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David Einhorn Explains How Ben Bernanke Is Destroying America

Tyler Durden's picture




 

David Einhorn knocks it out of the park with his very first statement during today's Buttonwood Gathering, in a segment dedicated to one thing only: explaining how the Fed's policies are not only not helping the economy, they are now actively destroying this country.

"Sometimes you have to look at what is the base assumption. because sometimes you have a groupthink around the base assumption and everybody agrees to the same thing and acts reflexively and doesn't really challenge what is going on. I think we have reached that point with the monetary policy. The assumption is that if you want the economy to improve, if you want more jobs, if you want more consumption, what we need is ever-easing monetary policy. My point is that if one jelly donut is a fine thing to have, 35 jelly donuts is not a fine thing to have, and it gets to a point where it's not a question of diminishing returns but it actually turns out to be a drag. I think we have passed the point where incremental easing of Federal policy actually acts as a headwind to the economy and is actually slowing down our recovery, and I am alarmed by the reflexive groupthink of the leaders which is if we want a stronger economy, we need lower rates, we need more QE and other such measures." 

And that, in a nutshell is it: everything else follows.

Because in addition to explaining the same fundamental error in the Fed's logic (from an economic standpoint; we already showed what the "market" error is, namely that instead of forcing investors to buy risk assets as Bernanke's wealth effect prerogative demands, these same investors are merely frontrunning the Fed's purchases of bonds and MBS, in what is truly a risk free, if lower-returning trade, and is key reason why ever fewer equity market participants are left, leading to lower bank revenues, bank employee terminations, lower Federal and State tax refunds, and so on, in a closed loop) it also points out the social aspect. At one point in the interview, Einhorn observes that traders and economists now have diametrically opposing views on the effectiveness of QE (no need to explain whose view is what). The reason for this dichotomy is simple, if crucial: we are now at a point where the entire practice of new-classical economics - the bedrock thinking of all modern soecity - is at risk of being exposed for a sham "science" which is and has always been absolutely flawed. Because when one day the Fed fails to prop up the Fed, and fail it will, all the economists that encouraged the Fed to do what it does, without grasping the true implications of 'diminishing returns', will be forced to fall on their swords (hopefully metaphorically but who knows). And with that the end of the shaman cult that shaped the modern world will finally end. But not before every single "economist" keen on perpetuating their job, their tenure, and their paycheck for as long as possible, backs the Chairman fully and unconditionally: anything less, any outright dissent within the economic cabal, would lead to a far faster unwind of the Fed's policy artifice even faster than it otherwise will fail.

Recall that this was precisely the dilemma before the Bundesbank as we explained yesterday, when it did what it had full right to do openly, yet did secretly, when it pulled its gold inventory from London: it implicitly confirmed it was no longer a willing participant of the NWO, and no longer is willing to sacrifice its sovereign independence at the altar of Keynesianism, and monetary theory.

But back to Einhorn, who presents one of the most coherent explanations why QE, contrary to the Chairman's "best intentions" does nothing to stimulate the economy at the consumer level, and why it effectively serves as a hindrance to future growth:

"Lower rates drive up the cost of commodities: oil and food. And money that is spent on oil is sent out of the country to the Mideast and it doesn't help, and takes out income from people's pockets that could otherwise be spent on other goods. The second [ZH: and this is by far the biggest thing that the Fed refuses to acknowledge] is that not being able to earn a safe return on savings, is causing people to hoard savings rather than consume. In other words if I know I am going to earn 3% in the bank I can spend that income and I can have visibility towards that, but if I know I'm going to earn zero in the bank, in order to figure out how much I need to save for retirement I need to save a much bigger number. Which means I can't spend much now, I need to save more now, to build up those savings for retirement. If I am already retired and I am on fixed income, my income has now really gone down and I have to hoard money so I can spread it out thinner over a longer part of my life. So by denying individuals savings or interest on income on their savings, it is causing hoarding which is driving down consumption which is hurting the economy."

As a reminder, in America consumption, not the government (which despite incorrect claims to the contrary has never created even one penny of wealth), is responsible for 70% of annual GDP. Is it any wonder that the Fed's own policies, done solely to protect the financial system, and to enrich those whose wealth is already primarily in the stock market (the infamous "1%"), are the cause of the ongoing catastrophe that is the destruction of America's middle class, which day after day sinks lower and lower?

Also, in direct debunking of all those Magic Money Tree (aka MMT) "economists" who say that government deficits are a great thing because the lead to higher savings, while maybe true on paper, Einhorn shows that the "expectations" component of behavior here is far more critical than what simplistic Econ 101 textbooks claim, especially the ones that were written long before anyone thought that the US would have a Zero Interest Rate Policy for at least 7 years (and likely more until the runaway inflation finally hits):

In terms of the savings, I don't think it's a zero sum, because it's a multiplier on the behavior. It's not just the income I am not receiving now. It is the income I don't expect to receive in the future as well. Now we are years years into [ZIRP] with a promise of at least three more, so that's seven years, and you are getting a change in behavior on a multiplied basis.

Finally, and touching on the previous point of why theoretical economists' views differ so much from those who practically make a living by being right for a change, Einhorn is laconic: "It's very hard for economists with models, with very limited sample sets and empirical data to understand [that we've gone beyond the point of monetary policy diminishing returns.] I think you wind up with a different view from people like me in the real world who aren't just trying to figure out what do the models say, but how do people actually behave.... We've opened up enormous tail risks of what happens if the Fed loses control, what happens if the Treasury loses control and these scare people and drive up risk premiums, and drive down P/E multiples and make companies defer long-term investments in the country because they are worried about significant tail risks these very aggressive policies are creating." And there you have it - someone please advise Paul Krugman and his cotterie of useless voodoo shamans whose only recommendation has always been more of the same. Pardon: much, much more.

None of the what Einhorn said in today's Buttonwood gathering of course is news, as he simply reiterated everything he said in his letter to investors from Tuesday, which is just as effective at explaining how the Fed's solipsistic illogical methods are bankrupting America. The key section in that letter is the following excerpt:

It seems as if nothing will stop the money printing, and Chairman Bernanke in fact assures us that it will continue even after the economic recovery strengthens. Specifically, he says, “Even after the economy starts to recover more quickly, even after the unemployment rate begins to move down more decisively, we’re not going to rush to begin to tighten policy.” Apparently, anything less than a $40 billion per month subscription order for MBS is now considered ‘tightening’. He’s letting us know that what once looked like a purchasing spree of unimaginable proportions is now just the monthly budget.

 

Chairman Bernanke concedes that this policy hurts savers, then offers some verbal sleight-of-hand worthy of a three-card monte hustle: He says the savers are helped by low rates because low rates support higher asset values and promote a healthy and growing economy. He then goes on to say that because savers benefit from a healthy and growing economy, we must therefore have an accommodative policy. This in turn begs the question: Does an accommodative policy promote a healthy economy? Chairman Bernanke argues that higher asset values create a wealth effect, which he again describes, “if people feel that their financial situation is better because their 401(k) looks better or for whatever reason, their house is worth more, they are more willing to go out and spend.”

 

We have just spent 15 years learning that a policy of creating asset bubbles is a bad idea, so it is hard to imagine why the Fed wants to create another one. But perhaps the more basic question is: How fruitful is the wealth effect? Is the additional spending that these volatile paper profits are intended to induce overwhelmed by the lost consumption of the many savers who are deprived of steady, recurring interest income? We have asked several well-known economists who publicly support the Fed’s policy and found that they don’t have good answers.

And so on. If by now it is unclear to anyone that Bernanke is not only not doing anything to help America, or the world, but is merely accelerating this country's destruction, and perpetuating the same practices that result in breakouts of food price shocks leading to isolated genocide in those parts of the world without a safety net, then we congratulate you on your imminent receipt of a Nobel prize in Economics.

Finally, for those asking "what should be done", Einhorn's suggestion is identical to the one Zero Hedge has preached to its readers since day 1, nearly 4 years ago. And we don't even charge 2 and 20...

If Chairman Bernanke is setting distant and hard-to-achieve benchmarks for when he would reverse course, it is possibly because he understands that it may never come to that. Sooner or later, we will enter another recession. It could come from normal cyclicality, or it could come from an exogenous shock. Either way, when it comes, it is very likely we will enter it prior to the Fed having ‘normalized’ monetary policy, and we’ll have a large fiscal deficit to boot. What tools will the Fed and the Congress have at that point? If the Fed is willing to deploy this new set of desperate measures in these frustrating, but non-desperate times, what will it do then? We don’t know, but a large allocation to gold still seems like a very good idea.

So who should listen to: a failed historian-economist who has never worked in the real world, who has no idea how human behavior plays out in reality, who has lived in an ivory tower all his life, and who has never had to put his money where his mouth is, or a self-made billionaire? For us the choice is clear.

* * *

The Einhorn segment in the Economist clip below starts 56 minutes in.

Watch live streaming video from theeconomist at livestream.com

And for more context, here is what Einhorn said about the Fed in his latest letter to clients:

Central bankers have been on a money printing spree. In Japan, they expanded monetary easing by ¥10 trillion. In the U.K., the Bank of England monetized another £50 billion of gilts. ECB President Mario Draghi promised “unlimited” bond buying, and the Swiss are committed to putting a floor under the Franc through unlimited purchases of Euros and other assets.

 

This buying binge brings to mind American Express cards, which are famous for their promise of no pre-set spending limits. But as some AmEx customers have learned, there is a spending limit – they just don’t tell you what it is. AmEx anticipates how much you can repay based on your annual income and your payment history. When your charges exceed their estimates, they cut you off until you pay off your balance.

 

Central bankers should keep this dynamic in mind, as they continue to run their printing presses. While the ink may be endless, the market’s tolerance is not (though there is no sign that it is nearly exhausted). Like American Express, the market won’t let the central bankers know what their spending limits are until they have exceeded them and get cut off.

 

Here in the U.S., Chairman Bernanke announced desperate measures in non-desperate times. The Fed will be using its new AmEx Debasium card to buy a minimum of $40 billion per month worth of mortgage-backed securities…indefinitely. If the job market doesn’t show “substantial improvement” the Fed might increase its monthly MBS allocation, or head over to aisle 3 to pick up some Treasuries. When asked what would bring the binge to an end, Chairman Bernanke was more intent on emphasizing all the things that would necessitate further easing. In conjunction with the money printing, Chairman Bernanke has promised zero percent interest rates through the middle of 2015.

 

It seems as if nothing will stop the money printing, and Chairman Bernanke in fact assures us that it will continue even after the economic recovery strengthens. Specifically, he says, “Even after the economy starts to recover more quickly, even after the unemployment rate begins to move down more decisively, we’re not going to rush to begin to tighten policy.” Apparently, anything less than a $40 billion per month subscription order for MBS is now considered ‘tightening’. He’s letting us know that what once looked like a purchasing spree of unimaginable proportions is now just the monthly budget.

One observation: it is not $40 billion. It is $85 billion as we said the day QE3 was announced:

 Because remember: exchanging Long-Term debt which has massive 10 year equivalent duration, with risk free paper, aka Operation Twist and of which $45 billion takes place each month (i.e., the direct monetization of all gross Treasury issuance with a maturity more than 10 Years) is merely another "Flow" type operation.

Einhorn continues:

Chairman Bernanke concedes that this policy hurts savers, then offers some verbal sleight-of-hand worthy of a three-card monte hustle: He says the savers are helped by low rates because low rates support higher asset values and promote a healthy and growing economy. He then goes on to say that because savers benefit from a healthy and growing economy, we must therefore have an accommodative policy. This in turn begs the question: Does an accommodative policy promote a healthy economy? Chairman Bernanke argues that higher asset values create a wealth effect, which he again describes, “if people feel that their financial situation is better because their 401(k) looks better or for whatever reason, their house is worth more, they are more willing to go out and spend.”

 

We have just spent 15 years learning that a policy of creating asset bubbles is a bad idea, so it is hard to imagine why the Fed wants to create another one. But perhaps the more basic question is: How fruitful is the wealth effect? Is the additional spending that these volatile paper profits are intended to induce overwhelmed by the lost consumption of the many savers who are deprived of steady, recurring interest income? We have asked several well-known economists who publicly support the Fed’s policy and found that they don’t have good answers.

 

If Chairman Bernanke is setting distant and hard-to-achieve benchmarks for when he would reverse course, it is possibly because he understands that it may never come to that. Sooner or later, we will enter another recession. It could come from normal cyclicality, or it could come from an exogenous shock. Either way, when it comes, it is very likely we will enter it prior to the Fed having ‘normalized’ monetary policy, and we’ll have a large fiscal deficit to boot. What tools will the Fed and the Congress have at that point? If the Fed is willing to deploy this new set of desperate measures in these frustrating, but non-desperate times, what will it do then? We don’t know, but a large allocation to gold still seems like a very good idea.

 

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Fri, 10/26/2012 - 06:51 | 2920920 NuYawkFrankie
NuYawkFrankie's picture

+!00

 

Excellent post Jafa - just about says it all.

THese Economists - et al. - are nothing but shills, carney-barkers, apologists for "The Agenda" - and dumb enough not to realise it...  or craven enough not to admit it.

Fri, 10/26/2012 - 04:18 | 2920848 ak_khanna
ak_khanna's picture

The only thing the Fed can do is print money and hand it over to the too big to fail banks in the form of QE which lead to lower standard of living for all the citizens of a country except for the beneficiaries of the bailouts. The poor people in any country cannot contribute to tax revenues. The others who earn their living by small businesses or salaries pay taxes at a much higher rate than the rich individuals or big businesses. This is due to the loopholes in the taxation system which enable them to declare maximum profits in countries which have the least tax rates. So effectively in the long run the governments route the money collected as taxes from the middle class people to the banks so that the bankers can enjoy enormous bonuses. We are in times of privatizing the profits and socializing losses for those who are well connected to the governments and the law makers.

The money which TBTF banks get in the form of QE is used to speculate in currency, stock, commodities and bond exchanges. None of this reaches the main street and hence recovery in the actual economy is not possible through QE. Moreover speculation in commodities like Oil and agriculture products lead to higher prices thus making the lives of the very middle class paying taxes and the poor more miserable.

http://www.marketoracle.co.uk/Article35345.html
www.letstalkmoney2012.in

Fri, 10/26/2012 - 04:41 | 2920856 Never One Roach
Never One Roach's picture

"...a very good idea."

Fri, 10/26/2012 - 05:03 | 2920869 Heyoka Bianco
Heyoka Bianco's picture

"all the economists that encouraged the Fed to do what it does, without grasping the true implications of 'diminishing returns', will be forced to fall on their swords (hopefully metaphorically but who knows)."

I can only say your hopes vary great from mine. Some public executions or coerced suicides would be just the tonic for the battered American spirit.

Fri, 10/26/2012 - 06:00 | 2920897 jack stephan
jack stephan's picture

Trent: You know what you are? You're like a big bear with claws and with fangs...
Sue: ...big fucking teeth, man.
Trent: Yeah... big fuckin' teeth on ya'. And she's just like this little bunny, who's just kinda cowering in the corner.
Sue: Shivering.
Trent: Yeah, man just kinda... you know, you got these claws and you're staring at these claws and your thinking to yourself, and with these claws you're thinking, "How am I supposed to kill this bunny, how am I supposed to kill this bunny?"
Sue: And you're poking at it, you're poking at it...
Trent: Yeah, you're not hurting it. You're just kinda gently batting the bunny around, you know what I mean? And the bunny's scared Mike, the bunny's scared of you, shivering.
Sue: And you got these fucking claws and these fangs...
Trent: And you got these fucking claws and these fangs, man! And you're looking at your claws and you're looking at your fangs. And you're thinking to yourself, you don't know what to do, man. "I don't know how to kill the bunny." With *this* you don't know how to kill the bunny, do you know what I mean?

Fri, 10/26/2012 - 06:09 | 2920901 negative rates
negative rates's picture

No, a bunny is not going to make for much of a meal to a hungry bear readying for hybernation. Stupid people wandering in places they do not belong, well that's another story.

Fri, 10/26/2012 - 07:39 | 2920914 NuYawkFrankie
NuYawkFrankie's picture

Re Sooner or later, we will enter another recession

 

 

Ahhhemmm... David...  hate to be the one to break the news - BUT we're already in a DEPRESSION.

Fri, 10/26/2012 - 06:55 | 2920927 dcb
dcb's picture

as I wrote on the front page of the new economics institute blog section the wealth effect is just made up, it he;ps the top 1%, who of course are the people bernenke surrounds himself with

Fri, 10/26/2012 - 07:37 | 2920952 samsara
samsara's picture

Maybe the Fed Isn't Failing. MAYBE it is it's intention to destroy America.

Who OWNS the Fed. The RED SHIELD.

Read "Civilization at the Crossroads"
http://www.silverbearcafe.com/private/04.09/crossroads.html

and you might get a clue

Fri, 10/26/2012 - 07:49 | 2920960 machineh
machineh's picture

'All the economists that encouraged the Fed to do what it does ... will be forced to fall on their swords (hopefully metaphorically but who knows).'

Tyler, Tyler ... your sympathy for the devils is unbecoming.

Unless these mumbling malefactors are bodily hurled into a volcano to appease the angry gods, they will destroy us.

Fri, 10/26/2012 - 09:11 | 2921133 sessinpo
sessinpo's picture

Quite frankly, I find these threads annoying because they don't address the problem, they address a symptom.

 

Without getting into a long political rant which pisses to many others, I will be short and leave you with this to ponder.

 

Under certain a political ideological environment, you wouldn't have such institutions created in the first place to become problems. That includes the FRB, the ECB as well as all worldly government financial institutions. It also includes all over bearing central governments.

 

Einhorn didn't knock it out of the park, he merely hit a single.

Fri, 10/26/2012 - 09:25 | 2921176 riphowardkatz
riphowardkatz's picture

perfect except Bernanke is not the culprit. If it wasn't him it would be someone else. An electorate that demands free healthcare, retirement benefits for all, disability insurance, a military force that is many times the size it needs and more and more consumption it what is causing it. Remove bernanke remove obama and the exact same results will ensue.

Fri, 10/26/2012 - 09:35 | 2921206 Stuck on Zero
Stuck on Zero's picture

There is that oft quoted number: "consumer spending is responsible for 70% of annual GDP."  It's a complete farce.  Government alone is 39% of GDP.  See details here:  http://www.usgovernmentspending.com/percent_gdp.

 

 

Fri, 10/26/2012 - 10:13 | 2921330 Fiat Money
Fiat Money's picture

 

  Agree completely that the Fed is ACTIVELY WRECKING the American economy.... Indeed, I would go FARTHER,  I believe the Fed,  using  (and based on) the Rothschilds model of  DESTROYING their competitors all through the 1800s, are INTENTIONALLY WRECKING the economy.... JUST AS THEY DID in the 1920s  (with the  typical R's model "Credit Expansion > Credit BUBBLE > inevitably some new businesses and loans will FAIL > CREDIT CONTRACTION > = CONTRACTION OF MONEY SUPPLY >  now even businesses which WERE HEALTHY, have NO CUSTOMERS - the customers have NO MONEY! > credit contraction leads to wholesale ECONOMIC CONTRACTION >  DEPRESSION >  they hyper-wealthy elites come in, and using their hoarded wealth (including their FIIRST-IN-LINE ACCESS to Fed/Central-Banker PRINTED OUT OF THIN AIR 'money')  NOW BUY UP ALL THE REAL WEALTH, for PENNIES on the dollar... 

  (the above is the "Economic Hit Man" or "DISASTER CAPITALISM" or "Vulture Capitalism" model of finance)

  That is, once you have CONDITIONED the public herd to accept "BAILOUTS' for failed bankers, it is pedal to the metal,  FULL SPEED DISASTER CAPITALISM ahead.

 

  However, this line is factually false:  "As a reminder, in America consumption, not the government (which despite incorrect claims to the contrary has never created even one penny of wealth), is responsible for 70% of annual GDP."  Have you never heard of the U.S.    INTERSTATE HIGHWAY system?   

  This GOVERNMENT RUN construction project, created BILLIONS upon BILLIONS upon BILLIONS of dollars of wealth,  turning farmers whose properties would surround new interchanges into overnight millionaires, and of course CREATING MARKETS for gas stations, car sales, tire sales, real estate developments, and of course creating HUGE new markets for those bedrocks of Right-Wing finance, the oil & gas & FINANCE industries. 

 

  Not only does the U.S. interstate highway system provide THE SKELETLE STRUCTURE  of American commerce - making the real estate accessible for building and expansion -  it is also the BLOODSTREAM,  HEART & ARTERIES of American commerce.

     If you think this is an exaggeration, just imagine how long it would take for New York city to come to a screeching halt,  IF TRUCKS could no longer deliver food and other products via highways into the city?  

(Yes, NYC has a port, but even ports must be policed & regulated, and most ag products get from farms to ports via highways.)  


 

Fri, 10/26/2012 - 23:51 | 2923212 Yen Cross
Yen Cross's picture

" Intrest income" makes Einhorn ok?   Smells like "debenture"  .  No matter how you package it.  It's bullshit when someone defaults!

  


Fri, 10/26/2012 - 21:30 | 2923220 disabledvet
disabledvet's picture

"Blaming Bernanke" why absolving the massive political pressure upon our Chairman Lone Ranger to "get the job done" (what might that be? Project Kill America?) while certainly easy to pile on to is simply not getting at the heart of the "who's who of villainy" all debauching the dollar, inciting wars without end, violating the most basic precepts of the Constitution and blowing hundreds of billions of IPO bucks on Social Media plays that stand at the epicenter of the "whole boondoggle." does it make money? does it shorten your lifespan? OH YEAH. the idea that the Pentagoon's don't have a "kill switch" on all this stuff is simply false. Sure...blame The Bernank...he is just doing his job (by ramming interest rates at or near zero) so that NARROW GOVERNMENT INTERESTS can be claimed. Obviously the big money center banks (as President Obama has been laughing about for years now) have been screaming bloody murder about these policies. How can they get a carry unless it's on the back of one while doing their darndest at the Colliseum? And of course they can't. I'm at a loss to explain "having bailed out the banks we've decided we really did want to blow them up after all" approach...but obviously the Fed isn't destroying the USA. Only Wall Street! I would think anyone in a State or region with a population greater than say...800,000 (cough, cough....Chicago....cough, cough) might say something NEGATIVE about this! nay, veerily..."tis but a flash in a financial nuclear pan my liege!"

Fri, 10/26/2012 - 21:51 | 2923266 Abraham Snake
Abraham Snake's picture

And what happens to the consumption habits of people who survive long years of substandard means once adequate income is restored? I think they tend to become lifelong hoarders, or at least I've known a number of great depression survivors who's boom years lifestyle was compulsively below their means.

Sat, 10/27/2012 - 01:02 | 2923455 jimmyjames
jimmyjames's picture

And what happens to the consumption habits of people who survive long years of substandard means once adequate income is restored?

***********

Good point- imo- that is the key target of Bernankes actions-he is trying to reverse sentiment by keeping markets and prices lofty and guaranteeing endless liquidity but his problem is that he's staring right into the face of Mr Market and as you explained-once sentiment shifts like it did back then and has again now--it is game over-

Fri, 10/26/2012 - 23:02 | 2923350 Dasa Slooofoot
Dasa Slooofoot's picture

Barney Frank just said Bernank was a hero on Bill Maher Overtime. 

Unreal.   

Fri, 10/26/2012 - 23:33 | 2923380 Yen Cross
Yen Cross's picture

Barney Frank, is about as credible, as an änal termite"!

Fri, 10/26/2012 - 23:18 | 2923365 Bearish News
Bearish News's picture

I haven't gone to Buttonwood the last 2 years exactly because they had no one like Einhorn around. Note to the Economist Group - if you want independent outlets to cover your bank-fest, get more shit-talkers and indepedent thinkers like David Einhorn. 

Fri, 10/26/2012 - 23:28 | 2923372 alfbell
alfbell's picture

Ok, so central banks (the arms of the elite) are running rampant, the citizens are too ignorant to understand what is going on so they aren't going to stop it. There is no chance of a stable system now with all of the dysfunction, false -isms, false and erroneous policies, corruption, etc that has been going on for the last 100 years in the USA. The damage has been done. The system will collapse and there will be a lot of misery for the citizenry of these countries. The powers that be are making it worse and worse (ie. The Fed's latest QE) and making the eventual collapse a bigger nightmare with each day that goes by... as we hurtle towards the wall in this runaway train. No one is stepping in to slap the Supreme Court, Congress, Federal Reserve, White House upside the head and saying... "ENOUGH! THIS STOPS RIGHT NOW!".

 

So... who ya gonna call?

Fri, 10/26/2012 - 23:37 | 2923382 bunnyswanson
bunnyswanson's picture

In a first world country, you call the politicians whom you have elected and who are paid handsomely in so many goddam ways (including friends and extended family).  That's who.

And when the USA turns into a Banana Republic for even the rich, we'll see some action.  But until then, we'll get second rate products, poor service, " no response " when we have issues. 

In the end, what it comes down to, is TIME.  time will be lost replacing piece-of-shit merchandise, wrong information and lousy service.

Frustration will bring some to massive heart attacks.  Some will give up before then and just say "fuck it." 

This is called A FAILING INFRASTRUCTURE. and you will realize why the effort to keep an infrastructure operational and up to day is preferable to allowing it to rust and corrode. 

 

 Had to edit to fix typos while I await HP customer service to explain to me why my brand new computer gives me the black screen of death everytime I turn it on.  Chat tech was mystified even when I told them that it is in the HP forum - black screen of death is common enough that it is an issue in the HP forum yet Maggeem has no idea why. 

Fri, 10/26/2012 - 23:38 | 2923385 alfbell
alfbell's picture

My fantasy...

An alien ship lands on the planet. A representative of this alien society steps up and announces... "We've been monitoring your planet for the last century. We will not tolerate the conditions here any longer. It is degrading to all beings that exist here. If the governments of this planet do not immediately cease and desist with all warfare, monetary and fiscal irregularities, oppression and suppression of their populations, etc. and allow societies where the poplulace can be safe, prosper and be free... we will turn this planet into a scorched billiard ball. You have 12 months."

Sat, 10/27/2012 - 00:12 | 2923410 francis_sawyer
francis_sawyer's picture

Scorched billiard ball it shall be then... See you in 12 months ~ enjoy the rest of your time...

Sat, 10/27/2012 - 03:22 | 2923529 Cast Iron Skillet
Cast Iron Skillet's picture

c'mon ... we'd just get Will Smith to blow up their rocket ship.

Sat, 10/27/2012 - 00:18 | 2923417 jgeneric
jgeneric's picture

The guy in the video thinks of himself an "outside the box" thinker proclaiming God is Dead.  Well, here I was with my neolithic Christian values and it didn't take blooming genius or outside the box thinker to see gold was a good buy a number of years ago.  Some of the other things he did didn't require some sort of "special revelation" that is only available to aetheists. I invested in mutual funds that only dealt with european companies and did quite well if for no other reason the Euro was getting stronger.  Sheesh!

I just started listening and I already don't like the guy.  Sorry.  Maybe I'll agree to other things he has to say...

Sat, 10/27/2012 - 00:18 | 2923419 jgeneric
jgeneric's picture

The guy in the video thinks of himself an "outside the box" thinker proclaiming God is Dead.  Well, here I was with my neolithic Christian values and it didn't take blooming genius or outside the box thinker to see gold was a good buy a number of years ago.  Some of the other things he did didn't require some sort of "special revelation" that is only available to aetheists. I invested in mutual funds that only dealt with european companies and did quite well if for no other reason the Euro was getting stronger.  Sheesh!

I just started listening and I already don't like the guy.  Sorry.  Maybe I'll agree to other things he has to say...

Sat, 10/27/2012 - 03:06 | 2923520 Me_Myself_and_I
Me_Myself_and_I's picture

Bernanke is a ship captain who keeps insisting on ramming the iceberg, ship after ship after ship.

 

Sat, 10/27/2012 - 03:19 | 2923525 Cast Iron Skillet
Cast Iron Skillet's picture

thank you for posting the video. I listened to the whole thing and Einhorn's segment was fantastic! It is extremely refreshing to listen to an intelligent person speak.

Sat, 10/27/2012 - 04:41 | 2923558 Venerability
Venerability's picture

I posted the following at Seeking Alpha yesterday, on a thread dominated by "Drink the Kool-Aid" young male acolytes of Paul Ryan and the Koch-led Birchers.

It was in response to one of these silly young Ninnies, in the 20-year-old range, saying, in essence, that we should admire "Billionaires" BECAUSE they are Billionaires, a piece of blasphemous Propaganda that would delight the Mob, Oligarchs around the world, the likes of the silly but abominable Donald Trump, and so-called serious Hedgie prognosticators like Mr. Einhorn.

Here is what I said:


Admire people BECAUSE they are "billionaires?"

A whole lot of dictators are or have been "billionaires."

So are most of the heads of leading crime families.

Most admire those who have gained wealth by CREATING and BUILDING and MAKING THE WORLD BETTER.

No one should admire those who have amassed wealth by stealing it from others, which unfortunately includes many of the richest people in America right now.

Anyone whose wealth has come from Short Selling, from Derivatives, from Downsizing, from Outsourcing, from Financial Engineering is not "admirable" to me or to most of our fellow Americans.

And it is hardly a coincidence that those whose wealth has been amassed from less than "admirable" practices would further demonstrate their lack of character and lack of support for the Social Contract by keeping that wealth in places where it is stagnant and unproductive, rather than utilizing it to start rebuilding and improving and growing our economy and the world economy again.

Our debating these issues on a Seeking Alpha board isn't going to change anything.

But after this election - and, I fully expect, another rejection of the "Nay-Sayers for Purposes of Pure Greed" crew - these are debates America needs to have collectively as a country and as a society.

 

Sat, 10/27/2012 - 09:51 | 2923691 spanish inquisition
spanish inquisition's picture

Let me recap "I made my bones on getting in early on the jelly donuts ponzi around 4 or 5 and it was awesome, I am living like a king now. The problem is that the factory is still running and my jelly donuts are getting less valuable. So I am imploring everyone to rise up and stop the madness of ponzi baking so that I can keep my jelly donuts more valuable. I should not be penalized because I realized the benefits of exploiting the jelly donut ponzi early. Stop the baking madness!"

EDIT: Einhorn and alot of other million/billionaires out there are beginning to face the realization that they are not "in the club".

Sat, 10/27/2012 - 10:50 | 2923743 Benjamin Glutton
Benjamin Glutton's picture

Bubbles are created to induce artificial growth which then enables expansion of the Federal budget.

 

any other silly questions Mr. Einhorn?

Sat, 10/27/2012 - 11:28 | 2923785 MFLTucson
MFLTucson's picture

Good piece and interesting comments.  My question is, when do the poeple take over this goverment and demand this man pay for what he has done?

Sat, 10/27/2012 - 11:40 | 2923802 Pie rre
Pie rre's picture

My backup plan is when I'm too old to work and taxes et all forces me from my home is to rob a bank and live the rest of my life on the the gov tit.  HELLO BUBBA please be kind.

Sat, 10/27/2012 - 11:41 | 2923805 Atomizer
Atomizer's picture

The Bankers are the Problem -2011

 

The only thing which has changed since the above video launch, more understanding to the core issues. Complacency, denial, fraud, fear of lost power, and re-evaluating wealth in terms of income/debt ratio converges into chaos theory . Shooting fish in a barrel is the only option available.

 

KaaaaaBooooommmmm!

Sat, 10/27/2012 - 11:51 | 2923810 mess nonster
mess nonster's picture

anything less, any outright dissent within the economic cabal, would lead to a far faster unwind of the Fed's policy artifice even faster than it otherwise will fail.

Don't say the emperor has no clothes. If you do, they will rip your balls off and shove them down your throat.

If Lenin had lived, Russian Comunism may have looked more like Scandavian Socialism. But he didn't.

Stailin (Dzhugashvili) was a Georgian. That is, he was not a natural-born Russian. Translation: He didn't give a shit about Russia.

Hitler was Austrian. That is, he was not a natural-born German. Translation: He didn't give a shit about Germany.

Hoid on, I'm going to wrap it all up.

Imposters thrive on illusion. When they come to power, the truth is the pin to their balloon. Therefore it must be supressed.

Sat, 10/27/2012 - 12:14 | 2923841 poldark
poldark's picture

Obama was born in Kenya.Translation - he does not give a shit about America.

Sat, 10/27/2012 - 11:53 | 2923816 moneybots
moneybots's picture

"We have just spent 15 years learning that a policy of creating asset bubbles is a bad idea"

 

We learned that in grade school, when we were taught about the Tulip bulble and the South Sea bubble.

Bernanke went to grade school and is a self professed expert on the Great Depression, so he has no excuse for ignoring grade school history and math, leveraging the FED up over 50 to 1.

Sat, 10/27/2012 - 12:15 | 2923842 smacker
smacker's picture

IMHO Einhorn is absolute right about the response a lot of people make to negative interest rates on their savings: they spend less. That has certainly been my response. So VAT (sales tax) revenues are lower.

Another consequence of the US Fed and UK BoE money-printing obsession not mentioned much is the destruction of pension annuity rates which are based upon bond yields at the time.

So, the central banks are destroying peoples' savings and destroying their future pensions. It's time to revolt...

Sat, 10/27/2012 - 12:26 | 2923852 moneybots
moneybots's picture

 "We've opened up enormous tail risks of what happens if the Fed loses control, what happens if the Treasury loses control."

 

The FED isn't in control now.   Years of ZIRP, with more promised, demonstrates that already.  QE1, 2, 2.5 and the economy is on the verge of a recession, with the FED panicking into QE3.  If the FED was in control, it wouldn't be leveraged up over 50 to 1.  How much were the investment banks leveraged and they ALL failed, with the politically connected getting bailed out?

Math is in control.  1+1 ALWAYS comes out to = 2, no matter how much financial engineers like Bernanke, want it to = 3.

100% of booms end in a bust because math is in control.  1+1 ALWAYS = 2.  Booms ALWAYS end in bust.

Sat, 10/27/2012 - 13:04 | 2923902 Michelle
Michelle's picture

TYLER, TYLER, TYLER, OH TYLER!

While I appreciate your opinion articles regarding the eventual demise of America, why aren't you covering some important factual stories that will have significant financial impact as well, i.e. the U.S. Court of Appeals decision yesterday afternoon regarding the Argentina bondholder decision and the blowout on their sovereign CDS?

 

 

Sat, 10/27/2012 - 13:34 | 2923961 resurger
resurger's picture

excellent post

Sat, 10/27/2012 - 15:15 | 2924094 dscott8186
dscott8186's picture

ZIRP has only one real beneficiary, the government bureaucrats.  This is one of the most selfish acts of the Progressive Elites to advance their agenda of enriching themselves.  The base of the Progressive Elites are government bureaucrats whose 5 figure incomes depend upon an expanding base of government jobs, thousands upon thousands of them living off of tax payer income.  Obama has done more to advance this increase in bureaucrat employment and ObamaCare will vastly expand those roles further.  These same selfish elites ensnare millions of poor people to trap them in poverty via handouts, all at tax payers expense.  Then to top off that selfishness they enlist corporatists to bank roll their campaigns of politicians who are their allies, again at tax payers expense via crony contracts for such things as military procurement and the latest fad, government grants to study AGW and selling expensive biofuel to the Navy, etc.  

The whole point of ZIRP is to finance the greed of the Progressive elite (the bureaucrats) who live at the expense of the tax payer.  We have advanced from the false morality of caring for the poor and the hypocritical meme, "its for the children" to create programs which require bureaucratic staffing, -> then to raising taxes to pay for it, -> then to borrowing money when raising taxes is insufficient, -> then to artificially depressing interest rates to hold down the monthly payments to support that borrowing and -> then finally to massive money printing as we are doing now.  This is the cycle of destruction that Argentina and Zimbabwe went through creating social programs to employ bureaucrats.

I submit the bubble expansions created by feds using various policies is deliberate.  By creating the bubble, they suck private equity into the bubble and then pop the bubble to destroy that wealth.  The Federal Reserve then prints money to replace that lost wealth for the Progressive elites own consumption purposes.  The Fed purchases Treasury Bonds with electronic ones and zeros thus hiding their money printing activities and so funding the Progressive agenda.

ZIRP is the selfishness of suppressing interest rates and thus depriving private investors of moderate risk investments like bonds producing income for fixed income retirees.  It also deprives equity investors as well of reasonable profits at moderate risk forcing them to take greater risks for less than reasonable profits.  This distorts the risk - reward paradigm and thus creates greater systematic instability through excessive risk taking that will eventually topple the whole economy.  ZIRP in the end will destroy the economy not save it.

 

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