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Niall Ferguson: If The Obama Administration Listens To Paul Krugman It Would Lead To An Imminent Debt Crisis
In an interview with Bloomberg TV's Erik Shatzker, Niall Ferguson picks up where Reinhart and Rogoff leave off. The historian discusses the bond vigilantes, "Bond vigilantes are a bit like the people short selling investment banks a couple of years ago. You start with Bear Stearns and Lehman Brothers, you don't get to Goldman Sachs until quite late in the game. In a way the sovereign debtors of the western world are pretty much in that position today. And we are working down the list, starting with Greece, moving on to Spain and Portugal, the UK dodged the bullet by implementing some preemptive measures. Sooner or later the bond vigilantes will get to the US, I don't think it will be this year, but in the absence of any political will to address this problem, this is simply an inevitability." As to why it is inevitable, Ferguson observes the case of the UK which was the only one to manage to grow its way out of massive debt load: "Britain after 1815 had two big advantages, it had the only the industrial revolution at that point that was going on in the word and had the world's biggest empire. I don't see anyone in that happy position today." The outlook: "Is it going to be inflation or is it going to be default. Right now there is no sign of inflation. We have monetary contraction at an alarming rate, and zero inflation in terms of core CPI, so the option of inflating this debt away doesn't seem to be there right now. What you are left with is therefore default. And I think it is a fair bet that US will default at least on the unfunded liabilities of Social Security and Medicare at some point in the foreseeable future. What the Greeks discovered you are fine until you are not fine with the bond market and if you have a non-credible fiscal strategy of borrowing a $1 tillion a year for the rest of time, never ever again running a balanced budget, at some point the markets are going to get spooked, and I think that point is nearer than Paul Krugman believes. Nothing would spook the markets more than for Paul Krugman's advice to be accepted by the Obama administration. That might well be the trigger."
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Someone give P-Krug a megaphone right now!!!
Like Krugman, Ferguson's just another academic chatterbox with no skin in the game.
Wrong - Krugman is vieing for political appointment - Niall is clearly quite well off judging by his dress and appearance and has no problem calling Krugman out.
Niall is clearly quite well off judging by his dress and appearance
You really have no clue about the world these guys live in, do you? It has nothing to do with money -- they both have all they need. It's about influence and prestige: who's getting the most airtime, who's quoted most, who's going get to ride in George Soros' Gulfstream when he goes to Davos next year? This is what really counts. As for a political appointment, neither one of these attention whores could keep his mouth shut long enough to last a week in anyone's administration without tenure.
Ferguson stated that he met with Republican congressmen on the budget during his recent CNN interview. He's definitely looking for a top appointment in the next administration.
He even dropped his wife for Neocon intellectual Ayaan Hirsi Ali. He's positioned himself for the eventual right-wing coup.
Duh!
+1
The Neocons strike back. Now the future is clear-an enlarged police state along with a perpetual Middle East war. All social contracts will be dismantled while distracting the masses using techniques of class warfare.
These guys want empire-an Anglo-Jewish Rome…
I'm being serious!
That's the plan; but plans rarely work out.
Except for your statement of class warfare being used, the rest is by far the dumbest thing I have read today.
I agree with you, 4shzl, but please allow me to elaborate:
Both Rogoff and Ferguson belong to the Bretton Woods Committee (brettonwoods.org), the lobbyist group for the global ultra-rich. They are both carrying on the official spin, and thus will back all the latest official talking points to misdirect, mystify and obfuscate everything as much as conceivably possible.
What Niall fails to mention is that once society embraces fractional reserve lending & interest bearing accounts, it doesn't matter if a monetary system is underpinned by hard money (eg gold) or is pure fiat.
Once the inflationary die is cast, the roll-over/forward game must be kept rolling. Our current predicament is just a long culmination of kicking the can forward for around 300 years. (Since the inception of the BoE.) For three centuries, humanity has continually lucked out, first with the discovery/development of two vast new continents and then the utilization/optimization of fossil fuels (ie the "energy subsidy").
If we don't come up with some new shiny pony real fast, this fucker is gonna come down. The game either keeps going, or it stops. When it stops, no one comes out a winner.
Not BoE but Sveriges Riksbank ;)
{OT} Looks like the kickstand just gave out on the market, not that anyone here would be surprised.{/OT}
I commonly use the BoE as a reference point, not because it's the oldest CB, but because it was created just when the British empire really got going. Before 1697, including the 90 year interregnum after the defeat of the Armada, the Dutch & French were still contesting for global domination.
We've happily been rolling forward each successive layer of accumulated debt ever since. Even the major panics/depressions were temporary set-backs on an overall growth trajectory. But what we really, really need @ this point is some miracle to save humanity's collective bacon.
As a traditional anarcho/capitalist/optimist, I don't necessarily fall into peak oil doomerism. Recall that we are derived first from yeast, then from fish. We still have many genes that are either dormant or currently serving different functions. If science really got wild, I don't believe there is anything that could stop us creating all sorts of new & different "beings" to explore previously undiscovered/optimized portions of our globe. (Um, the 70% that is water.)
Right now, our existing moral code is a convenience (luxury) based on plenty. Give a starving, war torn populace a little time rooting around like animals, and we'll be surprised how many of these "universal truths" are rapidly discarded.
B9K9,
You and Mako are correct. It is after all jr. high math.
However, for those who hold things that will retain value such as arable farm land, water sources, gold, useable commodities the great crash/reset won't be back to zero it'll just be to a lower level than they previously enjoyed. They may then be able to parlay those holding which retain value into future opportunities as things rebuild and sort out.
Oh, please. Prices deflated by 50% in the US from 1800 to 1900, when there were free banks practicing fractional banking. So long as the reserve ratios are correct and respected, there is nothing wrong with fractional banking.
Of course, there was a series of bank panics in the 1800's and early 1900's, but that was more due to the greed and imprudent decisions made by individual banks, not a systemic problem.
+401K
Who is the "bond market," anyway, that will supposedly wreak vengeance on nations with overhanging debt? If central banks are the engines behind treasury sales, directly or indirectly, it seems plausbile to me that yields will stay low indefinitely. Who are the "vigilantes" that are so powerful as to be able to undo the combined policies of the US Treasury and the Fed?
Blah blah blah. Listen to Krugman and we have an imminent debt crisis, so listen to Niall instead and default on the debt, and not debt held by foreigners; let's default on the money we owe to our own people instead. What great options we have. Also, Benron has the infinite money cheat code so bond vigilantes are masochists, IMO.
I wonder if he entered the "blood code" at the beginning of the game...
Its just UP-UP-DN-DN-LEFT-RIGHT-LEFT-RIGHT-B-A-SELECT-START on any FED terminal and you get infinite resources. Someone discovered that cheat code in 1971, the rest is just a cover story.
Isn't that the code for
BUBBLE BOBBLE ???
Krugman relies solely upon syllogistic logic underpinned with faulty assumptions, like an imminent debt crisis now does not exist.
Like the GEICO "diddly do" phone ring tone. We'll just ignore the problem as it exists and assume that it will really indeed manifest itself if we ignore it some more, and if it happens, which it is anyhow and is thus unavoidable, then ya'll screwed up 'cause ya' didn't listen to and criticized me when you shouldn't have, becaue we should have changed it when we couldn't have anyway if you'd just ignored it in the first place and done something.
God I hate these people.
Beware the Nobel Laureates.
The people who decide the winners of the noble prize in economics are a bunch of commie keynesianist - so yes beware. PS. The norwegians aren't a lot better, since they decide who gets the peace prize and then for some reason totally unknown gave it to Obama...
Spelling correction "Obama" WarbamO
No, the correct spelling is 0bama.
If Big Ben decides to crush the bond vigilantes with his printing press wouldn't that have other repercussions? China, Russia, the UN, etc. are already trying to get rid of the dollar as the world's reserve currency, wouldn't this this just force other nations to finally say: "OK, that tears it! No more oil/manufactured goods for Monopoly money."?
Damned if he does, damned if he doesn't. Ben's balance sheet is almost entirely treasuries and agency MBS.
Almost entirely agency MBS - and we all know how "solid" those are. heh.
Can't the UST just default on all the debt held by the Fed? A sort of strategic default. Just a thought...
Of course they "can" in theory, but there is no way they would ever do it.
The best course of action IMHAO* - generous personal bankruptcy laws to go along with the ridiculous inflation. At least this would help to get consumers somewhat out of debt. Giving $trillions to people who don't really need it is folly. I don't think it is a complete coincidence that the tightening of bankruptcy laws happened shortly before the banking crisis (but perhaps that was just because the banksters saw the writing on the wall?)
*IMHAO - in my humble amateur opinion.
They can, but in some way or another the shortfall would have to be made up by the US citizenry (taxes, inflation, etc.), which is the same thing as making the UST payments anyway. It's just a question of whether the money comes from groups A and B or groups B and C.
we don't have options, we have owners. read your Birth Certificate lately?
Gee whiz, Niall is supposedly some big shot Harvard guy who's supposed to have some semblance of knowledge of economics, so why does he sound like a Foxtard, NPR propagandist or Tea Bagger on those "unfunded liabilities of Social Security"?
Don't tell me Nially Wiley doesn't understand the SS is a pay-ahead tax, prefunded until 2044, or thereabouts? He can't really be that stupid can he????
Hahaha.
Social Security is not prefunded, and it contains nothing but the government's promise to pay via taxation. It's financed on a cash flow basis, and any cash flow excesses are invested in unrelated government expenditures that provide no returns for retirees. It's 100% unfunded.
That system can hold up if over time money in equals money out, but that's nowhere near the case in the SS's future.
US politicians and a balanced budget reflecting needed fiscal restraint? That is laughable. The US will print and borrow until it can't. That is the fiat way.
You can lead a horse to water but you can't make him drink.
I recommend Peter Tosh's "Bablylon Queendom" for insight on these matters.
The funny thing about Krugs is that he completely and honestly believes in what he is saying and thinks that it should be done out in the light of day - Completely oblivious that to do so would expose the current market structure as the complete and utter rigged fraud that it is while drawing more and more people/victims into its eventual blast radius.
*cough*Aspie*cough*
He won a Nobel Prize though so that makes him credible right? Surely the Nobel committee only hands out awards to those who deserve it...right?
They are the primary buffoons.
What he won for is about as far removed from the current situation as you can get.
If Krugz were a restaurant janitor his solution to a stopped up toilet would be to first go out into the middle of the restaurant to announce that through careful analysis he has discovered that the reason why the toilet won't flush is due to it being clogged with shit and then demand the patrons help him dislodge it by eating really fast and taking a shit on top of the already existing shit clog hoping the weight will push the clog through.
fucking brilliant analogy - well put sir, well put
It may very well be that he had strict toilet training.
http://www.last.fm/music/Erasure/_/Ship+of+Fools
Nobel prizes are awarded for the destruction of capitalism.
Personally, I think the funniest thing about Krugman are his ears. His economic viewpoint is right up there, though.
My vote would be for this pic.
Ha..ha..
He still believes that economists have something of value to speak of..
He's had this tune for a while. It's simple facts. There is no way to beat the math. It's impossible to grow out, look at the CBO numbers. they have a ludicrously high growth rate (for the US) plugged in and we still can't climb out. It's default or hyper inflation. Sure we can kick the can for a while, but sooner or later the the can will be to big to kick.
... or you get to the end of the road
"Austerity" is the new G20 code word for "Default" of the soft kind, where any kind of promised spending (social security, medicare, education and equivalents) gets legislated further and further down by reducing benefits paid out through the usual tricks like indexing, raised age thresholds, phase ins and ceilings. It will become a kind of religion justified by the need for the middle class to sacrifice. Meanwhile wealth will be transferred to bondholders, also as a religious form of absolution for debts incurred. This is the exact mirror of the rentier system during Europe under aristocracy and divine monarchy.
The latest G20 Toronto cry for "Austerity" was just a trial balloon to gauge the reaction of the population back home. It worked. Form now on it's "No Riot? No Money!" as governments find ways to legislate reductions in all manner of entitlement programs, benefits and promised payments that they will gradually default on.
"Austerity" is the new G20 code word for "Default" of the soft kind, where any kind of promised spending (social security, medicare, education and equivalents) gets legislated further and further down by reducing benefits paid out through the usual tricks like indexing, raised age thresholds, phase ins and ceilings.
Exactly right.
This is the exact mirror of the rentier system during Europe under aristocracy and divine monarchy.
But with very significant differences. Now the lumpen proletariat are provided a vicarious existence (Second Life, Facebook, etc. etc.) which allows them to participate in the narcissism of the ruling classes and be seduced by ideology of their oppressors. It's a brilliant, diabolical arrangement.
[Golf clap for the plutocrats]
Agreed and well said...
"And I think it is a fair debt that US will default at least on the unfunded liabilities of Social Security and Medicare at some point in the foreseeable future."
And this makes sense. The US "defaulted" in the 1930s by suspending redemption of US dollars in gold, but *only to its own citizens*. The rest of the world would not have tolerated the same treatment. Because the US citizens could be compelled to use the now fiat money by legal tender laws, it could be made to stick on them.
This time, it stands to reason that if the US government cannot pay everything that it owes, and it wants to continue to have access to international funding, it should stiff the people who cannot avoid continuing to deal with it.
"What the Greeks discovered you are fine until you are not fine..."
Krugman needs to listen to Mike Tyson. "Everybody's got plans...until they get hit."
Keynesian (borrow, inflate and spend) corollary: fiat money works until it stops working, then the value of the currency falls to the value of the paper it is printed on. The only exception to this rule is if the currency has some novelty value on eBay, then it is worth a few cents plus $3.99 for postage and handling.
Just search eBay for "zimbabwe trillion dollar" for today's market report on those sovereign debt instruments.
I am so sick of you know-nothings bashing "Keynesiasm". Why don't you visit "Infectious Greed" (the link is on the left), and look up Keynes' open letter to Roosevelt from 1933. He expressly told FDR that inflating the economy was a bad idea. You, and so many others here, have ZERO idea of what Keynes wrote, and what he stood for.
Your complaint is both true and false.
The trouble in not really the Keynes bashers, it is the so-called Keynesians themselves. Few of them are actually following Keynes' theories, consequently Keynesianism has become synonymous with perpetual government deficits and ever-growing government spending.
For instance take Krugman. He is not a Keynesian. He simply borrows a few of Keynes lessons to justify his personal policy preferences -- a large redistributive government. If he were actually a Keynesian, he would have a long history of advocating for spending decreases in good times; he would oppose government unions and strong civil service protections because flexibility is essential for Keynesianism; and he would push for stimulus spending aimed at the private sector as that was the goal of Keynes -- the private sector driven economic rebound.
I'm well aware of what Keynes believed, and that he made the case for austerity far more forcefully than his acolytes did.
But they were his followers, and they are Keynesians just as much as those who misconstrued Friedman's arguments for their policy preferences are Friedmanites.
Inflation, default, or...........
war?
Do the people who preach war as economic salvation not realize we are already in 2 wars?
And it's all related, no? If we know our system of credit expansion can only last for so long, and if the war is inevitable, I guess we did the right thing by securing our oil before the house of cards comes down. Is this what it feels like to root for the Yankees?
Is our oil secure now? I doubt it.
No... you are right... not secure. But more secure than if we didn't have "control" over Iraq. I'm not for any of this... just trying to get my arms around why we do what we do. I should be putting the "we's" in quotes.
Well, it could be, if Will Smith didn't have his knickers in a knot over Canada's oil sands. Oh well, we'll just sell it to China.
War on Poverty
War on Drugs
War on Terrorism
War in Afghanistan
War into Pakistan
War (black ops) into any country (against Al-Queda)
War in Iraq
Mere Green revolution
War on Homeless(ness) (announcd the other day)
Healthcare revolution (pending, gave way to health insurance regulation)
War against cyber warfare
Those just off the top....
Of course. But two wars clearly aren't doing it. So, the apparent thinking is that we've got to keep at it until the market starts improving.
No, Hansel, they seriously don't (and I would qualify that to say at least three overt wars, Iraq, Afghanistan, and Pakistan, with a multitude of covert wartime operations going on in Iran, Somilia - and elsewhere in Africa, etc.).
I have mentioned the numerous wars now going on whenever one of the American dunderheads makes mention of war as a future economic necessity, and they respond with their zombie looks.....
D. Inflation then War
E. Inflation, then default, then war
F. Default then War
H. War
I'm going to go with F, though F and H are kind of the same.
...precisely... the only thing backing (fiat) currency is power. Power = military might. It trumps everything...
Niall is basically a necrophiliac who suddenly woke up to the fact that the government would default or hyperinflate... as if he came up with it.
How come when an Austrian economist says something like that - in 2008 - he's called a lunatic, but when a Harvard guy who recently abandoned his wife says it, he's a thought leader?
If they're going to default on SS and Medicare, then they'd damn well better dismantle the rest of the government in the process. Actually, that's what will happen anyway when they default on those programs.
It'll be chaos.
Niall, this motherfucker has three children too, not only an abandoned wife. He talks the Bilderberg book where he has been twice. Another fucking elitist, nothing else.
+1
Divorce and new wife very expensive-must make sure inflated paper assets hold value by prolonging the illusion that US can keep AAA rating..
The Austrians will get no run in the MSM because the whole premise is gov is a net negative on the economy, and the MSM is firmly in the govs corner. This is why Krugman and others get play. Imagine Jabba the Hutt (AKA Larry Summers), naturally he is going to like someone who tells him that he looks sexy over someone who calls him a disgusting slob. The Keynesians appeal to the gov and their lackeys because the Keynesians tell them that they are in effect God, and that wasteful spending is the key to infinite eternal prosperity.
As far as a default sure they will default on SS and Medicare, but the system won't end there. Why go through all the hassle of building a police state if your not going to suppress the people? After all need those stimulus jobs in the military and law enforcement...
Austrians are receiving unusual play from the MSM. That's what's disconcerting to me. The establishment really don't understand Austrian econ, but they bring people on, and politicians are starting to be influenced by the increasing popularity.
Austrian economics is in effect a revolutionary ideology. Governments can swap to laissez-faire (and thereby become largely irrelevant, as is proper), but the transition will likely be chaotic.
The politicians will do anything possible to arrest the collapse. Paradoxically, every action that they take hastens the crack-up. Every injection of stimulus brings the ultimate day of reckoning closer, at this point.
I actually like some of Ferguson's books, but he's ultimately a second-hander, looter, and panderer to power.
"...but he's ultimately a second-hander, looter, and panderer to power."
Apostate,
Apparently Ferguson has got it all figured out, intending to ensure his future well being by acquiring wealth en masse.
Of course, there have only been 3 documented ways to do this in our history:
1.) You strategically "steal" from the rich
2.) You systematically "exploit" the masses.
3.) Hybrid approach...combination of #1 and #2 by establishlishing monopolistic control via barriers to entry, thereby sticking your tentacles in the rich, the poor, and everybody else (see Gates, Bill)
I see any expose such as an increase of people like Tom Woods getting on TV is two fold. One ratings, it's different and speaks to people. Two, as the MSMs machine has done it's damnedest to label fascist such as George W. Bush as free market, that when the system does break they and resume the chant that the breakdown was caused by a free market and that more government control is needed. As the next leg down is 100% backed into the cake a scape goat will be needed. The hatred of the people can be focused, but a scapegoat is needed to sacrifice to the ire of the masses.
I do not see politicians being heavily influenced by the Austrians, however as a group we are a loud minority. So when politically expedient they will toss a bone. For the best example about how they really feel towards us look at the audit the Fed campaign. They will vote for it when politically expedient, and then drop it when it is not.
I have not read his book, but I have listened to a few lectures so I cannot comment on his politics. But anyone who looks at the facts as presented know that the system as is will die. It's as simple as being able to predict that the sun will rise tomorrow. Debts that cannot be paid will not be paid.
There's also Hayek's raised profile. Even that's watered-down Austrianism, however.
They're still looking for that scapegoat. Maybe it'll be an air war with the Mexican cartels.
It helps the Austrian position that the vast majority of the country opposed the bailouts, while the entire economics establishment favored them.
Now that the stimuli have been an obvious failure, the rulers are ambling to save face. The current consensus appears to be "Austerity later - but we need one more teeny tiny stimulus - puleeeeez!" Everything that they've worked for could easily evaporate once the US government loses access to most of the credit markets.
None of them have a game plan. It's all ad hoc.
I think that's exactly what's going to happen, chaos. Then political revolution. The PhD's are arguing about the best way to stuff 10 lbs. of shit in an 8 lb. bag. They think they have formulas to accomplish this. But the mere mortals who actually work for a living know they offer nothing but more disaster.
This is a complete misrepresentation of Keynesian economics, which is basically what PK espouses. The problem with following Keynes's (and Krugman's) prescription is not that governments engage in deficit spending to fight off recessions, but that they do not then turn around and rebalance when times are flush.
Of course, I'm holding cash, so from a purely selfish point of view -- which is what today's financial landscape sems to be all about -- I really like Niall's approach. Throw the economy into a crushing depression. Those like me who are holding cash will be positioned to scarf up the spoils at bargain prices.
Go Niall!
"The outlook: "Is it going to be inflation or is it going to be default. Right now there is no sign of inflation. We have monetary contraction at an alarming rate, and zero inflation in terms of core CPI, so the option of inflating this debt away doesn't seem to be there right now. What you are left with is therefore default."
Well put.
But it will be war, without a doubt. The goal of which will be commodities acquisition in the name of national security. Indeed, the final chapter.
*sigh* Yup. Everyday looks more and more like "3 Days of the Condor" scenario. Damn.
OH-OH Paul "Krueger"man back to spook Mr Market.
"One, two,Krugerman's coming for you.
Three, four, better lock your door.
Five, six, grab your crucifix.
Seven, eight, gonna stay up late.
Nine, ten, never sleep again.
One, two Krugerman's coming for you
three, four better lock your door
five, six grab your crucifix
seven, eight gonna stay up late
nine, ten he's back again."
Which would be more entertaining? Default or Hyperfinflation? Is the end result really all that much different for either?
Vastly different. In a default, bond holders get hosed. In hyperinflation, bond holders are made whole but ordinary people get hosed.
Guess which one is going to happen?
Well being quite ordinary myself I would hope for a default...it would be most entertaining to see the bond vigilantes lose it before they LOSE IT!
Hi Ferguson, what about military spending?
I'm not going to work to 70 in order to support a US military who's main mandate is to protect the interest of the jobs outsourcing MNCs.
New rule - Enlist in the military if you are over 70. If you come back, you get social security. The teens can play with their DSx
Yes you are. If you're lucky enough to keep your job...
Exactly so! If Ferguson were truly an economist, not simply yet another shill for the ultra-rich, he would mention that 95% of the US economy (as in GDP) is made up of the fantasy finance sector and war spending.
Next he would mention that only around 11% to 13% of the workforce are employed in those two categories. Ergo, 11% to 13% responsible for 95% of the US "economy"?
Right, there is NO economy. These are not productive, but counterproductive workers who extract, and do not add to an actual economy, were one to exist.
Today, we still have some commerce.....but no economy.
Ferguson is a historian, not an economist, and he constantly makes that point clear.
contingent liabilities such as social security and medicare are not "financial debt" and therefore one does not "default" on them. Rather, they are promises which can not and will not be kept. One reason the bond market is not "freaking out" over these contingent liabilities is because it recognizes that they are not legally binding and will never be fulfilled. Now, if you or anyone in your family is planning on receiving those benefits beyond say 2012, then you should be "freaking out"
What happens when said people relying on those start to really freak out?
They are old and sick by definition.
They are not promises that can't be kept, they are a bullshit Ponzi sold to the masses. They are a massive theft. The payers of SS and Medicare tax have had their contributions stolen. Since we all know it is going to default, all people who have no hope of receiving any of the money in benefits should be refunded their contributions. Those collecting now, should have the amount they contributed minus benefits collected to date. Those who collect (disability) without ever having paid, should be rolled over into some type of "welfare" program. I am sick of this crap. I have paid a goodly proportion into this, I want my money back. Now.
Amen,
Let Bernake use the next QE session to buy out the SS fund and return the proceeds to the payees to roll in a 401k and then tell everybody else they are on their own. Put poverty cases into the general welfare fund.
I'll take mine in cash, no 401K bs for me. I paid them cash, I want cash back to use any way I want. It's not their money, it is mine, I can do what I want with it.
Honorable viewpoint!
Short on pragmatic thinking, though.
Exactly what you write about our social security and medicare being stolen I wrote in an email to Krugman to Krugman in 2006. Needless to say, my email was ignored. Even at that time it was obvious that someone was going to get their hands on that. Any form of wealth held by the middle class that has not already depreciated will be grabbed. I haven't heard much on this lately, but it seems clear that they will make a grab for 401k money as well as confiscate gold.
contingent liabilities such as social security and medicare are not "financial debt" and therefore one does not "default" on them. Rather, they are promises which can not and will not be kept.
Amen.
We need to make sure the Democrats don't fix the economy. If they are successful, it will be a long time before power shifts back to the Republicans. I can't understand why everyone thinks Bush did such damage to our party, but apparently he did.
Right now, the best strategy to ensure Obama-failure is to convince everyone that debts and deficits are the scariest monsters in the closet. Since both have exploded in recent years, it is very easy to convince the ordinary comatose American that debts/deficits need to be reigned in, now.
If we do so - right now - we will have a massive deflationary buzzsaw unleashed across this country that will chop every asset class in half, gold included. Hopefully, this happens; nothing clears out the incumbents like a depression.
And that's what we secretly want, right? If the black Democrat from Kenya actually lands this country safely away the cliff, it will make the Republican party look ineffective and incompetent, especially after Bush. And none of us want that!
I'd rather go through a depression and wide-spread financial chaos than to permanently loose this country to the Democrats, especially a black one. Undeniably, debts/deficits are a problem, but let's convince everyone that those are the scariest monsters to be tackled, now.
This is the surest way to make the last year of the Obama presidency worse than the last year of the Bush presidency. Revenge will be so sweet....
Where are the sacarsm off codes?
Not sure why his color matters as folks of every walk of life have had their turn making this mess...
It is just part of the story. The country needs to stay evenly split between those who blame everything on the Dems and those who blame everything on Republicans. It's all mythology. I like this quote to describe what we have:
"The smart way to keep people passive and obedient is
to strictly limit the spectrum of acceptable opinion,
but allow very lively debate within that spectrum."
-Noam Chomsky
Trust me, color does matter.
Especially among large groups of backwards conservative Repugnicants that comprise the despicable, dirty underbelly of this country.
..ummm... perhaps if you read a good book... Shakespeare for perspective and clarity... best of luck...
I won't agree or disagree with you there, but the majority of those responsible for our problems are not black. I'm no apologist, I just don't see the point in bringing it up. If you are run over by a blue car or red car doesen't matter when you are in the morgue dead.
Trust me, color does matter.
Of course it does -- to someone whose entire stock and trade consists of red herrings.
Color me bored...
Turning this into a story with the R's on one side and D's on the other creates cover for the criminals. That is all you are doing here.
Wrong!
That's not what I'm doing; that's what this entire country is doing.
No. You are writing a political narrative with an economic story arch. The story arch is fine, the narrative is fiction. Your blinders make you just as big a part of the problem as the Republicans who you villify.
Don't get me wrong... the Republicans have their own useless and wrong narrative.
Well put kridkrid!
This fellow is clearly not a Zero Hedge traditionalist (or convert)...those of us who realize that the entire political class is the problem.
And to perpetuate rascism as the attempt at corroborating a point is just poor form and an obvious sign of intellectual weakness.
Once they get to Washington Democrats and Republicans are the same. They're both owned by their benefactors. They are all egotistical sociopaths (like the wall st guys) whose greatest danger is the fact they truly believe they're smart.
Who cares that Will Smith is black? It's that he's finishing the job Bush started with destroying freedom. Where in the Constitution does it say the President can appoint various "czars"? GWB started it with DHS, and that arrogant prig Ashcroft, and Will is playing the same game - more government, more control, less freedom. A pox on both of them.
"black democrat from Kenya" Afraid to use the n-word to communicate your racism?
Math:
Republicans = Democrats + error term
The error term is small and can be assumed away for practical purposes.
But of course you Daily Kos types think you're fighting the good fight, because Dems are secretly anti-war, anti-bailout, pro-civil liberties or whatever.
Picking on Krugman's economic theory is going to be more popular than ice cream during this next phase of what will be the collapse of this age.
As the ultimate goal is to burn the house down - Krugman's recomendations will be implemented.
Burn down the house and replace it with what? And whose goal?
Ans to both = NWO.
You cannot have a NWO with a super power in it.
This entire orchestrated collapse is in pursuit of that goal and is simply an extension of 50+ years of policy.
No. I respectfully think you're wrong. The quickest way to burn the house down is to reign-in all spending on the eve of a massive depression. That will burn the house down, and it will do it immediately.
Debts/deficits will certainly topple the dominos, but there are many, many, many dominos to fall before those dominos fall against the last and largest one standing, the United States.
We need to get Obama out of the White House immediately, because none of us want a black Democrat with a Jesus-complex solving our country's problems. The quickest way to do so is to immediately rip the starter-chord on the deflationary buzzsaw and begin hacking away at our country. Hopefully this will lead to a massive depression right before the 2012 campaigns begin.
Palin/Jesus 2012
Come on! He's only HALF black!
Red Neck, it appears you are at the WRONG website.
You may want to go back to Daily KOS or Huffington Post to satisfy yourself.
All politicians are the problem, here, not just the Democrats.
Never listen to anyone regardless of their piece of paper that has never held an actual job in the real world. If they have not worked a summer job of labor as a teen or college years to pay their own way they are not worth listening to especially if they come from a life of privilege. (Of course there are mild exceptions). Based on the use of actual logic in this community I would assume the majority here have done so and are familiar with how important small business is to the global economy especially here in the U.S.
If you do a run down on most clowns running political policy in this nation you would see the majority never did an honest days work and their contribution is usually the regurgitation of outdated texts and theory.
Man, I remember working as a construction laborer each summer during college. Worked all day in the sun, got off and picked up some beers, headed over to my girl friend's house, took a shower and got off again. (And sometimes again - ah, to be young once more ...)
Yeah I did to for 2 years. Sure does make you appreciate that money you are actually earning and also allows for us to understand that there is no such thing as free money in this world. All that money Wall Street has been paying themselves is stolen producitivity from hard working citizens throughout the entire nation.
entire world
"If you do a run down on most clowns running political policy in this nation you would see the majority never did an honest days work ..."
And if you check on their membership and organization affiliations, you will also find that they belong to either one of the three following groups: the Bretton Woods Committee (brettonwoods.org), the Peterson Institute, or the Group of Thirty (group30.org).
What "Administration"? More like a dog and pony show.
Don't worry, Obama plan of paying over $1 million for each solar job will get the economy going. The government has unlimited funds. How cool.
This is only a hunch, but I have a feeling that Fan and Fred are another birdie to watch here. For all the brave talk at present about how "the GSEs are and always were really public liabilities, never mind what the paperwork says" it seems that the US government has not fully closed the door on pulling a Dubai World completely-absolutely-not-a-sovereign default ("can't you read what it says, right there on the front page?") at some point in the future - and I suspect that this isn't just an unintended consequence of keeping them off the national debt figures, it's partly deliberate. In that connection, I think this outraged reaction to a proposal to load the Fed's MBS junkpile on Fannie and Freddie may be missing the unstated and unstatable punchline.
Hmmmm... yes, Niall, so we're screwed if we do and screwed if we don't. "We" being the people who actually labor to produce the wealth that the "bond vigilantes", hedge fund managers, day traders, and investment bankers that you so breathlessly adore angle and scheme to skim off for themselves.
But that was always the game anyway, right Niall? The underclass labors and the overclass expropriates? Your problem with Krugman is that his prescription actually throws a few crumbs to people who have been ripped off for everything they built. Then got kicked to the curb when someone in Japan, then Korea, then China, and next Lesotho were desperate enogh to do it for less. Throwing crumbs to the unworthy is against the rules of the game.
Of course, the austerity that you pretend is the prescription for our economic ills is actually the road to depression, which will crush the working class completely, but, hey, that's what it's all about, right? Game over! Your boys won!
$700 billion for investment banks and we're "saving the economy". $700 billion to put ordinary people to work and it's a "crisis" -- a crisis you are working hard to avoid having repeated. You needn't worry, Niall. Your class learned long ago that the best return on investment is always in politicians. You can count on them to do the "right thing" when the chips are down.
Well, assuming enough states are still using those paperless voting machines. Which I imagine that they are, given that the present financial situation prevents most of them from upgrading to something that actually has a chance of producing a fair election.
Hello, you have reached BigBen's voicemail as I am busy trying to keep the markets in the green. Love and money bitches.
Ferguson made some points that I agree with:
1) The administrations blatant disregard for fiscal restraint in the face of ever increasing debt sales, vulnerable to rate hypersensitivity.
2) The President's lack of future fiscal restraint, and the inability of the CBO to motivate congress.
3) Forced cutting of benefits. SS will be first.
4) The tendancy of the bond markets to violently change direction with the loss in trust.
Most importantly is the sense that the US economy has been backed into a corner.
Overall, due to failed policies and the misuse of investment, we have essentually created momentum in negative growth.
Mark Beck
I know I simpleminded and ignorant but TPTB had to see at least some of this coming. Why no investment in alternative energy? Anyone remember the '70s'? The "engergy crisis" -- remember that? I mean, all of these trillions of dollars thrown around and very little of it seems to go to people who might be able to invent or develop things that might avert the mess that we'll soon be in. Does anyone find it simply obscene the amounts of money financial people make, while a scientist, a person that has to spend ten years to become a ph.d might be lucky to start at 50k and dreams of being a proffessor years and years later, topping out at 90k? Ok I've rambled enough.
No. It is not obscene. The market for tits and rims dwarfs your alternative energy sector.
I think this is a bit too generous. Isn't it reasonably clear that if and when a debt crisis emerges, Krugman will shift in a smooth and timely fashion from calling for larger deficits to calling for default in the same self-righteous tone?
He'll cry out that markets are being irrational and that we need to "reign in speculators." When the shit hits the fan, that will be his contention all along, that we were subject to rapacious market forces.
Anyone willing to start a Neo Pol Pot movement that smokes out anyone who earns more than $250 000 and kill 'em with a garden spade? ...... didn't think so... Unfortunately when it's time to dispose of those who make less than $250 000 TPTB won't have too many reservations about it for they have the means to make it look like whatever they want it to look like..nudge nudge...wink wink..
The following stats are what make me doubt the deficit hawks:
$293.7 billion -- 1950 USA gdp
$257 billion -- 1950 USA national debt
1950 debt/gdp ratio: .88
$14,623 billion -- 2010 USA gdp (projected)
$13,154 billion -- 2010 USA national debt
2010 debt/gdp ratio: .90
We all know what happened to the economcy after 1950. Why can't the same thing happen today?
What's really interesting about these stats is that both our debt and our GDB are about 5000% larger after 60 years. Do you know anyone who is still carping that the 1950 debt is going to sink us, and that the dow is still in a 1950 bear market rally?
sources:
http://130.94.230.21/debt_history.htm
http://www.usgovernmentspending.com/charts
In 1950, the US was still paying for the war effort, and the US economy was based on a relatively untouched industrial base. Europe and Asia, you may recall, were still digging out from the rubble.
Today, thanks to container ships, fibre optics, and the net, know how, skill, and goods are easily transferred. The only way to ensure prosperity is brains, and given the education system in the US (and Canada), I'm not sure we're going to have sustained success in that area.
The simple answer is;
Debt to GDP is not an effective measure of a country's ability to repay debt. Nor does it speak towards the governments effective use of capital when incurring debts. Also, the FED's greed essentially has put a tax on savings and production.
A few points:
GDP does not represent real growth when exposed to inefficient stimulus. Nor does it indicate the true health of the tax base (mean wages).
Net tax revenue is what is used to pay down debt not GDP.
There is a limited market for sovereign debt. High deficits will eventually increase the cost of credit.
Large debt imposes interest costs which hinder growth.
Instead of meaningful investment, tax proceedes were pulled ahead in order to pay for non-productive bad debt to bail out insolvent banks.
Most disturbing is that the government long term obligations are best represented through accural accounting, when we essentially operate on a cash basis. This severly under reports our real financial obligations.
Debt to GDP does not address this imbalance.
Mark Beck
Not so fast, Aaronb17...
The difference between 1950 and today lies in the demographic make-up (namely, age) of the population. In 1950, the future contained many years (a long investment horizon) for the majority of the populace, and it contained the American dream of making your future for and by yourself.
Today, the majority of the populace is nearing retirement and at the point at which they "check out" of the game with ever more frequency. Such dynamic changes the expectations of investment and spending, and creates a larger drag on potential, future economic momentum.
In any event, a comparison of the time periods fails to evaluate the meaning of the context involved.
Ferguson is not an economist (of any stripe), but a misplaced sycophantic historian who effusively documented the history of the Rothschilds over a decade ago. THAT'S how he earned his 'stripes'.
And no doubt, he is angling for a political appointment as well. Thoroughly coloring within the lines, he is.
Ferguson is right. Anyone who thinks that Medicare, Medicaid, Food Stamps, Social Security etc. will continue without being cut has been reading too much Krugman, Keynes and listening to Uncle Joe Stiglitz. Try reading Rogoff's book "It's different this time". Just finished it, and the point of the book among others is that the U.S. will not escape its debt problems. Of course if you don't think so load up on 30 year US bonds and hold to maturity. Good luck to ya.
It gets tiresome to constantly remind people like you that we can reduce the size of the military and stop waging wars before we decide to sock it to the little folks, the hoi poloi, the great unwashed, the lumpen proletariat, those people, etc. It's really astonishing how many crazy wacko fanatics there are in the US. A veritable insane asylum.
Can but won't.
The war in Afghanistan is now the longest in our nation's history and is supported unquestioningly by both Democrats and Republicans. Calls for pulling out are few and far between and subject to extreme condemnation, like the putdowns of Michael Steele from both sides of the aisle.
Calls for austerity are much more prominent and will be realized far before we stop funding stupid wars.
It's interesting to hear about lettin the air of the ole folks balloon. Problem is most of them there ole folks have sons and daughters who are not going to be terribly pleased to have to another set of plates at their table. Now add a bundle of grandchildren and you know what you're going to get--a lot of dead politicians. Milestones
Britain in 1815 ?????
what the ??????????
Not that this administration would think of it, but a massive spending program on infrastructure repair and spending could be very beneficial and leave something productive in its wake. However, it needs to be 'paid for' by cutting an identical massive amount of government salaries. And a freeze on government hiring for 5 years.
As far as default on SS and medicare being in the cards; its already started when there have been no cost of living increases in the last two years (but salaries of Senators and Congresspeople went up each of those years--and high level government salaries have been skyrocketing in numbers.)
I think we need a freeze on the federal debt ceiling for several years--and members in congress who will have the balls to honor it!