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Bob Janjuah On Brewing Popular Anger At The Failure Of Keynesianism

Tyler Durden's picture





 

If you are like us, you just can't get enough of Bob. The only economist from RBS whose opinions are worth reading, who will never make any financial pundit lists (especially not ones that have Jim Cramer on them), due to his unpleasant habit of being too "truthy", shares 17 minutes of his latest perspectives in this CNBC Europe interview. Not surprisingly, Bob blasts the lunatic response of resolving debt problems with more debt. This time he also shares some additional political perspectives: “Having elected people who said everything would be all right, ultimately the US and UK had to elect Reagan and Thatcher to get us back on track” and eventually angry voters in the developed world will shift to the far right. Some more US-centric perspectives: “The US mid-terms will be crucial. We will see a shift to the right as the Tea Party movement demands change. "There are 220 million people in middle America who are angry and believe stimulus spending has been wasted on vested interest and the banks that they believe got us into this mess. For all the talk of positive growth in America, those outside of LA and New York are hurting and want cuts in government spending, not more borrowing and spending.”

And just like all other skeptics, Bob sees deflation in the near term...

“Over the next 6 months we will see private sector deflation pushing 10-year yields down to 2 percent. This will see the policymakers mistakenly attempt to kick-start the economy and market with a global quantitative easing program worth between $10 and $15 trillion dollars."

... followed by inflation: his advice is to buy gold, safe, boring megacaps with no debt, and have more Asia-centric exposure.

His conclusion: “We are seeing a repeat of 2007 and 2008 with the inter-bank market in trouble, people are ignoring this."

 

h/t JRDCA

 

 


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Fri, 06/04/2010 - 12:04 | Link to Comment John McCloy
John McCloy's picture

   Anyone dressed all in black must be a chaotician. My kinda guy.

Fri, 06/04/2010 - 12:32 | Link to Comment pooplagrande
pooplagrande's picture

Not sure about you guys, but a SCIENTOLOGY ad appeared on the right hand side when I was viewing this article.

As a long time ZHer, I am now wondering if we are being targeted as prey for freaky deaky religions (ad manager thinking: these are doom/gloomers, the kind of guys that buy guns and gold...sounds like they could use some 'higher power meets sci-fi" kinda thing).

 

Fri, 06/04/2010 - 12:43 | Link to Comment Popo
Popo's picture

Google ads aren't the same for everyone.  So, it's not that ZH'ers as a whole are being targeted by Scientology:   You are.  

 

I get ads for FX trading and Viagra.  What does that say about me?

 

 


Fri, 06/04/2010 - 12:51 | Link to Comment percolator
Fri, 06/04/2010 - 12:56 | Link to Comment sumo
sumo's picture

Ad Block Plus works for me.

Fri, 06/04/2010 - 13:18 | Link to Comment superman07
superman07's picture

Hard-on for money?

Fri, 06/04/2010 - 12:44 | Link to Comment Clayton Bigsby
Clayton Bigsby's picture

awesome!  those guys are a fucking cult - http://www.xenu.net/

Fri, 06/04/2010 - 13:29 | Link to Comment BGO
BGO's picture

Janjuah apparently likes the cocaine, too.

Fri, 06/04/2010 - 13:38 | Link to Comment jswede
jswede's picture

like Hugh hendry, but with patience and manners....  not sure who I like better.

Fri, 06/04/2010 - 14:57 | Link to Comment GFORCE
GFORCE's picture

Probably Janjuah. No hint of arrogance. More than can be said for Hendry.

Fri, 06/04/2010 - 16:52 | Link to Comment Spaceman Spiff
Spaceman Spiff's picture

He wears the black for the investor that is beaten down,
Livin' in the hopeless, hungry side of town,
He wears it for the tax payer who pays for someone else's crime,
But pays because they're a victim of the times.

Fri, 06/04/2010 - 12:09 | Link to Comment etrader
etrader's picture

Note how he's never on the US output....

Speaking of which,

Trish full-cups Regan is also trying the Moto GP biker look after Ms Drury lead the way last Friday..... :-)

http://static.businessinsider.com/image/4c0916287f8b9a302a150000/bikers-...

 

Fri, 06/04/2010 - 12:25 | Link to Comment Ripped Chunk
Ripped Chunk's picture

Too funny!

Somene should put her on a moto GP bike about 200 yards from a steep drop off. "Just twist the grip on the right bar sweetie"

Fri, 06/04/2010 - 12:25 | Link to Comment snowball777
snowball777's picture

Trish looks like a Tiffani-Amber Thiessen clone that spoiled in the Petri dish.

Fri, 06/04/2010 - 12:04 | Link to Comment lynnybee
lynnybee's picture

...really enjoyed listening to him.   it's time to just let it all fall.  

Fri, 06/04/2010 - 12:50 | Link to Comment Divided States ...
Divided States of America's picture

Yup...its sad that we are back to letting a few connected wealthy people win at present now at the expense of the entire society in the future. Obviously, the action of the last 20 days (where the dow had intraday swings of over 200 pts each day) used to take weeks to play out. Things are going to be bleak for sure and everything is speeding up faster and faster to that conclusion. We never had bubbles that frequently but now we get that every 2 years, thx to Benny and Timmy.

Fri, 06/04/2010 - 12:05 | Link to Comment Coldcall
Coldcall's picture

His employers must hate him as his vitriol over the bank bailouts would logically include RBS, the biggest of the UK bailouts, now owned 75% by the taxpayer.

Still i guess they keep him around as their novelty uber-bear.

 

Fri, 06/04/2010 - 12:43 | Link to Comment sumo
sumo's picture

Bet his clients love him, though.

If RBS was to boot him out, what's the bet his clients and his team would go with him?

Fri, 06/04/2010 - 13:12 | Link to Comment New_Meat
New_Meat's picture

You mean like Rosie and Meredith?  Yep, any clients he would want would want to go with him.  - Ned

Fri, 06/04/2010 - 12:07 | Link to Comment lynnybee
lynnybee's picture

...he's cool / a truth-teller ..........

Fri, 06/04/2010 - 12:08 | Link to Comment Judge
Judge's picture

Oh HEYULL yeah...

Fri, 06/04/2010 - 12:11 | Link to Comment Mr Lennon Hendrix
Mr Lennon Hendrix's picture

Plan B:  A Controlled Demolition

There are two plans.  A and B.  A is inflation big time with a side of Hollywood Futures Index with a slab of facebook ipo.  B is somewhat different.  In B they try to collapse the EUro, Yen, and Pound before the doelarr fails.  One reason B is looking likely is the fact that Cameron was placed in 10 Downing and Kan might take over as PM in Japan; both are fiscally conservative.  Yes This is a dog and pony show, however long they are able to play the game.  Question; who knows what they are doing?  Wait, more importantly, 'Who thinks they know what they are doing?'

Summers for sure sakes thinks he knows what he is doing.  He did the math a few decades back in his Ivy league days that "proved" he knew what he was doing.  For another example we have Ben Bernanke.  BS went through the system, he did well, and now he is at the top of the pops, dictating the scripture as he goes.  Larry Summers was thought capable of winning a Nobel, and the fact he didn't always upset him, as he expected to.  BS wrote the gospel on micro-economics; a simplistic message through awkward assumptions; what is a "rational consumer"?

So what is important with these guys?  Well that we let them be important in the first place!  Right- because they do not know what they are doing means it is up to us to tell them off.  Once we all understand BS' economica is off kilter, then we can move to oust him and his Keynsian Nightmare he rode in on.  Summers' data must be equally as flawed, as it includes a cornicopia of unicorns and a ready supply of cheap, migrant oomploompas!

So now that we know that we know that they don't know what they are doing, let us conclude that whatever they are trying to accomplish (their plans) will not happen.  Lowering unemployment by having low interest rates will not happen when all the jobs have been shipped over seas, and many of the ones in the other secters were not only unnessarary, but unsustainable from the start.  Stimulating growth with low interest rates will not happen when cheap energy has peaked, as interest rates have no affecton the production rate of oil.  What will thesemeasures the Fed has taken do then?

First thing, the measures the Fed and Treasurie have taken will destroy the currentseas.  Never minddepreiciating currentseas to "better imports" - (economic professors everywhere!) - we are talking FIAT value at zero!  How will this happen?  Well now, that is the question!

Plan B- Kill the Euro now, alongside the Yen and the Pound, thus putting all the weight on the doelarr.  Then once the doelarrs status as only FIAT is seen as unfair and unstable, the IMF and World Bank will issue new loans of credit for new world currentseas.  The loans for the "credits" will be based off of gold reserves, resources, and "skilled" labor.  The contracts will also account for debt, so that debtor states like the US have to pay the loans, and reciever states like China get paid back; this in part, most likely at the same clip as current assets/deficite ratio.  America for example may recieve a rather large loan, but still would pay China back a large amount as well.  This would be fine for China, but the US gets the upper hand; China may have wished to increase their REAL level of Treasury holdings after all.  These new currentseas will pale in the face of gold; numbers are of no merit.  Silver/oz will give their supplier one month of necessities; rent, food, clothing, etc.  Gold/oz will give a year of comfortable living.  Have the numbers be what you will.  Equities will get crushed to a level that gold is.  It is very possible that we see these Wango-Fandango Dow 11-10k dance until gold is up at $10,000/oz.  It is also possible that the Dow moves to 5000, or even 2500.  It all depends on which plan they choose, and that all depends on the Hollywood Futures Index.

Call it what you will but what else will the next bubble be?  We live in a bubble economy, so we need a bubble, and barring zero point energy contracts, the only one I see is precious metals- hello girls ;)  "Hi Lennon!" - Platinum, Gold, and SIlver.  Note the Fed open swaps to liquidate holdings on the day of the HFI's 1st Congressional hearing.  Watching the outcomes of these deals will give insight into which way the gator will go; Plan A or B that is.  Watching them will be like looking through the keyhole.

Economics in large part deals with numbers.  I do not think of it as a science, so I like to question philosophy's role in markets as well.  Numbers, unlike the mind, deal with limits, and consumption/production possibilities provies a limit based on price; but who dictates price?  The guys running the Treasurie and Fed, thats who!  And by the way, what is a price predicated on?  While we are at it, what is a number?  Thus an arbitrary placeholder from the thoughts of a "rational consumer" generates the market.  Great.  Now let us consider the fact that the rational consumer is living with no conception of peak oil.  How can one make a rational choice in this case, when finite resources is not considered?  Finally remember how the complexity of the price structures affect all the other price structures; think butterfly effect if you will.

America hath dwelt in Samsara with the utmost of complacentcy, never questioning its easy access to energy and entertainment; thank you doelarr!  In a matter of years we will be on the backside of oil production, and even in the case of a strong economy the price of the US military would be too much for the taxpayer to bear.  The cost of energy not only affects the cost of transportation, but for lead and iron and other materials.  Peak oil will be nature's VAT tax if you will.  Very soon the reality will set in on the world; nothing is static, everything is falling apart.

Americans are then sandwhiched between delusions of FIAT wealth and the cold reality of peak oil, yet they have no idea what the magnitude of cost will be!  Even worse, when the pins come out of the FIAT printing press, spilling ink all over the floor of the "temple", the situation becomes only more dire, as the supply of real money in gold, silver, and platinum will crush the debt.  Then when commodities are considered, especially food- unless food is organic, it used petro-chems and petro-fertilizers to grow, the costs go through the roof.  This will harm the advantage of technology, so we will not be saved by AI; pray for zero-point, or get ready for the ride of your life.  PS, this market collapse has everything to do with oil.  This is why Plan B looks like a winner at this point; but now let us dissect what that means as to what stage we are at for peak oil.

My guess is that if we are about to experience an oil shock, the CBs are planning on mitigating this with a "strong" petro-doelarr.  Collapse everything except the doelarr, thus meaning the US war machine can get a party started somwhere, or at the very least, there can be one more summer driving season.  As WW pointed out, $4/gal would be quite the predicament during what is the Greatest Depression.

Economics is the half assed science dressed up as the real thing so it can be spun to further growth.  It relegates logic to be derived from fallacious assumptions like the rational consumer but also on growth expectations.  Peak oil is real, and we are on its platue.  This means we are currently experiencing zero growth, and have since '05.  Was it a coincidence that real estate crashed the first year that oil production peaked?  Equities followed; was it ironic that oil production still had not gone higher?  It is not a coincidence; in ordxer to achieve growth, we need cheap energy.  This and the money supply production peaked in the early '90's.  Yes I am talking about gold/silver/platinum.  These metals are stored in bank vaults for a reason; they make great collateral.  Peak iron happened a few months back, and this should also be a major concern.  The golden investment oppurtunity lies in the fact that oil is still not on its backside of production, it is at its peak.  This is the last time to use them big rigs to get the money out of the ground with oil prices remaining like the numbers we have come to know. 

So gold should see a rise in price, as economy professors everywhere say, "Why would a price increase in gold matter?"  They of course are not drawing the corallary that gold is being the banksasset on reserve is its first loan of recourse.  Gold's price has more to do with the whole system than anything else; it is the center of the arch, the fulcrum.  Gold is the fundamental soiurce of all money; it is what the Ark was built for.  So going forth in this Keynsian Nightmare gold will hold the weight of the economy, however much.  This is what it has to do.  This has always been its destiny.

Plan B, USTs are bought in the name of the system, and the dumb money goes along for the irde.  Smart money of course will go to gold.  If the Hollywood Futures is asked to manifest a Hollywood bubble, doelarrs alongside every currentsea find their weigh to the bottom at the same rate.  PAper FIAT isonly servicable to fund the ponzi.

Right now the banksters are in a corner.  They have a large supply of money on reserve from the bailouts of TARP ONE and TARP TWO (STIMULOUS), and the jobs program for this summer.  Depending on the level of fractional reserve lending you want to use, they have inbetween $13 trillion and $26 trillion to work with.  Europe and Asia have a similar amount combined.  This but they have a low velocity of exchange.  This is not ideal, as they want to maximize doelarr production.  This means increasing demand, but how to do that?  Well either the Hollywood Futures takes care of it, or eopic collapses in the other currentseas do.  Once again, Plan A and Plan B.  The HFI will give the new money something to chase and thus increase velocity.  Of course FIAT is rotten at its core, so this only gives the appearance to work.

One must not forget, there is a huge swath of people who believe (and have sfor awhile) that this Kensyian Nightmare brought a false paradigm of infinite growth into consideration.  Rest assured, if considered rightly, the infinite growth paradigm is ridiculous.  In order for this nightmare to end, we must sit and think about where we are in our epic journey, and where we want to go.

Fri, 06/04/2010 - 12:30 | Link to Comment fiddler_on_the_roof
fiddler_on_the_roof's picture

Good Commentry. Politics will decide Plan A or Plan B.

Fri, 06/04/2010 - 12:31 | Link to Comment anarchitect
anarchitect's picture

You're flagged as junk because you're repeatedly pasting this post. No one wants to read your tome, even if it is well-considered, which I don't have the time for once I spot numerous typos. STFU already.

Fri, 06/04/2010 - 12:37 | Link to Comment centerline
centerline's picture

edit - marginally considered.  Lots of good points and thoughts, not alot of process to tie together.  Read this yesterday and found it too convoluted in some areas to dissect for comment or compliment other than the obvious compliment for the effort that went in putting it together.

Fri, 06/04/2010 - 12:48 | Link to Comment Mr Lennon Hendrix
Mr Lennon Hendrix's picture

Tied together then-

Fucknutz have labeled "economics" a "science" and thus said it is absolute.  They then manipulate it as they see fit, and they fit not.  They purposely chose to ignore peak oil, and installed FIAT ponzi scheme.  Now they have boxed themselves in a corner, and they have limited their unlimited potential as human spirits by having plan A and B.  I am trying to not only figure out what they are thinking, but I am trying to look outside the box.  Thank you for your constructive criticism.

Sincerely,

LH

Fri, 06/04/2010 - 13:10 | Link to Comment centerline
centerline's picture

Always appreciate those who are willing to "put it out there" - especially in a cynical and smart environment like this group here at ZH.  Not saying at all you are wrong in any area per se.  My initial reaction though to Plan B is that is seems a recipe for war for sure.  Unfortunately, I still have "war" high on my list of potential outcomes.  Keep trying to look into the box LH.

Fri, 06/04/2010 - 12:50 | Link to Comment Mr Lennon Hendrix
Mr Lennon Hendrix's picture

Junking does not bother me; there, I junked it too.  I posted it at midnight the other night on Cheekys open forum, and on a video for kindergardeners; I do not believe I took up valuable face time then, nor do I now.  I also told myself, 'ok LH, you get one prime time post, make it a good one.'  When I saw that Bob was ripping Keynes, I thought 'bingo.'

I did not post this because I think, 'hey, maybe people want to read this.'  No, I post because we are at a live or die moment, and I think we should all speak our minds.  Thanks for your criticism.

Sincerely,

LH

Fri, 06/04/2010 - 12:53 | Link to Comment Clayton Bigsby
Clayton Bigsby's picture

I'm interested in the thoughts, but it would be great if you could re-post in "Dum-Dum Language" so I could understand what they all mean & the implications - does Google have  a translator for that?

Fri, 06/04/2010 - 13:08 | Link to Comment Mr Lennon Hendrix
Mr Lennon Hendrix's picture

Economics is not a science; it is better studied as a philosophy.  Resources, other than the mind, are finite; limitations are useful when considered.

Fri, 06/04/2010 - 12:55 | Link to Comment Mr Lennon Hendrix
Mr Lennon Hendrix's picture

PS

I did not post it on Bruce's, or Reggie's, or any contributers article because I think that would be pointless.  Those articles are for them to shine, and they do; I need no credit, thus why I post on ZH, as my concern is for us, not me.  No disrespect to Tyler; this is an interview.  You did not need to log into ZH to watch this interview.  This is not Tyler telling us his mind.  I would not have posted on something like that.  Also, this is 15 paragraphs, so if you were stressed from scrolling down through it I would suggest anger management.

Fri, 06/04/2010 - 12:52 | Link to Comment Bananamerican
Bananamerican's picture

Junked for run on sentence, Anarchitect.

(god, i hate spelling police)

Fri, 06/04/2010 - 12:53 | Link to Comment Clayton Bigsby
Clayton Bigsby's picture

Spellers of the world UNTIE!!!!

Fri, 06/04/2010 - 12:55 | Link to Comment economicmorphine
economicmorphine's picture

I agree, particularly with your last paragraph, but it isn't going to happen.  As Janjuah says, somebody's sitting with his finger on the $5TUSD QE trigger. I have absolutely zero doubt that he will pull the trigger.  

Fri, 06/04/2010 - 12:56 | Link to Comment Mr Lennon Hendrix
Mr Lennon Hendrix's picture

Plan A then.  We find out this month.

Sat, 06/05/2010 - 00:48 | Link to Comment Green Leader
Green Leader's picture

There's a lot of information to think about here.

I would like to point out that a major global food crisis is being set up for this fall.

http://www.marketskeptics.com/2009/12/2010-food-crisis-for-dummies.html

Stratospheric aerosol geoengineering (AKA chemtrails) is, IMO, playing a major part. Whether it's Plan A or Plan B the food crisis has been set in motion and is unstoppable. How will this play with players at the top that "don't know what they're doing"?

I consider myself pretty capable at highly organic farming techniques: compost making, raising worms (vermiculture) and other tricks of the trade. Chemtrails have wiped out my plantains & bananas; hens virtually stop laying eggs; pumpkins, beans & most tubers collapse. Most bees die, so do dogs. It sucks.

There's a lot of talk about gold here. As a natural resources major  and environmental activist, I say stock up on food, fertilizer and agricultural lime for at least two years. Get some Haifa 13-2-44 granular fertilizer and stash it.

Fri, 06/04/2010 - 12:13 | Link to Comment DosZap
DosZap's picture

I do not see Gold/Slvr dropping this time,( as in '08).

Fri, 06/04/2010 - 12:14 | Link to Comment DoChenRollingBearing
DoChenRollingBearing's picture

"those outside of LA and New York are hurting and want cuts in government spending, not more borrowing and spending.”

Yes, that's right.  Cut the spending stupid .gov.  Time for us to vote out the reckless & feckless politicians who will not lead.  Who are only destroying our country.

Yes, the bankers have committed great frauds.  But, it is WE who put these guys in Congress and Obama in the White House.  We have poxxed ourselves.

Fri, 06/04/2010 - 12:43 | Link to Comment chet
chet's picture

I agree with you, but I think it's dangerous to assume that all "those outside of LA and New York" diagnose the problem the same way, blame the same people, and want to prescribe the same medicine.

Those who think the Tea Party ideas are going to take over the nation will be disappointed.  There are many who will still be calling out for the government to save us all with whatever it takes.

Fri, 06/04/2010 - 13:03 | Link to Comment economicmorphine
economicmorphine's picture

Those of us out here in the middle all think the same way, even though in my little rural neighborhood in Texas I have neighbors from Mexico, Canada, Ireland, Wales, India and Germany.   I don't want to fuck with anyone's stereotype though.

Fri, 06/04/2010 - 13:26 | Link to Comment chet
chet's picture

"Those of us out here in the middle all think the same way"

No, they really don't.  The population of this country is more urban than rural at this point anyway.  Don't be disappointed when the revolution doesn't happen, that's all I'm saying.

Fri, 06/04/2010 - 12:18 | Link to Comment Gordon_Gekko
Gordon_Gekko's picture

It is clear that that’s NOT what always happens. Sometimes Gold is positively correlated with USD, other times inversely, and sometimes not at all. What should be clear to everybody though is the fact that a rising Gold price ITSELF represents “the drop” in USD (if you mean the purchasing power i.e. – the DXY really means NOTHING if that is what you are measuring). Gold is not volatile, the value of the dollar in which it is denominated is. In fact, as this crisis deepens and capital accelerates its flow down Exter’s liquidity pyramid, I expect more and more occurrences of USD/DXY (since USD is still the reserve currency of the world) moving higher together with Gold.

 


 

It is only and only a bull market in real money i.e. Gold – the correlations with equities or USD – real or imagined - will keep changing, reversing or completely falling by the wayside according to whatever favors Gold at the moment as this bull fully expresses itself in due course of time.

http://gordongekkosblog.blogspot.com/2009/09/gold-what-next.html

Fri, 06/04/2010 - 12:28 | Link to Comment Spitzer
Spitzer's picture

 somebody should invite Denninger to draw the inverted pyramid. I wonder what it would look like

Fri, 06/04/2010 - 12:31 | Link to Comment LeBalance
LeBalance's picture

it would be Karl as Elvis unable to eliminate just as the King failed.

Fri, 06/04/2010 - 16:52 | Link to Comment MayIMommaDogFac...
MayIMommaDogFace2theBananaPatch's picture

Best one-liner today...

Fri, 06/04/2010 - 12:30 | Link to Comment LeBalance
LeBalance's picture

Thanks GG.

I am going to print that like 100x and keep them in my car.

Fri, 06/04/2010 - 12:30 | Link to Comment Miles Kendig
Miles Kendig's picture

Thanks for the Project Mayhem reminder Gordon...

Fri, 06/04/2010 - 12:19 | Link to Comment FASB 666
FASB 666's picture

Dow 10,000 hats ???

Fri, 06/04/2010 - 12:27 | Link to Comment Citizen of an I...
Citizen of an IKEA World's picture

I'd swear I heard Art Cashin on CNBC this morning mentioning Dow 10,000 helmets.

Too funny.

Fri, 06/04/2010 - 12:21 | Link to Comment The Rogue Trader
The Rogue Trader's picture

Thanks Bob for the truth always...watch your back Bob...truth is dangerous to one's health it seems...

Fri, 06/04/2010 - 12:21 | Link to Comment Spitzer
Spitzer's picture

Some solid outlook from an Austrian economist.

Fri, 06/04/2010 - 12:22 | Link to Comment Bam_Man
Bam_Man's picture

You've got to absolutely love Bob.

The black outfit notwithstanding, gloom and doom is easier to take from someone with a Shemp Howard hairdo.

Fri, 06/04/2010 - 12:23 | Link to Comment Tarheel
Tarheel's picture

need...more...cowbell...

Fri, 06/04/2010 - 12:25 | Link to Comment Gimp
Gimp's picture

There are "grown-ups" out there who are willing to speak the truth. Love his view on the fantasy unemployment numbers. Ponzi masters must hate this guy as he will scare off all of their suckers.

Fri, 06/04/2010 - 12:26 | Link to Comment Caviar Emptor
Caviar Emptor's picture

Somewhat on subject (of anger): Breaking...

 

Wells Fargo Held Liable by Minnesota Jury for Nonprofits' Investor Losses

Wells Fargo & Co. must pay $30.1 million to four Minnesota nonprofits that claimed the bank marketed a risky securities-lending program as safe and blocked them from getting out of the investments, a jury said.

The Minnesota Workers’ Compensation Reinsurance Association and three charitable foundations sued in St. Paul, Minnesota, in 2008, claiming the bank failed to disclose the deteriorating value of the investments until it was too late. The nonprofits sought more than $400 million in damages.

http://preview.bloomberg.com/news/2010-06-02/wells-fargo-held-liable-by-... Popular anger rising. This case opens door wide

 

Fri, 06/04/2010 - 12:26 | Link to Comment DormRoom
DormRoom's picture

wtf.  How can he call himself an economist.  There are different mulitplier effects for each class of debt, so not all debt are equal.  You learn this in econ 101. Therefore, the argument that  using debt to pay off debt is lunacy, is specious.

 

For example, medical, and law students incurr hundreds of thousands of dollars in debt, to ascertain skills, and training, which will pay off millions in the long run.  Thus a 10x multiplier effect on debt accrued.

 

 

Fri, 06/04/2010 - 12:33 | Link to Comment Spitzer
Spitzer's picture

look at your name. Did you share that room with Ben Bernanke ?

Take the course in Austrian economics you poor hopeless fool. I will provide your misguided ass with a link to an online course in Austrian economics.

http://www.lewrockwell.com/hoppe/hoppe-hulsmann-videos.html

its an 11 hour course I think so listen carefully and make some notes

Fri, 06/04/2010 - 13:23 | Link to Comment Bull Meat
Bull Meat's picture

When debt is used to fund productive activities, its expansion may be beneficial and ultimately result in the debt being serviced with an increase of wealth following.

Do you really think that's what is happening here?

ADDITION: By the way, you're kind of missing the point by appealing to econ 101 when the topic of the thread is to challenge mainstream economic thought...

Fri, 06/04/2010 - 12:28 | Link to Comment buzlightening
buzlightening's picture

bilderbergers in spain, goon20 in s korea, and paper ponzi fiat burning to ashes internationally; seems like a soon to be combined shut down/false flag to reset financials!! FDR RIP extended banking holiday to allow the free lunch goons know they're here to help the people!!  It happens with the rank corrupt getting more corrupt and the reprobates shifting all risk to the innocent!!  Next job reports we have the CCC resurrected in the gulf states for toxic waste cleanup!! Can hardly wait to move into one of the nationwide tent cities the gov goons establish for we the sheeple!!  Bank on yourself and personal self sufficiency! dead head fed goons; republiCONs/demonCRAPS are all lil scamBO's and will leave the population in abject pulverized poverty lest you take personal initiative to keep what's yours out of the neoCONoplian elitists hands!!

Fri, 06/04/2010 - 12:29 | Link to Comment Miles Kendig
Miles Kendig's picture

Bob is being polite here.  He and we know that the Keynesianists are in full blown crack & heroin addiction and will refuse to admit their addiction to debt is the root of it until their "medicine" is taken away and they & we go through the painful withdrawal process.  Every day brings with it the potential for monetary death and makes the process of withdrawal all the more painful.  The heartland knows this.  The crack, coke & heroin addicts of LA & NYC will continue to binge & purge until we pull the plug.  Unfortunately, the political right in the US is even more messed up that the political left is and the Tea Party knows this.  In this look out for the phenomenon of what I have been calling Social Libertarianism to continue to gain as some strange alliances are formed.

Fri, 06/04/2010 - 15:19 | Link to Comment hound dog vigilante
hound dog vigilante's picture

"Social Libertarianism"

I like that. It gives a soft edge to an otherwise 'anarchist' reputation.

And I agree with you. The middle ground - which is a majority - is social liberal/fiscal conservative. I do not believe that the GOP will cast out the christian fundamentalists, and the Dems will not curtail governmental activism/growth. That leaves a majority of americans literally UNREPRESENTED in the current political system. This is why Tea Partys are spreading. This is why Obama will be a one-term president. Our current one-party (corporate-sponsored) system is designed to win elections and diffuse dissent. And just like our corporate-sponsored ponzi financial system, it is failing.

 

Fri, 06/04/2010 - 15:31 | Link to Comment akak
akak's picture

Why soft-peddle the one REAL alternative to the current one-party corporatist political establishment with any sort of modifiers?

Only one word is needed: Libertarianism.  The political philosophy upon which this nation was founded.

And by far the best examplar of that philosophy on the national stage today is Ron Paul.

Fri, 06/04/2010 - 19:26 | Link to Comment Miles Kendig
Miles Kendig's picture

From my perspective it isn't soft peddling.  Soft peddling is Libertarianism in the pure.  Our nation was founded on more than pure Libertarianism or else we would have no government, central or otherwise worthy of the name.  Social Libertarianism is essentially a libertarian that realizes that they do indeed have neighbors, live in human community and that governing is the process of actually representing a whole of society, not just the self. The power of the self unencumbered by the constraints of human society is Libertarianism in the pure. This sounds like heaven, but it denies the basic fact of life that humans are social creatures.  The really scarry thing for a Libertarian is to believe they can actually bring themselves to trust another human with their life, liberty and pursuit of their vocation.  If you cannot view yourself as trustworthy then how can you trust another with the essence of freedom and if you or your neighbors are not trustworthy then why form a self governing society in the first place?  So, I ask you which form is really soft peddling?

Fri, 06/04/2010 - 12:33 | Link to Comment snowball777
snowball777's picture

“Having elected people who said everything would be all right, ultimately the US and UK had to elect Reagan and Thatcher to get us back on track”

Republicans can't save you with whatever politically feasible cuts to Medicare and SS they can get away with.

I'll say it again: if and when politicians from ANY political party in the US (hot beverage based or otherwise) are ready to discuss serious cuts to the MIC, closing military bases, and leaving seniors to rot in the street, then, and only then, will I take them seriously.

Until then, we're still playing the socialism for me austerity for you game and kicking the can down the road (but using our other foot this time).

Fri, 06/04/2010 - 12:54 | Link to Comment anarchitect
anarchitect's picture

The situation is so far gone that it will take a combination of Ron Paul's *and* Harry Browne's solutions to save it.

Putting seniors on the street isn't ethical or even politically viable.

Serious cuts to the MIC (Paul) and selling federal assets--military bases, federal buildings, vast tracts of land in the west--(Browne) are viable and might save/raise enough money to make those dependent on social security whole while funding private IRAs for those who still have a reasonable number of working years ahead of them.

Federal healthcare can be dismantled by making health care affordable: deregulate the medical profession, shut down the FDA, allow interstate health insurance competition, implement tort reform, and make all medical expenses tax deductible without a 7.5% minimum level.

Fri, 06/04/2010 - 12:30 | Link to Comment macfly
macfly's picture

He makes great sense as always, thanks for posting this.

Fri, 06/04/2010 - 12:33 | Link to Comment Zina
Zina's picture

You know very well that this crisis was caused by Greenspanomics, which like Reaganomics, is a variant of Hayekonomics.

Stop being so cynical and accept that the crimes of Goldman Sachs and other financial fraudsters are the result of unregulated markets.

So, the popular anger first needs to build up against  Hayekonomics and its variations. After that, you can become angry about Keynesianism.

Fri, 06/04/2010 - 12:34 | Link to Comment snowball777
snowball777's picture

+1

Fri, 06/04/2010 - 12:38 | Link to Comment anarchitect
anarchitect's picture

You are totally clueless as to what Hayek (broadly, Austrian economics) is about.

Greenspan and Reagan, fine, they were part of the problem.

Greenspan had a lot in common with Hayek BEFORE HE SOLD OUT. Rand dismissed him as a "social climber". Rather astute given that she had few social skills of her own.

Fri, 06/04/2010 - 12:40 | Link to Comment Internet Tough Guy
Internet Tough Guy's picture

In truly free markets there would be no TBTF. Failure would cleanse the system. We don't have free markets, we have crony capitalism. Don't blame Hayek.

Fri, 06/04/2010 - 12:46 | Link to Comment Zina
Zina's picture

Give me an example of a country with "truly free markets" (on planet Earth, please).

If you don't find one in the present, you can show me one in the past, I will accept the example...

Fri, 06/04/2010 - 13:19 | Link to Comment anarchitect
anarchitect's picture

Sadly, there aren't any examples of "truly free markets". There are a few microcosms, like most of the computing industry.

In the present, the best examples are probably Hong Kong, Singapore, and New Zealand, though each has problems. Hong Kong and Singapore are instructive. Densely populated, no natural resources, yet with a better standard of living than most other places because of more economic freedom. Liberalization totally turned New Zealand around, to the point where enough wealth was created that redistributionists could resume their looting.

In the past, the US and the UK during the industrial revolution were relatively free, but again with some caveats.

The evidence is clear, but the obstacles are political. More economic freedom leads to a better standard of living for all. We don't need some idiotic "third way" compromise like Labour (UK), to give but one example, turn to once they start to sniff a clue and reconsider their past lunacies.

Interestingly, more economic freedom seems to lead to more political freedom (Chile, Singapore), whereas political freedom doesn't necessarily lead to more economic freedom (Scandinavia, South Africa). My guess is that the economic liberalization in China will lead to a lot more political freedom, despite resistance from the Party.

Fri, 06/04/2010 - 14:09 | Link to Comment Zina
Zina's picture

Sorry to tell you, but Hong Kong and Singapore had strong government intervention in its economies in a not so distant past, as all of the "Four Asian Tigers".

About New Zealand... Well, I think no tea partier would like headlines like that:

http://www.topnews.in/new-zealand-deficit-spiralling-out-control-ministe...

"New Zealand deficit spiralling out of control, minister warns"

The public debt to GDP ratio of New Zealand is already at 30%. No example of "small government".

 

Fri, 06/04/2010 - 13:26 | Link to Comment DiverCity
DiverCity's picture

You're the one on the wrong planet when you go blaming Misean or Hayekian economic theory for the mess we're in.  Greenspan was certainly NOT an adherent.  Rather, blame quasi-Keynesianism-cum-monetarism-cum-corporatism and then you'll have it.  Dude, you're just revealing your ignorance!

Fri, 06/04/2010 - 15:35 | Link to Comment THE DORK OF CORK
THE DORK OF CORK's picture

I don't see much evidence of Keynesian spending except on dole payments to keep the population fat and happy - meanwhile the vast bulk of the money is being used to fill the black hole of Bank balance sheets.

This crisis is simply a monetarists wet dream - Milton would be so proud of Ben and Alans efforts to sodomize the average Joe.

Ps Bob was making all the right moves until he mentioned the Glory days of Thatcher and Reagan - complete and utter bollox , debt went into orbit in the 80s and now its boldly going where no debt has gone before.

We have to get over the monetarist Jewish meme that believes that money is real when in fact it is just a symbol of the real economy.

putting money "to work" in financial vehicles with no physical connection to reality is just a mechanism to cream off a surplus - that is fine and dandy if you are a moneylender working in a functional economy but if everybody else is gaming the system and not creating then it quickly becomes a unprofitable enterprise.

Fri, 06/04/2010 - 13:35 | Link to Comment Bull Meat
Bull Meat's picture

You're tripping on your circular logic.  Hayek was an uber-advocate for free markets.  You argue (implicitly, not your words exactly) that the crisis demonstrates that free markets don't work.  Then you turn around and say that no free markets exist on earth...  What's your argument, again?

By the way, I agree that de-regulation contributed to the crisis.  Dropping Glass-Steagall and raising leverage limits raised problems because banks were still back-stopped by the Treasury.  When you're in a position of keeping all gambling gains and making someone else pay for your losses, you bet big.  That's what the banks did.

A free market also would drop Glass-Steagall, eliminate (not just raise) leverage limits and back off a host of other regulations.  But it would also imprudent bets to bankrupt those making the bets.  We could debate how that would work out.  But to argue that de-regulation was an invocation of Hayekism is ignorant at best if not disingenuous.

Fri, 06/04/2010 - 14:23 | Link to Comment Chupacabra
Chupacabra's picture

I agree about the circular logic.  Zina, if we don't have truly free markets, maybe we should give them a shot?  I think the problems stem from "central planners" who think they have everything figured out (money supply, interest rates, allocation of capital) only to realize belatedly that they are all to human and imperfect to manage a system as complex as the economy.

Fri, 06/04/2010 - 14:36 | Link to Comment Zina
Zina's picture

 Who needs logic? I'm a dadaist. My thinking has no logic. This world has no logic. This reality has no logic.

I just don't believe in "efficient self-regulated markets". And I don't believe in the ideological dogma that any government intervention in the economy is bad.

Fri, 06/04/2010 - 15:14 | Link to Comment akak
akak's picture

Then you are a believer in coercion and elitist control, as that is the very nature of government.  Government is NOT your friend, ever, it is the enemy!  Freedom and government are polar opposites.  The very essence of government is not voluntarism and free exchange, it is arbitrary control and the negation of free action.  Government is simply institutionalized force.

"Government is not eloquence, it is not reason, it is force!  Like fire, it is a dangerous servant, and a fearful master."

(George Washington)

Fri, 06/04/2010 - 16:41 | Link to Comment Zina
Zina's picture

"Government is NOT your friend, ever, it is the enemy!  Freedom and government are polar opposites."

It's just ideological dogma. I know some anarchists here in my town that say exactly the same thing...

Ideological dogma, nothing more than it...

George Washington was part of a government. In fact, head of a government.

The US railway system only developed in the 19th century because of government intervention and subsidies. And without that railway system, probably the US economy could never grow how much it grew:

http://en.wikipedia.org/wiki/Pacific_Railway_Acts

 

Fri, 06/04/2010 - 16:51 | Link to Comment akak
akak's picture

Freedom is not just an "ideological dogma" --- it is a fundamental political principle.

But if you are really the ideological nihilist that you appear to be, then there is no sense in trying to further discuss anything meaningful with you at all.  To what end do you post here, if your mind is closed to reason and debate in the first place?

And regarding the railroads, you make the simplistic and laughably absurd mistake of assuming that if the government had not gotten involved, then they would have NEVER been developed at all.  To which I say, prove it.

Anything worth doing, individually or societally, is only worth doing if it can be done without coercion.  Government is coercion and force.

Fri, 06/04/2010 - 17:02 | Link to Comment Zina
Zina's picture

What I called an "ideological dogma"is the assert that ANY government intervention in the economy is a threat to freedom.

Freedom is good. And there's no reason to say that any government intervention in the economy is a threat to it.

Are you against Antitrust Laws ? Antitrust Laws allow government INTERVENTION in the economy to prevent the private trusts from becoming ultra-powerful, in such a way that the PRIVATE trusts can be a threat to people's freedom. In this case, government intervention is done to PROTECT freedom from the PRIVATE trusts.

Fri, 06/04/2010 - 21:13 | Link to Comment Ragnar D
Ragnar D's picture

You couldn't have picked a better example than the railroads.  All but one were publically funded and turned into giant bloated bankrupt failures.

 

JJ Hill's Great Northern was entirely privately funded, and was the exception to the rest.

Fri, 06/04/2010 - 15:28 | Link to Comment fiddler_on_the_roof
fiddler_on_the_roof's picture

Afghanistan. Nope there is none, even here there are warlords.

All econimies have oligarchs who form capital by influence/bribery.

Fri, 06/04/2010 - 12:53 | Link to Comment Spitzer
Spitzer's picture

Moral hazard caused the crisis numb nuts, not regulation. Moral Hazard is explained very well in Austrian economics, moral hazard is inevitable in central  fractional reserved banking

Fri, 06/04/2010 - 13:10 | Link to Comment Zina
Zina's picture

Unregulated markets caused the fraud of subprime mortgages packaged in opaque  "financial vehicles".

Unregulated markets allows Goldman Sachs to manipulate markets and defraud their own customers.

What do you call "moral hazard"? The TARP bailout in October 2008? The crisis did not begin in October 2008. It began in August 2007. In October 2008, Lehman Brothers had gone bankrupt already.

Fri, 06/04/2010 - 13:25 | Link to Comment New_Meat
New_Meat's picture

Unregulated markets in the case of the MBSs.  Why were they permitted to remain unregulated?  Fannie/Freddie were stamping junk/liar/NINJA loans as AAA.  All part of the Community Reinvestment Act.

FHA still doing that crazy lending.

So, yes, there were reasons that a) they were unregulated and b) still are.

- Ned

Fri, 06/04/2010 - 13:38 | Link to Comment Bull Meat
Bull Meat's picture

Moral hazard was an issue because the banks believed that they could rely upon a bail out if they got in trouble.  It was not the bail out that precipitated the crisis but the promise of a bail out.

Fri, 06/04/2010 - 14:11 | Link to Comment Spitzer
Spitzer's picture

Fanny and freddie, fed interest rates

Fri, 06/04/2010 - 13:15 | Link to Comment Clayton Bigsby
Clayton Bigsby's picture

agreed on not blaming Hayek - that is some dumb shit right there

Fri, 06/04/2010 - 12:35 | Link to Comment LongShortSally
LongShortSally's picture

Tea Party folks may want to see cuts in gov't spending, but not in their social security, medicare or prescription drug benefits.  Not that I blame them.  Just sayin.

Fri, 06/04/2010 - 12:44 | Link to Comment Zina
Zina's picture

If Tea Party folks are worried about the deficit, they should start by protesting against the proposed ONE TRILLION dollars in DEFENSE related spending proposed to fiscal year 2011 budget:

http://laudyms.wordpress.com/2010/04/19/defense-spending-is-much-greater...

By the way, military spending accounts for 58% of federal discretionary spending in fiscal year 2010.

Fri, 06/04/2010 - 13:12 | Link to Comment MyFriendMises
MyFriendMises's picture

I think you are making the common mistake of thinking that the tea party is composed of the Fox News crowd.  Truth is Fox is just trying to hijack the movement.  The real movement is a libertarian one where most involved would love to bring all the armed forces home.

Fri, 06/04/2010 - 13:28 | Link to Comment anarchitect
anarchitect's picture

As much as I'd like to believe this, I think it's a case of "Would the REAL Tea Party movement please stand up?"

Sure, some are libertarians, but many others are right-wing Republicans who wouldn't support getting out of Iraq, let alone Afghanistan, let alone shutting down all those overseas military bases.

Fri, 06/04/2010 - 13:41 | Link to Comment Bull Meat
Bull Meat's picture

+1

I am always suspect of any political movement.  The conspiracy theorist in me wonders if the political action wing of the Tea Party movement isn't just another distraction to give us a political avenue for "doing something" rather than taking to the streets (as we should).

Fri, 06/04/2010 - 13:45 | Link to Comment MyFriendMises
MyFriendMises's picture

Completely BS.  The only reason you see that other side is because the Libertarian/Ron Paul based tea party is not given the media focus. Instead the MSM focuses on the far right.  If the SHTF you will see the real tea party.

Fri, 06/04/2010 - 22:14 | Link to Comment deadparrot
deadparrot's picture

It's the US political conundrum. We all want change, and we all want it now, but we want it to be painless. Kinda like all the painless and effortless diet gimicks out there. Problem is our politicians are happy to oblige us. Remember, Obama's campaign was about change. I don't see any real change. And the ironic thing is, if he did create some positive change, he would be hated.

US political elections are a lot like children choosing which of their divorced parents they want to live with. Both parents are smart enough to know that the only way they will get the kid to pick them is by offering them maximum privilege and minimum responsibility. How many kids do think ever decided they wanted to live with the parent that made them do chores, do their homework, and be in bed by 10 o'clock?

Fri, 06/04/2010 - 15:28 | Link to Comment hound dog vigilante
hound dog vigilante's picture

"I think you are making the common mistake of thinking that the tea party is composed of the Fox News crowd.  Truth is Fox is just trying to hijack the movement.  The real movement is a libertarian one where most involved would love to bring all the armed forces home."

Bingo. Exactly correct. Spot-on observation.

 

Fox and the neo-cons are hypocrites : anti-deficit & pro-empire.

The Tea Party movement is generally consistent : anti-deficit & anti-empire.

 

If you are picking-up other messages/signals, then perhaps you should think twice about the quality of your sources...

 

Fri, 06/04/2010 - 21:17 | Link to Comment Ragnar D
Ragnar D's picture

That's a cute trick to throw in the "discretionary" part, and ignore Entitlements.

 

Nevermind that they're the programs requiring expontential growth to fund.

 

Nevermind that completely gutting the military in its entirety would still leave us broke.  I'm all for pulling Europe's safety net instead of paying for their defense so they can throw that money away on handouts, but don't pretend that would solve our own pyramid scheme finances in the slightest.

Fri, 06/04/2010 - 13:22 | Link to Comment Treeplanter
Treeplanter's picture

A lot of Tea Partiers don't think there will be any money to pay social security, etc...  I believe that's the point.  We also don't care to pay the gambling debts of losers.  A lot has changed since Rick Santelli called for a Sons of Liberty style revolt.  We thought these trillions of bad debt would go on our kids' tab.  Now it's clear Treasury will default long before that.  The 10th Amendment continues to be a big issue.  The states created the federal gov't to form a more perfect union.  Now we have states jumping through hoops to get money from the feds, when it should be the other way around. We have to get rid of the bipartisan corruption to do anything practical in the way of free markets, honest money and representative democracy.  The media want to paint the Tea Party as a bunch of cranks.  I predict many will come to the same conclusions as the Tea Party but will couch them in different terms to escape being lumped in with those whom the media scorns.  

Fri, 06/04/2010 - 15:32 | Link to Comment LongShortSally
LongShortSally's picture

"A lot of Tea Partiers don't think there will be any money to pay social security" - That may be the case for some, but I saw several being questioned by interviewers (forget where - could have been Colbert or Stewart) and they were already collecting. Lot of dumbasses in the movement who don't understand the immense, complex theft going on in this society.

Fri, 06/04/2010 - 23:46 | Link to Comment Ragnar D
Ragnar D's picture

Colbert and Stewart are your sources?  Champagne Socialists who adhere to 95% of Hollywood's government cheerleading, with a few exceptions when the control freaks hit too close to home for them?

My take on the Tea Party isn't what some tv drama queen can find for his hit piece.  I'll use my parents as an example.  They're old school savers, against carrying credit card debt, "we don't need that", "live within your means", all that.

As a kid I'd say we were firmly working class, and over the past 15-20 years they've moved into upper middle class.  Decent house, run of the mill cars kept for a decade, still frugal spenders, do their own home repairs, etc etc.  Forget my generation not seeing SS--my dad's just over 50 and isn't counting on collecting a dime.

As far as politics, they probably pragmatically vote Republican most of the time, as a less-bad alternative to the socialists, but are about as apolitical as you can get.  But the last couple times I've visited, I've noticed my dad making comments about how "well I guess we're the enemy now", since it's dawning on him he's been redefined as one of those evil "rich"--ie anyone who's actually worked for a career.

 

That's my definition of the Tea Party.  People who've busted their asses their entire lives doing the responsible thing, while losing half their earnings to reward the deadbeats and failures, and knowing they're going to bear the consequences of politicians' bankrupting us.

Fri, 06/04/2010 - 17:00 | Link to Comment Yippie21
Yippie21's picture

+1000 Treeplanter. ..  Right on, right on, right on!

Fri, 06/04/2010 - 12:37 | Link to Comment buzlightening
buzlightening's picture

You need not worry about the paper ponzi crimex/lbma prices!!  All an illusion!!  Just line up in the street to get your honest money gold/silver for super premiums for physical possession!!  By the time the DIMMS(dumb ingnorant metal midget sheeple) figure out honest money gold/silvers real worth there won't be a wisp left to be had in the streets for any crashed paper ponzi price!!  History repeats!!  Look forward to the horrors of deep dark black depression II & WWIII at the hands of reprobate neoCONs!!!  

Fri, 06/04/2010 - 12:39 | Link to Comment Anarchist
Anarchist's picture

“Having elected people who said everything would be all right, ultimately the US and UK had to elect Reagan and Thatcher to get us back on track”

What a load of crap. Jimmy Carter appointed Volker to attempt the clean up the huge financial problems due to fighting two wasteful wars out of control spending and the huge increase in entitlements.

Reagan and Thatcher racked up huge deficits that are still unpaid. We wasted huge amounts of money building up our militaries even though it was known the Soviet Union was dying due to low oil and gas prices. The Saudis, Kuwaitis and other oil producers racked up huge deficits keeping oil artificially low and keeping oil priced in dollars. Of course no one mentions that Nixon threatened them and Carter continued the policy.

Fri, 06/04/2010 - 12:59 | Link to Comment Busy-Body
Busy-Body's picture

For the record, Thatcher was not bad - in fact, she was good for the British people.  She had for some time opposed the idea of Great Britain joining the then plan of a Euro currency and a unified Europe (though Britain is part of the EU (not the Euro), albeit not done on her watch) - for her beliefs, she was "selectively dethroned" in favor of puppet, John Major and was also "dismissed" from further participation on the Bilderberg Group. 

Fri, 06/04/2010 - 13:32 | Link to Comment Mr Lennon Hendrix
Mr Lennon Hendrix's picture

For the record, Thatcher got lucky from North Sea oil.

Fri, 06/04/2010 - 14:29 | Link to Comment Anarchist
Anarchist's picture

Absolutely correct. Whomever junked you has no clue. The discovery of large petroleum deposits in the North Sea saved Britain from another failed military adventure to prop up the dying Empire. Of course since the output of these fields is in a major decline, Britain signed onto the Iraq/Afghan adventure with the hope to kick the can (bankruptcy/insurrection) down the road again. To bad the Neocons sold them a bill of goods. Britain will relive it's failed adventures in the Mideast once again. When it costs 5 pounds to steal one you are cooked. 

Fri, 06/04/2010 - 14:51 | Link to Comment trav7777
trav7777's picture

Look at the AK N Slope historical production data if you want to know what saved Raygun.

I cannot OVERemphasize the importance of oil supply.

Fri, 06/04/2010 - 12:41 | Link to Comment godfader
godfader's picture

"Look, my prediction of EUR Zone aggregate growth for the next 3-5 years is 0%" Good one. The talking heads were speechless for a second.

Fri, 06/04/2010 - 12:47 | Link to Comment Muir
Muir's picture

"...ultimately the US and UK had to elect Reagan and Thatcher to get us back on track...”

 

BULLSHIT

 

Right/left... really?! 

 

As long as the populace is distracted with these meaningless terms the ruling elite in the US and elsewhere will continue to laugh themselves silly.

On the other hand, be careful of what you wish for; if the powers that be allow the "tea party" and the "conservatives" to really reduce spending, then the system will collapse. But of course, they will not, some "emergency" will need to be addressed.

 

Fri, 06/04/2010 - 14:11 | Link to Comment baldski
baldski's picture

You are so right!

Janujuah, Another asshole crying for the return of St. Ronnie Reagan, who started the government borrowing frenzy big time and then had to raise taxes too.

Why is Reagan a right wing nut hero?

 

Fri, 06/04/2010 - 12:54 | Link to Comment sumo
sumo's picture

I love this site.

Bob makes so much sense. So do Mark Faber and Hugh Hendry. Great stuff.

 

Fri, 06/04/2010 - 12:55 | Link to Comment Strider
Strider's picture

Biggest farce bullshit line of this century?

The Constitution's"We the People" what a load.

"and that government of the people, by the people, for the people, shall not perish from the earth." ...  Sorry Abe, its done, got up and gone to

Wash-out -ington

where they go from being one of us to being one of them.

Fri, 06/04/2010 - 13:06 | Link to Comment Pat Hand
Pat Hand's picture

So, let's see - the Republicans generated massive deficits by tax cut and spend and we have a huge loss of gov't revenue because of the ongoing recession.  Solution?  Let's go back and get them in power again!  More tax cuts for all!  Free rainbow ponies too!

Fri, 06/04/2010 - 13:12 | Link to Comment proLiberty
proLiberty's picture

Q: Can the private sector get by regardless of the inadequacy of the response from the public sector?

A: The total market cap of the S&P 500 is ~ $10.2 Trillion.  Governments can create debt faster than the private sector can create wealth, especially with the tax burden they  are saddled with.

Fri, 06/04/2010 - 13:14 | Link to Comment alexdg
alexdg's picture

Sure, a leaner government is what people say they want, but they'll all cheer for another stimulus when it comes. They just don't want it to be another TARP-like program, but a more of a "build roads and create jobs" stimulus. So it all stays the same, print more money and spend!

Fri, 06/04/2010 - 13:28 | Link to Comment Treeplanter
Treeplanter's picture

The 800 billion porkulus bill was sold as build infrastructure and create jobs.  But we know that was a load of crap.  I expect they will try it again, but they have to do it as a lame duck Congress, cause people don't cheer when they know they're getting burned.

Fri, 06/04/2010 - 13:26 | Link to Comment Mannwich
Mannwich's picture

Reagan?  Please.  His era of deficit spending started us down this path.

Fri, 06/04/2010 - 13:39 | Link to Comment Treeplanter
Treeplanter's picture

Reagan gave us the S&L boondoggle and started the bailout scam.  Bipartisan corruption has kept it going since.  Clinton depended on the GOP to do his scams in his second term, they gave us the Fannie Freddie disaster.   Bush and McCain gave us TARP, which Obama was all for.  Stupidity and corruption are in charge.   The everybody does it excuse doesn't cut it anymore. 

Fri, 06/04/2010 - 13:27 | Link to Comment Mannwich
Mannwich's picture

The Tea Party hacks and nuts don't have any more of a clue than the Keynsians do.  We're all delusional now.

Fri, 06/04/2010 - 14:17 | Link to Comment Spitzer
Spitzer's picture

No you fool, The tea party is just the opposite of keynes. CUT SPENDING, keynes that fag, says INCREASE SPENDING

Fri, 06/04/2010 - 14:37 | Link to Comment Anarchist
Anarchist's picture

Most Teabaggers are suckling the government teat while screaming down with big government and socialism out the side of their mouths. Oh and and don't touch my Social Security. They want everyone but themselves to take a haircut. Greedy worthless scumbags is all many of them are.

Fri, 06/04/2010 - 15:49 | Link to Comment WaterWings
WaterWings's picture

Logic. Use it. Tea Party ppl are not the only ones paying into SS.

Do you pay into welfare before you get it?

Greedy worthless scumbags is all many of them are.

Oh, the lying sacks running the country? Yeah, I agree. Now STFU.

Fri, 06/04/2010 - 17:08 | Link to Comment Anarchist
Anarchist's picture

Truth hurts? I have yet to see a single Teabagger speak the truth. None of them want to give up what most of them NEVER earned. How many of them are on the government dole either collecting SS or a state or federal pension? Many will collect 1000x more in SS or MC benefits than they EVER paid in. I doubt most of them could survive if they fell off the government teat.

Oh by the way another big problem we will have to deal with is all the ZioFacists who have distorted our foreign policy to the detriment of our country. We also need to cut off the billions of our money being "diverted" each year to your favorite dirtbag country. Maybe the Chinese will send back to the US the 10's of billions of US weapons they illegally bought from that $hitty little country.

Fri, 06/04/2010 - 17:40 | Link to Comment WaterWings
WaterWings's picture

T.R.O.L.L.

Fri, 06/04/2010 - 13:28 | Link to Comment Mannwich
Mannwich's picture

Bob just lost all credibilty with me with his policial commentary.  Sorry Tyler.

Fri, 06/04/2010 - 21:07 | Link to Comment msjimmied
msjimmied's picture

+1

Fri, 06/04/2010 - 13:28 | Link to Comment Mannwich
Mannwich's picture

Political.

Fri, 06/04/2010 - 14:29 | Link to Comment WaterWings
WaterWings's picture

Back from the dead, eh? Did this piece activate you out of troll-sleeper-cell mode?

Fri, 06/04/2010 - 13:34 | Link to Comment Double down
Double down's picture

He is a Hero

He sees through the looking glass.  I agree with most of what he says, and as soon as the currency "rebalances" have been completed I am shit-long Germany and the US.

But, what did he mean by "currently everyone is short the USD"?   

Fri, 06/04/2010 - 13:45 | Link to Comment Treeplanter
Treeplanter's picture

Bob J. gets it.  Bob J. can lay it out in plain English.

Fri, 06/04/2010 - 13:55 | Link to Comment Soma
Soma's picture

Amazing how much better this format is by allowing individuals to elaborate on thier thoughts vs. screaming for a sound bite. 

Fri, 06/04/2010 - 14:19 | Link to Comment saturno_v
saturno_v's picture

 

I enjoyed the video but I do not entirely agree on the "cleaning" that Reagan and Tatcher allowed to happen.

They let the fiat/debt monster getting out of hand, the financial industry run amok and they did not shrink government spending (military, lat time I check, is part of government spending).

They did not raise a finger during the disnmantling of productive capacity in their countries.

 

Public and private debt and the deficits (fiscal and trade) exploded during Ronnie and Maggie reign.....they were part of the problem....

 

We were already running out of steam at the beginning of the 90's, what allowed the facade to run a little bit longer was the real productivity gain of the "internet revolution", the fact that a couple of billion of people in Asia were/are willing to work for peanut sending stuff our way and the increasing willingness of people to go into debt...

 

We need real Austrian libertarian policies...

Fri, 06/04/2010 - 15:34 | Link to Comment hound dog vigilante
hound dog vigilante's picture

"We need real Austrian libertarian policies..."

 

YES. 

 

The US Constitution is an "austrian-libertarian" manifesto, imo.

 

Fri, 06/04/2010 - 14:40 | Link to Comment Marley
Marley's picture

“Having elected people who said everything would be all right, ultimately the US and UK had to elect Reagan and Thatcher to get us back on track”

Please review a few, particularly Jimmy Carter's, address to the people.

http://millercenter.org/scripps/archive/speeches

"Boy the way Glenn Miller Played.

Gee. our old LaSalle ran great.

Ronald Reagan gave us aids

Those were the days." 

Fri, 06/04/2010 - 16:42 | Link to Comment Marley
Marley's picture

My bad.

Fri, 06/04/2010 - 14:55 | Link to Comment Anarchist
Anarchist's picture

The goal of the Elite has been to burn the house down and claim there is nothing left. They want to return back to the 1800s or how much of the third world operates. They will own 98% of the pie and let everyone else have whats left. For this to work you need deniability. By bankrupting the system, they can claim it was not their fault that all social programs, MC/SS, pensions of any kind including Military have to be cut or flushed.

I watched Pete Peterson hawk one of his books a long time ago on CNN, CNBC and Fox. In one of the interviews he claims he met W after his first election. W told him the goal of his administration was to defund the US government. W said that once the system is broke politicians will be able to get rid of all the entitlement programs. Peterson told him what he was doing was immoral and lead to insurrection. W said the people will do nothing.

Judging how stupid and passive most Americans are I believe him. As was proven during the depression, you always make sure the serving army and police get a paycheck and they will shoot down anyone including any retired military or retired police.

Fri, 06/04/2010 - 17:00 | Link to Comment Breaker
Breaker's picture

Peterson has to be lying. W did more to advance big government and big entitlements than any modern president other than LBJ and Obama. Large new entitlement programs. Huge expansion in the Code of Federal Regulations. And worst, he did it pretending to be a conservative, thereby legitimizing the government bloat that Obama has taken exponential.

At least Clinton signed welfare reform, even though it was forced down his throat. We got thru Reagan, Bush I and Clinton with no new entitlement programs--Clinton even backed down welfare a little. Then W started that crap up again.

Fri, 06/04/2010 - 17:22 | Link to Comment Anarchist
Anarchist's picture

Maria Bartiromo was the one giving the interview to Peterson. She told him that what he was saying was shocking and does he feel safe saying something like that in public. Peterson responded I'm too old, too rich and I don't care. In reality the average american is a moron and would never believe him. The people in the know have been saying this type of thing for years. The most common saying would be to "starve the beast". This was the unofficial policy of the elite for years.

http://en.wikipedia.org/wiki/Starve_the_beast

If you starve the beast it means the US cannot meet it's obligations and will default on it's debts. The biggest debt is the unfunded mandates and the state, local and federal pensions.

Fri, 06/04/2010 - 14:53 | Link to Comment trav7777
trav7777's picture

Raygun?  Thatcher?

BOTH bailed out by oil.  And both total jokes.

Fri, 06/04/2010 - 15:01 | Link to Comment tony bonn
tony bonn's picture

i wish the birth party would demand that kenyan born indonesian citizen barry soetoro would show his birth certificate and stop practicing voodoo economics.

they all said keynesianism was dead after the disasterous 70s but its baaaack.....with its poster child soetoro leading the pom-pom girls...

discredited, fraudulent, and fatuluent, keynesianism will never die until all of the charlatans die....

www.obamacrimes.com

 

Fri, 06/04/2010 - 15:15 | Link to Comment Anarchist
Anarchist's picture

Stop confusing Keynesianism with a bailout for the rich. How convienient of you to forget the Bush administration pushed through Tarp. Obama is just continuing the bailout. I love the term TARP. Poetic description huh?

Other than an unemployment check, the average person will get nothing but higher taxes. The average strategic defaulter on a home loan may think he is getting a great deal but they will be a debt slave for life.

Fri, 06/04/2010 - 15:45 | Link to Comment saturno_v
saturno_v's picture

 

I agree...what we have is the worst of about the major school of economic thought...

 

Keynes, actually preached fiscal responsability during good times, something we never had in the last decades.

 

Austrian economics advocate free market for everyone, including the well connected, use of sound money and full-reserve banking system.

 

What we had with Reagan and Thatcher (and everyone after them) was/is free market for the masses and endless bailout/protection for the elite financed by endless amout of fiat paper from the CB.

 

In few words, what we have is an hybrid monster....

 

 

Fri, 06/04/2010 - 16:46 | Link to Comment trav7777
trav7777's picture

Economists don't know about this:

bauxite (peaking in 1943), copper (1998), iron ore (1951), magnesium (1966), phosphate rock (1980), potash (1967), rare earth metals (1984), tin (1945), titanium (1964), and zinc (1969). [USGS].  Oil, 1970.

These are the peak supply dates in the US for various things.  According to economists, higher prices should have reversed this.  Yet here we are...

Lower interest rates should also make water flow uphill.

Fri, 06/04/2010 - 18:18 | Link to Comment Anarchist
Anarchist's picture

Supply and demand generally works. The sad fiscal state of many countries selling commodities can distort things however. Most have no choice but to sell no matter what prices drop to. Russia can only pay it's bills if oil and gas prices are high. They play a cynical game with Iran. It is in the interest of the Russians if Iranian oil and gas are kept off the market. The British kept most Iraqi oil off the market for over 20 years to keep prices high.

The US stopped mining rare earths years ago due to a pricing collapse caused by the Chinese and others. We have been living off ore mined many years ago. The US government is now backing loans to reopen the mines. It will be a financial loss for the taxpayer since you cannot mine and process these rare earths and meet EPA rules unless the prices skyrocket. In the case of China, it is being forced to reign in "bootleg" miners of minerals and rare earths. Many of these miners are causing ecological havoc on a biblical scale and leaving the mess to the government to clean up. The Chinese want prices to go up so they can use more expensive methods to cause less environmental havoc. To do this they will hoard rare earths and force bootleg miners out of business.

Fri, 06/04/2010 - 18:43 | Link to Comment bam34
bam34's picture

Well, I can't say that I disagree with Bob for the most part. But I have to wonder about his opinions regarding Reagan and Thatcher. The national debt began to skyrocket under Reagan and continues to this day. Reagan instituted a policy of ignoring anti-monopoly laws that continues to this day. And that is just a couple of examples. I once thought Reagan was a good enough president but I have done some serious reading regarding Reagan and it turns out that Reagan was a member of the club (guess how many ZH readers are not members of that club).

Anyway, I too see trouble on the horizon for years to come. That is why I have done some homework to find someone who can give me an understanding of how to think about this whole mess and hopefully make some bucks from it all. I don't intend becoming a callous profiteer. I just want to preserve what I can and maybe make some extra. So, here is a link http://www.avaresearch.com/index.html to a site where a guy named Mike Stathis writes articles that are intended to help you think about it all. He wrote the book America's Financial Apacolypse which most accurately predicted this whole mess. He is a professional financial adviser and doesn't sell gold, mutual funds, securities or anything but a newsletter. I know you haven't heard of him because like Bob, too many people don't want to hear what he has to say and unlike Bob, he can't get any press. he doesn't pull punches you see. Check him out. I think you may be surprised that there is a guy that good who wants to help you think.

Fri, 06/04/2010 - 19:51 | Link to Comment steve from virginia
steve from virginia's picture

Reagan and Thatcher ... Austrians? Huh?

Volcker ... Austrian?

Volcker held the bag while the bond market 'vigilantes' did the heavy lifting (of nominal and real interest rates). The Reagan/Greenspan response to this? Bloat the finance sector and allow too big to fail banks and insurance companies to form so that fiscal deficits always have a home. The outcome? 2% 10 year rates as far as the eye can see.

Until the curtain falls. More on that later ...

Volcker's forcing banks caught (and bankrupted) during the S. American finance crisis to restructure was his contribution toward financial stability. Austrian? No, just sound banking practice which would be more Bagehotian. Greenspan's approach to a similar set of crises (S.E. Asia and LTCM) was bailouts and ZIRP. Of course, a gigantic finance sector was both the cause and the cure which has given the Western World endless ZIRP as far as the eye can see ... and a private sector capital shortage and a workforce that is at the edge of penury, hollowed- out manufacturing and a dependence upon government interventions. Austrian?

Both Reagan and Thatcher were beneficiaries of deregulation policies (and a large drop in energy demand due to conservation measures) put in place by their predecessors. Reagan declared war on the US working class - and started the process of gutting the US customer class at the same time. UK 'liberalized' by devaluing the pound and selling off assets dirt cheap. How much did the BOE its gold sell for? How about all that North Sea petroleum?

As for Treasury rates; the current smashup of different order derivatives, particularly in non- dollar currencies will cause a (reasonable) flight to quality. Our shit is less smelly than the other countries' shit.

At the same time the ZIRP carry trade between banks and the US Treasury will continue until it cannot. In other words as long as there are institutions able to receive US government deposits the interest rate will fall (on longer issues such as the 10 year) or remain low ... amplified by the flight to quality.

If there was real economic output, there would be demand for capital and short rates would rise. There is little or no real economic output in the vital area of labor purchasing power. Short rates are going to stay very low ... until they cannot for other reasons.

What is happening is a general hardening or revaluing of the dollar which makes it desireable. This dollar preference is seen in declining money multipliers such as the M3 and Fed monetary base charts. (Check M3 on John Williams' excellent Shadow Government Statistics site!) At some point dollar preference will extend to dollars versus dollar- derivatives such as Treasury issues. Those holding Treasuries will attempt to sell them to gain dollars. As there are lots of Treasuries in this world relative to the amount of available cash dollars. The selling will likely become disorderly with Treasury rates catapulting upward.

NOTE: the Fed is already engaged in QE on a massive scale: interest on reserves held at the Fed is a form of QE. Also is the purchasing of Treasury issues by proxies, foreign banks and primary dealers. More QE or larger currency issues are very problematic for the Fed. The oil ministry of Saudi Arabia makes monetary policy in the US. More dollars in circulation means sharply higher fuel prices and an oil price shock.

Also, the Fed might only add currency in context: in periods where liquidity is short and demand is desperate. The arrival of liquidity in panicked markets stuffed with massive overhangs of mortified debt would increase rather than decrease the demand for liquidity. As the holder of this debt - banks - are simply conduits, there would again be disorderly demand for any dollars made available and runs against every form of finance institution would take place. The weak links such as money market funds would be wiped out ... probably instantly.

Note also that any attempt to drive the dollar down by intervention would fail. Look to the Swiss and their recent attempts to drive their currency downward in value by buying euros. Dumb? Certainly not Austrian!

This is the non- Austrian legacy of Reagan and Thatcher along with their distain for energy conservation. The world had a party, drank empty the punch bowl ... welcome to the hangover!

Sat, 06/05/2010 - 11:59 | Link to Comment ozziindaus
ozziindaus's picture

your input is always educational and appreciated as usual. 

Fri, 06/04/2010 - 21:39 | Link to Comment THE DORK OF CORK
THE DORK OF CORK's picture

Is there some whiskey in the cabinet Steve - I need one more shot

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