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Guest Post: Extend And Pretend - A Guide To The Road Ahead
Submitted by Gordon T. Long of Tipping Points
Extend And Pretend - A Guide To The Road Ahead
It will likely surprise you but like a trolley car we are now locked into economic tracks that determine our financial destination. Unfortunately, it isn’t a place anyone would choose knowingly other than possibly the Bilderberg elite.
Financially and economically we are lurching along, rocking from side to side with the occasional unexpected jarring flash crash jolt. But unlike a trolley line, for some reason no one seems to know what the destination is. Many are asking but few are willing to tell.
This road is well travelled and documented if you were to take the time to study the maps and not rely on the happy face media spin doctors for directions. Since the route of the current global economic path is now locked in, we need to either accept the ride or hastily exit. I’m up from my seat and headed for the door. What are you going to do?
HISTORICAL FACT: A Financial Crisis is almost always followed by an Economic Crisis which is subsequently followed by a Political Crisis.
FINANCIAL CRISIS => ECONOMIC CRISIS => POLITICAL CRISIS
Banking Crisis Sovereign Debt Crisis Currency Crisis
When the financial crisis arrived in 2008, those who foresaw it in 2007 were not only prepared to capitalize on it, but ready to position for the economic crisis that they knew lay ahead. We are currently still in the midst of an economic crisis evidenced for some time by slowing global trade, unemployment, falling tax revenues and more recently, a sovereign debt crisis.
Have you prepared for the soon to emerge financial opportunities as the Stage 3 - Political Crisis unfolds?
I want to lay out the roadmap as simply and clearly as I can. Some no doubt will dispute it. What the nay-sayers need to fully understand however is that the roadmap, which this is part of, has served me remarkably well and resulted in a highly profitable decade. Maybe even more importantly, it has allowed me to sleep peacefully at night. The market drops for the most part have been ‘buying opportunities’ and market spikes have been excellent exit points.
Knowing the trend and destination has made all the difference.
THE ROAD AHEAD
The soon to unfold political crisis will be marked with beggar-thy-neighbor policies that foster political conflict, a currency crisis which dramatically impacts standards of living and a broad curtailment of entitlement programs that will devastate generations of retiring lower and middle income citizens. We are early in what the future may possibly label as the Age of Rage. Paradyn adjustments in expectations and sense of entitlement lay ahead for those living in the developed G7 democracies.
Let me show you why a Political – Currency Crisis is just as predetermined as the tracks of our trolley ride and will have serious consequences for your investment strategy.
For the full research report with a detailed expansion of the following roadmap: See TIPPING POINTS
THE ROAD AHEAD
EXPLAINING STAGE III
Though we are still in the midst of the full emergence of Stage II, Europe has recently overtaken the US in the rate of the expected, unfolding events.
There is no mistaking the fact that the US has a sovereign crisis as measured by many indicators such as: Debt to GDP, deficit percentage, balance of trade, state, city and local government financial imbalances, underfunded pension plans and excess unfunded entitlement programs. However, relative to Europe, the US is still lagging and therefore is not currently getting the media attention that it will soon receive.
What will mark the beginning of Stage III is a major shift in political policies. In Europe, early signs were witnessed with the European bailout of Greece and the $1 Trillion Euro “TARP” like program. Both political decisions decisively diverged from the basis upon which the Maastricht Agreement was constitutionally approved. The level and urgency of the crisis forced this structural shift. Though this level of political shift has not yet occurred in the US, it soon will (the ‘Tea Party’ advocates would likely vehemently suggest we are well on our way).
The $61 Trillion unfunded entitlement problem associated with Medicare / Medicaid and Social Security is presently a monster on the door step now that baby boomers are beginning to retire at accelerating rates each month. No longer can the government obscure the true size of annual budget deficits through the use of payroll entitlement payments. State, city and local governments are increasingly in crisis as more and more can no longer fund what Americans have taken for granted as basic necessities such as police, fire, K-12 education and public works. Without greatly increased and urgently needed tax revenues, these programs will be drastically cut. We read of 100,000 to 300,000 teachers being cut which less than 18 months ago would have been thought unimaginable in America. With 40 million Americans on food stamps, tax revenue deficits are making what is a monumental problem even more intractable. All of this and more will lead to political decisions that will lead to major social unrest and public policy initiatives which will be startling breaks from the past.
I fully expect to see a new $5 Trillion Quantitative Easing (QE) program marking the upcoming shift in the US to Stage III.
This will be what kicks off an accelerating increase in Velocity of Money that many inflations have been expecting. This has the potential to ignite a Minsky Melt-Up (Read: Extend & Pretend: Manufacturing a Minsky Melt-Up), though definitely not a certainty. The present rate of collapse in MZM, M1, M2 and M3 which supports the deflationists views, which I have held, is the ‘oil in the ointment’. The $5T QE program will be a desperate attempt aimed at reversing this
Massive monetization will eventually lead to a US currency crisis in the US by 2011- 2012.
Europe will continue to accelerate with problems associated with currency pegs and Euro denominated lending finally coming home to roost for Central and Eastern Europe (CEE). The CEE as the ‘sub-prime” of Europe will be the final catalyst to tip the UK and France over the edge into a sovereign crisis and subsequent major political confrontations. The new government in the UK is already warning the British electorate on an almost daily basis of the gravity of the situation and the degree to which changes in social entitlement expectations will need to change in the near future. Like France they are afraid to be specific – yet!
The US is experiencing a major shift with government employment becoming the primary creator of jobs. The fundamental shift is most evident through a movement towards larger government with more regulation and control.
POLITICAL SHIFT- It will be about choices which this generation has never had to confront.
The political shift is not primarily a shift from right wing to left wing politics as many in the ‘party oriented’ media might suggest or debate. It is rather a shift that the current generation in western developed nations haven’t witnessed - a shift in direction that is other than left or right and is more about a movement in Economic freedom versus Personal freedom.
It would make this particular article too long to explain the above Nolan Diagrams to show how and why these changes will occur (I will do so in the next Extend & Pretend series article entitled: “A Matter of National Security” – sign-up). But suffice it to say that there will be clear tell-tales that will emerge.
SIGNALS & TELL TALES
You must be alert to and carefully watch for these tell-tale signals in the not too distant future.
LEGISLATIVE REGULATION
CONCLUSIONS:
Expect the unexpected going forward since markets hate uncertainty and nothing creates more uncertainty than political decision making and policy legislation. Markets will experience increasing levels of volatility with steeper rates of price movement both up and down. Flash Crashes and Flash Dashes will be common as millisecond advantages separate the dynamic hedging winners from losers.
Hard assets such as physical gold and silver have traditionally been the ideal vehicle for an environment of high inflation coupled with a currency crisis. I fully expect governments will strip these assets from holders either directly or through predatory taxation, fees or other trading limitations. They will be classified somewhere in the four categories discussed above. Alternatively, if it is not done in this fashion it will be controlled through intervention similar to national currencies in the forex arena. I personally suspect it is already being controlled in some fashion based on the March 25th whistleblower testimony by Andrew Maguire. It is a matter of national security in a beggar-thy-neighbor environment since gold and silver are the only real money in a fiat based system. Protect yourself accordingly.
The only protection from the future storms will be unencumbered, revenue producing assets. The trick is knowing which investments will sustain their ability to produce inflation adjusted free cash flow in the midst of a contracting economic environment. They may not be in the publicly traded or manipulated markets.
Thinking for yourself and thinking outside the box is paramount if you are to capitalize on this bumpy trolley ride.
For further background read: EXTEND & PRETEND - Manufacturing a Minsky Melt-Up.
Sign Up for the next release in the EXTEND & PRETEND series: Commentary
The previous EXTEND & PRETEND article: EXTEND & PRETEND: The Flash Crash Omen
Gordon T Long
Tipping Points
Mr. Long is a former senior group executive with IBM & Motorola, a principle in a high tech public start-up and founder of a private venture capital fund. He is presently involved in private equity placements internationally along with proprietary trading involving the development & application of Chaos Theory and Mandelbrot Generator algorithms.
Gordon T Long is not a registered advisor and does not give investment advice. His comments are an expression of opinion only and should not be construed in any manner whatsoever as recommendations to buy or sell a stock, option, future, bond, commodity or any other financial instrument at any time. While he believes his statements to be true, they always depend on the reliability of his own credible sources. Of course, he recommends that you consult with a qualified investment advisor, one licensed by appropriate regulatory agencies in your legal jurisdiction, before making any investment decisions, and barring that, you are encouraged to confirm the facts on your own before making important investment commitments.
© Copyright 2010 Gordon T Long. The information herein was obtained from sources which Mr. Long believes reliable, but he does not guarantee its accuracy. None of the information, advertisements, website links, or any opinions expressed constitutes a solicitation of the purchase or sale of any securities or commodities. Please note that Mr. Long may already have invested or may from time to time invest in securities that are recommended or otherwise covered on this website. Mr. Long does not intend to disclose the extent of any current holdings or future transactions with respect to any particular security. You should consider this possibility before investing in any security based upon statements and information contained in any report, post, comment or recommendation you receive from him.
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Give it a few days, exponential progression and all. Or is that desensitization? I get so confused sometimes!
Yeah, that's the thing. The longer they wait, the higher QE2 is going to have to be. Doubling time is probably about 6 months maybe.
Aw fukkit.........we ain't never gonna' pay it back anyway. Think subprime, boys.
If they make it $10 T, we all might qualify for a $ 4,000 new CNG car built by Gubmint Motors. Backdoor socialism is the new normal . Front door too.
lol, yes, "we're never gonna pay it back anyway". Pay back what? Electrons floating around in cyberspace?
"Here you go!" "Excuse me, Mr. Geithner, but that is a napkin." "But it says $5T. So I paid you back." Timmah runs out the door.
; )
Isn't that how money/currency got started...except it was bark of a tree, with the emperors signature on it..?? And we (the peons) were supposed to bring our gold, rubies, emeralds, etc. and exchange for said piece of tree bark..
Hmmm...
Question: how do you protect yourself accordingly?
In other words, if your local government decides that holding Gold, Silver and other PMs is equivalent to a terrorist activity, what will happen? How can an investor keep its bullion from the greedy hands of the oligarchs?
Will we see black market for Gold and Silvers bullions, with prices probably several order of magnitude higher than current valuations? Or will foreign nations (Switzerland and Singapore come to mind) offer very discreet bullion packages for investors? Or both?
Any suggestions?
Jewelry. Big. Bad. Badda Bling.
me too.
gold jewelry from the best artist.
my guy was made an offer your Tiffany & Co. he couldn't refuse,,,,,,,,
but he did†
P R I C E L E SS.
Velo,
is that you in thigh highs and a corset with a masquerade on or is it bark peeling off an aspen?
I'm thinking about hanging out in front of the "We Buy Gold" store at the mall.
Out of curiosity, I asked the guy working there what they offer for an ounce of gold. He was surprisingly honest, once I told him that we were buyers, not sellers. He flatly stated that they cater to the naive and that their first offer is usually 40% below spot.
Heck, I'll wink and offer 20% below after the 'customers' have their gold appraised. Until I work up the nerve, though, we'll continue to buy our PMs locally, anonymously, and with cash.
I'd like to buy locally as well but my state charges 5.5% sales tax on bullion sales! Thats a hurdle I've yet to come to grip with.
Can you get around that by bying online?
Yes, but then you lose anonimity. Big brother will track you down.
Not if you buy using prepaid debit cards you in turn paid for with cash.
You didn't read any of the stories about folks buying entire boxes of prepaid cards to give Barry anonymous campaign contributions from "Sand E. Klauss", etc?
Local 5.5% tax?
Can you drive to a nearby jurisdiction without such a tax, and pay in cash?
Holding PMs = terrorist
Speaking out = terrorist
owning guns - terrorist
Able to read = terrorist
visiting zh = terrorist
copy of constitution = terrorist
Screw em'
I think that one is still merely considered extremist UNTIL found extra-specially-suspicious in a random, private, anonymous, proceedings using firmly-established, arbitrary guidelines.
Then you get the big T moniker.
AHA! I knew there had to be a good reason why people act so weird about literacy!
Funny...yet sadly, it's true.
Farmer buying fertilizer (bomb) = Terrorist
Farmer planting seed (because Monsanto agent tossed some of their GMO's into the field) = Terrorist
Unemployed Chemist (Pharma outsourcing) buying Flask (biowarfare) = Terrorist
one shot - one kill = priceless
Nobody expects the Hawaiian-Nigerian Inquisition.
I have pondered and worried about precisely this scenario for decades, but in light of current events and their likely future course, my working hypothesis is that any call-in, illegalization or onerous taxation of precious metals, this time, will just be a sign of the imminent collapse of the current financial and monetary paradigms, so all one need do in such a case is shut up, hold tight, and wait out the storm, which should not be a long one.
Does ANYONE really envisage another 40+ year period of gold illegalization? Anything can happen, I suppose, but such a prospect seems exceedingly unlikely to me, as I cannot imagine the prevailing political power structure not collapsing along with the financial and monetary systems that support and uphold it.
And if that strategy fails, then I guess we are just left with holding Chinese solar equities.
I think Leo said "be sure to take delivery."
I imagine most of it will be traded black market. I don't envision a direct seizure situation as being nearly as likely as just a manipulation of value situation (either through taxes or intervention). Coins are probably a better buy than bullion for this reason; easier to trade it. Of course, this makes valuation tricky, harder for the involved parties to know whether and to what extent the coin or bullion is adulterated. Regardless, it's a lot more complicated than:
1. Stockpile gold.
2. Win at life.
I think that should be:
You do the most radical thing possible. Rebel and restore the Constitution before the National Socialists take power. We are better equipped to handle a recovery than most of the world because we have the Constitution as a foundation. As bad as the dirty thirties were. the old folks were nostalgic for when neighbors helped each other. The 9/11 survivor spirit. We're Americans, we will roll when the time comes.
Actually, I would prefer to restore the Articles of Confederation so my great-great whatevers don't have to go thru this.
Treeplanter
Dude like this?
http://imgsrv.gocomics.com/dim/?fh=a0302a2e60d29d4d43d5d46186ede5cd&w=90...
oops..
"Question: how do you protect yourself accordingly?"
What gold? Where? Don't have a clue what you're talking about. I don't have any gold. Are you sure you have the right person?
You may cross your fingers behind your back if you feel the need.
And many things are already traded on a well established black market.
I remember before the 'revolution', one woman had to sell her 2 front teeth just to make ends meet.
Where is that level of desperation on the graphs?
Didn't she later write a holiday jingle?
Niiice!
LOL
+10
+5Trillion!
Sold her teeth?
I own a gun.
Crab Cake
"I own a gun"
Can I watch when that drone drops a hellfire missle down your chimney? I would prefer when the SWAT team kicks your down after tossing in a couple of flash bangs. That's entertainment.
After all life isn't like Jean Reno in The Professional now is it?
Sure Gully, why not, as long as you're entertained.
I'm not some tough guy, and I'm definitely not a professional, I have no illusions of how a firefight with trained soldiers/and or cops would turn out. I'm actually a pacifist, believe it or not, just don't put me in a corner because I'll do what I have to. By being in a corner, I mean having to sell my teeth. If it came to that, and it won't, I can assure you I could find a way to find a few bucks to survive by with a firearm and some willpower; that's all. Best case I get the money I need, worse case 3 hots and a cot, you know?
Good movie btw.
Nor is our tyrannical but increasingly ineffective federal government nearly as omniscient and omnipotent as you would infer it to be.
As dulled and sheepish as the average American is today, there is NEVER going to be any confiscation of gold, guns or food in this country --- there will be a revolution first.
I'll go with your scenario. One has to pick an outcome and plan for it. No waffling.
The current gov't can't even clean up an oily beach, let alone keep it from getting oily in the first place!
This guy is producing some fine work.
And, it's circulating - saw it elsewhere yesterday... the flash-crash. We must be getting close to a tipping point, as this stuff can't be allowed a wider audience for long.
Sh-h-h-h
The Sheeple are sleeping...
"The only protection from the future storms will be unencumbered, revenue producing assets. The trick is knowing which investments will sustain their ability to produce inflation adjusted free cash flow in the midst of a contracting economic environment. They may not be in the publicly traded or manipulated markets."
Assuming that anything is safe is folly. There is no protection. Absolutely everything has a downside risk, even stockpiling/self-sustaining.
The only protection, as always: Situational Awareness, be nimble, be quick, bury your golden candlestick.
Yes, try to be as invisible as possible to the Eye of Sauron.
Panafrican,
You got it............
Been laws on the books for a LONG time on hoarding, and stockpiling........
At the WILL of the Gv't, YOU can be forced to relocate(and separated from your family,home, forced to work on their selected job),all your supplies, foodstuffs can and will be confiscated....
There are so many SECRET PDD's & EO's, if we knew what they said, there would have been open revolution years ago.
Not counting the loss of Miranda rights for American citizens,.........and, unless you specifically Request them, they are no longer obligated to TELL you.
You may now be held Indefintely,without being charged, and have ZERO right to counsel.
For NO reason........None, Zero ,Zilch,Nada.
This is Fascist shit.............and the NWO complete.
"YOU can be forced..."
There is always a choice, always. Whether one is willing to pay the price for non compliance is another matter.
Indeed, the owners of 'revenue producing assets' were called 'kulaks', counter-revolutionaries, 'enemies of the people, Juden, etc. and tended to suffer worst of all once the shift to totalitarianism took hold.
The most valuable 'asset' in such circumstances might be a visa to a safer land and gold or other high value portable wealth held outside the reach of the state. A 'remedy' modern governments work hard to close to all but the richest amongst us.
There will be no safer lands this time.
You maybe right but , as remarkable as it may seem, such authoritarian states and statelets as the PRC, Singapore or Hong Kong might be 'safest' should the 'west' begin to disintegrate.
Uh, so you have 3 times the pop of US to compete with in a horribly polluted, country with no oil reserves in the ground? Good luck! Not to mention your white skin (?) and round eyes that the whole world already hates? I am always amazed that people here think they will be welcome any where else. But then again, South America and the US took a lot of the Nazis in........
I'm looking to get a job next week pulling refrigerated trailers over the road. Food moves when new computer furniture, etc. collects dust. We're not going to Mad Max, just hard times.
True, but it is still better than the alternate. At least the act of being proactive is engaging the mind to anticipate contingencies in advance.
Finaly someone who understands that the assult on gold will be legal in nature. That said either the author is too narrow and doesn't know about or chose not to relay the mass violence that goes with the various stages and the various possible outcomes which determine the laws which determine the settlement of the situation. Historically though when these things have happene one thing that was uniformly done was to start another frontier war. This time we are out of frontiers. The only corrolary is the European model of the rise of the Nation State. Germany for the Germans, England for the English and so on.
"This time we are out of frontiers."
This is where Obama's mission to Mars comes in to play...
WATCH OUT for Obama's mission to Uranus.
Just sayin'...
Will that be the same mission as the one to the black hole?
I understand that the pull of gravity is so strong that not even smell can escape!
Mr.Longs extend and pretend...well thats just hanging out there waiting for abuse.Nooooo don't do it ....Listen up greed will save Teldar Paper if not gold is the place ya otta be.
Nice opinion piece; I would like to see facts backing it up.
Hard to see anything when your head is in the sand:
http://globalresearch.ca/index.php?context=va&aid=19539
Gunther,
You have been living the above in it for the past 3 yrs............
This originally started, on 9-11..........incrementally increasing in velocity, and changes since.
Personaly the entire scenario IMHO, is very well done.
At this point, anyone here, that does not GET it, surprises the shit out of me.
Bargain, DosZap, I do not dispute that we are in dire circumstances. I did not find facts in the article to back that up. That is my point.
Bargain pointts a selection out in the globalresearch link and at the time around 9/11 I did not have TV and did not fall for the official version of things. A while ago I pointed out with link that in the dust of the WTC buildings a high-tech explosive was found by a scientist named Niels Harrit.
http://www.911truth.dk/first/en/art_Harrit.htm
http://www.youtube.com/watch?v=8_tf25lx_3o
Look it up again was faster then to look for the old comment.
Asking for arguments supporting my case is different then being ignorant.
It's important to try to keep people informed that "anarchy" is not the same as chaos. Please read brilliant authors, like Noam Chomsky, on the subject of anarchism. A system of mostly decentralized government, sometimes referred to as syndicalism, is what is sought by most anarchists. Not chaos, or the complete absence of government.
The notion that anarchy is the complete absence of all governing authority, and equivalent to "100% personal freedom" is statist propaganda used to instill fear and propagate a perceived need for government as it currently exists. Read, people, read.
take liberterian talking points to their conclusion in regards to finanical government/law enforcement and they want more than anarchy. Libertarians seem to acknowledge we need some law enfordement on main street, but think financially, economically, the private market and lawsuits would create the perfect, efficient free markets. Yeah, just like if we had no law enforcement or government on the streets...kinda like Haiti...
I think you're making a very common error.
Because one political camp tends to speak in absolutes, the assumption is sometimes made that other political camps are also projecting and claiming absolutes.
I think if you talk to any moderately serious libertarian, they would not suggest to you that things run along the lines of libertarian ideals will be "perfect, efficient, free markets". The very notion of them is either a sort of straw man claim or a misunderstanding. I think what you would be told is that the economy would work best that way, not that it would work perfectly. Nothing can work perfectly when subject to human foibles.
I love hearing that the ghetto-nations of the world (Haiti, Somalia, Zimbabwe, etc) are somehow supposed to be the consequences of "too little government", or a libertarian, individual-rights-centric system. Every one of these crapholes is dominated by control freak thug governments.
They may not have the sophisticated bureaucracies of more enlightened socialist crapholes elsewhere, but it's a joke to pretend they're not the same basic setup: omnipotent government that can trample the individual, instead of a strong system of individual rights that restrains the wannabe-dictators.
And the "perfect, efficient free markets" claim is a tired straw man argument. Those who support individual freedoms don't defend capitalism from the pragmatic standpoint that it's more efficient and creates more prosperity for more people than any alternative--they defend it because, by definition, it is the only system where individuals are left free to interact as they choose, rather than being dictated to by some overlord.
Markets are not perfectly efficient, but free ones are able to approach that ideal more easily than ones controlled by central planners. There are inefficiencies, but people are free to arb them away until the imbalance is reduced. There are business cycles with booms and recessions, but they are self correcting as opposed to systems distorted by perverse incentives leading to bubbles and depressions.
No one promises any "libertarian utopia"--life is still unfair, and earning things still requires hard work. But at least you can remove the thugs who want to run your life, count on your rights being upheld, and be free of the destructive coercive systems, whether they call their versions "socialism", "statism", "progressivism", "Marxism", "social democracy", "state capitalism", or whatever.
I wish I could tattoo your post on the forehead of every politician (except Ron Paul) in Washington DC today. Just before leading them all to the gallows, of course.
In the Spanish Civil War the Anarchists took responsibility for making things run in Madrid, by default, the other parties were all jockeying for power. Anarchists ain't what they used to be. And neither is clueless Chomsky. He went to Lebanon and had tea with Hezbollah a while back, threw a fit recently when Israel wouldn't let him in.
Canoe Driver
Chomsky? How about Bakunin or Emma Goldman.
Ok, Bakunin too.
"Americans have taken for granted as basic necessities such as police, fire, K-12 education and public works. Without greatly increased and urgently needed tax revenues, these programs will be drastically cut"
Hooray! The toxic crackerboxes 6 inches apart from each other can't be saved from fire. The cops are too busy ticketing motorists to fight crime because they feel so deprived that the local druglord makes 3x what they make. What education do you need to fill in dialog boxes all day long? And the water, fuck it, I already use reverse osmosis on that poison. May as well use rainwater/snow.
sounds like Haiti would be heaven to you...
RO is a finicky bitch. I hope you know how to handle it, otherwise it's worse than being single.
"Some no doubt will dispute it." Let them. The truth is blinding; not all eyes are trained to see in such a light.
...followed by the Eating Crisis.
And to think they are blacklisting the people that have figured all this shit out by now. I remember when I first got introduced to the wars, I was thinking surely there are some with similar interest that feel me and will come to my aid. But nope, not really. Just a bunch of blood sucking leeches also lost in the struggle. This is trickle down to it's fullest extent, half these sociopaths had a shitty childhood and don't even know what a friend is the other half, had sisters. Buckle up.
I think the eye-candy graphics and flowery language misses the mark and obscures the core point. The US is in the early stages of a war over Deflation. That alone has and will explain all the conflicts, policy decisions and debates. Yes, that's at the core.
ZIRP, QE and bailouts are politically motivated policy decisions aimed at combatting deflation at ANY cost. Why? Because despite the propaganda that deflation hurts borrowers, the ugly truth is that it hurts creditors and those with disposable wealth because borrowers can default and will. You can see the embryonic conflict taking shape in the debates over "Strategic Mortgage Defaults" aka Jingle Mail. Republicans in Congress introduced a bill today (discussed earlier in ZH) aimed at punishing strategic defaulters by cutting off their future access to FHA and gov backed loans. That's the first shot across the bow. Look for more. Ultimately TPTB could force underwater borrowers to become renters, indebted to landlords for the rest of their lives or face prison or other sanctions.
It's my contention that the sum total of all the efforts by the Fed, Treasury and US government branches of various stripes have one common and focused goal, though not everyone involved clearly understands this. The goal is combatting deflation at the expense of the US middle class. They are willing to expend Titanic sums, risk the stability of the US currency and credibility of the government to "Reflate" the economy. Only they can't. Because the strategy is fatally flawed. They target only the paper backing the real assets rather than the assets themselves. So housing, incomes, employment and now retirement assets will continue to deflate while paper assets will inflate along with the cost of living and doing business, creating The Double Whammy Economy I've talked about that will kill the middle. They will not stop without a fight. That's the essence of the conflict ahead.
In essence, the deflation struggle defines a struggle between the existing power structure (the old guard) and reallocation of resources. But nobody in power ever gives it up for the greater good. So they will use propaganda to narcotize the public into accepting what they define as "safe", "stable" or even "American". And all it will be is a fight to prevent deflation. A fatally flawed, futile experiment in preserving the status quo that will only serve to risk radicalizing politics. The consequences can range from angry confrontations and polarization all the way to civil unrest, radical politics and global war.
great post, deflation begets jubilee...and jubilee is a happy time for most folks...start clean again, economy fires up again, things are cheap...TPTB does not want jubilee, if individuals can't be made into debt slave one at a time, then they will use govt and taxes to pay for bailouts that only benefits them. Who benefits from a mortgage mod on a underwater mortgage...not the homowner, the bank. Homeowner should just leavstop paying and leave when forced, but if all did, banks are dead, dead, dead.
moneymutt
"TPTB does not want jubilee, if individuals can't be made into debt slave one at a time, then they will use govt and taxes to pay for bailouts that only benefits them."
Here is where I think you are wrong. A world wide jubilee ushers in a new single currency. Now profit can be made for poorer people by playing one currency against another. Obviously I don't mean poor people with no money but middle/upper middle class types.
A single currency ends that, no more money Matroishka sphere power. Universal government could then loan to business which employs all people which buy the goods produced and get taxed. A nice closed system that maintains control and caste offering no threats to the power elite.
Our system is built on people giving up power after their turn. Washington could have been King, he and his fellow rebels had a bigger vision. Capitalism has to have bankruptcy to function. Debt gets sorted out, you can start over, you take bad risks you pay. We know what works and now we know what does not. We choose the Constitution we get liberty, equal justice before the law and a free market. We have to be vigilant about corruption and concentrated power. America will be back, stronger and wiser--after we pay our dues.
I agree on America's potential. And if we get a big economic reset by allowing deflation to happen then the future will be bright. But the strongest of the strong political systems falter once there's an entrenched repressive power structure that exists simply to prolong the status quo. Instead of an abrupt change there's a multi-generational decline. And rather than providing opportunity for the US that provides opportunities for the competition.
Prolongation versus abruption is key, I think. A fast decline opens more eyes and supports more drastic corrective measures. A slow slide just allows those in charge to take advantage of the existing power structure while molding the "new" one in to the same old story.
Treeplanter
"We choose the Constitution we get liberty, equal justice before the law and a free market."
Except for Blacks, women, Native Americans and assorted Europeans.
It really would be nice to have a HONEST standard to believe in, but this continual revision of US History is fucking ridiculous! The US has ALWAYS been about RICH WHITE MALES fucking everyone else.
Why should European derived countries be forced to be inclusive while others are not?
"They target only the paper backing the real assets rather than the assets themselves. So housing, incomes, employment and now retirement assets will continue to deflate while paper assets will inflate along with the cost of living and doing business, creating The Double Whammy Economy I've talked about that will kill the middle. They will not stop without a fight. That's the essence of the conflict ahead. "
Succinct. Love it!
i can see the fed blowing up their balance sheet, and imploding themselves and the political class. the debt they are using to run to government is one big consumer loan.
there are only two political classes in America, the status quo, and those who don't give a shit. the number of the later is increasing, (see Geo Bush's red state Presidential mandate) the power of the former is significant, those interested in protecting their sense of entitlement don't care if Bush is Obama, or the other way around, the rest of the country doesn't care either, but they know the fix in in. actually both sides know, but they don't discuss it on Long Island.
after the Fed implodes, Treasury defaults, no one mentions it but we keep on funding the war, while the don't give a shit party, which doesn't pay much in the way of taxes anyway, resolves to give a shit not at all. this is where the rich get pissed, because the tax man is after them, but the bond market implosion hit them really hard. they can right off their losses for a decade at least. no one is paying taxes, and there is no more deficit to expand, so the new blood for the political class comes from the hicks, who couldn't care less about voting. the entitled class gravitates to candidates like Meg Whitman, a rich give a shit. she downplays her wealth, and plays up the disaffected hick angle, and she wins. others follow her lead, putting out nonstop million dollar ads of themselves voting no against everything, (mostly new taxes) and wearing sack cloth and ashes. the don't give a shit party doesn't care, the rich are tired of taxes. so mostly they get reelected by voting against taxes.
the rich don't give a shit party candidate stands on the premise of your fundamental right to not pay taxes, and this tax relief helps them the most. The first Tea Party was about taxations without representation, but the second Tea Party is about representation without taxation, and telling voters they want to pay less in taxes is a pretty easy sell. fewer and fewer people vote, the party of RGAS continues to expand their message to make the poor think they really have their best interest at heart. (that's why I spent hundreds of millions of my own money to run for office, to help you)
grateful, you don't know anything about the Tea Party. Go check the archives of blog sites like Gateway Pundit and just read the signs people are carrying. Spend an hour or two. You might learn something. Corruption in DC and our state houses is bipartisan. Too much power is concentrated in Federal government. The states created the Federal government to create a more perfect union, not an imperial system. We don't mind paying taxes, we don't want our money wasted on the gambling debts of investment banks and deadbeats' mortgages, etc. We don't like the government picking winners and losers and destroying the free market... do some research. Bush was a fool, Obama is the king of fools.
i want to believe in the TP, but everyone is a phony. i like to think that Paul guy might be the real deal, but they're going to make a phony out of him before breakfast. they can make a phony out of anyone. they know all about it.
sincerely JD Salinger
That's all going to change as the crisis unfolds. Soon even the most apathetic citizen will have strong words. Don't forget where we've come from, and you described it pretty well: nobody cared, voted or was even well-informed during the Me years and the Yuppie era. That's when peple could afford to be apathetic. At the rate of 1.8 million new jobless per month, deflating real estate values, incomes and retirement assets with a rising cost of living you'll soon have more caring than you ever wanted. It started slowly enough, but by now everyone has a view on "Bailouts". Many more people than I ever would imagine also freely talk about "Recession", "Ponzis", "Bankers", "Subprime", "Deficits" etc..
Being apathetic now will blindside you to the risk of being on the losing side of the political game. There's lots at stake.
i would say, if you care, then you're the loser, but that's just me talking from the disaffected side. i know these people they would never file for unemployment, or food stamps, or go to the VA hospital (hows that pain in your side, oh its okay now, how about a beer?). and sure there are people who can't escape the entitlement mess. mostly these people don't make enough to pay taxes, so they are disenfranchised, and the bush people caught their mojo and turned an electoral college trick, then started a war to keep it all moving. god bless them, they wanted to run the country, they did, and now obama wants to run it the same way. whew. we're back to square one, the give a shit party has the most votes.
+1...does that negate the junk?
Couldn't agree more! The success of the left/right paradigm is jsut tragic.
elections, become low volume melt-ups
I don't know how the author thinks these are mutually exclusive.
Try to explain how they aren't mutually exclusive (in their extremes) and you'll catch on.
QE to infinity !!!!!!!!
2-3 Trillion ?????????????
It will never end
Here it is Kids ** Hot off the presses today**
http://www.msnbc.msn.com/id/37602308/ns/business-eye_on_the_economy/
JS has been calling this and here it is
enjoy !
So is the consensus here that the Minsky Melt Up will be successful and we should all be covering our index shorts and going long now???
This shit really does your head in.
Well done, but I found some of the hyperlinked previous issues of the author's work to be among the most succinct, yet thorough and intelligible (to those not baptized into the financialist's guild) treatments of much of the backstory and mechanics of this whole, tawdry and time consuming, yet unavoidable distraction, which is apparently going to demolish much of the result of several centuries of productive human labor.
I wonder how many billions of hours of human effort and creativity are going to be wasted, not merely in paying for the debts the finance boys have already rung up for our civilization, but in dropping whatever else we would have been doing with our time and energy for the next decade or so, in order to devote it to understanding their less than zero sum game and trying to figure out how to avoid the black hole they've created.
Screw art, science, or just common labor. From now it's all finance all the time for anybody who wants to survive this. Thanks.
We have gone from bailouts to sovereign default.
If I, as a human, are endowed with inalienable rights, I too am the captain of my soul, a sovereign of myself.
Guess I could default as well. Government says I owe them something? Sorry. Must default.
It is easy now that they pay no interest, so I don't make enough to pay taxes, but they send me rebates on VAT tax and a little pension money.
Please sir, more soup?
Camilo Cienfuegos ...... Images for Camilo Cienfuegos
Che Guevara.............. Images for Che Guevara
The Castro Brothers... Images for The Castro Brothers
They don't look so stupid to me.....
Cienfuegos....disappeared on a simple flight from Camaguey to Havana
Che....sent off to die like the mass murderer, betrayed in Bolivia.
(Send me the hands of Che Guevera....)
Solzhenitsyn’s warning to the West: “The forces of Evil have begun their decisive offensive. You can feel their pressure, yet your screens and publications are full of prescribed smiles and raised glasses. What is the joy about?”
Caviar Emptor identifies the immediate danger as the fight to the nation’s death against deflation by the Fed. Shadowstats’ John Williams this week, in what spells the sinking of the middle class boat, provides the math on the US march to hyperinflation. The “renewed recession,” says Williams, “will set the stage for the U.S. Solvency Crisis and a severe inflation threat.”
Caviar Emptor: It's my contention that the sum total of all the efforts by the Fed, Treasury and US government branches of various stripes have one common and focused goal, though not everyone involved clearly understands this. The goal is combatting deflation at the expense of the US middle class. They are willing to expend Titanic sums, risk the stability of the US currency and credibility of the government to "Reflate" the economy. Only they can't. Because the strategy is fatally flawed. …
In essence, the deflation struggle defines a struggle between the existing power structure (the old guard) and reallocation of resources. But nobody in power ever gives it up for the greater good. So they will use propaganda to narcotize the public into accepting what they define as "safe", "stable" or even "American". And all it will be is a fight to prevent deflation. A fatally flawed, futile experiment in preserving the status quo that will only serve to risk radicalizing politics. The consequences can range from angry confrontations and polarization all the way to civil unrest, radical politics and global war.
John Williams (from subscribers’ June 7, 2010 Money Supply Update Report 301): For those who define inflation in terms of changes in money supply, the current environment is one of deflation. The inflation I discuss, however, is defined in terms of prices for consumer goods and services, and costs there seemed to be reasonably well contained as measured by the CPI-U. Where many people sense that their actual inflation is running higher than that reported by the government, such is covered by the SGS-Alternate CPI ((5.5% April 2010), yet the magnitude of inflation problems ahead will dwarf any issues as to how the CPI is measured.
Inflation fears from a (current) post-World War II record decline in broad domestic money supply certainly are counter-intuitive, but that is because the inflation problem is two steps removed from inadequate liquidity strangling business activity. As suggested by the discussion above (in the report) of contracting real M3, the economy is headed into an intensifying downturn or double-dip recession, which should blow apart forecasts of the federal budget deficit and related Treasury funding needs, as well as trigger massive selling of the U.S. Dollar. Those issues — resulting from the effects of the liquidity squeeze — are what threaten an early breaking of the ultimate inflation crisis. Otherwise, I refer you to the Hyperinflation Special Report for a longer term outlook on the pending hyperinflation.
Said Williams May 01, 2010, in an interview with The Gold Report—A Hyper-Inflation Great Depression Is Coming: “The sovereign solvency issues there (Greece) are minuscule compared to what we have with the United States, which is the elephant in the bathtub. The markets know it's there. The central bankers know it's there. Again, with the downturn in the economy, all the issues are going to be brought to a head. As they come to a head, there will be that effort to dump the dollar. I would expect that, indeed, it will be decoupled from its reserve status, although it could follow after the fact as opposed to before the fact.”
http://www.marketoracle.co.uk/Article19100.html
JR
your something, babe†
JR you just go off†
on assigment i presume.
It’s hard getting anything done, babe, worrying about you, and Bonderman, and Abramovitch…all that wine and that big old heavy, top-of-the-line $2500 safe, and what’s in it. Maybe we’ll get it straightened out at the ZH party, your Colorado mountain place, this Christmas…
ok babe.
bonderman, met up at bonderman's crib.
bonderman's annual boxer day christmas party.
i changed my situation cause i had a contract out on my life, up in the mountains. had to go into a witness protection living.
i really like my safe, it is the only thing i own.
i bought tons and tons of gold jewelry. C A S H. i have absolutely had it with banks.
go up in value because of the artist and the gold and raw diamonds.
give me your email and i will send you some of my porn pictures of myself, i will share.
"He is presently involved in private equity placements internationally along with proprietary trading involving the development & application of Chaos Theory and Mandelbrot Generator algorithms."
If Mandelbrot saw this author's work, he'd probably say Mr. Long was looking at things that appeared meaningful to him ex-post but in reality have zero predictive validity. I'm guessing there is a lot of "development" going on and not much "application."
Also, it's hard to trust the opinion of someone with a spelling error in the first line of his bio.
"Mr. Long is a former senior group executive with IBM & Motorola, a principle in a high tech public start-up..."
Yes, the spelling thing.
So many writers seem to disregard it
in spite of all kinds of spelling checkers available.
Maybe it's too 20th Century to pay attention to the details of spelling.
Still and all, it's not correct when it's spelled wrong.
And to CC's really important and serious question
I have no reasonable answer.
I think I am beyond the deer in the headlights, I am flying over the hood.
Scary stuff!
However, (from much earlier) Obama didn't fail too soon - he was put in place as the sacrificial lamb to take the hit when things got to where they are now. Also, the Tea party "revolution" is a manipulated strategy of the Oligarches to (again) decrease the power of government (if there is, in fact, any "government" power left at this point) and continue with their attempt at total control.
Of course the issue from the point of view of the Oligarches is to retain their power at all costs. If they believe that deflation and lowering the world wide standard of living by an average of 35% serves their interests that is what they will try to do. if, as the author suggests, generating a Minsky "Melt Up" is what they think will work then that is what they will attempt.
As I view the discussion I am constantly reminded that the basic inflationary argument is the TPTB have the wherewithall to control, or at least influence, the historical process to their advantage. They certainly have to this point. However, their view of themselves as "The Agents of History" reveals a dangerous hubris which may ultimately prove damaging to their interests.
On the other hand, the deflationary argument seems to rest on the view that TPTB do not have the power over the historical process they believe they have and that "The Will of Heaven", as the Chinese call it, commands all human activity to bow at its throne.
As a boomer of the Viet Nam era I am constantly reminded of the experience of the all powerful US military in that country. I guess that's why I tend to see the entire process as basically deflationary with the attempts by TPTB as egotistical exercises in futility in the face of a higher power that will, ultimately, overwhelm them.
Time will tell. Either way many will suffer in the process. I continue to prepare myself and my family for a hell on earth that I see increasing daily in the lives of those around me.
An interesting anecdote from the Central Florida area. I seldom watch local news...
A couple of nights ago a local news outlet ran a story about construction on two large road expansions in the Orlando area coming to a halt. It featured business people along the roads losing biz, etc.
Then the news anchor said that 'The contractor working on the roads has run out of money and that is why construction stopped'.
There was no further explanation of WHY the contractor has 'run out of money'...
Municipalities are running out of money and the contractors are not being paid!... and the local news is as bad as the national news...They simply make it up as they go.
According to a John Williams’ Shadow Government Statistics report: “Updated credit numbers (including today’s — June 7th — release of April consumer credit) continue to show lending in contraction, as indicated by declining levels of short-term credit... In terms of year-to-year change, consumer credit (April) is down by 3.2%, commercial and industrial loans (May) are down by 17.6%, and commercial paper outstanding (May) is down by 17.0%.”
The San Francisco Chronicle reported June 5 that “late payments on commercial mortgages bundled and sold as bonds rose 49 basis points to 7.97 percent last month, according to Fitch Ratings…fueled by a $1 billion jump in delinquencies on office loans….
"Hotels had the highest delinquency rate at 18.63 percent, as measured by dollar volume of the mortgages, followed by apartment buildings at 13.65 percent. The rate was 6.03 percent for retail properties and 5.07 for industrial properties. Office buildings were the lowest at 4.59 percent."
Also, according to Bloomberg News on June 5, “Wal-Mart, which has 2.2 million employees worldwide, is hiring internationally after traffic and sales at U.S. stores open at least a year declined, hurt by higher gasoline prices and unemployment. Sales by Wal-Mart’s U.S. stores older than a year have fallen for four straight quarters.”
This strikes me as vague and generic, something BULLSHIT! would tear apart as psychic scamming. Blah, blah, blah doom and gloom. Nothing truly new.
I'm getting a tad tired of the vague promises of collapse. Someone somewhere post a date, fuck it make it within a week. Pretty goddamned easy to claim someday the shit will hit the fan.
SHTF = 3/17/12 ± 9 days.
There. Feel better?
Until then --
The shit hits the fan slower than one would think....by then is smells like roses.
Great article. Thanks for posting it!
I am now reading "This Time is Different" by Rogoff and Reinhart. Much of Long's points are repeated in their book. Prepare, because it is going to get very ugly. There will be much social unrest.
Writes Gordon T. Long in his excellent “Guide to The Road Ahead": The $61 Trillion unfunded entitlement problem associated with Medicare / Medicaid and Social Security is presently a monster on the door step now that baby boomers are beginning to retire at accelerating rates each month…
The reason the Medicare / Medicaid / Social Security entitlement program is a problem is not because of the baby boomers but because the politicians keep adding on millions of “entitled” people who never paid into the “entitlement” program.
Here, item by item are the left turns Social Security has taken from its inception to nightmare, as posted from Yazoo earlier this week by a ZH blogger:
Our Social Security
Franklin Roosevelt, a Democrat, introduced the Social
Security (FICA) Program. He promised:
1.) That participation in the Program would be
Completely voluntary,
No longer Voluntary
2.) That the participants would only have to pay
1% of the first $1,400 of their annual
Incomes into the Program,
Now 7.65%
on the first $90,000
3.) That the money the participants elected to put
into the Program would be deductible from
their income for tax purposes each year,
No longer tax deductible
4.) That the money the participants put into the
independent 'Trust Fund' rather than into the
general operating fund, and therefore, would
only be used to fund the Social Security
Retirement Program, and no other
Government program, and,
Under Johnson the money was moved to
The General Fund and Spent
5.) That the annuity payments to the retirees would never be taxed as income.
Under Clinton & Gore
Up to 85% of your Social Security can be Taxed
Since many of us have paid into FICA for years and are
now receiving a Social Security check every month --
and then finding that we are getting taxed on 85% of
the money we paid to the Federal government to 'put
away' -- you may be interested in the following:
Q: Which Political Party took Social Security from the
independent 'Trust Fund' and put it into the
general fund so that Congress could spend it?
A: It was Lyndon Johnson and the democratically
controlled House and Senate.
Q: Which Political Party eliminated the income tax
deduction for Social Security (FICA) withholding?
A: The Democratic Party.
Q: Which Political Party started taxing Social
Security annuities?
A: The Democratic Party, with Al Gore casting the
'tie-breaking' deciding vote as President of the
Senate, while he was Vice President of the US
Q: Which Political Party decided to start
giving annuity payments to immigrants?
AND MY FAVORITE:
A: That's right!
Jimmy Carter and the Democratic Party.
Immigrants moved into this country, and at age 65,
began to receive Social Security payments! The
Democratic Party gave these payments to them,
even though they never paid a dime into it! …
AND CONGRESS GIVES THEMSELVES 100% RETIREMENT FOR ONLY SERVING ONE TERM!!! … (end)
In addition, Obama's IRS Czar Douglas Shulman announced more entitlements in his 2009 Tax Mission letter: “[T]he Earned Income Tax Credit was increased for families with three or more children (read Mexican-American)… Eligibility for the Additional Child Tax Credit also increased, meaning millions more low-income earners can claim it”
The maximum EITC Benefit in 2009 for was $5,657 (cash) for “Three or More Qualifying Children; $5,028 for Two Qualifying Children; $3,043 for One Qualifying Child: and $457 for No Children. For tax year 2008, approximately 24 million taxpayers received over $49 billion in EITC benefits.
According to Results.org, “What makes it so effective is that the EITC is fully refundable; if a tax filer's EITC exceeds the amount of taxes owed, he/she gets a full refund of any remaining amount, even if the worker’s tax liability is zero. In order to receive the EITC, low-income workers must file a tax return (even if they do not owe any federal income tax).”
http://www.results.org/issues/us_poverty_campaigns/economic_opportunity_for_all/earned_income_tax_credit/
Except FDR himself spent some of the SS trust fund on A bomb research. Matter of fact EVERY FUCKING PRESIDENT tapped the fund since it started.
Love that revisionist history.
"EVERY FUCKING" one of them is correct. Thank you.
The only PERSON who can OK an InterAgeny Loan between the 50+ agencies of the Executive Branch is, you guessed it, the Chief Executive.
So if somebody is stupid enough to make this fucking disaster grist for the political mill... here's the punchline...
After 26 years of Republican Chief Executives, with Bill Clinton being my favorite Republican CE, there really isn't much of a SS Trust. It's IOUs from the Treasury. Repos without collateral, or commercial paper, if you like.
One of the main reasons the gov't will decide to whittle down SS outflow, is because they don't want us dumb Mainstreeters to realize that the Treasury will have to sell bonds to make good on the IOUs, so that SS has cash to pay out.
Any cuts in spending will only mean a reduction of the soon-to-be realized liabilities, which was actually spent years ago, without having to bring bonds to market to cover it.
They don't make a KY jelly for this situation.
I thought this was a great charting of what we already know. What was not included was Black Swans, with big black plumes:
http://www.nytimes.com/gwire/2010/06/08/08greenwire-scientist-awed-by-size-density-of-undersea-oil-98517.html
The scientists are freaking. The military is trying to play it down. You decide. This oil spill may negate everyone's theory of everything.
There is a surprising amount of info on cnn.com; though not the complete truth/picture by any means, they seem to be trying to get info out from the blackout. Or at least keeping less-than-convenient stories displayed. With the new 'official' estimates of 20-40K barrels/day minimum, I thought hard about the ZH reader(s) who keep quoting Revelations. BP seems to be having a 64% kill rate:
http://edition.cnn.com/2010/US/06/09/gulf.oil.spill/index.html?iref=obinsite
Thanks CD.
As in, it's support for the abiotic oil theory? I always thought that it was quackery, but if it's true, that'd be a strange turn.
The damage to the ocean makes me think that we're living in a William Gibson novel.
indeed.
the information on this catastrophe is being held back, no doubt to be released in micro-managed increments so as not to startle the herd, but this IS huge. . .
as is the world-wide government's race to "own the weather" - so much for theories, eh?
http://www.globalresearch.ca/articles/CHO409F.html (for beginners)
I appreciate the work Tyler has put together.
But fwiw, I am not nearly as pessimistic as I was 2 years ago when SHTF.
Unemployment is always lagging in a recovery. The next opportunity is to finding and implementing solutions that will ensure survival as humans in an ever increasingly hostile environment with depleted resources.
Gold is a good hedge against the sovereign debt issue and financial crisis, but in the end the best, cleanest, most liveable environment is going to be sought after more like gold. What good is gold when your front and backyard look like Chernobyl?
Speaking of Chernobyl. After Chernobyl the world chastised all nuclear options for energy. Same is starting to develop with GOM or America's Chernobyl. As a result there will be increased potential in the alternative energy sector and investment from private as well as public funds will flow. Perhaps resulting to the next possible bubble in a stock market.
The future is offering challenges and challenges offer opportunities.
What the world is lacking is political leadership willing to make tough decisions and address the challenges, thus addressing the opportunities.
We need a "new MORNING in America".
My view is that God is giving Humanity an IQ test. Word: We're Failing!
Let me help you with that:
There you go, all better.
An article by Romy Varghese in the WSJ has raised the specter of an imminent flood of municipal bond defaults which many of the more astute financial commentators have long expected to inundate the nation with a vengeance, crippling the ability of municipalities to fund basic service and public safety issues, and in general wreaking an unprecedented economic and social havoc across the nation. The muni-bond canary in the coal mine was found dead in the tiny one square mile municipality of Central Falls, Rhode Island, whose mayor and city council petitioned the State for receivership on May 19, 2010 citing a $3 million deficit in its $18 million budget, a deficit which is expected to grow to $5 million in 2011. The municipality also must pay interest on $17 million in general obligation debt. Even more serious was the revelation of only $4 million in assets in the municipal pension fund with an outstanding $35 million dollars in liabilities. It is estimated that more than one out of every three residents of Central Falls, a city of 19,000 with an Hispanic population of 40%, lives in poverty. Central Falls acheived some national notoriety last March 1 when President Obama publicly endorsed the firing of 93 teachers and administrators from the senior high school by the Board of Trustees as only 7% of 11th graders tested proficient in math. Some of the teachers were renistated after a labor agreement allowed them an increased work load and longer hours.
If Cental Falls can't afford the services, then they simply shouldn't be a municipality.
The closing of services can be compensated by way of merging with another, perhaps stronger muni.
Default on debt is and will always be an option. No matter what the guarantees, when someone takes on the risk to finance debt to earn income the party has to accept a default when the loan cannot be satisfied anylonger.
Valuable report, Yardfarmer.
Interesting, that according to the Tribune Washington Bureau this week, “the bulk of the new private sector jobs have been going to workers with a high school education or less instead of to the middle-class workers on whom any long-term return to prosperity depends...adding to the worries so far this year.”
Expanding upon your municipal budget news, San Jose's Mayor Chuck Reed, declaring that San Jose’s public employees have refused to do their share to balance the budget, has taken a hard line on the city’s six unions and has asked the City Council to cut workers’ pay and benefits this coming week. He previously had asked for voluntary concessions.
The San Jose Mercury News likened Reed’s aggressive proposal to "a nuclear strike in a city where unions long have enjoyed political power." The cuts are needed to help close a record $118.5 million deficit.
“Wages and benefits continue to climb, even as the economy falters,” the mayor said, and quoted a recent civil grand jury report that found soaring employee costs were devouring municipal budgets throughout the country. (The six unions don’t include highly paid police and firefighters who can take pay disputes to an outside arbitrator under right voters granted in 1980 or to unions covered by existing contracts.)
Without the 10 percent cut in wages and benefits, Reed said, hundreds of layoffs will be necessary.
http://maxkeiser.com/
.
[KR50] Keiser Report – Sucking Gold & Slurping Silver with Freddie, Fannie & Confucius
key here. end the fed.
dog eat dog vomit
"R.I.C.O baby!"
Could today's 235-point stock rally be the beginning of the Minsky melt-up? Just wondering! Long's charts seem to point toward another surge upward soon, followed by the Mother of all Crashes in 2011-2012.
Today felt alot like March 2009.
Just wait until the day that feels like September 2008.
Worse, just wait for the day that makes September 2008 seem like a minor glitch.
Ya, everything in Europe is fixed now.
umm...not
http://www.calculatedriskblog.com/2010/06/update-on-european-bond-and-cd...
just love the articles about extend and pretend,learned so much from them.
happy to be all in on silver,gold,love and knowlege.
free minds will defeat facist in the end.
The most I have learned about economics and finance etc, has been from blogs like ZH. This was never my focus till 2006. I have watched waves of seagulls shit on everything for months. I have read damning revelation after damning revelation, I have dived so deep, no shower will ever wash me clean. I have only one really perplexing question. Why do we keep arguing about which way to wipe? does it matter? It's still shit. This is beyond a political issue at this point, but all the arguments I hear is still slanted towards gaining points for a home team. THERE IS NO HOME TEAM! You are on your own, ammo, gold and provisions aside, you have no one else on your side.
I'm still not buying that gun. It's just a diva girl thing.
Very interesting! I've noted a high percentage of the ladies posting here. That is a very good sign. Everyone knows that you chicks run everything anyhow -- when the truth is told. I'm not trying to be sarcastic at all; it's genuine admiration.
And, about the gun, when you decide you want one be sure to do some real training, not just the minimum you are required to do to get your carry permit.
There is a way out of this shit and you are not alone.
Gold and silver are our financial weapons,just poor your money out of the system and starve the beast.
Done this a few years ago and already convinced a few people to do the same,including my own mother.
Just leave your computers sometime and enjoy nature or go and watch some childeren playing,it will remind
you what we are fighting for.They are our home team!!
Math questions are so hard!
Quants measure numbers…. but behavior drives all of this… learn about Cliff High’s work.
Interesting, succinct article. Seems reasonable enough. It's just that I don't think the end game will be quite so dire. I think with the exception of the occasional systemic financial panic attack, debt and currency crises will be rolling around the world as they have been since the banking system began to implode. Also, I don't think that one needs to progress linearly from a banking crisis to a sovereign debt crisis to a currency crisis. They are all intertwined and can occur in various places at various times. The shit will hit the fan when they take out and shoot the US bond market, triggering a rapid rise in bond yields and rapid loss of value of the US dollar. But that won't happen until Europe is on solid footing, which could take a couple years.
I have been reading ZH for two months now - and am very happy to see others who think as I do - coming in from the wilderness. Remember the line from "Marathon Man" - "is it safe yet? Is it safe yet?" I haven't contributed - because I simply am not an expert in Economics - and can't say anything with any skill- altho, gotta say, love Chumbawumba- even if he is a racist motherfucker- he is most often correct. I am Marcia Brady's ChumbaWumba. I am a surgeon- former military. My sense, now, is readers on ZH - and I guess I amtalking to Tyler here mostly- since her directs traffic - readers really need - not as much -general "Lamo" banter - but really, desperately need a good consistent source of some very real world solutions to what is going to get very real very soon. I am not that person- but there are some serious killer infnatry airborne motherfuckers who are out of our forces in Iraq and Pakistan and Afghanistan - some serious Mo Fos- who we need to get onto ZH to tell us how to survive this. It aint me babe- but, Tyler, try to get these guys here. We need to take it to the next level - examples are need fpr Gen 4 night vision goggles- "we own the night", SWAT hand-carry heavy ballistic shields, police badges to get thru roadblocks- 15 foot lengths of razor wire bicycle locked to cinder blocks - moblile RV and ATV with Barret 50 cals mounted,, unfilled sandbags. The best goddmaned rangefinders and binoulars you can buy. Tyelr, and ZH- you got to keep a well-focused thread on the real shit that needs to be done- otherwise, some real assed rednecks, with real ass .308 - are going to take your Gold from you, in a Kentucky minute - think about it - you show up regularly paying in gold and silver coins, and you are dead meat. Rangers lead the way.
we have enough trouble dealing with the devolving economy, much less insurrection. the best advice i have for these mo fos, is don't come home, there's nothing here for you, get yourself a hootch, take your retirement out, and milk a few goats. nothing left here for you.
Dude, a little mellow dramatic? Where do you live? Sounds bleak. BTW you avatar gives me nightmares. One of the best.
Lots of vets here macktheknife, who post from time to time. Probably best to get that info over at survivalblog.com, Good firearms training can be had at frontsight. Various techniques can be discussed in a blog, but they are generally useless until actually practiced thousands of times!
Exactly. Survivalblog.com - just about everything you can think of is there.
Hulk's plan is the goal. Isolated, self-sufficient community that can produce their own high-quality calories. Without a sustainable plan for food you will be food. Having training and equipment will help the 24/7 LP/OP (listening/observing post) keep an eye out for trouble. It's not about preparing for battle as much as hedging your bets, concealing activities, and crossing fingers/praying to god that the heavies don't find you, and if they do, that you have the tactical advantage to survive.
Many will knock the "stocked cabin in the boonies/off-grid bunker" but it's making more and more sense. Storable food is necessary to help with the transition to full food independence; consumed sparingly; good for winter when nothing is growing/producing.
Hey grateful un - happy to see a response. I hear you. Imagine, for a minute, a Vet Nam Vet - right now - living in a little one room walk-up off of Tu Do street - a few blocks from The Majestic- imagine this 60 year-old grizzled combat vet, sitting on the floor dinking Ba Mi Ba with an twenty year old girl just feeding him rice and chicken soup. He went back, back into the Nam, and he looks out on the Samsung billboards on stilts over the tin roofed shacks on the other side of the Saigon River- and there are all these lily pads, from fucking Cambodia, floating on the river- and he has never been happier. Don't come home. Never get off the boat, never get off the boat.
What are you going to do? I am not going to feed at the public trough - social security, unemployment. I am not going to teach school or be a police officer for 25 years only to have society support me for the rest of my life. I am going to earn my own way by running a business that rewards me if I truly provide value to others. I will be responsible for my own retirement and be satisfied to live off of the fruits of my own labor. I am teaching this philosophy to my 3 sons who are in their 20's.