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Guest Post : Two Decades Of Greed - The Unraveling
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Submitted byJim Quinn of The Burning Platform
Two Decades Of Greed - The Unraveling
We are currently in the midst of a Fourth Turning. This twenty year
Crisis began during the 2005 – 2008 timeframe with the collapse of the
housing bubble and subsequent repercussions on the worldwide financial
system. It is progressing as expected, with the financial crisis
deepening and leading to tensions across the world. It will eventually
morph into military conflict, as all prior Fourth Turnings have. The
progression from High to Awakening through the Unraveling took from
1946 until 2006. The most treacherous period of the Saeculm is upon us.
The intensity of a Crisis is very much dependent upon how a country and
its citizens prepare for the Crisis during the final years of the
Unraveling. The last Unraveling period in U.S. history from 1984
through 2005 was symbolized by Boomer greed, materialism, debt and
selfishness. When Michael Lewis graduated from Princeton University in
1985 and joined Salomon Brothers, I’m sure he didn’t realize that he
would end up book-ending the Unraveling period in his two best-selling
books about Wall Street.
In his latest book, The Big Short: Inside the Doomsday Machine, Lewis seems bewildered by the fact that his first book Liar’s Poker, written in 1989, didn’t dissuade college students from pursuing careers on Wall Street. If Lewis had read The Fourth Turning
by Strauss & Howe when it was published in 1997, he would have
understood why the people on Wall Street couldn’t change. The
generations were just acting out their part in a grand never ending
cycle. Lewis explains what he thought would happen:
“I stumbled into a job at Salomon Brothers in 1985 and stumbled
out much richer three years later, and even though I wrote a book about
the experience, the whole thing still strikes me as preposterous—which
is one of the reasons the money was so easy to walk away from. I
figured the situation was unsustainable. Sooner rather than later,
someone was going to identify me, along with a lot of people more or
less like me, as a fraud. Sooner rather than later, there would come a
Great Reckoning when Wall Street would wake up and hundreds if not
thousands of young people like me, who had no business making huge bets
with other people’s money, would be expelled from finance.”
Michael Lewis was a 24 year old Generation X Ivy League graduate who
ended up on Wall Street at the outset of the Unraveling. He was
flabbergasted by how clueless youngsters could pretend to know what
they were doing while taking home phenomenal amounts of money. He was
sure it would end in short order. But he was wrong. It built to a
decadent crescendo two decades later. It took longer than he expected,
but the rebellion is beginning now:
“I thought I was writing a period piece about the 1980s in
America. Not for a moment did I suspect that the financial 1980s would
last two full decades longer or that the difference in degree between
Wall Street and ordinary life would swell into a difference in kind. In
the two decades since then, I had been waiting for the end of Wall
Street. The outrageous bonuses, the slender returns to shareholders,
the never-ending scandals, the bursting of the internet bubble, the
crisis following the collapse of Long-Term Capital Management: Over and
over again, the big Wall Street investment banks would be, in some
narrow way, discredited. Yet they just kept on growing, along with the
sums of money that they doled out to 26-year-olds to perform tasks of
no obvious social utility. The rebellion by American youth against the
money culture never happened. Why bother to overturn your parents’
world when you can buy it, slice it up into tranches, and sell off the
pieces? At some point, I gave up waiting for the end. There was no
scandal or reversal, I assumed, that could sink the system.”
The period from 1984 until 2005 was classified by Strauss & Howe
as the Third Turning Culture Wars. They describe this period in the
following terms:
“The Unraveling opened with triumphant “Morning in America”
individualism, and slowly drifted toward pessimism. Personal
confidence remained high, and few national problems demanded immediate
action. But the public reflected darkly on growing violence and
incivility, widening inequality, pervasive distrust of institutions and
leaders, and a debased popular culture. National consensus split into
competing “values” camps.”
Deregulation Decade
“The crew of the space shuttle Challenger honored us by the
manner in which they lived their lives. We will never forget them, nor
the last time we saw them, this morning, as they prepared for their
journey and waved goodbye and slipped the surly bonds of earth to touch
the face of God.” – Ronald Reagan

The Unraveling began during the 2nd Reagan term with the
“Morning in America” feel good landslide re-election campaign. The Dow
Jones Average on January 1,1984 was 1,259. The National Debt was $1.6
trillion. The oldest Baby Boomer turned forty-one in 1984, with the
youngest just twenty-four years old. This generation of 76 million
over-indulged spoiled social activists is the proverbial pig in a
python. Whatever path this generation chooses to take transforms the
country for better or worse. The term Yuppie was coined in the early
1980’s as the egocentric Boomers poured onto Wall Street beginning
their upwardly mobile perfectionist careers. The country was exhausted
from the 1960s turmoil and the depressing 1970s. Failed presidencies,
oil shortages, raging inflation, and American hostages had left an
America that was looking for a renaissance. Ronald Reagan’s first term
required extreme measures by Federal Reserve Chairman Paul Volcker to
break the back of inflation. By raising interest rates to 18%, Volcker
set the stage for a 20 year bull market in stocks and bonds. Reagan
survived an assassination attempt, the U.S. military conducted a
successful operation in Grenada, Reagan fired 11,000 air traffic
controllers, and an unprecedented peace time military buildup was
initiated. This created an atmosphere for economic revival, led by the
Boomers.
A new laissez faire era heralded by Ronald Reagan was based on his
belief that government was the problem, not the solution. His goal was
to cut the size of government while slashing taxes and unleashing the
animal spirits of the free market. Reagan was a rhetorical genius. It
is a shame that his soaring rhetoric did not match what actually
ensued. The basis of Reaganomics was:
- Reduce government spending,
- Reduce income and capital gains marginal tax rates,
- Reduce government regulation of the economy,
- Control the money supply to reduce inflation.
Reagan undoubtedly succeeded in radically cutting the top rates on
individuals from 70% to 28%. Of course, the only people affected by the
top marginal rates are the rich. These tax cuts did not benefit the
middle and lower classes. The benefits were supposed to trickle down to
these people.

http://www.americanthinker.com/blog/Tax%20Rates%20and%20Revenue.jpg
Corporate tax rates were decreased from 50% to 38% by the end of
Reagan’s term. Corporate America was delighted. The tax savings
permitted profits to soar. This additional capital could have been used
to invest in the business. The Harvard trained CEOs decided it was more
beneficial to pay them outrageously high compensation and to buy back
their own stock in order to inflate EPS.

http://dontmesswithtaxes.typepad.com/photos/uncategorized/2008/08/22/oecd_vs_us_tax_rates_2.jpg
The tone for the next twenty years had been set. Reagan’s policies
did reignite the animal spirits of America. Reagan’s defense buildup
increased annual spending from $303 billion in 1980 to $426 billion in
1988, a 40% surge. This most certainly contributed to the collapse of
the Soviet Union. They were a hollowed out oak tree and Reagan’s
defense buildup was the gust of wind that blew the rotting tree over.
His achievements were great, but his failure to reduce government
spending will haunt the country for decades and planted the seeds of
economic disaster. The Federal Government spent $590 billion in 1980.
In 1988, Federal Spending had grown to $1.064 trillion. Rhetoric did
not translate into action. Politicians have always been good at
following through on promises that buy them votes. The tough stuff can
be pushed off to the next guy.
http://en.wikipedia.org/wiki/File:CBO_Revenues_Outlays_Percentage_GDP.svg
The reality is that government debt as a % of GDP was on a downward
trajectory for 30 years, bottoming in the late 1970s at 45%. Reagan cut
taxes and doubled spending during his eight year reign. This initiated
the launch procedure for a US government debt rocket. It sent a message
to the world and to its citizens that debt was not a bad thing.
Interest rates were in the midst of a quarter century long decline, so
the debt became more serviceable as time progressed. There was no
reason to save and invest when government and consumers could borrow
and buy what they wanted today. This was the attitude that began to
emanate during the early 1980s. Total government debt as a % of GDP
skyrocketed from 45% to 80% during Reagan’s eight year presidency. The
National Debt grew from $908 billion to $2.6 trillion, a 286% increase.
The massive increase in debt without apparent negative consequences
gave politicians and Baby Boomers the green light to live it up today
and not worry about tomorrow.

The 1980’s proved to be a confidence building decade after two
decades of tumult. With the most egocentric self centered generation in
the history of the world entering the prime of their careers, a double
shot of renewed confidence and debt accumulation began a cycle of greed
and hubris like none ever seen on earth.
Fragmenting Culture
“I am not a destroyer of companies. I am a liberator of them!
The point is, ladies and gentleman, that greed, for lack of a better
word, is good. Greed is right, greed works. Greed clarifies, cuts
through, and captures the essence of the evolutionary spirit. Greed, in
all of its forms; greed for life, for money, for love, knowledge has
marked the upward surge of mankind. And greed, you mark my words, will
not only save Teldar Paper, but that other malfunctioning corporation
called the USA” – Michael Douglas as Gordon Gekko
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The self-absorbed yuppies’ goal of wealth, power, and material possessions was captured accurately in the 1987 movie Wall Street and Thomas Wolfe’s fantastic 1987 novel Bonfire of the Vanities. It
seems that 1987 marked the high point of the Unraveling period. The Dow
Jones Industrial Average had grown from 824 at the beginning of the
decade to 2,700 by September 1987. The Boomer heroes of unbridled greed
were Michael Milken, Ivan Boesky, Carl Icahn and Boone Pickens.
Leveraged buyouts, where corporate raiders used huge amounts of debt to
takeover companies, taking them private, firing thousands of workers,
spinning it off as an IPO, and reaping enormous profits, were hailed as
the savior of free markets by Wall Street. These deals generated
gigantic fees for the firms advising on the LBOs. This Boomer led
societal mood of wealth accumulation at the cost of gutting
corporations and screwing the working class became ingrained in the
fabric of America.
More Wall Street “inventions” like program trading, portfolio
insurance, and arbitrage combined with hype and hubris to cause a 508
point crash on October 19, 1987. This 22.6% one day drop was the
largest percentage decline in history. This once in a lifetime event
scared the average investor out of the market for years. This event
also unleashed a 20 year reign of banking terror, as the Greenspan Put
was born. Alan Greenspan became Federal Reserve Chairman in August
1987. His 1st major act was to pour billions of liquidity into the market after the Crash. This was the 1st of many risk enhancing acts by Greenspan over the next two decades.
http://en.wikipedia.org/wiki/File:Black_Monday_Dow_Jones.svg
Oliver Stone completed his film Wall Street before
the crash. He captured the battle between Boomer gluttony and the work
ethic of the average American worker. It was essentially a morality
play between the slick oily Gordon Gekko and the old union leader
looking out for the best interests of his fellow workers. They battle
for the soul of Charlie Sheen’s Bud Fox character. The film goes in
depth into the immoral culture of Wall Street. Inside trading on
non-public information is business as usual. Companies aren’t seen as a
productive part of society, but as pawns in a giant game of chess
played by the “Big Swinging Dicks” on Wall Street. The workers are seen
as liabilities that can be shed in order to boost short-term profits.
Maximizing returns as soon as possible was all that mattered to Gekko
and real life sharks on Wall Street. The movie’s message was clear.
Unrestrained free-market capitalism with no principles is destructive
for society. The movie isn’t anti-capitalism. It distinguishes between
the cynical, quick buck culture of the Boomers and the moral hard
working culture which had built America. Both Oliver Stone and Michael
Lewis thought that their works of art would deter young people from
vapid careers on Wall Street. Instead, young MBA students saw these
stories of greed as an exciting beckoning to riches, morality be damned.
Thomas Wolfe’s novel Bonfire of the Vanities addresses
the lack of control anyone has over their lives regardless of their
wealth, wisdom or success. He captured the yuppie Boomer excesses of
New York City and Wall Street in his brilliant novel. Beneath Wall
Street’s veneer of achievement, the New York City was a hot-bed of
racial and cultural tension. Homelessness and crime in the city were
soaring. Several high-profile racial incidents polarized the city,
particularly two black men who were murdered in white neighborhoods.
Bernie Goetz became a folk-hero in the city for shooting a group of
black punks who tried to rob him in the subway. The chasm between the
haves and have-nots had grown immense. In Wolfe’s New York, venal
self-interest motivates everyone but the suckers, while ethnic and
racial bigotry is extreme. Men use women for little other than sexual
gratification, and women use men almost entirely for monetary or social
gain.
Those in power fail to represent the disinterested abstractions
(justice, civil rights, truth) that they ostensibly represent. The
manipulation of truth and justice by the news media, show Wolfe’s
cynical view of these flawed apparatuses of human society. Tom Wolfe
ruthlessly exposes the superficiality of 1980s culture. Wolfe directs
his most serious criticism to the very rich, with their extravagant
dinner parties, 6-block hired-car rides which cost $250, and
thousand-dollar flower arrangements. Hypocrisy is rife in this novel,
and most evident in the two leaders depicted on opposing sides,
Reverend Bacon and the Mayor of New York. Neither of these men is truly
concerned with the people of New York, but rather with their own
advancement and profit. Each, in his way, is racist, but decries racism
at every turn. Each purports to be “of the people” but uses his
position of power for monetary gain. Wolfe captured the worst traits of
America during the early years of the Unraveling.
The 1980’s proceeded as expected with strengthening individualism
and weakening institutions. The GI Generation Heroes began to depart
from the scene. This steady, cautious, risk adverse generation that
built American industry and finance were being pushed into retirement
by the Baby Boomer Generation. The old civic order was cast aside and
the cultural revolutionaries stormed the gates. Baby Boomers seized
control of Wall Street, having never experienced a bear market, never
faced adversity, and never having to care about anyone but themselves.
A brooding sense of pessimism began to creep into the mood of the
country. Fiduciary responsibility towards your clients and proper risk
management was considered old school. Maximizing profits, generating
fees, and getting rich was the mantra of the new Wall Street
generation. As the Boomers grew rich and cynical on the street of
dreams, moralistic charlatan frauds like Jesse Jackson and Al Sharpton
exacted their share of profits for themselves and their constituents.
The working middle class sunk deeper into despair as their wages
continued a two decade long stagnation. Real hourly earnings were the
same in 2005 as they were in 1984, and 10% below the level of 1972.

The trickle down crowd, mostly Republicans, contended that a rising
tide lifts all boats. In theory that sounds great. In practice, it has
proven to be a lie. During the 1980s and 1990s, all boundaries
regarding compensation were obliterated by the “Me Generation”.
Executive pay packages began to skyrocket as they were viewed as rock
stars and masters of the universe. The ratio of CEO’s pay to the
average worker’s pay leaped from 30 to 1 in 1980 to 250 to 1 by 2005.
If CEOs had performed phenomenally over this time period, a case could
be made for this leap. But, corporate America and certainly Wall Street
had brought the US economy to the brink of disaster by 2005. This
outrageous pay disparity contributed to the deepening anger in the
country simmering below the surface.

http://www.cbpp.org/images/cms/4-17-09inc-f1.jpg
Strauss & Howe aptly described the mood:
“Personal confidence remains high, and few national
problems demand immediate action. But the public reflects darkly on
growing violence and incivility, widening inequality, pervasive
distrust of institutions and leaders, and a debased popular culture.
People fear that the national consensus is splitting into competing
“values” camps.”
Cynical Alienation
“Now, I have to go back to work on my State of the Union speech.
And I worked on it until pretty late last night. But I want to say one
thing to the American people. I want you to listen to me. I’m going to
say this again: I did not have sexual relations with that woman,
Miss Lewinsky. I never told anybody to lie, not a single time; never.
These allegations are false. And I need to go back to work for the
American people.” – President Bill Clinton, January 26, 1998
“The great story here for anybody willing to find it, write about it and explain it is this vast right-wing conspiracy that has been conspiring against my husband since the day he announced for president.” – First Lady Hillary Clinton, January 27, 1998

The appearance of progress on some issues overshadowed the
underlying deterioration of societal institutions and practices. Social
Security was “saved” by Alan Greenspan and his commission. Essentially
he manipulated the CPI calculation downward, screwing future
generations of seniors out of their rightful payouts. Politically
difficult decisions regarding Medicare and Medicaid were deferred to
sometime in the distant future. With oil prices averaging $20 per
barrel through the 1980s and 1990s, a coherent long-term energy
strategy seemed unnecessary to the next election cycle politicians who
control this country. The deregulation of the Savings & Loan
Industry gave them many of the capabilities of banks, without the same
regulations as banks. Imprudent real estate lending, fraud and insider
transactions by S&L executives, protected by high powered
Washington politicians, led to the first financial crisis. The failure
of 747 thrifts and losses of $160 billion to the taxpayer can be
attributed to lax oversight and fraud.
The Berlin Wall fell as communism collapsed under the weight of
central planning, corruption, and fraud. Academics like Francis
Fukuyama foolishly declared “The End of History”. According to
Fukuyama, Democracy had won over all other forms of government:
“What we may be witnessing is not just the end of the
Cold War, or the passing of a particular period of post-war history,
but the end of history as such: that is, the end point of mankind’s
ideological evolution and the universalization of Western liberal
democracy as the final form of human government.”
Only a Harvard academic could spout such claptrap. By 1991, the U.S. was again at war. The 1st
Gulf War was considered a moral war as the U.S. came to the rescue of
Kuwait and Saudi Arabia. Using traditional military maneuvers, General
Schwarzkopf obliterated Sadaam Hussein’s Republican Guard. But, there
was no consensus to follow through and eliminate Hussein. Unwittingly,
we planted the seeds for the bleak later stages of the Unraveling by
leaving military bases in Saudi Arabia. There were not many more feel
good national experiences after the 1st Gulf War. A
recession in 1991 (remember George Bush Sr. buying 4 pairs of socks at
JC Penney to exhort Americans to shop America out of recession) caused
by the S&L Crisis allowed an obscure Arkansas Governor to win the
Presidency. The election of Bill Clinton ushered in the culture wars of
the 1990s. The conservative religious right fought scorched earth
battles with the liberal left wing elite who control the media. Pat
Buchanan captured the animosity of this conflict:
“There is a religious war going on in our country for the soul
of America. It is a cultural war, as critical to the kind of nation we
will one day be as was the Cold War itself. Who is in your face here?
Who started this? Who is on the offensive? Who is pushing the envelope?
The answer is obvious. A radical Left aided by a cultural elite that
detests Christianity and finds Christian moral tenets reactionary and
repressive is hell-bent on pushing its amoral values and imposing its
ideology on our nation. The un-wisdom of what the Hollywood and the
Left are about should be transparent to all.”
As ideologues fought wars over morality, religion, and abortion,
unbridled corporate fascism and individual greed ran rampant. The
unholy alliance between mega banks, mega-corporations, the Federal
Reserve and Washington DC led to a widening chasm between the haves and
have-nots. The 1990s were rooted in three poisons: anger, greed, and
delusion. The Presidency of Bill Clinton was marked by a strong
economy, political gridlock, declining moral values and relatively
minor military skirmishes. Society glorified individuals, their wealth,
power and lifestyles. The TV show Lifestyles of the Rich and Famous, hosted
by Robin Leach, ran from 1984 until 1995. The show featured the
extravagant lifestyles of wealthy entertainers, athletes and business
moguls. Glorification of the rich and their profligate lifestyles,
spurred the superficial self-centered Boomer generation to idolize and
emulate this lifestyle. There was one big problem with emulating this
lifestyle. The Boomers didn’t have the money to live this lifestyle.
Wall Street stepped in to supply the fuel for the two decades of
decadence. Household debt grew from $2 trillion in 1984 to $14 trillion
in the mid 2000s.
http://www.swifteconomics.com/wp-content/uploads/2009/06/Debt.png
The United States has experienced a three decade long “expenditure
cascade”. An expenditure cascade occurs when the rapid income growth
of top earners fuels additional spending by the lower earners. The
cascade begins among top earners, which encourages the middle class to
spend more which, in turn, encourages the lower class to spend more.
Ultimately, these expenditure cascades reduce the amount that each
family saves, as there is less money available to save due to extra
spending. Expenditure cascades are triggered by consumption. The
consumption of the wealthy triggers increased spending in the class
directly below them and the chain continues down to the bottom. This is
a dangerous reaction for those at the bottom who have little disposable
income originally and even less after they attempt to keep up with
others spending habits. The personal savings rate was 12% in the early
1980s and declined to negative 1% by 2005. The expenditure cascade
couldn’t have occurred without easy access to debt. The question that
must be asked is, who benefits from debt and who pays?

http://wallstreetpit.com/wp-content/uploads/2010/01/image016.png
The delusion of the American populace cannot be underestimated.
Their worshipping at the altar of materialism and adoration of
Hollywood created pop culture was crucial to the societal delusion.
Without the corporate consumerism marketing machine, an unlimited
amount of credit provided by bankers, and ultra-low interest rates
supplied by the Federal Reserve, the delusions of grandeur could not
have been realized. Credit cards didn’t even exist until 1968. Until
the 1990s mortgage lenders followed the 28/36 rule. Your mortgage
payment, including taxes and insurance, couldn’t exceed 28% of your
monthly gross income. All of your debt payments couldn’t exceed 36% of
your monthly gross income. Homebuyers rarely put down less than 10% of
the home’s value. Home equity loans were virtually non-existent. The
subprime loan market for homes and automobiles was miniscule. In the
early 1980s auto loans averaged 45 months and buyers put 12% down on
the purchase. By the mid 2000s auto loans averaged 64 months with only
5% down on the purchase. By 1999, 40% of all cars on the highway were
leased. The proliferation of easy credit allowed average people to live
a life of excessive opulence, occupying 7,000 sq ft McMansions,
driving BMWs, and wearing Rolex watches. Americans bought so much stuff
on credit they couldn’t fit it all in their oversized abodes. So they
needed to rent outside storage for their stuff. In 1984 there were
6,601 facilities with 290 million square feet of rentable self storage
in the U.S. In 2009, there were 46,000 self storage facilities with
2.21 billion square feet, a 762% increase.

http://www.marketoracle.co.uk/images/2009/May/uk-housing-size.gif
The delusional middle and lower class Boomers believed they were
equal to the top 1% of ultra-wealthy, because they were living like
them. As Orwell noted, “all animals are created equal but some animals are more equal than others”. Those
that were “more equal” worked on Wall Street. The repeal of the
Glass-Steagall act in 1999 with overwhelming majorities in both Houses
of Congress and cheered on by Wall Street groomed Secretary of the
Treasury Robert Rubin, opened Pandora’s Box. Bank holding companies
started dealing in mortgage-backed securities, credit default swaps,
and structured investment vehicles. A blizzard of products solely
designed to generate fees while ignoring the banks’ fiduciary duty to
their clients was unleashed. Subprime mortgages surged from 5% of all
mortgages to 30% by 2008, as issuing the mortgage became detached from
the risk of the mortgage. The issuer of the loan had no risk, since the
mortgages were immediately bundled and sold off to investors (suckers).
No doc, Alt-A, and Option ARM mortgages proliferated as fraud ran
rampant on Wall Street and throughout the financial services industry.
The Federal Reserve, led by Alan Greenspan, aided and abetted the
delusional debt bubble through its non-existent regulation of the banks
and mortgage brokers, and unnecessarily keeping interest rates
extraordinarily low from 2001 through 2005.
As the average American middle class worker fell further behind,
without realizing it, the financial sector grew ever more powerful and
malevolent. A country that had once produced its way to world
domination degenerated into a paper kingdom run by Harvard MBAs,
lawyers, tax accountants and central bankers. They “create” pieces of
paper with terms that no one understands, packages worthless pieces of
debt obligations and sell it to other clueless financial experts,
borrow 40 times their capital and gambles it based on models that told
them they couldn’t lose, and rewards themselves with obscene pay
packages and bonuses.
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http://my.caseyresearch.com/displayTcr.php?id=21#cc1
The “creativity” of Wall Street was complimented by corporate
America instituting “free trade” and “globalization” policies (NAFTA)
supported by politicians in Washington DC. The terms free trade and
globalization were code for corporate CEOs shipping US manufacturing
jobs to China, India, and Vietnam, while expanding their corporate
earnings per share 3 cents above analyst expectations per quarter. As
reward for gutting American industry, the CEOs demanded their Board of
Director toadies give them stock options for 1 million shares and $10
million raises. Does it require a Harvard degree and ingenious
brilliance to fire 100,000 American workers making $20 per hour and
build a plant in China paying peasants $1 per hour and depending on
cheap oil to inexpensively ship the goods back to America? Only one
problem, people without jobs have trouble buying stuff. Without middle
class jobs, corporate CEOs turned to their Harvard buddies on Wall
Street to create $1.2 quadrillion of financial derivatives to convince
the middle class they really had wealth to spend on cheap Chinese
goods. This corporate/banking collusion was fully supported by their
paid for representatives in Washington DC. This unholy alliance between
big business and big government enriched the ruling elite, while
impoverishing the middle class.

Once In A Lifetime
“Indeed, recent research within the Federal Reserve suggests
that many homeowners might have saved tens of thousands of dollars had
they held adjustable-rate mortgages rather than fixed-rate mortgages
during the past decade, though this would not have been the case, of
course, had interest rates trended sharply upward.” – Alan Greenspan, February 2004
“Even though some down payments are borrowed, it would take a
large, and historically most unusual, fall in home prices to wipe out a
significant part of home equity. Many of those who purchased their
residence more than a year ago have equity buffers in their homes
adequate to withstand any price decline other than a very deep one.” – Alan Greenspan, October 2004
“Improvements in lending practices driven by information
technology have enabled lenders to reach out to households with
previously unrecognized borrowing capacities.” – Alan Greenspan, October 2004
“The use of a growing array of derivatives and the related
application of more-sophisticated approaches to measuring and managing
risk are key factors underpinning the greater resilience of our largest
financial institutions …. Derivatives have permitted the unbundling of
financial risks.” – Alan Greenspan, May 2005

You may find yourself living in a shotgun shack
You may find yourself in another part of the world
You may find yourself behind the wheel of a large automobile
You may find yourself in a beautiful house, with a beautiful wife
You may ask yourself: well… how did I get here?
Letting the days go by/let the water hold me down
Letting the days go by/water flowing underground
Into the blue again/after the money’s gone
Once in a lifetime/water flowing underground
You may ask yourself
How do I work this?
You may ask yourself
Where is that large automobile?
You may tell yourself
This is not my beautiful house!
You may tell yourself
This is not my beautiful wife!
You may ask yourself
What is that beautiful house?
You may ask yourself
Where does that highway lead to?
You may ask yourself
Am I right?… Am I wrong?
You may say to yourself
My God!… what have I done?
The Talking Heads – Once in a Lifetime
David Byrne’s lyrics are reflective of how Americans have operated
in a largely unconscious state for the last twenty years, operating on
debt-oriented auto-pilot, and waking up from their materialistic stupor
asking, “How did I get here?” We have taken the acquisition of material
belongings so seriously that it became what we worked for. Material
possessions defined who we are. When we lose these possessions we no
longer have the identity that we have blindly created by collecting
“things”. My God, what have we done? Charles Mackay in his book Extraordinary Popular Delusions and the Madness of Crowds , written in 1841, captures the essence of what has happened in the US:
“Money, again, has often been a cause of the delusion of the
multitudes. Sober nations have all at once become desperate gamblers,
and risked almost their existence upon the turn of a piece of paper.”
The nation had an opportunity to come to our senses with the
election of George Bush in 2000. The gravity of the coming Saecular
Winter could have been moderated through prudent actions taken on the
fiscal, political, and defense fronts. The autumnal Unraveling is a
time of foreboding and a brooding pessimism. As a howling wind begins
to blow, leaves turn brown and wither, determined squirrels scurry
around collecting acorns in preparation for the bitter snowy Winter
ahead. The opportunity to judiciously prepare was wasted after the
September 11, 2001 terrorist attack on America. The colossal
overreaction to an attack by a terrorist organization consisting of a
few thousand members, ensured that the coming Winter will be harsh,
deadly, and more bitter than any ever experienced in U.S. history.
Prudence, caution, intelligence, and sound judgment were required.
Recklessness, haste, stupidity, and hubris were employed. The result
was that the Crisis that arrived in 2005-2008 will be more painful and
possibly fatal for the United States. The multiple wars of choice,
immense housing bubble, stunning government deficits and unaddressed
unfunded liabilities have created a nation weakened and unprepared for
the harsh reality ahead. The Empire of Debt has reached epic
proportions.

http://www.profitscore.com/articles/prof_TCMD-Mar10.jpg
The recklessness of our lack of preparation is reflected in the following facts:
- Total US credit market debt increased from 275% of GDP in 2000 to 365% of GDP in 2009.
- The National Debt increased from $5.7 trillion in 2000 to $13 trillion today. It is projected to reach $20 billion by 2015.
- Consumer debt has increased from $1.5 trillion in 2000 to $2.4 trillion today.
- The U.S. has spent $1 trillion since 2003 on wars of choice in Iraq and Afghanistan.
- Annual defense spending has risen from $359 billion in 2000 to $896 billion in 2010.
- Unfunded liabilities for Social Security, Medicare, and Medicaid total $106 trillion.
- There are 7 million less Americans employed today than there were in 2007.
- In 2008, Wall Street lost $42.6 billion and required middle class
taxpayers to bail them out. Total compensation on Wall Street in 2009
totaled $55 billion, three times the previous high.
Michael Lewis was befuddled that his tale of greed, hubris and
recklessness, written in 1987, did not deter college graduates from
heading to Wall Street. It took two more decades, but the Wall Street
money culture is in the process of being discredited. Americans are
slowly coming to the realization that unbridled greed is not the same
as capitalism. Excessively low interest rates punish savers and senior
citizens, while benefitting borrowers, risk takers and Wall Street.
Savings leads to investment, while borrowing leads to impoverishment.
The actions taken thus far by politicians, government bureaucrats, and
the Federal Reserve are the exact opposite of what was required. The
next leg down in this Greater Depression will thoroughly discredit
those who have promoted a money culture over those virtues that will
benefit society in the long run. The current Crisis will require
personal sacrifice, renewed community spirit, public consensus, and
truth. Failure could prove fatal for our nation. The best of human
nature must win out over greed, ignorance, and love of power. Our
future hangs in the balance.
“It has always seemed strange to me… the things we admire in
men, kindness and generosity, openness, honesty, understanding and
feeling, are the concomitants of failure in our system. And those
traits we detest, sharpness, greed, acquisitiveness, meanness, egotism
and self-interest, are the traits of success. And while men admire the
quality of the first they love the produce of the second.” – John Steinbeck
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I have read the Strauss & Howe book and other articles similar several times. They do a great job of defining their theory and documenting historical patterns.
Many think we have entered the 4th Turning and maybe we have. What is interesting is that the book alludes to the fact that the 4th Turning starts with a major event, one that changes the people's outlook on everything. Some saw 911 as this event, although it was early, some saw Obama's election, the financial crash or even the GOM spill as this event. I think the big bang has not yet transpired.
While there clearly has been a change of heart by a number of people and a much more realistic view of our issues, not sure the people have completely moved into this new paradigm. That tells me there is another "big bang" that must occur, it will need to be on the order of 911 etc to make the impact. What I am seeing is many folks just going about their business, making money, going to the mall, etc. There does not seem to be a wide spread understanding of the immense problems we face yet.
It is more likely to be a slow slide rather than a big crash IMHO. One day will will wake up (although many see it now) and ask how we got here?
sschu
Give the GOM spill a bit more time, wait to see what a trio of Cat 4/5 hurricanes does to worsen the situation, and we might have our "big bang". Listening to an oyster farmer lament the loss of his 134 years old family business got me thinking of the last major economic and environmental catastrophy: The Dust Bowl of the 1930s! The drought and resulting dust storms that heavily contributed to the Depression were in great part - if not caused - then definitely exacerbated by wrong-minded agricultural practices such as monoculture and the planting of innapropriate crops for the terrain. Funny enough the Dust Bowl is never referred to as an ecological disaster accessoried by man's economic hubris. One could argue that there was a hell of a lot more maleovance in the Deepwater Horizon disaster but that's simply because "we" should have known better. But the scenario is disturbingly similar: A chain of events resutling in ecologlical and economic mayhem brought about by naive or simply irresponsible application of technology driven by economic necessity. I would even go so far to suggest that there is a corelation between severe financial shocks and econological disaster..the former being a leading indicator of the latter. A HUBRIS ALERT if you will. But that's just a hunch.
If the spill pans out to the worst case scenario expect the next to total destruction of the economies that ring the Gulf... The ruined lives of millions (I haven't a clue how many but I will assume a lot) will be much more than governement cheese can keep afloat for very long. It will lead to a new 1930s style diaspora of economically uprooted migrant families seeking a place to start a new life. My guess is they'll end up in cheap labour camps (or these days cheap service job camps) and at that point it will be all out street warfare on illegal immigrants.....
With reports of the well casing being shattered 1000 ft below the sea floor surface meaning that even relief wells might not work, expect this to be your trigger as it drives Americans into the depth of despair the country as not seen since, well, the FIRST Great Depression.
Yes, you may well be correct on the GOM event. It certainly has the capacity to significantly reduce the livelihood of a lot of people and this will reduce everyone's standard of living touched by it, which is nearly all of us.
Where the GOM spill does clearly represent the Strauss & Howe narrative is the lack of transparency by any institution involved, Feds, BP, regulators, etc. This is a classic 3rd Turning characteristic which the 4th Turning reveals dramatically to everyone, the idea that no one trusts our institutions because they are incompetent or liars or both. We end up wondering just how we let all this happen.
I do believe that the politicians that start talking straight, stop lying, that admit we have some issues and talk about how we address them will get amazing support, regardless of political affiliation.
The risk to the nation is significant, much like the 1920s Germany we are susceptible to being led in a dangerous and destructive direction. Let's hope not.
"I do believe that the politicians that start talking straight, stop lying, that admit we have some issues and talk about how we address them will get amazing support, regardless of political affiliation."
That won't happen. Our entire political system is based on campaign donations from wealthy individuals and corporate special interests. No politician under this system is ever going to speak any truth that goes agains those interests. We would have to have a collapse of some kind that completely changes the politial landscape first.
Fraid the government's elimination of dairy subsidies in 86 already took care of that "government cheese."
Yeah, 911 was a watershed moment.
But its natural effect on people was nearly immediately repealed. ALL was focused around war, spending, debt, bubbles. What did the Fed do? Cut rates to zilch. The debt ponzi HAD to grow and little things like a temporary awakening of real values, community, and a minor rebuke of materialism in the face of something so visceral had to be squelched.
There are many polarized 911 apologists as much as there are 911 jingoists, but one thing stands unrefuted: there is either or both something very wrong with US and/or something very wrong with THEM that people would choose to fly airliners into buildings.
911 was a classic 4th Turning event, like Fort Sumter, like the 1929 stock market, but you are correct, we decided it was safer to just go back to the mall.
IMHO, we have had several 4th Turning events, 911, Sept 2008, the 2008 election and now the GOM spill. None feel like we have entered a new paradigm, but mybe we have and just do not know.
If we have truly not entered the 4th Turning, the big bang has not yet occurred, then the next one will be catastrophic. There are plenty of flash points in the world that provide opportunities for this game changing event.
sschu
We didn't "decide" to just go back to the mall, we were practically ordered to do so by our fearless Commander in Thief. Remember?
http://www.washingtonpost.com/wp-dyn/content/article/2008/10/03/AR200810...
We are in a new paradigm and have been for over a decade. You just didn't get the memo because you weren't high enough up in the food chain, and the media has been ordered to go along with business as usual, as if a 40 million gallon oil spill (soon to be 40 million barrels) is normal, as if endless war is normal, as if spending oneself into oblivion is normal and healthy and will eventually result in economic recovery.
Go back to bed, America, your government has figured out how it all transpires. Go back to bed, America, your government is in control again.
http://www.youtube.com/watch?v=eR3KwODDzeY
I am Chumbawamba.
Not that you're impressed, but that was a good post!
This is not the 60's. Americans are like caged animals that have lost all natural instincts, except the ones flashed in their faces by 24x7 television propoganda. It's going to take a series of large events to break through the psychosis, and most won't change until something unhinges their world directly.
Also, most Americans are so in debt that they can't stop working for one week without starving. So no matter how bad it gets, they can't stop and protest... until they have nothing left to lose. This debt slavery was intentional and it works as a first buffer before tear gas and billy clubs have to come out.
Hey, when you can show me footage of all the planes I'll believe it. I only saw one. So did everybody else. Jihadis wanted to capture four planes while the largest empire on the planet sat defenseless but that couldn't happen unless there was complicity or three-year-olds sitting at a lot of important desks that day.
WaterWings
How does this sound.
BUSHCO knew that the grapevine hinted at some big event being planned. They did not know specifics at that point just that something was going down. So W was tapped to run with Uncle Dick. Which pissed Poppy off because Jebbie was the Golden boy.
The election comes down to the wire, no matter how many strings were pulled. Eventually we all know the biggest string of all was whipped like a weed wacker cutting Gore off at the knees.
Meanwhile more and more intel rolls in, calendars with planes crashing into the towers, various foriegn spy networks picking up on the chatter and passing it along.
They start piecing together what is coming down the pike.
The rest is history.
I'm so glad that nobody on our team went to jail for criminal negligence. Better than that there were promotions! promotions! promotions!
Bush: "We need new alphabet soup agencies to tackle problems we cannot forsee because they are busy playing solitaire on their computers! Harvey Wallbangers for everyone! In fact, lets make it the National Beverage! Thank God some smart lawyers had the P.A.T.R.I.O.T. Act already written up for us beforehand so we didn't have to figure out what to do!"
How about that! Create a solution, then go find a problem. Now that's America! Yay USA!
Did someone say "flew planes into buildings"? Not into building seven!
Watch! As before your eyes building seven evaporates due to small office fires on 3 floors!
http://www.youtube.com/watch?v=LD06SAf0p9A
http://www.youtube.com/watch?v=LRkQ7Tr9Q3o&NR=1
http://www.youtube.com/watch?v=SIbqaybkbWI&NR=1
Remember GWB's suggestion that we go shopping to get over 9/11, well now we have BHO eating Gulf seafood telling us we should too, and that we should vacation down there... we get the leaders we deserve I suppose... a bunch of make believe captain-save-a-hoe!
AAA, mezzanine tranche. Imma go store some fresh water now.
This analysis so called is riddled with biased statistics; the use of Wiki for anything is substatially weak. It is not a primary source, except for entertaiment.
I don't have time to dissect all the problems. Suffice is to say that the issue of individual vs. group is a red herring. The collapse of morality on an individual level is a matter to ponder deeply, however.
There are issues here (particularly the industrial production one which is based on headcount rather than real value), but the only morality issue I'm concerned with is the continuing rise of a population of people who think that the moral imperative is to insinuate themselves into the homes and churches and bedrooms and computers of their neighbors. If people are not being harmed or exploited, then nothing immoral is happening. The immorality is at the top, not in the home of your gay married couple neighbors.
http://www.youtube.com/watch?v=ZVR0selVELE&feature=channel
http://www.youtube.com/watch?v=oWLw7SoNWL4
My two favorite guys!!! Enjoy!
Imus is on Fox now. The world really is getting close to the edge.
Try 1000s of years of greed, 6+ decades of greed in the current state.
This collapse and liquidation will be by far the largest ever. Waves or cycles.
This is the great unwinding of the American Dream. I keep hoping that the whole thing crashes and bites the banksters in the asses, but I think that's hoping for too much. The American people need to wake up faster! The longer we sleep, the more spoils these sociopaths will grab and head on towards the sunset, leaving us with NOTHING.
We know, now what?
Tyler, you get five stars for the post, but the article, while somewhat accurate in its broad categorization of its listing of the problems today, oversimplifies how we got here. There is no single voodoo doll on can stick a pin into and blame, for example, for the growth in the national debt during the Reagan Administration (remember tahat there was a Democratic Congress for most of it).
However, it is an incredible oversight to not mention the bias of the tax code toward debt. Debt is cheaper than equity. If I am a potential homeowner, why would I put down an extra 5% or 10% in equity when I can borrow the extra money at say, 7%, take a tax deduction for the incremental debt and invest it in a stock market that's returning 20%? Remember that it wasn't until 1986 or so that credit card interest was also a tax deductible expense.
The same analysis is true for corporations. Why should I issue aditional equity to fund a capital expenditure when my stock is trading at a 16 times multiple when I can borrow and get a tax deduction for the interest.
A longer critique of the analysis is beyond the scope of what I can write here (I would love to be able to submit something for publication on the site) but one glaring error on the article is worth noting: "Thomas Wolfe" did not write Bonfire of the Vanities. Thomas Wolfe worte great books such as Of Time and The River, which I highly recommend. Tom Wolfe wrote The Bonfire of the Vanities (as well as The Electric Kool Aid Acid Test and is the writer who tagged the 70's as the "Me Decade") and if anyone wants to understand how we got to the cultural breakdown that we see today, I strongly recommend any and all of Tom Wolfe's early work. The man is a genius.
+100 ...I agree the man is a genius.
"when I can borrow the extra money at say, 7%, take a tax deduction for the incremental debt and invest it in a stock market that's returning 20%? remember that it wasn't until 1986 or so that credit card interest was also a tax deductible expense.
The same analysis is true for corporations. Why should I issue aditional equity to fund a capital expenditure when my stock is trading at a 16 times multiple when I can borrow and get a tax deduction for the interest."
Whan all of that is untrue, you will see that debt is indeed not cheaper than equity. In deflation, without tax credits and no corporate liability protection from malfeasance, your freedom from debt will become all-consuming. Trust me; I read history backwards.
I agree with you in a deflationary scenario. However, throughout most of the time period being addressed by the article, deflation was never a concern and it was the lax lending standards and low interest rates that led to the credit-fueled asset bubbles that we will begin paying the price of going forward.
"remember that it wasn't until 1986 or so that credit card interest was also a tax deductible expense"
Investment interest expense continues to be tax deductible.
Poor people use credit cards. Rich people have lines of credit.
I'm going to go out on a limb...but debt is cheaper because of the moral hazard known as bankruptcy. But the whole fractional reserve debt scheme would fail if it didn't exist. "Must. Keep. Printing."
Plus in the age of the printing press taxes are more for the illusion than for budget. Taxes serve two purposes:
Interesting about Mr. Wolfe.
Tom Wolfe also coined the term "radical chic".
Yep. White guilt sure has taken this country far. Still works like a charm.
"You RACIST! Aaaaaaaaaaaah!"
LMAO!
Printing and looting! Inflate through printing, then deflate by blowing up bombs, buildings, and BP!
Truly, a man in full!
Excellent article. I like sschu's comments too.
Trigger events for a shakeout of 20-year unsustainable buildups are unpredictable. But the risks are apparent. Just one story also in the press today - possible Israel take-out of Iranian nuclear facilities illustrates the point:
Imagine this is followed up by the closing of the Straits of Hormuz, SA crude bottled up. $200 per bbl. You only have to watch Food Inc movie to see how fragile the arteries of civilization are. Major disruption to oil supply - transportation, production, city-dwellers panic-buying from shops.
Bad-debts can be ignored for years. Bad food is visceral.
Jim Quinn should not be ignored.
+ 100
I'm an optimist. The election of Obama has brought hope and change. The path to universal health care has been laid and the Bush tax cuts will be allowed to expire. The government under Obama will regulate better, tax better, deliver better health care and create better higher paying jobs in new green industries. Better government control over the economy will lead to better schools, healthier children and more engaged citizens who show their good citizenship by eschewing selfishness and putting the interests of others ahead of themselves. Reaganism will finally be put to rest and the world will laud the ascendancy of Obamanism.
You're a loony.
lol..koolaid addict...lol
How ironic. Like the Zionist calling the Nazi a Fascist.
I am Chumbawamba.
A unicorn in every pot!
+1 for the dry delivery. Bc nobody is actually stupid enough to believe what you just wrote.
I forgot to mention free Thorazine for all which will be dispensed by highly skilled and trained technicians in neighborhood health clinics and senior centers.
I'm holding out for "Soma!"
I'm with you. I would never trash someone that stupid.
The optimist was dancing for joy in a huge pile of horse shit. "What are you so happy about?", his father asked.
To which his optimist son replied, "There's got to be a pony in here somewhere!"
Thank you for a really good laugh.
I object strongly to the villification of the so-called Boomers. It distorts entirely what happened in the 1960's-90's. The inward-looking gratification-seeking pop culture was not produced and sold by the boomers, but to the boomers, by the "Silent Generation," those too young to serve in WWII, but born before 1946. Rock, drugs, greed, all sold to the young by the Silent Generation, who saw its houses sky-rocket in value, saw its pre-retirement and early post-retirement portfolios surge, and who had the best retirement base and benefits, even now. IF the Boomers drank the koolaid, who sold it to them? Obvious analysis which doesn't serve the media salesmen or the grumpy rich old people of today.
Boomers may have been sold the goods, but the apprentice became the master long ago. Boomers are more to blame than anyone. Frankly they should all be put against the wall, the good with the bad. Would go farther towards fixing us than anything else combined.
When I think thoughts like that I get sad though, because it smacks of the Khmer Rouge.
When we boomers were split in two, some of us off to Vietnam (and Cambodia and Laos) to fight the Soviet/Sino proxy, the rest were off to protest the draft, but the silent generation were controlling the congressional votes, tolerating the big lies, and selling the defense hardware. The protesters learned, quite quickly, that going for the bucks and pleasure was the winning concept. Those who served (had low draft numbers but didn't go to Sweden or Canada) learned the bitter taste of abandonment, scars and all. The boomers didn't arrange the fiasco. The silent generation and the so-called greatest generation did. What baloney the labels are. I note we post-1950 boomers have been put under a worse SSN payout formula, as a parting kiss from the silent gen.
If you try putting us against the wall you will find that a lot of us are armed to the teeth and know how to shoot.
well done falcomadol, divide 'n' rule working as intended.
when the gangs of marauding dudes hit the streets, each will have their target enemy. . . "fuck the boomers!" will target anyone that fits their stereotyped "age" . . . "fuck the <insert race slur>" will, again, target their stereotype. . . "fuck the byaaatches!!" will target - and probably even gang rape, that boy-bonding game - any female that fits the stereotype. . .etc. etc. . . . every gang will have their "excuse" for an act of violence that befits their self-centered insanity.
you see where I'm going with this? because "boomers" is a HUGE fucking label, and nowhere near a majority of "boomers" got "theirs" at your expense.
when you really begin to realise what a small percentage of people have been gaming the system, and being cheered on and envied and emulated - then you'll begin to realise that the problem is NOT individuals, it's a SYSTEM that promotes the "self" above all. . .
greed is NOT good, it's fucked up.
it's just time to GROW UP and realise "you" is not the only thing in existence.
Indeed it's the elites that are gaming the system to their advantage, and using generational/race/gender/party warfare to distract us and get us fighting amongst ourselves. We need to turn all our collective anger against them. Everyone who is NOT in power, destroy those IN power.
Damn, now I don't know who to hate!
Will Jesus please stop the merry-go-round.
I am not religious, but someone pointed out yesterday, that we are in the age of Kali Yuga and I wholeheartedly agree. If you read it, the Kali Yuga, it describes what is happening today. There is a reason I picked "Kali" as my avatar. This belief is not restricted to Hindus, but virtually all religions and spiritual beliefs. Jesus, Dharma, whatever, is not gonna stop this. The only way to stop this if for humans to change and evolve to the next level. Unfortunately, that is not going to happen until many/most have been killed or have died.
Whenever I get too depressed about what is happening now, I try to remember, after this age of greed is done, the world will be reborn a better place.
Hmm. Won't say you wrong. ;-)
What naive posters don't understand around here is that Afghanistan is coming home. Tribal conditions, aerial bombings, midnight raids, goat farmers the most wealthy, etc. It's been happening overseas all this time while Americans fatten themselves for the slaughter.
NAPALM BITCHES!!
Six of the seven deadly sins seem to be covered....greed, sloth, pride, lust, envy and gluttony.
Now all that remains is WRATH
This is usually done through a process called 'Natural Selection'. The next step in evolution could have us acting more like animals. It might be an improvement.
Unraveling of the USA? Yes.
Globally? No.
The Asian Era is upon us.
Japan is bankrupt and China walked the exact same road as Japan did.
China has all the money. But better than that, they have a shitload of gold that is constantly growing. Best of all, they have an over-capacity of manufacturing.
They also have friendly agreements with resource-rich nations around the globe, with long-term production contracts for ores and agriculture. While we were off trying to fuck the world with our huge American cock, the Chinese were going around wooing everyone elegantly and pinning down global resources for the next century.
When the Iraqis surprise us one day by deciding they don't want to play along with the globalists plans for world domination and exterminate us from Iraq (and the rest of the Middle East, including our 51st state), we will have nothing. Just a wrecked coastline, a destroyed infrastructure, an empty wallet, poisoned lands, waters and skies, and a broken and deceived people.
I would write this as a warning of what might happen but I think it is pre-ordained at this point. Perhaps not in the way I describe, and maybe not even half as bad. Or maybe it'll be worse.
The point is to prepare here and now. If you have any plans to flee, do so now. Otherwise, batton down the hatches where you're at and start getting to know your neighbors. Like personally. You're going to need them and they're going to need you.
I talked to another one of my neighbors last night. Her daughter occasionally baby sits for little the Chumbas. I gave her as brief a synopsis as possible (I tried for 10 minutes but came in closer to the 60 minute mark) and recommended Chris Martenson's The Crash Course. She said she would watch it and we'll talk again.
Thank the gods for Chris Martenson. He's done such an excellent job laying it all out and putting it online for everyone to watch, for free. This is a tremendous effort that Chris is providing as a service, entirely out of love. He did the hard work so that you can carry the message to your family, friends and neighbors. All you have to do is present it.
Everyone should be passing on at least one useful link to at least one person at least once a day. The more people who wake up out of this stupor before the collapse accelerates the better for all of Us.
I am Chumbawamba.
+1.00000000!!
+1
There are little Chumbas? Now I AM scared. This has got to be stopped!
Yes, my little fractals :)
And yes, be afraid. Be very afraid. I am.
But they will only use their powers for good. I will teach them.
I am Chumbawamba.
LOL, you will teach them, of that there is no doubt!
great opportunity for mom to impart those gardening skills to the little Chumbas too, that way thousands of years of ag skills can continue on....
Of course. Right now they like the picking and eating part of gardening. Especially the strawberries :)
I am Chumbawamba.
chumba,
Be sure to let the little chumba's to watch this, while their still around.
http://www.youtube.com/watch?v=TMCf7SNUb-Q
Wow. I'd heard of this but never saw it. Simply amazing.
What beautiful creatures. So much more advanced in some ways. Perhaps all.
I am Chumbawamba.
Junked. LOL.
I'd like to take this moment to formally thank you for your fucking amazing tenacity around here:
Thank you.
wow, they knew exactly what they were doing creating the little rings. unbelievable...
"The point is to prepare here and now."
Yes, Chumba, you're right. I'm officially giving you a Boy Scout merit badge for preparedness. Raise your right hand and repeat after me: The Boy Scout motto is "Be Prepared".
If the shit doesn't hit the fan and you're prepared, no damage done and a good night's sleep in the meantime. I personally think that just like retirement planning, which most people don't do, they will forgo the personal preparedness planning as well. They will come begging from those that have planned or from the gov't.
Peace of mind is worth the initial effort and the $ investment to become prepared. Talk is cheaper, but you get what you pay for!
+ an "unjunk" or two. . .
great post chumba, particularly your emphasis on getting to know the neighbours. . . if people don't unlearn their bubble-worlds, and learn to converse & work with their neighbours, then their bubbles will *pop* and the shock may be debilitating.
if you want a keyword here, it's "trust" - collectively humans placed their trust in systems that have betrayed that trust, and now what is needed is to learn to filter out what is unhealthy, inside and out, and re-build trust based on common principles, ground up.
that starts with building community, right where you are.
I don't think the demographics are there. Their birth rates are just not high enough.
I'm thinking the new era will be the Caliphate.
Ease up a little, Quinn. You're scaring the children.
Mine eye well knows what with his gust is 'greeing,
And to his palate does prepare the cup:
If it be poison'd, 'tis the lesser sin
That mine eye loves it and doth first begin. - sonnet CX1V
Burning Platform is a waste of time. In Feb-09 they were writing articles darker than this one, saying that the S&P 500 would be < 300 by 2010, that 25% of all Americans would be squatting in abandoned shopping malls and another 25% would be living in refrigerator shipping cartons.
Enough already.
And then there's this discussion on ZH about "abiotic oil under 70,000 psi". What a load of crap. There is no such thing as abiotic oil; it's a completely discredited concept and ZH is impairing its intangible assets with references to the concept.
They were just a bit early on the doomsday scenario.
I am Chumbawamba.
+ 1000
Best piece I have seen yet, on the last 30 years, and we got here.
Don't worry. This turning of the Saeculum stuff comes directly from Knights Templar documents. It can't be wrong. Better listen carefully.
At just a few years beyond the oldest of official Boomers, I read this article with the strangest sense of deja vu. Kind of like re-reading a book after many years. Each section was both a revelation and a confirmation of memory. At the end I thought to myself: This was my life. I lived it and watched it unfold. Maybe I will even find out how this volume of human history ends. I'm not sure how to feel about that. Curious and apprehensive, I guess.
I haven't read the comments before this one; maybe later. There are probably a lot of passionate arguments about cause and effect, what caused what, who did what to whom, who are the villains and heros. Plus a lot of pointless labeling: Democrats, liberals, Republicans, conservatives, true conservatives, patriots, fools, environmentalists, destroyers, greedy, naive, on and on... Most of these are just pixels in the big picture.
I will close with a capsule review of the article: true, true, true, all true, every word. This is how we got here. This is where we are and what we have become.
right on )) great piece.... wud be the mother of all bear markets... S&P will hit the bottom of 87 crash, if they manage to keep afloat current financial setup........
You guys need to read Emerson's "Compensation" and call it a day.
http://www.fractal-timewave.com/math_twz.htm
of course, time might be contracting. If this is correct, it would certainly change things through this cycle...
After they allowed 9/11 to happen, there is no going back!
Jihad until Judgment day!
Long live the Children's Children's war!
Quinn is a solid, objective observer. He never fails to deliver some clarity in his missives regarding modern society. I highly recommend his previous posts.
Quinn is a vapid, plagiarizing, deliberately blind accomplice for the status quo.
He always fails to deliver any clarity in his shallow missives regarding modern society.
I highly recommend avoiding his previous posts as shallow dis-information taken from and easily available on hundreds of other MSM media outlets.
Enter into a debate with him at ...
www.thestinkingpile.com
See for yourselves his Racist, Bigoted attitudes and self-serving denial of self-evident scientific fact.
He is obstinately and intolerantly devoted to his own opinions and prejudices.
You are his sychophant or you are deleted.
Tell him DP says HI!
"and the depressing 1970s."
Possibly the greatest period for classic rock - take that back!
Yea well for the first couple of years anyway
Four words: Emerson Lake and Palmer
But yeah, other than the turds that inevitably pile in to every hip musical genre when the fad is in, it was a good decade for music. The 1970s was all heavy metal, baby.
Iron Maiden, Led Zeppelin, and Freddie Mercury.
http://www.youtube.com/watch?v=BTRMZk-l_VY
I am Chumbawamba.
And The Who. I believe Who's Next has a 1972 vintage.
Yes, one of my all time favorites, but Who is not an element from the periodic table, silly ;)
http://www.youtube.com/watch?v=eIpsDTSmRyM
I am Chumbawamba.
1971 Who's Next
1973 Quadrophenia - the pinnacle
1975 Who By Numbers - The decline begins
The only thing of real value is time and the good health to enjoy it. As long as I have a bottle of cheap (but dry) red wine, some bread, cheese a good book and my sailboat - I'm OK and so probably are you. Financial insanity moved into the Hotel California a long time ago and now can't check-out.
Some points:
Purchasing contagion between the classes to spend, nonsense!
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The American Thinker graph on total federal revenue as a % of GDP, well GDP went close to zero in 2001 for the year, how is it we do not see revenue as a % of GDP go to zero as well? It should probably be just net revenue? I like what it says, that an increase in tax rates does not necessarily increase revenues. But still it does not look right.
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The rise of the financial sector is not strange, it is the defacto industrial policy of the US without the industry. The fianacial, once a support industry, is now the most protected industry in the US. We have borrowed, and are still borrowing, massive amounts of money to support it. The banks get the upside, the tax payer the downside. The Amercan flag should change to a bank building symbol.
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Structured finance in its theoretical form, can distribute risk. But, in the end, this is not how they were used.
It was discovered that you could hide behind complexity. Complexity in financial instruments created a form of hidden leverage, and produced balance sheet and tax advantages that are still being used today.
Basically, derivatives circumvented rules of regulators (including FASB), rating agencies, and IRS costs. The problems with price discovery on a falling asset class within a window of a resonable return was not a concern, unless you held the CDO.
How can you sell something to a buyer within a traditional margin of return when it cannot be priced. In a falling market (falling price) the buyer, if there are any, will include a buffer to offset uncertainty becasue the derivative cannot be easily priced. This will mean a loss to the seller of another 10% or 20% at least. Also, the effect is not linear, it seems the steeper the falling price trend on the base asset class the greater the CDO hair cut.
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Are the Market players responsible for our downfall, motivated by greed? No our downfall is a lack of political will, a lack of political morality, more correctly, political greed.
It is the response of the politicians and the FED which is our downfall. Completely irresponsible fiscal and monetary policy, which obligated the public to pay for private debts, both corporate and union. A robbing of America, born of political corruption.
Mark Beck
In 1988 Japan assumed financial primacy from Anglo-America and since then has defined de facto if not de iure US' money supply; thus US has for over twenty years suffered "pump and dump", because Japanese not American authorities opted for that mode of providing US consumers with Japanese consumer goods. Recently China has both developed a great consumer market and also instituted transparent capital markets, so Japan has incepted a change from using US as the primary consumer market to using China; expect soon China's GDP to surpass greatly both US' and EU's GDP.
One person writing about what can be done to fix some of the fundamental structural problems in society is Charles Hugh Smith, on his blog at oftwominds.com
Here is an idea I am toying with. How many people follow ZH daily? Is there any way that ZH can start to organize a plan that connects people in the Real World? As an example, could people who read ZH meet, say every Sunday at the Mcdonald's in whatever town they are in? Every town has a McDonald's. They could have a ZH flag, or wear shirts with ZH logo. Then, over time, these people would get to know eachother, and could organize on a local level. Then, if things get bad, a certain group of local people would know - go to the local Mcdonald's - look for the ZH flag, shirts- and there would be some sort of structure. I don't really know of any other National function like that - the Tea Partiers actually may have developed something like this. The individual militias probably have. Does anyone have any ideas like this? Kind of a survivalist 4H kind of thing. It would make me feel a great deal better- if the shit starts coming down- that there is something in place- besides letting the National Gaurd tell you where to place your tent. Any ideas?
You mean like...a Fight Club?
:)
But yes, there is at least one similar model: 2600 Magazine, which since the 1980s has had regular "meet-ups", initially in New York and San Francisco, now all over the world:
http://www.2600.com/meetings/
The meetings generally congregate around payphones. At least they used to, when we had payphones.
I am Chumbawamba.
The first rule of fight club is you do not talk about fight club.
The second rule of fight club is YOU DO NOT TALK ABOUT FIGHT CLUB.
You aught to just form a secret society like the Masons and have a new secret handshake. One problem (as I see it) is the Mason's require their members to be deists and believe in a God. This dis-invites a large swath of the educated population. Perhaps we need a new lodge that also caters to Atheists and Agnostics.
When will people begin to distinguish between capitalism, consumerism, and corporatism?
When will people begin to distinguish between self-interested decisions (greed) and self-destructed decisions? Bernie Madoff was not self-interested, he was self-destructive.
Bernie was doing every body a favor
his was letting every one partake of the spoils.
who is not for unearned gain .
they all had a inkling . but let the good times roll
When will people begin to distinguish between capitalism, consumerism, and corporatism?
When will people begin to distinguish between self-interested decisions (greed) and self-destructed decisions? Bernie Madoff was not self-interested, he was self-destructive.
log in
burp
There was an age when giant predators ruled the earth, and then they succumbed to an extinction event. The corporate predators of today, whose tissues you may call home will soon leave their steel and concrete bones rusting in decay upon the landscape.
Their destruction will not come from outside, but from their rapacious appetites and the fouling stench of their toxic excrements.
An organism’s test of success is not measured in decades, but rather in millions of years.
Amazing that those with developed intellects and scientific minds should hand their work to the primitive Id and the only slightly more advanced Superegos of the lawyers, economists and government goons whose main occupation is in garnering short-term gain without reference to anything but their position in political hierarchy.
Be one of the coprophagous consumers of corporate excrement. In the end you will have spent your life making excrement, consuming excrement, and your unprincipled masters will excrete you.
as excrement.
we all are on the flow. excrement to excrement
dust to dust . illusion to illusion
I need to keep it simple for my simplicit mind. Things made in the US is inversely proportionate* to leverage used over the past 40 years.
Goverment, banks and mutinational pay and benefits have become inversely proportionate to private US small business pay and benefits.
Subsequently, debt has become inversely proportionate to savings for the goverment and middle class, but it hasn't for banks and mutinationals because government has socialised their debt and added to the middle class's future debt.
Lastly, US citizen's dissatisfactioon with goverment is becoming directly proportionate to personal and goverment debt burdens.
Changes in the wind
*Propotions are not exact
The beggining of the end:
http://www.marketoracle.co.uk/Article20253.html
(Can't wait to see a horde of lunatics giving support to this absurd idea... American society in a free fall on a bottomless pit...)
Should I be the one to point out that the title of the article (you have to click on the link) is indicative of an editor that attended the very institutions that the article proposes we eliminate?
:)
I am Chumbawamba.
You know what thet are currently doing? The Fed is printing dollars, using the President's working group to invest them in companies, the indexes move up, and then JPM and Goldman short the comapenies, then it starts all over! Those dollars are your taxes. Whew!
Unless they decide to just go off-balance sheet with phantom monetization, in which case they aren't taxes, they're just inflation.
Brilliant!
We've had 100 years of greed supported by a federally mandated fear-ectomy, and yet this facile 'analysis' says it's all about the last 20.
Any analysis of greed is incomplete without also looking at fear (or its artificial suppression).
The 'capitalism' and economic growth we were sold in history class as children, they are based on the illusion of wealth represented by arbitrarily-printed notes, and out-of-thin-air entries in the Treasury's ledgers. Whole wars, spending programs, and industries were created by debasing the spending power of the middle and lower classes, and by ballooning debt for future generations to pay.
They have sucked the dollar 95% or so dry, and we the people have given it to them willingly for the promises of 'stable prices and maximum employment'. How is that working out for us? Not as well as for those on the taking end of the dollar debasement project.
I guess my point is, the so-called 'greed' underlying the present economic collapse was put into play long before the last 2 decades, and blaming 'deregulation' for the fate of an unsustainable system that was already in play for 70 years by 1980 is not much more than a red herring.
This is simply incorrect. Unless by 'moderated' he means 'delayed and exacerbated'. Notice he didn't say actions should have been taken on the monetary front. With a government ready to pay all bills with free money provided by the Fed, no amount of fiscal, political, or defense tweaks will make a difference in the ultimate outcome. In fact everything has probably gone according to the plan that was written a century ago.
Greed was allowed to destroy the economy because 'they' removed the consequences. We've been cultivated and harvested, and now the field is about to be lain fallow.
Yeah, like Fight Club - or like Cheerleader MudWrestling Night!
No - I am going along the lines of trying to figure out a way to organize ZH readers, in the Real World. It would take some time, but if we could all think of a way to sort of Glom on to structures that exist already, maybe with some inherent chain of command - say, like interacting with all the Rotary Clubs in the country - they have existed for generations, are civic minded - and know the local lay of the land. Looking for some way to try to organize people to actually respond, in some coordinated way, if things start getting dicey. We don't want to look like what Haiti. looks like right now. I don't think it would take very much - with a little creativity - to come up with a workable scheme- using mostly existing infrastructure- to organize some basic National response. I have already started recruiting at all the Cheerleader gatherings - doing the basic leg work required. Anyone have any ideas?