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Michael Krieger - This Is The Last Dance

Tyler Durden's picture




 

Presenting the latest terrific analysis by Michael Krieger of KAM LP, who joins Willem Buiter and everyone else left with a gram of prudence, in realizing that this is nothing more than the "last dance."

History is a set of lies agreed upon.
-  Napoleon Bonaparte

Most people prefer to believe their leaders are just and fair even in the face of evidence to the contrary, because most people do not want to admit they do not have the courage to do anything about it.  Most propaganda is not designed to fool the critical thinker, but only to give moral cowards an excuse not to think at all"
-  Michael Rivero

Every man gotta right to decide his own destiny,
And in this judgment there is no partiality.
So arm in arms, with arms, we'll fight this little struggle,
'Cause that's the only way we can overcome our little trouble.
-  Bob Marley, Zimbabwe

A Thousand Words On Conventional Wisdom

Conventional wisdom.  Many market analysts define conventional wisdom in relation to what direction the market is going to head in the future, but I think this is an utter mischaracterization of the concept.  For example, someone that is bullish on the market right now is likely to see conventional wisdom on stocks and the economy as overly bearish after ten years of no returns for U.S. equities.  In contrast, someone that expects a market collapse will say that everyone is a cheerleader and that the “conventional wisdom” after such a huge rally is for stocks to continue to go up.  This is not how I would describe conventional wisdom and all is does is drag the debate into the intellectual gutter.  Rather, to me conventional wisdom is more the “zeitgeist” of the financial and economic community at any given time.  Zeitgeist is defined by the Merriam-Webster dictionary as:  the general intellectual, moral, and cultural climate of an era.  In this sense an “era” will generally mean a lengthy period of time, several decades or perhaps even more extended periods.  That said, what is interesting is that every cycle in the global economy seems to bring forward distinct “mini-zeitgeists” that the experts create to justify market movements or give credence to economic dogma. 

When I define conventional wisdom in this manner what I have found is that I almost always disagree with conventional wisdom.  Two very interesting recent periods were fall 2007-July 2008 and then mid-2008-early 2009 period.  In the first period, it was clear to me that decoupling was impossible because the U.S. was too large and it was clearly on the verge of collapse and, more importantly, that China and the U.S. were joined at the hip in a Keynesian economic Frankenstein that would not be easily severed.  Despite what I thought was pretty obvious at the time, conventional wisdom was that the BRICS had decoupled and all would be well.  Rather than seeing the commodity surge as the flight out of the dollar due to the distinct money policies of the U.S. Fed and everyone else, the rally was seen as evidence of decoupling.  This is mainly because conventional wisdom tends to view rising assets as a signal of prosperity.  I believe this was and is generally due to a misunderstanding of economics (we are all taught mostly rubbish in schools) and a shocking ignorance of the global financial system, how it really works and who/what is pulling the levers.    

Once the collapse occurred the mini-zeitgeist cycle changed and everyone was forced to admit the errors of the decoupling thesis.  That said, a new “conventional wisdom” emerged that was just as ridiculous as the one that came before.  For example, the dollar rally was perceived as a flight to safety when this is not exactly true.  The real reason for the dollar rally was that the world expected deflation and with the world’s reserve currency still the U.S. dollar this meant it would be time to settle positions much of which meant dollar settlement.  So while many investors did indeed end up rushing out of “risk assets” and into the dollar, the desire to be in the dollar due to the relative strength of the U.S. economy was not the cause of the rally.  This misunderstanding is also why so many investors remained in the deflationary mindset for far too long.  The only way a deflation defined as dollar strength and commodity weakness could occur on a sustainable basis would have been if things were allowed to fail and the financial system was allowed to collapse.  As soon as quantitative easing became a reality if should have been clear to all that we had just entered a new era.  Even if one wanted to make the deflation case today (and I think the case can be made), the idea that deflation would lead to commodities falling in value versus the dollar is preposterous given the stance of the Federal Reserve.  In my opinion, the deflation would be in relation to gold since it is now rightfully starting to be appreciated as the natural reserve currency of the world.  The whole idea of the inflation/deflation debate is asinine since both sides are right in their own ways.  The missing component is that the deflationists by and large haven’t figured out that the new reserve currency is gold.  This becomes very clear when one watches the recent debate between Jim Grant and David Rosenberg.  Grant argues that long-term treasuries are a horrific investment right now (I agree 100%) while Rosenberg thinks they are attractive.  I respect Mr. Rosenberg and I think he does fantastic work but it wasn’t lost on me that he had no good response when Mr. Grant posed to him the question about what if the entire monetary system itself changes.  This is the key point.  The Central Bankers and their inept political allies will be the last to figure out that the entire paper ponzi they created and nurtured is falling apart all around them.  The Central Bankers because they are loyalists to economic dogma as absurd as the notion that the sun revolves around the earth.  The politicians because for the most part they don’t understand anything and have few skills other than getting elected to office by making promised they can’t keep.  Look back at history and you will notice that it is entrenched academic ideas that die the hardest.  In the Middle Ages they would send people to prison or worse for speaking against the dogma of the day.  The establishment has and will fight back hard to maintain the status quo but the truth and economic law will win out in the end.  Ben Bernanke is a parlor magician with a printing press.  Please just go away! 

For more on this topic please read the following piece by Martin Armstrong titled “The Clash of Two Worlds:  The Battle Between Knowledge and Ignorance.”  http://www.martinarmstrong.org/files/The-Clash-of-Two-Worlds-2-7-10.pdf

Does China Need the U.S. to Collapse?

Another piece of conventional wisdom espoused these days is this idea that the Chinese “need the U.S. as much as we need them.”  I think this is utter nonsense and in fact the opposite may in fact be true.  At the least, it is worth considering.  In July 2009 I wrote a piece titled “The Emerging China Risk” just before the Shanghai market topped out in early August.  I noted that M2 and loan growth in China was dangerously high and that they risked creating major bubbles.  Very few people were talking about this at that time.  Now it is accepted that China has a property issue and the Shanghai index is still around 18% off from the August high.  When I talk to people I respect in the business about the tremendous mal-investments occurring in China as a result of the government’s throwing money at the problem in an attempt to retain power, the main pushback I get are “ well x number of people still need to move to the cities” and “cars person in China is x versus the developed world.”  This is all well and good but has anyone noticed oil is $85/b.  As I have said time and time again, resource constraints are a very serious fact of life in the short-term.  What 2007-2008 should prove to everyone is that the developed world and the emerging world cannot both grow strongly at the same time in the near-term.  Resources will not allow China to grow at 10% and the U.S. to grow at 3%.  Sorry folks, we will see oil at $200/b before you know it. 

What is happening right now is everyone is printing enormous amounts of money in this Keynesian nightmare and thus supporting inefficient aggregate demand as I mentioned in last week’s email.  This means the market’s rebellion will continue to be expressed in surging commodity prices and then surging sovereign yields.  The really scary thing for me as an American is that the longer this goes on and the more empty cities and malls the Chinese create the greater their incentive and need to collapse the United States becomes.  This is because as commodity prices continue to soar and the terms of China shifts against China (this has already started) the more they will need the improve their consumers purchasing power so that they can fill all of the vacant infrastructure.  This is when the need to allow the yuan to strengthen will be most apparent and there will be no choice.  Purchasing power for the Chinese will surge and the U.S. and Europe will be priced out.

The Last Dance

Either China’s leadership is very smart or is very stupid (I know what ours is).  I do not have a great feel for this since I have no connections there but I am pretty sure it is one or the other.  Conventional wisdom at the moment tells us two things with regard to China.  1) They need us as much as we need them.  2) They are creating monster bubbles that are dangerous and have no idea what they are doing.  With point #1 I completely disagree.  On point #2 I had tended to agree with that and in fact may have even played a small role in making that notion part of conventional wisdom with my prior writings.  More and more I am doubting #2.  The alternate scenario goes like this.  They refuse to allow the yuan to strengthen because they know that once they do that it will mark the real end of the dollar era.  So instead they are spending like crazy on infrastructure ahead of them allowing the dollar to plunge.  Then the strong yuan will be employed to purchase all the commodities they need to utilize their infrastructure and the OECD gets priced out. To those that talk about yuan devaluation, you need to be specific.  Devaluation versus what?  Versus commodities generally along with other currencies?  I can buy that argument very easily.  Versus the dollar, highly doubtful.  Why?  The latest data says China owns $877.5 billion in U.S. treasuries.  All they have to do is start dumping and the dollar is finished as the Fed will be forced to print so many dollars it will make Mugabe blush.  People need to wake up.

Last year I wrote about how the leaders in America were essentially fiddling as Rome burned.  This fiddling has become an all out dance party and many investors have been dragged onto the floor one more time due to money printing, an inherent desire to be optimistic, a plethora of propaganda and rising asset prices.  However, this is the last dance folks.  Our corporate and political leaders have destroyed us.  Chuck Prince would be proud.

Mike  

 

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Thu, 04/29/2010 - 12:27 | 323816 Mako
Mako's picture

Its a race to the bottom being lead by Eastern Europe then Western Europe.  When the US goes the whole thing goes, matter of fact when even a medium size soveign goes under it will be over.

Which is why Greece should spend everything they are given.  Greece holds all the cards, soon Portugal will hold all the cards, Spain will hold all the cards, etc.

"There is no out, there is only in"

It's over, last call for drinks.

People that believe decoupling are retards, that simply is not how the system is constructed.  There is no alternate system.   This one goes there is no backup that just kicks in. 

"Either China’s leadership is very smart or is very stupid"

I will answer for you, they are very stupid.  They will collapse just like every other nation is going to collapse, for failure to recongize the use of a flawed financial model... ie compounding interest.

Thu, 04/29/2010 - 13:00 | 323835 WaterWings
WaterWings's picture

Bar closed early, and only us dedicated drinkers are raising a stink about it. I'm gonna go get back on the dance floor while I can - I've got a fifth in the trunk anyway.

Tomorrow I'm gonna have to plow the fields.

Thu, 04/29/2010 - 18:17 | 324561 geopol
geopol's picture

Vodka one hopes.....

Senate hearings, carried on CNBC, Bloomberg, and C-SPAN, represent the first major exposure of the American people to the scandalous frauds of the derivatives casino, including synthetic collateralized debt obligations (synthetic CDOs or CDO²). These are things most people have heard very little about. They begin to open up the shocking reality behind such shopworn euphemisms like “toxic assets,” “exotic instruments,” and “troubled assets.” Reactionaries in general and Republicans in particular have done everything possible to hide the role of derivatives, which must be considered the main cause of the financial panic of September 2008 which brought down Lehman Brothers, Merrill Lynch, and AIG, after felling Bear Stearns in March of the same year. The reactionary legend, repeated yesterday on the Senate floor by financier minion GOP Sen. Gregg of New Hampshire, is that the crisis was caused by poor people taking out subprime mortgages and then defaulting, bringing down the entire Anglo-American banking system and triggering the bailouts. Either that, or too much government spending was too blame.

A mass of kited derivatives blew up in September 2008

This Big Lie has come from such propaganda sources as the Limbaugh Institute of Retarded Reactionary Ranting. But the $1.5 trillion in subprime mortgages were dwarfed by the $15 trillion US residential real estate market, to say nothing of the $1.5 thousand trillion world derivatives bubble. But, starting with Bush-Goldman Sachs Treasury Secretary Henry Paulson, the talk has been of a “housing correction,” not a derivatives panic. It must be pointed out that derivatives are nothing but wagers, bets placed from a distance on securities which themselves are often not mortgages, but rather other derivatives. The bettor buying a synthetic CDO or CDO² does not own the underlying mortgages or mortgage-backed securities, any more than someone who bets on a racehorse owns part of the horse. Blankfein and others tried to portray derivatives as a service to hedgers and end-users, but it’s clear that the vast majority of derivatives involve neither hedgers nor users, but only bettors on both side of the transaction. It is in any case this mass of kited derivatives which blew up in 2008, bringing on the present world economic depression.

Goldman Sachs executives are babbling cretins

The mystique of Goldman Sachs is based in large part on their reputation as the smartest financiers on Wall Street. After today’s hearings, this mystique has permanently dissipated. The Goldman executives babbled. They sounded dumb. They stalled and stammered and went into contortions to avoid giving straight answers to simple questions. They were mendacious and evasive when they did speak. Financial powers around the world will note carefully the refusal of three out of four Goldman executives on one panel to state that they had a duty to defend the interests of their clients. Who will want to do business with such a gang? Goldman Sachs got $10 billion of taxpayer money in low-interest loans under the Bush-Paulson TARP. Part of that money went to pay for obscene bonuses for Goldman executives like the ones on display today. The argument for bonuses is that they must be paid to retain the highly talented personnel, virtual geniuses, who are indispensable for Wall Street speculative success. But these are no geniuses, they are imbeciles. No more bonuses should be paid by banks saved through public money.

Don’t buy any used cars from Lloyd Blankfein

Sleaziest of all was Goldman’s risk-monger in chief, Lloyd Blankfein, who pretended not to know that derivatives are often kept hidden off balance sheet. The morally insane Blankfein testified that his role was to provide the firm’s clients with “the risk they wanted.” Other GS witnesses represented the firm’s role as “distributing risk.” But it turned out that they were manufacturing risk through the very existence and activities of Goldman Sachs, which had the result of pyramiding the total risk of the US financial system into intergalactic space. It is time to regulate much of that unbearable risk out of existence with appropriate regulatory legislation. In the meantime, no sane person would buy a used car from Blankfein. Nor should they believe his assurance that the “recession” has ended.

But when at the end of the day Blankfein finally suggested to Sen. Tester that synthetic CDOs might be outlawed, we should accept his proposal immediately.

Today’s hearings reveal the Goldman Sachs gunslingers and whiz kids as ignorant gangsters and con artists, notable only for their ability to practice massive fraud with impudence. These sleazy mediocrities do not deserve bonuses paid for by taxpayers. Rather, it is time to shut them down and put them in the dock.

If Goldman Sachs had cared about is clients, it would have urgently warned them to unload their subprime risk by late 2006 or thereabouts. Instead, Goldman was busily increasing its clients’ risk by selling them more toxic CDOs out of its own inventory warehouse.

Goldman Sachs: bookies who stack the deck and fix the games

As the philandering Sen. Ensign pointed out, comparing Wall Street to Las Vegas is a slander on the croupiers of Las Vegas, where everyone knows or should know that the game is rigged so that the house always wins. To use the comparison introduced by Sen. McCaskill, Goldman Sachs was operating as the gambling house, or the bookie. At the same time, Goldman was betting for their own account. But much worse was the fact that Goldman was stacking the decks, loading the dice, fixing the games on which the bets were placed, and bribing the umpires.

As Ensign put it in a rare moment of lucidity, the subprime mortgage was bad. But the collapse of subprime would not have had anything like its actual destructive effect on the US economy if it had not been compounded by the mass of synthetic derivatives that were piled on top of subprime.

No national or social purpose served by Goldman Sachs and toxic derivatives bets

The broader issue raised by today’s hearing is: what human purpose is served by the existence of Goldman Sachs, which concocts toxic synthetic CDOs for the purpose of allowing speculators, who are often lied to and duped, to bet for or against them. Goldman Sachs can only be described as a speculative parasite which promotes the activities of other speculative parasites, such as the John Paulson hedge fund at the expense of the public and of its other clients. It was a crime to inject $10 billion of Treasury money into Goldman Sachs. It was another crime for the Fed to lend Goldman untold billions (just how many billions Bernanke still refuses to disclose) to keep them afloat and enable more predatory profits. These crimes must stop, and the public money must be clawed back. Most important, it is time to shut down the derivatives rackets.

Goldman got $12.5 billion from taxpayers for AIG credit default swaps

Useful questions from GOP Sen. Coburn pointed to another kind of derivative: the infamous credit default swap (CDS). These CDS are what brought down AIG, whose London hedge fund had issues $3 trillion in derivatives. When the government bailed out AIG, part of that $180 billion of taxpayer money was used for payouts to the CDS counterparties of AIG, biggest among them Goldman, which got $12.5 billion from the US taxpayer. That was 100 cents on the dollar on a mass of toxic CDS. Coburn wanted to know why Goldman got all their money back, while GM bondholders took a bath as GM went bankrupt. That was, of course, a matter of Goldman’s political clout through GS alum Henry Paulson and Obama Car Czar Steve “The Rat” Rattner, backed up by the historic preponderance of finance capital over industrial capital in this country since Andrew Carnegie sold out to JP Morgan over a century ago.

Derivatives and zombie banks: the toll

Thanks to Goldman Sachs, the other Wall Street zombie banks, and their derivatives, the financial panic of 2008 has turned into a world economic depression of unimaginable proportions. The unemployed and underemployed in the US alone are surely in excess of 20 million. Five to six million home foreclosures are already done or in the pipeline, throwing tens of millions of Americans out of their homes. World trade has been seriously impacted. The budgets of California, New York, Illinois, and many other states are in crisis, with massive layoffs of teachers and other state employees. An entire generation is being destroyed. Now, Greek bonds are trading at junk levels under the attack of speculative predators including Soros, Greenlight Capital, SAC, and the protagonists of today’s hearings – Paulson and Co and Goldman Sachs itself. The attack on Greece and the euro represents the leading edge of the second wave of the depression, which is now arriving in much the same way that the second wave of the 1930s depression was unleashed by the Vienna Kreditanstalt bankruptcy in May of 1931, about 79 years ago and just a year and a half into that depression.

The goal of the Republicans is to portray themselves as stern judges of Wall Street, even as they line up in a unanimous phalanx to protect the finance jackals from any meaningful regulation whatsoever — as seen in yesterday’s vote to block cloture on derivatives re-regulation and reform. The goal of the Democrats is to expose the sociopathic evil of Goldman Sachs and the rest of Wall Street while preening themselves as defenders of the public interest, without however banning credit default swaps, banning synthetic CDOs, and imposing a Wall Street sales tax on all remaining derivatives and asset transactions.

To this degree, today’s hearings are being conducted in bad faith by both major parties. However, the dynamic of the resulting spectacle has the result of educating and mobilizing public opinion against the predatory practices which are the essence of Wall Street, even a year and a half after the banking panic of September 2008 and the monster bailout of zombie banks which soon followed. What is required is a new edition of the anti-banker sentiment set off by the Senate Banking Committee hearings conducted from January 1933 to May 1934 by committee counsel Ferdinand Pecora, which unmasked the corruption of Wall Street. Persons of good will need to get active now to push this process as far as possible while these social dynamics are working. It is time to hit the zombie banks, the hedge funds, and their derivatives as hard as possible, before the second wave of the depression hits. The program necessary to fight the depression and break the strangle-hold of Wall Street on the US economy and political system is given on my web site.

Mitch McConnell on the bailout: “Harry, I think we need to do this, we should try to do this, and we can do this.”

During a break the senators filed out, and the GOP reactionary lockstep once again blocked cloture for a final debate on the Wall Street reform bill, weak as it is. Many activists of the Tea Party naively believe that they have been fighting for a year and a half that they have been fighting to take back the Republican Party. If that is what they believe, today’s second cloture vote proves that they have gotten nowhere in their efforts. Despite their charades, the GOP are the bodyguards of the Wall Street predators. Tea baggers who think they can break the Wall Street grip on the Republicans are pathetic dupes, and they need to wake up, pronto.

When Paulson went to the leaders of Congress to demand a $700 billion bailout for Goldman and his Wall Street cronies, GOP Senate majority leader Mitch McConnell was “deeply frightened” by the apocalyptic briefing delivered by Paulson and Bernanke. When Democratic Majority Leader Harry Reid started talking about how difficult it would be to get so much money in a hurry, McConnell urged an immediate bailout, saying: “Harry, I think we need to do this, we should try to do this, and we can do this.” (Andrew Ross Sorkin, Too Big to Fail [New York: Viking, 2009], p. 442) The GOP was the original party of the bailout, and they have not repented, as best seen through the continuance of McConnell, one of the key midwives of the bailout, as Republican Senate Majority Leader. This is the same McConnell who went to Wall Street recently to meet with zombie bankers and hedge fund hyenas, pledging to block derivatives reforms in exchange for big bucks contributed to the GOP’s campaign coffers. Tea baggers who think the GOP has changed or is moving to their side are sadly deluded.

Today, the market fetishism of the crackpot Austrian school has taken a severe blow. Now that Blankfein‘s public image has been soiled by Goldman’s scurrilous and scatological emails, the time is ripe for the radical reform of derivatives and the zombie banks. This is a matter of national survival.

Now that Goldman Sachs is masquerading as a bank holding company, it is subject to FDIC rules. If Goldman’s derivative hoard is marked to market, it is bankrupt. The FDIC should therefore seize Goldman and liquidate it under chapter 7 of the US Code. Sheila Bair should not wait for Friday.

 

Thu, 04/29/2010 - 18:21 | 324570 faustian bargain
faustian bargain's picture

Today, the market fetishism of the crackpot Austrian school has taken a severe blow.

With all due respect, your credibility is taking the blows here, if that's what you think has happened.

Thu, 04/29/2010 - 18:36 | 324574 geopol
geopol's picture

your credibility is taking the blows here

 

From you, and who else?? Don't presume you have followers..

We had a free market when???? Let me help...never..in this structure we will never have one....do I believe in it's general tenet,, yes,,,but in this era,,it's crackpot..when in Rome...Human Action Ludwig...

Thu, 04/29/2010 - 18:42 | 324596 faustian bargain
faustian bargain's picture

That we don't have anything near a free market is undisputed.

That Austrian Economics is a crackpot and is "taking blows" is your opinion. In what way have the Goldman hearings refuted any views of the Austrian school?

Thu, 04/29/2010 - 20:17 | 324622 geopol
geopol's picture

That we don't have anything near a free market is undisputed.

Undisputed???? Maybe some elements of ZH, but the general sheep of the amalgamated order of nitwits / majority....? Please..

 

In today's world,,,if I have to explain....hit the books...we can converge in a later life, when you get it.. With my condolences...

Fri, 04/30/2010 - 02:51 | 324998 John_Coltrane
John_Coltrane's picture

The Austrian school makes the commonsense equation that productivity=wealth but debt and that debt/credit = serfdom.  So how are these simple equations invalidated by your rambling arguments?  Austrians believe in creative destruction not an unholy alliance between the soveign state and bankers with debt as the glue-thus the government bailout of the banks is anathema as is the idea of public sector stimulus as favored by the federalist party-the democrats.  Austrian economists and liberatians like Ron Paul (they are the same) value the individual above the collective as the individual is the source, nay foutainhead of all creativity and thus wealth.  Recall Hamilton pushed the idea of debt and a national bank (the first Fed) to finance it while Jefferson the founder of the republican party opposed both a central bank and Hamilton's desired use of a standing army to create empire.

Apparently, you need to take your own advice and read the books instead of hitting them with your head as this won't give you knowledge via osmosis (i.e. diffusion through a semi-permeable membrane)

 

Fri, 04/30/2010 - 11:20 | 325508 chumbawamba
chumbawamba's picture

Yeah, I'm less impressed with Webster if that's what he boils Austrian Economics down to.

Talk about a disconnect.

I am Chumbawamba.

Fri, 04/30/2010 - 19:11 | 326297 geopol
geopol's picture

Show me the pure implementation of it, a Utopian I'm not,,,nor a Malthusian..talk to me directly, not in third person...

 

It would be nice if all our children attended the Ludwig Von Mises Institute and infected our society with it's influences.

The disconnect is with you,,not to understand the tools we are denied in this insane existence.Your response clearly indicates your read was incomplete...

 

And your friend John Coltrane.. A love supreme part I...1964...Before your time...

 

Fri, 04/30/2010 - 01:43 | 324976 Winston Smith 2009
Winston Smith 2009's picture

About the Austrian school which I've always believed relies as much on "faith" as socialism, Greenspan said it himself, "I made a mistake in presuming that the self-interests of organizations, specifically banks and others, were such as that they were best capable of protecting their own shareholders and their equity in the firms."

The excellent Nova episode last night "Mind Over Money" proved to my satifaction something that I've long believed: markets _are not_ always rational and in both the best and worst of times they are the least rational.  This results in massive bubbles of all kinds (ex., in tulip bulbs) and overshoots at the bottom.

Thu, 04/29/2010 - 19:05 | 324632 velobabe
velobabe's picture

geo, thanks for my cliff notes.

kiss, kiss

Thu, 04/29/2010 - 20:29 | 324726 ZerOhead
ZerOhead's picture

Great post... long... but well worth the read! ~Thx

Thu, 04/29/2010 - 20:52 | 324744 pan-the-ist
pan-the-ist's picture

Is the chick interviewing you on RT.com infinitely pokable in real life?

Fri, 04/30/2010 - 18:41 | 326300 geopol
geopol's picture

We never broached the subject,, as I was on my way to Rome the following day,,,

Never reveal you intentions,, this I should not elude..

 

Thu, 04/29/2010 - 21:32 | 324796 Hulk
Hulk's picture

Nice plan geopol. As soon as we can get the massive fraud and corruption out of the system, we will get started....

In the meantime, we have started a pasture based farm and it is doing great. Thanks to Pollan, Salatin and others, high quality, nutritionally dense food is a big hit.

Thu, 04/29/2010 - 23:26 | 324889 Alienated Serf
Alienated Serf's picture

need any farmhands?  i need to learn how to farm.  fuck the white collar shit.  and fuck it even if the economy is great, i've had enough 18hr days in a cubicle.

Fri, 04/30/2010 - 00:16 | 324925 Hulk
Hulk's picture

We do . This is our first productive year and therefore we are just getting out of the gate. I'll be there either in mid may or late june, so if you could arrange to be in Va then, that would be great! Also, polyfacefarms has an internship program that is the best

http://www.polyfacefarms.com/apprentice.aspx

What state are you in AS?

Perhaps crab cake and waterwings could make an appearance . We can  train with the CQB's  too

 

Fri, 04/30/2010 - 00:31 | 324946 Alienated Serf
Alienated Serf's picture

Hulk, that is seriously impressive.  My hat is off to you.  and giving apprenticeships, that is a  gift.  I personally believe the local food movement is going to be one of the things that can truly help our country. less fat people, less imported garbage, less foreign oil to transport the garbage and teaching good values.

I currently live in NYC, my wife is from Syracuse, and her sis has her eye on a nice 100 acre parcel that she boards her horses on in exchange for cleaning the barn and taking care of all the other animals.  She has quite a large garden, and we have have BS'd about doing exactly what you are.  I have also been looking at new england, as the type of thing you are doing is taking off there as well (as you know I am obsessed with maine).

I got laid off today (was a temp thing for a few months), if i don't have something lined up soon, I am rolling down to get my hands dirty!!

I don't see an email on there though...

You are living the dream brother.

 

Fri, 04/30/2010 - 10:29 | 325320 Hulk
Hulk's picture

Getting this farm stated is hard work though

And it is in the middle of nowhere with no electricity or running water. Lots of drinkable spring water though. But its sawdust toilets ,solar showers and lots of ticks  AS (no lyme diesease in our area ) email me at iphulk@gmail.com

As time goes on and the Farm gets more established, I do want to establish an apprenticeship program for multiple people every year

 Lastly, if you are not in shape, now is the time to start. Get on the treadmill or nordic track for 30 minutes a day. Otherwise, you simply will not last....

Fri, 04/30/2010 - 10:57 | 325453 WaterWings
WaterWings's picture

Awesome - that is what we need: places to get your hands dirty and see it in action; it's the only way to preserve ourselves. I'm in Seattle :-( If I can make it happen I will contact you. I'll bring a portable solar panel and deep-cycle batt to demonstrate a simple system to maintain rechargeables! CQB would be awesome - wouldn't mind trying 300 m+ if you have the space! LOL

Very, very true about the exercise - it helps mentally in times of high stress as well. Simply add pushups and situps for quick/simple strengthening. Too many people make it complicated/time-absorbing and quit early; dedication to daily basics can get you into excellent shape.

Fri, 04/30/2010 - 11:23 | 325511 Hulk
Hulk's picture

It would be great to see you guys out there.

We do have solar, our electric poultry netting is solar powered. One of my careers was in EE, so I am well versed in that. We will eventually establish a small power station, but no need for it at the moment.

We can make a pilgramage to polyface farm,about 60 miles away. Polyface is the pinnacle of pasture based farming and should be, imho, every pasture based farmers target goal.

AS, get yourself a copy of Joel Salatin's "everything I want to do is illegal" That will illustrate to you the problems that the USDA creates for the pasture based farmer and small farmers in general.

 

 

Fri, 04/30/2010 - 11:57 | 325586 WaterWings
WaterWings's picture

I would be honored.

As the ZHers know we've hit an iceberg, but if the ship isn't tilting by September I'll send in an application.

Thanks.

Fri, 04/30/2010 - 12:20 | 325648 chumbawamba
chumbawamba's picture

Just checked out the website, Hulk.  Very, VERY cool.  I wish I could spend a season with you guys out there boning up on my gardening.  I still have a lot to learn from my mother.  I wish I had pictures of her garden to share.  One woman tends to a garden about the size of 1/4 of an American football field.

I am Chumbawamba.

Fri, 04/30/2010 - 14:15 | 325858 Hulk
Hulk's picture

Consider it an open invite Chumbawamba

I am going to get at least one wall tent up, on a wooden platform (16 x 20) so that folks can have a decent place to sleep. The spring water on the property is the best!

The tent will look something like this:

http://www.pillowsandpancakes.com/uploads/1002878_TSmYSG5TVR3Dt5tt.jpg

Interesting that it was your mom who had the garden, because very old tradition was that women ran the garden while the men hunted.

 

Fri, 04/30/2010 - 14:21 | 325865 chumbawamba
chumbawamba's picture

She comes from such an era.  Certain parts of Syria in the 1930s-1950s were still effectively in the stone ages.  To this day, my mom works the garden and my dad does the hunting (mmmm, venison).  In hindsight, I couldn't have been gifted with better parents and teachers, epsecially for what lay ahead.  I take back all the rotten things I ever said or did to them.  Oh, what a petulant little bitch I was :(

Anyway, I hope to make it out to Virginia someday.  Except for that trip across the Potomac to Arlington Cemetery I made when I visited DC many moons ago, it will be my first visit.

I am Chumbawamba.

Fri, 04/30/2010 - 12:59 | 325713 Alienated Serf
Alienated Serf's picture

field trip!!!!

hulk, done a decent bit of backcountry livin, got the stuff to bring.  and spring on the property, key!!

man, you are lucky about no lymes, upstate NY is the world epicenter for it.

sending an email your way  

Fri, 04/30/2010 - 12:25 | 325663 Papa Legba
Papa Legba's picture

You don't need a huge farm. You can grow enough for a family on a 1/10 acre plot in the middle of town.

Check out urbanhomestead.com for an example. We're growing a nice garden and raising chickens on our little 1/3 of an acre in our town.

Fixing this problem (or surviving it) starts at your door.

 

Fri, 04/30/2010 - 13:28 | 325761 WaterWings
WaterWings's picture

Square-foot Gardening!

Soil blend from scratch:

1/3 peat moss, 1/3 various composts, 1/3 vermiculite

4' x 12' x 1' (depth) = plentiful garden for family of four, with leftovers for the root cellar.

No weeding, Minimal watering, Any backyard, Minimal work (time for other tasks).

Cons: upfront costs

This isn't about being lazy, this is working smart.

http://www.squarefootgardening.com/

 

Fri, 04/30/2010 - 15:45 | 325996 Hulk
Hulk's picture

It is all about working smart WW. Last week I read an article describing how, in Korea, they spray their hen house wood shavings with lactic acid to break down the chicken shit.

They are getting a 10 to 20 year life out of their woods shavings, which is just incredible.

All you have to do is wash rice in water and let the water sit for a week. Then add milk and let sit for a week. Then spray in a sprayer. I just finished the week long rice water rinse,and sure enough, i have a sour smelling lactic acid solution. can't wait to see if it works. Otherwise, woodshavings are changed every 3 weeks, so this is a huge find...

Also important to make farming fun, especially for the sake of the  kids. When I was a kid, it was just sheer drudgery and hollering...

 

Fri, 04/30/2010 - 04:23 | 325041 No More Bubbles
No More Bubbles's picture

VERY impressive!

Fri, 04/30/2010 - 13:48 | 325802 velobabe
velobabe's picture

hulk, what a beautiful story you brought to the ZH community table. lovely and sustainable ideas, optimism for our minds. wonderful. i was so f*cked up growing up, when i had to go to my aunt's farm every sunday. i thought they were poor, cause they didn't have enough money to shop at the grocery store. brain dead, but now i embrace it and have grown up with much appreciation that i have farmer/agriculture roots in my DNA.

where i live now, there are small plots of community gardens about every 4 blocks, right downtown. the city provides water for the drip systems. it is a beautiful thing. mostly college kids partaking.

thanks.

Fri, 04/30/2010 - 15:14 | 325958 Hulk
Hulk's picture

Thanks Velobabe, we drank out of jelly jars as kids, which I used to hate! Could you actually use a sawdust toilet? Just curious. I refuse to put that shit (pun intended)  in the ground where it pollutes our springwater. Don't believe in septic systems either. Most people are disgusted by the sawdust toilets, but they are clean and there is no smell. Composts perfectly...Thaks again for the kind words

Fri, 04/30/2010 - 19:42 | 326381 geopol
geopol's picture

You will do well,,, keep you eyes on the skyline, and your back to the wind...Jeremiah Johnson.. With all my good will..

Sat, 05/01/2010 - 11:08 | 326886 Hulk
Hulk's picture

LOL, thanks Geopol.(you will never, ever, find me jumping in an icy creek in the dead of winter to catch a fish!) It will take years, but the kids should reap the benefits...It takes about 20 years to get these pasture based farms working optimally...

Thu, 04/29/2010 - 23:33 | 324896 Oh regional Indian
Oh regional Indian's picture

Phew!

Long but not entirely lost Geo.

If I may make one or three "obvious" observations...

1. You cannot fix the system from within the system. It is a logical impossibility. A system as old and embedded as the current one needs to shatter, burn, whatever before anything new can arise. We are in a phoenix from the ashes moment (long moment, but a moment nonetheless). Only a self-aware system can self-heal. The financial system is nowhere near self-aware.

2. In simplistic, but I believe hugely overlooked terms, what we are seeing is the collapse, total and absolute of the Supply-side oriented Industrial revolution, of which financial "innovation (what an oxymoron) is but the logical though ugly conclusion. As in, innovation went from machine to virtual, since time-to-market demanded that you needed to show the maximum change with the minimum input. The virtual world provides that outlet. A quant can think up a million ways to slice/dice and represent/mis-represent a number. Nature is demand side oriented (I would highly recommend Ishmael and the Story of B by James Quinn to the interested) and such others. That which goes against nature always collapses (we live in and are ABSOLUTELY governed by the laws of nature).

3. We consider six-sigma (statistically speaking) as the far out tail of the distribution, so low on probability that it almost never happens and if it does, it is a Black Swan or White Tiger of whatever event. Anyone notice how many Black Swans are happening all around us today, in every field? Freak weather, wars, collapses of major banks, Volcanoes, oil-spills.....the list of so called six sigma or at least 5 sigma events about. That should tell us something critical...

The center-line/mean-point has shifted... FOR GOOD. Not necessarily for the better, but for good! Our assumptions, by which we live/work are not working anymore. They are based in an old mean, maybe as old as 400 years.

I don't think living is 400 year old assumptions is very wise for us, three-brained intellectuals, is it?

Fri, 04/30/2010 - 00:21 | 324938 Joe Sixpack
Joe Sixpack's picture

"...the list of so called six sigma or at least 5 sigma events about. That should tell us something critical..."

 

God speaks.

 

(Clue: When God speaks, people listen)

Fri, 04/30/2010 - 12:56 | 325703 Papa Legba
Papa Legba's picture

"We're terrible animals. I think that the Earth's immune system is trying to get rid of us, as well it should."

- Vonnegut


Fri, 04/30/2010 - 12:56 | 325704 Papa Legba
Papa Legba's picture

"We're terrible animals. I think that the Earth's immune system is trying to get rid of us, as well it should."

- Vonnegut


Thu, 04/29/2010 - 23:49 | 324920 velobabe
velobabe's picture

everybody, we are only every body.

geopol has it it right, he consolidates quite well.

Fri, 04/30/2010 - 00:19 | 324937 Joe Sixpack
Joe Sixpack's picture

Thanks, Geo. Derivatives are the key.

 

www.DerivativesCollapse.com

Fri, 04/30/2010 - 04:18 | 325034 No More Bubbles
No More Bubbles's picture

Well covered and well said!

Thu, 04/29/2010 - 12:41 | 323857 HEHEHE
HEHEHE's picture

"matter of fact when even a medium size soveign goes under it will be over."

Roubini posits that Spain will be the one to crash the system.  Too big to bail, too large a piece of EU to not take it down with it.

Thu, 04/29/2010 - 13:03 | 323904 Edmon Plume
Edmon Plume's picture

Spain?  No, not possible for them to go down.  They have "invested" so much in wind power and other green energy products.  It's a regular utopia, and we all know utopias don't fail.

/s

Thu, 04/29/2010 - 13:23 | 323972 Selah
Selah's picture

Whoa ho ho!

I know where I'm moving!!!

Bullfights and Sangria Bitches!!!

 

Thu, 04/29/2010 - 16:42 | 324385 Ripped Chunk
Ripped Chunk's picture

As you said. It will be Spain that triggers the final blow. Then the gold bitches better stay low and out of sight.

Thu, 04/29/2010 - 13:17 | 323945 crosey
crosey's picture

Mako, I am sincerely interested in your choice of a system that would work, if it's not compound interest.  Simple interest?  Cash and zero leverage?

Please respond.  Thanks.

Thu, 04/29/2010 - 13:57 | 324079 anony
anony's picture

There are no systems that can withstand the essential larceny in the hearts and minds of nearly every man, woman and child.

The imperfection of the human construct will sabotage any system.

And as long as the vote exists, wherein one man can simply vote to himself that which she will not or can not earn, there is only one predestined outcome.

Epic Fail.

 

 

Thu, 04/29/2010 - 14:03 | 324103 crosey
crosey's picture

And as long as the vote exists, wherein one man can simply vote to himself that which she will not or can not earn, there is only one predestined outcome.

de Tocqueville would agree with you, with respect to democracy.

Thu, 04/29/2010 - 18:02 | 324528 Waterfallsparkles
Waterfallsparkles's picture

There used to be a Poll Tax.  Anyone that did not own Property had to pay a Tax to Vote.  This at least used to protect Property Owners from people that did not pay Property Taxes from Voting for benifits for themselves without paying either Property Tax or a Poll Tax.

I am all for Voting rights but if you do not pay Taxes or are on Government Welfare you should not have a say in how the Money of the People who do pay Taxes is spent.

Thu, 04/29/2010 - 19:32 | 324660 kaiserhoff
kaiserhoff's picture

+1

 He who pays the piper, calls the tune.

Thu, 04/29/2010 - 21:19 | 324779 Phenonymous
Phenonymous's picture

Doesn't this assume that the foundational principles of the formation of that government are solely concerned with the proper assignment and governance of property?  

Most governments have, at their foundation, at least some pretence of a set of principles that is not materialistic in nature, but rather concerned with the fundamental rights of individuals to lead their lives in the way they see fit, which does not necessarily concern itself with some foundation of material gain or preservation.  Whether you like it or not, the people who participate in the founding of such governments have a diverse set of beliefs which may not hold as their central belief, the importance of property, but rather the rights to freedoms and basic standards of life.

While property is a very useful tool to establish the protection of such rights, it does exclude the possibility of a propertyless individual having the same rights as others if they are constantly forced to adapt to the material excesses of their fellow citizens (i.e.: native american culture).  

Sometimes, the notion of a basic standard of life comes at odds when other people's beliefs about their rights to parcels of land or materials begins to infringe on the standards of life that are set to ensure basic rights to certain freedoms and ways of life that are not necessarily profit-driven in nature.  

So, I guess it comes down to whether you think the country's government most fundamental role is to protect property or, more fundamentally (in my opinion), to protect the rights of lifestyles that may or may NOT be profit/material driven in nature.  

The way the constitution was designed, did leave open the possibility for both a hippy hippy freedom land and the system it has become today.  But, just because it is the way it is today, does not mean that the allowance for the possibility of a hippy hippy land should no longer be at the heart of the constitution's foundation.  

Personally, I think the importance of voting rights is that they protected the basic rights of citizens, rather than the singular dimension of those rights as expressed in property ownership.

Thu, 04/29/2010 - 23:33 | 324893 Alienated Serf
Alienated Serf's picture

waterfagsparkly, umm yeah, voting is not based upon economic status, but upon citizenship.  when the ponzi has everyone on the street, who will vote then?  ignorant fucker.  i rent, i am saving to buy, should i pay to vote? i pay tons of taxes and fees.

you are ignorant. please kill yourself asap you worthless pissmop.

Fri, 04/30/2010 - 13:08 | 325726 TrulyStupid
TrulyStupid's picture

Renters effectively pay the taxes on their landlord's property, but the poll tax

disenfranchises them (mostly "working class" people). For this reason, most modern cities have done away with poll taxes and have residency the only requirement for voting.

Thu, 04/29/2010 - 17:26 | 324474 AnAnonymous
AnAnonymous's picture

Funny one. Still how to conciliate the start and the conclusion? Were people allowed to vote forever? What happened when they could not vote? System failure?

Thu, 04/29/2010 - 14:02 | 324091 Mako
Mako's picture

crosey,

That is the question.  I don't know what the answer to that is.   Life will definitely be different because you would then get only what you need instead of what you want. 

Life would be completely different and the amount of growth would be almost non-existent.  Even simple interest gets to the same point, matter of fact if everyone figured out compounding interest was a fraud, well then they would realize that simple interest is a fraud, although you might be able to get longer scale of the system.

Most religions figure this out 1000s of years ago, it's a lie but most ignore it out of greed.   The amish are really the only group I know that lives by this, even the Muslins have move away from this. 

I will never say the alternative is an easy road, but it does not have a self-destruct button in it though.  Humans have choice, although we might not like our choices we do have them. 

Thu, 04/29/2010 - 14:15 | 324123 crosey
crosey's picture

Thanks Mako.  I think simple interest used infrequently is the only way to endure interest at all.  I agree with your perspective on the Amish (Mennonites, et.al.).  They don't have all of the toys, but they also don't have the burden of excess.

Thu, 04/29/2010 - 14:20 | 324129 Mako
Mako's picture

Their(amish) financial system does not come with a balloon payment in this case many Amish will probably get wiped out even though they had nothing to do with it directly. 

At what point does the fraud actually start, very hard to point to out but no doubt when the masses start doing it and the whole system is based on it... well, its one big fraud... pyramid scheme.

 

Thu, 04/29/2010 - 21:09 | 324764 pan-the-ist
pan-the-ist's picture

I believe there is a way to create wealth.

If you are a craftsman and you build a chair, that chair is created wealth.  Doesn't this seem natural that money should expand as wealth expands?  I admit I am naive on some of this.

If I build a house (from scratch, say from the natual resources that exist on the land I already own - hypothetically.)

If I sell that house, where does the money come from?  If the money supply cannot expand, my house may be unaffordable!

Thu, 04/29/2010 - 23:12 | 324877 AUD
AUD's picture

www.goldstandardinstitute.com

Start with 'What is a Real Bill?' on the homepage

Thu, 04/29/2010 - 20:12 | 324698 nhsadika
nhsadika's picture

Muslims have moved away from this.

People do a lot of things.  Islam has not changed, as is not in need of change (despite what they tell you on constant mindnumbing TV).  The last sermon of the Prophet - which is meaningful as every act was meaningful - outlawed interest "Your capital is yours to keep. You will neither inflict nor suffer any inequity." 

To say that you can not have growth and "life would be completely different" without unfair advantage (interest) is telling.   There are certain walls that have been blocked out in the most elite minds, as evidenced here (no offense).   The Islamic concept on growth is shared risk, you can lend but you have to share risk - not this compounding nightmare that few can grow out of - and then when the balloon pops the collective are harmed...  how can that in anyway be considered "THE RECIPE FOR GROWTH!?"

 

 

 

Thu, 04/29/2010 - 23:34 | 324897 Crab Cake
Crab Cake's picture

I'm not a huge fan of Islam.  I'm going to be upfront about that.  However, Islam seems to be the only Abrahamic religion to vaguely remember the tenet against usury; which is nice. 

BUT

To say Islam is unchanged is false.  All things change, for that is the nature of this reality.  If Islam was static there would have never been a schism between Shia and Sunni over succession, or over the compilation and standardization of the Qur'an, and varying recordings of Hadith.  Also, please explain why a Saudi prince (Walid bin Talal) believes its within the tenets of Islam to invest in a usurious Western bank (Citi)?  Shared risk?  Right....

Thu, 04/29/2010 - 23:39 | 324904 Alienated Serf
Alienated Serf's picture

Let us leave religous factors out of finance.  usury is bad b/c it takes advantage of the weak, not b/c a religion says so.  credit card companies should not be alowed to charge 30% because it is wrong, not b/c islam or jesus or the old testament says so.  moralility and religion are two different things.

in your personal life, religous thought is fine.

Fri, 04/30/2010 - 13:02 | 325717 Papa Legba
Papa Legba's picture

Most religious tenets are based on the need to solve or avoid some social or public problem.

Usury violates a religious tenet because it takes advantage of the weak.

People died from eating shellfish.

Etc.

 

Fri, 04/30/2010 - 13:02 | 325718 Papa Legba
Papa Legba's picture

Most religious tenets are based on the need to solve or avoid some social or public problem.

Usury violates a religious tenet because it takes advantage of the weak.

People died from eating shellfish.

Etc.

 

Thu, 04/29/2010 - 23:52 | 324927 nhsadika
nhsadika's picture

This isn't the place, but your analogy about a Saudi prince & Islam is like saying Lord Blankfein is an argument against the Constitution.  It is that "out there".

 

Again people are people.  True islamic scholarship and principles are surely not familiar to you and trying to ascertain a system from the people is obviously a ridiculous way to go about things.

These are the most basic logical flaws I can imagine.

 

 

Fri, 04/30/2010 - 02:11 | 324982 PaperWillBurn
PaperWillBurn's picture

The new system will be a system of Freegold. Paper is no longer a wealth reserve but currency will still exist. Gold becomes individuals savings but economic activity will still take place in currency as forced by governments. Gold will be marked to market and rise as currency is debased and fall as currency is managed correctly. Governments will have an incentive to manage their currencies properly because a properly managed currency will allow people to have the confidence they need to deploy their gold into the economy investing in businesses and creating wealth(and tax revenue)

 

Gold will act like a sponge sucking up all of the worlds paper wealth so it can fulfill it's role as the economic stabalizer.

Thu, 04/29/2010 - 16:19 | 324363 Greyzone
Greyzone's picture

I've seen this question so many times before that I can accurately see the "real" question behind the question about 95% of the time. And the real question usually being asked is "what system will work and still give me mine?" That's where "mine" is defined as want, want, want, even when it is dangerously infantile and narcissistic.

So before I venture to say more here, what are you really asking? Are you asking what a system that is truly sustainable might look like or are you asking if there is yet another Ponzi scheme of a different color to allow the party to go for a bit longer?

Thu, 04/29/2010 - 20:49 | 324742 Matto
Matto's picture

Tell me what system will work so i can front run it ..

Thu, 04/29/2010 - 18:49 | 324608 ghostfaceinvestah
ghostfaceinvestah's picture

This is all part of the plan for the NWO.

 

http://www.youtube.com/watch?v=NO24XmP1c5E

Fri, 04/30/2010 - 02:46 | 324995 dark pools of soros
dark pools of soros's picture

but so what..  its only fake money like you all say anyway.. if it goes poof all together you just have a debt jubilee and point your guns at the creditor countries

 

the countries with resources still have the resources - soon we'll have oil coming out of our tap water anyway with some more oil spills

Thu, 04/29/2010 - 12:23 | 323820 anynonmous
anynonmous's picture

I agree this is may well be the last dance but this party has been going strong for a very long time.

Thu, 04/29/2010 - 13:01 | 323899 cougar_w
cougar_w's picture

Past performance should not be used as a predictor of future returns.

Right?

Thu, 04/29/2010 - 14:00 | 324087 anony
anony's picture

Sometimes yes, sometimes no.

There are no absolutes except that I am never on this earth, or any other, going to attract one of RoboTrader's or Leo's cyber-babes.

Thu, 04/29/2010 - 13:40 | 324023 BorisTheBlade
BorisTheBlade's picture

Last party is usually the most insane and memorable, just think of how people get lost when they throw one to mark the graduation.

Thu, 04/29/2010 - 12:27 | 323832 Sudden Debt
Sudden Debt's picture

TO ZEROHEDGE

Today all fuel prices in Europe went up to 2008 high's.

Remember what happend to the economy when fuell was so high?

1 Liter of unleaded fuel:  1.504€

1 Liter diesel: 1.213€

 

Filling up your car makes you cry these days.

Thu, 04/29/2010 - 12:34 | 323849 Bam_Man
Bam_Man's picture

An unpleasant side effect of overusing the printing press.

So pass along your personal thanks to Sir Fred Goodwin, among others.

Thu, 04/29/2010 - 13:13 | 323932 Alienated Serf
Alienated Serf's picture

HELLO PEOPLE? HELLO? anyone notice this?

Jan. 11 (Bloomberg) -- China supplanted the U.S. as the world’s largest auto market after its 2009 vehicle sales jumped 46 percent, ending more than a century of American dominance that started with the Model T Ford.

 

THATS GONNA BE GREAT FOR OIL/FUEL PRICES!

Thu, 04/29/2010 - 13:44 | 324036 BorisTheBlade
BorisTheBlade's picture

China made a long way from being a net oil exporter back in the 90s to a second biggest oil importer after US these days, that explains why despite 10% unemployment (if you believe, but that's anyway much higher than back in the 90s) that we have oil @ 80+ a bbl. We ain't seen anything.

Thu, 04/29/2010 - 14:02 | 324097 anony
anony's picture

If you aren't long oil, then you should be. Should even come out ahead of your fillups.   

Thu, 04/29/2010 - 15:54 | 324335 Moe Gamble
Moe Gamble's picture

IMHO, there is no way on earth that we are going into the 2010 elections with high gasoline prices. But Ben won't turn off the printing presses. Instead, Obama will be what Bush did in 2006--arrange a forced sale of energy futures to drive prices down hard.

 

They will pass Blanche Lincoln's financial reform bill that allows the CFTC to limit position sizes, and they will limit positions even for entities like USO. And no more tankers for Goldman.

 

For the 2012 elections, they'll up the ethanol percentage in gasoline.

 

The two plays could happen in the reverse order.

 

And then their bullets will be all used up.

Thu, 04/29/2010 - 16:47 | 324390 Greyzone
Greyzone's picture

I recall some of your comments from TOD in the past, Moe. Good observations over there and a good speculative thesis for what's ahead here. My only concern is with ethanol already taking such a large percentage of US agricultural production whether the ethanol "bullet" has already been fired or not. And I just cannot tell at this time.

Thu, 04/29/2010 - 17:14 | 324449 Ripped Chunk
Ripped Chunk's picture

Great vehicles to have a collision in those Chinese ones.

 

 

Thu, 04/29/2010 - 14:46 | 324199 SteveNYC
SteveNYC's picture

Time to short commodities EXCEPT gold/silver. Ben-the-Idiot will have to pull back on his press accelerator soon enough or risk crashing his hyper-bubble economy with high oil prices.

Either way, they are screwed. Mako is right. But who cares, who wants to go and bust their ass all day every day to earn paper and pay inflated paper prices for shit we don't need anyway? Show me the nearest bar and beach....

Thu, 04/29/2010 - 17:10 | 324444 aaronvelasquez
aaronvelasquez's picture

Bicycles bitches!

Or is it horse and buggies bitchez?

Thu, 04/29/2010 - 18:08 | 324545 snakeboat
snakeboat's picture

ComboRombo on that one.  A little of both.  And armored Hummers for the Elites.

Thu, 04/29/2010 - 23:41 | 324909 Alienated Serf
Alienated Serf's picture

coal locomotives bitchez

Fri, 04/30/2010 - 01:51 | 324978 -273
-273's picture

Not in Austria,

1 Liter of unleaded fuel:  1.13€

1 Liter diesel: 1.06€

Thu, 04/29/2010 - 12:29 | 323838 buzzsaw99
buzzsaw99's picture

We may as well learn to dance because everyone will pay for it in the end no matter what.

http://www.youtube.com/watch?v=W551R1h_LKA

Thu, 04/29/2010 - 12:31 | 323841 Commander Cody
Commander Cody's picture

Let's not forget the curative aspects of global war.

Thu, 04/29/2010 - 14:03 | 324102 macfly
macfly's picture

Indeed, TPTB will hold on to power any and every way they can, and war is the ultimate 'do as I say' trick as Howard Zinn and many others have pointed out. Every one of us here would be committing treason just reading this, let alone commenting.

 

This is going to be hectic indeed.

Thu, 04/29/2010 - 17:56 | 324518 Alienated Serf
Alienated Serf's picture

spot on mac

Thu, 04/29/2010 - 12:31 | 323842 Sudden Debt
Sudden Debt's picture

ANOTHER GREAT INVESTMENT SHORT TERM:

There is almost no more paper pulp available to make paper. China bought almost all the pulp!

Expect paper prices to go through the roof soon!

 

Thu, 04/29/2010 - 12:36 | 323852 Bam_Man
Bam_Man's picture

And the Federal Reserve and Bank of England have cornered the market on green and black ink.

Thu, 04/29/2010 - 12:56 | 323884 AR15AU
AR15AU's picture

... don't forget red...!

Thu, 04/29/2010 - 12:52 | 323879 sushi
sushi's picture

China is reported to have gone all in. They entered a bid for the entire euro-zone. If accepted the deal could close as early as May 19th.

Thu, 04/29/2010 - 12:56 | 323886 HumbleServant
HumbleServant's picture

Interesting SD.

My company utilizes a lot of plastics and I was complaining to one of my suppliers the other day about the price increases.

He said that we haven't seen anything - printers in the paper industry have had a price increase each of the last three months.

I hand't thought about the possibility of China cornering the market.

Thu, 04/29/2010 - 13:08 | 323922 percolator
percolator's picture

SD, do you have any links to support your comment?

Thu, 04/29/2010 - 13:53 | 324058 Sudden Debt
Sudden Debt's picture

No links, this commes from my paper suppliers, and they are all saying the same. All the paper you buy now in Europe come out of the stocks.

Especially offeset paper is getting very scarce and almost impossible to get by. China's printing industry is one that is growing about 17 to 20% a year, and where they used to use bamboo for their paper, this was never the quality you want to print archive material on.

I have the same kind of warning from my  metalsuppliers who are all charging a price increase from 5 to 15% starting 1st of may

      F1 11.8% Inox

      F2 10.2% Copper

      F3 15.5% stainless steel

      F4  5.2% Zinc

And THIS IS NOTED IN DOLLAR! I mean, add another 5% because of a weak euro!

Worst thing is, we will not be able to charge this to our customers as we are still faced with declining margins for the last 2 years.

Thu, 04/29/2010 - 14:02 | 324098 FEDbuster
FEDbuster's picture

Long toilet paper, immediate delivery.

Thu, 04/29/2010 - 14:03 | 324101 Sudden Debt
Sudden Debt's picture

Pulp Prices:

http://www.foex.fi/

Thu, 04/29/2010 - 14:27 | 324150 Translational Lift
Translational Lift's picture

That should be interesting...buying paper from the Chinese to print more green-backs....

Thu, 04/29/2010 - 17:05 | 324432 Clampit
Clampit's picture

TL, cool moniker; one has to believe there are cyclic and collective inputs given all the lead-lag and flap forces. Sadly though, I don't see us landing soft enough to avoid the inevitable boom strike.

Thu, 04/29/2010 - 18:26 | 324577 Translational Lift
Translational Lift's picture

Unfortunately the jesus-nut is missing from this regime and all will be lost long before any boom-strike......or any chance of recovery....

;>)

Thu, 04/29/2010 - 12:34 | 323847 fUny1
fUny1's picture

There's going to be lots of Samba in South Africa this summer( technically winter) at the World Cup.

Then the world wide army boys will party hardy before they head into herd culling war.

That would be the plan of the bank and warfare model.

Except this time, I believe it's going to go via the Sci Fi route.

http://funy1.blogspot.com/2010/04/if-criminal-charges-are-brought-up.html

Laugh now, watch in amazement later :-)

Thu, 04/29/2010 - 12:38 | 323850 Mitchman
Mitchman's picture

A very good post.  But what happens to all of that export-driven Chinese growth when the dollar and euro depreciate against the yuan?  What are they going to do, sell houses to each other for a while like we did?  Do you think the Japanese are going to stand idly by while this goes on?  Remember, they have almost as much dollar denominated debt as the Chinese do.  And the Japanese are as oil-constrained as the Chinese.  I refuse to pay that part of my taxes that doesn't go to the military-industrial complex!

You may see a different alignment of economic interests if this happens.  And, hopefully, a different Administration in Washington that is not quite as focused on kicking our allies in the teeth.

Thu, 04/29/2010 - 13:06 | 323915 tmosley
tmosley's picture

A few problems with your argument:

1.  China hasn't been selling us houses.

2.  The demand coming from America has been the demand of someone passing off bad checks.  They don't need that kind of demand.  They only need demand from countries that make things that they can use.

China can retool for domestic consumption just as easily as the US did after WWII.  Government economists back then proposed that we continue producing ships and sinking them just to keep the economy going.  Can you imagine what would have happened to us if anyone had paid attention to them back then?

Thu, 04/29/2010 - 13:23 | 323971 Pure Evil
Pure Evil's picture

Why build ships just to sink them, doesn't sound very Green to me. We just build the ships, sail them through the Panama Canal to the other side of the country where they are dismantled, with the scrap steel then sent via rail lines to the steel mills, which then make new steel to build more ships. That we we could get a real factory going, I would think if we can do it with soda pop cans, plastic bottles, and newspapers, we could do it with ships.

Thu, 04/29/2010 - 13:33 | 324004 Mitchman
Mitchman's picture

How would you feel if we put Congress persons in them before we sunk them?  :-}

Thu, 04/29/2010 - 15:19 | 324269 kaiserhoff
kaiserhoff's picture

+1000 Sweet Jesus Mitchman,

I just choked on my Cabernet.  I'll live with it.

Carry on.

Thu, 04/29/2010 - 13:31 | 323986 Mitchman
Mitchman's picture

Thanks for your post.  Your points are well taken.  My point is that I have difficulty believeing that the Pacific Basin will replace the demand for Chinese exports represented by the US and Europe and that India and Japan will not likely (or gladly) be as stupid as we have been in allowing China to economically and militarily hegemonize its immediate sphere of influence.

While you are absolutely correct that tremendous pent-up consumer demand exists within China's borders, as we have seen time and again, that demand brings with it demands for political freedoms inconsistent with the wishes of the Party.

We may not be around to see it all play out.  Unfortunately we may just be around long enough to witness an unendurably painful denoument.

Thanks again for the comment.

Thu, 04/29/2010 - 13:25 | 323979 weinerdog43
weinerdog43's picture

Pray tell exactly who we are 'kicking in the teeth'?  We have bases all over the world and still act as 'the world's policeman' whether the world wants us or not. 

Thu, 04/29/2010 - 12:36 | 323851 yabs
yabs's picture

I think the party stops when oil reaches a certain level
In 2008 it was 150 dollars
with the economy so weak now i would say 100 dollars a barrel
is the psychological blow out
get to 100 and its all over

Thu, 04/29/2010 - 12:48 | 323868 Racer
Racer's picture

Petrol and diesel at all time highs in the UK now thanks to tax hikes

Thu, 04/29/2010 - 13:42 | 324031 aerojet
aerojet's picture

Not to underestimate the tax side of it, but does that really count? Taxes that are levied could conceivably be removed if the right political will exists.

Thu, 04/29/2010 - 14:13 | 324121 Bam_Man
Bam_Man's picture

Petrol and diesel at all time highs in the UK now thanks to tax hikes

Intentional Sterling devaluation through liberal use of QE may also be a factor ;p

Thu, 04/29/2010 - 13:06 | 323914 cougar_w
cougar_w's picture

Oil was $150/bbl for less than a day, but it was over $120/bbl for a longer while. And that was horrendous.

$100/bbl sustained for very long might prove lethal.

Thu, 04/29/2010 - 13:18 | 323952 crosey
crosey's picture

Yeppers.  Want to go in with me on a Vespa dealership?

Thu, 04/29/2010 - 13:41 | 324025 tmosley
tmosley's picture

lol, I came within two inches of buying one at the height of the gas crisis.

Luckily, the dealer wanted me to pay something outrageous like half up front, so I said nothing doing.  I bought silver instead.  I'm much happier with that.

Thu, 04/29/2010 - 13:50 | 324044 crosey
crosey's picture

You can't carry too much silver on a Vespa, for sure.

People watch or re-watch Roman Holiday and fall in love with Italy, Vespas, cafes, etc.  I was in Italy last fall, and the masses were NOT happy.  Even in the small towns.  A financial mess.

Americans fantasize about living like Europeans....just wait, you'll get your (austere) chance soon enough.  Shared misery coming up!

Thu, 04/29/2010 - 23:16 | 324881 Crime of the Century
Crime of the Century's picture

People watch or re-watch Roman Holiday and fall in love with Italy

Maybe they should be watching Gomorrah instead...

 

Thu, 04/29/2010 - 23:43 | 324912 Alienated Serf
Alienated Serf's picture

naples is the future of europe

Thu, 04/29/2010 - 13:44 | 324038 aerojet
aerojet's picture

How was it horrendous?  Toyota sold thousands more Prius cars than they otherwise would have and Smart was able to gain a foothold on US soil even with those fuck ugly excuses for automobiles they produce. 

Thu, 04/29/2010 - 14:05 | 324105 Mad Max
Mad Max's picture

The Prius is an abomination.  The life-cycle energy cost for a hybrid, with its batteries, electric motors, exotic magnets and heavy use of aluminum, is worse than for a comparable sized conventional gasoline car, and much, much worse than an equivalent compact diesel.  If the public tried to convert to hybrids in quantity it would create a shortage of many key materials for the batteries and motors.  With current technology the hybrid car is a dead end.

(Note, in some specialized uses like city buses, hybrid technology may make sense.)

Fri, 04/30/2010 - 03:07 | 325001 John_Coltrane
John_Coltrane's picture

So true, but like solar panels on your roof, it makes fools feel like they're "saving the environment" and "lowering their carbon footprint".

Thu, 04/29/2010 - 23:45 | 324916 Alienated Serf
Alienated Serf's picture

smart car is not any more fuel efficient then your run of the mill compact.  if you are a couple on a day trip, great.  if you live in a city where you can squeeze into tiny spots, great.  otherwise its a gimmick.

Thu, 04/29/2010 - 12:51 | 323859 Crab Cake
Crab Cake's picture

Need a song for the last dance?  I've always liked this one...

April 26, 1992 - Sublime

http://www.youtube.com/watch?v=z-L3D8vKBCM

Cuz everyone in the hood has had it up to here.  It's getting harder harder harder each and every year.

...

It's about coming up, and staying on top, and screaming 187 on a mother fucking cop!  It's not the paper, it's on the wall.  National guard, smoke from all around!

...

As long as I'm alive I'm gonna live illegal.

...

Let it burn, wanna let it burn,
wanna let it burn, wanna wanna let it burn.

(I'm feelin' Sad and Blue)

Riots on the streets of Miami,
oh, Riots on the streets of Chicago,
oh, on the streets of Long Beach,
mmm, and San Francisco (Boise Idaho),
Riots on the streets of Kansas City
(Salt Lake, Hunnington Beach, CA),
Tuscalusa Alabama (Arcada Compton Mischigan),
Cleveland Ohio,
Fountain Valley (Texas, Barstow - Let's do this every year),
Paramount, Victorville (Twice a Year),
Eugene OR, Eureka CA (Let it burn, let it burn),
Hesperia (Oh, ya let it burn, wont'cha wont'cha let it burn),
Santa Barbara, Nevada, (let it burn)
Phoenix Arizona,
San Diego, Lakeland Florida, (let it burn)
fuckin... 29 Palms (wontcha let it burn)

Some of you want to prepare, some want to run and hide.... Well I ain't gonna do it.  I'm not afraid.  I will be the sheep made wolf, a hunter in the night, and I will throw open the gates of hell on the criminals and their families.  Scorched earth, no quarter given or asked.

"It is better to die on your feet than live on your knees." -Emiliano Zapata

Thu, 04/29/2010 - 14:36 | 324170 duo
duo's picture

"Last dance with Mary Jane, one more time to kill the pain"

 

great song from the '90s (Tom Petty)

Thu, 04/29/2010 - 14:47 | 324196 Crab Cake
Crab Cake's picture

I hear ya man, let's spin it.

Last Dance With Mary Jane - Tom Petty

http://www.youtube.com/watch?v=L5pHM-o2_Dk

Thu, 04/29/2010 - 22:26 | 324833 duo
duo's picture

Deflation's creeping in and I don't wanna go broke agai----ian

Thu, 04/29/2010 - 23:48 | 324918 Alienated Serf
Alienated Serf's picture

personally, i would choose some heavy thrash hardcore.  or maiden, you just can't beat maiden.

Fri, 04/30/2010 - 04:35 | 325023 Rusty Shorts
Rusty Shorts's picture

 -

Thu, 04/29/2010 - 12:41 | 323860 seventree
seventree's picture

Most propaganda is not designed to fool the critical thinker, but only to give moral cowards an excuse not to think at all. -  Michael Rivero

Terrific quote. This is why it is so hard to talk to most people about these ideas. Not just because you are contradicting their belief system, but because you threaten to tear down their comfortable fortress against a scary world.

Thu, 04/29/2010 - 13:16 | 323943 Alienated Serf
Alienated Serf's picture

my friend (who works in finance, granted IT systems) and who should know better had a kid last week.  He gets mad when I bring up reality, so of course I say "You just had a kid, you really need to start caring." replied to with= "i saved plenty of money i am fine, why do i need to worry about deficits?"

wtf?

Thu, 04/29/2010 - 13:21 | 323963 crosey
crosey's picture

Your friend has reiterated to beliefs of 80% of the population.  Pretty sad when you're on the Titanic, to learn that it will sink.

Thu, 04/29/2010 - 13:29 | 323989 Alienated Serf
Alienated Serf's picture

crosey, i know he does.  but he isn't disconnected, he works at a major investment bank.  he pays attention, but is comopletely unable to think on his own.  its just very disheartening.  saem for so many others.  wall st. group think i guess.

Fri, 04/30/2010 - 03:34 | 325015 No More Bubbles
No More Bubbles's picture

but he isn't disconnected, he works at a major investment bank.

 

On the contrary.  Where he is employed actually depends on his being disconnected to succeed. Some of the dumbest people I know regarding financial matters are actually managing millions, sometimes hundreds of millions.  It boggles the mind.

Thu, 04/29/2010 - 17:23 | 324469 drwells
drwells's picture

Yep. Personally I believe humanity is doomed. Since I'm going to die anyway, I don't worry about it as much. If I had kids or other reasons to care about what comes after me...that would be painful.

Thu, 04/29/2010 - 13:49 | 324050 aerojet
aerojet's picture

Why should he worry about things that are not within his realm of ability to influence the outcome of?  You do the best you can, until that doesn't work anymore, then you come up with another plan.  Going against the tide will only drive you mad.

I gave up voting by the time I was 20 and I pretty much avoid all politics--the only winning move is not to play the game.  How much time each week do you spend thinking about this crap?

Thu, 04/29/2010 - 13:55 | 324063 Alienated Serf
Alienated Serf's picture

aero, obv he can not save the world.  can he manage his money carefully so that he doesn't end up broke?  He is all index funds and cash in savings, no inflation protection, no sense of the risk.  he can at least be dilligent and do what he can for himself.

and you know what, inmy book if you have a kid, you are obliged to give a shit and try, no matter how futile it is, and you are obliged to have a contigency plan.

you need to take a stand to protect your offspring.

 

Thu, 04/29/2010 - 14:21 | 324135 Lux Fiat
Lux Fiat's picture

Perhaps one person cannot save the world.  But if enough people decide to put up a fight, even in the face of horrendous odds, there is a chance for bettering the outcome.  There are no guarantees in this world, but I've always said that you get what you are willing to put up with.  It's a shame that so many are willing to settle for so little, both for themselves and their offspring.  People need to pull their collective heads out of the defeatist sand - the song's not over yet.

Thu, 04/29/2010 - 12:43 | 323862 primefool
primefool's picture

I disagree with much of this article although his paragraph on "conventional wisdom" was indeed poetic. If we get the type of complete breakdown of the world monetary system , and by extension world trade that he envisions - OK then look at the "assets" of the big economies. China has a huge , mostly poor , mostly rural population and will have a huge population of recently displaced people in the big cities ( people who migrated from rural to urban). China has a major deficit in fresh water , food and energy.

The US by contrast has a relative abundance of fresh water, food and can become self sufficient in energy if pushed.

I doubt there will be a complete global monetary collase of this type though - it is in no one's interest and new monetary arrangements ( ala Bretton Woods) are much more likely.

Thu, 04/29/2010 - 14:31 | 324158 velobabe
velobabe's picture

that article resonates with me every much so. i have been yelling this same thing. i had shit shale water my entire 30 years on my property. my neighbor let me draw surface water from his small creek and did a reverse septic tank storage and pumped that water up the hill to a 1200 gallon storage tank. my county laws made us provide enough water storage in case of a fire, and the fire trucks couldn't arrive in time. a lot of maintenance but at least clear hard water. my property was only 100 miles as the crow flies, from the head waters of the colorado river. all my neighbors and farmers having to redrill their pumps lower, just like the author says the great lakes district are doing and it is costing beaucoup electricity. water scarcity is the scariest scenario to me. people don't get that water just doesn't come from the tap.

Thu, 04/29/2010 - 14:34 | 324165 Alienated Serf
Alienated Serf's picture

umm yeah, vegas, Albuquerque, etc etc are gonna be ghostowns as the western water system of damned rivers silts up and drought dries.

where there is water, is where you need to be.

Thu, 04/29/2010 - 18:08 | 324540 velobabe
velobabe's picture

arizona people think there is a HUGE aquifer strategically located right under tucson and phoenix. no problem folks, develop all the ghost towns and golf courses (disclaimer i play but ride my bike to the course).

“silts up”, is another worry. like what powel has been doing and the winds just blow all that sand into the open water. we are really living beyond our means.

the city i guess, guarantee water expensive.

raw land, iffy if you got any in the west.

Thu, 04/29/2010 - 23:49 | 324921 Alienated Serf
Alienated Serf's picture

to the east my sister, to the east

Thu, 04/29/2010 - 12:43 | 323863 murray
murray's picture

Might anyone share their informed thoughts on the best region/location on Earth to store private gold in a self-storage box?

Thu, 04/29/2010 - 12:56 | 323885 nope-1004
nope-1004's picture

You're welcome to store it at my house.   ;-)

Thu, 04/29/2010 - 13:21 | 323966 crosey
crosey's picture

Yucca Mountain?

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