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Guest Post: Fuck The Deficit (Or Will The Deficit End Up Fucking Us?)

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Fuck The Deficit (Or Will The Deficit End Up Fucking Us?)

Submitted by Gonzalo Lira

Currently, the United States is conducting one of the most remarkable experiments in fiscal finances in world history.

The
American economy is in a severe recession. Coupled with that—as both
partial cause and partial effect of the recession—the United States'
banking system crashed in the Fall of '08, a crash which in many ways is
still ongoing as I write this, nearly two years later.
What
the recession and the concomitant banking crisis have caused are,
essentially, a fall in aggregate demand levels, as well as a fall in
aggregate asset value. In other words, the population is spending less,
and asset values have deteriorated, both nominally and as compared to
any basket of hard commodities.
These are the
two metrics which the two principal camps of current American
macroeconomic thought consider vital. “Saltwater” economists look to
aggregate demand levels, while “freshwater” economists look to aggregate
asset value—each of these camps view their fetish-object as the
cornerstone for economic growth, development and prosperity. Naturally,
when either of these camps see their juju slide, they freak out. They
declare the economy to be “in crisis”—and further declare that
“something must be done”.
Something has been done: It's called The Deficit.
To
combat the fall in aggregate demand levels, the Federal Government has
embarked on a massive spending program. This spending program has been
financed by debt issued by the Treasury. The way things are looking,
another big spending package is in the offing some time soon—that should
keep the “saltwaters” happy.
On the other
hand, to combat the fall in aggregate asset value—and keep the
“freshwaters” happy—the Federal Reserve Board has embarked on an asset
purchase program that is also massive and unprecedented.
Through a
fairly complex scheme that seems to be deliberately opaque, the Fed has
relieved the Too Big To Fail banks of their deteriorated assets, and
given them cash, in an ongoing process. The Too Big To Fail banks have
turned around and used that cash to purchase Treasury bonds—which are
being used to finance this massive Federal Government spending. Whether
there has been collusion between the Treasury, the Fed and the TBTF
banks is for the courts and the historians to decide—but prima facie, it would certainly look so.
This
two-sided scheme—more Federal Government spending on the one hand, and
more propping up of asset values on the other—adds up to The Deficit.
When
I refer to it as The Deficit (it is too majestic for the lowercase), I
am not referring to a mere fiscal shortfall—I am referring to a policy
mentality. This policy mentality—shared by both “saltwater” and
“freshwater” economists—effectively amounts to a suspension of the
notion of opportunity cost. In the realm of The Deficit, the
macroeconomic policy questions cease to be “either/or”—they become
“both/and”. All policy options can be achieved because—according to the
macroeconomic policy known as The Deficit—the American fiscal shortfall
can never bring the United States to bankruptcy. As Dick Cheney so
memorably phrased it, deficits don’t matter—so The Deficit as a
macroeconomic policy can continue indefinitely.
In
a historical sense, The Deficit is unprecedented: Never before in world
history has a reserve currency provider gone into this much debt, with a
currency that floats on nothing but air. This is the key issue: The
dollar is a fiat currency. The Roman, French, British, Austro-Hungarian
empires, all of them world-historical empires in their times, all might
have gone way into the red on more than one occasion—but none has ever
done it on a purely fiat currency before.
America is the first to do so (“U!! S!! A!! WE’RE!! NUMBER!! ONE!!”). Hooray.
The Deficit is the policy that the United States is implementing, and it has had several effects:
1.
The most obvious, it has allowed the Federal Government to finance
every last one of its spending programs, in an effort to boost aggregate
demand levels. No need for Obama’s vaunted talk of “tough choices”—the
Federal Government has officially been renamed the Great American Teet.
2.
It has prevented the TBTF banks from acknowledging the plain fact that
they are broke. Indeed, the Fed asset buy-back has effectively kept the
banks solvent in a practical sense—they have money to pay off any of
their liabilities. But more importantly from the Fed's point of view, it
has sustained deteriorated aggregate asset values in the overall
economy, at least on a nominal basis.
3. It has created a fiscal shortfall of staggering proportions—currently about 100% of GDP, and growing without end.
4.
Finally—and most importantly—it has created the generalized impression
among policy makers that fiscal shortfalls indeed do not matter, and
that liquidity and stimulus simply mustbe provided whenever there is a crisis, the rationale being that the economy is too “fragile” to withstand the “shock”.
This
is a key effect of this policy, I would argue the most important of all
of the effects: The fact that the fiscal shortfall has crossed the 100%
of GDP mark, and nothing bad has happened has given everyone a false
sense of security—the sky has not fallen, the world has not ended.
Therefore,
as a practical political matter, the people with decision-making
authority in American public policy have effectively said, “Fuck The
Deficit, let’s keep on truckin’.”
But what if
the sky does fall? What if we are simply living in the lull before the
fall? I mean, it can't be that this enormous fiscal shortfall can
continue growing indefinitely, can it? It has to lead to some kind of
ruinous effect, right? Like drinking a bottle of scotch in a single
sitting—you feel good while you're doing it, sure, but you know you’ll
feel like death warmed over soon enough, right?
I mean, The Deficit will eventually come back and bite us on the ass—right?
Lately, there have been an awful lot of clever people explaining how, in fact, The Deficit will not harm us in the long term.
Very sensible-sounding words, and seemingly-sophisticated arguments, are deployed to make precisely this point. Others further argue
that The Deficit, because of its sheer size, will become its own growth
engine, and hence will grow the economy to such a point that The
Deficit will essentially pay for itself—a bit of financial magic that
almost seems believable.
And to any talk that
The Deficit and the stealth-monetization going on might lead to
hyperinflation, these clever people are scoffing and saying, in effect,
“Haven’t you heard the news? We got deflation, pal—forget about
inflation, let alone hyperinflation: We gotta spend-spend-spend, in
order to whip that deflationary monkey. After that’s taken care of, and
the economy’s growing again, that’s when we’ll be able to bring down The
Deficit.”
Recently, I had a private
exchange with a financial blogger, about precisely this point. This
blogger—who should have known better—argued that since we were in a
deflationary environment, there were currently no inflationary
pressures, and none in the forseeable future. Therefore, she argued,
since the economy was experiencing a deflationary trough and inflation
highly unlikely, then hyperinflation was an impossibility. Nay, an
absurdity, or so she claimed.
She's clever, but she made a common mistake—she confused inflation with hyperinflation.
Granted,
they do seem to look alike—both of them are essentially money losing
value against wages, commodities and goods-and-services over time.
Commonly—and mistakenly—hyperinflation is viewed as simply
inflation-plus, inflation-XL. After all, the name seems to imply it: Hyper-inflation. Inflation’s big brother. Inflation with an extra bit of kick.
This is a dangerous fallacy.
Inflation
is indeed the economy “over-heating”, in Neo-Keynesian parlance—wage
pressures, say, dragging prices up across the economy, or perhaps raw
commodity prices doing the same. Inflation can gallop up to 25% a year,
but still remain a distinct animal from hyperinflation. Ordinarily,
inflation is simply the economy eating up commodities—be it raw
materials or labor—so as to meet demand.
Hyperinflation,
however, is the loss of faith in money. It is not that prices are
rising because the economy is moving forward—it’s that prices are rising
because nobody believes that money is worth a damn anymore.
Hyperinflation
is not simply money-printing: Rather, it is when no amount of money
will get you what you want. Zimbabwe-style hyperinflation is an example
of government money-printing run amok. The Zimbabwe example gives us the
mistaken sense that hyperinflation only happens in “disorderly
printing” regimes. But that’s not the case.
Chilean
hyperinflation in 1973 (which led to the September 11 coup), or Weimar
style hyperinflation (which led to you-know-who), are more indicative of
what I’d call “scarcity” hyperinflation: Both are examples of when the
scarcity of basic commodities suddenly and abruptly leads to a complete
loss of faith in money—the belief that no amount of money will get you
what you want or need.
That’s hyperinflation.
2008
Deflationists (of which I am a member) argued that after the credit
crisis, there would be a deflationary trough. The reasoning of the 2008
Deflationists was, credit should be considered as part of the money
supply—so when credit contracts sharply, as happened following the
banking crisis in ’08, then that’s the same as if total money supply had
contracted. A constriction in the money supply obviously leads to
deflationary pressures: Less money is available for the same or more
goods. Hence prices fall to meet lowered demand. Hence wages fall as
business incomes fall. Hence less money. Hence downward spiral.
As
the 2008 Deflationists predicted, today the U.S. economy is in a
deflationary trough—I am certainly not arguing otherwise: The evidence
is all around, and too obvious.
But what I am
saying is, our current deflation can trip over into hyperinflation at a
moment’s notice. The stumbling block—the thing that could trip us over
from deflation to hyperinflation literally overnight—is The Deficit.
Not just the Federal shortfall itself, but the policy
implicitly embodied by The Deficit: The belief that all you need to do
is throw money at the problem—open up as many liquidity windows as
needed, or expand Federal spending as much as necessary, to prop up
those twin aggregates I mentioned before, aggregate demand and aggregate
asset value.
The pernicious sense among
American macroeconomic policy makers that fiscal shortfalls don’t
matter—and don’t matter especially in a financial or economic crisis—is
what I believe will lead to hyperinflation. Policy makers—who have lost
any fear of providing as much liquidity and stimulus as necessary to
steamroller any problem—will have no compunction about adding to The
Deficit at the next crisis.
That’s when hyperinflation will kick us in the teeth.
If
I had to make a prediction, I’d say that the immediate trigger for a
hyperinflationary catastrophe will be a sudden and unexpected commodity
spike. It won’t necessarily be big, but it’ll be flashy—enough to cause a
panic.
This will be the opening stages of hyperinflation: It will be a market panic, and it’ll be fast.
At
the next panic-inducing crisis, American public-policy makers will once
again turn to The Deficit, providing more liquidity and more
stimulus—and this will make the financial markets realize that the
fiscal shortfall is unsustainable: It will be obvious that all those
Treasuries cannot be repaid—or if they are ever to be repaid, it will be
done by the Fed via surreptitious monetization. In other words, a
dollar with lesser value.
Thus, everyone will
want to be the first to get out of the dollar—and everyone will want to
be the first out the door all at once.
Markets
turn on a dime, and they are not rational in the short term—they’re
rational like a herd of thundering buffaloes hopped up on crystal meth.
As
everyone gets out of the dollar in the financial markets, there’ll be a
cascading effect, as everyone—both Wall Street sophisticates and Main
Street naifs—try getting out of their dollars, and into hard assets:
Gold, land, food, whatever.
In other
words, hyperinflation as I have described it above: A loss of faith in
money. The belief that no amount of money will buy you what you want.
The
Deficit—that’s the demon’s name. The Deficit. Not, as I have argued,
the fiscal shortfall, but the macroeconomic mentality that fiscal
shortfalls in a reserve fiat currency do not matter. The sense that as
much liquidity and stimulas must be and can be provided to maintain
aggregate demand levels and aggregate asset value.
Policy
makers are not exactly known for being prescient timers of the
markets—at the next market crisis/panic, they will without hesitation
provide stimulus and liquidity, adding even more to the fiscal
shortfall. But it will be the market’s and the public’s loss of faith
that that fiscal shortfall will ever be repaid that will lead them to
abandon the dollar.
Once they lose faith in
the dollar, hyperinflation will ensue, as public policy officials
continue providing “stimulus” and “liquidity” which the market will
interpret as nothing but worthless paper.
Actions
have effects—it is stupid to think that massive deficit spending of a
fiat currency won’t have consequences. The policy embodied by The
Deficit has brought the U.S. economy to the brink of oblivion—with no
way to pull back from that brink. So at this point, the only question
is, what will finally tip it over, and when will that tip-over happen,
and what will the . So at this point, there are only two questions that
need to be answered: One, when will the economy finally tip over the
brink, and two, what will give us that final push.
 

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Thu, 08/05/2010 - 19:09 | 505926 Monkey Craig
Monkey Craig's picture

people will wake up about the deficit when 60% of their paycheck goes to taxes, interest rates are double digits, or the paycheck won't even buy a lunch or pack of cigarettes

Thu, 08/05/2010 - 19:37 | 505970 Boilermaker
Boilermaker's picture

You just described Europe.

Thu, 08/05/2010 - 22:07 | 506252 Guillermo
Guillermo's picture

Europeans get health care, good schools, good vacations and state support for their taxes. We get bombs with which to kill muslims for Israel.

 

 

Thu, 08/05/2010 - 23:03 | 506389 TBT or not TBT
TBT or not TBT's picture

Europeons get to wait in lines, get their kids programmed in state schools, get forced to have a lot of free time and "vacation"...time essentially..in exchange for the very little income available after a million taxes on everything they do and want.   They're so depressed and repressed that they're not even having kids, which is causing the gigantic welfare states over there to collapse in slow motion.  The motion will speed up quickly, as it has repeatedly in European history.

Thu, 08/05/2010 - 23:04 | 506391 TBT or not TBT
TBT or not TBT's picture

EUO bitchez!      (and not TBT just yet)

Fri, 08/06/2010 - 08:35 | 506772 Zina
Zina's picture

Europeans are much happier with life than Americans.

Wanna proof?

We don't see crazy europeans shooting room-mates and co-workers every month, as we see in the US...

And we don't see crowds of europeans trying to emigrate to the US.

Life in Europe is much better than in the US. If I had to leave Brasil and choose to live in the US or in Europe, I obviously would go to Europe.

Fri, 08/06/2010 - 10:17 | 507102 cmalbatros
cmalbatros's picture

+1 , europeans live longer than Americans - for now - less stress due to "Free" medical & Higher education & a much better Social safety net.

Fri, 08/06/2010 - 18:31 | 508218 Quantum Nucleonics
Quantum Nucleonics's picture

Longer lifespans in Europe have less to do with socialized health care (survival rates for cancer in Europe are signficantly lower than in the US, for example) and far more to do with demographics and diet.

Fri, 08/06/2010 - 11:26 | 507343 Edmon Plume
Edmon Plume's picture

That's proof?  You should be unhappy for the sole reason that you aren't even coherent.

You can keep your fat dumb and happy lives.  I'll cling bitterly to my guns.  Betcha the Greeks are starting to rethink this whole happiness thing.  In time, you will too.

Yes, please stay out of the USA.  We don't need any more teat sucking entitlement victims.

Fri, 08/06/2010 - 20:59 | 508381 SWRichmond
SWRichmond's picture

I'll cling bitterly to my guns.  Betcha the Greeks are starting to rethink this whole happiness thing.  In time, you will too.

I share this idea.  Welfarism doesn't work; eventually, everyone figures out that hard work is for suckers, and no one works anymore. 

Sat, 08/07/2010 - 01:46 | 508641 Guillermo
Guillermo's picture

It's an either/or. Either we pay taxes for bombs OR we pay taxes for benefits. I would rather my taxes benefit me and the city/state/country I live in than the cash be used for a fucking horrid degenerate empire.

Sat, 08/07/2010 - 06:50 | 508720 SWRichmond
SWRichmond's picture

False choice.  I don't want to do either.

Sun, 08/08/2010 - 00:50 | 509338 Guillermo
Guillermo's picture

What you want doesn't matter.

Fri, 08/06/2010 - 00:09 | 506477 Arkadaba
Arkadaba's picture

Give me a break. U.S. education is a joke. I'll never forget meeting one person who had a Master's in the same field as I did- and I wasn't sure how she got out of high school let alone got a Masters.  Yeah she was Catholic so I'm sure she will reproduce. 

Fri, 08/06/2010 - 08:24 | 506765 -Michelle-
-Michelle-'s picture

Did you also obtain your degree from the US educational system?

Fri, 08/06/2010 - 11:52 | 507416 Edmon Plume
Edmon Plume's picture

True, a degree is no longer proof of mastery of any subject, except for perhaps math or engineering.  I'm seeing some trending toward skills-based employment, rather than degreed employment.  Employers are weary of not being able to trust the broken education system, and are responding in kind.  There are still a great many holdouts to the old "bachelor's degree required" theme.

Europe is losing the demographics war, and the US isn't far behind.  I wouldn't sneer at reproduction - it is a country's saving.  Unless you think that a citizenry doesn't need citizens.  The Catholics and Protestants were right about the carnage wrought by the birth control/sexual freedom/abortion/no-fault-divorce movements in the 1960s and beyond.

Fri, 08/06/2010 - 00:51 | 506518 BobWatNorCal
BobWatNorCal's picture

Even Euros in the US don't have kids. It's kind of creepy.

Fri, 08/06/2010 - 01:00 | 506529 Guillermo
Guillermo's picture

Who can afford them? Between taxes and inflation a family with more than one kid requires an income that very few people have. It is only going to get worse.

Thu, 08/05/2010 - 23:57 | 506461 lolmaster
lolmaster's picture

You're welcome to move to Cuba or Saudi Arabia

Fri, 08/06/2010 - 01:12 | 506538 Fred C Dobbs
Fred C Dobbs's picture

No you're not.  One cannot immigrate to just any country.  

Fri, 08/06/2010 - 05:59 | 506646 breezer1
breezer1's picture

i emailed the cuban consulate once asking about immigration and business regs and recieved no response after several times.

Fri, 08/06/2010 - 08:05 | 506734 israhole
israhole's picture

How true, we get more wars for Israel, and all the enemies that come with it.  

Fri, 08/06/2010 - 08:53 | 506823 Max Hunter
Max Hunter's picture

Come on now.. You can't tell me you don't get that deep down clean feeling for hating Muslims and brown people like we are conditioned to..

Besides, Israel is our best friend. They would do anything for us..  They are a beacon of democracy.. It's all good.. Go back to sleep..

Thu, 08/05/2010 - 22:03 | 506270 B9K9
B9K9's picture

Overall, a nice analysis. Nothing new to any regular ZH readers, but it still conveniently summarizes all the key points.

The only thing I would quibble over is that there should at least be a nod to the notion that our current policy initiatives were never implemented (nor are being maintained & potentially ramped up) with any sincere intent.

Ultimately, regardless of the current crisis, there are a number of large-scale domestic macro trends that really would have confounded any established status quo. Among these are ongoing demographic changes, resource depletion, de-industrialization & debt accumulation.

So faced with these underlying facts, would someone with both awareness & power set up a purposeful fail, or would they merely humor & go along with academics who proposed these farcical policies in order to loot & strip any last remaining asset values?

(I guess a potential third option is that certain members of the power-elite might actually hope & believe - guffaw - that any of these actions might actually succeed.)

I guess that's up to the historians to argue over. For those of us living in the here & now, about the only thing one can count on is this mofo is not gonna last very much longer. Benny, Bammy, Timmy & the cabal of hench people are shit out of time.

If extensive Congressional hearings don't bring Barry down after Nov, team Petraeus might take matters into their own hands. Either way, as many others have noted, the USA we grew up with & have always known, as if it was some kind of natural absolute like the sun rising each day, is done, over, kaput, all pau.

Fri, 08/06/2010 - 01:00 | 506531 DoChenRollingBearing
DoChenRollingBearing's picture

+ $1.4 trillion to the author and to you B9K9.

There appears to be no way out of the box.  It is either hyperinflate or default.  Hyperinflation seems to be the solution most go for.

Congressional hearings to bring Barry down.  Only if the 'R's win big.  Even so, I doubt there is the will among almost any politician to resolve all of this.

Woe will be upon us.  Prepare...

Fri, 08/06/2010 - 08:22 | 506762 MeTarzanUjane
MeTarzanUjane's picture

Maybe, but Tyler does not need to resort to such vulgarity to drive home the facts. Catchy titles are a ZH staple and normally set the tone. I hope they institute a policy regarding such or soon each title will be descriptive of all things excretionatory.

Fri, 08/06/2010 - 11:33 | 507356 defender
defender's picture

And I thought that I was conservative.  If you look at the top of the page you will notice that it says "guest post".  That means that the title and body are both from another author.  But outside of that, if you think that these phrases aren't common language, you must not watch any TV, or go to any grocery stores.  I think you need to get out more.

Fri, 08/06/2010 - 13:54 | 507702 MeTarzanUjane
MeTarzanUjane's picture

TRUST me Defender, Tyler & Co have the final right of refusal and can therefore edit and or influence editors.

Meaning; ZH blesses every article posted.

I rest my case.

(Your sphere of influence is TV and the grocery store? You may want to look in the mirror, council.)

Sat, 08/07/2010 - 08:53 | 508758 MaximumPig
MaximumPig's picture

Bring Barry down and replace him with what?  A military receivership run by Petraeus?  Is he a follower of Austrian school?  Otherwise, if it's just another Republicrat, we'll be having more of the same.  Sure, you could point to a couple of Republicans here and there who follow Austrian school thinking, but what chance do you think someone like that has in the mainstream Republican party?  Paging Ron Paul . . .

Thu, 08/05/2010 - 21:28 | 506218 Hedge Jobs
Hedge Jobs's picture

all this useless bitching and moaning, has any noticed the H&S reversal pattern that has formed in the DOW over the last 6 months?

shorters have all capitulated (we dont have any more down days they all say!the market only ever goes up! boo hoo!)as they got carted out thanks to the FED. Well if this isnt a right shoulder at 10700 i dont know what is. Even the most basic algo would be able to recognise this, and so would humans if they stopped complaining and actually started paying attention.

likes like a pretty good set up to go short now on technicals, sentiment and definatelty fundamentals although i realise these dont matter much anymore.

time to put the shorts back on bitchez!

 

 

 

 

Thu, 08/05/2010 - 21:33 | 506227 goldfish1
goldfish1's picture

yeah yea, technicals schmechnicals...it's the guy(s) behind the curtains running the numbers so don't get overly confident or bet against the house.  

Thu, 08/05/2010 - 21:53 | 506263 Hedge Jobs
Hedge Jobs's picture

Thanks for tip GF1, But i closed out my shorts and went long at the start of July (check post history if you dont beleive me) and this looks like a very low risk time to go short again. You certainly wouldn't be going long here.

So how do make money for yourself and clients in this market then? Or are you just another one of the many armchair spectators who likes to pass comment but has no skin in the game?

Thu, 08/05/2010 - 23:17 | 506411 Panafrican Funk...
Panafrican Funktron Robot's picture

Yeah I'm looking at late August through early October as being the period when the shorts accelerate.  Now's the time to get in while it's still relatively cheap.  700's might actually turn out to be right on lol.

Thu, 08/05/2010 - 23:23 | 506418 dark pools of soros
dark pools of soros's picture

make money for your clients???  you surely aren't doing god's work

Fri, 08/06/2010 - 01:02 | 506534 DoChenRollingBearing
DoChenRollingBearing's picture

+ 1   !!!

Thu, 08/05/2010 - 22:29 | 506335 Blano
Blano's picture

The DOW had one of these last summer too, and it failed miserably.

Right or wrong, I believe this one will fail too.

Failed patterns is the name of the game these days.

Thu, 08/05/2010 - 22:42 | 506358 Hedge Jobs
Hedge Jobs's picture

Blano / GF1 you are exactly the sort of sentiment indicators i am looking for and are typical of beaten up bearish investors everywhere.

There is no H&S last summer except in your imagination. They form over months not weeks. Please dont tell me you went short the market last summer at 8000 points? you did didnt you! GF1 was probably right there with you.

Fri, 08/06/2010 - 08:22 | 506763 Shocker
Shocker's picture

We are going to pay dearly for all this reckless spending.

Thu, 08/05/2010 - 23:05 | 506395 Jasper M
Jasper M's picture

Dear boy, some of us with long time horizons, never took them off.

Fri, 08/06/2010 - 00:13 | 506480 Hedge Jobs
Hedge Jobs's picture

good move JM!

The FED has done its job wiping out all the nasty shorters and ramping the market enough to get them through the bad GDP number last week and the bad NFP number tonight.If they keep ramping the market they are going to make it too obvious and the game will be up. people are already starting to ask questions.

They wont care if the market drops back to 10,000. they will probably be the ones that sell it down there,close out their longs and replenish cash so they can add support lowed down becuase they know they will need to.

either play the game or sit on the sidelines Bitchez! Im going short.

Fri, 08/06/2010 - 01:21 | 506544 whatsinaname
whatsinaname's picture

gave up trying.

 

Fri, 08/06/2010 - 07:54 | 506718 realtick
realtick's picture

I disagree - look at this

http://i35.tinypic.com/ztjgnt.jpg

You're all mixed up like pasta primavera
Why'd you throw that chair at Geraldo Rivera
Cause one man's ceiling is another man's floor

 

Fri, 08/06/2010 - 08:30 | 506767 MeTarzanUjane
MeTarzanUjane's picture

QE2 will be the juice to send this thing into overdrive. The shorts will get creamed again. Cream corn for errbody.

Thu, 08/05/2010 - 19:13 | 505936 DosZap
DosZap's picture

Obama planning on a 800 Billion dollar bailout without Congressional Approval?.

Go here................if you haven't already.

http://jsmineset.com/category/jimsmailbox/

Thu, 08/05/2010 - 20:52 | 506148 Mr Lennon Hendrix
Mr Lennon Hendrix's picture
Forget Instarefi: Here Comes Instaloanforgiveness:

http://www.zerohedge.com/article/forget-instarefi-here-comes-instaloanfo...

Thu, 08/05/2010 - 22:30 | 506341 Blano
Blano's picture

ZH's cohorts at Calculated Risk are debunking this story.

Fri, 08/06/2010 - 08:37 | 506773 MeTarzanUjane
MeTarzanUjane's picture

My money is on the zero's. Free haircuts sponsored by The Demon Barber of Liberty Street.

Fri, 08/06/2010 - 00:15 | 506485 Moneygrove
Moneygrove's picture

End bush tax cuts now !!!!!!!!!!! why do we need more jobs ?? didn`t bush tax cuts make all the jobs we need ? lol !!!!!!

Thu, 08/05/2010 - 19:16 | 505938 walküre
walküre's picture

The author's name is Gonzola "Lira"

A great name when you want to debate the coming hyper inflation.

Lira was Italy's infamous chewing gum of a currency.

When I spent time in Italy during their currency crisis, it was always an exciting visit at the markets. One day I paid 1000 Lira for the water melon, next day it was 2000 and after that it went up to 3000. I never held any Liras overnight. Just had my hard Deutsch Mark and exchanged one day at a time. One day my 100 Deutsche Mark gave me 100,000 Lira, next day I got 200,000 and so on ... It was fun!

Thu, 08/05/2010 - 20:07 | 506049 Oracle of Kypseli
Oracle of Kypseli's picture

Same thing happened with the Israeli Lira in the 70's (before switching to the Shekel). Supermarkets had 4 people repricing everything every night. Israelis will buy gold chains food and other assets that retained value as soon as they got paid. They were even buying hard liquor. All the paycheck was spent that day.

Thu, 08/05/2010 - 19:19 | 505939 Dehrow
Dehrow's picture

Shit, this article is some good fuck.

Thu, 08/05/2010 - 19:19 | 505940 Dehrow
Dehrow's picture

Shit, this article is some good fuck-adoodle-doo.

Thu, 08/05/2010 - 19:19 | 505941 Übermensch
Übermensch's picture

Technically true the usd is a fiat currency, but in reality it is backed by oil and most world trade... Now you know why the need for military bases around the world.

Thu, 08/05/2010 - 19:23 | 505946 SheepDog-One
SheepDog-One's picture

'Backed' by oil? Thats ridiculous, oil may be traded in the dollar but not a penny of it is BACKED by any oil. 

Thu, 08/05/2010 - 19:24 | 505950 Shameful
Shameful's picture

Explicitly no.  But I'm sure that hte House of Saud knows what would happen if they priced in Euros.  We would find terrorists in their country and need to rout them out. 

Thu, 08/05/2010 - 19:39 | 505972 walküre
walküre's picture

The world allowed it to happen only once. Iraq was doomed.

Nobody supported the war but nobody wanted to protect the Iraqis either.

The story is different now. Still no support for the US but if they fuck with the Arabs, the Russkies and the Chinese are a-coming.

 

Thu, 08/05/2010 - 19:51 | 506006 Shameful
Shameful's picture

I'm not so sure,  Russia is in a great position.  When we attack Iran, who will get to sell that oil at insane prices, our pal Russia.  China on the other hand, world of pissed off.  Might see them threaten to sell treasuries if they don't get cheap oil from some where.  It's in Russia's best interest to see more geopolitical uncertainty there because it devastates the US's global power and puts a check on China's growth.  All the while filling Russia's coffers.  Now Russia will have a motivation to see Iran able to defend itself because it wants the Strait blocked as long as humanly possible.

So I understand the Russian situation, can't lose.  I don't know exactly how China will play this as they are a bit more captive.  I doubt they will directly intervene as they cannot project that far and to intervene directly would threaten the naval connection to their Africa energy investments but I would expect some sort of economic reprisals.  Who knows maybe they would try and crash the LBMA or something crazy, I honestly don't know.  Any China expert have an idea what they would do when we drive up their cost of energy?

Thu, 08/05/2010 - 21:09 | 506179 masterinchancery
masterinchancery's picture

Except that Russia is demographically DOA, so they can't win.

Thu, 08/05/2010 - 21:39 | 506242 Shameful
Shameful's picture

Ah and?  So is all of Europe and the US and China.  In the long term China at 2040-2050 is in a world of hurt.  So anywhere with industry has a demographic problem or will have one, what's your point?

You can argue about the US, but you take out immigration and children of immigrants and its a Euro like birth rate.  I'm not saying Russia is going to take over the world, only they are set to reap some nice rewards off this round of geopolitics.

Thu, 08/05/2010 - 23:13 | 506405 TBT or not TBT
TBT or not TBT's picture

The least demographically pharked of the three is definitively the US.    China's and Europe's demographic dearth started much longer ago and dived further than what we have seen in the US.   And then there is the quality level of the immigration.   In Europe, it is islamicate peoples from the third world who the generally intolerant intrinsically racist europeans reject into ghettos(see the recent events in Grenoble for a taste of france circa 2020).   In the US, it is relatively conservative, mostly catholic and hard working people coming in, and largely they're embraced, and more importantly, largely their kids are productive and employed amd speak the language of the country.

Thu, 08/05/2010 - 23:51 | 506441 Suisse
Suisse's picture

50% of hispanic births are to unwed mothers... Give me a break, eigth grade educated peasants are useless. They aren't "conservative," they are ignorant people who cling to science fiction from the days Roman legions marched around the world. There aren't that many muslims in Europe as a whole, well there is Albania but that isn't really thought of as a "problem." How are the Europeans "racist," shouldn't they be entitled to their own countries like the Japanese and Koreans?

 

I read a report from the Federal Reserve Bank out of Texas, they projected in 2040 30% of the workforce of Texas would not have a high school education. Sorry, but the U.S. is toast too.

Thu, 08/05/2010 - 23:54 | 506454 TBT or not TBT
TBT or not TBT's picture

Krugman is hypereducated, and decorated, and he is worse than useless.

Also, note that the unwed mother rate is much higher among what we used to call "blacks" in the United States.    50% ain't that bad as to the "unwed" stat.   Of course the most important stat isn't the wedding status(i.e. whether the couple have a government license), it is the percent of children whose father and mother were present on the household. The mental quality and psychological balance of the kids is well correlated with the =presence= of both parents throughout childhood.    I've had a few folks work for me that probably didn't do well even in 8th grade, who've been solid and productive, sane and dependable throughout their lives.    Dependable people, not takers and whiners.     As a certain Tarentino character explained so well, character goes a long way.    My little stake in EUO has been sucking lately though... 

Fri, 08/06/2010 - 00:02 | 506465 Suisse
Suisse's picture

Yes, because an 8th grade education will be very helpful in the "Knowledge Economy" of the future. I can imagine these people becoming a massive, chronically unemployed underclass too ignorant to take any job in a future wholly dependent upon advanced technology.

 

But yes as a group, they are a bit better and much less crime prone than those of sub-saharan  descent. Although that is not saying very much.

 

At least Krugman is able to offer economic insight, what percentage of the population can even read a supply and demand graph?

Fri, 08/06/2010 - 00:19 | 506484 TBT or not TBT
TBT or not TBT's picture

"At least Krugman is able to offer economic insight, what percentage of the population can even read a supply and demand graph?"

Generally 8th graders get way better at math when you reformulate the problem in terms of money..their money.     They can be great at computing what they'll charge to fix an air conditioner, ship a pallet across town, or offer for a used car, all of which has to do with developing a keen REAL sense of supply and demand.    Krugman on the other hand, writes articles about Other People's Money for a newspaper whose editorial line is that government should take Other People's Money to spend on people who will vote for more government largesse.    Also, he's a very notable worshipper of The Deficit n'es-ce pas?    A very smart asshole, shilling for control freak central government, which does a very bad job, over and over again in history, of allocating resources to activities for the benefit of the citizens.    Central government sucks and Krugman the high IQ, great-at-dinner parties smarty pants is on the other side of that reality.   Give me the 8th grader guy that can get something practical done in the real world EVERY TIME.

Fri, 08/06/2010 - 00:21 | 506493 Suisse
Suisse's picture

I am glad you picked the 8th grade guy, I have about 3 billion people in the world to introduce you to. I believe I found a gentleman from Vietnam who is willing to work for you for $3.25/hr... This is why this terribly educated demographic will be a disaster.

Fri, 08/06/2010 - 00:46 | 506514 TBT or not TBT
TBT or not TBT's picture

Supply and demand, Monsieur le Suisse.   We have plenty of 8th grade retards ici, deja.   Notre probleme, si tu veux, c'est que leurs "incentives" ont etes detruites par les bien-intentionnees professionnels qui sont nos politiciens etatistes.

Fri, 08/06/2010 - 07:34 | 506679 Sneeve
Sneeve's picture

I

can't

breathe.

Fri, 08/06/2010 - 08:13 | 506750 israhole
israhole's picture

We're in deep shit when we're seriously comparing an immigrant with 8th grade education to  a Chosen one (complete with a Nobel turd) with unlimited media exposure and Princeton tenure.

Shows what these jerkoffs running the country, sharing "expert opinions" are worth.

Fri, 08/06/2010 - 00:08 | 506473 TBT or not TBT
TBT or not TBT's picture

"How are the Europeans "racist," shouldn't they be entitled to their own countries like the Japanese and Koreans?"

Indeed, the Europeans may well revert to form, to use a euphemism, if you will, to the, ah, solutions they'll be thinking of.      BTW it isn't the muslim faith that is directly the problem, it is the islamicate culture surrounding the smaller core of truly islamic hard core.   They raise ignorant hateful children in Europe, half destined for submission and service(if they have female genitalia), the other half destined to dominate the former and be angry heads of welfare recipient households among the, yes, generally raciste and ethnicist, rapidly aging european society around them.   

Also, for what its worth, I left out any value judgement on on my own part as to whether racism or ethnic or national preference is forcibly a bad thing.    For the moment I'm just pointing out the fact that these things are rampant in Europe, no matter what their pretentions may be, and less so in the U.S.     The tipping point on racism in the US was at some point back in the 50's or 60's.    What's left is mostly ersatz, pouty race hustling and politically motivated racism seeking advantage based on supposed victim status.   It's a bad joke.   It doesn't stop effective, well intentioned, dependable latinos from getting jobs and advancing according to their merits.   In Europe, the racist and ethnic preference is still premordial. 

Fri, 08/06/2010 - 00:25 | 506483 Suisse
Suisse's picture

Where in "Europe," does this occur, and how is this "racist" when the bulk of these Muslims in places like France are from North Africa? Have you looked at what the U.S. Census calls those people? You did not answer my question on how a massive group without any education will be able to find gainful employment in the future economy.

 

In regards to women being mistreated, have you looked at the level of atheism in Europe? Rational thought seems to grow more common by the day, why would women be mistreated?

 

You say "Rapidly Aging," but the world population is supposed to peak around 2050, yet of course below replacement fertility doesn't last forever.

 

Fri, 08/06/2010 - 00:38 | 506506 TBT or not TBT
TBT or not TBT's picture

"Where in "Europe," does this occur"

Everywhere I've been, which is a whole lot of it.

", and how is this "racist" when the bulk of these Muslims in places like France are from North Africa?"

Give me an effing break.    Any european born and raised can pick one type of scandy from another at 50 meters at a glance, and now you're suggesting....or maybe I've got you wrong?...that north africans wouldn't be evaluated by europeans as belonging to a different race from themselves????    Buehler?

" Have you looked at what the U.S. Census calls those people? "

My wife is persian, but we answered in the Other checkbox, writing in "Amercan" as the response.   I suppose a lot of other Americans are equally dismissive of this ridiculous offense to the E Pluribus Unum principle we take an oath to here, legal immigrants particularly.   I find that legal immigrants know more about the constitution than the average born american, sadly, and a lot of them bristle that the census has categories like this.    I didnd't read through them, as rage didn't permit.  We filled it out the only way patriots could.

"You did not answer my question on how a massive group without any education will be able to find gainful employment in the future economy."

Pffft.   Ever had to get trees trimmed on your property?   Ever had to put your car in a body shop?    Ever had to get physical therapy for an injury?   Every had to have any category of work done in your house?   Ever had your country's military go to war?   Any sort of shit like that?    One of my dudes is thick as rocks, but he did two tours as a marine in Vietnam, and has forgotten more practical things than you and I will ever know just out of those two tours.   

"You say "Rapidly Aging," but the world population is supposed to peak around 2050, yet of course below replacement fertility doesn't last forever."

We're not talking about the "world" population.       We're talking about Europe and China and Russia versus the US.     European birthrates cannot recover, according to professionals of demography, which passes for a science at universities...and you seem to respect higher education and fancy math.   Ergo Europe's demise is practically speaking a done deal, and Russia uber doomed.        Japan's native population might recovery, some day far in the future, but that's because there is no rapidly multiplying replacement population in place.    Unless you want to count culturally and ethnically and racially non-European (or non Russian, or non-Chinese) immigrants into the mix, all of these regions are on demographic deathbeds.    They might have survived had they been able to integrate the children of these immigrants, but, as you and I know, they all fail at this.   

Fri, 08/06/2010 - 01:09 | 506524 Suisse
Suisse's picture

I wonder what happens when social security ponzi schemes finally collapse? Oh, people decide to have more children... populations have had below replacement fertility in the past, like when the Roman Empire collapsed. You can look at the fertility of these groups, they aren't that high. Even countries like Morocco have a TFR close to 1.8.

 

I rarely ever have work done on my house that isn't done myself, 30% of the workforce cannot have basically no education in 2040. I wouldn't be surprised to see even more things automated making manual labor nearly worthless. Even things like war fighting, how much more of that will be controlled by computers versus today? The welfare state cannot be supported by such an uneducated and useless workforce.

 

By the way, your wife answered incorrectly. Your wife is Persian and thus "Caucasoid," she should have checked the "White" category. They do not wish to know her nationality. As proof, I googled "Persian Girl." How would you describe her? http://www.myspace.com/145380281

Fri, 08/06/2010 - 01:28 | 506551 TBT or not TBT
TBT or not TBT's picture

"I wonder what happens when social security ponzi schemes finally collapse? "

In Europe, that's a given, and has been for a few decades now.   Maybe you can educate us ast to what you expect over there?    What I see is Europe eating its capital, which is what aging people do...spending the capital they built up in the past during retirement and senility.   The difference here being that these particulary oldies are not leaving anything behind.    The U.S. socialist insecurity ponzi scheme is just now tipping materially into the red, but european countries are already there since decades.    The attempts at papering this over would be laughable if they weren't so tragic.    Shindler's List really worked me over bad, and Europe will do much, much worse in the next round of festivities.

"Oh, people decide to have more children... populations have had below replacement fertility in the past, like when the Roman Empire collapsed. "

The key word being "collapsed."     If you're OK with a euphemisitic "collapse" and the subsequent rise of some replacement population some years thereafter, well, yeah, technically you are right.    This being a financial blog, I'm not sure what placements you should make based on that, but sure, the flame of human DMA will go on after the "collapse" in some form.   Maybe they'll take up trading pretty seashells, and you can bury a trove of them for your ancestors to find, if any of them survive.

"You can look at the fertility of these groups, they aren't that high. Even countries like Morocco have a TFR close to 1.8."

I guess they don't have much of welfare state in Morocco?    Didn't even look that one up, just knew I was right.

"I rarely ever have work done on my house that isn't done myself, "

Indeed, in Europe, given the enforced free time and heavy confiscation of gross pay, on top of high minimum wages and taxes on services and regulation thereof, many many europeans have to burn up all of that precious "free time" their socialist governments "give" them learning and doing all sorts of specialised pain-in-the-ass DIY themselves.    In the US, up to now and still today, we can afford specialists who are good at what they do to arrive and get it done up to spec in quality way, and still make our dinner appointment and get our own highly specialised jobs done, BECAUSE WE HAVE PLENTY OF PAY AFTER TAXES, and because our minimum wage laws and regulations and income taxes don't price professionals out the market.   Everybody does what they are good at.   Kind of reminds me "comparative advantage" and all that from the wealth of nations, but do continue to do your own repairs around the house during all that mandated free time forced on you.    No need to employ any of those people at the other end of the bell curve to do it for you  at a fair price.   No, have the government pay them to subjugate their breeders and lay about in their government flats.   Brilliant civilisational plan, for about two generations worth.   After that, better expatriate.

"30% of the workforce cannot have basically no education in 2040. I wouldn't be surprised to see even more things automated making manual labor nearly worthless."

You would need sentient robots to do much of what consumers want done.   That might happen, but that world is outside human experience so far.  Might ought to take that up on a "Singularity" centered web site.

Fri, 08/06/2010 - 05:13 | 506634 kaiten
kaiten's picture

You should seriously start treating your europhobia, dude. It´s getting worse by hour and clouds your remaining little brain ...

Fri, 08/06/2010 - 09:20 | 506948 grunion
grunion's picture

atheism denotes intelligernce? You possess some very interesting wiring...

Fri, 08/06/2010 - 10:39 | 507187 Suisse
Suisse's picture

I'd say it simply denotes rational thought, not necessarily intelligence.

Fri, 08/06/2010 - 11:50 | 507402 defender
defender's picture

not true, it denotes a dismissal of common ethics (replaced by some form of rationalization of actions, or legalism) and dismissal of the possiblity that the unseen could be real.  Atheism is the culmination of Humanism, ie "Man - the measure of all".  I am not sure why anyone would choose man as the basis to measure anything, when there are such glaring deficiencies inherent in him.

Fri, 08/06/2010 - 13:15 | 507619 Suisse
Suisse's picture

You may word it however you like, but religion is by definition irrational.

Fri, 08/06/2010 - 15:14 | 507837 Cathartes Aura
Cathartes Aura's picture

dismissal of the possiblity that the unseen could be real.

I'm a great fan of the unseen as real (or as real as anything can be).

however, my unseen doesn't include an angry old dude with a beard, wearing robes.

religion is man-made, it's patently obvious - the rules are delivered by men, and designed to elevate one set of men over the other, with resultant punishment meted out to the un-chosen.

rinse. repeat. ad nauseam.

Thu, 08/05/2010 - 20:11 | 506065 jakoye
jakoye's picture

Hogwash. The Russians and the Chinese wouldn't lift a finger to help the "Arabs", although I don't think we'll be attacking any Arab country anytime soon. It's Persians we're after.

Thu, 08/05/2010 - 21:52 | 506261 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

See Shanghai Cooperative.

Thu, 08/05/2010 - 23:17 | 506408 TBT or not TBT
TBT or not TBT's picture

Actually, most Persians were born after the revolution and are mighty disgusted with the ruling mullahs and their foreign arab religion.     So, to clear up your statement that "It's the Persians we're after." well, actually most of the Persians are after being like us.   Really.  

Thu, 08/05/2010 - 19:46 | 505995 Bartanist
Bartanist's picture

Yes, but as many have said, the dollar is backed not by oil, but by the US military.

In the US who always wins? It is not the person who is in the right... Never. It is the person or entity with the most POWER! Always is and always has been. Maybe always will be, and maybe there was a time in our history when the rule of law was supported by those with the most power... unfortunately, no longer.

Which brings up an interesting conundrum: How do you garner enough power without being perceived as a threat? Apparently Waco was a threat... and was dealt will accordingly. Those militia people in Michigan were perceived as a threat and dealt with accordingly. Small people are easily threatened, but just because they may be small in intellect or scope does not mean that they cannot garner power.

So, what do you teach your kids? There are so many choices ...

Thu, 08/05/2010 - 19:56 | 506016 walküre
walküre's picture

The US didn't win Vietnam, didn't win Iraq and still hasn't accomplished the mission in Afghanistan.

There may be US boots on the ground but nothing has changed. Once the boots leave, the same shit starts to come back and maybe that is not all that bad.

Thu, 08/05/2010 - 20:04 | 506043 Shameful
Shameful's picture

What is a win?  The US went in murdered untold numbers of people, filled the pockets of the CIA and the military industrial complex, and blew up a lot of infrastructure.  I gotta think to the lunatics in charge that sounds like a win.  Need to define what hte "win" is and who the war was for.

Thu, 08/05/2010 - 23:45 | 506444 JLee2027
JLee2027's picture

Murdered?  That's offensive to any American. If you really believe that, leave the USA and never return.

Fri, 08/06/2010 - 00:42 | 506482 Shameful
Shameful's picture

Forgive me but can you point out when Vietnam invaded the US?  Those poor Vietnamese who were trying to throw off their French masters surly must have been a dire threat to the US, maybe they were going to build a nuke!  Oh wait that was the Gulf of Tonkin, on record a farce a lie and false flag.  So LBJ goes balls deep in Vietnam because he wanted to.  Surly "We want to kill people" is a valid reason to invade a country no?  And if it's Americans kill indiscriminately and bomb a people that pose no threat to them then its not murder but epic heroism!  Gee must be nice to always be in the right no matter what actions you take.  So in American blood is spilled it makes any killing holy?  I ask you if you were a Vietnamese peasant and Americans came in to your land with bombs and guns what would you do?  It a was war to enrich a few at the expense of American and Vietnamese lives, so how does that justify killing people.  Hey sorry if you got caught up in it, but murder is murder.  Could have dodged the draft, it was good enough for Clinton and Bush.  They must be good right, America elected them as presidents, twice.

And yeah I want out, and don't plan on coming back.  Aside from the economic time bomb America is a moral cesspit.  Look at America objectively.  We are the sledgehammer of the oligarchs and the banks, they point we kill.  We go crack heads for them and in exchange they keep our currency as the reserve currency allowing us to live above our means in exchange for taking on debt we never plan on repaying.  We are nothing more then soulless mercs, we are a vapid culture that worships death and slaughter.  One only needs to turn on the TV or watch a popular movie and then look our forebears and see how far we have fallen.  It's only fitting to see the rise of the PMC as the US sinks into total insolvency. 

Fri, 08/06/2010 - 00:51 | 506519 TBT or not TBT
TBT or not TBT's picture

Forgive me but can you point out when Vietnam invaded the US?

>>> Last time I checked, the US had a military alliance with Vietnam at the time the unpleasantries commenced over there.     Key words to look up for this lesson:   Alliance, Military, Credibility.....oh, oh ,oh, and Shame

Fri, 08/06/2010 - 09:32 | 506986 grunion
grunion's picture

Let's establish that you are speaking for youself only.

Fri, 08/06/2010 - 10:51 | 507229 WaterWings
WaterWings's picture

-1

Noise-to-signal ratio-wise Shameful is needed clarity. Cutting through the din.

Fri, 08/06/2010 - 15:24 | 507908 Cathartes Aura
Cathartes Aura's picture

++ Shameful, telling it like it is.

truth can be a painful pill to swallow, but living a lie is infinitely more destructive.

Thu, 08/05/2010 - 21:12 | 506184 masterinchancery
masterinchancery's picture

A hardass commander could change the climate in Afghanistan overnight. Saturation bombing of any area controlled  by the Taliban would be a game changer.

Fri, 08/06/2010 - 00:01 | 506468 Freebird
Freebird's picture

Bollox mic. Read your history.

Fri, 08/06/2010 - 08:23 | 506764 israhole
israhole's picture

Who feels the need to change Afghanistan?  What for?  For Israel? When Afghanistan changes, what will we get from it?

I'll guarantee we'll never win there, anyway, because not only is there nothing to win, but they are getting stronger every month.  Somebody here posted a video a few days ago with the number of IEDs detonated each month since the beginning, and they're bigger and far more frequent as our invasion gets extended.  That's right, OUR invasion.

Or you can believe your tv, and what the Chosen tell you.

 

Fri, 08/06/2010 - 15:27 | 507918 Cathartes Aura
Cathartes Aura's picture

as recent amrkn military involvements illustrate, wars are not for "winning" - they're for expenditure and profiteering.

nobody wins, but plenty make monies.

Thu, 08/05/2010 - 23:28 | 506423 TBT or not TBT
TBT or not TBT's picture

After the "Tet Offensive" Walter Conkrite declared ignomonious defeat, whereas on the ground it was an utter decimation of the attackers, a clear unmitigated victory by the US and South Vietnam...on the ground.   The US won the Vietnam war, the Congress abandoned South Vietnam, and a long period of time later our few remaining personnel left after South Vietnam was overrun(the famous helicopter lifting off from the embassy scene).   Try to recenter on the FACT that in the 1960's and 70's there were only a few channels to watch, and Cronkite decided on his own, far from events or any credible knowledge of them, that the war was clearly lost.   And back then that "trusted voice" carried that to become the accepted truth.   It stuck.   Perception later became reality.   Fast forward to Harry Reid and his thoroughly pussified "this war is lost" 2006 era speech regarding Iraq.    Not the same world anymore, eh?  The US did NOT lose the Vietnam war, it..the US Congress.... abandoned South Vietnam AFTER defeating the enemy quite soundly, on the advice of a handful of elitist jerk offs.    /Sam Kennisson OFF

Fri, 08/06/2010 - 00:09 | 506476 Freebird
Freebird's picture

Sorry Bud, but the US lost the AMERICAN WAR in Indochina.

Fri, 08/06/2010 - 00:52 | 506521 TBT or not TBT
TBT or not TBT's picture

Congress abandoned South Vietnam well AFTER the war on the ground was soundly won.

Fri, 08/06/2010 - 07:45 | 506695 Goldenballs
Goldenballs's picture

If the military had been allowed to do what they wanted the war would have been won,the politicians would not allow this and lost the war.As can be seen recently the relationship recently between the Whitehouse and the Military is not exactly "tea and crumpets" the next time things turn critical the "Whitehouse" may find the roles are reversed and they either play the game or find they are gradually removed.Mutinous Generals can be removed however if everyone sticks together Obama and co will shit their pants ............................

Fri, 08/06/2010 - 09:40 | 507005 grunion
grunion's picture

It was reported that Johnson gave orders over the phone to commanders in the field during combat operations. The troops' position in Nam was untenable because of this interference in addition to other policy madness.

Fri, 08/06/2010 - 00:55 | 506525 Fred Hayek
Fred Hayek's picture

Correct.  Each subsequent NVA offensive after Tet only did worse and worse.  Abrams's strategies of holding territory rather than going out on sweeps a la Westmoreland were solid improvements.  Frank Church and George McGovern beat the U.S. in Vietnam.

Those so sure that this isn't so should try reading Sorley's book A Better War.  Conventional wisdom is almost always conventional but not always wise.  Challenge yourselves to re-think this.

 

Thu, 08/05/2010 - 20:43 | 506135 QQQBall
QQQBall's picture

I would teach your kids to listen to someone else other than their father.... You don't get it, eventually 'Merikans won't even want to hold Clown Bucks. This isn't about blasting some polygamists - its about the eventual loss in confidence that will be brought on by "The Deficit" (a gubbermint mentality that there is NO reckoning - its always what you don't know that fucks you hardest). The reckoning is the eventual loss in confidence - its too "global" for military intervention...

Thu, 08/05/2010 - 20:31 | 506107 1100-TACTICAL-12
1100-TACTICAL-12's picture

We ain't quick draw Mc Graw anymore. With this new carrier buster missle china is about to bring on line.

Thu, 08/05/2010 - 23:43 | 506442 TBT or not TBT
TBT or not TBT's picture

Do they have a "buster" missile for ballistic missile subs?   Do they even know where to find those subs to at least permit launching in the general direction?   A China v US general war is nearly impossible as long as rational actors are running things, and any second tier power that destroys a US carrier and its thousands of sailors and marines would be ipso fact toast in a matter of weeks.    Oh, and yeah, the dollar will the be the last major fiat currency "standing," in part because of the continued military superiority of the US.

Fri, 08/06/2010 - 04:59 | 506629 Seer
Seer's picture

Military supremacy?  Apparently you're not paying attention to current war efforts in Iraq and Afghanistan.

4GW, bitches! (http://www.antiwar.com/lind/index.php?articleid=1702)

BTW - Hitler also thought that he could roll over everyone, including Russia.  Despite being techincally vastly superior, Germany got toasted in Russia (here is where Germany's war finally lost traction, not the US entering the theatre in Europe).  The US vs. China would be like Germany vs. Russia; expect the same results...

Fri, 08/06/2010 - 07:36 | 506684 Tense INDIAN
Tense INDIAN's picture

america is in these countries to STAY ...not to murder all the beards and return.......all those car bombs which have killed thousands in IRAQ...are not done by any muslim terrorist but by CIA , MOSSAD, n MI6.........they need a motive to stay there after they found no nukes............bringing safety, democracy etc etc have certainly given them good motive.......create the problem and then provide the solution.........

 

like wise HITLER was also put up by the unsen hand...he was not there to win the war....he was making tooo many stupid mistakes in the eastern front with Russia....Martin borman was disliked by many of his generals...they thought Bormann was having negative influence in German offense.....

 

The FIX was already in.....

Fri, 08/06/2010 - 09:43 | 507016 grunion
grunion's picture

Hitler knew he was under-manned and under-equipped to carry off a sustained global war. He was banking on some help.

Thu, 08/05/2010 - 21:11 | 506183 Arkadaba
Arkadaba's picture

Yep! And a few years ago we did hear talk about Iraq pricing oil in dollars. Time to visit the internet archive or the wayback machine.

Thu, 08/05/2010 - 19:42 | 505977 Übermensch
Übermensch's picture

Your naivety about world politics is charming.

Thu, 08/05/2010 - 19:59 | 506029 Not For Reuse
Not For Reuse's picture

LOL, all you "dollar is backed by oil" people are a fucking hoot. If the dollar is backed by oil, explain why the price of oil in dollars fluctuates. I'd love to hear this one.

Fri, 08/06/2010 - 04:56 | 506628 Trichy
Trichy's picture

Maybe they are referring to the oil floating around in GOM? Just a wild guess.

Thu, 08/05/2010 - 19:54 | 505996 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

I will not junk you, instead I will tell you that that is one of the most ludicrous statements ever made.  I know what you think, because oil is traded in $$ it is backed by them.  But if OPEC et al decided they would take gold or oompaloompas instead, then it would not be "backed" as you say, or traded in its denomination.

In order for the $ to be backed by oil, the (not our) Private Federal Reserve Bank of the US would need to guarantee debtors oil for their dollars.  As of now, that is not the case.  The dollar is FIAT.  It is backed by NOTHING.  Spend it while you got it!

Highroller by The Crystal Method:

http://www.youtube.com/watch?v=KQ9Wj8GyrDU

Thu, 08/05/2010 - 19:57 | 506021 Übermensch
Übermensch's picture

Your explanation for said reasoning for my "ludicrous" statement highlights your own ignorance to what I was implying.

Thu, 08/05/2010 - 20:07 | 506050 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

How so?

Fri, 08/06/2010 - 13:46 | 507685 Trichy
Trichy's picture

Ubermensch,

My guess is that people or states that act and think like Hitler will end up like him.

Thu, 08/05/2010 - 20:16 | 506079 linrom
linrom's picture

You can not only buy oil with Dollars, you can also exchange it for anything that is Made in China. You can even buy all the gold in the world with Dollars. The Dollar is magical; without dollars all world's currencies are worthless.

Thu, 08/05/2010 - 20:22 | 506090 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

All the world's currentseas are worthless.

Thu, 08/05/2010 - 21:17 | 506192 Kayman
Kayman's picture

Lenny

don't confuse him with facts.

Thu, 08/05/2010 - 21:36 | 506235 wake the roach
wake the roach's picture

In order for the $ to be backed by oil, the (not our) Private Federal Reserve Bank of the US would need to guarantee debtors oil for their dollars.  As of now, that is not the case.  The dollar is FIAT.  It is backed by NOTHING.

 

Sorry but there is no such thing as "fiat" money backed by nothing. Or maybe you would like to explain why fiat money has not made everyone rich? What connects money to the laws of our physical reality? 

I'll quote myself from a previous post...

A monetary unit represents a claim on energy. Energy humans can neither identify or quantify with our physical sense’s without a unit of account to represent it.

A monetary unit entitles its owner to a quantity of energy that can be utilized from available energy resources.

A monetary units energy value (purchasing power) is determined by the sum total of energy consumed from energy resources in an economy (including food energy) at any given point in time (scarcity).

Every resource or product of limited supply mankind either needs or desires requires energy to extract, produce or consume and thus money as a unit of account is required to enable fair exchange of energy value.

 

Marx was almost correct with his labour theory of value. What he neglected was the fact that it is the energy derived from food resources that gives labour value.

Is it a coincidence that the birth of money (as we know it anyway) coincided with the production of surplus energy (food) from agriculture???

Our entire economic system begins with food energy that allows human labour. Add to this the net energy leverage provided by a hammer, a horse, coal then oil and what you end up with is a world flooded with money (surplus energy) chasing mostly useless goods and services ( that require surplus energy to produce).

Oh, and the fed does guarantee debtors oil for dollars, by military proxy.

But this is old knowledge superseded by the religion of neo-classical economics. Biophysical economics will not become standardised until after the collapse so maybe we could dive into the  blatantly obvious then.

Thu, 08/05/2010 - 22:10 | 506300 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

Your point on "backing with force" is worth noting, but what will they do if they can't grease their machine? 

I will reiterate; FIAT, by definition, is not backed by anything.

We did nothing except charge debt to amass the dollars in circ, and lying in wait via bonds. 

Thu, 08/05/2010 - 23:55 | 506456 wake the roach
wake the roach's picture

what will they do if they can't grease their machine?

 

Technocracy or bust my friend...

Technology has made the human labour component of the energy system (aka, the monetary economy) almost completely obsolete (as predicted by many a wise man many years ago). In other words, there is not enough labour work for 7 billion people to earn even a subsistence wage unless we can produce and consume (waste/destroy) goods and services on a scale that defies even the most cornucopian persons mind and that would destroy our environmental life support systems... Unless we go back to a pre-christ type agrarian lifestyle, mass structural un-employment and all the good times that come with it are guaranteed and waiting right around the corner...

The fact is, technology has already made the monetary system of scarce resource allocation obsolete and along with it, all the useless jobs for the sake of jobs we have today (to create waste and thus employment). We can feed, house, clothe and educate every human being alive today to an excellent standard with only a fraction of our resource consumption (and with very little per capita labour) and with it, destroy the class system and war that are necessary evils of monetary systems...

This was/is the long term objective of the global cap and trade economy and what many refer to as the "evil new world order"... To eventually allocate energy credits freely and equally to all people in place of todays failing currency's as a bridge to the moneyless society (type 1 society). The value of goods and services being determined by the  energy required to produce them ( measured as CO2 emissions).

But, this will fail because 99.99 percent of people just cannot see the big picture so we're all fucked.

And yes, maybe I will take another bong hit and maybe even crank some tunes too ;-) 

http://www.youtube.com/watch?v=d8Nys3M7fx4

 

 

 

 

Fri, 08/06/2010 - 00:56 | 506528 Real Estate Geek
Real Estate Geek's picture

This was/is the long term objective of the global cap and trade economy and what many refer to as the "evil new world order" . . . To eventually allocate energy credits freely and equally to all people . . .

I'm pretty confident that the allocators' shares will be a tad more equal than those of the hoi polloi.

Fri, 08/06/2010 - 03:53 | 506611 wake the roach
wake the roach's picture

I'm pretty confident that the allocators' shares will be a tad more equal than those of the hoi polloi.

until the system becomes self reinforcing, yes... a necessary evil... power must pool in the hands of the few in order to be directed most efficiently... getting three people to agree on something is hard enough let alone 300 million or seven billion... such is life

Fri, 08/06/2010 - 04:26 | 506618 nuinut
nuinut's picture

Good points, Roach. Got some links for further reading?

Awesome Jimi clip too.

Fri, 08/06/2010 - 06:28 | 506662 wake the roach
wake the roach's picture

hey nuinut... yeah I could give you thousands but its far easier to just do a random search as it always opens new and unexpected doors... I've been researching energy economics for years and continue to find new info on the net...

Search for biophysical economics, energy theory of value, energy economics, technocracy, net energy, carbon currency etc. These should start you in the right direction and i'm sure it will be an eye opening journey to say the least...  Happy hunting... 

 

And yeah, I fucking love Hendrix... A true genius in a mad scientist kinda way haha ;-)

Thu, 08/05/2010 - 23:04 | 506390 Not For Reuse
Not For Reuse's picture

no, the dollar is fucking backed by SWEET FUCK ALL. "oil" "military" & "power" are all reasons why the dollar is the world's RESERVE CURRENCY, but they have absolutely nothing to do with what the dollar is or isn't backed by. If you want to dispute the author's assertion that USD is the first reserve currency backed by jack shit, you have to provide examples of what it's BACKED BY, not examples of why it's the fucking reserve currency

Thu, 08/05/2010 - 23:48 | 506447 JLee2027
JLee2027's picture

God invented money, not the farmer.

Fri, 08/06/2010 - 01:22 | 506545 merehuman
merehuman's picture

its still just paper. i would as soon have beads if it allowed more freedom than we have now. We are debt slaves.  I am not. Garden silver, stored food shotgun etc. Toilet paper has value, o yeah

goverment scrip, bits of green colored paper. I am so ;laughing my ass off as i watch my food grow and you all sweat and fret over the dollar bernanke prints wide open. And a lot of you trade on the immoral friggen market to get your pound of flesh, well its commen out of all our hides.

 

Thu, 08/05/2010 - 19:21 | 505942 Goldenballs
Goldenballs's picture

The deficit is unpayable.Hyperinflation is the only way out,QE2 will lead the way but it will be played as the main means of stimulus to the economy for consumption by the masses.When in full swing Gold will become generally unaffordable to most people.

Fri, 08/06/2010 - 01:23 | 506546 DoChenRollingBearing
DoChenRollingBearing's picture

Default on The Debt is a possibility that you should factor in as well.

I completely agree with you on gold.

Thu, 08/05/2010 - 19:24 | 505945 uno
uno's picture

" what will finally tip it over"

 

new petrol & gold based regional currencies.   I would assume within a year.  Once that happens, oil, food go up, the prez releases the SPR to keep the riots down, and then hasta la vista baby.

Thu, 08/05/2010 - 20:46 | 506140 QQQBall
QQQBall's picture

Uno - I was thinking "they" might try to go to a global currency first - some sort of massive negotiated reset. That would buy time to extent the looting.

Thu, 08/05/2010 - 21:21 | 506206 Kayman
Kayman's picture

"they" will never agree who gets to do the printing.

But on that note Bernanke seems suspiciously circumspect- does he know we are at (or past) the tipping point ?

 

 

Fri, 08/06/2010 - 11:22 | 507329 Abigail Adams
Abigail Adams's picture

"They" will not have to agree. When fiats collapse, since the history of money, he who has the gold wins. The global currencies' (mostly/all) fiat are already in place, jusy waiting. Forget the IMF, the BIS has SDR's. God (and some of the Rothschilds) only knows who really has the gold, what with the shell game being so clever. Between the hinky leasing and swapping of gold, everyone has the gold (on their books).

Maybe someone from the last Bilderberg meeting has memoed helicopter Ben on the tipping point. In reality, isn't that when every American (not "in" the club) has been looted and the (vig) interest on all that debt is impossible, mathematically, just to cover?

Thu, 08/05/2010 - 19:23 | 505948 Shameful
Shameful's picture

The dollar is a big global Mexican standoff. We all know how this ends but everyone is waiting for for the "signal" to draw and start shooting. A few are shifting nervously and moving positions, but no one has gone for their guns...yet.

No one believes they will get paid back they are just trying to keep the ponzi going a little longer to delay the inevitable global realignment. And it will be big, after all hyperinflation means no more American policeman.

Thu, 08/05/2010 - 19:36 | 505963 TeddyRoosevelt
TeddyRoosevelt's picture

Oh that's a scary thought.  Well maybe some problems will be worked out.  Just this time people will have the big guns.  Sad really.

Thu, 08/05/2010 - 19:25 | 505951 Hamsterfist
Hamsterfist's picture

I needed an answer to when this is gonna happen, damn it.  I keep sitting around with my tinfoil hat on, waiting for the end.  The anticipation is killing me!

Thu, 08/05/2010 - 19:36 | 505964 Shameful
Shameful's picture

Anticipation?  I'm horrified by this.  I'm grateful every single day this does not happen!  At this point it seems pretty inevitable, all I'm hoping it's as far in the future as possible.  The printing and spending will not stop until the world says no, so thank you world for allowing this to continue while I try to get ready.

Thu, 08/05/2010 - 19:43 | 505980 Hamsterfist
Hamsterfist's picture

Bring on the doom I say.  IMO it is inevitable, let's just get this shit out of the way now.  Face it, you are fucked.  It could be worse though.....  Not sure how, yet.

Thu, 08/05/2010 - 19:56 | 506015 Shameful
Shameful's picture

Get it out of the way?  When it goes the US will be GONE.  May even keep the Fed on our neck but the country we all know and grew up in will be gone.  And the standard of willing will collapse, and it won't come back maybe never, maybe not for generations.  It's like saying "I'm going to die someday might as well be today".  Maybe I'm a coward but I want to duck the pain as long as I can.

Thu, 08/05/2010 - 20:21 | 506089 cougar_w
cougar_w's picture

It's probably not pain you are running from.

Would be really nice if all it did was hurt.

What's lurking out there is evaporation.

I don't think the world has seen an economic system evaporate into nothing since the fall of Rome.

Thu, 08/05/2010 - 21:35 | 506233 mark mchugh
mark mchugh's picture

I understand your fears, and I certainly don't want to see our country destroyed either, but the longer we wait, the worse it will be.  This is more like a brain tumor than certain death.  Everyone's afraid of brain surgery, I don't care who you are, but the longer you pretend everything's gonna be ok, the worse the outcome will be.

I don't think it's too late - yet, but I also think we're approaching the point of no return rapidly. 

Thu, 08/05/2010 - 21:44 | 506255 Shameful
Shameful's picture

If this was 2002 I would agree.  But this late in the game it's already over.  When it goes there will be no floor under it now.  Even if something was left the culture of "gimme gimme" would snap it up and redistribute it.  When we go it's 3rd world, so the argument that it will be worse doesn't hold water for me.

It is to late.  Culturally we can't take austerity.  Generations have been brought up on the ideals of conspicuous consumption, and government handouts.  You pull the rug on that and you will they in the streets demanding to divvy up what is left. The tumor is no longer operable.  Our choices are die partying or die on the operating table.  Don't mean to be a downer that's just how I see things.

Thu, 08/05/2010 - 22:07 | 506297 mark mchugh
mark mchugh's picture

Dammit!

I knew when I cooked up the brain tumor analogy somebody was gonna say something about "inoperable."

Thu, 08/05/2010 - 22:39 | 506355 mikla
mikla's picture

I agree it's "game over", but people live through amazing things.

Further, people really are pretty elastic.  I work with scouts, and can take 10-14 year old boys from nintendo to (very) primitive camping in weeks.  People can do this.  I could do the same thing with grandmas, and I'm not unique (these are skills for which humans are adept).

That's the military's experience too:  It's relatively straight-forward to "train-them-up" on a regular schedule (although it is rather difficult to hold them at military "readiness", but that won't be our problem).

Scouts *love* the camping, and they get "good" at it relatively quickly.

It's gone now, it's gone tomorrow, it's gone in 2012, I don't care.  It's still gone.  And, I think that's a Good Thing.  There will be adversity, but also *many* good things.  Fear not.

Fri, 08/06/2010 - 00:22 | 506494 Shameful
Shameful's picture

Oh I'm not saying everyone will curl up and die.  Merely that culturally every scape of value will be sucked out and consumed, and then we will have to start from square 1.  The only possible good thing is maybe the financial black hole will so destabilize the rest of the world that an enterprising nation won't try to strip off some resources.

The problem is people worldwide have a hard time losing something they see as theirs.  And like it or not Americans believe that an extremely high standard of living is their birthright.

Fri, 08/06/2010 - 03:21 | 506607 Assetman
Assetman's picture

Well, Americans are going to be forcefed a change in cultural standards that's going to taste like a heaping pile of dung.  And they will adapt, even left fighting and screaming every step of the way.

Given the state of other major world economies, I'm taking the under and going for the default scenario.  I have no idea when it will start in earnest, but the triggers will be U.S. state bankruptices and European chaos.

Under such a scenario, we simply won't pay back our major creditors-- and if we do, it will be nowhere close to in full.  Our kleptocraptic political system will collapse, and a military one will take its place for about a decade.  There will be a lot of upset people in the U.S., but it will be directed at the civilan leaders, and not at the new GW.  

We will be very aggressive militarily about protecting our essential (oil) assets-- even to the extent of threatening conventional/nuclear war against  a very pissed China.  Europe is a non-factor, but Russia gets a nice bribe for "non interference".  We won't give a crap about Israel; only the oil assets in the region.

If we get a "George Washington" leader, we will get a return to a Consitiutional-based government in about 15 years.  Since global trade will collapse, the U.S. will revert back inward to self-sufficiency.  Farmers will be the nations civil servants.  And there will be a lot of civil servants.  Medicare and Social Security will be will simply not exist and such "benefits" will be regional and "pay as you go" and not government liabilites.

As part of the default process, the U.S. will be issued a "Red" Currency, as backed by the faith and credit of the U.S. Treasury (or something even more tangible).  There will not be a Federal Reserve under martial law, and protections will be put in the Constitution to prevent its re-creation.

We will all be poorer, but the next stage will be set to address challenges that techology will overcome, such as alternative energy discoveries and more efficient freshwater distillery.  We will all be back to the extended family structure, and adopt values that we never thought were possible today.  And as we become more a self-sufficient, we will also be building a new and much improved manufacturing base. 

The other scenario involves a "Hitler leader".  If we get that, we simply lose.  As does most of the civilized world.

 

Thu, 08/05/2010 - 23:52 | 506449 JLee2027
JLee2027's picture

When it goes the US will be GONE. 

Oh my goodness.  Name one country hyperinflation has removed from the map.

Thu, 08/05/2010 - 23:55 | 506455 Suisse
Suisse's picture

The Weimar Republic and multiple governments in Latin America. The countries still existed as a political entity, they were simply "under new management."

Fri, 08/06/2010 - 00:57 | 506527 TBT or not TBT
TBT or not TBT's picture

Yeah, it would be interesting to see how that would work out for the rest of the world when the former U.S. puts out its "under new management" signs.     All those military assets would still be there, debt or no debt.    The rest of the world really doesn't wanna go there.

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