This page has been archived and commenting is disabled.
Guest Post: Preserve and Protect: The Jaws Of Death
- Case-Shiller
- CDO
- Collateralized Debt Obligations
- ETC
- Fannie Mae
- Federal Reserve
- fixed
- Florida
- Guest Post
- Home Equity
- Housing Bubble
- Housing Prices
- Housing Starts
- M3
- Monetary Policy
- Money Supply
- OTC
- Quantitative Easing
- Rahm Emanuel
- Real estate
- Reality
- recovery
- Shadow Banking
- Stimulus Spending
- Trade Deficit
- Unemployment
- Wall Street Journal
- White House
Submitted by Gordon T. Long of Tipping Points
Preserve and Protect: The Jaws Of Death
The United States is facing both a structural and demand problem - it is not the cyclical recessionary business cycle or the fallout of a credit supply crisis which the Washington spin would have you believe.
It is my opinion that the Washington political machine is being forced to take this position, because it simply does not know what to do about the real dilemma associated with the implications of the massive structural debt and deficits facing the US. This is a politically dangerous predicament because the reality is we are on the cusp of an imminent and significant collapse in the standard of living for most Americans.
The politicos’ proven tool of stimulus spending, which has been the silver bullet solution for decades to everything that has even hinted of being a problem, is clearly no longer working. Monetary and Fiscal policy are presently no match for the collapse of the Shadow Banking System. A $2.1 Trillion YTD drop in Shadow Banking Liabilities has become an insurmountable problem for the Federal Reserve without a further and dramatic increase in Quantitative Easing. The fallout from this action will be an intractable problem which we will face for the next five to eight years, resulting in the 'Jaws of Death' for the American public.
The ‘Jaws of Death’ is the crushing squeeze of a shrinking gap between incomes and a rising burden of the real cost of debt burdens. Many may say there is nothing new in this, but I would respectfully disagree. There is a widespread misperception of what is actually evolving that stops voters from forcing politicians to address America’s substantial underlying dilemma. It also stops investors from positioning themselves correctly.
Any solutions of real substance are presently considered political suicide. It is wiser to wait for a crisis event to unfold. As White House Chief of Staff and a primary Obama political strategist, Rahm Emanuel has said on numerous occasions: “You never want a serious crisis to go to waste”. It doesn’t take much intelligence to understand this also implies looking for a crisis as a political shield, for example from an almost insurmountable political problem such as a generational reduction in the US standard of living.
Before I delve into misperceptions of the ‘Jaws of Death’ and a reduced US standard of living, we need to briefly consider for a moment whether this is a planned outcome or just happenstance? President Franklin Roosevelt said:
“Nothing in politics happens by chance”.
Being in business I have always been very watchful of a slightly different variation of the same theme:
“Strategy is something that happens to you while you are looking the other way”.
Maybe Mark Twain said it better than both of us:
“It ain’t what you don’t know that gets you into trouble. It’s what you know for sure and just ain’t so!”
My point is that there is a strong possibility that the ‘Jaws of Death’ is an orchestrated plan to reposition America’s standard of living. A plan not for the good of Americans but for the good of the banks and those that control the $630 Trillion unregulated, off shore, off balance sheet, OTC derivative market. It is no secret that America’s standard of living is no longer viable, as evidenced by a continuous and chronic deterioration in the US Balance of Payments, Trade Deficit and Current Account funding. It must be addressed and this may already be happening in a stealth fashion.
What the above suggests is that we need to address what is perceived as ‘truisms’ but in fact are not; what is perceived as reality versus what is perception. These subtleties are the veils that hide the real dangers from us.
THREE MISPERCEPTIONS
1- Housing
Consider President George W. Bush’s ‘ownership society’ where it was heralded, along with the previous Clinton administration, that every American should own his/her own home. It is fair to say that our society bought into this ‘hook, line and sinker’. I used to hear the following statements endlessly, and disputing any of them fell on deaf ears with blank stares, as though you were an idiot to even challenge them.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
I can’t remember how long it has been since I have heard any of these statements. How quickly accepted fact is found to be mistaken. Without this false mantra being sold to the public we would never have had a CDO driven financial crisis. Consider for a moment who is responsible for orchestrating this false belief system that the financial collapse was built on? Our government's misguided public policy certainly holds some responsibility for this.
“The public and majority of investors are always wrong.”
What we now face is the reality that jobs have disappeared and housing has fallen in an almost mirror image of unemployment as shown by housing starts below.
According to a recent 3,400 households’ survey by Fannie Mae, a more realistic attitude towards homeownership has emerged as the American dream of owning a home has lost its allure. Only 67% felt housing was any longer a safe investment and 33% said they were likely to rent in the future. The Wall Street Journal recently cited an interesting illustrative example of shifting psychology in which a 26 year graduate student walked away from his down payment to purchase a condo because he felt homeownership was an “economic trap” and “being mobile and adaptable to the job market was far more important than homeownership”.
The National Association of Realtors is starting to show signs of panic because this shifting psychology is moving legislators to reconsider federal subsidies for homeownership. It has reacted by launching a campaign on the “value of homeownership”. I wonder if the National Association will get the same look I did when I questioned the housing statements listed above. Oh how quickly things change!
2- Inflation / Deflation
I am continuously troubled by the inflation – deflation debate. One of a number of issues in these debates that concerns me is no one ever defines ‘time’ in their analysis and predictions. Without time specified we could have inflation, then deflation, (or visa-versa) for exactly the reasons that both opposing views meticulously articulate. Maybe even more blatant is that seldom do analysts consider the possibility that we could have both. This is the school that I am a believer in.
I predict that over the next few years we will have inflation in the things we NEED and USE. These are the items we buy and consume every week, the items we buy and not finance, and the items we need ready and recurring cash for. Food, energy, consumables, and basic services are examples.
We will have deflation in the things we WANT and OWN. These are the items we strive for that we perceive will move our lives to an even higher standard of living. They are primarily assets like: housing, real estate, financial instruments, boats, exotic cars, art, collectibles, etc. - often the items we finance.
It may be as simple as Maslow's Hierarchy of Needs; until our survival needs are met we won’t move towards the ultimate state of self actualization. We won’t think of luxury goods when we are hungry, cold and tired. But what is pushing us towards the ‘survival’ end of Maslow’s spectrum? If we live on debt and it becomes harder to secure or service, then this will accomplish that shift, despite new debt being cheaper than it previously was.
Money supply which is a driver of monetary inflation and deflation is now negative, as shown by the broader M3 money supply (which is no longer reported by the government). This illustrates that despite massive monetary intervention, forced deleveraging of mal-investments has come home to roost.
3- Credit Availability versus Credit Demand & Debt Servicing
Thirdly, only a few years ago interest rates were considered low and widespread refinancing was occurring. Home equity loans were all the rage to buy new boats, campers, vacation homes and every other imaginable toy that cheap money was felt to afford. Advertising was replete every evening with 0/0/0 financing offers: Zero down payment, zero payments for 48/60 months and zero interest. Who could refrain from taking advantage of these incredible offers?
Well guess what? Interest rates are now significantly lower and the products you bought previously are in most instances now even cheaper; yet few are clamoring for them. At the marina where my boat is moored, you can’t give away a boat; where only a few years ago no one could get a mooring or slip for their newly purchased boat. What has changed is we can generally no longer service our debt loads at even present historic 50 year low interest rate levels. Heaven forbid rates should go up!
The central issue may be not about whether rates go up, but rather if the above outlined housing weakness, concurrent inflation/deflation and weak credit demand persist for a protracted period.
I would like to show you exactly what this means if these trends persist, by using a fictional family as a way of illustrating what is now in store for the public.
THE SMITH FAMILY DILEMMA
The Smith family bought into all this mantra by purchasing a home. All their peers were doing it. Their family kept asking them why they hadn’t bought a home; and if they didn’t, they would surely never be able to afford one. They felt pressured to take on the debt obligations. Unlike many, they were relatively conservative and bought a home with a small down payment, securing a $200,000 mortgage at 6.5% fixed for 5 years. The mortgage was possible because they absorbed Private Mortgage Insurance (PMI) payments into their monthly budget. The family income was $50,000 annually. These are all nominal prices. To adjust for real values, we need to subtract the inflation rate from the mortgage rate. Inflation helps the Smith’s get ahead over the leveraged housing asset. The higher the inflation rate above 6.5% the more they win. The drawback is that their $50,000 income diminishes in real value. The salary therefore needs to be adjusted for real terms by subtracting the inflation rate from the $50,000. Here are the theoretical results for various Deflation, Inflation and Hyper-Inflation scenarios.
As bad as the above theoretical charts look, it is actually worse in reality. Why? Because as the pressures mount on unemployment, underemployment and competition for jobs, money becomes tougher and harder to earn. As disinflationary pressures shift to deflationary pressures, housing prices fall faster than the overall inflation/deflation rate. As a matter of fact they fall substantially faster. The following table represents the same numbers for the Smith family, but I have adjusted for the variance in house prices falling faster than the overall deflation rate. This is where it gets really scary.
What the charts tell us is that if present Monetary and Fiscal Policy is anything other than totally successful in arresting deflation and creating balanced inflation in both what we USE and OWN, we are in serious troubles. Any imbalances will be a disaster as shown on our charts. A failure to stop deflation will be devastating to those who are in highly leveraged assets.
If after reading the former example of the Smith Family you discarded it because you strongly believe elevated inflation is around the corner and you are a highly leveraged home owner, let me take you through a brief quiz published by The Daily Bell to further test your understanding of reality: “The Great Housing Bamboozle: A Look Behind The Numbers Shows Home Ownership To Be A Horrible Investment”.
WHAT ARE THE CHANCES OF HOUSING FALLING FURTHER?
As I mentioned previously, attitudes towards housing as an investment have changed. There has been enough written on the housing decline but surprisingly little on how much further it is likely to go or whether it should be considered an investment at all.
Even after massive assistance in the form of HAMP, over $1T of government purchases of Government Agency debt, 50 year low interest rates and Quantitative Easing, the Federal Reserve’s monetary policy and the US fiscal policy has been unsuccessful in reversing the housing decline. New Sales, Housing Starts and Building Permits continue to deteriorate as housing inventories once again resume their climb with untold amounts of ‘shadow’ inventory still being held back from foreclosure by the banks.
Karl Case, the co-founder of the S&P/Case-Shiller home-price index, believes “a common mistake of the housing bubble years was the desire to own something that goes up in value rather than to own something you can afford”. He feels “more Americans need to view homes as durable goods, such as cars, and not primarily as investments”.
Housing is not coming back soon and I suspect we are still in the middle stages of a longer term housing correction. Historically, major financial distortions always return to at least retest their long term trend support. By various comparisons we still have a fair ways to go over the next two years.
PEOPLE ARE STILL HURTING – IT ISN’T GETTING BETTER!
A recent convention in Palm Beach Florida attracted over 50,000 people, estimated to be holding 25,000 problem mortgages. This is after the government placed Fannie and Freddie in conservatorship and bought over $1T in agency mortgages to keep the US mortgage system from imploding.
FHA will soon be in a similar untenable position as the government has become the holder of almost all new US mortgage product. If this is not sustained, despite it being a near impossibility to do such, US housing may not just fall further but collapse.
CONCLUSION
“The great enemy of the truth is very often not the lie – deliberate, contrived and dishonest – but the myth – persistent, persuasive and unrealistic.”
John F. Kennedy
1962 commencement address at Yale University
Americans must face the hard reality that the US is now in decline and rapidly relinquishing its hold as the world’s dominant industrial power. A serious failure in political leadership to recognize this and act upon it, along with misguided public policy legislation, has hastened the decline.
What this means is that America’s standard of living, which has almost been assumed as a birthright, is now in jeopardy and for the middle class is already in full erosion. America, like all great powers in decline, has become complacent and apathetic with an unjustified sense of entitlement. Americans somehow believe that bad things cannot befall America, as though it is preordained to always be a preeminent power with the corresponding highest standard of living.
The facts are that we are at the precipice of a crushing decline in our standard of living due to fifty years of wasteful spending and bad public policy. We are near or now possibly past the point of no return without bold and rapid change. We need change that can only come from the public’s understanding of what change specifically is required and not just a political billboard proclaiming the ‘change’ mantra at election time.
As we move more and more towards a “have” and “have not” society where the middle class is disappearing and the government is involved in all aspects of our lives and economic well being, we are becoming acutely aware that America is now different. Our perceptions of what America is no longer matches the reality around us on a daily basis. The middle class in America is rapidly disappearing.
|
|
|
|
Inflation lies ahead
Deflation lies ahead |
Deflation & Inflation
- Inflation in what we
- Deflation in what we |
|
Unemployment is a |
Employment is a long |
|
Credit Availability |
Easy credit is the |
|
Bank Lending is the |
Borrowing is the |
Like housing being a good investment, much of what we hear or believe are false perceptions. We are distracted by these contrived and orchestrated misperceptions from the hard reality in taking the actions required to make real needed change. The US Standard of Living is now on the line.
Follow daily Tipping Point developments at Tipping Points
»
- 23426 reads
- Printer-friendly version
- Send to friend
- advertisements -
I think Gordon is right about this. I think it was an article that I read last year that suggested that we may see both deflation and inflation. We are seeing this emerge right now!
Just pull up a chart for corn, cattle, soybeans, cotton, coffee, wheat, milk, oats, rice, gold, silver, copper. These are all things we NEED! Their prices are going parabolic!
Gordon's article that I read last year implied that with the higher commodity price (input costs), more and more businesses would become insolvent, face bankruptcy, and lay off employees. Thus, circumstances would worsen and enter a "death spiral".
I'm convinced we are entering that next phase over the next several months.
I am looking for a boat to live on. E mail me who is giving one away
Are a few holes in the hull okay?
Won't a nice can of paint take care of those? Ha ha ha.
I have a great one for you.
www.titanic.com
If you go to Charleston, SC you can find one, free for the taking. They are having problems down there with people abandoning their boats cause they can't afford them and the slip rents anymore. Go check it out.
http://dontkilljobs.org/
And they eat their own.
http://agonist.org/sean_paul_kelley/20100917/obama_to_liberals_dont_blam...
Obama To Liberals: Don't Blame Me, Blame YourselfObama said this last night at a $30,000 a plate fundraiser:
So, let's review the record one more time:
First, Obama killed the public option.
Second, Obama told a federal judge that military detainees have no rights in Afghanistan. And has fought to prevent Geneva Convention rights from being given to Afghan POWs.
Third, Obama has done nothing meaningful about unemployment, post crisis.
Fourth, Obama supported HAMP, which has led to foreclosures, against the advice of people who said it would do exactly that.
Fifth, Obama has used cluster bombs against civilians in Yemen.
Sixth, Obama has approved the assassination of an American citizen.
Seventh, Obama has denied the rights of a free press by signing an order against the release of torture photos.
Eighth, Obama opposes the rights of same sex couples.
Ninth, Obama has stonewalled the repeal of DADT.
Tenth, Obama promised to close GITMO and has not done so and does not seem likely to.
Eleventh, Obama has perverted science in the interest of corporations.
Twelve, Obama allowed an ex-post facto bill giving the telecoms immunity from Bush era domestic spying.
Thirteen, Obama prosecuted a child soldier.
Fourteen, Obama created a deficit commission that stacked in such a way as to guarantee cuts in Social Security, the nation's single most popular and successful government program.
Fifteen, Obama sat by and did nothing while Congress set back Roe v Wade via the Stupak Amendment.
Sixteen, refused to punish--not even giving them a slap on the wrist--the policymakers behind the torture memos.
Seventeen, has claimed state secrets to prevent anyone from gaining any knowledge as to whether our intelligence organs are torturing people contra International law.
Am I missing anything?
You know, for once, I'd like my president to adhere to the Constitution and International Law.
But hey, I'm just a dirty fucking hippie who always sees the glass as half-empty!
Yep, he just re-authorized the Patriot Act.
"I'm just a fucking hippie who always sees the glass as half-empty!"
QED
heh heh heh. That was easy.
francismarion
I'm not certain if it is the same guy but one of them runs a big ole ranch in Texas. More like a capitalist hippy working his ass off.
Also seems to be a world traveller, someone who actally spends time amongst the Fellaheen and Campesinos. Shit very people do.
I'm gonna cut them some slack for actually walking the walk, instead of being full of hot air and shit.
A "dirty hippie"? Just put some daisies in your hair and you'll do OK.
Great list btw, Thanks.
I thought he was going to save me! I'm sure the reincarnation of Christ will present himself at the next election.
He extended for another year the 9/11 "State of Emergency."
http://www.politico.com/blogs/joshgerstein/0910/Obama_extends_911_state_...
And they eat their own.
http://www.rawstory.com/rs/2010/09/rove-challenges-palin-campaign-odonnell/
Rove challenges Palin to campaign for O’Donnell in person
Rove: O'Donnell should explain 'dabbling' in witchcraftOh come on, enough is enough.
Some people decry Rosie O'Donnell as an obnoxious, self-centered, ego-maniacal, close minded lesbian who did a famously oxymoronic "Family Cruise" (so said the Christian Reconstructionists) shtick, and there's hear tell in the province of cerebral, ever so credible multi-media like the National Enquirer that she's been known to eat small children raw, but Satanic Worship? No Way. Let's please stay a little more realistically on topic without such random, meaningless and distracting digressions.
This is why I'm a Republican:
http://www.youtube.com/watch?v=IMgyi57s-A4
Best video on the internet. My favorite part is at 1:23.
Absolutely hilarious!!!!
And he even admits that he has a master's degree in communication. LOL!
In case you've missed it, here is Christine O'Donnell masturbation video:
http://www.youtube.com/watch?v=RzHcqcXo_NA&feature=channel
And here's the video where she admits she was a witch:
http://www.youtube.com/watch?v=5iWRw3oZdg4&feature=related
Love those Republicans!!
Somebody please help me out here.
OK This woman (kinda like the infamous "that woman", but purely coincidental and has nothing to do with sex or politics, believe me) was carrying the message that one should not masturbate in private. In private.
Well, WTF?!?!?!?! I mean what does that leave me with?
Public Masturbation. YES!
Right?
No private masturbation, but silent on public dicking around.
Thereby as a "non-said" political statement, condoning (?) public displays of sex, which many find immoral, degrading, perverse or at least twistedly funny, but not your normal everyday ordinary behavior.
Especially for nationally recognized political figures like..... Oh well.
See this is exactly the problem with all these politicians, the Law of Unintended Consequences comes home to Bite.
Hard. Gotta think this stuff out better.
Now, if I were running for orifice.....
God, you'd think she was from KY or something.
Wrong Place
iota
"Wrong Place"
Dude you told the joke wrong.
A Texas business man, while in Japan for some business meetings and a few rounds of golf, arrived in Tokyo a day earlier than expected. Feeling lonely that evening, he employed the services of a beautiful young Japanese girl to be his companion for the evening. Although the Japanese girl spoke very little English and the businessman spoke no Japanese, their passion roared and in the heat of the moment she began yelling "Gama Su!, Gama Su!". Hearing this, the Texan knew he had pleased his female Japanese friend and soon afterwards went to sleep.
The next day while playing golf with his Japanese business colleagues, one of his Japanese partners holed his shot from 170 yards away! Everyone went crazy and began yelling excitedly in Japanese. Wanting to impress his friends, the Texan joined in and began yelling, "Gama Su! Gama Su!"
Suddenly everyone became quiet. After a moment of silence, one of the Japanese turned to him and asked "Wrong hole? What do you mean wrong hole?"
Gama Su!
I meant I posted in the wrong place, but nice joke.
Great assesment.
People are fed up with politicos which is clear from the tea baggers (ahem) getting more popular.
I am guessing that if a politician had a sack big enough to call out the real problems people would get behind him/her.
Picture if you will.....
Yes people of this great nation, the American lifestyle as you have known it over the last 30 years is at risk. But guess what people it was an American dream fueled by imaginary money called debt.
Meanwhile we have been sending jobs and our earning overseas.
The only way out of this mess is up to you, sometimes change for the better needs to be forced and can hurt a little....Now is the time to buckle down, take some lumps and do things differently! Great companies like GE, Disney and Microsoft all started during extreme economic downturns. Don't look for politicians or bankers to fix things. It is up to you.......
Someone? Anyone?
BTW. Housing can still be a good investment (maybe not in the short term). But only if you use the olde school model of paying off your mortgage over a period of 15-20 years to own free and clear an income producing (or cost reducing via no housing costs) asset.
Sounds like the windup for soul destroying wealth and labor confiscation. Screw this place. Let the jews, blacks, illegals and baby killers have it. That should make for one hell of a national anthem.
liberal sodomy
Fucking eh dude!
Where can I get one of those cool SS tat's?
If I don't shave my head can I still be a Skinhead? I know you guys do it so you can easily see the lice. But I'm clean, so I don't have bugs.
Liberal Sodomy is definitely an old poster, reincarnated. I'm not sure he really expects to be taken seriously, or even cares.
You do contribute so much to the discussion. Your boyfriend told you not to drink and post at the same time.
Djirk
"People are fed up with politicos which is clear from the tea baggers (ahem) getting more popular"
Except on the Democrat side instead of taking a page from the Tea Party play book and actually starting a party, faction, which runs more Liberal candidates they choose to host Stewart/Colbert rallies.
What the fuck? Haven't they learned anything?
Those people don't want to change anything. They don't want to challenge the status quo.
It's like being the wife an abuser who prays every night for shit to get better, when all she has to do is walk out the door.
You are so right. D's and the R's don't want to change a thing. Everything is fine for them & shit on everybody else.
The Ds don't have to take a page from any playbook. They were infiltrated by the "progressives" 100 years ago and are now completely left of reasonable to anyone not relying on government assistance. The same Statists managed to get into the R party as well. So, now we have one giant, big government party that manages to fool probably ~70% of the population into believing there is a difference.
The TEA Party is looking to infiltrate the R in order to bring it back out of control of the Statists; ironically this means they are attempting to make the party liberal once again, in the true sense of the word that is.
I just adore the term "Tea baggers". It shouldn't be construed as a slur but more as a badge of honor. As the movement "bags" the seat of each incumbent, the movenment faithful should jiggle a tea bag on high.
As for the gushing Christine O'Donnell, who just won the seat in Delaware, did anyone else notice how her response to the win was how everyone had voted for HER?
Isn't it remarkable how the whole campaign to oust incumbents has devolved to being about her.
Christine, don't get too cozy in your tax payer office. Don't forget where you got your support.
Your one term is all you get.
Rules of the fight club.
And they eat their own.
http://hotair.com/archives/2010/09/17/great-news-incumbent-sore-loser-to...
Great news: Incumbent sore loser to launch desperate bid to keep powerhttp://hotair.com/archives/2010/09/17/murkowski-this-is-one-woman-who-wo...
Murkowski: This is one woman who won’t quit on Alaskahttp://hotair.com/archives/2010/09/18/can-murkowski-win/
Can Murkowski win? Update: Calling all lobbyists!**** "A recent convention in Palm Beach Florida attracted over 50,000 people, estimated to be holding 25,000 problem mortgages." ****
With a population of 2 million people (Palm Beach County) and 25,000 mortgages being in trouble... out of 1 million mortgages outstanding? is a 2.5% failure rate which I don't know doesnt sound like the end of the world to me, I dont know what the National average is... as well as how many of these people are faking problems to reduce thier debt load.
They are having to hold conventions now to advise tens of thousands of people at a time, city by city, about their options on underwater mortgages. It used to be a personal meeting with your financier.
And you don't deduce something is awry as you watch this phenomenon?
Move along, nothing to see here. Send me a pair of those glasses you wear, JW. I like the hue of the lenses.
All those people with 2 mortgages each. Makes one want to cry.
Estimated to have 25,000 bad mortgages - estimated by whom? There is your answer knuckles.
Hey, JW showed. Welcome.
I thought a house was someplace to live. Silly me.
Leveraged Life.
Online poker anyone?
America, like all great powers in decline, has become complacent and apathetic with an unjustified sense of entitlement. – Gordon T. Long
That is insufficient argument. Why did all this happen? It was because of fiat money—the Federal Reserve System.
We have two choices, America or the Fed. The Fed has forced the choice. It was one thing when it manipulated the money supply for financial greed and national power; it’s another when the money manipulators decided to take full control of America and change her government into a supra-national world system for the subjugation of the human race to tyranny. That is when they crossed the Rubicon; it was the end of Caesar in Rome and it’s going to be the end of the Fed in America.
It’s called treason.
Those who settled and built American never considered home ownership without first working and paying for it; they considered the opportunity to do so a blessing. It was the bankers who concocted the recent American Dream Home scam to house an imported workforce at taxpayer expense and to enrich their friends, such as KB Homes’ founders Donald Kaufman and Eli Broad.
It’s called the American Swindle.
Innovation, invention and hard labor produce value--value for those who practice it. Fiat money removes that value and transfers it to the originator of the fiat.
America’s corporations were stolen by hostile mergers and acquisitions financed by the Fed for its chosen winners and through political policy bought and paid for by the Fed. That policy pushes the outsourcing and the offshoring and the unlimited low-wage illegal immigration and the rising social and welfare programs to buy a mass audience’s support—while keeping Mexico submerged as a low-wage plantation opportunity for the multinational tyrants.
Anyone familiar with North American labor and resource problems knows that the Mexican people crossing the border are not doing it because they would rather be in the U.S. than in Mexico. Because of international bankers and the corporations who put a premium on low wages and low fringe benefits—who made a deal with Mexico’s and America’s corrupt governments—Mexicans are forced to leave a homeland and a culture they love. Unfortunately, America’s banker/corporation system, now mirroring Mexico’s corrupt government, has put the entire world on the road to serfdom.
It’s upsetting to hear people say that it was “American” corporations and the people’s wayward greed that drove the stake into America’s economy. The more we see of all the problems—it’s the currency, the fiat money, and the fact that those who own the money are taking the value.
IMO, “the crushing squeeze” in the Jaws of Death is between real value and fiat money. When a man is paid in Fed notes for his services, as soon as he walks out the corporate door, the fiat money begins to take the value from him. They have a million implements to take the money, the biggest being inflation; the others are derivatives, the NYSE, the 401k fraud, the SS fraud… on and on and on. But the handle that fits them all is fiat money; without it none of this would have happened.
America is morphing into a big plantation where the workers are paid in script to be spent at the company store.
It’s called chattel slavery.
AMEN BROTHER!!!
+!!!
"Those who settled and built American never considered home ownership without first working and paying for it;"
Revisionist history is pretty essential to perpetuating the Great Myth... Seems to me that a LOT of land was acquired for free, well, that is, if you don't count the genocide that was necessary to obtain it, for "free."
http://www.newyorkfed.org/research/staff_reports/sr458.pdf
Zoom way in on page 3 -- amazing stuff!
holy crap, that hurt my head. I'm glad I don't know what most of that stuff means.
Wow! The secrets of the universe explained!
...significant collapse in the standard of living for most Americans.....
Just as the late Sir John Templeton predicted during the housing home-refi boom....
We're seeing this scenario beginning to manifest itself NOW!
Ag commodities continue to go parabolic Sunday evening. Corn, beans, wheat, oats, rice, milk, cattle, all higher. Gold futures too!
The Fed wants inflation! It's getting inflation in ALL the wrong places, just as Gordon Long has described!
Feeling poor is more common than everhttp://www.freep.com/article/20100919/COL01/9190484/1433/Feeling-poor-is-more-common-than-ever
cloward and piven--here we go.
- Ned
Outstanding post! TD, thanks for posting.
Before I delve into misperceptions of the ‘Jaws of Death’ and a reduced US standard of living, we need to briefly consider for a moment whether this is a planned outcome or just happenstance? President Franklin Roosevelt said:
“Nothing in politics happens by chance”.
This is not by happenstance. Do not be deceived, this is not about money, but about total control of all society. Think about it, America was strong when its people were independent, hard working and were common sense smart and could think for themsleves.
It seems clear to me what is happening. A huge portion of US home mortgages are now controlled either directly by the government or by GSAs. From everything I read, this is only going to continue and at an accelerating rate. This is EXACTELY what the elite intend. At this rate, in 10 years most Americans will be living in government owned housing. This is not about money, but control over us.
Another fine article by Mr. Long.
Yes people are starting to feel it. Initially people thought there would be some pain, but in 18-24 months Uncle Sugar would have things back to normal and we would get back to "normal" growth & economic expanion. Its been like 3 years now and we still have 500k new UE every report; people are realizing that this time is different. I suspect most people held on much longer than they dreeamed they would have to and now the reality of a financial wipeout and bleak employment future is starting to FORCE people to finally CHANGE.
compunding a bad situation is government actions and meddling - you don't know what they are gonna do next, but its probably gonna be bad - uncertainty increases risk.
Um, it's only 450k now, which was better then expected, rally on! /sarcasm
?
Looks like deep doo doo. This ain't barnacles on your boat, this is the unthinkable Titanic (pun intended).
Besides partying, what would Grandma be doo doing in 1912 if she could Tweet and had two life preservers? Mine would probably take both life preservers, but she did make great oatmeal cookies.
But can our structural problems be overcome by a new political reality? Depends. House and no Senate means dysfunction and 1/2 measures, no rollbacks, and no painful austerity to survive. House AND Senate means dysfunction, and 3/4 measures, unless Executive Branch also returns to "free" markets and rollbacks.
Either way, looks like Grandma was a smart chick and did the right thing.
I is broke, cant pay debts, and getting low on food and the light bill is over due. It aint looking too good. Aint no botty hiring cants find me a job. this sucks
Anecdotally, here in the midwest the Mexican immigrants with the ability to organize labor -- i.e. successfully import illegals willing to work -- make good money. The workers get paid in cash and go back to Mexico during the winter months and live like relative kings / heros. The organizers stick around and finance the drug trade.
The overarching problem is a paradox: Americans need to consume less - however American business, and the rest of the world for that matter, is hooked to mindless American consumers.
The author posits that we will shift from a "wants" based economy to a "needs" based one; while the emerging economies shift from needs to wants. This presents another problem - the baseline for "needs" mirrors global population.
At the end of the day, what most are upset about, -- and rightfully so, I think -- is a global government system determining who makes the sacrifices.
.
The outrage is building. I don’t think the American people are going to slide quietly into a global tyranny, acceptng a continuously lowered standard of living.
Rebellion is afoot. As Tyler points out today, Hayek's Road to Serfdom recently became Amazon's most popular book. A June 10 Publishers Weekly article reported Hayek’s anti-big government book to be in the unprecedented position of number one in Amazon and Barnes &Noble's sales rankings; on Sept.5 it was reported to be 261 days on Amazon’s top 100 non-fiction bestsellers list.
“An oppressed people are authorized whenever they can to rise and break their fetters.” Henry Clay: Speech, House of Representatives, March 4, 1818.
i went to buy some flour at the company store
said hi to the owner put my sack on the floor
no way, not today, flour went up too high to pay.
I went back to the company store
I got sumpin' the man wants more
no way not today, flour gone up so the way you pay,
lay onna counter, they call me a whore.
And what exactly should we do?
Right now it's looking like spontaneous combustion wins the day. A plan would be nice, though.
Everyone needs to check out:
http://www.iwantyourmoney.com/
Of course, none of the movie trailer will be news to readers of Zero Hedge, so pass it on to the benighted citizens you run across in daily life. Consider it a moral obligation.
Nah - I got the sense it was just a Teaparty/Republican puff piece that tried to fondly recall the glory days of reagan. What about the Bush tax cuts, unfunded entitlement spending, and run-away congressional pork during the republican days? And I wish we had Clinton back - at least he seemed to get it at times. But then again, he got through NAFTA and created that giant sucking sound of jobs. They're all one party, just to distract the sheeple from their fleecing...
Did say somebody say, "Read the Protocols of the Elders of Zion?"
http://iamthewitness.com/audiobooks/archive.php?dir=the+protocols+of+the...
http://iamthewitness.com/audiobooks/the%20protocols%20of%20the%20Elders%...
=========
WE SHALL END LIBERTY
25. Far back in ancient times we were the first to cry among the masses of the people the words "Liberty, Equality, Fraternity," words many times repeated since these days by stupid poll-parrots who, from all sides around, flew down upon these baits and with them carried away the well-being of the world, true freedom of the individual, formerly so well guarded against the pressure of the mob. The would-be wise men of the GOYIM, the intellectuals, could not make anything out of the uttered words in their abstractedness; did not see that in nature there is no equality, cannot be freedom: that Nature herself has established inequality of minds, of characters, and capacities, just as immutably as she has established subordination to her laws: never stopped to think that the mob is a blind thing, that upstarts elected from among it to bear rule are, in regard to the political, the same blind men as the mob itself, that the adept, though he be a fool, can yet rule, whereas the non-adept, even if he were a genius, understands nothing in the political - to all those things the GOYIM paid no regard; yet all the time it was based upon these things that dynastic rule rested: the father passed on to the son a knowledge of the course of political affairs in such wise that none should know it but members of the dynasty and none could betray it to the governed. As time went on, the meaning of the dynastic transference of the true position of affairs in the political was lost, and this aided the success of our cause.
26. In all corners of the earth the words "Liberty, Equality, Fraternity," brought to our ranks, thanks to our blind agents, whole legions who bore our banners with enthusiasm. And all the time these words were canker-worms at work boring into the well-being of the GOYIM, putting an end everywhere to peace, quiet, solidarity and destroying all the foundations of the GOY States. As you will see later, this helped us to our triumph: it gave us the possibility, among other things, of getting into our hands the master card - the destruction of the privileges, or in other words of the very existence of the aristocracy of the GOYIM, that class which was the only defense peoples and countries had against us. On the ruins of the natural and genealogical aristocracy of the GOYIM we have set up the aristocracy of our educated class headed by the aristocracy of money. The qualifications for this aristocracy we have established in wealth, which is dependent upon us, and in knowledge, for which our learned elders provide the motive force.
27. Our triumph has been rendered easier by the fact that in our relations with the men, whom we wanted, we have always worked upon the most sensitive chords of the human mind, upon the cash account, upon the cupidity, upon the insatiability for material needs of man; and each one of these human weaknesses, taken alone, is sufficient to paralyze initiative, for it hands over the will of men to the disposition of him who has bought their activities.
28. The abstraction of freedom has enabled us to persuade the mob in all countries that their government is nothing but the steward of the people who are the owners of the country, and that the steward may be replaced like a worn-out glove.
29. It is this possibility of replacing the representatives of the people which has placed at our disposal, and, as it were, given us the power of appointment.
PROTOCOL No. 2
1. It is indispensable for our purpose that wars, so far as possible, should not result in territorial gains: war will thus be brought on to the economic ground, where the nations will not fail to perceive in the assistance we give the strength of our predominance, and this state of things will put both sides at the mercy of our international AGENTUR; which possesses millions of eyes ever on the watch and unhampered by any limitations whatsoever. Our international rights will then wipe out national rights, in the proper sense of right, and will rule the nations precisely as the civil law of States rules the relations of their subjects among themselves.
2. The administrators, whom we shall choose from among the public, with strict regard to their capacities for servile obedience, will not be persons trained in the arts of government, and will therefore easily become pawns in our game in the hands of men of learning and genius who will be their advisers, specialists bred and reared from early childhood to rule the affairs of the whole world. As is well known to you, these specialists of ours have been drawing to fit them for rule the information they need from our political plans from the lessons of history, from observations made of the events of every moment as it passes. The GOYIM are not guided by practical use of unprejudiced historical observation, but by theoretical routine without any critical regard for consequent results. We need not, therefore, take any account of them - let them amuse themselves until the hour strikes, or live on hopes of new forms of enterprising pastime, or on the memories of all they have enjoyed. For them let that play the principal part which we have persuaded them to accept as the dictates of science (theory). It is with this object in view that we are constantly, by means of our press, arousing a blind confidence in these theories. The intellectuals of the GOYIM will puff themselves up with their knowledges and without any logical verification of them will put into effect all the information available from science, which our AGENTUR specialists have cunningly pieced together for the purpose of educating their minds in the direction we want.
DESTRUCTIVE EDUCATION
3. Do not suppose for a moment that these statements are empty words: think carefully of the successes we arranged for Darwinism (Evolution), Marxism (Communism), Nietzsche-ism (Socialism). To us Jews, at any rate, it should be plain to see what a disintegrating importance these directives have had upon the minds of the GOYIM.
4. It is indispensable for us to take account of the thoughts, characters, tendencies of the nations in order to avoid making slips in the political and in the direction of administrative affairs. The triumph of our system of which the component parts of the machinery may be variously disposed according to the temperament of the peoples met on our way, will fail of success if the practical application of it be not based upon a summing up of the lessons of the past in the light of the present.
5. In the hands of the States of to-day there is a great force that creates the movement of thought in the people, and that is the Press. The part played by the Press is to keep pointing out requirements supposed to be indispensable, to give voice to the complaints of the people, to express and to create discontent. It is in the Press that the triumph of freedom of speech finds its incarnation. But the GOYIM States have not known how to make use of this force; and it has fallen into our hands. Through the Press we have gained the power to influence while remaining ourselves in the shade; thanks to the Press we have got the GOLD in our hands, notwithstanding that we have had to gather it out of the oceans of blood and tears. But it has paid us, though we have sacrificed many of our people. Each victim on our side is worth in the sight of God a thousand GOYIM.
PROTOCOL No. 3
1. To-day I may tell you that our goal is now only a few steps off. There remains a small space to cross and the whole long path we have trodden is ready now to close its cycle of the Symbolic Snake, by which we symbolize our people. When this ring closes, all the States of Europe will be locked in its coil as in a powerful vice.
2. The constitution scales of these days will shortly break down, for we have established them with a certain lack of accurate balance in order that they may oscillate incessantly until they wear through the pivot on which they turn. The GOYIM are under the impression that they have welded them sufficiently strong and they have all along kept on expecting that the scales would come into equilibrium. But the pivots - the kings on their thrones - are hemmed in by their representatives, who play the fool, distraught with their own uncontrolled and irresponsible power. This power they owe to the terror which has been breathed into the palaces. As they have no means of getting at their people, into their very midst, the kings on their thrones are no longer able to come to terms with them and so strengthen themselves against seekers after power. We have made a gulf between the far-seeing Sovereign Power and the blind force of the people so that both have lost all meaning, for like the blind man and his stick, both are powerless apart.
3. In order to incite seekers after power to a misuse of power we have set all forces in opposition one to another, breaking up their liberal tendencies towards independence. To this end we have stirred up every form of enterprise, we have armed all parties, we have set up authority as a target for every ambition. Of States we have made gladiatorial arenas where a lot of confused issues contend ... A little more, and disorders and bankruptcy will be universal ...
4. Babblers, inexhaustible, have turned into oratorical contests the sittings of Parliament and Administrative Boards. Bold journalists and unscrupulous pamphleteers daily fall upon executive officials. Abuses of power will put the final touch in preparing all institutions for their overthrow and everything will fly skyward under the blows of the maddened mob.
POVERTY OUR WEAPON
5. All people are chained down to heavy toil by poverty more firmly than ever. They were chained by slavery and serfdom; from these, one way and another, they might free themselves. These could be settled with, but from want they will never get away. We have included in the constitution such rights as to the masses appear fictitious and not actual rights. All these so-called "Peoples Rights" can exist only in idea, an idea which can never be realized in practical life. What is it to the proletariat laborer, bowed double over his heavy toil, crushed by his lot in life, if talkers get the right to babble, if journalists get the right to scribble any nonsense side by side with good stuff, once the proletariat has no other profit out of the constitution save only those pitiful crumbs which we fling them from our table in return for their voting in favor of what we dictate, in favor of the men we place in power, the servants of our AGENTUR ... Republican rights for a poor man are no more than a bitter piece of irony, for the necessity he is under of toiling almost all day gives him no present use of them, but the other hand robs him of all guarantee of regular and certain earnings by making him dependent on strikes by his comrades or lockouts by his masters.
WE SUPPORT COMMUNISM
6. The people, under our guidance, have annihilated the aristocracy, who were their one and only defense and foster-mother for the sake of their own advantage which is inseparably bound up with the well-being of the people. Nowadays, with the destruction of the aristocracy, the people have fallen into the grips of merciless money-grinding scoundrels who have laid a pitiless and cruel yoke upon the necks of the workers.
7. We appear on the scene as alleged saviours of the worker from this oppression when we propose to him to enter the ranks of our fighting forces - Socialists, Anarchists, Communists - to whom we always give support in accordance with an alleged brotherly rule (of the solidarity of all humanity) of our SOCIAL MASONRY. The aristocracy, which enjoyed by law the labor of the workers, was interested in seeing that the workers were well fed, healthy, and strong. We are interested in just the opposite - in the diminution, the KILLING OUT OF THE GOYIM. Our power is in the chronic shortness of food and physical weakness of the worker because by all that this implies he is made the slave of our will, and he will not find in his own authorities either strength or energy to set against our will. Hunger creates the right of capital to rule the worker more surely than it was given to the aristocracy by the legal authority of kings.
8. By want and the envy and hatred which it engenders we shall move the mobs and with their hands we shall wipe out all those who hinder us on our way.
9. WHEN THE HOUR STRIKES FOR OUR SOVEREIGN LORD OF ALL THE WORLD TO BE CROWNED IT IS THESE SAME HANDS WHICH WILL SWEEP AWAY EVERYTHING THAT MIGHT BE A HINDRANCE THERETO. (The Biblical "Anti-Christ?")
10. The GOYIM have lost the habit of thinking unless prompted by the suggestions of our specialists. Therefore they do not see the urgent necessity of what we, when our kingdom comes, shall adopt at once, namely this, that IT IS ESSENTIAL TO TEACH IN NATIONAL SCHOOLS ONE SIMPLE, TRUE PIECE OF KNOWLEDGE, THE BASIS OF ALL KNOWLEDGE - THE KNOWLEDGE OF THE STRUCTURE OF HUMAN LIFE, OF SOCIAL EXISTENCE, WHICH REQUIRES DIVISION OF LABOR, AND, CONSEQUENTLY, THE DIVISION OF MEN INTO CLASSES AND CONDITIONS. It is essential for all to know that OWING TO DIFFERENCE IN THE OBJECTS OF HUMAN ACTIVITY THERE CANNOT BE ANY EQUALITY, that he, who by any act of his compromises a whole class, cannot be equally responsible before the law with him who affects no one but only his own honor. The true knowledge of the structure of society, into the secrets of which we do not admit the GOYIM, would demonstrate to all men that the positions and work must be kept within a certain circle, that they may not become a source of human suffering, arising from an education which does not correspond with the work which individuals are called upon to do. After a thorough study of this knowledge, the peoples will voluntarily submit to authority and accept such position as is appointed them in the State. In the present state of knowledge and the direction we have given to its development of the people, blindly believing things in print - cherishes - thanks to promptings intended to mislead and to its own ignorance - a blind hatred towards all conditions which it considers above itself, for it has no understanding of the meaning of class and condition.
JEWS WILL BE SAFE
11. THIS HATRED WILL BE STILL FURTHER MAGNIFIED BY THE EFFECTS of an ECONOMIC CRISES, which will stop dealing on the exchanges and bring industry to a standstill. We shall create by all the secret subterranean methods open to us and with the aid of gold, which is all in our hands, A UNIVERSAL ECONOMIC CRISES WHEREBY WE SHALL THROW UPON THE STREETS WHOLE MOBS OF WORKERS SIMULTANEOUSLY IN ALL THE COUNTRIES OF EUROPE. These mobs will rush delightedly to shed the blood of those whom, in the simplicity of their ignorance, they have envied from their cradles, and whose property they will then be able to loot.
12. "OURS" THEY WILL NOT TOUCH, BECAUSE THE MOMENT OF ATTACK WILL BE KNOWN TO US AND WE SHALL TAKE MEASURES TO PROTECT OUR OWN.
13. We have demonstrated that progress will bring all the GOYIM to the sovereignty of reason. Our despotism will be precisely that; for it will know how, by wise severities, to pacificate all unrest, to cauterize liberalism out of all institutions.
14. When the populace has seen that all sorts of concessions and indulgences are yielded it, in the same name of freedom it has imagined itself to be sovereign lord and has stormed its way to power, but, naturally like every other blind man, it has come upon a host of stumbling blocks. IT HAS RUSHED TO FIND A GUIDE, IT HAS NEVER HAD THE SENSE TO RETURN TO THE FORMER STATE and it has laid down its plenipotentiary powers at OUR feet. Remember the French Revolution, to which it was we who gave the name of "Great": the secrets of its preparations are well known to us for it was wholly the work of our hands.
15. Ever since that time we have been leading the peoples from one disenchantment to another, so that in the end they should turn also from us in favor of that KING-DESPOT OF THE BLOOD OF ZION, WHOM WE ARE PREPARING FOR THE WORLD.
16. At the present day we are, as an international force, invincible, because if attacked by some we are supported by other States. It is the bottomless rascality of the GOYIM peoples, who crawl on their bellies to force, but are merciless towards weakness, unsparing to faults and indulgent to crimes, unwilling to bear the contradictions of a free social system but patient unto martyrdom under the violence of a bold despotism - it is those qualities which are aiding us to independence. From the premier-dictators of the present day, the GOYIM peoples suffer patiently and bear such abuses as for the least of them they would have beheaded twenty kings.
17. What is the explanation of this phenomenon, this curious inconsequence of the masses of the peoples in their attitude towards what would appear to be events of the same order?
18. It is explained by the fact that these dictators whisper to the peoples through their agents that through these abuses they are inflicting injury on the States with the highest purpose - to secure the welfare of the peoples, the international brotherhood of them all, their solidarity and equality of rights. Naturally they do not tell the peoples that this unification must be accomplished only under our sovereign rule.
19. And thus the people condemn the upright and acquit the guilty, persuaded ever more and more that it can do whatsoever it wishes. Thanks to this state of things, the people are destroying every kind of stability and creating disorders at every step.
20. The word "freedom" brings out the communities of men to fight against every kind of force, against every kind of authority even against God and the laws of nature. For this reason we, when we come into our kingdom, shall have to erase this word from the lexicon of life as implying a principle of brute force which turns mobs into bloodthirsty beasts.
21. These beasts, it is true, fall asleep again every time when they have drunk their fill of blood, and at such time can easily be riveted into their chains. But if they be not given blood they will not sleep and continue to struggle.
----
Israel Did 9/11... if you didn't know already..
http://theinfounderground.com/forum/viewtopic.php?t=5367
You sure picked the right user name.
Can't wait to see an actual avatar. But the sack is good.
lmao
All the "reasonable, just" genocide, ethnic cleansing going on will be paid for dearly.
Ain't denial grand?
Due to the massive debt levels of western nations taken on to save the banks from the crisis they caused, the people must now pay through a reduction of their standards of living. – Andrew Gavin Marshall, When Empire Hits Home
And the old argument by the banks that the best defense is a good offense, so blame the victims for your crimes, is back in play.
So, no, it is not “fair to say that our society bought into this [heralded home ‘ownership society’] ‘hook, line and sinker.’” Many taxpayers saw it for what it was—and complained bitterly about the unfairness and descrimination behind it.
Sadly, economic pundits keep addressing the symptoms and not the cause. It’s the Fed that has driven the people into all these shady deals--from the 401(k) pension replacement rip-off to the dot-com wipeout to the housing bubble to the house flip debacle to the pension crisis to the home equity scam on into the 2008 champion market fleece… And all that the people were trying to do, in general, was to protect their money from inflation.
And now Gordon Long says “a more realistic attitude towards homeownership has emerged as the American dream of owning a home has lost its allure”; that “only 67% felt housing was any longer a safe investment.”
Good grief, can't people even own a home anymore? People’s "attitudes" haven’t changed: they are trying to stay away from the thieves. The Fed’s stealing their houses!
Long then says, “What has changed is we can generally no longer service our debt loads at even present historic 50 year low interest rate levels. Heaven forbid rates should go up!”
Is this not central planning on Long’s part? If the market is to work and flush out institutions that are not solvent, interest rates must go up. Fed policy of punishing those who are prudent or trying to save must stop. Inflation statistics are fudged. Low interest rates to induce more borrowing and commodity inflation is just a longer rope to hang the economy.
As Ron Paul said, “Wall Street made a killing during the housing bubble, reaping record profits.” Now, after the bubble burst, the same firms are dumping their losses on the taxpayers.
Too bad about your house.
Great post!
When is the ponz going supernova?
Aren't advances in technology generally considered deflationary? To achieve a unit of production takes fewer inputs for a given time.
Therefore, for a global economy to grow at a rate beyond net population growth (ignoring demographics for now), there must exist either demand for (MORE goods or MORE needs per person) or (HIGHER value goods per need per person) which must exceed a major deflationary force I'll call "technology innovation."
I believe that BOTH the "MORE" and "HIGHER VALUE" demands of the consumer of the past 10++ years has created, in the least, a false signal (via credit growth). People will eventually realize that they really don't need most of the things they've been "demanding" (many of these things they will be "deleveraging") and many will default on their "discretionary consumer good" debt, which will cascade to banks, and so on to taxpayers.
I'll add that these "discretionary goods" are usually delivered via various sensory imprints designed to overstimulate...
Imagine that. A house is a place to live and not just a large credit card or a black jack double down.
DOW weekly chart shows key resistance around 10,700
http://stockmarket618.wordpress.com