Guest Post: Disinformation Fog Intensifies As Economic Turmoil Develops

Tyler Durden's picture

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ak_khanna's picture

The blame for causing the financial crises is to be shared by all the parties involved.

Individuals kept on spending even in face of declining incomes by using the cheap and easily available loans handed over to them by the bankers.

The bankers kept on lending to the individuals, who they knew would never be able to repay their loans, because they were getting commission and charging exorbitant interest on the loans. Moreover they were able to sell the poor loans (after getting them fraudently rated as AAA) to Freddie Mac and Fannie Mae. The bankers also sold these toxic products to the pension funds and fixed income investors for commissions knowing very well they will go down in value when the borrowers default. The bankers were confident that the government would route tax payers collections to them in case of any mishap as they had become too big to fail and controlled the politicians, rule-makers and the rule enforcers.

The politician­­s around the world are nothing more than auction items which can be sold to the highest bidder. They will do whatever they can for the lobbyist paying them the maximum amount of money or votes, be it the unions, the banksters, the richest corporatio­­ns or individual­­s. They are in the power seat to extract maximum advantage for themselves in the small time frame they occupy the seat of power.

The rest of the population is least of their concerns. The only activity they do is pacify the majority of the population using false statistics and promises of a better future so that they do not lynch them and their masters while they are robbing the taxpayers.

66Sexy's picture

QE has failed in its objectives, and has only resulted in commodity inflation; there has been no improvement to jobs, housing, or the real economy.

Unemployment will likely go up again once the holdiay reports start phasing out in feb.. Oil prices going up; bad for everyone. Food prices going up, bad for main street. Housing is a complete disaster.

It all brings to light the false assumption that digital control in a credit-debt system is the end all- be all of economics.

hedgeless_horseman's picture

Truth:  The OJ at McDonald's contains much less orange juice (up 11.7% in a month), and much more water than it did a month prior.

How long before they revert back to that "orange drink" we grew up with?

Hephasteus's picture

Quick sell the orange juice ADD drugs. It's LOSING CONCENTRATION.

kridkrid's picture

It doesn't matter who gets the blame... the end result would have been the same.  Our monetary system requires that credit/debt be in a state of constant expansion.  It isn't the players bringing us down, it's mathematics.

midtowng's picture


Fiat currency systems can be built either on printing, or on debt. Printing always leads to inflation. Debt always leads to implosion.

We would be better off with printing because at least that wouldn't lead to such enormous inequality.

Sean7k's picture

No, the blame is squarely on the FED. It is the FED that is responsible to control inflation, maintain employment levels and monitor banks. It is the FED that sets reserve requirements, the overnight rates and interest rates. It is the FED that determines safe levels of capitalization for the leveraging of money for new loans.

It is not "everyones" fault. It is the FED. They could have mopped up the liquidity, but instead they blew the bubble larger. They could have monitored the capital in banks, but instead allowed banks to max out the credit card so it could be dumped on the economy. The FED could have interceded in the derivative markets and exercised some discipline in the construction and sale of these tranch time bombs, but they didn't.

If the FED is incapable of following it's own mandates, if the FED is functioning in a way that benefits bankers to the detriment of society at large, it is the FED that should pay the piper. 

Quit being a banker shill!

the not so mighty maximiza's picture

Great Article!!!!  I would give my left nut to know when the "braking point" is achieved.

Sudden Debt's picture

Just cut if off, put it in a jar, fedex it and I'll tell you :)

Strike Back's picture

But, but, prices are rising due to rising demand!

LooseLee's picture

Hey. Like your avatar. Lee wouldn't recognize the world we live in now...

sushi's picture

Lie: The USA is a representative democracy.

Read the prior post on the number of multi-millionaires in Congress. They must be making out like bandits on The Chairman's market boost. Do you really think they will enact any legislation that benefits the populace and has a negative impact on them?


SheepDog-One's picture

The US is certainly is not a 'representative republic' as it was established any longer, and 'democracies' are what the founders dreaded most. We know have a Kleptocracy at best, those who gain power similar to mafia dons look at 'the people' as things to extort more money out of until we've reached this point where basically everything you produce is confiscated in one way or another.

Sudden Debt's picture

That doesn' t sound so democratic.

Why won't you just follow the line and do what the rest of the hive is doing?

AnAnonymous's picture

The US is certainly is not a 'representative republic' as it was established any longer


A representative republic? Awesome. Try your luck at the local circus. They must look for contortionist talents, you'll do great.

Savonarola's picture

I blame Pharoah and his policies for making a bad situation much worse.

Most important lesson which they don't teach at Harvard or Yale:  Never trust money to a thief, liar, or man with a beard.


JW n FL's picture

I gave you a 5 for effort... the major hole in the china will bite the hand theory is, we financed everything vertical of scope, scale and / or real value... Bush would not let American's re-patriot monies from China, ala' Blackstone and so on...,+Blackstone+2007&spell=1&fp=ddb181364976507e


The fact that not even the fringe media wants to cover what the facts are gets boring...


I think I need to buy a gun's picture

this was by they have all the money and all the gold at the fuckin end. No one in their right mind would have let all these jobs go years ago....Whatever let the implosion begin.

umop episdn's picture

While I like the article in general, it has a few faults, imho.

Weather has affected the BDI as well as crop prices. Many mines in Austrailia will be shut in for quite some time, especially the mountaintop removal coal mines which collected the rainwater. The flooding has been severe in Aus.

Oil is magic stuff. If there were $50 barrels of oil out there, demand would skyrocket. $90 barrel oil, not so much. Oil production has declined since the 2005 to 2008 plateau and is likely to get worse. Getting oil up from holes a mile under the sea and up to six miles under the sea bed requires a *lot* of expensive suckage.

N_Jones's picture

Your post insinuates that the current monetary policies would have worked if it wasn't for some bad luck.  I suggest to you that the bad luck has just exacerbated the underlying problem of trying to print our way out of debt.

SheepDog-One's picture

The only delusion is believing anyone thinks we can 'service the debt' of $14 trillion, throw in unfunded liabilities of 100 trillion more and only a lunatic would extend the Roach Motels bar tab.

Bob's picture

Interestingly, China holds 7% of our debt--the Social Security Trust Fund holds at least 15% (bought and paid for.) The vast majority of total Treasury Debt is held by American individuals and institutions. 

I think it important to bear this in mind as the evolving meme of cutting SS benefits grows louder on the bullshit rhetoric of "fiscal responsibility."  As if fiscal responsibility is threatening to break out ANYWHERE else!  I think this pressure is effectively an effort to impose a selective default that places average US citizens first on the chopping block . . . while couching it in other, more high-minded language. 

Paper CRUSHer's picture

The ECB has begun its recruiting campaign.To join forces in the gold sales program,one tough SOB.....Estonia.Hah,armed with a measly 0.2 tonnes of .9999 fine caliber munitions.

Sudden Debt's picture

+100 tyler, you best post this year!

I hope everybody reads it at least 2 times!

Mad Mad Woman's picture

Excellent well-written post!  The writer nails it, the actual truths and where the lies are. Kudos!

Eternal Student's picture

An excellent summary of our current economic clusterf*ck.

Perhaps the title should be changed to "Globalization for Dummies"? :)

whatz that smell's picture

Two distinct behaviours are used by inking squids. The first is the release of large amounts of ink into the water by the squid, in order to create a dark, diffuse cloud (much like a smokescreen) which can obscure the blogger’s view, allowing the squid to make a rapid retreat by jetting away.

The second response is to release ‘pseudomorphs’ (‘false bodies’); smaller clouds of ink with a greater mucus content. These are expelled slightly away from the squid, which will often release several pseudomorphs and change color. The pseudomorphs are roughly the same volume and look similar to the squid that released them, and many bloggers have been observed attacking them mistakenly, allowing the squid to escape (this behavior is often referred to as the ‘Bernank-Ink-Jet Maneuver’).

johnnynaps's picture

There definitely is a "smokescreen" going on right now. Me thinks, it's actually more devious than the obvious. "Hope and Change" as the slogan should be changed to "Loaded Corporations and Indentured Servants".

Downtoolong's picture

Globalism, successful or otherwise, inevitably involves some wealth transfer from those who have to those who have not, particularly in the early phases, before the promised long term benefits to all can be realized. The financiers of the world love it because they make money off transfers and exchanges, a lot of money. It’s all well and good, as long as it’s some other guys wealth that is being transferred.

AnAnonymous's picture

Globalism, successful or otherwise, inevitably involves some wealth transfer from those who have to those who have not, particularly in the early phases, before the promised long term benefits to all can be realized.


Solid footing. In a period like this... And the Moon is the Sun etc...

Poor people in the world are squeezed out of their resources. The transfer is from the poorest regions of the world to the richer. Not the reverse.

No riots if that was not the case...

Oh regional Indian's picture

Excellent article as always.

Here is the rub, the food price rub:

Grain prices surged in 2010. Corn gained nearly 60%, while soy and wheat gained around 40%. Cooking oil prices jumped 62%:

No way that genie can be put back in the bottle. And we are not collectively at a stage yet where the photograph of a tomato on an iPhone is the same thing as having it. Better yet, if it were grown on prime Second Life land (ha!) and paid for with Linden Dollars?

reality, so relentless in it's efforts to bite us in our collective asses. Meanwhile, we just keep padding it up to dull the pain.

Exporting inflation, such a sign of a bizzaro world we live in.


alter ego's picture

Remember that the devil works using twisted ideas, manipulations and moreover, half-truths.


teichman317's picture

Great post

"Second, the greater the proliferation of Yuan bonds, the faster the Chinese can begin to dump their U.S. Treasuries. This is the key!"


Can someone explain the above to me. Thanks


Sean7k's picture

The more people buy the bonds, the more yuan that will need to be spent. It will allow the Chinese to trade in their own currency globally (essential to an export driven economy). 

Presently, they are tied to the dollar to complete trades as there are not enough yuan for the volume of trade they are conducting. 

People will only trade in a currency if they think they can use it later (in another trade or to buy products). The acceptance of bonds means that people are confident they will be using your currency in trade.

The dollar had been fulfilling this function as it is so liquid. As the Yuan bonds increase, the Chinese can sell their treasuries and gain more control over their future.

metastar's picture

"Panda Bonds" is cute is kinda like saying that the PatRIOT Act is patriotic!

MiddleMeThis's picture

My question is this:  "What does the common man/woman do?"  Seems to me we are virutally powerless and are simply along for the ride.  What action can we take to protect ourselves?

LFMayor's picture

Stock up weapons and food.  Learn to use them efficiently.  Standby to run riot.

Are you like me? I don't have the capital to invest in PM's.  I'm screwed.  If the power fails, my IT job will. Maybe sooner.  The only reason I'll keep my roof is because there are millions of other foreclosures log-jamming the paperwork river.  Since victory gardens are now legislated illegal and subject to "confiscation", how in the hell will I feed my family?

So I'm planning on the Sampson Option:

If I'm screwed then at least I can act up... maybe even be that little fish bone that lodges sideways in some bastards throat when I get swallowed whole.  Anything better than that I'll consider a happy bonus.

topcallingtroll's picture

Join the new religion of St. vincent and help do battle against the 47 named demons.

hedgeless_horseman's picture

Standby to run riot.

Running riot is when poorly-trained hounds chase the wrong prey.

Lower Class Elite's picture

Check out, I say.  In whatever fashion is available to you.  For some, that can mean physically bailing out to Montana or Argentina or wherever.  For most (myself included in this group), I think it means getting as many friendlies as close by as possible, and really working on how to take care of you and yours completely outside of the "normal" way that has been ingrained in us since birth.  For example, in my case I have a small piece of land owned free and clear.  It is surrounded by family and friends and woodlands.  It is in the town where I was born and raised, so I am intimately familiar with the area and a good number of the people/families nearby.  It is not by any means prime real estate, but it has decent water and trees, it's within walking distance to a rail line, it has great topsoil, but it is otherwise completely unremarkable and under "normal" conditions not particularly valuable.  I have no financial "assets" whatsoever (not even PM's, sorry, but I need other things worse), but I also have no debt.  I am personally building my own house on the land, cash and carry, no mortgage, no Home Depot card.  Even with experience, this is a demanding task.  I am fortunate in that I grew up on a farm, but even then we took full advantage of cheap and easily obtained pesticides, fertilizers, and farm equipment.  I am also fortunate that I am a fairly skilled and experienced carpenter/woodworker/bodger, and I have quite a collection of useful tools (my "precious" metals).  I still have my "normal" day job, but I am in fact checking out of BAU in plain sight.  I hold no illusions that I'm headed for some utopian Amish-without-the-religion "Good Life".  Cars are freaking cool.  Computers are awesome.  Refrigerators are kick ass.  Air conditioning is wonderful.  Hot and cold running water 24/7/365 is quite nice.  Zipping down to the Ultra Mega Mart and buying 40 pounds of strawberries in January if I feel like it is fantastic.  Now barring an actual no-shit extinction event, I don't think all those things will just disappear from the world entirely one day.  But I am increasingly convinced that they will disappear from MY world at some point.  Soon perhaps.  So I'm checking out of the entire thought process that has enabled me to come to expect all that cheap, easy, neato stuff.  I'll use it while it's still available to me, and I'll try to be as ready as I can for when it's not.  Even then, there are absolutely no guarantees.  I'm OK with that.      

Oh regional Indian's picture

Awesome post LCE. Dripping with honesty. Awesome attitude to life also.


Lower Class Elite's picture

Thanks ORI.  On a long enough timeline, etc., eh?

Salinger's picture

great article, reminds me of that Obama website that was set up to fight smears

proLiberty's picture


We should also recall the extent to which subsidies for ethanol and biodiesel distorts the prices of corn and oil-rich seed crops like soybeans.  These distortions in market prices are not only on a per gallon basis as is the case with ethanol, but also in large 7 and 8 figure grants to private investor groups to build facilities, as well as in running interference with local agencies for rapid and favorable terms and approvals of permits, especially for water resources.

The more government intrudes in multiple areas of the economy, the less anyone can accurately judge true market conditions. It is like trying to measure the height of waves in a lake from a motor boat circling in its own wake. Worse, one government bureaucracy will then attempt to intrude in the market based on prices and conditions that were partly the result of intrusion of some other government bureaucracy down the block. The result is always the dissipation of wealth and liberty, and the squandering of what remains of our future.

Obama is the first post-solvency president. We have clearly moved beyond merely squandering our blessings. Thanks to big and Bigger government, we have moved to squandering our credit line.


Beatscape's picture

Great post.  One thing missing from this analysis that belongs here... the pressure on wages from globalization.  We are all competing with Chinese wages.  This is one of the key factors that is preventing hyperinflation from kicking in. And, is a critical factor that is starting to lower standards of living in 1st world countries--and raise them in 3rd world countries.  There is a great equalization of wages going on and it's impact is significant.