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Goldman Sees "Disturbing Signs" If Government Does Not Bow Down To Krugman, Reflate Monetary And Fiscal Bubbles

Tyler Durden's picture




 

Last week, Goldman, in a piece unambiguously titled The Second Half Slowdown has Begun, made it all too clear that unless the US government were to succumb to yet another, and another, and another round of drunken sailor spending, the gratuitous ability of its sellside analyst to place crap companies on Conviction Buy lists may suddenly become mysteriously impaired as reality seeps through the gaps, thereby infuriating CEOs of worthless and overlevered widget makers, who know all too well their corporate earnings are about to be taxed through the nose by the Obama crack economic team, as their stock is about to plunge. Today, just in case the threat may have been missed by the cheap seats the first time around, here comes Jan Hatzius with the ominously titled "Disturbing Signs" which reads like Paul Krugman's induction essay into the Useless Economists' Society.

1. Friday’s jobs numbers were disturbing.  At best, they show an economy that is growing only quickly enough to keep the unemployment rate flat near 10%.  At worst, they suggest that the labor market is once again turning down.  Both the manufacturing workweek (the only part of the employment report included in the index of leading indicators) and the employment/population ratio (the broadest job market measure in the household survey) dropped significantly in June.  Given the noise in these series and—in the case of the workweek—the potential for substantial revisions, both fortunately fall short of a clear-cut signal that another labor market downturn has begun.  But we will need to see at least a partial reversal of these declines next month.

2. This comes at a time when the end of the inventory cycle has triggered the inevitable slowdown in the manufacturing sector.  With inventory investment now again close to a normal rate, GDP growth is likely to converge to final demand growth, which has averaged only 1½% since mid-2009 and is unlikely to accelerate given the various headwinds facing the economy.  The resulting slowdown in GDP growth is likely to be concentrated in the goods-producing sector, which previously received the largest boost from the inventory cycle.  Hence, further declines in the ISM index following last Thursday’s drop to 56.2 are likely; our GDP forecast implies a decline to around 50 by early 2011.
 
3. The weak labor market implies not only a great deal of hardship for workers, but also a growing risk of deflation.  Although the last couple of core CPI/PCE releases were a bit higher than those earlier in 2010, the trend still seems to be downward and other measures such as wage growth and inflation expectations have been declining.  In particular, the 5-year 5-year forward breakeven inflation rate in the TIPS market has fallen 75bp since April and now stands at 2% for on-the-run securities, the lowest level since mid-2009.

4. Our recently released Global Economics Paper No. 200 entitled “No Rush for the Exit” argues that policymakers should react to the combination of a sluggish recovery and declining inflation with additional policy easing, either via a return to unconventional monetary policy or via further fiscal stimulus.  The obvious counterargument is that monetary and fiscal easing carries long-term costs in the form of, respectively, a risk of a renewed asset bubble and a higher public debt burden.  But our study shows that these costs look far from prohibitive at present.  On the monetary side, US financial markets are nowhere close to bubble territory.  On the fiscal side, it is difficult to argue that the US government has reached the limits of its debt capacity when long-term bond yields are low and falling, and when federal interest payments stand at just 1½% of GDP.  When compared with the risk of a renewed economic downturn and/or a descent into deflation, the cost of additional stimulus seems to be well worth paying.

5. So what is to be done?  On the monetary side, the possibilities include additional purchases of Treasuries and mortgage-backed securities, as well as TALF-like structures—i.e., special purpose vehicles that lend to nonbanks using equity provided by the Treasury and debt provided by the Fed.  Whether these will happen anytime soon is another matter.  Additional purchases of Treasuries and/or MBS mortgages do not yet seem to command a sufficient majority on the FOMC.  This might change if growth and/or inflation ease further.  But even then it is unclear just how effective they would be.  After all, Treasury purchases did not seem to have much impact in 2009, and MBS spreads are already quite compressed, limiting the potential for further narrowing.  A TALF-like structure could be more powerful, but it would need the Treasury’s cooperation and the Fed’s authorization under article 13.3 of the Federal Reserve Act, i.e. the Fed would need to invoke “unusual and exigent circumstances.”  This is a very high hurdle. [TD: please Jan, have you met the criminals who run this country? The "very high hurdle" is about $100,000 per fat, bald and corrupt politician]

6. On the fiscal side, we hope that Congress passes the extension of emergency unemployment insurance, continued aid to state and local governments, and at least a temporary extension of the bulk of the 2001/2003 tax cuts beyond the end of 2010.  If some of the tax cuts are left to expire, then this should be offset by temporary fiscal easing elsewhere.  The point is that a tightening of the overall fiscal stance at a time when the economy is already struggling to maintain the current, unacceptably low level of resource utilization is a bad idea.  In fact, we favor additional deficit-financed stimulus, coupled with a commitment to cut the longer-term deficit more aggressively than currently envisaged in the administration’s 10-year plan.  The consolidation could include cuts in discretionary expenditures, slower growth in entitlement spending, and gradual hikes in both direct and indirect taxes.  The precise mix is a matter of political preferences, and reasonable people can disagree about the pros and cons of different measures.  But the need for long-term budget restraint should not stand in the way of a near-term boost when the economy clearly needs it.

7. A failure to enact additional stimulus—at a minimum, extended unemployment benefits, state fiscal assistance, and extension of the bulk of the 2001/2003 tax cuts—would imply a downside risk to our GDP and employment forecasts, specifically for 2011.  Right now, we are showing a gradual reacceleration to 3% on a Q4/Q4 basis in 2011, but we worry that this might end up being too optimistic.  We will evaluate developments both on the policy front and in the US economic data closely over the next few weeks to see whether any adjustments are warranted.

And what is unsaid: should GDP downside risk materialize, you can kiss all those Buy Rated companies goodbye, as Goldman moves to a conviction sell on everything that moves, thus wiping out about $5 trillion in stock market value. Obama: you have been warned - how will your corporate sponsors feel that for once you did what is in the interest of the people of this country, instead of the 100,000 richest folks, who just happen to pay 80% of all taxes, and proceeded to destroy the bulk of their equity values. Oh yes, and that whole thing about the Fed buying up your debt via the Goldman/JPM-led group of Primary Dealers... you can kiss that goodbye too.

 

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Tue, 07/06/2010 - 20:21 | 455783 Rusty_Shackleford
Rusty_Shackleford's picture

Seems the full court press is on for QE2.0 (?3.0).

Tue, 07/06/2010 - 20:25 | 455791 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

They are locked and loaded....and so am I.

Tue, 07/06/2010 - 20:52 | 455839 Careless Whisper
Careless Whisper's picture

and just to show you they really really care, goldie will wave their fees on all those bonds that will be financing the deficit spending.

Tue, 07/06/2010 - 22:58 | 455996 B9K9
B9K9's picture

Think big, people. If QE X.0 fails to be engaged, the country is going down. (Of course, if QE succeeds in being implemented, the country still fails, but perhaps a bit further out.)

Now, by my estimate, around 50% of the citizens of this great land are just about ready for a reset, and everything that entails.

Once the meme that !QE = !USA reaches a broad audience, people just may vote in November to see & experience such an outcome.

Tue, 07/06/2010 - 23:49 | 456043 Al Huxley
Al Huxley's picture

Next QE will just speed up the failure - negative return on debt now.

Wed, 07/07/2010 - 00:23 | 456065 UncleFester
UncleFester's picture

At least it will finally resemble reality.

Wed, 07/07/2010 - 00:36 | 456078 Kegfreak
Kegfreak's picture

There has to be a velocity to QE.  Every additional round of lube has to do less then the last, and if this is the case, when QE 2 and 3 ease there way in to the economy, the feeling will not be as good as the first time, and we all know that the first QE saved us from the "greatest depression since the Great depression."

Wed, 07/07/2010 - 00:16 | 456058 Assetman
Assetman's picture

If Goldman is pushing QE for public consumption, the jig is in to compress this market.  One more short squeeze and internal GS reposition, and the Fed will wait until the hapless populous is begging for more stimulus.

Of course, the machinations of buying more assets will only help the banking system, and that won't go unnoticed.  Fiscal spending is a tricky issue politically as well.

Make no mistake about this-- while the Treasury is promoting "growth policies" by issuing more debt, they are desperate to keep those new issue coupons as low as possible.  That becomes more difficult to pull of under QE 2.0 and a Europe under the 12-step austerity programme.

Wed, 07/07/2010 - 11:20 | 456628 Gwynplaine (not verified)
Gwynplaine's picture

So the vote in November will be in favor of free spending Democrats?  If the economy deteriorates materially from now to October, that's a big win for the opposition.  The Democrats only hope is to push through an unemployment extension and another Cash for Suckers program.   They have the votes for it, and it will be pushed through - despite the protests of savers and fiscal conservatives.

If it's successful, it's the beginning of your reset.  The Dems will be re-elected by the grateful unemployed.  They can alleviate each downturn by spending and selling debt/QE.   That will deteriorate the value of the dollar, requiring more of the same medicine at each downturn.  Historical inflation cycles took up to 10 years to complete.  This one could happen much faster.

If the unemployment bill is thwarted, the Republicans can win in November by default.  That will leave the country to float until the next big crisis.  The timeline of this second scenario is harder to predict.  

 

Wed, 07/07/2010 - 12:16 | 456712 Assetman
Assetman's picture

So the vote in November will be in favor of free spending Democrats? 

From what corner of the galaxy did you come up with THAT conclusion?

Regardless of what the Democrats give to the "grateful" unemployed, they are toast in November.  Sure, they will do their very best to spin a good story to get re-elected... but did you see the primary results just 6 weeks ago?  Again, this was BEFORE we saw a turn in the leading economic indicators.  There will be very few incumbents re-elected, given the course that was chosen.

The issue in November isn't if the Democrats will lose, it's how much will they lose-- and who they lose to.  I wouldn't be surprised to see a handful of 3rd party candidates actually taking Congressional seats-- especially in the western states.  But a chronic lack of alternative party organization will likely keep the D/R duopoly strongly entrenched for years to come.

Still, an unemployment bill ain't going to do squat for the Dems, I'm afraid.  If the Dems had done some real thinking and addressed the country's structural problems in the 1st stimulus package, we might be telling a different story.  I doubt it, though, because we still let Uncle Ben waste $2 trillion trying to save a banking system not worth saving. 

Tue, 07/06/2010 - 21:33 | 455896 SDRII
SDRII's picture

That should be good for a nother $25 takedown in Au. QE 2.0 appetizer: AIG plane leasing unit talking about buying more planes today just in time to boost fledgling durables per Bloomberg article today (because of course they want to leverage their cost of capital advantage)...laugh or cry

Tue, 07/06/2010 - 21:41 | 455903 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

If these fools think they can play the PM market the way they always have during this capitulation, they better be careful.  I could definitely see gold making unpredictable moves to the upside while they try to game it.  The biggest mistakes are always made by those who are over confident, and GS and Co look way over confident right now.  PMs will not be bullied much longer, I know it.

Wed, 07/07/2010 - 00:40 | 456084 Kegfreak
Kegfreak's picture

If they could just bully them sub $1000.00, I would for once be grateful.  I'm more of a silver bug though so I will take $15 and below to totally blow my saved rounds.

Tue, 07/06/2010 - 21:03 | 455844 Scooby Dooby Doo
Scooby Dooby Doo's picture

Obama is being schooled by the Hebrew Mafia. Do what you're told and things will run smooth for you.

Resist and every media outlet in this country will eat you alive.

Iran?

Did you see a media image of Obama and Benjamin Netanyahoo today? Reassuring everyone of their chumminess?

Tue, 07/06/2010 - 21:11 | 455859 MountainHawk
MountainHawk's picture

NPR this morning did a piece on Isreal's economy. They were untouched by the financial crisis. They came out much stronger.

Tue, 07/06/2010 - 21:44 | 455908 Scooby Dooby Doo
Scooby Dooby Doo's picture

A bill sponsored by Lieberman was passed in Oct 2008 and approved by a non contested silent head nod vote.

The bill gave $265 Billion to israel and an apology for causing any type of apocalyptic impression that the US would not be sending more free money in the future.

Brought to you by your friends at AIPAC.

Tue, 07/06/2010 - 22:07 | 455937 pan-the-ist
pan-the-ist's picture

NPR is the mouthpiece of the "Hebrew Mafia."

Tue, 07/06/2010 - 22:59 | 455998 TuesdayBen
TuesdayBen's picture

NPR is in the business of generating Leftist propaganda.

Wed, 07/07/2010 - 00:42 | 456086 Kegfreak
Kegfreak's picture

They have quality gardening programing, not something you find where competition is involved!

Wed, 07/07/2010 - 03:42 | 456174 jeff montanye
jeff montanye's picture

not when viewed from palestine, in most cases.

Tue, 07/06/2010 - 21:18 | 455867 NOTW777
NOTW777's picture

obamas overtures to israel were as reassuring as his promise not to prosecute the CIA, shortly before he, prosecuted the CIA

Wed, 07/07/2010 - 03:44 | 456177 jeff montanye
jeff montanye's picture

details?  who, other than whistle blowers, has he prosecuted at security agencies?

Tue, 07/06/2010 - 21:50 | 455919 RockyRacoon
RockyRacoon's picture

You'll excuse me for saying so (maybe) but you seem to be a one-trick pony.

One guess as to what that trick is.

Tue, 07/06/2010 - 22:10 | 455942 Scooby Dooby Doo
Tue, 07/06/2010 - 22:06 | 455934 zevulon
zevulon's picture

lets face it, this is all the jews fault. rich non-jews are responsible and non greedy, all rich jews comprise all greedy influential persons out there. they control everything.

Wed, 07/07/2010 - 02:42 | 456163 dogbreath
dogbreath's picture

Samizdat; 200 years together. 

 

What do you think?

 

http://firstword.us/solzhenitsyn-200-years-together/

Tue, 07/06/2010 - 22:08 | 455938 Al Huxley
Al Huxley's picture

Full court press for QE2 is like having a full court press on the Titanic to crank the engines after the iceberg ripped a hole in the hull.  All that will happen is we'll sink faster.

Tue, 07/06/2010 - 23:21 | 456024 Rusty_Shackleford
Rusty_Shackleford's picture

Check out this corpse that CNBC trotted out to sell QE2 today.

It reminded me of Weekend at Bernie's.

 

http://www.cnbc.com/id/15840232?video=1538569699&play=1

Tue, 07/06/2010 - 23:53 | 456047 Al Huxley
Al Huxley's picture

I'd really like all these guys to come back and justify their actions and recommendations when the US finally gets its credit pulled.

Wed, 07/07/2010 - 04:19 | 456184 Sudden Debt
Sudden Debt's picture

The boilers of the Titanic where one of the first rooms to be flooded. The only thing keeping the lights on where the bateries untill they also where under water. That caused the lights to go out, but never the less, even the bateries wouldn't have taken much longuer as the powersource was already long gone.

Like now, the lights are still burning but the engines of our economie are under water already a long time ago. Long live the battery!

Tue, 07/06/2010 - 20:21 | 455785 lawton
lawton's picture

Anything to keep those billions in bonuses rolling in...

Tue, 07/06/2010 - 20:29 | 455800 King_of_simpletons
King_of_simpletons's picture

Let's admit it. QE2.0 is going to happen. The HFTs have to stay employed. Satans minions must be paid the billion dollar bonuses.

Tue, 07/06/2010 - 21:46 | 455913 TexasAggie
TexasAggie's picture

I and many other members of the armed forces take umbridge with teh term "drunken sailor" or "drunken soldier", or "drunken airman." They don't spend money they don't have. They may borrow a little from their mates, but they pay it back at the next payday.

Let's use the correct terminology, "Like a drunken congress critter, because they don't know where they are, where they're going, or how to get there."

 

Wed, 07/07/2010 - 00:48 | 456093 Kegfreak
Kegfreak's picture

I prefer drunken Marine personally!  When I joined, I wanted to drink, fight, and get tattoos.  Fighting is bad apparently, no tattoos that show in a short sleeve shirt, and drinking is frowned on now.  That's why I got out.  Also, drunken airmen do not exist, they sip drinks with their pinky sticking out.

Wed, 07/07/2010 - 07:58 | 456254 SecretGoldfish
SecretGoldfish's picture

drunken paratrooper?  i can testify to that label being accurate more often than not.  there wasn't a single 'social drinker' in the company i can remember.  there was oliphant, who didn't drink a drop, and then EVERYONE else.

and i remember most guys being broke a week before payday in my platoon.

ah, good times. 

Tue, 07/06/2010 - 20:23 | 455789 bugs_
bugs_'s picture

Could Goldman be right this time?

Tue, 07/06/2010 - 20:25 | 455790 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

He who convincingly does G-d's work is always right!  Duh.....

Tue, 07/06/2010 - 20:33 | 455809 Eternal Student
Eternal Student's picture

Not a chance. The only thing QE 2 will do is to kick the can down the road, at best.

The alternative is, to them, unthinkable. Unfortunately at this point, it is also unavoidable, QE or not. It's all just a matter of time now.

 

Tue, 07/06/2010 - 20:57 | 455845 Careless Whisper
Careless Whisper's picture

@bugs

wake up you fukin moron. goldman doesn't give a shit about anything but it's profits, and if it can wreck the u.s. economy while making profits on those newly issued bonds -- icing on the cake.

Tue, 07/06/2010 - 22:14 | 455949 pan-the-ist
pan-the-ist's picture

I've said it before, the public is cold and sour on QE, so it will not happen overtly.  Even the uninformed knuckle draggers I know (AKA the Goy) know that giving more money to wall street is a bad thing. The government cannot do QE 2 in a pallitable way and keep their jobs.

Tue, 07/06/2010 - 22:48 | 455986 Careless Whisper
Careless Whisper's picture

and a zei gesund to that

Wed, 07/07/2010 - 00:54 | 456107 Kegfreak
Kegfreak's picture

and congress is constitutionaly bound to pass a budget.  Whats your point?  The new Iphone is fucked up, didn't you read?  Lindsay Lohan is going to jail, and we will support Isreal's bombing of Iran and "need" the money to contain those evil Persians.  QE 2?  What the hell is a couple trillion when the fate of the free world is on the line?

Wed, 07/07/2010 - 04:53 | 456197 Pondmaster
Pondmaster's picture

I find the Jew bashing and Gentile ( Goy?) bashing amusing on this blog . Absolutely amazing . Do you hear yourself ? Funny though , the Goy are the Head , and Jews are still the tail . To provoke to jealousy . Knuckle draggers indeed !   

Wed, 07/07/2010 - 05:22 | 456200 nmewn
nmewn's picture

Maybe, like Goldman, they think they're doing God's work ;-)

Tue, 07/06/2010 - 20:25 | 455792 Fritz
Fritz's picture

It seems like only yesterday that Goldman's in-house narcoleptic head of strategy was publishing a weekly memo promising S&P 1300.

 

Tue, 07/06/2010 - 21:55 | 455927 jdrose1985
jdrose1985's picture

+1

Tue, 07/06/2010 - 22:25 | 455960 AccreditedEYE
AccreditedEYE's picture

Seriously. It's like one tentacle doesn't know what the other is doing... their reputation as master of the universe continues to get tarnished by their own. I love it.

Tue, 07/06/2010 - 20:27 | 455794 Reese Bobby
Reese Bobby's picture

This is at least a triple switch by The Squid.  My worker bee head is spinning.  Help me Lloyd!

 

Serious comment...this crap will deliver a chance to get into hard assets (gold) at nice prices.  As ZH readers know...

Tue, 07/06/2010 - 20:27 | 455796 kennard
kennard's picture

The only reason that Congress and the Executive won't do what Jan Hatzius suggests is that it is not in their short-term interests: (1) the "stimulus" will not be felt prior to the November elections, and (2) the voters are watching them. The best interests of the country are not a consideration.

Tue, 07/06/2010 - 20:36 | 455814 Sancho Ponzi
Sancho Ponzi's picture

...unless the 'stimulus' winds up being a 5-10k check sent to each and every taxpayer. 

When you can no longer keep your House or Senate seat by means of graft, bribe your constituency.

Tue, 07/06/2010 - 21:31 | 455893 kennard
kennard's picture

... with their own money.

Wed, 07/07/2010 - 09:47 | 456406 MayIMommaDogFac...
MayIMommaDogFace2theBananaPatch's picture

Or their neighbor's....

Tue, 07/06/2010 - 22:14 | 455952 Let them all fail
Let them all fail's picture

nothing like forcing loans upon people to get people spending

Wed, 07/07/2010 - 07:36 | 456244 The Merchant of...
The Merchant of Venice's picture

That won't work.  Obama would be thrown out of office if he signed a Pelosi bill that gave away money.

Sure, some Americans will love the idea, but the majority will scoff.

Tue, 07/06/2010 - 20:27 | 455798 Hedge Jobs
Hedge Jobs's picture

with GS firmly in charge of treasury, the fed and congress expect this last pathetic attempt of grasping at straws to become policy any day now. 

Tue, 07/06/2010 - 22:34 | 455969 living on the edge
living on the edge's picture

They will indeed pass another stimulus package. Desperate people do desperate things. Time is growing short for these nefarious bastards irrespective of any new stimulus policies put forth.  

Tue, 07/06/2010 - 20:29 | 455801 Apostate
Apostate's picture

The squid needs more blood...

Tue, 07/06/2010 - 20:30 | 455802 sangell
sangell's picture

Article 13.3 seems like the 'new normal' as well. The permanent 'emergency' . Time to assemble the Reichst.. er Congress to pass an 'Enabling Act' to allow for rule by Executive Order.

Tue, 07/06/2010 - 21:36 | 455858 Rusty_Shackleford
Rusty_Shackleford's picture

Why not.  We've already got our own "Nacht und Nebel Decree".

http://www.youtube.com/watch?v=5qzs-57av0s

Wed, 07/07/2010 - 04:03 | 456179 jeff montanye
jeff montanye's picture

thank you for the reference.  the actual night and fog seems pioneered by w.  the assassination program highlighted on your link and proudly defended by the clintonite panetta (first typed "padilla", talk about your freudian slips) is unambiguously obama's. 

Tue, 07/06/2010 - 20:30 | 455803 DavidC
DavidC's picture

Is that a threat...?

DavidC

Tue, 07/06/2010 - 20:31 | 455804 B9K9
B9K9's picture

Blah, blah, blah. Tyler, the value proposition of front-running blogs is beginning to transition away from pure information sources and towards community management portals:

http://www.collapsenet.com

http://theautomaticearth.blogspot.com/

One of the things we will add to that new home is a Preparation section, which has still to crystallize out in its full shape and form. Stoneleigh is working hard on that.

These two sites, while excellent resources, tend to cater to socialist hippies. You've got a nice thing going here with an excellent user base that I would characterize as crypto-anarchist-capitalist. The era of talk is nearing its end - things are going to start becoming, shall we say, "hot"?

No reason to let an opportunity to fill this gap walk away.

Tue, 07/06/2010 - 20:44 | 455828 Apostate
Apostate's picture

Anarcho-capitalism is default human behavior. Only criminals, politicians, thugs, and frauds are statist by action. Beliefs are largely irrelevant; behavior is everything.

If you want to organize people towards some purpose, then take a leadership role. Mr. Durden is already busy enough. 

Wed, 07/07/2010 - 00:29 | 456070 UncleFester
UncleFester's picture

Beliefs are everything, behavior is dictated by belief.  "The body cannot live without the mind."

Tue, 07/06/2010 - 21:19 | 455870 DocLogo
DocLogo's picture

I like LATOC

Wed, 07/07/2010 - 00:32 | 456074 Assetman
Assetman's picture

I agree with Apostate for the most part on this issue.

You have an interesting suggestion, B9K9, but community management and/or political activism isn't Tyler's domain.  Nor should we force that upon him (them).

Perhaps you should take up Apostate's suggestion of taking this opportunity upon yourself and affiliate your crypto-anarchist-capitalist platform with ZH news content.  I'm sure there would be others who would support your leadership.

Tue, 07/06/2010 - 20:32 | 455805 SMG
SMG's picture

The Illuminati are going to try and force us into where they want us to go.  It's really blackmail on a global scale.  Do what we want or suffer.

 

They need to be replaced.  

 

After that it's going to require radical and unconventional thinking to overcome this.

 

There's still time to stop it, I pray everyday we wake up and overcome this.

 

Tue, 07/06/2010 - 22:13 | 455947 walküre
walküre's picture

The forces that fill the void after a revolution aren't typically any better for the "small guy" (lol) than the ruling elite before them. Read and understand the French and Russian revolutions.

Wed, 07/07/2010 - 01:03 | 456115 Kegfreak
Kegfreak's picture

+1

 

the Russian revolution could have turned out a bit different if the Bolsheviks weren't funded by J.P Morgan and crew however.  Check out the Red Cross mission to Russia during that time.

Tue, 07/06/2010 - 23:13 | 456016 Bow Tie
Bow Tie's picture

"After that it's going to require radical and unconventional thinking to overcome this."

or just some common sense for a change.

Tue, 07/06/2010 - 20:34 | 455811 Prof Gulliver
Prof Gulliver's picture

Geez, why don't we just let GS print money with full-faith Treasury backing and get it over with already. They're going to end up with most of QE anyway. Lloyd can be on the $20, Old Man Goldman can be on the $100, and Hank Paulson on the $1. Just sub out the one-eye pyramid for a one-eye squid.

Tue, 07/06/2010 - 20:44 | 455829 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

Monie with the number 2 is reserved for people they don't like.  Ever wonder why it is Jackson and Jefferson?  It represents the double cross, or whatever their slackjawed logic is.

Tue, 07/06/2010 - 21:21 | 455876 DocLogo
DocLogo's picture

Seriously, I always did see it as an insult that they put the faces of the people who were against paper on the bills

Tue, 07/06/2010 - 20:41 | 455813 suldog
suldog's picture

After the -6% B-slap GS delivered to BHO on Inauguration Day ("hey, annointed, lookee who's in charge here"), they slithered the S&P up to key moving averages to coincide with Geithner's announcement of his "plan" to bail out the banks ... which consisted of zero specifics other than he wanted to hire some consultants then run ideas before a Congressional committee.  That day ended with a -6% beat-down and -2 or -3% virtually daily for three weeks until ... Geithner announced the bail out.  The bail out would consist of, among many other bribes, fed funds rate $$ for the hedgies to buy MBS garbage (which of course would have gov't backed downside protection), and QE-orama.   Expect nothing less this time.  The widows diving out of stocks and into 0% savings accounts are no consideration.

Tue, 07/06/2010 - 20:47 | 455835 traderjoe
traderjoe's picture

+1

Tue, 07/06/2010 - 20:36 | 455815 drbill
drbill's picture

Isn't putting "Paul Krugman" and "useless economist" in the same sentence redundant?

Tue, 07/06/2010 - 21:22 | 455878 DocLogo
DocLogo's picture

same goes for useless and economist

Wed, 07/07/2010 - 01:10 | 456119 Kegfreak
Kegfreak's picture

Offense taken, some of us work in the real world!  I don't have a Ph.D though, so I'm not totally lost.

 

 

Tue, 07/06/2010 - 23:17 | 456020 Bow Tie
Bow Tie's picture

double negative makes a.......nobel prize.

barry obama    vicious warmonger

Tue, 07/06/2010 - 20:36 | 455816 Wheatman
Wheatman's picture

Jan is another drug smoking moron with her snout firmly planted in the trough. When will this moronic expansionary idiocy come to an end. Goldman idiots and criminals. Get a life.

Tue, 07/06/2010 - 20:40 | 455820 gigeze787
gigeze787's picture

Expect Fed to resume buying MBS by October (i.e. just in time to boost Obama/Dems going into elections). PIMCO's Bill Gross hinted at this early last spring just before the Fed stopped buying MBS on mar 31.

Wall Street wants whichever party will feed the beast with the proletariat's grandchildren's money. With Republicans starting to at least sound like fiscal conservatives (instead of just corporate crony fascists), the Dems are more likely to play Keynesian ball with GS and JPM.

Wed, 07/07/2010 - 00:38 | 456082 Assetman
Assetman's picture

Unless we have another grand financial crisis, QE 2.0 won't happen until after November elections-- too much of the electorate has figured out it only benefits of the banking at the (eventual) expense of the taxpayer.

If they want to start QE over again, they will need to scare the ever loving crap out of Joe Sixpack.

Sadly enough, they can do nothing for awhile-- and achieve that objective.

Wed, 07/07/2010 - 07:42 | 456249 The Merchant of...
The Merchant of Venice's picture

That won't work.

Adding to the Fed's balance sheet isn't go to steer the ship back into friendly waters.

TThe Pelosi Congress is over.

Good luck to Obama as he tries to engineer a derivative domino to fall.

Tue, 07/06/2010 - 20:54 | 455823 Astute Investor
Astute Investor's picture

"On the fiscal side, it is difficult to argue that the U.S. government has reached the limits of its debt capacity when long-term bond yields are low and falling, and when federal interest payments stand at just 1 1/2% of GDP."

The reason the universe is bankrupt is principally due to this type of moronic thinking.  People, corporations, governments, etc. need to stop thinking "affordability" is based on the ability to "make the payments".  This strategy is particularly ludicrous in an environment of artifically low interest rates and predicated on asset values continuing to increase.  It was a death sentence to subprime borrowers (and their lenders) and sovereigns are soon to follow.  Let's try looking at the size of the obligation assumed by the borrower when determining solvency and the likelihood of future repayment.  

Tue, 07/06/2010 - 20:56 | 455842 ewmayer
ewmayer's picture

@Astute:

 

My thoughts exactly - Krugman also loves to think only in terms of making the monthly nut, using artificially low rates based on flight-to-safety and QE.

 

To Krugman and the rest of the Keynesian debt-bubbleheads, life is a neverending series of refinanceable teaser-rate ARMs ... actually ever paying down the principal isn't even part of their thinking. "We can do that later, once the economy is ship-shape". [As if it ever happens], or "We can always outgrow the debt".

Tue, 07/06/2010 - 21:19 | 455869 Muir
Muir's picture

Dave Kujan: Do you believe in him, Verbal?

Tue, 07/06/2010 - 20:43 | 455825 traderjoe
traderjoe's picture

Zandi, Krugman, GS. Have to think that some of this is actually going to come to pass. From God's lips?

1. "Given the noise in these series and—in the case of the workweek—the potential for substantial revisions" - I do hate it when people talk about the establishment survey without mentioning the B/D model. 

2. "GDP growth is likely to converge to final demand growth, which has averaged only 1½% since mid-2009 and is unlikely to accelerate given the various headwinds facing the economy." - How do they reconcile this with their current prediction of a "re-acceleration to 3%" by 2011? What's the driver? I think this economy has an escape velocity - either it grows to pay off debts (not going to happen), or it gets crushed under the weight of defaults. See the home delinquency numbers today? I don't personally think 1% growth is possible. It's binary - up or down. 

3. "But our study shows that these costs look far from prohibitive at present." - Is this one of those GS proprietary studies (that really is just like licking your finger in the wind)?

4. "The precise mix is a matter of political preferences, and reasonable people can disagree about the pros and cons of different measures." - This is the part of stimulus, QE, etc. that really chaps my a**. The government chooses the winners and losers, thereby creating mis-allocations in the economy. But, as ZH frequently refers, if I had GS's access, of course I'd be all for it. 

5. "On the monetary side, US financial markets are nowhere close to bubble territory." - What, you just know it when you see it? Need to dump your CRE, MBS, etc. book pronto? Insert damning GS e-mail quote here. 

Wed, 07/07/2010 - 07:05 | 456230 Ned Zeppelin
Ned Zeppelin's picture

"What's the driver?"

A simple, but very important question that folks like Leo (not to pick on him, but he keeps calling for a resumption of jobs growth) fail to answer.  The answer, unfortunately, is that there is none. Slogging, slow organic growth over time. Lots of time. But nothing like 3% for the foreseeable future. DO that math, and you're in deep doo doo, and the prescription for a long deflationary period has been filled, fueled by slow growth and debt defaults.

I agree this is orchestrated politically to time stimulus for the November elections.  Not so sure this will result in QE 2.0 right now, but to me the actions of the Fed are viewed by many as "disconnected" from the Executive Office and thus QE2.0 is a political freebie. The hard stuff is passing more jobs programs.  But as this New Depression deepens, the chorus will grow.

Tue, 07/06/2010 - 20:43 | 455826 FranSix
FranSix's picture

THAR SHE BLOWS!!

 

Negative signs on rates at the short end of the curve, and flattening of the yield curve.

 

http://www.bloomberg.com/markets/rates-bonds/government-bonds/us/

Tue, 07/06/2010 - 20:44 | 455827 Nolsgrad
Nolsgrad's picture

wow, just wow Tyler.

 

Oh yes, and that whole thing about the Fed buying up your debt via the Goldman/JPM-led group of Primary Dealers... you can kiss that goodbye too

Tue, 07/06/2010 - 20:46 | 455831 Darth Vader
Darth Vader's picture

Seems like the backroom talks failed and a little argy bargy in the media might convince those stubborn pollies.  What are they thinking, not listening to the bankers.  They're not paid to think.

Tue, 07/06/2010 - 20:47 | 455833 buzzsaw99
buzzsaw99's picture

Stimulate me bitchez!

Tue, 07/06/2010 - 20:51 | 455838 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

Fear mongering, bitchez!

Wed, 07/07/2010 - 10:05 | 456450 MayIMommaDogFac...
MayIMommaDogFace2theBananaPatch's picture

Can I invest in that?

Tue, 07/06/2010 - 20:51 | 455837 ewmayer
ewmayer's picture

@Wheatman: Um, this Jan is a he [or more fittingly, "dieser Jan ist ein er".] First name pronounced like his cycling countryman, Jan Ullrich.

 

You must be thinking of Yves Smith, another name-confused gender-bender who frequently appears in economics blogs. ;)

Tue, 07/06/2010 - 20:58 | 455843 plocequ1
plocequ1's picture

Wont this add to the deficit? Let them do what they haveto do. I dont give a fuck anymore. Let the raping of my $320.00 paycheck begin. As far as grandkids, Fuckem. I have no kids. Just me, My cat and Thou. Bring it on Bitches. Praise Bernanke.....

Tue, 07/06/2010 - 20:58 | 455846 SWRichmond
SWRichmond's picture

Somebody tell Goldman for me that I see some disturbing signs, too. 

Wed, 07/07/2010 - 09:28 | 456362 OpenEyes
OpenEyes's picture

+1 Quadrillion

Tue, 07/06/2010 - 21:01 | 455850 Internet Tough Guy
Internet Tough Guy's picture

Gonzo monetarism.

Raoul Duke: [narrating] We were somewhere around Barstow, on the edge of the desert, when the Keynesian drugs began to take hold. 

Tue, 07/06/2010 - 21:11 | 455860 Shameful
Shameful's picture

That is amazing!

Krugman:  We can't stop spending now!  We're in bat country!

I would fork over some fun bux to watch a monetarist retelling of Fear and Loathing in Los Vegas...

Tue, 07/06/2010 - 21:31 | 455892 Apostate
Apostate's picture

So now, less than five years later, you can go up on a steep hill in Washington D.C. and look North, and with the right kind of eyes you can almost see the high-dollar mark — that place where the liquidity wave finally broke and rolled back, leaving nothing but oil-soaked bankers behind.

Tue, 07/06/2010 - 22:23 | 455958 pan-the-ist
pan-the-ist's picture

I'm not convinced coke heads would be as entertaining as mescaline users, but I'd be willing to proof read a script.

Wed, 07/07/2010 - 10:09 | 456464 MayIMommaDogFac...
MayIMommaDogFace2theBananaPatch's picture

The good Doctor and his lawyer were not exactly PICKY about their substances...You know, like DRUG OF CHOICE == MORE...

Tue, 07/06/2010 - 21:29 | 455890 Rusty Shorts
Tue, 07/06/2010 - 21:03 | 455851 bada boom
bada boom's picture

Lets see, what will happen to goldman's profits if QEx doesn't come?

So, if we don't create more funny money, the keg with run dry.

Tue, 07/06/2010 - 21:58 | 455930 Implicit simplicit
Implicit simplicit's picture

True that. they're lookin for a little of the hair off the dog that bit them so they can avoid withdrawal. The GS stimulus  junkies would ripp off their own mother for another hit.

Wed, 07/07/2010 - 00:54 | 456108 Assetman
Assetman's picture

Aren't these the same Goldman guys that ended up making a crapload from the collapse of AIG, Lehman, and others?

They talk a good QE book, but these squid-like vultures are likely ready to pounce on the entrails of deflation's next victims. 

Having an GS economist express his personal Keynesian wet dreams provides for an effective diversion before the eventual collapse.

Tue, 07/06/2010 - 21:05 | 455852 Muir
Muir's picture

-

 

Goldman Sees "Disturbing Signs" If Government Does Not Bow Down To Krugman, Reflate Monetary And Fiscal Bubbles

 

And now for your viewing pleasure.
The Mistress of the Macabre. The
Epitome of Evil. The most sinister
woman to dance on the face of the
earth. Lowly dogs, get on your
knees, bow your heads and worship
at the feet of SANTANICO
PANDEMONIUM!

Tue, 07/06/2010 - 21:31 | 455863 John McCloy
John McCloy's picture

The wheels have been set in motion. The chess pieces have been arranged. The media rhetoric for QE2 has been set in place.

We have "Nobel Laureate Princeton Super Economist Extraordinaire" Paul Krugman out a week ago saying we are entering another depression.

We have Krugman (Who is supposed to be perceived as the authority on economics because of a prize placed upon him by those who capitalize off his furthering of their needed interests) claiming how imperative it is for an incredibly indebted nation spend money it literally does not have in order to jump start their lackluster capability of thieving form productivity since none remains. He walked out with the White House & Fed talking points in order to give the false credence to this theology of spend spend spend which has still never manifested itself into anything productive because that is how they operate. The use their media captures and political captures and the administration can always turn and say "our nobel prize economist" stated we needed this to avoid a depression. You do not want to go hungry do you America?

   So the cogs and wheels turn and once again banks and owners of assets become reliant upon their modern slaves the American and now global middle class to chip in to bear all the burden and reap none of the benefits aside from inflated costs in order for their lifestyle to be maintained. They can achieve this because they use their wealth and influence to offer prominent figures their pieces of silver if they just align.

   It is the most disgraceful show of contempt for humanity I have ever seen.Not a one of these indivuals even understand Rawls "Veil of ignorance" because they are short sighted and consider themselves and their offspring entitled since it is the burden of the middle class and not themselves. It is a game. A financial war waged with suits and pens and money and influence as opposed to feared uniforms and flags and frightening weapons.

  They use their modern day weapons of war and threats of mass destruction because history has taught us blatant threats and acts of aggression are easily spotted but this is no different to us. The stage now is crisis hour. We have a rising political party attempting to return to their roots of which this nation is founded in the constitution being labeled racists with every media tool in their quiver and it is not stemming the tide.

    We have outright calls for Fed intervention and politicians shedding their masks in full daylight in order to show their allegiance and we are seeing a Normandy invasion of epic proportions being fought by the elite in full light to preserve their political power hence the ramp ups of important coverage like Lohans 90 day sentence, American idol and FALSE FALSE ASSERTIONS BY THE MEDIA THAT WALL STREET IS FIGHTING BACK AGAINST THE DEMOCRATS BY  NOT DONATING FUNDS.

  This is all orchestrated from the top down. And let me say this. History shows this tyranny has never succeeded for long and even guised modern day tyranny will be revealed eventually. I know I am not the only one but if you think I have any intentions of letting you steal from my children that are the result of trial and tribulations of my past generations so that you can invent a modern day caste system on our land which was founded to prevent precisely what is occuring than you have another thing coming.

“Gentlemen, I have had men watching you for a long time, and I am convinced that you have used the funds of the bank to speculate in the breadstuffs of the country. When you won, you divided the profits amongst you, and when you lost, you charged it to the bank. You tell me that if I take the deposits from the bank and annul its charter, I shall ruin ten thousand families. That may be true, gentlemen, but that is your sin! Should I let you go on, you will ruin fifty thousand families, and that would be my sin! You are a den of vipers and thieves. I intend to rout you out, and by the eternal God, I will rout you out.”

-Andrew Jackson

Also a fellow Irishman.

And let me close with this Mr.Krugman. All of my Economics teachings have been based on your texts and let me tell you sir "You are a fucking idiot and get a real job"

And if you have any difficulties understand the fundamentals of math go down the hall and speak to fellow Princetonite John Nash and he will prove to you 2+2 does not = 28.


Tue, 07/06/2010 - 21:32 | 455895 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

What I find interesting about this whole Kkkrugman thing is that his Nobel acceptance speech stated that "Firms" were about to take control of the world-"What is old will be new again", refering duirectly to "merchants".  And so now he wants Sovereign Nations to continue to listen to his advice, when he has already told them they will loose out in the end?!  Unbelievable! 

Tue, 07/06/2010 - 21:51 | 455921 Apostate
Apostate's picture

If your words were bomblets, the Federal Reserve building would be a scorched dust pile by now. 

Nice rant.

Tue, 07/06/2010 - 23:18 | 456019 Village Idiot
Village Idiot's picture

+1.  I could have said, "couldn't say it better myself," but I couldn't have even said it to begin with.  Thanks for putting it into words for me.

Tue, 07/06/2010 - 23:07 | 456007 kridkrid
kridkrid's picture

Nice work.  I have shared it with friends.

Wed, 07/07/2010 - 06:24 | 456213 BurritoGas
BurritoGas's picture

My First Post..

I'm sitting here at 3:02AM Pacific Time, feeling hunger pangs and effects of drinking too much coffee earlier on in the day so I will try outmost to make sense.

About two hours ago, I began reading your post, but due to a short attention span (I'm Young) I had to stop and decided to do other things among which were watching movies on youtube which led to JFK speeches leading to lastly Louis McFadden's speech regarding the Federal Reserve.

I know this might sound awkward, but after closing all those tabs and coming back to this page having read the whole speech given by Mr.McFadden(link below) I somehow decided to look over your avatar and for a second I got the feeling that you might be a reincarnation of Thomas Jefferson. Then I started to think looking at my wide screen monitor on how I would explain to Mr.Jefferson the technology that is the Personal Computer and the condition of this country.

I take great joy in reading your responses to posts (among others) because they are something that strike me as the truth (and right now I'm 99% convinced you are Thomas Jefferson -it just might be the coffee overload I'm experiencing).

Mr.Mcloy I would like to thank you for your insightful posts, and perhaps you should think of starting a blog with your entries so that I might find it easy to follow your writings outside this website, and also so that it is easier for me to spread them around to my friends and family. It would serve as a backup to your writings on Zero Hedge in case they are unavailable in the future for whatever reason.

As well, I would like to bring to your attention Damon Vrabel. He is a great man, and he made a series of videos explaining monetary policy, and geo political events that are shaped by that policy in great detail. You may view the videos here on the second link below.

Thanks again, and keep those essays coming (Mr. Jefferson 21st Century Edition )

http://www.modernhistoryproject.org/mhp/ArticleDisplay.php?Article=McFad...

http://www.csper.org/renaissance-20.html

Tue, 07/06/2010 - 21:19 | 455871 docj
docj's picture

Doing God's work is evidently pretty freaking expensive.

For us, not Goldman, of course.

The lunatics are obviously running this asylum.

Tue, 07/06/2010 - 21:28 | 455886 DocLogo
DocLogo's picture

Why does god always need more money?

Tue, 07/06/2010 - 21:34 | 455897 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

Maybe God uses paper monie as a fuel source so to keep the furnaces in hell stoked.

Tue, 07/06/2010 - 23:15 | 456018 TuesdayBen
TuesdayBen's picture

My understanding is that God transfers fiat to Satan in exchange for molten PMs.

Tue, 07/06/2010 - 23:08 | 456010 Mactheknife
Mactheknife's picture

>Doing God's work is evidently pretty freaking expensive.

Noticed that did ya. Best laugh I've had this week.

Tue, 07/06/2010 - 21:21 | 455874 Muir
Muir's picture

-

 

" History shows this tyranny has never succeeded for long...."

 

I beg to differ, my good Sir.

Tue, 07/06/2010 - 22:02 | 455931 RockyRacoon
RockyRacoon's picture

When one is god, time is irrelevant, eh?

Tue, 07/06/2010 - 21:23 | 455879 Veeken
Veeken's picture

binarized sabre-rattling par excellence...now pass me a 9 handle on the Spus to make things crystal clear.

Tue, 07/06/2010 - 21:29 | 455889 Xibalba
Xibalba's picture

"Democracy is the precursor to Socialism." - a wise man.

Tue, 07/06/2010 - 21:45 | 455911 Xibalba
Xibalba's picture

"Workers of the world unite; you have nothing to lose but your chains."

"The rich will do anything for the poor but get off their backs."

"The oppressed are allowed once every few years to decide which particular representatives of the oppressing class are to represent and repress them."

 

-Karl Marx
Tue, 07/06/2010 - 21:55 | 455926 Instant Karma
Instant Karma's picture

I'm confused. I agree completely with the Goldman piece. Cutting off "cold turkey" unemployment benefits to a couple of million people, plus the end of the inventory re-build, plus the end of most pent up demand from 2009, plus the tailing off of stimulus (such as it was), plus the sun downing of the Bush tax cuts in 2011, has already led to a marked re-slowing (double dipping) of the economy.

Is there any really good economic data? The stock market "correction" is nearing bear market territory (20%, FWIW), a portent of things to come. Commodities are starting to swing down.

No doubt Goldman and the other big desks and hedge funds, etc, are front running the impending double dip, selling off stocks, buying up bonds, and selling off commodities. I like gold so much I own the stuff, but technically and fundamentally people much smarter than I am suspect that gold has already topped, and begun a correction.

It's hard to look at a 5 year chart of gold and not get a certain fear of heights.

I like to watch what certain stocks/commodities do on the first couple of days of a new quarter as big money re-positions. First day of this quarter on 7/1, gold was smashed. On 7/2, before the 3 day weekend, a bounce. Today, on 7/6, gold was smashed again. On volume. Without a catalyst, it appears stocks and commodities and even the bastion of value, gold, are in for a rough 3rd quarter as big money gets out.

I'm a lousy trader, but I've been trying to establish short positions in GLD as a hedge against physical gold. I use puts, but the put premiums are high, so I'm left rolling month to month.

Tue, 07/06/2010 - 21:58 | 455929 JR
JR's picture

The reason economic policy makers are lying about price inflation in the U.S., as Jan Hatzius does here, is they benefit from it.  Inflation is so low and on the decline, Goldman preaches, and it’s all so wonderful.  The only problem is that all the prices are higher.  Still, they say, even with the prices going up, it’s just incredible how much money you can save on the same old declining paycheck because of declining inflation; it just goes so much farther than it used to!  Harumph!

We’re headed for a crackup.  The economy is bigger than Bernanke.  He’s not Moses.  This thing is leveraged to the hilt, with too many crooks baked into the pie. 

As Watchdog on Wall Street said on his Sunday program, it’s all about fraud and a financial culture that has spawned these charlatans—the schemers, the cheaters, the political hacks, the regulators in the pockets of their buddies.  They’re all just stealing the store. As for Obama, he’s probably the least intelligent president we’ve ever had.  He’s not smart.  And ever since he’s been elected, his preachin’ isn’t even any good.  He lies and you see it.

I am not “scared” because they are headed for the crackup. 

It’s a crackup where the people are going to turn politics on these financial swindlers; they’ve been overtaxed, they’ve been lied to, they’ve been forced into a financial box canyon with no exits and they aren’t going to take more hard times to bail these princes out.  When the bankers and politicians wail it’s all starting to fail and we’ve got to fix it because we’re too big to fail, the people are going to say, you know what?  We’re not going to fix it; we’re not going to sacrifice our lives and our fortunes and our country for a bunch of international currency counterfeiters and tax collectors.

In short, IMO, Krugman’s not going to get another stimulus; the people are livid.

Already, lots of politicians have been defeated at the polls because of their initial support for bailout.  The public identifies the politicians who voted for that first TARP as the culprits; if a politician voted for it, even if he later held the line as some conservative Republicans did, you’re out. To the public, you can’t be trusted.  And as far as the public’s concerned, all these banker alphabet schemes and taxpayer stimuli are bailouts. 

People aren’t going to accept it. 

It’s the financial people and large stockholders, IMO, who are going to get hurt. It’s those stockholders that are trusting in the banker lie, going along with it.  Mercifully, a lot of stockholders aren’t in the current stock market… because they don’t’ trust it.

That’s the way I see it.

Tue, 07/06/2010 - 22:55 | 455992 UncleFester
UncleFester's picture

I appreciate your passion, but respectively disagree with it's placement.  Democracy will not save you, Democracy is the Epic Fail.  Voting the bums out, even en mass, will do nothing.

Tue, 07/06/2010 - 23:49 | 456044 JR
JR's picture

I absolutely agree.  The two-party system is a dramatically failed system at the moment. It’s because special powers have taken over both parties and controlled primaries and a willing media have made elections worthless. 

The points I made relate to a coming dissatisfaction from the people that’s so strong that I’m hopeful it will produce major changes in the way our leaders represent us.  There is power in vast dissatisfaction and that’s what’s beginning to happen.  You already have the Republican constituency turning against the candidates running in the Republican primaries.  But the most important thing is what they’re saying.  They are going through frustrations and the frustrations are going to be taken out on the political leaders.  The people are very upset with the system.  This is leading somewhere…  If the people’s dissatisfaction didn’t matter, why then should politicians bother to campaign and make promises and lie?

That’s what we’re seeing with the dissatisfaction in these bailouts.  For example, the Republican leadership is saying that the tea party movement isn’t going to last because it isn’t organized, because there are no written principles, no state organization, no discipline.  What they mean, is they don’t have someone on the East Coast telling them what to do, what stands to take on foreign policy and Wall Street and how to get the black vote... It is this discipline that has sold us out. 

What you want is not voting, you want pressure; but it begins with voting because the voters are registering their feelings.  It’s not democracy; it’s not rule by majority. These are the rustlings of a Republic.  This is what you get, for example, from people who want a government that responds to them, not from people who want some kind of civil institutionalized entity that rules them..  They want leaders who represent them. 

The people turning out for the tea party movement aren’t saying let’s get somebody and run them in the Republican Primary (and, by the way, many of them are Democrats).  You know what they’re saying?  I don’t like what’s going on; let’ do something about it.  It’s a good thing the tea party isn’t organized; if it were, the organizers would take all the money and hire some eastern establishment to run it.  And all of a sudden you’ve got the “discipline” and you’ve got another the same as the two parties you have now in Washington.

As former economic professor Michael Rozeff said this week, and I agree:  “Large political change demands large changes in political ideas. What most people accept as a normal relation between the individual and government has to change if a dire totalitarian outcome is not to eventuate. Most people defer to government and accept government as their master. This has to change if civilization is to survive. There is simply no alternative but to go to minimalist government and/or self-government. Heart and soul, people have to repudiate the corporative fascist and socialist structures that now dominate their lives.

“The established government structures grind on inexorably in directions that have been immune to deflection. There is no option to resisting these developments in toto if one is to avoid degrading slavery. They cannot be fought on a case-by-case basis. The system has to be shattered.”

Wed, 07/07/2010 - 00:15 | 456055 UncleFester
UncleFester's picture

Just understand that the system will not be shattered via the general voting booth.  It will take a small handful of dedicated individuals re-embracing their sovereignty and leading by example within their own locale.  And after the collective has demonized them to the rest of the nation, indeed the rest of the world...it will take another small group of individuals to do the same elsewhere.  Then another, then another...

Any general "movement" like the tea-party is expected and properly managed.  How many tea-partiers payed their taxes?  You have to kick them out of your kitchen, one household at a time.

Wed, 07/07/2010 - 00:16 | 456057 Rusty Shorts
Rusty Shorts's picture

JR, thank you.

Tue, 07/06/2010 - 23:07 | 456006 trav7777
trav7777's picture

Wrong.  People were only against the stimulus because it didn't go to THEM.  Try another 700B and give it to the people and see how much support you get.  Guarantee a majority.

It'll be, "hey the bankers got theirs, now it's time to get mine."

Tue, 07/06/2010 - 22:09 | 455932 Red Neck Repugnicant
Red Neck Repugnicant's picture

If a man is hanging by his fingernails off the side of a cliff, do you do what is necessary to save him?

Or do you ask him questions about how much credit card debt he has?

I am quite saddened to see that everyone here would rather focus on his debt, rather than save him, especially during a time when guy's creditors have absolutely no problem with him. 

Is there some alternative reason you want him to die? Would it not be prudent to save him, then get his financial affairs in order afterwards?  Or do you let him fall to his death, and tell him that he deserved it, because his creditors - at some point in the future - will certainly have a problem with him?

You guys have a very apocalyptic death wish for this country.  Weird. 

Tue, 07/06/2010 - 22:09 | 455940 Apostate
Apostate's picture

Stick to satire.

If that man hanging from the cliff is the state, I'd stomp on his fingernails until the bones cracked.

With relish.

No pity for killers and thieves. 

Tue, 07/06/2010 - 22:34 | 455965 Red Neck Repugnicant
Red Neck Repugnicant's picture

@apostate

I read you posts and admire you ability to reason and write (especially that post about trying to dodge bullets from 17 different directions in the matrix).  Good stuff.  Seriously, your posts are among my favorites.

However, I fervently disagree with you on this matter.  You don't destroy an entire country in spite of a few.  You wring them out orderly and methodically.  You don't detonate a nuclear bomb and create a waste land to prove a point.  

Don't try to romanticize the apocalypse of this country, by envisioning brave battles and coups that you remember from the history books.  You may have the guts for it; some readers around this forum may have the guts for it; but the majority of 300 million Americans just want to go to take their kids to school, and go to work tomorrow.  

Tue, 07/06/2010 - 22:55 | 455993 Apostate
Apostate's picture

Thanks.

If you've read my posts, you know just how little I romanticize this process. I wish that it didn't have to be this way.

Your posited solution is actually more destructive than the alternative. The system must be allowed to crack up quickly.

Coups are never brave.

I want peace, property, and a stable future. The country has already been destroyed. The faster the system crashes, the less time that the looters have to rob those who rightfully own their property. Mind you, I personally have almost no property to loot. I'm ascetic. 

The two sides to the debate presented by the media are merely opposing gangster factions. The "austerians" want to preserve the government's access to the credit markets as long as possible. They will cut budgets and 'privatize' state assets (transfer property to oligarchs through criminal transactions) while ratcheting up taxation. 

The Keynsians want to preserve the ponzi as long as possible to transfer assets to political allies through the scattershot process of mass inflation of the money supply; partly arrested by massive taxation.

The calls for bloody revolution aren't coming from me. I tell people consistently to put away their AR-15s.

My primary goal is to orient people to reality and to counter the propaganda. The more effectively that we can parry the thrusts of the enemy, the faster that we can increase the incremental costs of looting each dollar and apply pressure for a peaceful transition. 

Tue, 07/06/2010 - 23:05 | 456004 Red Neck Repugnicant
Red Neck Repugnicant's picture

Your brain is very large and powerful and fully oxygenated.  You make me feel dumb. 

I respectfully tap-out.

 

Tue, 07/06/2010 - 23:14 | 456017 kridkrid
kridkrid's picture

Don't tap-out.  Just forget what you think you know about "left vs. right"... or at the very least, Republican vs. Democrat.  Everything you stated earlier today was based on a mythology that has been carefully crafted to perpetuate a failed state.

Tue, 07/06/2010 - 23:40 | 456039 Red Neck Repugnicant
Red Neck Repugnicant's picture

Mythology?  Exactly.  And that is why my posts are laced with venom. Regretfully, that mythology is alive and flourishing. 

Palin/Jesus 2012

Tue, 07/06/2010 - 23:47 | 456042 NOTW777
NOTW777's picture

ah thats not venom. it might be koolaid

Tue, 07/06/2010 - 23:55 | 456046 Red Neck Repugnicant
Red Neck Repugnicant's picture

Kool-aid is venom, especially when consumed in large doses. 

<putting my dumb Republican mask back on>

Wed, 07/07/2010 - 15:35 | 457031 Marla And Me
Marla And Me's picture

Thanks for breaking from your usual slanted satire.  We appreciate to know that there is a human typing back there.  Your back and forth with Apostate today makes this place better.  You should try it more often. 

Wed, 07/07/2010 - 00:34 | 456075 Apostate
Apostate's picture

There's no reason to feel ashamed or stupid.

I've known this was coming for about ten years now. I've prepared for this exigency. 

Tue, 07/06/2010 - 23:12 | 456013 trav7777
trav7777's picture

What we need is just mass debt repudiation.

everyone stop paying.  WE are the Z1, We are the money supply. Fuck them.  By austerity or ponzi, they are going to destroy our currency anyway.  The die is cast on this.

Wed, 07/07/2010 - 07:38 | 456246 WaterWings
WaterWings's picture

+1

That is the only way to peacefully resist enslavement by the Banksters.

Wed, 07/07/2010 - 07:37 | 456243 WaterWings
WaterWings's picture

The calls for bloody revolution aren't coming from me. I tell people consistently to put away their AR-15s.

Their move first. If they want peace they'll allow me into the process of peacefully choosing my own way of living. Otherwise what is the point of the 2nd Amendment? If the civilian power is inferior to the rulers the outcome is obvious. If I put down my rifle I will be shot.

Currently I am living peacefully. But if an intervention is made my actions will be in self-defense, and it is my right to defend myself.

If you want a picture of the future, imagine a boot stamping on a human face— forever.

 

- George Orwell

Wed, 07/07/2010 - 15:44 | 457046 Marla And Me
Marla And Me's picture

And yet Orwell was no fan of Capitalism, and thought that socialism would would provide us with all the answers we needed, all this from the man who gave us 1984 and Animal Farm.  He failed to notice that the sociopathic rats always rise to the top of EVERY single system conceived; captialism, communism, socialism...  It takes a lot of work and constant vigilance to keep the rats out...

Tue, 07/06/2010 - 23:00 | 456000 UncleFester
UncleFester's picture

"...but the majority of 300 million Americans just want to go to take their kids to school, and go to work tomorrow."

That's the problem in a nut shell.  Most want someone else (the state) to raise and educate their children and then go to a job they despise and be told what to do (the corporation).  Is anyone really surprised when the State creates the Corporation and the Corporation tells the State how to educate the future generations to become better servants?

Tue, 07/06/2010 - 23:29 | 456033 Apostate
Apostate's picture

Do they want that?

Is that what they really want? Or are they merely unaware of the alternatives?

What is the matrix?

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