• Gold Money
    05/03/2016 - 11:35
    Crude oil time-spreads have completely dislocated from inventories. Historically, such dislocations have proved to be short lived. We expect that either spot prices will sell-off again or the back...

IceCap Asset Management April 2011 Market Outlook: "A Picture Is Worth 1.8 Trillion Words"

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Sat, 04/30/2011 - 03:53 | 1223462 legal eagle
legal eagle's picture

Yes, smoke and mirrors work best. Want a change, end the empire.

Sat, 04/30/2011 - 10:14 | 1223763 Rogerwilco
Rogerwilco's picture

The Palace at Versailles had a hall of mirrors that was popular with the court and visitors. Why can't the White House have the same, for budget negotiations and such. Of course overuse might lead to installation of other forms of entertainment. Here's a real crowd pleaser:

http://tinyurl.com/3e5z7de

Sat, 04/30/2011 - 14:04 | 1224204 eisley79
eisley79's picture

I'm canadian, and canada sure as heck is not the land of low taxes.  We pay more tax then americans on everything.

More income tax, more state(provincial) tax, more sales tax, more sin tax(alcohol, cigarettes, etc), more tax on gasoline, more environmental fees, more surcharges, and on and on.

But we dont pay for health care, our drugs are way cheaper because we buy en masse through socialized medicine, and there are a lot less profiteering infrastructure (toll roads, etc).

Sat, 04/30/2011 - 20:54 | 1224699 NidStyles
NidStyles's picture

I would suggest you go read it again.

Sat, 04/30/2011 - 22:49 | 1224847 ceilidh_trail
ceilidh_trail's picture

eisley- you should ride the toll road that circles above toronto. $40 to driveabout 40 miles and no sign advising what the toll would cost- all automated, I got a bill in the mail here in the states like a year later threatening my driver liscence if I didn't pay- crooks on both sides of the border...

Sat, 04/30/2011 - 04:01 | 1223465 legal eagle
legal eagle's picture

What we need is free markets where the profits And Losses go to those taking the risk. Socializing banker and hedge fund losses reduces their purported tax rates to, well, next to nothing. If the income that is taxed comes from the taxpayer how can any rate of tax be too high? If $100 goes from taxpayer to bank bond holder and they pay an 85 tax rate, didn't they just get a 15 dollar bonus? Until you stop the madness, the tax rates will make no sense and distort all usual incentives.

Sat, 04/30/2011 - 07:38 | 1223558 SWRichmond
SWRichmond's picture

What we need is free markets where the profits And Losses go to those taking the risk

Imagine that.

Socializing banker and hedge fund losses reduces their purported tax rates to, well, next to nothing.

Actually, it is a kind of "Advance Earned Income Credit" for the bankster classes, where they achieve an effective negative real tax rate.  In other words, the existence of the tax system is a net positive for them; it places a floor under their incomes.  This is its real purpose, of course.

Sat, 04/30/2011 - 17:39 | 1224483 Banjo
Banjo's picture

legal eagle: Exactly. Well done what you wrote is clear, direct and simple.

It STRIPS away the nonsense that the "rich" are paying all of the taxes.

It also explains why the top 10% own 80%-90% of all the assets.

Sun, 05/01/2011 - 13:33 | 1225671 plane jain
plane jain's picture

Ah...poor little rich taxpayer.  How do they ever manage?  What's that you say?  The top rate is less than it was in the "greed is good" '80s when Reagan hiked payroll taxes?

 

It’s true that the top 1 percent of wage earners paid 38 percent of the federal income taxes in 2008 (the most recent year for which data is available). But people forget that the income tax is less than half of federal taxes and only one-fifth of taxes at all levels of government.

Social Security, Medicare and unemployment insurance taxes (known as payroll taxes) are paid mostly by the bottom 90 percent of wage earners.  That’s because, once you reach $106,800 of income, you pay no more for Social Security, though the much smaller Medicare tax applies to all wages. Warren Buffett pays the exact same amount of Social Security taxes as someone who earns $106,800.

 

http://www.wweek.com/portland/article-17350-9_things_the_rich_dont_want_you_to_know_about_taxes.html

 

 

Sat, 04/30/2011 - 04:07 | 1223466 legal eagle
legal eagle's picture

In other words, until the gravy train stops, don't expect too many who benefit from our Central Planning to run away.

Sat, 04/30/2011 - 04:18 | 1223470 Sokhmate
Sokhmate's picture

aaaand it's gone. it's gone it's all gone.

Sat, 04/30/2011 - 04:19 | 1223473 alexwest
alexwest's picture

v.v. .sloppy
do those guy run real money ? i'd NOT trust them..

#1
p13 ' in 2010 year us goverment took about 2.4 trln in receipts', actully if its financial 2010 that ended in sept 2010 then recepits are 2.161 trln ..
see http://www.fms.treas.gov/mts/mts0910.txt

in reality its even less cause US goverment counts interest on SS money as receipts too ..

#2 p13 too
' mandotary spending that CANT REMOVED LEGALLY'
what kind of idiot would write that kind of nonsense?

everything what goverment/congress do is according the law and can be removed/modified/altered by law..

alx

Sat, 04/30/2011 - 04:22 | 1223474 Urban Redneck
Urban Redneck's picture

Monetary debasement is ubiquitous.  Through the FED's brilliant marketing campaign, they have made QE synonymous with "money printing."  Since no one would believe that removing Xerox®  machines from offices would eliminate photocopying, why do they believe that eliminating QE®  programs from the FED would eliminate monetary debasement? 

Sat, 04/30/2011 - 08:20 | 1223594 disabledvet
disabledvet's picture

obviously the market doesn't think so so as is normal in "these times" horse sense appears.  I'm only "speculating" of course but if i were to answer for Professor Bernanke I would say "it all comes down to jobs."  That is the only measure of growth in an economy that I think is understandable to any government official and for any statisical measure of GDP.  Only Tom Keene of Bloomberg (of course--he's got intellectual horse sense up the...well, you get my meaning--"rubber hits the road" of he mind) asked the simple question "where's the discussion about jobs."  And he did so from day 1 of the Obama Administration...which was ruthlessly silent on the subject.  In short "he immediately understood the problem of the debt and deficit and immediately saw what was needed to be done to get cracking on it."  Unfortunately "he's from New York" where "things are measured by getting things done."  When I presented my term paper to Tom Keene...which consisted of a single sentence as is my wont (it said simply "create a ten million man Army and tell 'em to suck it up") i took note "there was silence."  What he didn't understand is that I understood how DC works and have no clue how New York works (though I think i'm learning on that one.)  In short "if there's a problem we'll wait for it to go away" is the DC way.  So far my DC analysis is looking pretty good and "i'm learning the ways of New York City" to boot.

Sat, 04/30/2011 - 05:21 | 1223499 The Navigator
The Navigator's picture

What a stupid fuck - rescind your own ObamaCare and you solve so many problems: budget, taxes, confidence in the economy and cut $??Trillions in 5 years.

For Gods Sake - send the DEA into Wash DC and cut off the fucking drugs to these crack whores. And give them a damn lesson in math 101.

Sat, 04/30/2011 - 09:05 | 1223649 Chuck Walla
Chuck Walla's picture

But, but without Obama care, the elite can't rule us so completely, all for our own good. We plebes are so ungrateful.

Sat, 04/30/2011 - 14:14 | 1224219 The Navigator
The Navigator's picture

That's right - how in the world did we ever last so long as a species without big government.

Sun, 05/01/2011 - 00:37 | 1224973 johnnynaps
johnnynaps's picture

Contrary to your followers' beliefs.....you need Math 101! Because, the Economy was doing so well before Obamacare? Funny, how everyone was just fine in 2006 while the real estate fraud wasn't called out for what is was.

Sat, 04/30/2011 - 05:26 | 1223501 Hive Raid
Hive Raid's picture

Solution:

Drastic austerity measures, including cutting the untouchables, to eliminate the budget deficit.

No more deficit, so debt stabilizes at say 20 T.

Interest rate to 3%, so annual interest is 600 B. That's out of total (current) federal tax revenues of 2-3 T.

Perpetually recycle all debt principal into new debt.

It's not pretty, but it doesn't look like total collapse or debasement. In which case, no Zimbabwe and no running to the hills. And, perhaps a slower increase in silver due mostly to rising industrial demand.

Am I missing something here? I'm a noob at econ.

Don't get me wrong, I've got 2 years of Costco rice and beans and an embarassing amount of ammo, but why would this not work?

Cutting programs is not palatable now, but if the situation is impossible, then it would have to be forced. At that point, "social tensions", i.e. "demographic" tensions would seem the most significant threat relative to the financial.

Sat, 04/30/2011 - 08:32 | 1223608 Bob Sacamano
Bob Sacamano's picture

 "social tensions", i.e. "demographic" tensions would seem the most significant threat relative to the financial.

Some would say this is exactly what BHO wants - exacerbate the problem (or at least do absolutely nothing to slow it down), foster more financial and social "crisis" in order to create the need for "immediate" and "bold" action by expanding government to unseen levels.  This plan has been in play during the first term and he will have nothing to lose in the second term -- so he is setting the table for some fun starting in 2013.

Sat, 04/30/2011 - 11:57 | 1224014 sschu
sschu's picture

foster more financial and social "crisis" in order to create the need for "immediate" and "bold" action by expanding government to unseen levels.

This is a plausible scenario.  It may also include (but is not limited to):

1. "Confiscation" of 401K/retirements, maybe via converting them to USG bonds of some type and 100 year terms.  Ever listen to Jeremiah Wright?

2. Crisis is impetus for "everyone" working for and becoming dependent on the government.  Hence a permanent majority for the ruling elite.

3. Eventually complete centralization of power in government to regulate and control your entire life.  Education, housing, health care, livelihood will all be controlled and regulated by a centralized bureaucracy that answers to no one.

You and your children's lives just changed forever.  OBTW, in order to mollify the prols, a few of the bourgeois will be sacrificed along the way, some sort of modern day guillotine will become fashionable and on TV Wednesdays during Prime time.

Life as we know it is about to abruptly change, not sure many are ready.

sschu 

Sat, 04/30/2011 - 22:01 | 1224787 StychoKiller
Sun, 05/01/2011 - 00:39 | 1224976 johnnynaps
johnnynaps's picture

The US has more resources, better housing, and the most militaristic empire the world has ever seen. We will not be Zimbabwe. As for demographic tensions, don't be such a pussy and call it as it is (or as Merkel, Cameron and Sarkozy have) multiculturalism is a failed experiment!

Sat, 04/30/2011 - 05:44 | 1223504 Urban Redneck
Urban Redneck's picture

The chart on page 10 brings to mind one of the systemic failures that led to the last credit crisis.  Most of the analysis of the causes of the credit bubble burst has focused on the structural failures, and not the mechanics of credit analysis that led to the structural failures.  Risk models based on nominal rate changes, and which ignore relative rate changes, cannot correctly model a borrower's future ability repay when the current interest rate paid is close to zero.

 

In simple English, the US is a borrower with a HUGE mortgage, that mortgage is structured as a SHORT TERM INTEREST ONLY MORTAGE that needs to be refinanced on a REGULAR BASIS.  Furthermore, the homeowner keeps adding rooms onto his house, so at each refinancing the principal amount increases, instead of remaining constant or being paid down.  The slice of the graph representing current interest expense on page 10 is relatively small, but what happens to the borrower when the mortgage rates rise? 

 

A borrower with a $100,000 interest only loan at 0.18% (current 1 YR Treasury yield) pays $15 per month on that mortgage.  While the US isn't Greece or Portugal, when the FED reversed the post-9/11 ZIRP it raised rates from 1% to 6.25% before the collapse of the GSEs.  If the same borrower goes to refinance the $100,000 mortgage at 6.25% ($100,000 would assume an immediate BALANCED BUDGET in the US) - his monthly payment increases from $15 to $520.83 an increase of 3300% in the monthly mortgage payment.  Now go back and look at the chart on page 10 again.

 

It really doesn't matter whether a rating agency classifies the US as a prime or sub-prime borrower, a high debt load initiated at near zero interest rates cannot be refinanced at significantly higher interest rates, any credit risk model that states otherwise is broken.

 

You can use the calculator below to run your own scenarios.  The 12 month MTA and CMT actually only increased to around 5% in early 2007, and the total outstanding US debt is distributed along the Treasury curve.  

 

http://www.bankrate.com/calculators/mortgages/interest-only-mortgage-pay...

Sat, 04/30/2011 - 08:35 | 1223612 disabledvet
disabledvet's picture

"like teaching an Offensive lineman for the NY Giants to do ballet."  VERY delicate.  Again "growth must be restored to the economy" which is "jobs, jobs, jobs."  But there are other "both personal and public measures of growth" as well that to say the least "work against this policy." Sudden and soaring growth for example stands out.  Indeed as I right this Chairman Bernanke could be getting enormous amounts of data from Japan as money supply over there is aboslutely soaring due to the Fukushima nuclear disaster.  Consider it a "test run" you might say.  And "as if from nowhere" a "Silver Surfer" so to speak has appeared in the form of a parabolic move in the price of silver: precious metal that exists in massive quantities.  "Imagine the current value of SLV."  And that of course is "the poor man's gold."

Sun, 05/01/2011 - 00:49 | 1224982 johnnynaps
johnnynaps's picture

And, no one every thinks to point the blame at the average dopey American. My wife and I are the only ones with a 15 year mortgage. Our condo is the cheapest out of everyone else's dwellings. Math=we won't have a mortgage in 10 years and our taxes will always be below all my friends due to our assessed value. As for saving on interest, we save $57k by going 15 year on a $125k mortgage. Which means, my wife's fat, pompous bitch friend who bought a brand new house for over $300k will probably pay almost 3 times what we save just in interest. FINANCE BITCHEZ!!!!

Sat, 04/30/2011 - 05:54 | 1223516 jtaskinen
jtaskinen's picture

I voted True Finns, as I believed they would bring change to the way things have been handled in the past, most by the idosts of National Coalition.

Now I am very sad that the True Finns are becoming more like the bankster/corrupt Portuguese/Greek etc supporters.

If they vote yes, there will be a riot. This is how I sense the mood.

I hpe they will not eat their word.

Sat, 04/30/2011 - 06:54 | 1223532 Moe Howard
Moe Howard's picture

If they betray you brother, look for lamposts or telephone poles to hang them from. The banksters are making that the only answer we have left.

Sat, 04/30/2011 - 06:02 | 1223517 Hushups
Hushups's picture

As fucked up as everything is, I really could not help but burst out into laughter at the section headline of "Nobel Prize for economics will not be added to the mantel." The truth hurts, but it's also only funny when it's true.

Sat, 04/30/2011 - 07:12 | 1223538 Kickaha
Kickaha's picture

From Picture 1, total credit is $354 Trillion.  That number has presumably been created by fractional reserve lending by privately owned entities, although I suppose it should include government-created credit, also.  I also suspect that the truth of the matter is that the rise of derivative securities and unreasonable margin usage represents most of that number (i.e. the financial "house of cards", the collapse of which supposedly would return us to the stone age).

Ice Cap estimates that total additional government created credit since 2008 is estimated at about $6T.

The newly created credit is still a small but not insignificant amount of the total M3 money supply. 

According to Picture 1, total credit has declined about $20T since 2008.

While a chart showing the parabolic increase in the size of the Fed balance sheet is dramatic, it is misleading in terms of being an indicator of inflation.

How is debt created by the Fed different than debt created by fractional reserve lending? Does the recipient of that largesse notice any difference in how those dollars spend?

If the total amount of money (defined as available credit and currency) has actually declined by $20T since 2008, monetarist theory would lead me to conclude that we are currently in a period of mild deflation.

That deflation seems concentrated in the housing market for reasons unclear to me.  Perhaps speculative wealth has simply fled that sector in view of an obvious oversupply, exagerating the price deflation in housing while causing upwards price distortions in other areas, including both stocks and PM. 

As pointed out in the Ice Cap analysis, the
Fed is struggling to maintain the money supply by printing money because they can no longer lower interest rates to positively affect private bank fractional reserve lending.

How can hyperinflation occur when credit destruction is proceeding 300% faster than Ben's printing presses are churning out money?

If there is no hyperinflation, are all you folks holding PM based purely on sentiment? 

It is very interesting how folks here, and in the articles suppled by ZH, can put together facially credible arguments for huge deflation and massive hyperinflation, and then flip-flop from one side of the debate to the other overnight, or predict that both will happen in the near future.

Maybe WB7 could give us Ben as a one-armed Capt. Powell, steering a fragile wooden dingy down a flood of printed currency through the rocks of credit collapse, at the bottom of a canyon too steep to permit any other way out.

Sat, 04/30/2011 - 08:45 | 1223629 UninterestedObserver
UninterestedObserver's picture

The problem is WHERE the credit is being destroyed(Joe 6 pack) and where it is being created (banks,govt,etc). Looks like the worst possible scenario.

Sat, 04/30/2011 - 08:48 | 1223630 disabledvet
disabledvet's picture

most people "flip-flop" when it comes to tomorrow.  that's why they "call it tomorrow."  what you fail to point out is that "prices are rising" and in the case of silver "absolutely soaring."  needless to say you have no understanding of New York because unlike government "they don't look at money as a piece of paper."  Telling DC as is there wont of late that "Congress should be arrested," while noble, is telling indeed.  I like to think of it as "the question they will not ask because they already know the answer is true:" and that is "gold is money."  Period.  You may call that "sentimental" of course--but you don't strike me as a guy who just finished his dissertation on the mathematics of protein folds.  And while it might be fun to watch Ben "crash his little boat on the rocks" the "Silver Surfer is a sad and lonely man who has mysterious powers and brings death to entire civilizations." 

Sat, 04/30/2011 - 09:05 | 1223647 Matto
Matto's picture

You are wrong, and yes i do know why.

Sat, 04/30/2011 - 09:29 | 1223683 Matto
Matto's picture

Some quick tips because it is late here and well past my bed time

 

1. You must take available credit out of your money supply computations to guage actual money in use.

 

2. Once used, credit is money (not before) and it is not destroyed by asset deflation even though it is created during asset inflation. Think about that - the money already spent is out there even if say a property developer folds and his untapped existing lines of credit are cancelled..

 

3. As the market problem of asset price deflation takes hold there is less assets for the exisiting money supply - monetary inflation within asset/economic deflation.

 

4. As the asset deflation takes hold (via sentiment or fundamentals or whatever) the money (capital) moves from risky/leveraged positions  to more secure ones. This can include currency and can precipitate its dumping (velocity up).  

 

5. To top it off the process of making the banks whole for their bad investments is actually the further monetization of assets - more money for less assets - A mirror of the problems being played out in the whole market!

 

 

Sat, 04/30/2011 - 15:38 | 1224347 Kickaha
Kickaha's picture

"1. You must take available credit out of your money supply computations to guage actual money in use."

I think I understand your point.  But I think it is sort of a "snapshot" of the situation rather than a description of a dynamic and ongoing process.  As to whether or not potential usae of credit should be 100% discounted is a proposition which I think is open to debate.  Combine that with issues of velocity, and you quickly reach a point where measurement of the money supply becomes almost metaphysical, like trying to count the angels dancing on the head of a pin.

Your point does highlight one of the aspects of the current crisis.  While the banks have the money to loan, they are not loaning it out, hence there is good reason to consider a huge portion of M3 as being "on the sidelines" right now and not really countable as money.  The banks could be making loans.  The fact that they are not is really quite disturbing.  It is an indication that they either don't believe the debtor will repay the loan, or that he will do so with inflated dollars.  This lack of faith in the supposed "recovering" economy contributes mightily to the public's perception that there really is no recovery underway.

 

"2. Once used, credit is money (not before) and it is not destroyed by asset deflation even though it is created during asset inflation. Think about that - the money already spent is out there even if say a property developer folds and his untapped existing lines of credit are cancelled.."

True enough, although, once again, in a dynamic process credit will not remain available if the collateral gets devalued by deflation.  Lines of credit will be reduced if the collateral value is diminished.  I see this as one reason for eliminating mark-to-market accounting.  A lot of those securities have been pledged as collateral to obtain credit, which has then probaly been leveraged to some extreme ratio to enhance perceived speculative outcomes.  The accounting change allowed credit to continue to exist.  I think this was terrible, but I am sure the TBTF banks loved the idea.

"3. As the market problem of asset price deflation takes hold there is less assets for the exisiting money supply - monetary inflation within asset/economic deflation."

No.  Changing the value of an asset does not vaporize the asset itself.  In a stagnant economy, entropy will gradually decrease total assets, and with a static money supply, and a super-tight credit environment, the same money will chase an ever-decreasing supply of assets, and prices will rise.  Sounds like stagflation to me.  Assuming that available credit is not being converted into money to combat asset entropy, but also assuming the Fed is printing more money, I would agree that more inflation is inevitable and the direct result of Fed policy.

I would note that I have already taken the position above that reduction in asset values will by itself produce credit contraction, since less collateral value means smaller lines of credit.  In the absence of credit, the rate of new asset creation will diminish.

End the end, I'm not sure we see things all that differently here, but maybe we are analyzing the same general process from slightly different assumptions as a starting point.

 

"4. As the asset deflation takes hold (via sentiment or fundamentals or whatever) the money (capital) moves from risky/leveraged positions  to more secure ones. This can include currency and can precipitate its dumping (velocity up)."  

 Hmmmnnn...seems like this might be the crux of the matter.  Is any asset truly secure at any purchase price?  Even if the asset appears secure, you can still lose a lot of money if your entry point is an overpriced one.  The premise that people will "move money" is just another way of saying there is a monumental rolling ball of speculative capital careening through the markets.  Obviously, this pool of speculative capital can go long PM and short the dollar. Or vice versa.  Agreed that it would be an increase in velocity, which would be inflationary.

"5. To top it off the process of making the banks whole for their bad investments is actually the further monetization of assets - more money for less assets - A mirror of the problems being played out in the whole market!"

Agreed.  It is paying them in cash for the full value of an asset which has been massively reduced in value due to counterparty risk disasters. I'm not sure which alphabet-soup named program is doing this, but it is certainly inflationary.

On balance I would lean in favor of inflation.  In fact, I think its intentional, if only to reduce the minimum wage in terms of real spending power, to aid in the payment of federal debt obligations, and to screw with the Chinese.

I am not convinced that the combination of credit destruction and currency printing is going to produce hyperinflation or the complete destruction of the currency anytime soon.

Sat, 04/30/2011 - 23:17 | 1224849 Matto
Matto's picture

Good commentary. On hyper-inflation: no one knows the future but the US has been exporting its inflation for years, the dollars are out there either in paper or digital and if they are repudiated by the holders a tipping point in the currensea can easily be reached off the existing $$ supply. I heard the other day that 60% of the worlds currensea is USD. If someone could confirm that i'd love to double check if its true, most likely the cake is already baked on this one.

One of the my main points on inflation/deflation is that broad money measures is actually broader than the true money supply in use at any one point and includes near cash assets and untapped available credit. If you use the collapse in broad money measures it will look like monetary deflation but is actually near cash asset deflation. The collapse in available unused credit only exacerbates the asset deflation (assets cant be bid up any further) and does not impact the existing money supply, only repayment does that (default just means the money stays in circulation rather than being paid to the bank against the loan, the bank reduces its income so the cash stays out in the economy rather than going to bank shareholders as dividends - the bank taking a write down on yet another asset, not cash).

"No.  Changing the value of an asset does not vaporize the asset itself.  In a stagnant economy, entropy will gradually decrease total assets, and with a static money supply, and a super-tight credit environment, the same money will chase an ever-decreasing supply of assets, and prices will rise.  Sounds like stagflation to me"

Yes - stagflation. Financial assets can be vaporized and other assets can be impaired to such a degree that wealth, not money, is destroyed. In a leveraged society this can occur very quickly leading to asset/economic deflation + currensea inflation (by relation to the asset base) hence stagflation and possible hyperinflation.

 

So is hyperinflation a derivative of stagflation? hmmm just thought of that. I guess it depends on the circumstances and the way they try to fight it.

 

"On balance I would lean in favor of inflation.  In fact, I think its intentional," Yes probably, but there is no reason to believe that central planners have the skills to manage such a complex system successfully. Most likely they just manage to defer the day of reckoning as each participant in the system also labours individually to keep the system intact. History is repeat with attempts though and our current financial system being the ripe old age of 40 this year, i'd argue that we are screwed royally. (the new sytem being required because they fkd up the last one, which was far more stable in nature than the present). The telling tale is in the last point we've discussed- converting bank assets to cash during an asset deflation, that is the hyperinflation catalyst right there.

 

 

Sat, 04/30/2011 - 10:38 | 1223833 Kayman
Kayman's picture

Kickaha

"How can hyperinflation occur when credit destruction is proceeding 300% faster than Ben's printing presses are churning out money?"

1. You are staring at hyperinflation right now. The criminal speculator class are running paper assets and PM's to the moon, with the money Bernanke stole from your grandmother.

2. The " I used to work for a living" class are jobless or underemployed and are watching their housing wealth crumble before their eyes.

This story is a political story and not an economic story.  This is perhaps the greatest theft of wealth ever perpetrated.

Sat, 04/30/2011 - 15:53 | 1224365 Kickaha
Kickaha's picture

I was a young man when short term rates hit 21% or thereabouts in the Carter era.  Nobody called that "hyperinflation".  I think the annualized inflation rate, ex-housing, is about 9% right now.  I'm sure I'm doing anything better than the BLS by intentionally excluding a large expense from the inflation calculation, so, including housing, the rate might be quite smaller than 9%.  You see an out-of-control, accelerating spiral. I don't think the data supports that conclusion, yet

Yes, it certainly is political.  Why give the banksters the .25% loans?  The gov knows they are all zombie banks. I would prefer taking them down for being insolvent, and to counteract the credit destruction, send every citizen a fat fiatsco check, and hope inflation remains at a livable level afterwards.

It will take awhile for the TBTF bank assets to be reallocated to solvent banks, but the citizenry would have the fat fiatsco check to help them whether the storm.

 

Sat, 04/30/2011 - 07:36 | 1223554 pcrs
pcrs's picture

I think the main receiver of the 1.8 T$ is government. Gvt is the bubble. They hired an army of TSA perverts at 70k$/year. They bought tons of equipment for subjugating their subjects and dropping Tomohawks on foreign subjects. They increased regulators, stamp issuers and allowers.

Sat, 04/30/2011 - 07:34 | 1223556 earnulf
earnulf's picture

We have already reached the point of no return.     Everything from this point on (actually we may have missed the point to jump from this runaway express a long time ago and just now realized that we missed our stop) is just pablum to calm the masses before something unexpected happens and the whole thing collapses like a termite riddle structure.

ZIRP is allowing us to rolll over and add to debt at artificially low rates.    Even so, nearly 20% of revenues are consumed just to pay the outstanding debt

CBO revenue figures for the next four years assume a surging revenue stream from income taxes and social security taxes, better than ten percent for the next couple of years.   Yeah, right, in this economy reciepts will just Tsunami!    Meanwhile spending stays bascially neutral yet we still add between 7-900 Trillion dollars of new debt each year at artificially low rates

We can no longer tax our way out (without a revolution or mass immigration) or cut enough entitlements and defense spending (everything IS on the table) without the same.     So instead of facing our problems, we literally paper over them and proclaim everything is just hunky-dory.

Each of us has the responsibility to take care of ourselves and those we choose to help (friends, family).    Those who rely on the government to take care of them will get to catch this runaway locomotive at the end of the tracks which conviently end halfway across the gorge where the bridge was stopped for lack of funds.

Sat, 04/30/2011 - 08:45 | 1223631 Bob Sacamano
Bob Sacamano's picture

Very well said.

Wish there was the will to change spending habits in both public and private sector, but sadly I believe those in government actually do represent the American people -- most just do not want to face any harsh reality.  The people are generally very weak, short-sighted infants who really do not want to figure how to get through life on their own -- they need help at every turn and those in government (who all want more government power) are happy to "help" them.  

Sat, 04/30/2011 - 22:16 | 1224810 StychoKiller
StychoKiller's picture

Until retirees and soon-to-be-retired people realize they paid for a pig in a poke (in this case, more like a pyramid scheme!), there will be no political will to deal with Social Security, Medicare & Medicaid!  Sorry folks, but you were lied to:  http://reason.com/blog/2008/10/24/saving-social-security-episode

http://reason.com/blog/2009/10/15/social-security-chief-says-ins
http://reason.com/archives/2005/05/02/social-securitys-progressive-p

 

 

Sat, 04/30/2011 - 08:02 | 1223577 Hotspur
Hotspur's picture

Since when does Canada have lower taxes than the U.S.?

Sat, 04/30/2011 - 08:06 | 1223583 billwilson
billwilson's picture

What Canada does have is a lower deficit and lower debt/gdp, because Canadians actually  are willing to pay taxes for what they receive (and we all do get health care - unlike the f&cked up system the US has).

For now Canadina pay higher taxes (and get more in return) ... but with the massive refusal of Americans to pay taxes (i.e. just put it on the national debt credit card) this may not be true for long.

 

Sat, 04/30/2011 - 09:01 | 1223645 disabledvet
disabledvet's picture

"there is no more unitary polity in all of history than the American Republic" although the Roman Republic sure was pretty effective and so were a couple of the French ones.  Needless to say "those are American legions" fighing abroad and i can tell from reading you you have no clue of "their standards."  they had them when i was there and from what i see and (barely) hear "they have them even more so today."

Sat, 04/30/2011 - 11:31 | 1223947 sun tzu
sun tzu's picture

and we all do get health care - unlike the f&cked up system the US has

Can you tell me why over 100,000 of your fellow Canschmucks come to the USA each year for medical procedures? Wait until your old and need major surgery and they tell you to fuck off. Your sorry ass will have to fly to India or Brazil to pay for your Canadian healthcare. Why did Liberal MP Belinda Stronach go to the US for her cancer treatment instead of using the non-fucked up Canschmuck hospitals?

If you weren't so fucking stupid, you would realize that there is no way to tax the deficit away. Total federal spending was at $3.7 trillion. Total federal tax receipts was at $2.2 trillion. The middle class tax rates would go from 25% to nearly 50% plus another 7.65% for payroll taxes plus state income taxes, sales taxes, real estate taxes. A person making the median income of $50,000 would have about $12,000 left to live on for the entire year after taxes. That's enough for an apartment and they can eat out of the dumpster. At least they will have "free" healthcare.

Correct me if I'm wrong, but don't you Schmucks have over $500 billion on your national credit card? We'll send you our 20 million illegal immigrants and see how your healthcare system deals with that.

Sat, 04/30/2011 - 08:04 | 1223580 billwilson
billwilson's picture

What a bunch of idiots. Do people actually pay for this drivel? I guess anyone on the internet can spew whatever crap they want, but come on Tyler. - this is pure crap.

Sat, 04/30/2011 - 09:21 | 1223663 High Wire
High Wire's picture

This is the second uber partisan post in as many days and I'm left wondering if zerohedge hhas decided to abandon a Libertarian bent in favor of something friendly to the faux two party nonsense.  Obama does so many awful things, why are we discussing stuff that is under Congressional domain?

I can only imagine that your advertisers prefer it.  A shame.  No one likes to see a nice blog go to hell.

 

 

 

Sat, 04/30/2011 - 11:36 | 1223973 sun tzu
sun tzu's picture

Obama's policies are anti-libertarian. It would make sense that his policies come under attack more. Federal government spending has doubled over the past 10 years. So where's the money going? We're not getting twice the amount of government services.Was the government so small in 2001 that we had to double government spending 10 years later? End the wars and cut all spending back to 2001 levels adjusted for inflation. It's as simple as that. 

Sat, 04/30/2011 - 13:29 | 1224132 blunderdog
blunderdog's picture

Both party's policies are anti-libertarian, though, which is why the partisanshit is so tiresome.

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