This page has been archived and commenting is disabled.

David Stockman On "The Great Deformation" And The US Treasury As "The M&A Department Of Goldman Sachs"

Tyler Durden's picture


From David Stockman's upcoming book The Great Deformation: The Corruption Of Capitalism In America

The Great Deformation

The fiscal cliff is permanent and insurmountable. It stands at the edge of a $20 trillion abyss of deficits over the next decade. And this estimation is conservative, based on sober economic assumptions and the dug-in tax and spending positions of the two parties, both powerfully abetted by lobbies and special interests which fight for every paragraph of loophole ridden tax code and each line of a grossly bloated budget.

Fiscal cliffs as far as the eye can see are the deeply troubling outcome of the Great Deformation. They are the result of capture of the state, especially its central bank, the Federal Reserve, by crony capitalist forces deeply inimical to free markets and democracy.

Why we are mired in this virtually unsolvable problem is the reason I wrote this book. It originated in my being flabbergasted when the Republican White House in September 2008 proposed the $700 billion TARP bailout of Wall Street. When the courageous House Republicans who voted it down were forced to walk the plank a second time in betrayal of their principled stand, my sense of disbelief turned into a not-inconsiderable outrage. Likewise, I was shocked to read of the blatant deal making, bribing, and bullying of the troubled big banks being conducted out of the treasury secretary’s office, as if it were the M&A department of Goldman Sachs.

By the end of the Bush administration it was starkly apparent that a Republican White House had wantonly trashed all the old-time fiscal rules, and it had been done by political neophytes: Hank Paulson and his posse of eager-beaver Goldman bankers. But I had been at the center of the most intense fiscal battle of modern times during the early Reagan era and had learned something they apparently hadn’t: that the Congress is made up of representatives from 435 mini-principalities and duchies, and they reason by precedent above all else. Once Wall Street, AIG, and GM were bailed out, the state would have no boundaries: the public purse would be fair game for all.

I found this alarming in view of the long ago Reagan-era battle of the budget that had ended in dismal failure. Notwithstanding decades of Republican speech making about Ronald Reagan’s rebuke to “big government,” it never happened. In the interim, Republican administrations whose mantra was “smaller government” only made Big Government more corpulent, so plainly by 2008 there was no fiscal headroom left at all to plunge into “bailout nation.”

After I left the White House in 1985 I wrote a youthful screed, The Triumph of Politics, decrying Republican hypocrisy about the evils of deficit finance. But I had also tried to accomplish something more constructive: to systematically call the roll of the spending cuts not made by Ronald Reagan, and thereby document that almost nobody was willing to challenge the core components that comprise Big Government.

Thus, the giant social insurance programs of Medicare and Social Security had barely been scratched; means-tested entitlements had been modestly
reformed but had saved only small change because there weren’t so many welfare queens after all; farm subsidies and veterans’ benefits had not been cut because these were GOP constituencies; and the Education Department had emerged standing tall because middle-class families demanded their student loans and grants. In all, Ronald Reagan had left the “welfare state” barely one-half of 1 percent of GDP smaller than Jimmy Carter’s, and added a massive structural deficit to boot.

But that was twenty-five years ago, and whatever fiscal rectitude had existed among the Republican congressional elders at the time had long since disappeared. During the eight years of George W. Bush, the GOP had pivoted from spending cuts not made to a spending spree not seen since the presidency of Lyndon Baines Johnson—adopting Medicare prescription drug benefits, massive growth in education spending, the monstrosity of the Homeland Security Department, sky-high farm subsidies, and pork-barrel excess everywhere. Worse still, the defense budget had doubled and the so-called Republican brand had been reduced to tax cutting for any reason and in whatever form the lobbies of K Street could concoct. George W. Bush thus left the White House trailed by previously unthinkable bailouts and a deluge of red ink which would reach $1.2 trillion and 10 percent of GDP, even before the Obama stimulus. What was truly galling, however, was that the Wall Street satrap occupying the third floor of the Treasury Building had talked the hapless Bush into a $150 billion one-time tax rebate to “stimulate” the economy.

I had long since parted ways with the supply-siders and had left the White House with my admiration for President Reagan considerably dulled by his obdurate inflexibility on the runaway defense buildup, and his refusal to acknowledge that the giant deficits which emerged in the 1980s were his responsibility, not Jimmy Carter’s. But despite all this, I thought that the Paulson tax rebate was a sharp slap in the Gipper’s face. President Reagan’s great accomplishment had been the burial of the Keynesian predicate: the notion that Washington could create economic growth and wealth by borrowing money and passing it out to consumers so they would buy more shoes and soda pop.

Now Paulson was throwing even that overboard. Didn’t the whirling dervish from Goldman know that once upon a time all the young men and women in Ronald Reagan’s crusade, and most especially the father of supply side, Jack Kemp, had ridiculed the very tax rebate that he peddled to Nancy Pelosi in February 2008 as Jimmy Carter’s $50 per family folly? At length, I saw the light, and it had nothing to do with Paulson’s apparent illiteracy on the precepts of sound fiscal policy. The bailouts, the Fed’s frenzied money printing, the embrace of primitive Keynesian tax stimulus by a Republican White House amounted to something terrible: a de facto coup d’état by Wall Street, resulting in Washington’s embrace of any expedient necessary to keep the financial bubble going—and no matter how offensive it was to every historic principle of free markets, sound money, and fiscal rectitude.


- advertisements -

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
Tue, 03/12/2013 - 13:01 | 3322866 Jacque Itch
Jacque Itch's picture


Tue, 03/12/2013 - 13:38 | 3322996 BaBaBouy
BaBaBouy's picture

It's Pretty Simple...

SackMan GOLD Runs The Whole Fecking Show ...

Tue, 03/12/2013 - 13:51 | 3323053 NotApplicable
NotApplicable's picture

Hey don't blame Reagan! He was tired of getting shot.

Tue, 03/12/2013 - 13:56 | 3323073 redpill
redpill's picture

"Likewise, I was shocked to read of the blatant deal making, bribing, and bullying of the troubled big banks being conducted out of the treasury secretary’s office, as if it were the M&A department of Goldman Sachs."

Really??  Were you really shocked?  Because if so, you might be in the wrong line of work!

Tue, 03/12/2013 - 14:19 | 3323156 cougar_w
cougar_w's picture

Shocking that it was done in so public a fashion. There was once a time when these things were managed over drinks down at the Skull and Bones.

Tue, 03/12/2013 - 14:40 | 3323238 SafelyGraze
SafelyGraze's picture

" I was shocked -- SHOCKED -- to read of the blatant deal making, bribing, and bullying of the troubled big banks being conducted out of the treasury secretary’s office"


Economy (noun): the system by which the banks of the federal reserve corporation lend to governments, corporations, and homeowners whose defaults are paid from taxes collected elsewhere

Tue, 03/12/2013 - 14:51 | 3323290 markmotive
markmotive's picture

Ever-expanding debt is required to keep the system from imploding. We must destroy ourselves in order to save ourselves.

Tue, 03/12/2013 - 16:14 | 3323666 Herodotus
Herodotus's picture

Bush told him...."I've got plenty of other buddies with crazy sons, so why don't you just take the hint and go along with the program?"

Tue, 03/12/2013 - 15:08 | 3323400 Panafrican Funk...
Panafrican Funktron Robot's picture

"a de facto coup d’état by Wall Street"

This is the distilled essence.

Tue, 03/12/2013 - 13:37 | 3322997 DoChenRollingBearing
DoChenRollingBearing's picture

Since virtually none of us here at ZH can change DC, I would suggest buying:


gold, gold, gold, gold, gold, gold,

gold, gold, gold, gold, gold, gold,

gold, gold, gold, gold, gold, gold,

(a Bearing´s vocab can be very limited...)

Tue, 03/12/2013 - 14:34 | 3323147 ZerOhead
ZerOhead's picture

But first pick up some cheap environmentally protected wetlands (@$200-500/ acre) ...

You get fresh fish, ducks, frogs legs and turtle soup a la carte with a side helping of rich organic and totally irrigated soil for your veggies. Personally I find that endangered species taste the best... nothing can beat a nice bald eagle or whooping crane on the rotisserie.

Don't get me wrong... gold is great and fun to play with down by the dock when it absolutely gleams in the late afternoon sun... but food supply is going to be even more important because when the music stops the ponziconomy with it's global supply chain comes to a grinding halt.

Tue, 03/12/2013 - 15:37 | 3323531 css1971
css1971's picture

Isn't "wetland" the politically correct name for "swamp".

Tue, 03/12/2013 - 15:13 | 3323434 orez65
orez65's picture

... and silver, silver, silver, silver, silver, silver, silver, silver, silver, silver, silver, silver, silver, silver, silver, silver, silver, silver, silver, silver, silver, silver, silver, silver ...

Tue, 03/12/2013 - 15:45 | 3323559 Kirk2NCC1701
Kirk2NCC1701's picture

But a bearing would more likely make the following sounds:

au,au,au,au,au...   and

ag,ag,ag,ag,ag,ag,ag...  Occasionaly even


Tue, 03/12/2013 - 13:02 | 3322871 TomJoad
TomJoad's picture

Okay, but now what?

Tue, 03/12/2013 - 13:04 | 3322877 Jonas Parker
Jonas Parker's picture


Tue, 03/12/2013 - 13:09 | 3322896 knukles
knukles's picture

Declare Victory and go home to watch a couple Three Stooges movies?

Tue, 03/12/2013 - 13:16 | 3322929 cougar_w
cougar_w's picture

I'm down with that. I'll bring a 12-pack.

Tue, 03/12/2013 - 13:17 | 3322934 bank guy in Brussels
bank guy in Brussels's picture

Funny how David Stockman still hasn't digested what happened to him 30 years ago under Reagan, as his idealism about cutting budget fat got destroyed by the oligarch owners of American politics ... who have been running things ever since

And an older guy now, Stockman still thinks 'writing a book' will make a difference

Stockman was 'powerful' once upon a time, as long as he appeared to serve his masters

But now he is on the margin, like another Reagan appointee, Paul Craig Roberts, relegated to a 'conspiracy' and 'fringe' role ... Tho Roberts is better at going all the way to truth on what a fascist shite-pile the USA has become

Stockman now on the edge, with fringe ZeroHedge

David Stockman's 'new book', ha! ... Like the book Karl Denninger has tried to sell as one of his several failed political efforts ... or the books marketed by Mr Testicle Pit, er Testosterone Pit, on Zero Hedge

One thing for sure, it is far too late for a 'book for sale' to change anything

Tue, 03/12/2013 - 13:29 | 3322979 Darkdoc
Darkdoc's picture

I count at least 5 ad hominem attacks in there, but no one actually making a point.

Got any?

Tue, 03/12/2013 - 13:31 | 3322982 imaginalis
imaginalis's picture

"When the courageous House Republicans....."???



Tue, 03/12/2013 - 13:55 | 3323069 NotApplicable
NotApplicable's picture

Well, they were courageous. They looked Wall St. in the eye and said no (like "we the people" directed them to). It's one of the few times in my life I've actually seen this happen.

Then Wall St. played the trump card, trashed the Dow, looked over at these "Mr. Smiths" and calmly asked...

"Double or nothing?"

Tue, 03/12/2013 - 14:57 | 3323331 James_Cole
James_Cole's picture

Well, they were courageous. They looked Wall St. in the eye and said no (like "we the people" directed them to). It's one of the few times in my life I've actually seen this happen.

The Republicans were "courageous" for all of ten mins, the initial vote was 140–95 Dems (for), 133-65 Repubs (against).

After the stock market meltdown this was quickly fixed with bipartisan support of the new bill. Interestingly, Paul Ryan who is oh-so-important in the congress now voted for Tarp both times. Big time deficit hawk there!

And after the first "bill" was accepted, George W. used executive authority to completely change the whole deal anyway, which was the icing on the cake. 

Tue, 03/12/2013 - 15:44 | 3323556 mick_richfield
mick_richfield's picture

They also had the 4th-ever closed door session in the House, and told the Republicans that there would be blood in the streets and martial law if they did not vote for the bailout.  And they rolled over.


Tue, 03/12/2013 - 18:22 | 3324084 Redhotfill
Redhotfill's picture

" Courageous House Republicans "  Found in dictionary next to definition of Oxymoron

Tue, 03/12/2013 - 13:40 | 3323006 MiltonFriedmans...
MiltonFriedmansNightmare's picture

"They (fiscal cliffs) are the result of capture of the state, especially its central bankl..."  OK David, you lost me there with a reference to the state (as in the American public) owned FED. You of all people should know who owns the sure as hell isn't the American people.

Tue, 03/12/2013 - 15:19 | 3323472 orez65
orez65's picture

The Fed is owned by the Too Big To Fail Banks.

They run the US.

They just let us play with social issues like gay rights and abortion.

They don't care about those because there is no money to be made there.

Tue, 03/12/2013 - 23:18 | 3324860 MiltonFriedmans...
MiltonFriedmansNightmare's picture


TBTFBs run the world....gots to get me some Beppe, I just love that guy.

Tue, 03/12/2013 - 23:19 | 3324863 MiltonFriedmans...
MiltonFriedmansNightmare's picture

Meant to say run and own....the world.

Tue, 03/12/2013 - 14:38 | 3323224 Tinky
Tinky's picture

I find these sort of attacks to be quite odd. It's as if those who actually do awaken and reform their views are to be reflexively ridiculed because they didn't wake up (or act) early enough.

Stockman and PC Roberts are laudable in that they are at least trying to sound warnings. And while no one would suggest that they will make a decisive difference in how the awful drama plays out, there is little doubt that their writings will have helped to awaken other individuals who, as a result, will be better positioned to weather the storm.

Tue, 03/12/2013 - 15:04 | 3323381 James_Cole
James_Cole's picture

I find these sort of attacks to be quite odd. It's as if those who actually do awaken and reform their views are to be reflexively ridiculed because they didn't wake up (or act) early enough.

Yeah, especially for people like Stockman who could've easily towed the party line and done really well. It's easy to complain about the establishment on anonymous websites with nothing to lose, for a guy like Stockman it takes real courage. 

Tue, 03/12/2013 - 14:51 | 3323296 Charles Nelson ...
Charles Nelson Reilly's picture

sooooo, you liked your pre-released copy or no?

Would you recommend I read Krugman instead?

Tue, 03/12/2013 - 15:22 | 3323477 Panafrican Funk...
Panafrican Funktron Robot's picture

I agree, "Stockman gets it!  He's gonna write a book and stuff!  See!  See!  Stockman, he was an insider that has "seen the light"!"  As if he'll get fucking anywhere with this.  THE OWNERS DON'T GIVE A FUCK.  THEY ARE NOT GOING TO CHANGE THEIR WAYS.  THERE IS NO "FREEDOM" OR "DEMOCRACY".  YOU ARE A SLAVE.

Please, for fucks sake, let's move beyond the "what can we do within the current paradigm to fix what ails us" bullshit.  The current paradigm is two things:

1.  A giant force, who's direction we cannot stop.

2.  Highly unstable, and near the end of its life.   

As noted by many others here, there is only the following:

1.  Become self-sustaining to the greatest degree possible.

2.  Teach others to do the same.

Yet another book explaining how "Goldman runs the world", which isn't even technically correct (they are still relatively small players), has no bearing on our preparations.  I could write a book about the various things I've done incorrectly in attempting to grow vegetables in my backyard, and I would be more useful than Stockman here.  

Tue, 03/12/2013 - 13:19 | 3322940 McMolotov
McMolotov's picture

There will be blood.

Tue, 03/12/2013 - 13:29 | 3322977 Cdad
Cdad's picture

There really is no need for it.  All folks need to do, from today and until such time as the Federal Reserve is shuttered, is to simply not spend money on anything that is not necessary.  Needs only.

The Revolution of the Closed Wallet, folks.

Tue, 03/12/2013 - 13:53 | 3323060 McMolotov
McMolotov's picture

I agree there's no need for it, but I think it will happen anyway. I've cut back to only the essentials myself, but people around me think it's "weird." They're conditioned to spend, and old habits die hard. There are also too many people dependent on the system now, and they won't go quietly when the spigot is turned off.

The government will solve this problem the way most governments have throughout history: war. Find a scapegoat and cause a distraction. It's the coward's way out — and to be sure, we are dealing with cowards.

Tue, 03/12/2013 - 15:29 | 3323505 Panafrican Funk...
Panafrican Funktron Robot's picture

"They're conditioned to spend, and old habits die hard."

Indeed.  Everytime I see your sig picture, I want McDonald's fries.  Even though I am aware that they're not food.

Yeah, if you're not seeing the steady drumbeat of an Asia-Pacific + M.E. theatre war, you're living in a cave.  Who knows when the heck it will happen, but I personally don't see where we're going to get out of Q1 earnings season without at least the first live fire flareups.  "Stocks are down over jitters that xyz is happening" to mask total shit earnings numbers.  Playbook getting old.  

Tue, 03/12/2013 - 13:52 | 3323061 shovelhead
shovelhead's picture

And 150 million Americans filing tax exempt...

Tell em to come and get it.

Let's see how efficient .Gov. really is.

Tue, 03/12/2013 - 14:08 | 3323120 whatsinaname
whatsinaname's picture

Are you kidding ? Did you watch the Schiff - Mauldin gymboree ? Did you get the remark that Schiff made about folks at the DMV ? 

Tue, 03/12/2013 - 15:39 | 3323537 Professorlocknload
Professorlocknload's picture

Damned thing about purchasing only essentials is, it seems only the prices of necessities are rising? I think we're being end run, maybe?

Water, power, food, gas all up in my neighborhood. (Won't mention health care)

Something tells me the statists have that one dialed. Soon won't be optional, it'll be the only (un?) affordable choice.


Tue, 03/12/2013 - 13:29 | 3322970 chubbar
chubbar's picture

If you need an example of what happens to folks who ask the wrong questions or try to stand up for their rights, here's an example of our new US of A and the titheads that run it.

"Eileen Hart and her husband, Keith, are property owners in Newfield, New Jersey.

On Saturday, March 9 there was an informal meeting at the Gloucester Community Center, to discuss the findings on "revaluations" by Appraisal Systems, Inc.- a company which has been contracted by the state of New Jersey- to assess the fair market property values for each county or borough- for the tax assessor's offices.

There has been much derision caused by these "revaluations" by homeowners, because property values have fallen dramatically- and the real estate market has been hit very hard . There is nothing "fair" about the market or the home values that have been assessed, according to many New Jersey families.

Ms. Hart attended the meeting, armed with- as she said "her Constitution and the facts."

Said Hart "I tried to express my opinion and tell them that my Constitutional rights had been violated. I began quoting the Constitution, line by line.

Ms. Hart tried to explain, that Appraisal Systems, Inc. was attempting to inspect her property without her husband being present. As an Orthodox Jew, this is against the tenets of her religion. Her husband had to be present. According to Ms. Hart, she was unable to express this concern.

A representative of Appraisal Systems, Inc. -(<List of Appraisal System Employees at this link) apparently took offense to her objections and brought in Robyn Glocker-Hammond, the Tax Assessor - who stated that her job was to "enforce the law."

(This writer was under the impression that Tax Collectors collected taxes. They are NOT "law enforcement." But then, I am not a Tax Collector in New Jersey. )

Relates Hart: "She also wouldn't let me speak and told me to sit down and shut up and listen as well. That's when the young man came toward me. I knew he was going to put his hands on me. I saw him out of the corner of my eye. I said to him "Don't you dare touch me." Then they threw us out of the auditorium. The young man from Appraisal Systems, Inc. was the one going postal, and I believe if HE HAD A GUN, he would have shot me, Keith and Khloe on the spot. I was calm the entire time."

When the Harts left the gathering, they were followed into the parking lot of the community center, and the same young man who had been so upset by Ms. Hart's comments in the community center, started screaming and shouting at her, took down the license plate number of her vehicle and said - "See if you are able to pay your property taxes NOW!"

Eileen didn't understand what that shouted threat meant, until she returned to her home with her family.

When they arrived, there were 5 police cars from the Franklinville Police Department. They advised her that the Clayton Police wanted to talk to her about the allegations.

States Hart "For the record, both the police officers DID acknowledge that it was "an allegation."

Her purse was taken from her and she was put into a "paddy wagon," transported to the police station-

Her young daughter witnessed the events and was traumatized to see her mother being treated like a common criminal.

She was arrested and booked for "terroristic threats" and "contempt."

At the police station, she was handcuffed to a chair.

The cops ran a background check- and it revealed that she had absolutely NO criminal record. It also showed that she was the lawful owner of two hand guns. She was advised to turn in the guns over to the court (surrendered or confiscated) - and they would be held for "safe keeping." If she did not- she was told by the police- her bail would be VERY high. And- if she could not make the bail- she would sit in the county jail until an unknown date.

The complaint (in part) states: The State of New Jersey vs. Eileen B. Hart -"The Defendant was yelling and screaming and making the threatening comment. "If the door is locked. I'll be back with a gun."

Ms. Hart denies she ever made this statement, as does her husband, Keith. However, this is how the complaint was written up by Clayton County Sergeant J. Dick- who, it may be noted, was not present during the meeting.

She surrendered her guns and was released on her own recognizance."

Tue, 03/12/2013 - 13:54 | 3323067 McMolotov
McMolotov's picture

Sick. Not much else to say but that.

Tue, 03/12/2013 - 14:43 | 3323256 koncaswatch
koncaswatch's picture

Notice the booking for "terroristic threats".... here we go; anything they don't like is terrorism.

Tue, 03/12/2013 - 15:03 | 3323370 McMolotov
McMolotov's picture

She was probably "combative," too...

Wed, 03/13/2013 - 01:04 | 3325064 mkhs
mkhs's picture

Clearly resisting arrest, too.  She is lucky she was not shot.  I know I was in fear of my life reading that.

Tue, 03/12/2013 - 15:33 | 3323522 Panafrican Funk...
Panafrican Funktron Robot's picture

Ah, I see the issue here.  She was an Orthodox Jew.  Better get in line, lady.  Only "Reform Zionists" allowed.

Tue, 03/12/2013 - 16:26 | 3323704 H E D G E H O G
H E D G E H O G's picture

should've GLOCKED ms. GLOCKER..................fucking bitchrat.............

Tue, 03/12/2013 - 13:29 | 3322980 azzhatter
azzhatter's picture

We all know where we are but how do we stop it?

Tue, 03/12/2013 - 14:34 | 3323207 Professorlocknload
Professorlocknload's picture

We can't stop it.

"When the Elephants wrestle, the grass suffers." 

Just don't be the grass.



Tue, 03/12/2013 - 15:57 | 3323607 Kirk2NCC1701
Kirk2NCC1701's picture

"Okay, but now what?"

Now we wait and see if his book (a cogent cohesion of the many ZH articles and blogs?) actually makes a difference, even if he makes a guest appearance on Jon Stewart's Daily Show.  Hopefully the book will do well enough to encourage more such books, and to give these issues visibility and consciousness with the general public.

Worst case:  Stockman hopefully made a bit of money and got the issues a bit wider audience, into which to plant the ZH seed.  Time, rain & sunshine will hopefully do the rest. 

My bet -- if I had a website to bet it on ;-)  ;-) -- would be:  'No discernible difference' to the Kool Aid masses, and the dumb, fat, grain-fed sheep. 

Tue, 03/12/2013 - 13:03 | 3322875 Pareto
Pareto's picture

You ain't seen nothing yet David.  Herr Bernanke is just getting warmed up!

Tue, 03/12/2013 - 13:07 | 3322878 Popo
Popo's picture

"The bailouts, the Fed’s frenzied money printing, the embrace of primitive Keynesian tax stimulus by a Republican White House amounted to something terrible: a de facto coup d’état by Wall Street, resulting in Washington’s embrace of any expedient necessary to keep the financial bubble going—and no matter how offensive it was to every historic principle of free markets, sound money, and fiscal rectitude."


Yep.   And here we are 5 years later, and nothing's changed.  

Which raises the question:  Will we be here 5 years from now still telling this story?   10 years from now?  

Anyone who thinks that this game "will and must" end within our lifetimes may be dreaming.  Or maybe not...     The Soviet Union was clearly unsustainable many decades before it's collapse.    But anyone waiting for the big kaboom had a long wait ahead of them.

Tue, 03/12/2013 - 13:19 | 3322938 Rustysilver
Rustysilver's picture


Soviet Union lasted 72 years. I know the history of Europe and Central Europe quit well.

We (US) have been feeding Soviets since 1920's.  They would have gone very hungry in the 1970's but for our grains. We sold the the grains and gave them the loans so the our poor millionaire farmers could survive.

Tue, 03/12/2013 - 14:51 | 3323295 Professorlocknload
Professorlocknload's picture

 We fed them because the state becomes powerless sans an enemy from which to protect it's subjects. Of course, the farmers couldn't really complain, as secondary beneficiaries. Kinda like they don't complain much about the EBT program either.


Tue, 03/12/2013 - 13:20 | 3322950 aka Gil
aka Gil's picture

The only change is that the tentacles of the squid have penetrated deeper into the structure of the government/corporate Amerika fascist business model.

But does this story have another 5 years? Hard to imagine, but maybe we'll all live long enough to see if it does.

Tue, 03/12/2013 - 13:22 | 3322953 Northeaster
Northeaster's picture

"Which raises the question:  Will we be here 5 years from now still telling this story?   10 years from now?"

No one knows for sure, but I think the fiscal and monetary Pandora's Box has been opened with no way to close it.

Tue, 03/12/2013 - 13:35 | 3322985 McMolotov
McMolotov's picture

The Soviet Union was clearly unsustainable many decades before its collapse.

The past decade has been a wake-up call for a lot of people, and in retrospect, I think most of us would agree the United States became unsustainable decades ago. In other words, we've been in decline for a long time already. Our Potemkin Village of a nation is now being held together with a few strings and some bubblegum, and the only thing propping it up is a huge stack of counterfeit money hidden behind it.

I'd be shocked if we go ten more years without a real systemic disruption that up-ends everything.

Tue, 03/12/2013 - 14:11 | 3323127 aka Gil
aka Gil's picture

I'll be shocked if we go another 5 years without the systemic disruption you speak of. Yes, the USSR plodded along for decades but only with the aid of the west. And the Japanese economy, along with their zombie banks, have plodded along for decades now as well but only because there have been other larger economies in the world to buy their exports. Who will support the US for decades to come? Our military? I hear a death rattle.

Tue, 03/12/2013 - 15:44 | 3323555 Panafrican Funk...
Panafrican Funktron Robot's picture

"some bubblegum"

Kinda prefer "meat glue" here.  For those unaware:

Fucking savages.

Tue, 03/12/2013 - 13:07 | 3322883 brown_hornet
brown_hornet's picture

Vote for me, I'll set you free.

And the politicians say mo taxes will solve everthing...

and the band played on.

Tue, 03/12/2013 - 13:09 | 3322891 surfersd
surfersd's picture

Inflation trade starting to move. Note that WTI is starting to move towards backwardation. Watch June Dec at $1.00 over move to $3.00 over by expiry. When the pipelines open from the mid con watch WTI finally catch up to the real price of world crude. What is the govt going to say when spot WTI is trading over a $100?

 Gold and Silver are also in backwardation, one day it is going to bang zoom to the moon!

As far as Stockman's comments like we didn't know that Goldman controlled everything.

Tue, 03/12/2013 - 13:29 | 3322975 steve brassey
steve brassey's picture

on an on it goes with u guys trying to claim gold, silver, and crude r inverted; u never learn

Tue, 03/12/2013 - 13:08 | 3322892 dick cheneys ghost
dick cheneys ghost's picture

You had me at HELLO.............Bravo David Stockman

Tue, 03/12/2013 - 13:18 | 3322936 cougar_w
cougar_w's picture

The guy has really being throwing it down of late. Nice job.

Tue, 03/12/2013 - 13:43 | 3323025 Cursive
Cursive's picture


Yes.  And this quote:


In all, Ronald Reagan had left the “welfare state” barely one-half of 1 percent of GDP smaller than Jimmy Carter’s, and added a massive structural deficit to boot.


As a very young Reaganite, I "learned" that Stockman was a clueless, dangerous hothead.  That was what I thought when I was a boy.  Not that I've grown up, I realize that David Stockman would have been very comfortable at a table with Adams and Jefferson.

Tue, 03/12/2013 - 13:49 | 3323045 kaiserhoff
kaiserhoff's picture

And what do the Dems want to cut?

Oh yes, the entire budget for border patrol.

Tue, 03/12/2013 - 15:04 | 3323376 Professorlocknload
Professorlocknload's picture

Not to worry about the Border Patrol. They know how to forage.

Tue, 03/12/2013 - 13:59 | 3323088 cougar_w
cougar_w's picture

Anyone who sets out to challenge the king-makers of this corrupt system will at least be labeled a clueless, dangerous hothead. That's how the oligarchs do it. That's how they destroy any real threats to their cold grip on power. And I don't think they'll stop at labels, if that doesn't do the trick. They will without doubt happily murder anyone who cannot be supressed.

This will end in war, of that I have no doubt whatsoever, because the oligarchs are willing to go that far. What form that war will take -- hot, cold, shadowy, underground, cyber, disinformation -- or all of those -- it's going to be costly beyond calculation. And that is the cost we Americans must now pay as a nation for being lazy, feckless shits and allowing vemonous sociopaths to seduce us into slumbering complacency.

Tue, 03/12/2013 - 14:35 | 3323216 kaiserhoff
kaiserhoff's picture

Wish I could see another way for it to end, Cougar, but I don't.

Tue, 03/12/2013 - 15:00 | 3323352 marathonman
marathonman's picture

It's probably going to be a domestic war. 

Tue, 03/12/2013 - 16:03 | 3323621 Kirk2NCC1701
Kirk2NCC1701's picture

Agreed.  My take is that anything that brings these issues into the general public and keeps it there, is a good thing.

"Good enough for me", I say.  And as my Chief Engineer Scotty would say: "Perfection is the enemy of good enough."

Tue, 03/12/2013 - 13:08 | 3322894 Manthong
Manthong's picture

I think "putsch" has a better ring than coup d’état in this case. 

Tue, 03/12/2013 - 13:09 | 3322900 DOT
DOT's picture

...and in the darkness bind them. 

Tue, 03/12/2013 - 14:52 | 3323283 Kirk2NCC1701
Kirk2NCC1701's picture

Tyler the Grey, which way to Mordor, to Mt. Doom? So we can all get back to the Shore.

Tue, 03/12/2013 - 13:09 | 3322901 lolmao500
lolmao500's picture

The 4 week tresuries yield went from 0.085% to 0.1%... a trend?

The bid/cover ratio on the Japanese 5 years treasuries was also lower from about 3.8 to 3.1 last night...

Tue, 03/12/2013 - 13:10 | 3322902 Clowns on Acid
Clowns on Acid's picture

Geez Mr Stockman...a little late on the book...huh?

We at ZH knew about the GS coup d'etat 3 years ago...

Tue, 03/12/2013 - 13:10 | 3322904 Oldwood
Oldwood's picture

Principles have no place in Washington. This is the home of compromise at a time when so many bemoan the apparent lack of such comings to togethers. The result of compromise has always been the same, the effective procrastination of hard choices in favor of short term benefits for the deciders and the long term losses of the people. To be compromised used to have a negative meaning, but not so much now days. Afterall, in the face of a crisis, they have to do SOMETHING! Right? Stockman may have some very good points and ideas, but we will never see him in the service of our government as it would never be allowed. True freedom to express ideas only happens outside of government.

Tue, 03/12/2013 - 13:11 | 3322906 joego1
joego1's picture

Humans are messy critters.

Tue, 03/12/2013 - 13:11 | 3322910 observer007
observer007's picture

Video: Fraud. Why the great recession


docu about banks and goldman sachs.

Free markets are not to be blamed for the Great Recession. On the contrary, its origins rest upon the deep government and central bank intervention in the economy. Through fraudulent mechanisms, this causes recurrent boom and bust cycles: bad policies create phases of irrational exuberance, which are then followed by economic recessions, a result that every citizen ends up suffering from.

Tue, 03/12/2013 - 13:12 | 3322911 G_T_A_44
G_T_A_44's picture

Welcome to the Fascist Business Model and that of Third World Status Banana Republic. Indeed.

Tue, 03/12/2013 - 13:12 | 3322913 zapdude
zapdude's picture

" if it were the M&A department of Goldman Sachs."

That's just the most current public face of the great evil that has existed for centuries that has enriched its small ranks to the destruction of others and devoured souls and entire nations through government oppression and war.

Instead of the vampire squid analogy, I rather liken it to the gargantuan squid that is simulaneously crushing and consuming a whole fleet of ships.

Tue, 03/12/2013 - 13:14 | 3322920 apberusdisvet
apberusdisvet's picture

Within 5 years, anyone disagreeing with the psychos will have already received their specially marked hollow point; whether or not you survive depends on how much you disclose on CIA-Facebook or NSA-Google.

Tue, 03/12/2013 - 13:42 | 3323014 cougar_w
cougar_w's picture

I notice you didn't mention FBI-Zerohedge.

Sorry Tylers, even if you tried it would not have worked. They won't allow it. But I guess you knew that.

My current startup could solve part of the problem. If I'm even half as paranoid as the situation warrants, it might do the trick.

Tue, 03/12/2013 - 14:59 | 3323343 Kirk2NCC1701
Kirk2NCC1701's picture

Please elaborate a tad, as I've misplaced my decoder ring and Lt. Uhura is doing God knows what.

Tue, 03/12/2013 - 13:16 | 3322925 lunaticfringe
lunaticfringe's picture

Well written David but certainly old news here.

I was absolutely appalled in 2008. Personally, I'd love to find Paulson and slap the shit out of him. What he did was premeditated and cunning- it was accomplished with lies and fear mongering- 

That banks run this country is not in question. They own this fucking place. Figure out how we get the SOB back (our country) and write a book about that.

Tue, 03/12/2013 - 13:18 | 3322937 RougeUnderwriter
RougeUnderwriter's picture

When is John Galt going to show up

Tue, 03/12/2013 - 13:36 | 3322995 cougar_w
cougar_w's picture


Better have a Plan B son cuz nobody is going to save your candy ass.

Tue, 03/12/2013 - 17:32 | 3323920 Thisson
Thisson's picture

Look in the mirror and ask him yourself.

Tue, 03/12/2013 - 13:40 | 3322939 Ham-bone
Ham-bone's picture

Markets are unpredictable and mean reverting...centrally directed "markets" have none of those issues and do as they are told.

Permanently high plateau...err permanently higher incline indeed.

Tue, 03/12/2013 - 13:19 | 3322947 El Oregonian
El Oregonian's picture

Yes the farcical "Left/Right" paradigm is in full bloom... Puppet-Makers LOVE their strings, don't they?

Tue, 03/12/2013 - 13:34 | 3322991 cougar_w
cougar_w's picture

"resulting in Washington’s embrace of any expedient necessary to keep the financial bubble going—and no matter how offensive it was to every historic principle of free markets, sound money, and fiscal rectitude."

And that "embrace" not going to end either, not ever for evar I don't care who you put in the White House.

This problem will end but not through any political act of will. It must end suddenly, badly, frighteningly, and with great chaotic destruction when suddenly the teeth strip off the monetary gears of the world and everything is blown into countless fragments.

Tue, 03/12/2013 - 16:13 | 3323405 Kirk2NCC1701
Kirk2NCC1701's picture

Then it will be due to an exogenous event, not endogenous. Some large entity or groups thereof could force the issue at the right, er, Golden moment. Your cloud could have a Silver lining. And don't be Plumb unwise, or get caught short.

Translation (for the Plebeian masses): It will be due to an event external to the US, not internal.  If CB's in the BRIC+ countries make a point of buying up all the available gold, silver and platinum on the market -- and they have the cash to do it -- then it creates a PM crisis, then a PM run, and finally a currency crisis for the USD.  In the meantime, you can line that dark monetary cloud with stacks of silver.  And don't run out of lead.

Tue, 03/12/2013 - 13:39 | 3323002 Joebloinvestor
Joebloinvestor's picture

Another book from someone trying to make it look like he/she didn't contributre to the mess we are all in.

It should be mandatory that they donate all book profits. 


Tue, 03/12/2013 - 14:01 | 3323043 cougar_w
cougar_w's picture

He could be seen doing mea culpas even in this small excerpt. I think the guy is genuinely horrified, as are we all.

And you must admit, we're all contributing to the mess. By paying taxes, by buying the gasoline and iPads, by attending the mass consumer sports events, by listening (yes just listening) to the media propaganda, by voting for one stupid puppet schlub over another every 4 years. By all the countless little ways we cave when we probably should be loudly occupying Wall Street and expressing raw outrage (oh wait that's been tried never mind.)

When it all goes down I'm not blaming anyone but myself. Toward that sad day I'm fighting this fog of personal complacency as hard as I can.

Tue, 03/12/2013 - 13:52 | 3323057 goldbear1974
goldbear1974's picture

Stocks starting a big retracement today.

Tue, 03/12/2013 - 13:57 | 3323078 sbenard
sbenard's picture

I hope you're right! It's about time the bubble burst!

Tue, 03/12/2013 - 14:08 | 3323114 eclectic syncretist
eclectic syncretist's picture

I think I'll buy some PAAS calls about a year out and have a merry Christmas!

Tue, 03/12/2013 - 13:53 | 3323064 lasvegaspersona
lasvegaspersona's picture

FOFOA has recently asked a simple question: Is the system strong and a threat due to it's immense power or is it fragile and in need of constant support? If I interpret correctly he believes that gold (which is after all the only real universally recognized wealth  in the banking system) is requiring support. If the POG falls it gets bought up and the system fails as the gold market requires some physical to continue. If the POG rises then inflation of other things follow and the system fails.

The recent narrow bank in which the POG finds itself may be due to the fragility of the system rather than some outright attempt to scalp the tourists (although that is certainly a factor).

If FOFOA is correct in his assessment we shall soon see which way the system will fail if indeed it is a fragile system.

Tue, 03/12/2013 - 13:56 | 3323075 sbenard
sbenard's picture

My local library has been very accomodating when I've asked them to acquire books I wanted to read. They got This Time Is Different by Reinhart/Rogoff, and Endgame by Mauldin for me. This is another one I think I'll ask them to get, just so I can read it. It also helps to spread the message to fellow citizens who also feel inclined to read it as well.

Thanks for this article!

Tue, 03/12/2013 - 14:48 | 3323272 marathonman
marathonman's picture

You might also like The Real Crash by Schiff, Secrets of the Federal Reserve by Mullins, and The Case Against the Federal Reserve by Rothbard.  Control of money markets and how money is created has a lot to do with national power.  You might also like on YouTube 'Money as Debt 2 Promises Unleashed' and 'The Money Masters'.  You don't even have to check those last two out from the library.

Tue, 03/12/2013 - 15:18 | 3323462 WTFx10
Tue, 03/12/2013 - 19:00 | 3324168 Quisat_Sadarak
Quisat_Sadarak's picture

All excellent suggestions... 

By the way, I believe you can download/read those books without a charge  at


As Eddie Murphy would say... "What a bargain!"


Tue, 03/12/2013 - 14:01 | 3323091 decentralizedsc...
decentralizedscutinizer's picture

What a masterful example of political double-talk.  Only a career government insider could have come up with such convincing bullshit to rationalize an insane system without once using the word "corporatism".

What's really trgic is that these shit-for-brains "insiders" are running the country.

In our quest for common sense we should start with: "Which came first; the Constitution or the Corporate Charter"? We could build from there.   

Tue, 03/12/2013 - 16:05 | 3323632 paint it red ca...
paint it red call it hell's picture

My thoughts exactly.

If one blindly accepted his views reflective of political independence swallowing his marshmellow infused effluent, one could fail to recognize this exploitation of a fiat odyssey is actually a multi decade swindle inflicted at the expense of the health, wealth and futures the useless eaters others besides kissinger would refer to as citizens.

whew, glad i got that out.....

Tue, 03/12/2013 - 14:05 | 3323107 eclectic syncretist
eclectic syncretist's picture

Ben Bernanke is a stupid jackass egotistical sociopathic blowhard who has no idea of how to go about stimulating an economy, as he is too busy stimulating his massive ego with beard strokes and self-delusional inner monologue fairy-tales about saving the world by burying it in debt.  He is a fuckwit asshole that in a just world would be choking on a roll of Ben Franklins right now.

Tue, 03/12/2013 - 14:14 | 3323141 tony bonn
tony bonn's picture

the exact same budget battle of 1981/2 is the exact same one as 1995/6 and the exact same one as 2012/13....nothing has changed except the number of commas needed to keep track of all the zeroes....

reagan was a spendthrift, as was clinton, as is the indonesian citizen soetoro.....and they all take their orders from the nazi rockefeller cabal.....

republicans love big government because it means more debt and bonuses for wall street; democrats love big government because it buys votes....and together they love it becasue it means control and the establishment of the new world order.

you can either have high taxes and big government or high deficits and big government.....high deficits are high taxes on steroids.....the cancer has finally triumphed - as planned.

Tue, 03/12/2013 - 14:19 | 3323154 goldbear1974
goldbear1974's picture

ESM13 target 1418 by end of month.

Tue, 03/12/2013 - 14:25 | 3323172 goldbear1974
goldbear1974's picture

ALEX,HURRY...APRIL 1500 puts for 10 points!!!!!

Tue, 03/12/2013 - 16:23 | 3323691 Kirk2NCC1701
Kirk2NCC1701's picture

I'd be more worried about thousands of 1,000 unit forces swarming into Alaska and then southward.  Each of these units is completely self-sustained, with the entire spectrum of skill sets needed to repopulate and rebuild the world from scratch.  Too many to stop, too widespread to nuke.  Chew on that gristle!  Red dawn at night...

Tue, 03/12/2013 - 14:28 | 3323184 Gamma735
Gamma735's picture

The next World War will solve lots of problems.  The USA, Britain, Japan and France will fight China, Germany and Russia.  Countries will get to draft into their armies all the young unemployed.  Those young unemployed will be slaughtered by the millions and Wall Street will finance the winners and losers of the War. These are exciting and historic times in which we live.

Tue, 03/12/2013 - 14:41 | 3323245 marathonman
marathonman's picture

Just think of all the technology that will be created in the destruction.  Sad but true. 

Wed, 03/13/2013 - 01:20 | 3325091 mkhs
mkhs's picture

No.  Just the crimson plague. 

Tue, 03/12/2013 - 14:30 | 3323193 goldbear1974
goldbear1974's picture

a close today under 1546=sayonara.

Tue, 03/12/2013 - 14:40 | 3323236 marathonman
marathonman's picture

So maybe it's not just me, that David Stockman is coming across as disingenuious.  That comment about the capturing of the state and its central bank by crony capitalist forces irks me.  The central bank was created by crony capitalists.  I mean seriously, it was created to 'capture the state.'  Come on David.  Quit pissing down my back and telling me its raining.

I mean it's nice to get some attention on the issue by someone with national credibility and all, but for God's sake quit acting like the capture just happened by dumb accident.  It's been a relentless campaign and propaganda driven spin drive down the toilet of national power.  Goldman and Morgan were there at the inception.

Tue, 03/12/2013 - 17:40 | 3323943 Dineroguru
Dineroguru's picture

The Damned Cabal is more influential than ever.  The western financial players (Euro-Fed alliance) are filling their drawers with what is happening right now, but still the only game in town when it comes to pushing buttons and pulling triggers to get puppets like Obama to do their bidding....How they handle the Beppe Grillos of the world will be fun to watch.

Mon, 03/18/2013 - 18:35 | 3344782 No More Bubbles
No More Bubbles's picture

10 years from now, we'll all be reading a similarly worded article with some added names and some figure adjustments.  The national debt will be $70 trillion, Debt to GDP ratio will be 300% and the Dow Jones will be over 50,000.  Same shit, different day.....

Tue, 03/12/2013 - 14:50 | 3323284 Augustus
Augustus's picture

Posting any article by the abysmal failure David Stockman demeans this website.

Tue, 03/12/2013 - 15:01 | 3323360 q99x2
q99x2's picture

How long will it take the Generals in the US Army to realize that you can take over Nations with money easier than with war and that Goldman Sachs is winning the war against them.

Tue, 03/12/2013 - 16:26 | 3323703 Kirk2NCC1701
Kirk2NCC1701's picture

A:  Ever since they invited Jim Rickards to help them create a Financial War game a few years back.  Read the book, then come back.

Wed, 03/13/2013 - 02:24 | 3325160 enloe creek
enloe creek's picture

thanks getting the library copy tomorrow

Tue, 03/12/2013 - 15:28 | 3323502 Herdee
Herdee's picture

Eisenhower was right on the money with his warning.

Tue, 03/12/2013 - 16:06 | 3323631 Jack Burton
Jack Burton's picture

The Myth of the Reagan Revolution. It dies hard, too many like the myth and refuse to look at the record. Style over substance, it is what makes the American electorate tick! Ronald's deficits were extraordinary, but good republicans ignored them because it was their guy in the White House. You can't mess with your president when there is so much looting to be done!

What I find sick about the two party system is how corrupt they both are yet many will come on here and praise the republicans as if they have ever been anything but big spending war mongers. Now we have the socialst Obama and what is he? A mad bomber, a war mongering fool and a big spender. Liberals praise this jackass, when he is to the right of many presidents, GH Bush, Nixon and even Reagan. Obama is nothing but a fucking tool of the establishment, all this talk of socialism at a time of record corporate profits and all income growth going to an elite 1%? How does a communist like Obama manage that?

Easy! He is a fucking tool of the banks, a tool of the military indutrial complex and a big spender for all the special interests, including corporate special interests. Obama was put in to give the one party state a new face. He is a useless tool, and still blacks and deomcrates kiss his ass as if he is anything but a president for the bankers and elite war mongering cowards that fill the halls of Washington.

Obama is useless.

Tue, 03/12/2013 - 17:37 | 3323932 akak
akak's picture


Obama is useless.

Anyone with half a brain could have seen that back in 2007, long before the Obamessiah was elected as the puppet leader of the USA by the banking and military-industrial interests.  Unfortunately, most Americans have significantly less than half of a working brain.

Wed, 03/13/2013 - 01:22 | 3325096 mkhs
mkhs's picture

Hey, don't mess with the community organizer.  He knows how to tell a story.

Wed, 03/13/2013 - 02:30 | 3325167 Notarocketscientist
Notarocketscientist's picture


Wed, 03/13/2013 - 02:30 | 3325168 Notarocketscientist
Notarocketscientist's picture


Tue, 03/12/2013 - 17:40 | 3323863 busted by the b...
busted by the bailout's picture

"my being flabbergasted when the Republican White House in September 2008 proposed the $700 billion TARP bailout of Wall Street." 

Me too and it cost me my life savings and, even worse, an opportunity to make more than anyone here would believe, so there is no point in saying how much.

I don't disagree with a word Stockman wrote here, but I want to know what he thinks is going to happen as a result of,  "The fiscal cliff is permanent and insurmountable. It stands at the edge of a $20 trillion abyss of deficits over the next decade."

I guess I'll need to get the book to find out.

Tue, 03/12/2013 - 17:39 | 3323942 ozzz169
ozzz169's picture

The only difference between now and the years of old, is now they can say in the open what they are doing, ie fed admits its punishing savers and manipulating interest rates, and the people are too stupid to know what the consequenses are so they can do it freely and openly.


If you didnt see stockmans rant on the fed, should watch it was great..

Tue, 03/12/2013 - 19:57 | 3324278 JohnGaltsChild
JohnGaltsChild's picture

Oh, Crap. I can't handle the truth!

Thu, 03/14/2013 - 12:05 | 3329686 rbblum
rbblum's picture

THANK YOU, David Stockman, for presenting an objective presentation of the nefarious dealings embraced by America's powers that be who were largely responsible for assuring our republic's forward direction of financial ruin. May God bless our republic's future with wise men who will be able to recreate an environment laden with the values, ideals and visions that origianlly gave birth to a once great nation.

Fri, 03/15/2013 - 02:01 | 3331743 rbblum
rbblum's picture

In review of the most insightful individuals regarding the fiscal and monetary issues of the day, one may find solace and tranquility listening to Litany of the Saints. . . . even those who are not religious and hold no gold.

Do NOT follow this link or you will be banned from the site!