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Smoking Some Bad Debt Dope?
All week, I've been watching the circus and clowns in Washington make fools out of themselves. The "debt ceiling drama" is annoying me. More smoke & mirrors to scare retail investors away while the big guns load up on risk assets. Let me go over a few key points to convince you to keep buying the dips hard and ignore the debt boogeyman which permeates our mass media every day.
First, take the time to read Peter Coy's article which appears on yahoo Finance (provided by Bloomberg Businessweek), Why the Debt Crisis Is Even Worse Than You Think. I quote the following:
The language we use is part of the problem. Every would-be budget balancer in Washington should read "On the General Relativity of Fiscal Language," a brilliant 2006 paper by economists Laurence J. Kotlikoff of Boston University and Jerry Green of Harvard University (available online from the National Bureau of Economic Research). The authors write that accountants and economists have something to learn from Albert Einstein's theory of relativity, about how measured quantities depend on one's frame of reference. Terms such as "deficit" and "tax," they write, "represent numbers in search of concepts that provide the illusion of meaning where none exists."
The national debt itself is one such Einsteinian (that is, squishy) concept. The Treasury Dept.'s punctilious daily accounting of it -- $14,342,841,083,049.67 as of July 25, of which just under $14.3 trillion is subject to the ceiling and about $10 trillion is held by the public -- gives the impression that it's as real and tangible as the Washington Monument. But what to include in that sum is ultimately a political choice. For instance, the national debt held by the public doesn't include America's obligation to make Social Security payments to future generations of the elderly. Why not?
Suppose that instead of paying Social Security payroll taxes, working people used that amount of money to buy bonds from the Social Security Administration, which they would redeem in their retirement years. In such an arrangement, the current and future cash flows would be identical, but because of a simple labeling change the reported debt held by the public would skyrocket. That example alone should generate a certain queasiness about the reliability of the numbers that are taken for granted by budget combatants on both sides of the aisle.
A more revealing calculation is the CBO's measurement of what's called the fiscal gap. That figure is conceptually cleaner than the national debt -- and consequently more alarming. Boston University's Kotlikoff has extended the agency's analysis from 2085 out to the infinite horizon, which he says is the only method that's invulnerable to the frame-of-reference problem. It's an approach used by actuaries to make sure that a pension system doesn't contain an instability that will manifest itself just past the last year studied. Years far in the future carry very little weight, converging toward zero, because they are discounted by the time value of money. Even so, Kotlikoff concluded that the fiscal gap -- i.e., the net present value of all future expenses minus all future revenue -- amounts to $211 trillion.
Yikes! Douglas J. Holtz-Eakin, a former director of the CBO from 2003 to 2005, says he doesn't favor the infinite-horizon calculation because the result you get depends too heavily on arbitrary assumptions, such as exactly when health-care cost growth slows. But directionally, he says, Kotlikoff is "exactly right."
Which means we've been heading the wrong way for years. Even in the late 1990s, when official Washington was jubilant because the national debt briefly shrank, fiscal-gap calculations showed that the government was quietly getting into deeper trouble. It was paying out generous benefits to the elderly while incurring big obligations to boomers, whose leading edge was then 15 years from retirement. Now the gray deluge is upon us. As Holtz-Eakin, now president of the American Action Forum, a self-described center-right policy institute, says: "We're just in a world of hurt."
The U.S. is in danger of reaching a generational tipping point at which older Americans have the clout to vote themselves benefits that sap the strength of the younger generation -- benefits that can never be repeated. Kotlikoff argues that we may have reached that point already. He worries that the U.S. could become Argentina, which went from one of the world's richest to lower-middle income in a century of chronic mismanagement.
Senior citizens are being told by their own lobbyists, repeatedly, that any attempt to rein in the cost of Social Security and Medicare is an unjust attack on earned benefits. "Stop the liberals from raiding the Social Security Trust Fund once and for all!" says a recent mailing from the National Retirement Security Task Force. Similar messages aimed at Democratic voters make the same charge against Republicans. No wonder Obama and Boehner were rebuffed by their own parties for putting entitlements on the table. In the end neither the House nor the Senate debt-ceiling proposals touched Social Security or Medicare. Not pretty.
So is the US at risk of becoming the next Argentina or worse still, Greece? Of course not!!! This is all nonsense doctored up by the power elite to scare the masses into believing that the US economy is heading down a "path of fiscal destruction" so they can abdicate their duty to pay their fair share of taxes. I watch all these debates on television and think to myself "what a bunch of bullshit!"
On Friday, I spoke to my favorite fixed income senior portfolio manager/analyst at the Caisse -- a guy that PIMCO only wishes would be working for them. As far as brains go, he can take on Bill Gross and any other 'top gun' at PIMCO but he's too nice of a guy to work with sharks there or on Wall Street. He should be working for an elite global macro hedge fund but he's content where he's at and they value him (even though he's probably grossly underpaid relative to his peers at other large Canadian pension funds).
Anyways, this person confirmed a lot of my thinking on the US debt drama, namely, that most people don't have a clue of what they're talking about when it comes to public economics:
- On the 'balanced budget' proposal we both agreed that this is a stupid and dangerous proposal and President Obama would be nuts to accept it. Running government finances is not the same thing as running a family budget (thank God!). By law, states have to balance their budgets. When states need money, they go to the federal government. Why in the world would the US federal government -- the lender of last resort -- accept an economic straightjacket? "That's just stupid and would effectively mean the end of counter-cyclical fiscal policy and the end of the welfare state." I would go a step further and state that a balanced budget at the federal level would effectively kill the US economy for long time by posing serious economic, social and health risks. Only lunatics would accept such a proposal, ignoring the serious risks it actually entails.
- We both agreed that this "US debt crisis" is a political crisis, not an economic crisis. The lack of leadership in Washington is disconcerting. It's actually disturbing to see Tea Party representatives sticking to "their principles" with little or no concern as to the harm that a US default will cause not only in the US, but throughout the world. Already billions have been wiped off the stock market this past week, making a lot of investors poorer, but these politicians have no concern. Like religious zealots who think they will end up in heaven if they carry out their god's work, these lunatics are holding the US economy hostage. The only good thing from this entire messy debt debate is that it will set the Tea Party back years. On that front, Obama and his advisors are brilliant.
- As far as austerity goes, my friend and I are in full agreement. It's a disaster in Greece, it's a disaster in England, and it's pretty much going to be a total disaster everywhere else. My friend told me that the only place austerity worked was in Canada during the 90's but "that's because the economy was growing." Those of you who still cling to this silly notion that austerity works should take the time to listen to Michael Hudson at the end of my comment on the rottenness of the world.
- We both agree that the debt crisis is way overblown. The August 2nd deadline is not set in stone. "The cost of capital extending it by a week is zero but the stock market will likely slide further on uncertainty. In theory, the Fed could mint a trillion dollar 'platinum' coin and the US government will pay all its obligations." More importantly, we both agree that the real long-term issue for the US and other developed economies remains the jobs crisis. And the real unemployment scandal is how it's impacting certain minorities much harsher than others. Importantly, if you don't tackle the jobs crisis, the debt and deficit will only get worse.
- As far as Bill Gross and PIMCO, my friend chuckled at his advice to "short Treasuries" when yields were at 3.75%. "Anyone following his advice would have gotten killed, but to be fair to him, he has a fiduciary responsibility to his clients and won't reveal his true positions beforehand." Yields continue to fall as the US economy slows and flight to quality reigns as global investors remain jittery.
- In Europe, my friend sees this as a long, drawn out mess where yields will gyrate widely over the next year. He joked: "the way spreads are moving, BCA Research should start a new publication call the European Fixed Income Weekly."
- Finally, my friend thinks universities across the world should "burn standard economics textbooks." Having graduated from McGill University with an M.A. in Economics, I'm somewhat in agreement but also recognize that some of the greatest social thinkers of the 20th century were brilliant economists like Keynes, Hicks, Hayek, Fisher, Friedman, etc. The problem isn't economics, it's what they're teaching students, ignoring a rich history of economic thought (too much mathematics and programming, not enough economics and history!)
I leave you with an excellent roundtable discussion from ABC's This Week (entire show is worth watching online; watch both parts of roundtable discussion below). Pay close attention to what Paul Kruman and Mohamed El-Erian are saying. Cutting spending now will only exacerbate the jobs crisis and will make things much worse. In my opinion, Krugman is wrong about targeted cuts to the federal government, but he's absolutely right that the Obama administration has basically pandered to the Republicans and caved into every one of their demands.
As I stated before, the world is sinking into a hellhole. We have incompetent fools running our governments, major corporations, banks and yes, alas, our public pension funds (with a few exceptions). It's a total disaster but remember this: the power elite need to continue making profits. These sociopaths will stop at nothing to extend and pretend, which is why I'm not worried about this entire "debt crisis debacle" and keep buying the dips on risk assets. And lo and behold, as I wind down my comment, Bloomberg reports that a deal framework has been reached on raising the debt ceiling. Relax, it should be a great week in the stock market. :)
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I usually mock you beause you deserve it, Leo, but damn if you didn't hit the nail on the head and cause some massive head trauma to the readership here.
Despite the bleating of the anti-tax crowd on ZH and elsewhere, the taxation rate vs. GDP in the USA is one of the lowest in the developed world. We do have a problem with spending to a degree, but we largely have a problem with taxation.
For 8 years, George W. Bush ran deficits, started unwinnable wars, created new entitlements and insisted on tax cuts for the wealthiest amongst us. He was one of the most fiscally irresponsible leaders the US has ever had.
What'd the lizard brains do? Cheer him on and whine about libruls and their homosexual islamofascist agenda.
You morons. You've bought this idea that you're temporarily embarrassed millionaires. You're fucking stupid. You're getting fucked and you're asking for more because you cling to this idea that if only it were every man for himself, things would magically work out and all would be well.
I'm going to leave this country because it's obvious that Republicans won't risk their re-election by cutting entitlements massively, but they also won't do the right thing and raise taxes on the wealthy either. They will continue to play this fiscal irresponsibility game until it can't be played any further, and then they will board planes out of this shithole and leave you to pick up the pieces.
The Ulcered Sphincter of Asserica indeed.
Derpin, you are either clueless or disingenuous.
The USA, like every other chronically overspending and unsustainably indebted nation throughout history, did NOT arrive at such a situation by continually cutting taxes --- it managed to slit its own fiscal throat via overspending, overspending, OVERSPENDING! This is so self-evident that I am deeply suspicious, if not instantly dismissive, of anyone (like leo) who would even try to suggest otherwise. Undertaxation is NOT the problem, as NO amount of additional taxation will solve the problem at this point, nor indeed could possibly have solved the problem at ANY point, without corresponding and massively larger federal budgetary spending cuts.
When a gambling addict spends his paycheck, then his life savings, then maxes out his credit cards to fuel his addiction, is his problem merely one of insufficient income?
http://www.theglobeandmail.com/report-on-business/international-news/us/...
US tax revenue as a percentage of GDP is 24%.
In Canada, it's 31%. It's even higher in the UK.
Under Reagan, we increased spending as a percentage of GDP while reducing taxation as a percentage of GDP.
The same thing occurred under GW Bush, even excluding the wars.
The Republican party has been fiscally irresponsible over the last 30 years with the exception of GHW Bush who saw Reaganomics for the bullshit "voodoo" economics it was. He was pilloried by Republicans for doing the right thing.
Now Obama has raised spending and actually tried to raise revenues to pay for it. The Republicans have blocked him at every turn.
Who's really the fiscally irresponsible party?
You can bash Obama for the spending if you want, but he's tried to pay for it. It's Republicans who have stood in the way. The unfunded mandates are the fault of Republicans who have refused to actually pay for the bills they've racked up.
Now the Republican solution, after being irresponsible for 8 years, is to cut spending which affects the most vulnerable amongst us while refusing to share any of the pain with the wealthiest. The entirety of their program is to put it on the backs of the lower and middle classes.
Your own numbers prove my point --- even doubling taxes, theoretically, might JUST cut the annual deficits --- if it were not for the enormously destructive effect such a move would have on the economy, which would of course largely negate the effects of said onerous level of taxation.
And your attempt to blame one of the two Establishment political parties (it matters not a whit which one you attempt to put the burden of the blame upon) just proves that you are another clueless sheep who buys into the whole sham bipartisan charade, and are just another part of the problem.
The problem with what you say is viewing all tax cuts as equal and all spending as equal in terms of their effect upon GDP. Nothing could be further from the truth.
The generalized platitude that tax cuts are stimulative and tax hikes are detrimental is just wrong. It takes no account of the fact that the US economy is 70% based upon consumer spending. It is not a supply-side economy. Therefore, cutting taxes for the rich will have minimal beneficial impact while having a very detrimental impact upon the deficit.
Programs like foodstamps, unemployment and social security are, on the other hand, the opposite side of the coin. They are incredibly stimulative to the economy because they are going to be immediately spent.
Military spending is the worst spending we do. It is harmful to the economy and jobs. It relies upon destruction of wealth as a means for recurrence. It is a net wealth reducer and a drag upon economic activity. It is the truest misallocation of resources man can make, short of simply burning energy for the sake of it.
Tax hikes need not be made to the point of truly balancing the budget. What they need to accomplish is a sincere reduction in the annual deficit. As/if the economy can recover from the massive deleveraging it's experiencing, the deficit will naturally reduce itself as GDP increases.
The idea that we can cut 25% of our spending and not throw the economy into a negative feedback loop tailspin is fucking ludicrous. Absolutely insanely stupid. It is a guaranteed depression and implosion.
Hey Derpin, Paul Kaveman Krugman just called, and he would like his left wing/Keynesian/"soak the rich" talking points back when you're done with them.
Just like most muddle-headed liberals (I have equal venom for so-called "conservatives" as well, though), you are apparently incapable of thinking quantitatively. Yes, certain taxes were cut under Reagan and Bush AND Clinton, but those cuts were far, FAR exceeded by all the additional spending added at the same time. Also, as vile and monstrous as most US miilitary spending (and action) actually is, in NO way constituting actual "defense", it almost pales into insignificance when set against so-called "entitlement" spending such as Social Security, and most especially Medicaid and Medicare, whose costs are escalating exponentially. The Welfare State is even more unsustainable than the Warfare State, and fundamentally just as socially corrosive, destructive and immoral.
ATAK, having read the recurring theme of your posts, I am nearly sure your level of passion and vitriol stems from no other force than a general ignorance of the sheer mind-boggling complexities of the federal budget, either that or you are extremely jealous of people with any wealth (yet sometimes equally disgusted with the needy), sometimes it seems your only agenda is to find a pulpit to express some retarded world rage expressed solely in ZH mega-soundbites. It sounds to me that the only reason you don’t like “status quo defenders” is because the said status quo has its dick in your ass, and nothing to do with economics at all. I am sure that if you had of put all this passion into finding the philosophical certainties, that by now you would have come across the conclusion that there aren’t any, and that would go some way in humbling your replies. But alas you haven’t, so you keep yapping your little brain farts and ideologues to any goat that will listen, but its just circular broad-strokes reactionary gibberish and you know it. You have the intelligence to understand that economists are largely full of hot air and always have been, yet claim you have some econometric elixir of your own - it just fucking defies belief man that you think this nonsense will actually go anywhere other than spin round and round in your inflated head.
This speil about rejection of bi/tri party political charades, its just a lazy cop out, you are blaming the actual arguments to release yourself of the responsibility in taking part in them - the dynamics of the arguments as they stand are more than sufficient to sustain any political debate that matters into the next century. What I find really interesting though, its fascinating actually, is that people who claim this highbrow rejection of bi party politics are usually deeply republican/conservative…it don’t say much for them that they have to deny that the goal posts actually exist. Perhaps it has something to do with all they’re major fuck-ups on social security, Vietnam, equal rights, civil liberties, church- state separation, consumer issues, public education, reproductive freedom, national health care, labor issues, gun policy, campaign-finance reform, defacing the constitution, the environment, tax fairness etc while spurting some moralist family values propagandised filth. No, maybe its clear why they want to confuse matters after all? Believe me, the stage is set for the political debates, step up to the plate if you care enough…any one who thinks that there is some magical party that will come along and tell everyone to believe in American nationalism and 18th century values then everything will be alright, are a bunch of dangerous fucking nut jobs. Enter stage right - TEA Baggers. Never mind the hypocrisy of these particular wankers;
"Sixty House members backed by the Tea Party, whose opposition to federal spending helped bring on an impasse over raising the U.S. debt ceiling, represent districts that last year received $43 billion in government contracts. In 16 of those constituencies, spending exceeded $1 billion each -- more than twice the median amount for all House districts"
As per your “paper games” gibberish above; I’m hearing children on the street talking about fed paper games, WTF all these chin-stroking sheep warning me about the perils of Keynesianism and budgetary responsibility after they considered it for all of two minutes, they are even doing youtube raps about Keynesianism! fucksake man you are wielding deep philosophical whims like you were wielding some cheap plastic bat on the beech. Sometimes people only moan about the game when they cant play it, or when it plays them - paper or no paper, I would be putting my capital to work regardless, if you think little wankers crying about ponzi schemes and unfair paper games will stop me you are just fucking stupid. Don’t tell me you are not taking trades because its all beneath you and you cant accept the evil tenets of Keynesian paper shuffling… do me a fucking favour, who do you think you are kidding here? You would like to think you have more sense than money, but the reason you are not trading is because you would have your clumsy ass handed to you, and it kills you . Stop spurting your bitter nonsense and get on with your life.
Scratch and Sniff, I am strangely in awe of what is in fact YOUR aimless and unfocused vitriol, "full of sound and fury, signifying nothing". If you had an honest or legitimate point you were trying to make in that amorphous, chaotic rant, it eluded me. Suffice it to say that I got a good laugh out of your bitterly and clearly left-wing partisan bias and your resulting assumption that I must be a Republican/conservative, when nothing could be more untrue --- I reject and despise the entire restricted and false left/right political paradigm as the divide-and-conquer grotesque sham that it is, something which you are evidently incapable of seeing, and obviously still defend.
The fact that little leo stood up for your inchoate and venomous bilge vomited out in my general direction is just more proof that you actually had little or nothing meaningful to say. Do please come back when you can make some specific and intelligent arguments.
+1
Yeah you’re right, sorry about that man im only noticing now when the "red mist" has faded, that’s actually embarrassing how that slipped by me, sorry man, it seems that my only point was that you’re a demented moaning wanker, when I could have swore I had something to say. Ah well, I am man enough to apologise if you’re man enough to accept it.
Your "apology" is. somehow, oddly unconvincing.
Let's move on.
ok thats cool, sometimes i say the first thing comes into my head for kicks then sit here laughing like a little bitch waiting on the reply, its fucking disgraceful man but there you go, im trying to keep it to a minimum for no other reason than its probably boring the living daylights out of people...i can forgive myself, the big question is, can you forgive me?
If you wont, jesus will...why not beat him to it?
scratch_and_sniff, this was beautiful, thank you!
Hahahaha. What an epic takedown.
He's a temporarily embarrassed millionaire. Didn't you get the memo?
Also, as vile and monstrous as most US miilitary spending (and action) actually is, in NO way constituting actual "defense", it almost pales into insignificance when set against so-called "entitlement" spending
This is just flat-out wrong. Defense spending is by far the most destructive spending we engage in. It destroys wealth. Entitlement spending does not destroy wealth any moreso than normal consumer spending. It puts it back into the economy on the demand side for services, durable goods and food.
Social Security, and most especially Medicaid and Medicare, whose costs are escalating exponentially.
Social security's problem is changing demographics. Its funding will have to be increased as the demographics change. However, that will eventually level off. It is not an infinitely expanding cost.
The increase in costs of the medical programs comes down to clamping down on costs and not paying top dollar for services. It's actually the hybrid private/public system that is creating the issue. It's being done in a half-assed way that allows provider exploitation.
The Welfare State is even more unsustainable than the Warfare State, and fundamentally just as socially corrosive, destructive and immoral.
The Netherlands, Germany, Australia and the plethora of other countries who provide for the common good don't seem very immoral or self-destructive. In fact, by every measure taken, their populace is far happier with their quality of life than the average US citizen.
It's odd. It's as if not having to worry about going to a doctor or about what might happen in the event of a personal financial calamity makes people confident so that they can focus on other aspects of life.
"What you've just said is one of the most insanely idiotic things I have ever heard. At no point in your rambling, incoherent response were you even close to anything that could be considered a rational thought. Everyone in this room is now dumber for having listened to it. I award you no points, and may God have mercy on your soul."
http://www.youtube.com/watch?v=5hfYJsQAhl0
-FN
Leo I don't understand how you don't understand how the Tea Party will restore the economy through deficit reduction, ie putting a cap on spending intended to prop up wall street, instead of letting the market set interest rates and asset values. i agree the Tea Party probably doesn't have this in their manifesto, they dont have a manifesto, but they do believe that 2008 was the wrong turn, the bailouts to save the rich bankers. do you think that asset values are out of line according to Fed policy, and why is that, and who does that help?
I posted much of the comments below as a response to another poster, but then realized it was buried too deep and really applies to more than just one commenter. So many of you hate Leo and what he stands for and would like to see his posts banned, but reconsider. While you are absolutely correct that Leo's childess, imature tone amounts to nothing more than the same cheerleading we see from other ignorant "sheeple" and "useful idiots", I adamently disagree that ZH should stop posting Leo's drivel. Leo is a poster child for all that is wrong with American media including mainstream business media like the WSJ, etc. Reading Leo helps us all see into the soul of the dreamers, wishers, and hopers who prefer to ignore financial facts because it disagrees with their socialist and/or selfish goals. Leo is a wannabe money manager, so naturally it is in his interests to see the market "go up" regardless of fundamentals or the damage it causes to average hard working Americans who just want to save a few dollars because they do not want a corrupt system to dicate every facet of their lives. For Leo, particularly since he is canadian and doesn't have to suffer the same debasement and pillaging of responsible U.S. citizen savings, he is simply looking out for his own interests much like the criminals in New York, big banks, big goverment, etc., who love to spend other peoples money and steal their labor. Leo is not smart enough to realize that what the Fed, the U.S. government, and big banks are doing is punishing hard workers and savers in order to enrich themselves----even if Leo were smart enough to realize that, it simply does not matter to him because his interests are aligned with the criminals that do the stealing.
I am also confident that Leo likely doesn't realize that the stocks they he so loves are really nothing more than the equivalent of the Fed printing presses. When corrupt corporate execs, which compose 99.99% of all U.S. corporations, want money they simply manipulate earnings and "print" stock options and generously award themselves. Insider selling has been setting records for years, but if it wasn't the fact is the only people that make money off of public companies are corrupt execs who award themselves shares, their friends, and of course the government. Between this theft of shareholder value and the giveawyas to unions and other corrupt special interests, there is nothing left for the real owners of most public companies. Yet, despite the theft by execs of these companies, people like Leo do nothing but cheerlead the companies and come up with a multitude of ways to "value" the company to suit their needs. For intelligent, critical thinkers who can understand economics 101 and finance 101, it really is quite comical, yet terrifying, that the mainstream media and useful idiots like Leo are able to swindle the average investor into putting their money into the most corrupt ponzi scheme ever devised by mankind.
In the end, look at Leo's diatribe's as a positive---by seeing into the soul of a useful idiot, you can better understand how the criminals are able to convince idiots like Leo to continue pumping their money into the fiat ponzi scheme. We would all like to believe that at some point sanity will return and true capitalism will work, however, every second another "Leo" is born, and for every enlightend person that recognizes the corrupt system for what it is, another 10 Leo's are born, and Leo is simply counting on the fact that most people are retarded and will not recognize the corrupt financial system for what it is----a legalized form of theft designed to separate hard working people from their money. Leo may never get his socialist tax system, but he knows that as long as the mainstream populace buy into the corrupt fiat ponzi scheme casino, he and his heros can steal the money via fiat inflation and the casino. In the end, all Leo cares about is getting something for nothing, redistribution, and screwing hard working people who are doing nothing more than trying their to be independent of a corrupt, marxist/socialist system where the irresponsible are rewarded at the responsibles expense.
Hate Leo if you want but don't ban him-----everyone that cares about their money needs to understand both the criminal minds that run our casino and the sheeple that so glorify it.
LOL, thanks for that drivel insight, now I can sleep better at night!
LOL, thanks for that drivel insight, now I can sleep better at night!
In my response to Leo ... The American people are only borrowing (creating) $4.5 billion per day ... not $.5 billion ... Type-o.
Anyway ... The answer is NOT to fix the staus quo... the answer is to scrap this system before the inevitable collapse arrives due to lack of money (credit) creation and circulation.
The idiots that blame the FED Reserve and government spending can't find their own butts in the dark with a flashlight. Leo and others like him see themselves as gods and think they can overcome the forces of nature and natural law.
Every tin pot occultism dictator and the dupes that do their bidding keep trying to convince people that they have the answers when everything they have ever done is the cause of the problems.
It has and always be about Money, Credit and Circulation... It's just too damb bad that the so-called economists and financial experts have no idea what that means.
Nature will run it's course, as it always has and always will.
We are witnessing the collapse of the global emerging market export model. Americans consume more than they earn while the world has loaned us money. What happens to the world when the U.S. slows consuming?
Export models like China whom depend on the U.S. to consume will be cooked in the squat. Unless the Chinese can make their own populace consume their fucked.
The amount of debt that the Fed and Congress are creating will put us into 3rd world status. Raising taxes or monetize the debt that's their choice. Inflation is coming bitchez!
What a load of crap Leo. The creators of real value are damned tired of seeing the money and wealth that they earned, in exchange for their labor, be stolen by paper-pushing fucknuts such as yourself. Bring accountability to the system and return compensation to those that actually add real value to the system or all things paper will continue to burn. It really is that simple, the world is demanding accountability and the financial pricks at the banks and wall street just don't get it. Yeah, I'd be nervous too if my business didn't produce anything of real value. Fuck you Leo.
Hence the near-hysterical desperation of all those "paper-pushing fucknuts" like leo, who have never produced anything of real value to society, and who continually suck its lifeblood through the straws supplied by the State and the oligarchic power elite. Watching the unsustainable and immoral financial and fiat monetary paradigm, which has up to now supported their parasitical lifestyle, collapsing before their eyes must really be a bitch. Sorry if I fail to be able to summon any tears of pity for them.
Yeah, yeah, everything rational is a 'load of crap' to Tea Bagging scumbags like you. Watch the videos I posted carefully, you might actually learn something.
leo,
We laugh at your idiotic rantings and desperate hysteria in the face of your paper-pimping Ponzi financial Establishment crashing around your ears. In your particular case, though, it couldn't have happened to a better person!
Leo, you really are a fucking troll now. You don't know shit about my political affiliation, nor the services I have provided for my community and country (many pro bono) during my life to date. Thanks for making more than clear to avoid all your posting from here on out. Keep squirming fucknut, it is truly amusing. The only thing the tea party has gotten right so far is to oppose TARP, TALF, and all manner of kickbacks to the financial world. The financial world forgot their is a very real cost for creating capital (thanks to ZIRP forever), now they re-learn the lesson of the 1930's again. Capital will now take many forms, none of it in paper.
...When you finally wake up (put on the sunglasses) you will realize that your freedom is? a facade...
Movie They live where he sees the real world, the other reality
http://www.youtube.com/watch?v=Zqi5KGljJZk
Leo,
You (and anyone else who talks this trash) is, well, an ass.
The Fed could print a trillion dollar silver coin and the US government will pay all its obligations.
Bruce,
Please don't tell us that you just figured out that leo is a Keynesian ass!
It has been abundantly evident to many of us for some time now.
But much worse than leo being a Keynesian ass is his vile and reprehensible apologies for, and admonitions of surrender to, the innumerable corrupt and Machiavellian machinations of the sociopathic financial and political power elites, whose boots he willingly licks at every opportunity.
Bruce, when did you win a Nobel-Prize in Economics? What makes you so sure that the US economy will be better off after they implement these spending cuts with no new taxes? Watch the videos I posted very carefully, dear Bruce, and be careful for what you wish for.
Hey Leo
Just read that the 2 eastern Canadian socialist states, Ontario and Quebec, owe as much money as the Canadian Federal government.
Gosh almighty, now you're not going to tell me that fairy tale again about fiscally responsible Canadians, are ya ???
Bruce, see my post above. Accountability will come to pricks like Leo one way or another. Let them play with thier corrupt paper all they want, the moral hazard was unleashed long ago. Shit has been bad for many people for several years now, does Leo really think they give a shit what the cuts are? Many in my neck of the woods are living "under the radar" already. Hell, I just did some work on my properties and paid the plumber in silver, He kept some and had no problem turning the rest into lots of fiat. Fuck you Leo. As my father used to say, go get a real job already, you know, one that results in the creation of something of real value. More and more recognizing that the paper chase is rigged.
Gold and silver,
Silver and gold,
Nothing can beat them,
Metals that you hold.
in very simplistic terms you're right about the deficit. government spending creates economic activity, period. in this instance the problem is the Feds leviatating of asset prices against a backdrop of falling personal income and wages. the release of the SPR was not intended to lower the price of oil, it was intended to maintain the price of oil, price stability is more desirable at the moment, to the status quo, than allowing market forces to restart the economy on their own accord. The Tea Party has one thing correct, they were against the 2008 bailouts. Tarp and QE whatever, should have never happened.
the stock market is in trouble, not because the debt ceiling has become street theatre, but because there is not enough real economic growth to support consumption, interest rates have limboed as low as they can go, and the Fed has little or no ammunition to support corporate sponsorship for stocks. and corporation already have more than enough cash. the market went from overbought to ridiculously overbought.
now we head into a double dip recession, (which i can tell you anecdotally has been forming a few months) with little or no fiscal or monetary wiggle room. but then maybe someday asset prices will come into line with income and wages. maybe the painful cuts (not to spending but to asset values, think pension fund assets, mortgage assets, if you chop 1/2 off the Canadian Public Pension fund spending on retirees will NOT, repeat, will not be any more difficult, if asset prices are allowed to fall) There is of course the likelihood of some inflation which Bernanke would applaud. He even has inflation targets he would like to pursue. He can't do them as long the status quo political class protects asset values at the expense of the general economy.
..uh huh.. this is possibly the most ridiculous thing Ive ever read on ZH, even including all the comments. juslulwtf
even assuming they did learn how to "print" silver
Gold n Silver bitches, people like Leo are in charge...
It's called a typo, and I corrected it to read mint a trillion dollar "platinum" coin, which Krugman also referred to.
Masochism must be a Greek trait applied to posting articles on ZH , sex, and modern economics. Most times Leo makes sense but then again every 28 days or so we get this. Some of us in the same ward understand Leo
I guess you are all smarter than Krugman, Stiglitz and other Nobel-Prize winning economists who think exactly like me. Damn, why do I bother with these ZH fools?!?
When the USA actually had an economic engine to start, then pump priming made a lot of sense. The US economic engine was scrapped and sent to the melting pots in China.
Yesterday's economic solutions do not fit the hollowed out shell of America today.
ps Leo are you seriously suggesting a Nobel prize is anything more than a political sop ?
Spit my coffe out with that one!
Krugman.. Gheesh!
"why do I bother with these ZH fools?!?"
Becouse you are a paid sophist?
Many of the economic "models" that brought us here were in fact Krugman's. The laws of physics and Nature will assert themselves once again. Academic idiots like Krugman failed to keep their models grounded in reality. You really want to use Krugman as your defense? He has contradicted himself over and over during his academic career. Damn Leo, what happened to that shred of credibility that you had.
IMO, Leo....Krugman looks like a leprechaun with a constant expression of the need to pinch a loaf and though he has received the so called Nobel Prize I find him as dumb as fence post when it comes to understanding free trade!
"Damn, why do I bother with these ZH fools?!?"
Welcome to Fight Club beeaatch!!!
At least leprechauns believe in holding gold, unlike such ivory-tower economic quacks as Keynesian Kaveman Krugman.
Yes. I am smarter than they are. I'm also more peaceful than the Nobel Peace Prize winning Obama.
Indeed, why DO you bother?
This specious and disingenuous type of argument is called "Appeal to Authority", and it is widely recognized in any Logic 101 class as one of the classic logical fallacies.
As for Kaveman (Krugman) et al, there were likewise literally thousands of PhD-level Marxist economists (sic) in the former USSR and Eastern Bloc as well --- I guess all of THEM were so much smarter and wiser than us free-market-believing untermenschen, by virtue of their oh-so-vaunted "education" and academic standing, eh? And the fact that the economics departments of every major US university were long ago bought off by the Federal Reserve and its academic lackies, or otherwise pressured into paying homage to the central banking cartel, is just another "conspiracy theory", right?
Again, little leo, just shut the fuck up already.
About the wealth "wiped off the stock market this past week" I'm a little confused. High leverage Bear equities were smokin' hot.
About "only place austerity worked was in Canada during the 90's" what part of the 1920's in the USA can't you people come to grips with.
About it being "actually disturbing to see Tea party representatives sticking to "their principles" with little or no concern as to the harm that a US default will cause not only in the US"....this is a two pronged answer. Yes I agree that "Cutting spending now will only exacerbate the jobs crisis and will make things much worse." This 'kind' of spending can not be cut. As much as the SNAP program is corrupted I know a few people who might perish without it. (Of course I would never let that happen. I moved both on my property. Hear me asking for Gov. aid?)
WHAT CAN BE CUT ASAP are several hundred (or thousand) SIX-FIGURE HIGH LEVEL GOVERNMENT PIGS sucking blood from the trough. The heads of the EPA, FDA, USDA, FCC are on witch hunts. The CZARs are contributing WHAT exactly? Oh right. They are "shaping" public policy. RIIIIIIIIIIIGGGGGGGGHHHHHHHTTTTT! If what we are seeing is their shaping of public policy then the Tea Party is 'dead on balls accurate' about the immediate need to cut government spending. If this is extreme and fringe thinking then y'all are bigger bullshit artists than the con artists you mock in Washington.
"Relax, it should be a great week in the stock market." Now I'm long and strong from Friday's low with plenty of dry powder.
You Die Hard liberals crack me up and kill me too. A round table with Amanpour and Krugman? Vomit Bag please.
1) "Debts are not a bad thing. We are conditioned to think this way. The US can easily wipe all its debts off its books by implementing Canadian or European style income and sales taxes, but this will never happen. The focus now should be on the jobs crisis, not the debt crisis. Importantly, the former is what is exacerbating the latter, not the other way around."
This is my first Zerohedge post. I was compelled by Leo's faulty logic. I will try to not incur too much wrath here with my virgin post, but......Leo , where is your logic? You state that with european tax rates our debt would go away?!??! Check the rates in Italy, spain , or greece. Are they not heigher than ours? How about Ireland, Portugal , the UK even? Are these countries without debt? You discredit yourself and expose your heavy socialist agenda with your drivel.
Acoustic Medicine
Welcome to Fight Club.
If you grow weary of ad hominems, non sequiturs and vacuous logic, you will grow weary of Leo.
Amen. I care not about "the debt". I care about jobs.
You know, all the time George Bush and Dick Cheney were creating three Wars, the Far Left Wing Drug Giveaway, and the Ruling Class Tax Subsidy, two thoughts were droned endlessly into our ears: 1. "Deficits don't matter"; and 2. "The debt doesn't matter because it's just money that we owe to OURSELVES."
But the instant someone of The Party That Occasionally Throws The Peasants A Crumb took office, two new thoughts were droned endlessly into our ears: 1. "Deficits DO matter, because they are going to eat your children;" and 2. "The debt DOES matter because it's money that YOU owe THE CHINESE."
WHAT? The money that was OWED TO ME somehow, magically, became money I OWE some Chinese Banker?
When? How? Who did it? Why aren't we asking a lot of specific probing questions about exactly how and when and where that financial transaction occured? And who, exactly, that Chinese Banker is?
Please Leo, my sister's name is Dimitra.