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The Fed Cannot Move Without a Crisis… And One is Coming

Phoenix Capital Research's picture




 

Well the Fed disappointed as I stated it would. How anyone could be surprised by this is beyond me. The Fed was admitting that the consequences of QE rendered it less “attractive” as an option as far back as May 2011.

 

 

Moreover, the last six months have shown the Fed to be relying heavily on verbal intervention rather than direct monetary intervention. Every FOMC meeting (and any time the market takes a dive) some Fed official steps forward and promises that the Fed stands ready to help if needed.

 

The reasons for this are three fold:

 

1)  

Why bother with monetary intervention when you can get the same effect from verbal intervention?

2)  

The Fed is too politically toxic now to simply unveil a massive new monetary scheme without a Crisis hitting first.

3)  

The Fed is well aware of the consequences of QE (higher food and gas prices) and while it focuses on CPI as the measure of inflation, the political pressure engendered by higher costs of living are certainly on the Fed’s radar.

 

In plain terms, the bar for more QE is set much, much higher than the vast majority of analysts realize. The reason is that the Fed can no longer simply prime up the printing presses if the economy takes a dip.

 

We’ve seen this clearly in the last two Fed FOMC statements, in which the Fed downgraded its view of the US economy to posting “modest growth” (Fed speak for next to none) and then offered a “highly accommodative stance,” (Fed speak for “we’re out of ideas but can always hit the ‘print’ button”) as way of dealing with this.

 

Let’s cut the BS here. The Fed has maintained a more than highly accommodative stance for three years now and U-16 unemployment, food stamp usage, home prices, and virtually every other economic metric indicate that they’ve done little to boost the US economy in any meaningful way. QE has and always will be about boosting asset prices in the hope that the Fed can stimulate a recovery by getting the S&P 500 to some level.

 

The only problem with this is that people don’t engage in financial speculation to pay their bills. Incomes have and always will be the single most important metric for gauging consumer strength. And as the below chart from Morgan Stanley shows, the Fed’s policies of the last few years have done nothing to boost incomes (unless you work on Wall Street).

 

 

This chart goes a long way towards explaining the current political environment in which the Fed is about as popular as the bubonic plague. If you read headlines stating “Fed Gave Trillions to Banks” and you’ve been laid off and are living off food stamps, your blood pressure might tend to rise.

 

And you might tend to vote based on that.

 

Folks, the reality is that the Fed’s hands are tied. That’s why they keep issuing these innocuous policies (keeping interest rates low until 5056 or some insane future date) without actually doing anything. They know that additional easing means inflation soaring, which makes the Fed that much more a target of popular outrage.

 

So if you’re counting on the Fed propping the market up throughout 2012 as it did in 2011, you may be in for a rude awakening in the coming months. Every day that we get closer to the 2012 Presidential election, the bar for more QE goes higher and higher. Truly unless we get some kind of major Crisis, the Fed won’t be doing much of anything.

 

So let the traders run their “end of the month” games this week. But don’t be surprised if stocks start to take a dive in early February.

 

 If you’re looking for specific ideas to profit from this mess, my Surviving a Crisis Four Times Worse Than 2008 report can show you how to turn the unfolding disaster into a time of gains and profits for any investor.

 

 

Within its nine pages I explain precisely how the Second Round of the Crisis will unfold, where it will hit hardest, and the best means of profiting from it (the very investments my clients used to make triple digit returns in 2008).

 

Best of all, this report is 100% FREE. To pick up your copy today simply go to: http://www.gainspainscapital.com and click on the OUR FREE REPORTS tab.

 

Good Investing!

 

Graham Summers

 

PS. We also feature four other reports ALL devoted to helping you protect yourself, your portfolio, and your loved ones from the Second Round of the Great Crisis. Whether it’s my proprietary Crash Indicator which has caught every crash in the last 25 years, or how to stockpile food (where to get it, what to buy, and how to store it) our reports cover this information in great detail.

 

And ALL of this is available for FREE under the OUR FREE REPORTS tab at: http://www.gainspainscapital.com

 

 

 

 

 

 

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Fri, 01/27/2012 - 15:46 | 2103549 billsbest
billsbest's picture

And here's the sledgehammer winding up to come down on us!

Baltic Dry Index Continues To Collapse Down Another 3.94%
Fri, 01/27/2012 - 14:17 | 2103180 TrulyStupid
TrulyStupid's picture

The fact is that there is a "crisis" that must be addressed by more QE. This is an election year and for the first time in recent history, all the incumbents are behind the eight ball, from both "parties". Only the appearance of a sustained recovery will save the incumbents, so there will be more stimulus and more hopium peddled until November.  Look for the stock market to rally strongly  from Aug-Nov.

Fri, 01/27/2012 - 14:06 | 2103112 HungrySeagull
HungrySeagull's picture

4 words.

 

Gold Standard.

Glass-Seagull.

Fri, 01/27/2012 - 11:36 | 2102545 Fix It Again Timmy
Fix It Again Timmy's picture

I am not at all looking forward to any crisis, much less the one that probably will appear.  I much prefer the situation where money [fiat] retained it's value and did not lose purchasing power at all.  Also a savings rate of 5% that would compensate for risk when loaning capital and would encourage savings.  When neither of these bare minimum situations for relative prosperity exist, be looking over your shoulder, constantly...

Fri, 01/27/2012 - 13:30 | 2102898 Cone of Uncertainty
Cone of Uncertainty's picture

Why is everyone so fucking afraid of another crisis?

The ONLY way we will return to sound money is through another crises and failed crises response.

The solution to our problems IS collapse!!!

Of course, if you believe that along with such a crises comes dictatorship, murder, incarceration, and any number of untold attrocities, then we all might as well off ourself right now and get it over with.

Personally, a complete reset of the global fiancnial system and the attendant risk of such an earth rocking event, gives me a fucking hard on.

It sure the hell beats living in a state of suspended animation, where there are no markets at all.

 

Fri, 01/27/2012 - 11:31 | 2102535 mariner22
mariner22's picture

A one or two month increase in the "unemployment rate" is all that is needed to spark a crisis triggerring QE3.

Fri, 01/27/2012 - 11:28 | 2102522 SheepDog-One
SheepDog-One's picture

Exactly, a big crisis is coming.

Fri, 01/27/2012 - 11:25 | 2102513 Fix It Again Timmy
Fix It Again Timmy's picture

Turning this tub around is impossible, the only way out is through the necessary actions for survival and it will come to that point with the attendent chaos and destruction that accompanies disaster. There is no other way out....

Fri, 01/27/2012 - 11:25 | 2102511 tony bonn
tony bonn's picture

without doubt the fed has failed abjectly to improve the economy of the little people....however, it has succeeded spectacularly in enriching the accounts of the banksters who DELIBERATELY staged this economic crisis....

if the totalitarian police state needs more money for more wars of foreign aggression or to murder vast tracts of the usa population, the fed will accomodate....

Fri, 01/27/2012 - 10:39 | 2102353 ShankyS
ShankyS's picture

I used to think the Fed needed a reason to ease and would manufacture or allow a crash to make this more accommodating. Now I think they don't give a shit as they have possibly come to the realization that the next turn in the markets may not be defendable. I think they are in "last stand" mode now. 

Fri, 01/27/2012 - 11:21 | 2102493 chdwlch1
chdwlch1's picture

They're not in "last stand" mode yet...not while they can still create funny money to steer the markets!  They might have been waiting for the $1.3 trillion debt ceiling increase before making their plans to influence markets.  Also, the real "crossroads" date is March 20th when Greece gets called on the carpet on rolling over debt.  You have to consider Europe when framing a game theory about what the Fed might do...they're still the only show in town (or on the Globe) when it comes to creating new fiat.  The ECB is impotent in that regard. Beware the Ides of March...I'm thinking that will be a major inflection point.

Fri, 01/27/2012 - 10:29 | 2102325 Stuck on Zero
Stuck on Zero's picture

The Federal Reserve isn't the only guilty party.  Obama and the Congressional scoundrels spend every cent they possibly can.  The entire capital of the United States is being confiscated by the rich.

Fri, 01/27/2012 - 11:01 | 2102427 SokPOTUS
SokPOTUS's picture

The capital of the United States is being confiscated by the Oligarchs because the Capitol of the United States has been confiscated by the Oligarchs.

Fri, 01/27/2012 - 10:30 | 2102324 Stuck on Zero
Stuck on Zero's picture

ooops.  Duplicate..

Fri, 01/27/2012 - 09:12 | 2102075 JuicedGamma
JuicedGamma's picture

Graham your three points are well taken, but i think you've missed most importantly, the interest on the debt must be kept in check lest we break the Treasury. This will come in time, as long as the Fed has it's back the govt can continue it's Ponzi.

Eventually, not Feb for sure, the Fed is apt to lose control, then the mother of all interest rate hikes will ensue and phase II of the Great Recession can take hold. Thats when your gold will be worthwhile.

Timing the rate explosion is not possible, it's foreseeable. The housing implosion was in the cards in twenty o three but it took 4 more years to unfold. A friend from NY called me then and told me it was immanent. I believed him and loaded up on properties in Ca and Hi anyway and sold all but one by the end of 2006. It was too tempting, just never go overboard and you can remain solvent.

I tried betting against the Fed with TBT but gave up last fall. Buying Deep OTM puts as suggested will bleed you to death while you wait for the inevitable. The Fed has so much power at it's disposal it's impossible to say when they will lose control. The nice thing is that we have a load of realtime models of the implosion running in slow motion right now in Europe. Keep watching what happens to the Little PIGGS to see how to play this.

There is plenty of time, the powder is loaded, the ball is being rammed, the trigger is not yet cocked, but will be soon.

Fri, 01/27/2012 - 18:48 | 2104132 DaveyJones
DaveyJones's picture

nice post

Fri, 01/27/2012 - 09:04 | 2102061 Gromit
Gromit's picture

Yes.

Could have reset back in 08 with horrendous pain but that window of opportunity has long passed.

Good luck to us all!

 

Fri, 01/27/2012 - 08:36 | 2102023 razorthin
razorthin's picture

Impatient Americans want armageddon now.  Relax fools, Graham is correct.  It's a process that takes more than a few nanoseconds.

Fri, 01/27/2012 - 11:07 | 2102444 Cole Younger
Cole Younger's picture

Anyone who wants amageddon is a nut case. Still, armageddon is likely to occur. What form it takes or how it will affect the public as a whole is debatable. Will it be a soup line depression or a full blown mad max scenario I couldn't say. One thing seems certain, the dollar will not survive. How the government handles that should be the real question.

Fri, 01/27/2012 - 14:21 | 2103204 Are you kidding
Are you kidding's picture

Soup lines? You mean SNAP recipients...50 million are already in soup lines. Mad Max is when the card stops working. At least for a little while.

Fri, 01/27/2012 - 13:11 | 2102821 boiltherich
boiltherich's picture

Soup line OR Mad Max?  From where I am watching this endless drama play out it obvious to me we can have both at the same time, and we are already well on our way. 

Sat, 01/28/2012 - 21:30 | 2106275 LongBalls
LongBalls's picture

Water, food, guns, ammo, gas generator, solar generator, gold, silver, cash. Go to work.

Fri, 01/27/2012 - 08:18 | 2102005 azzhatter
azzhatter's picture

Nobody talks about the real economic destruction of the FED policy. I have approx $750,000 in savings. If I could earn a safe 4% on my savings or $30,000 per year and added to my social security would give me income of $50K per year, enough to live a life of dignity. Instead I am forced to deplete savings, curb spending and pay no taxes on interest income. The depleting savings is a drag on the economy perpetually as the amount of positive capital in the system declines. As inflation increases rapidly the savings will deplete even faster. There will be nothing to pass on to heirs if I live long enough which is a drag on future growth. All of this real wealth destruction is the legacy of Bernanle. And please don't tell me to invest in manipulated risk assets. 70% of the trades last year were held less than 11 seconds. I'm not looking for 10%, just a fair and reasonable 4-5%. There are a lot of people in my age group in the same situation and much worse. I support Ron Paul because for the first time in my life we have a guy who understands money and sound fiscal policy. This may our last chance to save what's left of america

Fri, 01/27/2012 - 12:04 | 2102633 DaveyJones
DaveyJones's picture

A succinct, beautiful, and tragic post. The voice of a dying country.    

Fri, 01/27/2012 - 13:34 | 2102900 HungrySeagull
HungrySeagull's picture

I will take about 10 years worth of living expenses, cut costs' no debts and have a little each year for yourself.

Sink the rest into Gold and Silver and wait a year or three.

It's all paper until you convert it into a asset.

And I am doing the exact same myself. I have to do it for several people in my home. Thanfully we are all working together on the same goals.

 

A bit of perspective. A month in the burn ward can eat about 200,000 right there. Physical therapy, medicines and what have you will take twice more and a year.

At any time you can be hurt as to be shipped involuntarily to a nursing home and that 750,000 will vanish in a little more than a few years.

I fix my own paper cuts instead of incurring a automatic 700 dollar entry into a ER and add Doc , lab, medicines, cultures etc etc etc etc etc to that. The last time I had to go cost me a cool 5K fortunately insurance picked it up. Some of those needles entering my skin was running me anywhere from 50 to 500 dollars each dose.

 

It's easier and cheaper to keep a Datsun or a 70's car going these days than to try and fix something broken in your body.

Fri, 01/27/2012 - 11:22 | 2102500 Elmer Fudd
Elmer Fudd's picture

You own paper, not money.

Fri, 01/27/2012 - 06:40 | 2101923 Element
Element's picture

That graph is a real eye-popper ... "What is is?" ... debt-deflation ... that is only just barely beginning.

Fri, 01/27/2012 - 04:11 | 2101886 El Gordo
El Gordo's picture

It's really hard to win a pissing contest against a skunk.

Fri, 01/27/2012 - 03:56 | 2101879 Ungaro
Ungaro's picture

If the OP's (Original Poster's) initials are GS (Graham Summers, Goldman Sachs), you know the content already.

ZIRP is QE. It is like the "Dan Quayle" bonds, perpetual zero-coupon: no interest and no maturity. I wish I was a bank so I could borrow from the Fed at zero percent and clip coupons off various sovereign instruments until maturity or default. I also want to be a TBTF Bank so the Fed would accept my least credit-worthy pieces of paper (and assume all credit risk) as collateral for more loans.

A fine business it is to earn lots of interest in money that never existed! Tempting as that sounds, I will not be happy with the measly returns on US, Portugese and Greek bonds. Since I am fail-safe, I can ratchet up the risk, collect higher returns, and if the pork bellies or S&P futures move against me, then Uncle Ben or Uncle Timmy will help me out.

Is this a great country, or what? I wonder how long could this racket go on. Will the FBI or Navy SEAL Team 6 show up one day and close down the dens of these financial terrorists?

Fri, 01/27/2012 - 09:54 | 2102195 unnamed enemy
unnamed enemy's picture

"Will the FBI or Navy SEAL Team 6 show up one day and close down the dens of these financial terrorists?" 

lol - of course not - but they may show up at your door one day and put you in jail for calling the owners terrorists.

 

 

Fri, 01/27/2012 - 03:55 | 2101877 resurger
resurger's picture

The best guy on ZH said it, his name is WB7:

The only vay, is the Chinese Downhill (or teh American one)

Fri, 01/27/2012 - 02:36 | 2101835 Seer
Seer's picture

I'll repeat my hypothesis that there is in fact some sense of timing on all of this.

I believe that it's more than clear to everyone now, even PhDs!  The housing market is very connected to the economy.  As such, I believe that the Fed HAS to (believes that is has to) force interests to stay low until the last big ARM resets.

Interesting interactive tool: http://www.loancentral.com/ARMresets

That shows that in 2012 we might be fairly clear of the ARM reset issue.  If this is the case then we might expect interest rate increases: yes, the Fed said not until 2014, but since when do they announce what they are going to do well in advance?  Complicating matters is the fact that this is an election year.

Fri, 01/27/2012 - 02:16 | 2101817 AbruptlyKawaii
AbruptlyKawaii's picture

pheonix = qe forever?

Fri, 01/27/2012 - 01:58 | 2101800 Marty Rothbard
Marty Rothbard's picture

Someone is sure buying crappy paper, like US treasuries for instance, at a much higher price than any sane investor would pay.  If not the Fed, or their hatchet men, then who?  When is QE3 not QE3?  Perhaps when you dont announce it, and do it through a cat's paw?

   On  the other hand, he does have a valid point.  Pay is going down, and prices are going up.  As Joe Sixpack loses his house, and TV, he will start paing attention to the fact his beer prices are going up way faster than 3 percent a year.  Bring on the price controls, and the shortages Barry. 

Fri, 01/27/2012 - 04:05 | 2101884 groundedkiwi
groundedkiwi's picture

Joe six pack is waking up, and its not to the price of his beer. Not only is he waking up, he is fully loaded.

Fri, 01/27/2012 - 02:16 | 2101820 The Monkey
The Monkey's picture

Almost everone has boarded the QE express. This is helicopter Ben afterall, and what we know is that he wii punch the button. At least, that is what we have come to believe as a truism.

Bernanke's days are numbered as the chairman. As the Republican debates drag on, more and more people are being exposed to the downside of cheap credit and a policy that discourages savings and encouages risk taking.

If household savings rates were 15%, housing had fully deflated, and private sector deleveraging had really run it's course, then an activist Fed might be able to reignight an organic recovery without the moral hazard caveat. Instead, these ultra easy money policies are being carried out when savinngs rates are near all-time lows and wealth disparity is near all time highs.

END THE FED

Fri, 01/27/2012 - 01:43 | 2101781 Marty Rothbard
Marty Rothbard's picture

Gee, I wonder what strategy that worked in 2008 he could be talking about?  Maybe buying out of the money puts on consumer stocks, and transport?  Oops guess no one will have to buy your newsletter now.  Sorry dude.

Fri, 01/27/2012 - 01:40 | 2101775 CapitalistRock
CapitalistRock's picture

QE3 started in August. Look at M2. Look at how very clearly Bernanke justified throwing savers under the bus when asked about it specifically. Look at how they are printing money for the EU.

The only thing the fed disappointed in was their language on QE. Their actions are full throttle printing. That's why gold and especially silver lept starting right at 12:30.

Graham, you are blind. Shut off cnbc and open your eyes.

Fri, 01/27/2012 - 06:38 | 2101925 Element
Element's picture

Anyone else think it quite amazing that Bernanke said several years ago that if anything like, you know, NOW ever happened, then the US had this technology called a printing-press, and as many helicopters as necessary.

And ever since 2008 the Chartelista MMT-bots have been saying the FED is not REALLY printing money!

And, it's also not REALLY capable of being price-inflationary ... at this stage ... just asset-inflationary ... yeah ... because dah pRiCE gOeZ uP!

So .... then, it apparently may become 'money' ... if it is ever spent ... and can thus then be considered to have been printed!

WTF!?

There's nothing to compare with a FED fan-buoy's en-echelon levels of denial.

Fri, 01/27/2012 - 03:56 | 2101878 resurger
resurger's picture

are you sure its QE3!! Man he printed more money than you can imagine

Fri, 01/27/2012 - 01:37 | 2101771 847328_3527
847328_3527's picture

Print, it's election year mania.

Fri, 01/27/2012 - 01:00 | 2101723 Eireann go Brach
Eireann go Brach's picture

Graham can you write just one fucking article without pitching youR shitty newsletter! You would get a lot more respect around here man or woman or fucking alien or whatever you are!

Fri, 01/27/2012 - 01:34 | 2101767 fourchan
fourchan's picture

i like how he hides his spam under a name other than graham in the title.

Fri, 01/27/2012 - 01:15 | 2101741 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

Graham sees the writing on the wall, but his timing is off.  One thing that isn't right about this article is that there is no easing.  There is.  POMO ops continue.  OT2 continues.  It is merely mitigating the deflation; it is matching the deflation with inflation.  The rise from the market has come from the Fed and Treasury too.  From the Special President's Groups.  So there is monetary manipulation, it's just that the PTB learned that the easing was backfiring politically, and since there is no press coverage for the operations the Fed continued FX swaps, OT2, POMO, etc.

Fri, 01/27/2012 - 01:36 | 2101768 Silver Alert
Silver Alert's picture

It all boils down to what the administration thinks will help/hurt re-election chances.

Graham thinks the markets will tank and the FED won't intervene (print) because it would be politically injurious to the administration to do so because of inflation.

On the other hand, most people here seem to expect the FED would intervene (print) because a falling stock market would be even more injurious to the administation's chances for re-election.  After all, the stock market = the economy (/sarc)

Fri, 01/27/2012 - 04:02 | 2101875 boiltherich
boiltherich's picture

When I went to get this months payday loan the clerk at the check cashing office said she and her husband were moving to North Dakota to get work.  I told her that the Bakken oil fields were in western North Dakota (she was baffled by my mention of Bakken oil fields by the way, had no idea what I was talking about) so they might consider a town in eastern Montana because there is no sales tax in Montana.  I said the roads are flat and wide open and there really is no speed limit there so commuting 50 miles should not be a burden. 

Her ears pricked up when I mentioned no sales taxes and she started bitching about all the people who pay no taxes.  She is ready to uproot her family to move to hell (in case you never saw North Dakota) because her husband has been out of work for 18 months and her 10 buck an hour minimum wage job is not covering expenses, they had to go on Oregon Trail (SNAP), and she knows so little about it that she does not know what the Bakken fields are, yet she can spew Rush/Gingrich "facts" about who does and does not pay taxes.  I was never so unpleasantly ready to strangle a dumb bitch in my life, she was spitting out all these facts about the leeches on her paycheck and said that it did not matter that Oregon has no sales taxes because when they get their earned income tax credit back from the feds it goes right to Salem to pay the state taxes.  I was able to restrain my urge to tell her that 47% of people pay no taxes because they are in POVERTY! you dumb cunt.  Or are old, disabled, and last but not least they are filthy rich and take full advantage of loopholes big enough to drive their Bentley through. 

Also not to mention that like her they paid taxes but after earned income tax credits got more back than they paid in, in the old days we used to call using your womb for money what it was, prostitution.  Oregon has low property tax and no sales tax, we have no toll roads and car registration is $50 a year, almost all state tax revenue comes from those who have it to pay, and the richer you are the more you pay, but max rate is about 9% with most people under 50k paying almost nothing.  But nooooooo, the GOP propaganda machine MUST be right yes? 

The election is not going to be about who the fed bails out, it is going to be about stupid bitches like the one that waited on me today that has simply got a third grade education, is very angry, and is scared.  No doubt the hubby blew all his unemployment checks customizing the Datsun or some such thinking the extensions to unemployment were de facto permanent, now is really angry to the point she is scared.  Lot of Nazis around here, cops came down on them hard a few years ago but they are still around.  I mean real Nazis, you get punished for your SS uniform not being authentic.  Google "Phoenix Oregon Nazi" and you will see what I mean, there is serious bad out there fellow ZH'ers.  Being right does not mean you can win, safety in numbers. 

I predict this election will be about which candidate in November makes you the least nauseous, Obama and his religion surrounding vote for me or you are a racist, or Newt and his sickening fat.  Romney is going to be toast, nobody likes a Mormon closet case.  Paul has upped his political capital but he is not even a contender, his poll numbers show that the right wing establishment have to listen to him and throw him some bones in the next congress, but in the brokered convention to come he is a bit player.  I could not vote Obama in 2008 and I can do so even less now, I wish him well on his golf game, but we would have been better off with Tiger Woods as president.  And the GOP choices are none of them worth considering at this point, Gingrich or Romney, and who does Sarah through her voters to?  Bachman?  Paul?  Santorum that frothy mixture of lube and fecal material?  I will vote for Paul as a write in because I pledge I will never again vote for a candidate because they are the nominee.  I am too old for that, I will vote for the person I want to be the President of the United States.  Maybe we should have no parties or primaries, just an election day where everyone eligible to vote goes and writes down the name of the person they want to be president, he or she with the most votes wins, all 50 states same time same day, down and dirty. 

Fri, 01/27/2012 - 12:16 | 2102668 HungrySeagull
HungrySeagull's picture

Datsun eh?

I remember those. Good little cars for the time.

Fri, 01/27/2012 - 11:24 | 2102506 Uchtdorf
Uchtdorf's picture

Ron Paul has already announced that he is retiring from Congress. He's "all in" for the Oval Office. So there will be no bones thrown to him in the next session of Congress. Please troll somewhere else.

Fri, 01/27/2012 - 12:58 | 2102761 boiltherich
boiltherich's picture

Good for him, I like Ron Paul and plan to vote for him whether he is in the race or not, but unlike many posters here I have no delusions about that vote counting or he becoming president because it just is not going to happen, my vote for him write in or otherwise is a protest vote to send a message and likely futile at that, the structure of power in our country no longer listens to messages we send.  They would kill him before they allowed him into office or if he were allowed into office they would kill him before he could make any difference at all.  Look what happened to Kennedy when he bypassed the fed.

As to payday loans, nice to know there are still people out there that can get through most months without them, good for you Mr. 2% or above investor class, but when the population sets out to get payback on the wealthy do not look so surprised when they break down YOUR door because if you have a positive net worth you are in a fast shrinking minority. 

But try doing this, try getting paid once per month on the first, and if the first is on a weekend or holiday like January first ALWAYS is since it is a holiday try making it through January till February 1st from December 30th on your disability pay.  Nine out of ten will resort to a payday loan rather than go that last week without and risk OD fees from the bank because of something you might have forgot.  Because yes, three years without a COLA and all my credit cards like all good Americans are maxed out.  It was part of the point of the story that yes I do have to resort to payday loans some months, I am shocked SHOCKED that you do not get that, just like some of you don't get that Stephen Colbert is making a joke out of you, and TV wrestling is "real."

The more smug here, you with the red arrows, part of the investor class and neo Calvinists all, you make me laugh because the ice is indeed thin and while it might be comical to you that most of America has either already fallen in or will very soon, it is comical to me that you just don't get it that you are standing on the same fucking ice. 

Fri, 01/27/2012 - 09:47 | 2102162 swmnguy
swmnguy's picture

I've had the exact same conversation with people here in Minnesota.  We have high sales tax, high property tax, high income tax; but otherwise same deal.  Not sure why people seem to think they themselves have such unique circumstances. 

Mr. Smith knows he earns the median $33,000/yr. at his job, and Mrs. Smith earns about half that at her job, totalling the national median $50,000/yr.  They have 2 kids, a mortgage, health insurance and some deductible expenses, so at the end of the year they have no money left over, and they end up paying almost nothing in Federal Income Tax.  They may actually be going into debt, if they had to buy a furnace or fix a car.

But ask Mr. Smith about Mr. Jones across the street, who is in the exact same spot except Mr. Jones got laid off and has been on Unemployment for 2 years, and just hear how Mr. Jones is a leech and people like him are ruining America.  If Mr. Jones took the $7/hr. job Mr. Smith seems to think is so readily available and inevitable, Mr. Jones would lose his house and have to bankrupt out all his debt (he may have to anyway).  He sure couldn't pay for health insurance, so every paper cut could lead to an emergency room trip he couldn't pay for either.  But Mr. Smith will go on and on about rotten lazy Mr. Jones, and how badly we all need a cut in the Capital Gains tax and an end to the Death Tax.  How is Mr. Smith going to leave his lavish estate to the little Smiths?

Sad watching an Empire dismember itself.  Sadder still to watch its citizens fight among themselves rather than try to make something positive happen.  But when everyone has gotten used to waiting for some sort of Authority Figure, organic or supernatural, to come down and fix everything for them, this is what happens.  America is a Cargo Cult, and the planes aren't coming anymore.

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