Albert Edwards: Europe Is On The Edge Of A Deflationary Precipice That Will, Paradoxically, Usher In 20-30% Inflation

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Fri, 05/21/2010 - 11:02 | 365682 Mitchman
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Tyler, it is posts like this that make ZH the best site on the web.  I used to read Ritholz' page but now when I turn to it, it feels like the web's version of cnbs.  Thank you so much for the great work.

Fri, 05/21/2010 - 11:34 | 365763 Mr. Anonymous
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The Big Picture is really just Ritholz's very own Barry Ritholz Fan Page, with every third or fourth insertion a tout for one of Barry's media or conference appearances, mixed in with what he's buying from Amazon and some random two-day old economic or world news.  But, that said, calling BR a hack is unfair to the hacks who've earned the title.  To top it off, his commentors are VASTLY inferior in scope and wit to the ones found here at the Hedge.  IMO.

Fri, 05/21/2010 - 11:34 | 365768 crzyhun
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+10

I have had 'seminars' with BR recently. Both were so unsubstantive. I cannot for the life of me see what people get from him. And the Big Pic is equally soft stuff.

Fri, 05/21/2010 - 12:04 | 365847 Double down
Double down's picture

Hear, hear!!!

Fri, 05/21/2010 - 14:24 | 366151 Noah Vail
Noah Vail's picture

Agreed, nothing of substance by BR. Took it off bookmarks yesterday.

 

The problem with people employed in "high" finance is that they don't dare state the obvious. They must keep pushing their garbage onto the public so they pretend that all will end well. Inflation, deflation, what difference does it make when you economy collapses like the world trade center in a cloud of dust? No one will give a shit when there are national guardsmen on every corner and the cities are buring like Bangkok.

Albert Edwards must continue to paint rosy pictures no matter what. Insiders no longer have ANY credibility and are not to be believed. Believe them at your own risk.

 

Anyone here old enough to remember 1965 knows that our cities will once again be burnt to the ground by a populace enraged at those who robbed them blind. Let them eat cake, the powermad say, and vengence will be had.

Fri, 05/21/2010 - 12:42 | 365925 Damn the Federa...
Damn the Federal Reserve to Hell's picture

ZH is by far my favorite financial/economic website on the interent. I have been reading Zerohedge since it was a blog long ago. I just recently decided to register for an account last week and finally got it approved today! I have learned so much information from Zerohedge over the years and from the users who post on this site. While I am posting, I would like to say hello to my new ZH family and I look forward to sharing more thoughts and information in the future.

Fri, 05/21/2010 - 13:54 | 366103 jomama
jomama's picture

i'm astounded all this great work is still free.  (teach me to open my big mouth)

Fri, 05/21/2010 - 14:37 | 366224 nikku
nikku's picture

The link to the Koo interview (the PDF, which is linked to from the link above) is  a very interesting read.  Here's a quote from Koo...

"Remember, the amount of wealth the U.S. lost
in the Great Depression is estimated to have
equalled one year of 1929 GDP. Japan lost
wealth equivalent to three years of 1989 GDP.
So Japan should have experienced a GDP
decline far larger than 46% drop the U.S. suffered
in the 1930s. Even if we conservatively
estimate that Japan’s GDP would only have fallen
back to the level of 1985, which was when
the bubble began, the difference between that
and what Japan actually achieved, over the 15
years between 1990 and 2005, would have
amounted to over 2,000 trillion yen. In other
words, to my way of thinking, the government
bought GDP equivalent to 2,000 trillion yen
with 315 trillion yen of deficit spending. A very
good bargain, I’d say."

The problem, however, is not one of how much would be lost in terms of currency/GDP.  Rather it is that the cost of Koo's prescription is the end of creative destruction and the mid-point for unlimited moral hazard (it will have an endpoint).  He does not show how much GDP would have rebounded after people would have rediscovered how to appropriate captial more wisely.

Sadly, his analysis sounds good enough that I expect Obama will pull out a blackboard and use it to justify, successfully, more and more debt, resulting in further and exponentially growing missallocation of capital... and did I mention the loss of freedom that comes from government manipulation of our economic "wellbeing?"

Fri, 05/21/2010 - 16:09 | 366485 ThreeTrees
ThreeTrees's picture

Is Koo adjusting for inflation in his calculations of GDP?  That seems like it would be important.

 

He's right that the Japanese government "bought" GDP though.  They aren't renting it.  If they do reverse-QE, aka: sell, the whole thing implodes again.

Fri, 05/21/2010 - 11:04 | 365686 Kreditanstalt
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So tighten or don't tighten: the governments are screwed either way.  That's the point he doesn't see.  Sure, they have no choice BUT to inflate at any cost, but they also have no choice but to retrench fiscally.

Gold.

Fri, 05/21/2010 - 11:44 | 365796 chumbawamba
chumbawamba's picture

Bitches.

I am Chumbawamba.

Fri, 05/21/2010 - 13:16 | 366016 DoChenRollingBearing
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+ $1170

Gold will be back, count on it.

Fri, 05/21/2010 - 13:27 | 366038 Mr Lennon Hendrix
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This next run will be big and quick. Back up to $1240 by early June, to $1350 by late June, and then to the moon. The Hollywood Futures index will make sure of it.   Spend those phun bux on Hollywood, 'Merca!  A sure bet!

Fri, 05/21/2010 - 13:46 | 366083 Paystee Gangsta
Paystee Gangsta's picture

I'm sorry.  What did you say your name was again?

Fri, 05/21/2010 - 17:15 | 366671 Lux Fiat
Lux Fiat's picture

From my perspective, one reason for the shudder in the markets Thursday was Dubai turning $23+ billion in debt into $14+ billion [hopefully] payable 5 and 8 years out.  To paraphrase T.S. Eliot, "I will show you fear in a handful of restructured bonds". 

Ultimately, "restructuring" makes the most sense to me.  Moral hazard is left intact.  Further idiotic policies and subterfuge [whose main purpose is to mask the fact that there is a major problem, and "buy time" by kicking the can down the road using means that will make the problem much worse when we get there] would not be needed.  While there would be short-term dislocations, most of the costs would be born by those who made poor decisions. 

Instead, we get taxpayer-funded bailouts of banks and sovereigns that provide those who should be leaving many pounds of flesh behind with numeous opportunities to extricate themselves at far superior prices than they deserve.  And to add insult to injury, the bailouts are funded with gobs of GDP-crushing, future-generation smothering debt (i.e. more money we don't really have).

But this would assume/necessitate that we have public servants who are more interested in acting in the best interests of their country than the next election.  Looks like we are screwed for the time being.

Fri, 05/21/2010 - 11:04 | 365687 Printfaster
Printfaster's picture

As the price of gold shows, we have had 10-20% monetary inflation for years.

Printing money to fund overpaid government workers will take us all to a currency shunning uncontrollable inflation, and economies that produce nothing but more printed money.

Unbelievable.

 

Fri, 05/21/2010 - 11:49 | 365809 chumbawamba
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Bitches.

I am Chumbawamba.

Fri, 05/21/2010 - 13:56 | 366112 jomama
jomama's picture

wow chumbawamba, your fan base is out in full force!

Fri, 05/21/2010 - 11:10 | 365694 Biggvs
Biggvs's picture

Lower prices are a bad thing? I don't think Ben can print fast enough to get 20-30% price rises. Japan has been printing for a long time and look at all it got them.

Fri, 05/21/2010 - 11:07 | 365696 bigdumbnugly
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I have  kind of seen unraveling this way to, but with a much less informed and experienced basis on which to build.

 

The question for me, if this is to be accurate, is timeline.  Don't want to be caught fighting traffic here. 

Fri, 05/21/2010 - 11:10 | 365703 suteibu
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Everybody is trying to rejigger the economy to maintain it while just making it worse by increasing the debt to a point that no one can "grow" out of it.  It is not an economic solution, it is a political one.  All the powers in power don't want to be on the watch when the necessary revaluation happens and economists, mostly on the political payroll or otherwise connected, are more than happy to come up with a great theory to justify more debt.  Now it's accepted as fact, no one questions it at all.

Fri, 05/21/2010 - 11:22 | 365740 Internet Tough Guy
Internet Tough Guy's picture

They all think they can devalue their fiat money against...other fiat paper. Can't work, won't work. They will have to devalue against something. Guess what?

Fri, 05/21/2010 - 11:14 | 365708 godfader
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I wonder where Edwards takes his confidence that the European bailout experiment will end in 30% inflation. Quote: "1970’s style 20-30% inflation will surely return." Surley? How was ever anything a sure thing in financial history?

It may, or it may not. There is absolutely no guarantee either way.

Fri, 05/21/2010 - 14:52 | 366277 moneymutt
moneymutt's picture

good point, he makes no back up arguments about why 20-30...other than to vaguely reference currency comparisons....

I think we can be just a bit more rigorous in how we try to figure what happens next. Compare money supplies including/credit debt, try to figure how much monetization is going on, compare how different countries CB may behave...

doubt there is anyway we can predict given insider manipulation matter...at least as far as timing and order of countries falling...but eventually I think CB do not have ability to wash away debt bubble unnoticed....

I'm still thinking, depreciating assets down to pre-bubble adjusted dollar levels or lower (equities, housing etc.) and expensive consumer goods

Fri, 05/21/2010 - 11:16 | 365715 Amish Hacker
Amish Hacker's picture

So what would be the best way to play this scenario, physical gold and TLT?

Fri, 05/21/2010 - 11:17 | 365716 Tinsu
Tinsu's picture

Albert,  You state above ....

"their only natural response to preserve the system will be to do what Japan has been doing for decades (successfully, they will claim) and respond with the most extreme round of monetization ever seen, 'inevitably driving us towards out ultimate destination - 1970's style 20-30% inflation.' "

Yes, Japan has monitized for 10, 20 years.  But, no, they do not have a a 1970's style 20-30% inflation.  The reason is that the deflation on the Island is a massive Dyson vacuum, sucking up all that Yennie monetization. No?

 

Fri, 05/21/2010 - 11:25 | 365745 Biggvs
Biggvs's picture

That was my point too: deflationary forces will destroy money faster than it gets printed, at least for quite a while.

Fri, 05/21/2010 - 11:34 | 365767 SDRII
SDRII's picture

Tim Geithner had prescient comments at the start of the crisis which went something like "we can not lose out nerve and must stay the course." This is exactly the message and moral suasion he will take to Europe next week. The wildcard is whether the Fed can keep all the disparate forces corralled. There are already those in Europe who are embracing some form of deflation as a necessary restorative measure. Ben Bernanke is neither the BOJ nor timid. He is Ike's analog.

Fri, 05/21/2010 - 11:51 | 365816 THE DORK OF CORK
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Japan was a Island of Deflation in a Inflationary world, I am not sure the dynamics now  are similar.

Remember try not to see these entities as countries but of cogs in the global dollar system.

The core of the dollar system was threatened in 2008 but over the last two years the FEDs policey has worked to a extent.

The consumption increase within the US / China union has remained but at the expense of forced Austerity within Europe and Japan.

The question is will the old imperial powers again accept American dominance and its dollar system within the context of their domestic political turmoil.

 

Fri, 05/21/2010 - 12:07 | 365853 Canucklehead
Canucklehead's picture

I don't think the old imperial powers have any choice in the matter.  Basically the discussions within the EU focus on a "Do Over"...  Woulda coulda shouda...  The world is moving quickly now.  Clearly the EU decision-making process is too slow and cumbersome.  Hence, one should talk to Germany.  The rest will fall in line and come on board when they see their lifeboat leaving them to sink or swim.

The world is looking for balance.  Heightened economic acrimony leads to heightened political acriomony which will be balanced by military acrimony.

Right now everyone assumes default wipes the slate clean.  Military acrimony will focus attention on the pluses and minuses of default.

Fri, 05/21/2010 - 12:38 | 365917 THE DORK OF CORK
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If you believe that everybody will deflate against America/China then you are in the Hendry camp of Dollar Bulls.

I do not believe that Europe can take the level of deflation necessary to subsidise American consumption , I am not so sure about Japan as I do not fully understand its strange culture.

Europe will have to break the dollar umbilical if it wants to remain a first world economy and the longer it waits the more wealth will be transferred to America

Besides even if the Dollar is successful it will be a pyrrhic victory as it is geared towards increased consumption via capital destruction - this system will not survive peak oil.

Step right up and take your pick Bitches.

Dollars or Gold.

Fri, 05/21/2010 - 14:33 | 366208 Canucklehead
Canucklehead's picture

I'm a big believer in agriculture.  I can take 24 carats and turn it into 14 carats.  Heck, Youtube shows you how.  Government stopped that trade.  When the SHTF, how do you tell 24 carat from 14 carat?  Where is the seal of approval?

When the SHTF, I can't think of any meaningful purchase made with gold that won't be backstopped with lead.  Who you gonna trust?  Who you gonna call? One party will be USA and another will be Germany.

In WWII, cigarettes were the currency of choice in POW land.  If Mad Max land prevails, ammo will be the currency of choice.

The fact of the matter is the situation will never get that bad.  We will always have a digital world, with digital money.  Gold is an investment like any other.  I can't think of any big tycoon in the last 500 years who made their fortune hoarding gold.

Greece is the future vision of Europe.  When they try to default, an auction of Greek assets will take place.  No one will walk away from Billions and Billions of euros.  I expect Germany will be well into DM by the time that auction takes place.  The auction will be shades of 1923.

Today, what would it cost to buy Zimbabwe?

Regarding peak oil, I'm thinking Hitachi and their mass produced nuclear batteries, or Thorium fueled salt reactors.

Fri, 05/21/2010 - 15:30 | 366382 Votewithabullet
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Reply                    Flagged as Non-Junk

Fri, 05/21/2010 - 11:57 | 365827 svoboda59
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Wasn't the carry trade the result of that monetization?

Now the monetization throughout the world will not play the same as it did in Japan.

Fri, 05/21/2010 - 12:14 | 365867 THE DORK OF CORK
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Yes Japan saved its surplus but this saving shows the futility of saving within the dollar system as the surplus of one entity just got expressed in consumption somewhere else.

There is little or no capital growth.

I would argue that there has been net negative capital growth since 71 or maybe before - the financial system just got more efficient in its ability to extract capital from the future.

The system is crashing because the future is now the present.

Fri, 05/21/2010 - 12:42 | 365926 cougar_w
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the financial system just got more efficient in its ability to extract capital from the future.

 

++ Excellent analysis. The future will not be kind to us, and is knocking down the door to collect our heads on a pike.

Fri, 05/21/2010 - 13:08 | 365987 hangemhigh
hangemhigh's picture

Yo, DOC:

spot on commentary.  all post 1971 debt/QE/financial engineering has done is pull demand from future to present.

with enough misallocation and malinvestment, you create distant dead zones devoid of future savings based demand.

we are there now......................

Fri, 05/21/2010 - 16:23 | 366529 ThreeTrees
ThreeTrees's picture

Huge word.  Thank you for putting such a fine point on it.

Sat, 05/22/2010 - 00:28 | 367247 assembler
assembler's picture

The future is already here - it is just unevenly distributed.

-William Gibson

Fri, 05/21/2010 - 13:03 | 365977 trav7777
trav7777's picture

No.

The credit growth in Japan went into other nations via the carry trade.

That was the tailwind for BRIC growth.  ZIRP *cannot* make uneconomical activity economical.

CBs control money supply by cheapening debt.  In a growth climate, this causes debt growth because people can borrow at cheaper rates than their rate of return.

But you can *clearly* see a long-term secular decline in yields.  This is caused by the economicalness of the region getting tapped out.  When rates hit zero, the CB is trying to lend money for free.  But if there is nothing economical to DO with that money, it does not get put to the purpose of growth and industrial activity.  A lot goes into speculative bubbles.  Or it simply doesn't get borrowed.

When RoR is .1% and you borrow at 0%, you *must* use insane leverage to make that meager margin into something worthwhile.  This creates deleveraging risks because even a tiny movement against you creates a margin call.

This is easy math to do.

I submit that the secular decline in yields is a result of money chasing decreasingly economical activity in the aggregate.  Japan intended for ZIRP to stimulate Japan, but it could not because the loans were unprofitable even at 0%.  There is no other way around this conclusion.

It made more sense to take the yen loan, FX to BRL and invest there where there are MANY projects to get involved in.  This is what credit IS and how it has been used as a lever on growth over the centuries.

Debt-based monetary systems *cannot* function as a matter of MATH in a contractionary climate.  Every currency must be backed by production of some sort and we are now in an era of contraction after 1000 years of growth.  Therefore, currency outstanding *must* decline.  Insofar as our systems require it to be borrowed, *nobody* should be surprised that the macroeconomic contraction trends are driving a decrease in credit.

Fri, 05/21/2010 - 13:22 | 366031 THE DORK OF CORK
THE DORK OF CORK's picture

Trav7777 - I get your point but you have to ask yourself why there is no organic real growth in the worlds economy.

In my view this is due to the phenomena of extracting capital from utilities.

Extracting capital from utilities and expressing this as profit does not create real growth.

The energy and banking crisis are essentially the same where banks reduce capital and convert this to "profit" and power utilities run down energy capital such as power stations without replacing these ageing plants.

The neo liberal consumption orgy would not have happened if this dubious accounting was not tolerated 

Fri, 05/21/2010 - 14:06 | 366131 bokapita
bokapita's picture

I have to say that this is a very insightful comment very clearly expressed

Fri, 05/21/2010 - 14:19 | 366165 trav7777
trav7777's picture

To answer this I will look at simple metrics.

In every year prior to 2005, the amount of supply of core Crude & Condensate increased.

2005 was its inflection.

What is capital anyway?  I submit that it is energy.  Energy is what does the doing.  Not money.  It never was money.  It's always a claim on energy, the ability to do or to make or to causeth to become.

Banking is certainly a parasite, but nothing they or anyone else can do can affect the energy supply curve.  They cannot make the uneconomical from an ENERGY standpoint, economical.  Period.

Fri, 05/21/2010 - 15:42 | 366372 THE DORK OF CORK
THE DORK OF CORK's picture

I agree with with everything you say except the final sentence.

The banking system is the symbolic representation of the energy infrastructure yet over the years  it did not differentiate between loans for consumption and loans for future energy growth.

It just looks for short term yield within the energy ecosystem which is false as it is not a organism within the environment but is the ecosystem itself.

You say that oil cannot be replaced yet atomic energy is a far more concentrated energy source then any fossil fuel.

Why did the ambitious nuclear energy program die in the 60s ?

It died because the new economic theories of monetarism did not recognize capital as a source to be built on but extracted over time and expressed into profit.

The earlier keynesian while extremely imperfect built projects outside the narrow zone of profitability defined at the time but increased capital and therefore long term profitability for every animal in the Jungle.

In times of economic stress the monetarist solution is to cut capital projects to fuel further consumption , this latter morphed into cuts in wage growth and therefore consumption decline of the masses and conveyed the remaining surplus towards holders of now declining capital.

There is nothing wrong in cutting consumption to save for future capital growth but this monetarist austerity does not fuel capital growth but merely transfers consumption to another group.

As I mentioned earlier saving within the current dollar system merely transfers your savings to consumption elsewhere

A fine example of these dynamics is the travails of the Airline Industry.

The rise of oil prices over time has clearly made this Industry unviable over the long term yet what happened to this Industry since the days of the first oil shocks of the 70s ?

The solution of course was to cut wages to continue to make this Industry competitive against High speed rail for example.

High speed rail was deemed unviable given its high capital cost which was raised now via the banks who demanded high interest on their loans yet the flawed accounting used did not quantify the capital lost due to depletion of the finite resourse that is Kerosene.

So as the price of Kerosene increased over time the airlines cut wages and the money paid to aircraft manufacturers.

Boeing and Airbus now have very small budgets for innovation with predictable results towards innovation, also this business model of cutting wages to increase effeciencey was adopted throughout the rest of the economy and therefore overtime the demand for transport declines as people have less income for discretionary spending and so the cycle accelerates.

Eventually the last lowest cost airline gains a monoply and to continue in business it has to raise prices dramitically to survive and econimic activity crashes.

Notice the above similarity to the Banking Industry.

What would have happened to the Airlines if they did not decrease their wages - the Industry would have been regarded as unviable at least in its present form and would have been replaced by other modes of travel such as high speed trains and if the last airline went bust at least the infrastruture developed as a replacment would now be in place.

The artifical effeciencey of the American and to a lesser extent the European transport network is now being exposed and due to short term policeys which benefitted single cooperations the ecosystem is dead or dying.

 

Fri, 05/21/2010 - 16:33 | 366563 ThreeTrees
ThreeTrees's picture

Excellent discourse!  I can't wait to read Trav's response.

Sat, 05/22/2010 - 12:03 | 367628 JW n FL
JW n FL's picture

So, depressed wages and a real cost of Oil being plus $150 a Barrel which equates into $5 dollar a gallon gas because of the constant pressure of wage arbitrage is the cause of the down fall of the Great Nation the Planet has ever seen?

 

I would disagree... The pricing built into the Global Economy for transport is similar to the best numbers they could find... which would be the $50 a barrel drop dead numbers for light sweet crude in the mid east... so the entire world is lite 200% on transportation costs which affects the wage arbitrage number which changes the entire planets purchasing habits.

 

Our GDP growth number of 2.5% - 3% is really a farce… there can be no, NO! real growth without taxing the World supply… so we don’t have enough to go around and we have priced the entire system wrong based on hopes and dreams numbers.

 

The system does not respond to ideological theorem, it responds only to real constraints.

 

Back stopping all of our largest companies with 0% Fed window monies insures they can and will survive the transition that we are all suffering right now… the monies pulled from Freddie and Fannie and everywhere else they could cut are going where? Iraq is so much more expensive that it already was? Afghanistan’s ramp up? Where are all of those dollars going? Our debt is not getting any smaller?

 

Someone is keeping the lights on… Someone is hoping that if we backstop our biggest and best we may survive… Banking is a “Hey look over here! While we do what we need to over there.” Play... nothing more, nothing less. Big Bad Wall Street has been automated for how many years now? Nothing new!

 

We are raising the planets temperature… FACT! And I am no tree hugging fucking hippie… And I am saying the temperature is going UP!

 

Next, the real cost of oil… Light sweet crude, we are running out of… we as a Country are not set up to refine heavy or sour and / or any other type… China is only set up for Sour, Heavy and the like… board terms yes, fucking forgive me.

 

And Finally our entire WORLD! Economy is based on Trade! And we are 200% MINIMUM!!!! Off on transportation costs!

 

We don’t have enough affordable oil… offshore drilling? 7,000 feet of water and 5 miles under the Gulf of Mexico is NOT! $50 dollars a barrel oil!

 

The entire economic structure of the World is being remade before our very eyes… Wage arbitrage in any and all industries is not the cause of the World’s problems… Labor has always been and will always be the cheapest of commodities anywhere at any time! It is a NON-ISSUE!

 

Fri, 05/21/2010 - 16:13 | 366488 anonnn
anonnn's picture

The great Russian chemist Mendeleyev [who created the path to the modern Chemical Table of Elements] visited the first oil fields in W. Pennsylvania abt 1870's to inspect the fact that petroleum [rock oil] was found in commercial quantities.

Observing great amounts of oil spread willy-nilly on the ground, characteristic of early production methods,  he wisely asked " Why are you wasting such  precious resources?".

It was clearly his genius that realized the unique properties of petroleum...and I dare to say less than a handful on this board even today understand that it is unique as energy source.

Its energy density, liquid form, voluminous availability, ease of transport and storage, relative safety, low cost to produce made it so...yet  this precious resource has now a doubtful future as all the low-cost "low-hanging fruit" is nearly gone.

There is no other fuel that can compete with lo-cost and liquid oil. [Not even alcohol.]

Any other fuel reqires  an intermediate step [e.g. a boiler] to convert to useful energy...as for the internal-combustion engine, etc.

 

 

 

He remarked wisely, extremely wisely you should note.

Sat, 05/22/2010 - 12:08 | 367634 JW n FL
JW n FL's picture

And the other part... would be... there is plenty of low hanging fruit... we as a Country are not yet ready to do what is needed to protect our way of life... there has not been enough ugly yet. when the ugly gets ugly enough for the people to rise up and demand more fuel...

Orinoco... http://en.wikipedia.org/wiki/Orinoco_Belt

Is just a close 5 billion barrels... if we wanted too, and I mean really wanted too... we could fix our problems... but the public is not on board... Obama is a Commie fuck for going and playing nice with the dumb lil dictator... when the rolling black outs effect the quality of life for americans... that lil fucker will be dead!

WMD's Bitches!!!

Fri, 05/21/2010 - 13:36 | 366060 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

+1

Fri, 05/21/2010 - 14:21 | 366175 THE DORK OF CORK
THE DORK OF CORK's picture

Thanks , I have been very repetitive about this subject for some time as I believe this is the core problem with the economies of the world.

It is really very simple energy dynamics.

Money as I see it is just a token for future energy consumption and this does not seem to be expressed in modern mainstream economics.

Do NOT follow this link or you will be banned from the site!