems capable of making tough choices.

Fri, 02/12/2010 - 14:13 | 228715 Wynn
Wynn's picture


Regarding your 392? page missive

I'd like to read it (before the edits), as the unsanitized versions are usually where the real meat resides. I can assure you I will treat your words with the respect they deserve.

Economics is but one slice of a very large pie, and philosophically speaking, a rather insignificant slice at that.

road4010(at)gmail(dot)com if you're interested

Fri, 02/12/2010 - 15:23 | 228797 Cognitive Dissonance
Cognitive Dissonance's picture


Thank you for your offer. And I'm doubly delighted that you would respond to a comment from another thread here, where you've obviously found me playing in the sand box.

I've decided to screw up my courage and simply post part one this weekend and let the feathers fly. Like I said, it's an opinion piece that will touch on subjects most people reject out of hand without ever considering the possibility they're even slightly wrong. For me, this is a bit frightening and I've needed to work my way into it.

Closed minds are usually the most obvious when scanning the crowd. The problem is that the consensus view is often swayed by the extremely noisy and disruptive minority. So many creative people are stifled because they don't wish to withstand the slings and arrows of the ignorant and frightened. I'm no different, having only begun to feel confident in my new suede shoes.

As far as edits are concerned, that is my problem. I wind up editing in way more stuff then I ever take out. One sentence becomes a paragraph which then becomes 5, mostly because I'm trying to explain concepts and idea that few people ever consider and which I'm struggling to explain. And to be honest, understand myself. In addition, I find writing to be extremely therapeutic and enlightening. I rarely know what I will say before I hit the keyboard and it often has a mind of it's own and I'm simply the transcriber.

But this process often leaves huge gaps, which makes my writing extremely hard to follow in it's raw state, forcing me to go back and fill and paste and patch and mold. I can't describe how long even a short post such as this takes me. Add in my terrible spelling and my poor command of English (even though I'm a native speaker) and each post, large or small, is a gestation and birth rolled into one.

And yet I love it. Does it show? :>)

Fri, 02/12/2010 - 15:29 | 228900 Wynn
Wynn's picture

Thank you for the eloquent reply, I look forward to reading your piece.


A quote I have become quite fond of, "Experience is free, lunch is not".

Fri, 02/12/2010 - 15:38 | 228920 Hammer59
Hammer59's picture

C D----I'd call you a luminary.

Fri, 02/12/2010 - 15:52 | 228947 WaterWings
WaterWings's picture


Nothing wrong with a little crowdsourcing, CD. It's not like you're Moses. But close.

Sat, 02/13/2010 - 10:08 | 229736 Baron Robber
Baron Robber's picture

Have always enjoyed your take on things and appreciate your efforts. To really understand the big picture of all that is going on is not easy and to describe it it eloquently is a gift. Great commenters here at ZH even if one has to put up with those who wish violence on others for disagreeing with them. There were plenty who committed fraud, high crimes and treason who may deserve such treatment, but who here would know which in this community may be guilty of such crimes.

Fri, 02/12/2010 - 15:49 | 228943 Anonymous
Fri, 02/12/2010 - 19:47 | 229249 ahab
ahab's picture

return of the Deutsche Mark?

and Franc?

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