"Terminal State Of Broken"

Tyler Durden's picture

Originally posted at Monty Pelerin's World blog,

As markets continue to confound, it is useful to reflect on this quote from Jim Sinclair, particularly the last sentence:

The world has taken on a “virtual reality” with no reference to what really is. This is the biggest market power play of smoke and mirrors in history. It is happening because the financial system is in a terminal state of broken.

I could not agree more. This same view has been expressed since the inception of this website (over three and a half years ago). Mr. Sinclair’s wonderfully clever and colorful phrase,”terminal state of broken,” captures matters well. He used it with respect to financial markets, but it applies to much more.

The terminal state of broken also applies to government and the institutions contained therein. Furthermore, these areas have infected non-governmental institutions, especially those which derive their existence and/or success from a close association with government. These include the educational system, defense industry, highly regulated industries like medicine and finance and a host of others.

The common denominator in all of this is government. It is the modern day equivalent of typhoid Mary, infecting all that it comes in contact with duplicity, dishonesty and corruption. This “brokeness” now infects the very morality and civility of society. Institutional behavior provides the moral guidelines (or lack thereof) for society. Corruption, deceit and theft are not virtues, yet if they are practiced openly they cease to become vices.

Immorality in higher institutions weakens the social and moral fabric of a society. Incivility and coarseness is the least of the problems. Justice Brandeis commented on the “trickle down” effect of institutional behavior, focusing on that of government itself:

In a government of laws, the existence of the government will be imperiled if it fails to observe the law scrupulously. Our government is the potent, the omnipotent teacher. For good or ill, it teaches the whole people by its example. If government becomes a lawbreaker it breeds contempt for law: it invites every man to become a law unto himself. It invites anarchy.

Brandeis’ warning was early enough to head off our current condition, but it went unheeded. Instead, our “omnipotent teacher” chose to ignore ethics and morality as they stood in the way of the desire for power and wealth.

Albert J. Nock

Albert J. Nock

Government increasingly took on the Nockian (Albert J. Nock) description:

Taking the State wherever found, striking into its history at any point, one sees no way to differentiate the activities of its founders, administrators and beneficiaries from those of a professional-criminal class.

Years of misbehavior, favoritism and outright criminal acts produced a view of government officials that ranks below that of used-car salesmen. No other group or institution is held in lower esteem. Government’s survival is no longer based on a functional, moral need. Its continued survival depends upon its ability to distribute largess.

The wealthy and the poor now consider themselves allies with government. The wealthy are provided favors and leeway that free markets would not allow. The poor are bribed with “goodies” that government takes from the productive in exchange for votes.

“Terminally broken” is the exact description for our current situation. Terminally, I interpret, as hopelessly, as in unfixable. Terminally also implies a temporary condition, one that cannot last very long. The unstable equilibrium that now exists is not too different from the eye of a hurricane. Any movement out of this rather small protective area will produce havoc.

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slaughterer's picture

More and more, the writers on ZH sound like bears who have been trapped by this rally.

Divided States of America's picture

More like "Terminal State of Bernanked"


slaughterer, so I guess you must have shorted at the highs yesterday and covered all your shorts in the dump this morning and made another great trade, good for you.


you just decided to go long all-in after the markets have gone up 30% in a straight line. good for you there also

The Thunder Child's picture

Humanity is in a Terminal State of cold civil war against Bankers and the corruption that eiminates from their central bank currency control. Everything else is just hisses and pops from the fire they have lit under us.

Pinto Currency's picture


The collapse is happening because of the centrally-planned debt-based fiat money system.

This money system has to be replaced with sound money (and not a "gold standard" which is another form of fiat money ).

This fiat money system was broken the day it was created.

Freegold's picture

It will be replaced by freegold, the natural evolution.

Poor Grogman's picture

Freegold requires that fiat currency(means of exchange) survives through the heavy handed intervention of government laws (no gold loans). Therefore it is yet another cunning artifice of the money changers.

Don't worry if FOFOA gets her freegold, the sheeple will still be donating to the money changers by way of interest paid on money created from thin air.

Freegold is an attempt to integrate the money power (interest on fiat) into a gold coin framework, it is cynical sophistry at is most cunning.

I repeat my challenge to FOFOA to show up here on the boards and debate this bullshit.

Pinto Currency's picture


FOFOA has been posting giberish about fiat money being absolutely needed because people want to spend more than they have and that fiat wipes out the debt every few decades allowing this consumption.

FOFOA is crafty but the message of a pro-gold proponent pushing continued fiat money tells us much about him/her.

Poor Grogman's picture

If you were a banker who loves gold wouldn't it be great to be able to loan people money that they paid you interest on, thus enabling you to accumulate more gold.

All the while calling for a 50k gold price and simultaneous .gov ban of gold loans thus funneling even more fiat/gold to you?

A nice scam indeed if you were the one who benifitted.

Just saying...

Edit: then when the whole scheme of free gold Inevitably collapsed you would conveniently be sitting a mountain of gold that now "would be available to loan" .

The devil himself would be proud of this scheme...

GVB's picture

It is well enough that people of the nation do not understand our banking and monetary system, for if they did, I believe there would be a revolution before tomorrow morning. Unquote


greyghost's picture

nice article....side note: sears holding to transform empty stores into "data" centers! what ever that means.

Divided States of America's picture

Maybe they meant "drone centers" for storing drones for the US govt in cities near you.

earleflorida's picture

indeed, and all the piled-on-high 'horseshit' suddenly disappeared-- a twofer

btw    there's a reason 'bears' go into hybernation?

bluskyes's picture

You're only trapped if you hold an active position.

Professorlocknload's picture

"You're only trapped if you hold an active position."


Or if you must live within this system.

gjp's picture

Doesn't make any of it less true.

GeezerGeek's picture

Please explain what part of the financial system bears any resemblance to a rational system. Economy struggles to break even, but stocks double over the last few years with hardly a correction. Government expands while the middle class dwindles. Cost of things needed to live rise rapidly, but we're told the increases in the cost of living are negligible. This is surreal. Being trapped by this manufactured rally is inevitable when one has a bias toward rational markets and refuses to adjust for the lies and manipulation. 

Lion In a Sidecar's picture

I assume these types of articles come from those who have already stepped out of the game and are trying to encourage others to do so as well.

Kreditanstalt's picture

So what?  They COULD end up being right...

Hal n back's picture

I kind of remember 2000 and 2008--I missed the last part of the run up--but when the dust settled I was green in 2008 and 2000 and 2001.


Stand outs--I sold INTC at 70 in summer of 2000 via a covered call, I sold CSCO at 81--unfortunately I thought it was a bargain at 52 later on.



spaceduck's picture

Actually i think the writers of ZH (great writers, of such inspiring and very truthful and interesting articles) have nothing to do with trading. IF they would be traders, of course they would be bears, and considering the fact that ZH is per se a bearish blog, such writers-traders would be already broke from long time.

So, don't mix ZH and traders, ZH is not about trading, it's more about.. well, ZH!

cheers ;)

MythicalFish's picture

Scientific research shows that when you are winning and you are "onto something", you are 89% less likely to blog about it than when the reverse is true.

Chupacabra-322's picture

It is happening because the financial system is in a terminal state of broken.

Bullshit.  it is happening because the financial system is in a terminal state of CRIMINAL FRAUD!

SRSrocco's picture

The collapse of the worlds economies has more to do with energy than most realize. This is taking place in the gold industry as well. I discuss it in my post below at the link.


LawsofPhysics's picture

True, but this would also be corrected in part if people/corporations/governments were being held accountable.  In any case, the laws of physics and Nature really don't give a shit either way.  But yes, new technology requires that no existing captial or resources are mis-allocated or mal-invested.  The financialization (enrichment of fucking paper-pushers) has been a horrible and is still a horrible mis-allocation/mal-investment.

Stu's picture
Arab Countries Openly Discuss Peak Oil for the First Time

Reflections by Robert Hirsch on the Conference “Peak Oil: Challenges and Opportunities for the GCC Countries”. Held at Doha, Qatar on 2-4 April 2013. Posted with his generous permission. I was fortunate to be among the few westerners invited to attend and speak at this first-of-its kind “peak oil” (PO) conference in a Middle East. The fact that a major Middle East oil exporter would hold such a conference on what has long been a verboten subject was quite remarkable and a dramatic change from decades of PO denial. The two and a half day meeting was well attended by people from the GCC as well as other regional countries. The going-in assumption was that “peak oil” will occur in the near future.

Peak Oil:


• Peak oil provides an incentive to consider important national and regional issues. The GCC is currently working new problems with old solutions.

• Oil revenue represents about 93% of the Saudi budget. Everything is now imported — foreign expertise and most labor. Saudi can’t continue on the current track, because it would lead to a “bad future.” We need radical change.

• After peak oil, will there be great cities, or will Middle East cities end up like the gold mining ghost towns of the old U.S. west?

• So far we have wasted our opportunity.

Shale oil in the U.S. is so much foolishness and does not invalidate peak oil. We definitely must worry about peak oil.



Widowmaker's picture


This is EXACTLY what it is.

Engineered racketeering, a fucking lie compounded.

buzzsaw99's picture

Do not blame the poor for this. There is only a very small percentage who must have their heads cut off for everything to come into balance.

Widowmaker's picture

Do you mean recipients of record bonuses from TARP?

You better damn well.

Kreditanstalt's picture

Nonsense.  It's insolvent simply because there isn't enough reason to produce wealth anymore.  The poor are some of the biggest lovers of government, and the violence on which it maintains a monopoly.  So are the corrupt rich, of course, but this is NOT a "99% vs.1%" situation...not class vs. class or "rich" vs. "poor". 

It's honest people, self-reliant, responsible for their own lives...vs. the institution of government.

Kobe Beef's picture

+1. Kleptocracy above, Lootarchy below. 

IridiumRebel's picture

"We can have democracy in this country, or we can have great wealth concentrated in the hands of a few, but we can't have both."

Louis Brandeis

rosiescenario's picture

...so, you are saying we have become Mexico or any of the other 3rd. Worlds where corruption rules and the elite .5% control the wealth?

TNTARG's picture

Have you ever seen more corruption than in the US? All the rest of us are just amateurs.


Dan The Man's picture

Corruption, deceit and theft are not virtues, yet if they are practiced openly they cease to become vices.

Well put mang

q99x2's picture

You just BTFD and don't worry about it.

RSloane's picture

Of course the government's survivability depends on its ability to distribute largesse. On a rational level, what else do they have to offer at this point?

Dareconomics's picture

Easy money policies increase income inequality.  Trickle down economics, whether by tax cuts for the rich or cheap Fed cash handed to the TBTF banks, is a failure. 


RaymondKHessel's picture

“Go shopping more" - Bush

aerojet's picture

Pretty sure it was Bush just after 9/11.

robnume's picture

Great observation! Someone IS awake out there in the void! Just as parents set the tone for their children's behavior, government sets the tone for society. As George Santayana said "Those who do not learn the lessons of history are doomed to repeat them". Personally, I can't wait for the fall, it's inevitable; there will be no reset. Chaos is coming soon to a theatre near you.

GeezerGeek's picture

Actually, what's coming to a movie theatre near you is "The Purge". http://www.fandango.com/movie-trailer/thepurge-trailer/161109

Sort of a limited edition of Chaos on a regular schedule, from what the trailer says.

rosiescenario's picture

....Clinton kind of made lying OK...."Read my lips. I did not have sex with Monica...."

Shigure's picture

Clinton also said "You know, by the time you become the leader of a country, someone else makes all the decisions.  You may find you can get away with virtual presidents, virtual prime ministers, virtual everything" President Bill Clinton, speaking in Ireland 1998