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Balestra Capital: "If Government Programs Were Cancelled, The Economy Would Collapse Back Into Severe Recession"

Tyler Durden's picture




 

While hardly an opinion that would be questioned around these parts, it is still good to see that even some of the smart money shares our views about the Schrodinger Economy ('alive' and 'dead' at the same time, depending if the BLS or anyone else is observing it) and we are not totally insane vis-a-vis one-time, non recurring government bailouts, which just incidentally have become perpetual and endless: "The Federal government has manfully stepped up to fill the gap left by consumers who have been forced to retrench and who are trying to repair their finances by paying down debt and increasing their savings.  So the next question has to be:  Is this recovery self-sustaining or is the economy still on life support, held together by periodic massive liquidity injections and ultra low interest rates, and accompanied by a dangerous, if not reckless, expansion of government debt?  We think that if government programs were canceled, the economy would collapse back into severe recession." And here Balestra's Chris Gorgone explains quite astutely why anyone betting on a decoupling or perpetual USD reserve status may want to reconsider: "the U.S. is no longer in complete control of its own destiny.  We exist now in a world of increasing correlation in the arenas of economics, finance, trade, politics, etc.  What happens in Europe, China, the Middle East, etc. will have major impacts on American economic, political, and social outcomes.  The world is changing  rapidly.  The old rules that so many investors rely upon may no longer apply the way they did during the great growth years after World War II." Alas, this too is spot on.

More:

From its October 2011 low of 1075 to its high point at the end of October, the S&P 500 stock index has risen 28%, buoyed by improving economic data in employment and manufacturing along with historically low interest rates.  The obvious question:  Is the strong stock market a sign of a strengthening and enduring economic recovery?  Economic data has been improving  for several months, including employment, manufacturing, and consumption reports, abetted by historically low interest rates. 

 

The Federal government has manfully stepped up to fill the gap left by consumers who have been forced to retrench and who are trying to repair their finances by paying down debt and increasing their savings.  So the next question has to be:  Is this recovery self-sustaining or is the economy still on life support, held together by periodic massive liquidity injections and ultra low interest rates, and accompanied by a dangerous, if not reckless, expansion of government debt? We think that if government programs were canceled, the economy would collapse back into severe recession.  With the continuation of these programs the U.S. can probably maintain a reasonably steady state, which could allow consumers to repair their finances over a period of several years and allow a gradually reducing level of government support.  However, the U.S. is no longer in complete control of its own destiny. 

 

We exist now in a world of increasing correlation in the arenas of economics, finance, trade, politics, etc.  What happens in Europe, China, the Middle East, etc. will have major impacts on American economic, political, and social outcomes.  The world is changing  rapidly.  The old rules that so many investors rely upon may no longer apply the way they did during the great growth years after World War II.  The LTRO was successful in delaying a serious breakdown in the European banking system.  However, it has not solved the problems.  The ECB has been accepting dubious, if not worthless, collateral against its loans to banks, which is a roundabout way of printing money.  Japan has finally embarked on a serious effort to stimulate inflation, with moderate success over the past few weeks.  A cynic might say that these are just two more steps in the currency debasement race to the bottom.

As for where Balesta is invested:

We made some gains on our long-term options on the yen in February, and additional gains during first week of March.  There were also modest losses in equities derivatives.  The portfolio is modestly short overall, but long gold, as usual, mainly to protect against continuing debasement of fiat currencies.  We are also short via options (mostly puts) the yen, euro, and Australian dollar against the U.S. dollar. Equities holdings are balanced, with long positions focused on income producers such as utilities and mortgage REITs.

 

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Mon, 03/12/2012 - 20:55 | 2249135 jm
jm's picture

I agree. So why do people clamor for cancelling government programs?

Mon, 03/12/2012 - 20:58 | 2249142 Tyler Durden
Tyler Durden's picture

 

Monthly deficits:

and net US tax revenues:

...

It's all the grandchildren's fault for not begging for hyperinflation hard enough.

 

Mon, 03/12/2012 - 21:00 | 2249147 jm
jm's picture

Tell it to Japan.  We got a ways to run yet.

Mon, 03/12/2012 - 21:05 | 2249159 Yen Cross
Yen Cross's picture

The MoF is running the FED handbook! Why do you think the Yen has gone from 75 to 82 in (usd/jpy in 2 weeks?) The MoF meets again today. I am long the yen. The BoJ wants a 80 level. They will stall the economy if they lossen up any more right now.

Mon, 03/12/2012 - 21:08 | 2249178 jm
jm's picture

The issue I have in mind is the debt level, not the currency game.  That's your domain, I think.

Mon, 03/12/2012 - 21:09 | 2249184 Yen Cross
Yen Cross's picture

The debt level is directly driven by the currency level. Japan is an export economy.

Mon, 03/12/2012 - 21:15 | 2249196 jm
jm's picture

I don't disagree, but the question I ask is this:  if all are agreed that the economy is a disaster, why do people want to fast-track the downward spiral Greece is in by cutting government programs?

Mon, 03/12/2012 - 21:19 | 2249214 a growing concern
a growing concern's picture

What point is there in delaying the inevitable?  Let's go Iceland on their asses and start fresh.  This is not solvable.

Mon, 03/12/2012 - 21:25 | 2249232 jm
jm's picture

Nothing is inevitable, and no one can predict the future.  Many that have a job and think they will not lose said job if gov programs were cut:  thus it is someone else's problem.  Consider that SSI, Medicare and the rest really make it everyone's problem.   

Not sure that Iceland is a solution for any place but Iceland.

 

Mon, 03/12/2012 - 21:47 | 2249282 Fluffybunny
Fluffybunny's picture

Monetary and Fiscal intervention following the collapse of the housing bubble has prevented the Economy from adjusting from it's previous malinvestments. We all know that the economy will have to re-adjust to a structure that is sustainable without government intervention. The longer we keep this re-adjustment from happening, the longer we're wasting precious resources supporting a scheme that can not hold.

 

You don't keep financially supporting a Ponzi-scheme after you've exposed it. Why would you do it with the global economy?

Mon, 03/12/2012 - 22:01 | 2249327 economics1996
economics1996's picture

 

Currently 8.7% of the GDP is financed.  That means with a 3% GDP growth rate the economy would shrink in the short term.  3-8.7=5.7% decline.  With the massive monetary inflation it will collapse sooner or later.  It always does.  Housing bubble, 1925-29 monetary expansion, 1862-73, its all the same, bubble/bust.

Here is the data from WWII and after when the government quite spending.

1942-01-01 1616.8 1943-01-01 1881.5 1944-01-01 2033.5 1945-01-01 2010.7 1946-01-01 1790.7 1947-01-01 1774.6 1948-01-01 1852.7 1949-01-01 1843.1 1950-01-01 2004.2

 

Mon, 03/12/2012 - 22:03 | 2249333 economics1996
economics1996's picture

The best thing that could happen would be for the Federal Reserve to quit printing and the federal government to declare bankruptcy, restructure, move on.

Mon, 03/12/2012 - 22:26 | 2249372 IAmNotMark
IAmNotMark's picture

But that would require honest, ethic people at the Fed and in government.  Where are you going to find any of them?

Mon, 03/12/2012 - 23:38 | 2249532 JPM Hater001
JPM Hater001's picture

I'm calling shennanigans...

Weighing in @ 2 years 35 weeks - JAAAAAAAA DOUBLE U!

Weighing in @ 2 years 42 WEEKS - Tyler Durden!

Tue, 03/13/2012 - 02:14 | 2249648 TruthInSunshine
TruthInSunshine's picture

This analysis and article is rubbish.

With 1 out of every 5 dollars expended/circulated in the U.S. economy the result of government transfer payments (e.g. SNAP, unemployment benefits, Medicare, Medicaid, Social Security, SSI,AFDC, etc., etc.), if such government programs were even scaled back by 25%, let alone 50%, we'd be in a far more serious situation than a severe recession; we'd be in a depression. Banning such programs? Ha! The Ponzi that literally makes a mockery of Banana Republics would collapse.

And that tells one all that they need to know about the house of cards that the U.S. economy truly is, thanks to a treasonous Congress that unconstitutionally delegated its sole power to coin money to a decisively acting not in America's best interests Non-Federal Reserveless Non-Bank entity.

Tue, 03/13/2012 - 02:21 | 2249687 Pinto Currency
Pinto Currency's picture

 

 

Institute sound currency, restructure the outstanding debt, cancel government programs.

The economy would recover. 

 

But there goes big bro.  Can't have that.

Tue, 03/13/2012 - 02:48 | 2249699 Michael
Michael's picture

It's not about Power, it's about Ownership.

It's about who owns you, & everything above and below you.

Tue, 03/13/2012 - 09:29 | 2250034 Pinto Currency
Pinto Currency's picture

 

 

ETF

We live in a collapsing ponzi scheme.  Saying that you can't eliminate the government programs that are part of the ponzi scheme doesn't address the central issues of debt based (unsound) currency and more than 50 trillion in outstanding debt (according to the Fed z1 Flow of Funds report).

Tue, 03/13/2012 - 01:18 | 2249562 BlackholeDivestment
BlackholeDivestment's picture

''The best thing that could happen'' is not a choice. ''What shall happen'' ..is; every host in contempt shall perish, their home(s) shall burn and fall away ...as they were. http://www.youtube.com/watch?v=eckzjxXvcQ4&feature=BFa&list=AVGxdCwVVULXeu-Q7_EqwiTqRF0qtwcjuy&lf=list_related  

Funny thing about lawlessness, the host does not escape. 

It is amazing to see streets that do not run red with the blood (yet) of these bankers and their corrupt political hosts, along with any government employee that dares to defend the bastards. Say ''HELLo'' to my little friend, he's ''Greek''. LMAO. It is not surprising, not seeing red, of course, as with ''this''(contempt) market trend forecast, the offense against the blind, defining execution of the trade craft of the market, lol, the ''trend'' is against the foundation for ''this market''. LMAO. Time for blow up ...Bitchez, it's just always a little later ...so it seems. LOL

Tue, 03/13/2012 - 03:56 | 2249720 Gazooks
Gazooks's picture

Best things always begin with instantaneous global-panic driven financial collapse. Add the sudden end of $ reserve status, extended social instability resulting food riots, police state political chaos and war de jour.

Fed spending buys political adjustment time for the inevitable end of $ hegemony, extends our interesting times. It's goin down regardless, careful what you wish for by way of landing.

Move on to what? This ain't no disco.

Tue, 03/13/2012 - 00:46 | 2249615 francis_sawyer
francis_sawyer's picture

You don't keep financially supporting a Ponzi-scheme after you've exposed it. Why would you do it with the global economy?

~~~

You do it because if you're the "gatekeepers" there are still new economies (think Russia, China, Africa) that aren't fully controlled by central banking cartels...

You don't want to stop until you have every last hamster running full speed on the wheel...

I'm not saying that I APPROVE of all of this, I'm just answering the question of WHY the "ponzi-scheme" (even exposed) is sputtering, but alive & well... It seems most hamsters can't fathom life OFF the wheel...

Tue, 03/13/2012 - 04:05 | 2249724 Gazooks
Gazooks's picture

+ fathom

Tue, 03/13/2012 - 05:59 | 2249757 Fluffybunny
Fluffybunny's picture

@Francis

Maybe so, but I was sort of trying to justify to him why it would be beneficial for us non-central bankers for another correction to occur.

Mon, 03/12/2012 - 22:35 | 2249381 BlackholeDivestment
BlackholeDivestment's picture

''Nothing is inevitable'', yeah right and from ''nothing'' came the ''inevitable''? LMAO, Wise up a bit, will yuh? ...and yes you can ''predict the future'', it is written, measured and confirmed by the ''Truth'', not a choice.

 

There is no Yang. Lol, but for the unbecoming.  http://www.youtube.com/watch?v=qsxqq_89Elg&feature=related

 

.

Mon, 03/12/2012 - 23:16 | 2249492 Red Heeler
Red Heeler's picture

"Nothing is inevitable"

I just ran your comment past the Taxman and the Grim Reaper - they'd like to have a word with you . . . .

Tue, 03/13/2012 - 01:04 | 2249637 GMadScientist
GMadScientist's picture

Pessimist.

Tue, 03/13/2012 - 02:51 | 2249701 q99x2
q99x2's picture

No one can predict the future because there is no future.

Listen to the Ben Bernank. He knows what has happened and will tell everyone nothing about what will be. That is because there is no future. The Ben Bernank makes things the way they are now. We must listen to the Ben Bernank to know now. His slighest gesture has the power to destroy Nations or raise global markets. Nothing absolutely nothing could exist if not for him. Only the Ben Bernank has the power to change the past that we may have a better now.

Mon, 03/12/2012 - 23:08 | 2249471 DoChenRollingBearing
DoChenRollingBearing's picture

 

The government breaks pension promises in Peru as well.  

My wife's father is a leader of a grassroots protest group ("FONAVI") down there.  He just got his picture on the FRONT PAGE of a Peruvian newspaper.  He is 91 years old and a is great-great-grandfather.  He works the protests about once a week.  Our daughter loves her grandfather to death!

Read all about it (and see the picture) at my blog (article title: "PMMFM..."),  Gmail me at my name if you would like the link, or just use Google creatively...

 

Mon, 03/12/2012 - 23:49 | 2249545 FreeNewEnergy
FreeNewEnergy's picture

Hey, DoChen, I dig your mojo, with all the bearings and Peru and all that, but pimping your blog here is a little, may I say, fucking boorish.

And the fact that you do it so often is rather annoying.

Just for the record, I maintain three websites and three blogs, to which I post daily. I don't pimp them anywhere. So please do me and the rest of the real bloggers of the world a favor and STFU about your blog. Most of us don't care and I, for one, will never send you an email to be included in your select list of "readers."

If you would like to understand how a blog works, please take a few moments and check out bradblog.com. Brad has worked tirelessly on his enterprise at great risk to his personal safety and everybody gets to read it and comment on it, not just a select few.

Stick to ball bearings. You're probably better at it than blogging.

No personal enmity intended. Just real bloggers don't like pimpers and I'm actually surprised the Tylers haven't shut you down.

Hope you read this. Really.

Tue, 03/13/2012 - 00:04 | 2249566 DoChenRollingBearing
DoChenRollingBearing's picture

I did read your comment, thank you.  If I get ENOUGH comments like yours, the Tylers will not have to have to shut me off, I will stop.

I have found most of my blog's readers from here.  But, I DO take note of the negative comments as well, including yours.

I am a Junior Blogger, and have had to learn all of this on my own.  Thanks as well for the reference re blogging.

Peace

Tue, 03/13/2012 - 00:07 | 2249575 Renfield
Renfield's picture

Do Chen, whatever else may be said about or to you, you always show a lot of class.

Tue, 03/13/2012 - 00:22 | 2249590 dark pools of soros
dark pools of soros's picture

yeah a lot of us would of just monkey hammered newfreeenergy no matter if he was right or not

Tue, 03/13/2012 - 00:46 | 2249613 jwoop66
jwoop66's picture

I was impressed with his response.   I would have been a dick back. 

+1chen

I do kind of like the other guys post too. 

+1 to both!

I love ZH!

Tue, 03/13/2012 - 00:55 | 2249622 DoChenRollingBearing
DoChenRollingBearing's picture

+ 1

It's a big playground!

Tue, 03/13/2012 - 01:21 | 2249644 FreeNewEnergy
FreeNewEnergy's picture

Do-Chen, glad you read my comment and responded. As far as being a "Junior Blogger" is concerned, one of the first rules of internet etiquette, AKA "netiquette" from the long-ago days of the late 1990s, was "do not spam" and what I called pimping is actually spamming, which is why I made my original comment. I learned early on how to suffer through almost no hits, readers, interest, but persevered by organic growth. It's not easy and it's not quick, so, maybe lesson learned and best of luck. I appreciate your good manners, and, believe me, I can be a very unmannered individual, so I have to give myself props for restraint.

I spent ten years as a self-employed newspaper publisher back in the day. I'm a journalist by nature, and that separates me from a lot of would-be and hopeful bloggers. Content is king and always will be. There are plenty of resources online - some good, some not so much - about blogging success, but my advice is to be relevant and patient and controversial if warranted. The traffic will come if your efforts are worthy.

No offense intended or taken. All the best to you.

Tue, 03/13/2012 - 01:27 | 2249650 DoChenRollingBearing
DoChenRollingBearing's picture

Back at you.  A 56 year old not trained in computers has a steep learning curve.

And yes, we will see if my blog works out.  I do not take ads or donations.

I am a bearing buyer by nature, not a journalist, but my blog works for some.

+ 1 for restraint!

Tue, 03/13/2012 - 10:23 | 2250248 Blankman
Blankman's picture

"I'm a journalist by nature, and that separates me from a lot of would-be and hopeful bloggers."

 

- you just bitch slapped bearing for pimping and now you are pimping yourself.    

Tue, 03/13/2012 - 00:59 | 2249629 francis_sawyer
francis_sawyer's picture

I'm trying to imagine what the scenario would be like if I walked into a restaurant... looked over all the tables filled with patrons... & proceeded to say:

"you sir, you ma'am, yes, the whole group of you sitting in that booth over there, & yes, the piano player... all of you are cordially invited over to my NEW restaurant across the street... Drinks will flow & less blood will be spilt... the atmosphere is cozy & we serve a light fare... Please ~ won't you join me?... (& oh, by the way, if your head didn't get tapped in the little DUCK DUCK GOOSE game I just played, enjoy your meal here... I'll be back next week to do some more recruiting"

Wonder what that would be like...

 

Tue, 03/13/2012 - 01:09 | 2249639 GMadScientist
GMadScientist's picture

Fuck Off. You no da boss of the bearing.

When he starts selling shoes, you can get your hackles back up; until then, STFU.

Tue, 03/13/2012 - 07:21 | 2249789 TheFourthStooge-ing
TheFourthStooge-ing's picture

FreeNewEnergy said:

No personal enmity intended. Just real bloggers don't like pimpers and I'm actually surprised the Tylers haven't shut you down.

FNE, while I understand what you are saying, and in the case of some posters here I would agree with you, I feel obliged to say a few words in DoChen's defense. Although he does promote his blog from time to time, a majority of the time his comments address the article to which they are attached or, at the very least, are appropriate in the context of the direction in which a comment thread has drifted. I am much more forgiving of someone who actually participates  in the discussion.

Let me take a moment to contrast this with the actions of some posters here that I've found to be less than useless. We have wanklord, who in the past has repeatedly copied and pasted the same three or four boilerplate screeds, with very minor variations, and has shown no indication that he has ever bothered to return to read any followups to his comments. We had props2009 who simply spammed his crappy capital3x site with one-liners that had nothing to do with the article or comment thread. When his props2009 account was cancelled, he returned as reutersanalyst and did the same thing. The reutersanalyst account now seems to have been smacked down, but he'll probably be back spewing more capital3x spam. We had mattu13048 spamming for his crappy armadamarkets site until his account was whacked. This was followed by ilion spamming for armadamarkets, although he hasn't done that for awhile and actually posts some relevant comments. Then mattu13048 appeared to return as JennaChick, still spamming his stupid armadamarkets site, occasionally throwing in a non-spam comment which at best might be marginally relevant. A new spammer that I discovered yesterday is JenniferS, who seems to comment on articles which are months old, embedding URLs that link back to assorted sleazy sites for things like cheap loans and other garbage.

DoChenRollingBearing actually involves himself in discussions here, and even if you find his blog promotions boorish, I know you'll have to agree that the active participation of the commenters here adds value to the site. We can all be boorish from time to time. I'm certainly no exception. Even posters like AnAnonymous, with his theories on American citizenism, add points of view which we might not otherwise see and which can sometimes be thought provoking.

I have no problem with shitcanning the posters whose participation is limited to littering the site with spam. I'm glad that Tyler doesn't shitcan those who participate, though, because even posters that are agenda-driven shills add value when it results in other commenters exposing their flawed arguments in the light of day. I think after you've given it some thought you'll agree.

No personal enmity intended.

It's cool, bro, we all love this site.

 

Mon, 03/12/2012 - 21:22 | 2249223 surf0766
surf0766's picture

I would rather sacrific than put it on the backs of a younger generation. The longer we wait, the worse it will be.

Mon, 03/12/2012 - 23:43 | 2249537 Hansel
Tue, 03/13/2012 - 04:58 | 2249741 StychoKiller
StychoKiller's picture

Hmm, WHAT A GREAT IDEA!  I do believe I will...in November.

Tue, 03/13/2012 - 06:39 | 2249772 spankfish
spankfish's picture

I'm writing in the Greek Riot Dog.

Mon, 03/12/2012 - 21:23 | 2249227 taraxias
taraxias's picture

Because they are stealing from then 99% to give to the 1%, that's why.

On whose back do you think all this massive deficit is being build?

If you said on the back of the 99% who will paid all back through inflation, you'd be right.

Mon, 03/12/2012 - 21:39 | 2249269 surf0766
surf0766's picture

It is more like the 50% that still pay taxes not the 99%.

Mon, 03/12/2012 - 21:52 | 2249305 taraxias
taraxias's picture

No one has the balls to raise taxes and the FED knows it.

Their answer is to continue to devalue the dollar, hence INFLATION. The 1% won't give a shit, the 99% will feel the pain.

Mon, 03/12/2012 - 21:58 | 2249323 surf0766
surf0766's picture

So there have been no increases in taxes in fed, state , or local in the past 3 years? Wow...

Mon, 03/12/2012 - 22:09 | 2249344 taraxias
taraxias's picture

I didn't say that, you did.

Whatever increases we have seen are not anywhere near what really needs to be done to deal with our obscene deficit.

No one has the balls to do that, it will be dealt with through dollar debasement.

Mon, 03/12/2012 - 22:23 | 2249368 Dr. Engali
Dr. Engali's picture

Even if they had the balls it wouldn't work. The level of taxes needed would send this economy into a tail spin and they would pull in less revenue.

Mon, 03/12/2012 - 22:31 | 2249378 Conrad Murray
Conrad Murray's picture

To this point, for anyone with 10m to spare - https://www.youtube.com/watch?v=661pi6K-8WQ

Mon, 03/12/2012 - 23:25 | 2249513 Monedas
Monedas's picture

Taxpariah !  It takes bigger balls to cut spending ! Anyway, it's too late to fix anything !  All these people breathlessly waiting for a fix ! I love it !   Monedas   2012   Comedy Jihad End Of The World We Never Understood Tour

Tue, 03/13/2012 - 07:02 | 2249773 i-dog
i-dog's picture

I'm confused! Are we meant to Eat the Rich, Boil the Rich, Tax the Rich, Hang the Rich, Jail the Rich, Fuck the Rich, Steal From the Rich, or what?

Some of those proposed "solutions" to overspending by the elected government seem mutually exclusive.

Any definitve guidance appreciated!

Tue, 03/13/2012 - 07:02 | 2249782 nmewn
nmewn's picture

I was confused for a time as well...this vaporous term thrown about, "the rich".

Now it's becoming clearer to me who "the rich" are...apparently it starts somewhere around 200k-250k. So, sell off granny's house after she passes away and you can be one of "the rich" too...if only for that one year ;-)

Tue, 03/13/2012 - 07:07 | 2249785 surf0766
surf0766's picture

Cut spending $1 trillion. Your first move is to raise taxes... again we have a spending problem.  I find those that want to do away with capitalism only want communism.

 

Tue, 03/13/2012 - 00:25 | 2249595 dark pools of soros
dark pools of soros's picture

yeah the other 49% are just ticks along for the ride

Mon, 03/12/2012 - 22:55 | 2249439 sablya
sablya's picture

I think it is pathetic that the vast majority of people don't realize how wealth is redistributed through fiat money creation, via fractional reserve banking and quantitave easing.  The Occupy X movements were trying to figure out who to blame for the fact that the rich keep getting richer and the poor poorer but it never really seems to have occurred to them or the moronic financial press that printing fiat money is the real culprit which permanently alters the distribution of wealth.  It's is the proverbial secret hidden in plain sight.  Most of the 99% probably think that Bernanke is a hero for having saved the country from economic ruin, whereas he is the one who is quietly robbing from the poor to give to the rich.  It is pathetic, indeed, that such an villain could be held in such generally high esteem.

 

Tue, 03/13/2012 - 00:25 | 2249585 jwoop66
jwoop66's picture

I'm sure the "1%" have their share of pricks, but their greed is not the only problem.   I'm more in tune with surf, but to use your 1/99 meme I would say the 99% have shown more than their share of the greed as well.  The most entitled 99% since we crawled out of the trees or caves or wherever.  They have allowed their govt (in the US) to get into the retirement business and the old age medical business and that worked out so well that they have now allowed the govt to fully control the medical business.   Cant wait till we have to pay for that!  Forgot to mention now the govt is building cars and deciding on what type of propulsion systems they run on...built by unions that are the very definition of greedy.  Now there is that dumb, contrived debate about "free" birth control!  Yeah, I don't want to spend $9 a month, so lets have a third party pay for it, that'll be cheaper! Free even!

1%...     99%...    Indeed...

The welfare state never did, never does and never will work.  

Lets just let it crash and rebuild! 

Conrad's youtube link above explains a lot nicely.

Mon, 03/12/2012 - 21:49 | 2249294 Beam Me Up Scotty
Beam Me Up Scotty's picture

Government is the problem, not the solution.  When is the last time government tried to run efficiently??  Answer: Never.

The only answer government EVER has is MORE MONEY.  MORE MORE MORE.

I run a restaurant with about 170 employees.  I can tell you there is waste in many facets of the operation, as there is with every operation.  From petty employee theft to inefficient heating/cooling.  We try our best to minimize these wastes.  But government?  With TRILLIONS of dollars for a budget?  Not ONE WORD about minimizing waste.  There is probably 500 BILLION AT LEAST in waste in the budget.

Came back from Mexico the other day.  Over an hour to get through US Customs.  OVER AN HOUR!!  If I had a line that long outside of my business, I'd hire more people.  But not the gubbamint.  You can wait in line----forever if necessary.

We won't be able to make the debt payments eventually, even with ZIRP. 

Mon, 03/12/2012 - 22:00 | 2249329 jm
jm's picture

Eventually, and if things stay as they are, sure.

But things don't stay the same.  People and governments adjust.  I think this isn't a good time to heed the Teutonic refrain of "cuts, cuts, cuts..."

Mon, 03/12/2012 - 23:02 | 2249461 lineskis
lineskis's picture

Yeah, let's go Japan! 20 years of a slow train wreck... Brilliant!

Dude, seriously, did you even see what Iceland did? Yes they took a hard hit for a year or two, but now they're back on track full speed!

I'd better take the hit now, rather than being sorry in front of my grand children having to explain to them that they have to take it instead of me and much much harder...

Get that in your brain you stupid selfish!

Mon, 03/12/2012 - 22:10 | 2249347 Conrad Murray
Conrad Murray's picture

We won't be able to make the debt payments eventually

Pages 9 and 10(I haven't looked for an updated version, this is 2011) - http://www.gao.gov/special.pubs/longterm/pdfs/jan2011slides.pdf

For shits and giggles - http://www.gao.gov/assets/590/589002.pdf

The GAO has lots of "goodies" for anyone willing to dig.

Tue, 03/13/2012 - 08:03 | 2249830 chubbar
chubbar's picture

It's quicker if you bypass the customs line and walk around that checkpoint. It works for the Mexicans at any rate and the gov't doesn't seem to mind.

Tue, 03/13/2012 - 11:16 | 2250456 cfosnock
cfosnock's picture

"There is no means of avoiding a final collapse of a boom brought about by credit expansion. The alternative is only whether the crisis should come sooner as a result of a voluntary abandonment of further credit expansion or later as a final and total catastrophe of the currency system involved."

- Ludwig von Mises

Mon, 03/12/2012 - 21:05 | 2249168 spiral_eyes
spiral_eyes's picture

USA is much more combustible and individualistic society as opposed to Japan which is conformistic and traditional and will blow up into civil unrest and secessions before we ever get to where Japan are today.

http://azizonomics.com/2011/10/07/japanisation-the-zombie-apocalypse/ 

Mon, 03/12/2012 - 22:37 | 2249391 r101958
r101958's picture

We may want to note that the people of Japan fund their own debt whereas we in the U.S. depend on other countries to fund our profligacy. A big difference.

Tue, 03/13/2012 - 08:07 | 2249837 chubbar
chubbar's picture

That is old school thinking. Which country is funding our debt? China is not only not buying our debt but has decreased their reserves, as has Japan. Is the U.K. buying our debt? Every damn country is in debt trouble and not likely to be running deficits in order to buy U.S. dollars, so the answer is the FED is buying the debt of the U.S. Perhaps they are backchanneling money to other friendlies to keep up appearances but make no mistake about who it is holding the debt.

Mon, 03/12/2012 - 23:31 | 2249522 TBT or not TBT
TBT or not TBT's picture

And we're all preparing for that.  The popularity of "Walking Dead" and post-apocalyptic first person shooter games is our collective expectation of this end poking way up out of our subconscience.   Next big post-apocalyptic TV series will be about a post-EMP america.

Mon, 03/12/2012 - 23:38 | 2249531 Renfield
Renfield's picture

I agree with you. I am personally fascinated by the psychology of our entertainment, expressing the monsters and fears that haunt each generation. I have had a few casual conversations here & there about rise of the "vampire" and "zombie" myths, and the "survival" genre in entertainment, and what those reveal of our "zeitgeist".

Sorry, lots of words to say Me Too. Could have just settled for a Green Arrow. But I was so chuffed to see someone here making a comment about something that only comes up AFK for me, that I had to chime in.

Tue, 03/13/2012 - 02:05 | 2249671 TBT or not TBT
TBT or not TBT's picture

Tyler Durden, the Fight Club character, acted to bring about the end of economics, so we'd wear leather clothes and climb vines up the Sears Tower and so on.    So ZH has got more than its share of mortified preppers/anticipators.

Tue, 03/13/2012 - 01:14 | 2249642 francis_sawyer
francis_sawyer's picture

There's going to be a big blockbuster Hollywood movie coming out, (opening on 12/21/12 no less), starring Brad Pitt called "World War Z" (based on a novel)... It's about a zombie apocalypse...

http://www.imdb.com/title/tt0816711/

Who knows, maybe we've reached a crescendo?

Peak Zombies bitchez!

Tue, 03/13/2012 - 02:02 | 2249667 TBT or not TBT
TBT or not TBT's picture

I'm loading up for the crossbow bubble of 2012.  Will get out right at the top.

Tue, 03/13/2012 - 04:13 | 2249729 Renfield
Renfield's picture

I dunno, Francis, I've been pretty disappointed in Hollywood's big busters for the last, oh, six years or so I guess.

World War Z is an AWESOME novel. One of my favourites. Everyone here should read it. Bit devoid of financial insight, but a fucking awesome read, especially if you're into guns and 'splosions and battles and all that good shit.

I only hope they do it some little bit of justice. Maybe if Frank Darabont directs, or at least someone with some zombie experience. Ima wait for the reviews though. Brad Pitt starring is not that promising as a start...we'll see. Has he done ANYTHING good since Fight Club?

As for Peak Zombie...meh. I hope you're right when it comes to the real-life ones featuring the pig banksters.

The fictional ones...fuk yeh, bring on more of them. Everyone loves zombies!

Tue, 03/13/2012 - 01:00 | 2249630 ReactionToClose...
ReactionToClosedMinds's picture

spiral_eyes ... do not take this as 'criticism' per se .... but within the last 150 years arguably Japan had a major societal 'nervous breakdown' which seemed to last 2-4 years ... which arguably led to the Meiji Restoration.  It is a little known but (to me at least0 relevant slice of history ...as we all know ... economics is part rationality and part psychology ...but there comes a point when psychology jumps off the rails ... and Japan is one of the few places where you can legitimately rule out outside influences due to its homegeneity and cohesivenes. 

Tue, 03/13/2012 - 01:22 | 2249646 jwoop66
jwoop66's picture

I hate to be one of those spelling/grammar bitches, but you gotta rewrite that statement.

Mon, 03/12/2012 - 21:12 | 2249189 Dr. Engali
Dr. Engali's picture

Japan's debt load and economy was no where near the same size as ours. There isn't enough money out there to buy our debt. We can't be carried in the same manner that Japan was and is.

Mon, 03/12/2012 - 21:16 | 2249207 jm
jm's picture

Treasuries beg to differ.

Mon, 03/12/2012 - 21:26 | 2249233 taraxias
taraxias's picture

No, the FED becks to differ. However, anything that can't be sustained, won't be sustained. Then what?

Mon, 03/12/2012 - 21:52 | 2249276 Dr. Engali
Dr. Engali's picture

Okay this might be hard to comprehend. Maybe you're new to this but here goes. Treasuries are where they are because the fed is printing money and buying the debt. If there wasn't a buyer with unlimited money treasuries would have a much higher yield. By the way have you noticed grocery and gas prices lately?

Mon, 03/12/2012 - 22:08 | 2249340 CrashisOptimistic
CrashisOptimistic's picture

Supposing the whole world is terrified and still views US Treasuries as the ultimate safe haven?

The Fed is buying MBS.  They are doing some non balance sheet expanding Operation Twist, but there is no QE underway.  Now, the MBS buys can be cash that banks use, in their own terror, to park in Treasuries, but no, the Fed is not presently outright buying Treasuries.

Yields are low because there is no economic activity, there is deflation in house prices, and overseas money is scared.

There is most certainly inflation in oil and food, but it is swamped out by an absence of such in rents.

Mon, 03/12/2012 - 22:43 | 2249356 Dr. Engali
Dr. Engali's picture

Bull. Operation twist is buying long dated treasuries and selling the short end of the curve. Money managers and money market funds buy up the short end because they don't want to be hung out on the long end of the curve when inflationary pressures hit. That's what keeps the short end down. That is your fear trade. The fed also buys indirectly through the swap lines. By the way. If the whole world thinks U.S. treasuries are so safe... Why are Russia and China net sellers ?

Mon, 03/12/2012 - 23:34 | 2249526 CrashisOptimistic
CrashisOptimistic's picture

You've made my point.  They sell the short end, buy the long end, and no net balance sheet expansion.

As for Russia and China, I think the story last year is they are buying through the UK.

You gotta be careful not to talk your book.  If you're a gold guy, you are desperate for inflation.  You are also inclined to ignore the relentless decline in real estate.

But it's there.  And it is compelling.  Rent is the predominant expenditure of renters in the US.  This is not true everywhere in the world, but it is true in the US.  Stagnant rents are smashing inflation.

Tue, 03/13/2012 - 00:23 | 2249591 Clowns on Acid
Clowns on Acid's picture

"You've made my point.  They sell the short end, buy the long end, and no net balance sheet expansion."

Do you understand duration risk..? If not....your comment is very low brow and dangerous to democratic republics everywhere.

Oh yeh....the USA is the only one....

Tue, 03/13/2012 - 01:19 | 2249643 francis_sawyer
francis_sawyer's picture

 If you're a gold guy, you are desperate for inflation.

I can tell you quite factually, that as a "gold guy", I'd RARELY feel desperate about anything (except maybe for the boat to make it to shore without capsizing)...

Tue, 03/13/2012 - 07:20 | 2249788 Esso
Esso's picture

Jeeze, you guys are makin' me scared of the water.  I've taken to keeping my gold & silver in a backpack, strapped on real tight, in case my boat capsizes.

Mon, 03/12/2012 - 22:37 | 2249390 tsx500
tsx500's picture

i'm guessin that mom & dad pick up the gas & groceries for this clown.

Mon, 03/12/2012 - 22:25 | 2249371 Calmyourself
Calmyourself's picture

JM is missing the fact of whom owns these obligations.  The Japanese people as a monolithic group have purchased their own Government debt for many years.  They were willing to accept low rates in doing it.  Demographically this can no longer happen as they age they must have income it also explains in some part the Japanese obsession with robotics. 

America's debt on the other hand is held by whom?  Do you think they are interested in keeping the ponzi going for U.S. domestic tranquility puposes as we devalue?  This will take a while but it will be one hell of a show when it goes, tipping point is the key..

Mon, 03/12/2012 - 23:55 | 2249557 LowProfile
LowProfile's picture

You need to watch that video of Thomas Woods ZH recently posted here.

About 100 times.

Tue, 03/13/2012 - 04:17 | 2249732 jomama
jomama's picture

i lol'd

Mon, 03/12/2012 - 22:41 | 2249402 falun bong
falun bong's picture

My question is how long the can kicking can go on. Europe has been at these debt levels before, not just the periphery but France, Germany, UK, when they were repaying WWI and WWII debts. Germany finished paying its WWI debt in...2010.

If everybody does the beggar-thy-neighbor printing/debasement at the same time (like now) why won't that be just like a partial global Jubilee? Maybe the peanut gallery has some answers/insight. Certainly a better informed audience than the mainstream "financial press"

Mon, 03/12/2012 - 22:43 | 2249408 falun bong
falun bong's picture

It's like checking out the bar at 2AM after all the hot women have already left with someone...the average goes down considerably

Tue, 03/13/2012 - 00:20 | 2249582 Real Estate Geek
Real Estate Geek's picture

If you drink more they'll all look great by 2AM!

Tue, 03/13/2012 - 00:59 | 2249627 RockyRacoon
RockyRacoon's picture

You're saying she was an 2 at 10 and a 10 at 2.   I've found that to be true.

Tue, 03/13/2012 - 02:23 | 2249690 Tao 4 the Show
Tao 4 the Show's picture

A couple points:

Japan, as an export economy with it's own workers buying it's bonds, is essentially living on it's citizens savings. That sounds okay until you realize the workers have something else in mind - using their savings in their old age. The population is top heavy (old) and eventually will have big problems as the workers retire. Their savings have surreptitiously been spent.

The U.S. Is a reserve currency economy. It only manages to get away with overspending because in the past, others bought US bonds to finance the deficit. Now, it gets away with it because it is monetizing and the reserve currency status slows massive price inflation by spreading the inflation around the world.

The reserve currency game is ending. Freedom to deficit spend goes with it. Monetization without a mitigating factor results in price inflation and then loss of confidence. You, and the rest of the US will be working for money that buys little or nothing.

Tue, 03/13/2012 - 05:59 | 2249756 socalat_Kruger's
socalat_Kruger's's picture

+1

Mon, 03/12/2012 - 21:04 | 2249157 Renfield
Renfield's picture

heh

There'll be much blaming of grandchildren as payable interest grows. What do you mean, Millennials, that you won't pay Boomer debt? Don't you know that ran up that debt all for YOU? So you could live in a risk-free, hurt-free, labour-free world?

Mon, 03/12/2012 - 21:12 | 2249188 stocktivity
stocktivity's picture

I hate to tell you this but most Boomers bought their homes 20 -30 years ago and paid the mortgage. it was the younger crowd that bought the houses for $500000 while making $40-$50000....along with their SUVs, boats, and all the other toys on credit.

Mon, 03/12/2012 - 21:23 | 2249202 Renfield
Renfield's picture

Actually I wasn't talking about houses, but you raise a good point referring to those. Debt for house, cars, other consumer crap. And let's not forget, for an irrelevant "education" that has a steadily decreasing chance of even getting you a job.

Certainly, Gens X & Y have stupidly followed the Boomers over the debt cliff. It's too early to say for the Millennials, but it's hard to believe they'll have the option of doing the same thing. As it written, "What can't be paid, won't be."

I was referring to the asinine levels of government spending and "entitlement" programs. Warfare and welfare, all to give us a "better, safer, healthier society" no doubt.

What was Lyndon Johnson's phrase? "Great Society"?

Mon, 03/12/2012 - 22:42 | 2249407 r101958
r101958's picture

Agreed. But let's not forget that it wasn't the boomers that voted either Johnson or Nixon into office.

Tue, 03/13/2012 - 13:20 | 2249494 Renfield
Renfield's picture

R101...

I've often thought the Boomers cop part of the blame for something the Silents started. ("Great Society" and the whole thinking around that.)

There tends to be more generosity toward the Silents, probably because they are seen as the grandparents who went to war, defended us, ushered in the most productive era we've had, etc. And left some big inheritances.

However, I don't think there can be any doubt that this is now primarily a Boomer problem. (NB: "Problem", not "fault".) The Great Society was the beginning of the swelling entitlements, soaring deficits, and runaway money printing, followed by scarcity for the generations following. The Boomers ran up government debt for entitlement programs, and their children now run up government debt for houses and toys, things the Boomers tended to have, things their children could not afford. All while we were distracted with a flood of entertainment and societal engineering.

Are Boomers responsible for our crisis? No - I would say that blame first of all lies the generation-but-one prior to the Silents, actually, the generation that cursed everyone after them with the Federal Reserve. Are Boomers responsible for a huge bulge in the birthrate at the time they were born, which tended to distort all demographics for that generation and make everyone think that distortion was "normal"? Of course not.

Who's worse? Wilson (was it Wilson?) who gave us the Fed? Johnson, who gave us the "Great Society"? Reagan, who gave us Reaganomics? The Bush/Clinton warfare/welfare cycle?

Are you more of a fool if you go into debt for government programs, or for consumer toys, or for "basics" like houses and cars that your parents took for granted but you can never afford even if you work your whole life? If you can't afford it, and aren't reasonably likely to pay it off, does it even matter if it was "a necessity" or for "a good reason"?

Doesn't really matter who's to blame since there's plenty to go around. I call this a Boomer problem simply because it is the Boomers who are retiring, and they are the ones who are now faced with a big increase in survival costs, WITH a big decrease in personal productivity. Therefore we are all faced with the URGENT question, of who is going to pay for senior care. So without saying Boomers are more to blame than anyone else, I feel pretty confident in saying that the Boomer generation is ground zero of this crisis. As was inevitable, considering the bulge in that demographic, and has been warned about (and ignored) for the years of Boomer productivity. Unfortunately, most of that productivity was wasted on welfare and warfare, and soon the bill will be due...to their grandchildren, the Millennials. For the Millennials, deficits will again matter.

Will they pay it? I doubt it. Hence my reply to Tyler's comment about crying grandchildren, that there will be plenty of blaming when the Millennials don't pay up and their grandparents (the Boomers) don't get the entitlements they were promised, especially when many of those Boomers will be relying on such entitlements just to survive.

PS: I believe the Boomers did actually vote Nixon in (and the Silents too of course). Unless you are conflating Generation Jones (mid-'50s thru mid-'60s) with Boomer, which people tend to do since Jones was also part of that 20-year birth boom.

Mon, 03/12/2012 - 21:52 | 2249306 kito
kito's picture

Stocktivity.....you fail to take into account all of those boomer home equity loans on those paid off houses to put their kids through overpriced higher education institutions.....

Mon, 03/12/2012 - 21:42 | 2249274 Everybodys All ...
Everybodys All American's picture

the most telling charts I've seen.

Mon, 03/12/2012 - 22:36 | 2249388 monopoly
monopoly's picture

As they say, a picture is worth a thousand words.

Mon, 03/12/2012 - 23:20 | 2249498 vast-dom
vast-dom's picture

but they grandchildren are both dead and alive and the poison was ingested or it wasn't -- so it's....uh.......not the pet's fault.

Tue, 03/13/2012 - 04:14 | 2249731 jomama
jomama's picture

wtf m8. is that top chart for reals?!

Mon, 03/12/2012 - 21:02 | 2249155 spiral_eyes
spiral_eyes's picture

The point is that our economy has become so broken that the only thing that is holding it up is the circulatory flushing around of government cash, and the monetisation of debt. 

Cutting spending in this environment (particularly domestic spending — Ron Paul is excused because he actually wants to cut waste that destroys productivity) will lead to lower receipts and bigger deficits. 

The obvious conclusion is that we are heading to systemic collapse.

Mon, 03/12/2012 - 21:06 | 2249173 jm
jm's picture

This type of thinking is just a variant of the crap that has destroyed Greece.  Thankfully it ain't going to happen in Spain. 

You need growth to service debt.  Cutting spending when it is the only support is what caused systemic collapse in Greece.  There is time for tax hikes and spending cuts later.

Mon, 03/12/2012 - 21:14 | 2249186 spiral_eyes
spiral_eyes's picture

The point is that both austerity and stimulus lead to the same destination: systemic collapse, either via hyperinflation, or via debt deflation.

The system is fucked, and neither of the tools the talking heads are arguing about will achieve anything.

Where are you going to get organic growth from at a rate that will service the present level debt? We're not a productive society or savings-driven society anymore, we shipped a lot of our productivity East. A "recovery" will just be more debt-fuelled and home-equity fuelled consumption that leads nowhere other than another bubble that bursts and has to be reflated with more money printing.

Mon, 03/12/2012 - 21:21 | 2249220 jm
jm's picture

Neither hyperinflation nor uberdeflation are inevitable.  This country with its short history has seen worse than now without "systemic collapse".

Reduce the debt by various means and the Ponzi vanishes.

 

Mon, 03/12/2012 - 21:26 | 2249231 spiral_eyes
spiral_eyes's picture

Name one reasonable debt reduction strategy that will actually work other than outright default.

The only thing I give HALF a chance is Ron Paul's plan, because it's focused on reducing regulation and reducing waste. 

Mon, 03/12/2012 - 21:28 | 2249239 jm
jm's picture

They lie outside of your frame of reference, but such examples are commonplace.  Bankruptcy has many possible chapters.

Mon, 03/12/2012 - 21:32 | 2249248 taraxias
taraxias's picture

Oh yes, so many possibilities, if we could get that growth and debt expansion thing going again.

I quess you haven't clued in yet that a game changer came along...BRENT $125

Mon, 03/12/2012 - 21:35 | 2249256 spiral_eyes
spiral_eyes's picture

Such examples are not commonplace because sovereign debtors defaulting on their debt is not commonplace, and the issuer of the world reserve fiat currency defaulting on its (quadruple A) debt is not commonplace. 

But at least you recognise that this will come down to some kind of restructuring.

My point is that creditors will not take such restructuring kindly.

While hedge funds will insist on taking Greece and Argentina to court, America's external creditors will come after their pound of a flesh a little more — shall we say — aggressively.

Mon, 03/12/2012 - 21:44 | 2249280 jm
jm's picture

I know this isn't what you want to hear.  I know that... receptivity and open-mindedness... is pretty much gone. 

But the United States isn't Greece.  It isn't Argentina.  It isn't Iceland. 

It may be one day, but it is not now. 

I don't know why this fantasy is so persistent.  

Mon, 03/12/2012 - 21:54 | 2249312 spiral_eyes
spiral_eyes's picture

I don't even see what your point is. Of course the US isn't Greece. It's worse, because its problems will have more and more damaging knock-on effects

You admit that there's going to be restructuring. If you think the Greek and Argentinian debt, or the Lehman debt was smeared around balance sheets spreading systemic risk, the USA is 100,000x worse. US insolvency/restructuring/defeasement/CDS trigger GUARANTEES total derivatives meltdown, default cascade, systemic illiquidity. 

Mon, 03/12/2012 - 22:11 | 2249348 jm
jm's picture

The point:  If government programs were cancelled, then the economy would slide back into severe recession.   The US can borrow at 2% for 10 years.  Maybe now isn't the time to put the economy into severe recession by following the example of Greece.

Another point:  no politician is going to cut anything until they have to, so there is no use in getting hot and bothered about this crap.    

 

Mon, 03/12/2012 - 22:20 | 2249362 Conrad Murray
Conrad Murray's picture

I was hoping you were just trolling for fun(as I know you are rather intelligent), but, "the economy would slide back into severe recession"?

You are clearly delusional, or you live in an insulated white suburbia, parasiting your way about through life, hoping and praying for more mass acceptance of a failed system, ready to suck any central planner cock that comes along that will keep the ponzi going.

We never left recession. We'll be lucky to walk away with merely the greatest depression.

Mon, 03/12/2012 - 22:27 | 2249374 spiral_eyes
spiral_eyes's picture

Who the hell do you think I am?

Tyler Cowen?

Look, you wanna go around arguing about banal shit about austerity vs stimulus — neither of which will resolve the debt problem — you go right ahead, but you might as well be arguing with a brick wall, because what I'm actually talking about is the debt endgame.

However, the people here might appreciate your input:

http://krugman.blogs.nytimes.com/ 

Mon, 03/12/2012 - 22:46 | 2249418 r101958
r101958's picture

No matter what we do the fix will be painful. It is most important though that we stop doing everything in our power to run away from that pain. It is the only thing that will signal that reality is returning.

Tue, 03/13/2012 - 00:05 | 2249574 jerry_theking_lawler
jerry_theking_lawler's picture

there is a way out....cheap US energy.....be it nuclear, coal, natural gas (fracking)....this would provide jobs, revenue, reverse balance of payments. then, we need Ron Paul to clear out Washington and put us on a sound money principle. we could make it happen then.....

since neither will happen...then we are Fucked + your children are fucked + your grandchildren fucked.....and when i say fucked, i mean literally, with a big 12" dildo, up the ass, repeatedly....just because you wanted your mcmansion and hummer.....all by waking up at 10am, making a few phone calls to your mexican work crew, and 'flipping' houses....

systemic collapse can not come fast enough. when it does it will be "BEAUTIFUL"....

Mon, 03/12/2012 - 22:38 | 2249392 lincolnsteffens
lincolnsteffens's picture

The point is dufus that we are in a sever recession. It just doesn't qualify as a GREAT DEPRESSION yet. Gasoline going up and

use going down. All those motels along the interstates getting less revenue. Housing fraud and recession making it almost

impossible for people to buy or sell a home. Abandoned housing or people living in houses they are not paying on. Mall rental

occupancy falling, business afraid to spend cash because they have no idea what nonsense the Govt. will pull next. Massive fraud

and market manipulation. I could go on by why waste my time on you.

Tue, 03/13/2012 - 06:44 | 2249775 Calmyourself
Calmyourself's picture

SE, the creditors will be asked a simple question, " How many divisions you got"? 

"My point is that creditors will not take such restructuring kindly."  The real point being it always comes down to guns and force, war is an extension of politics.  Savaged some prussian with that mangled quote..

Mon, 03/12/2012 - 21:42 | 2249266 Global Hunter
Global Hunter's picture

running tally on your red arrows: 43

Mon, 03/12/2012 - 21:49 | 2249287 jm
jm's picture

Yeah, a bunch of mouth-breathers pushing a button is a fine indicator of truth and value.

EDIT:  I thought you meant one comment had 40+ down arrows... it looks like you added all the down arrows on every comment.  Way better ways to spend your free time than that, bro.

Mon, 03/12/2012 - 23:46 | 2249542 Assetman
Assetman's picture

Don't worry... it's still early.

 

Mon, 03/12/2012 - 21:45 | 2249283 kito
kito's picture

Yes jm, bankruptcy has many chapters, and since this country has been bankrupt for many years, I'd say the final chapter is playing out right about now.......

Tue, 03/13/2012 - 06:49 | 2249776 Overflow-admin
Overflow-admin's picture

Yes and BAILOUT isn't.

Mon, 03/12/2012 - 21:29 | 2249241 taraxias
taraxias's picture

At least I hope you are getting paid by the piece putting up this shit tonight.

Mon, 03/12/2012 - 21:57 | 2249321 Dr. Engali
Dr. Engali's picture

He's a toady collecting welfare while occupying his mom's basement. He is afraid that productive Americans will get fed up and kick him off the dole. Then maybe he will have to work. Hmmm.. I think I just described I government worker.

Mon, 03/12/2012 - 21:35 | 2249257 Lednbrass
Lednbrass's picture

When have we seen worse then now? Previous generations did not start life owing years of labor to the government in a high competition world environment, thats a post- boomer development. Add in poor job prospects, crippling educational debt, and an unpayable social safety net and I would love to hear how reducing debt is remotely possible, much less likely.

Niehter party has any interest in it and neither does the majority of the public- the vast majority have their snouts in the trough in one way or another.

Mon, 03/12/2012 - 22:40 | 2249400 jm
jm's picture

The fix:  it is the time-honored way of the world.  Cuts in the lifestyle of debtors and haircuts for creditors and term extension to let inflation do its trick.  Hate it, love it... it doesn't matter.  It is how the world works.

The only good time for such pain is when it must be done. Some crowd pining for it doesn't make it desirable. 

Mon, 03/12/2012 - 22:55 | 2249440 Lednbrass
Lednbrass's picture

Provide a solid concrete example of a nation doing this please.

Tue, 03/13/2012 - 00:04 | 2249563 sitenine
sitenine's picture

Right.  Way to cling to reality there bro. /sarc

What?  If we all just suffer a little austerity, then we can afford all the unfunded liabilities, mark to market can be redeployed, central banks will easily clear their toxic asset sheets, and unicorns will start flying from my ass.  How'd that work out for Greece?

It is quite obvious that your picture of the world includes neither fraud nor politics.  I see that you have been around here nearly since ZH inception - It's about time to start paying attention, don't you think?

Mon, 03/12/2012 - 21:13 | 2249190 Crab Cake
Crab Cake's picture

We, and Spain, are screwed either way and you know that, and the banks win either way... So we just need to put a noose around all their mf'ing necks, revolt if necessary, start over with a con con, and take it from there.

Mon, 03/12/2012 - 21:06 | 2249171 Chuck Bone
Chuck Bone's picture

Because we have to take our medicine. Debt has grown faster than GDP every single quarter from 1980-2007. Read that again until it sinks in. Stimulus DOES NOT WORK. Period.

Mon, 03/12/2012 - 21:12 | 2249187 jm
jm's picture

Take the medicien when you have to, not when people whine about it.  Uncle Sam can borrow for 10 years at 2%. 

Stop:  hatin' is bad.

Mon, 03/12/2012 - 22:06 | 2249337 spiral_eyes
spiral_eyes's picture

Professor Krugman, is that you?

Tue, 03/13/2012 - 00:09 | 2249576 jerry_theking_lawler
jerry_theking_lawler's picture

nope, its the tooth fairy, santa, and a leprechaun all rolled into one....because he is obviously living in a fantasy world....

Mon, 03/12/2012 - 22:14 | 2249353 infiniti
infiniti's picture

It can only borrow a small fraction of the necessary funding at 2%. Most is borrowed at the extreme short end.

 

But I agree with the general point you are making - this can go on for a long long time. The Fed stuffs the banks with cash, they buy the treasuries, on and on. The situation may persist for 5+ years but it will end in a matter of days.

Mon, 03/12/2012 - 22:22 | 2249365 jm
jm's picture

Good point about the short end.

What you say is true.  Nobody-- nobody-- but the lucky will be in the right place at the right time when it comes down.  It's like predicting when the San Andreas will finally snap. 

Mon, 03/12/2012 - 23:44 | 2249489 sitenine
sitenine's picture

What kind of idiot argues that deficits are good, and then agrees to infiniti's point above, and then goes on to talk about how it will all collapse!?  Jog on jm.  We have much better trolls to feed.

[edit] and for the record, I will be in the right place at the right time, as will many other phyzical asset holders.  Luck has not a damned thing to do with it.  Stick that in your pipe (assuming you smoke, and I am assuming you smoke - a lot apparently) and smoke it.

Tue, 03/13/2012 - 11:05 | 2250411 Chump
Chump's picture

Spot on good sir!  "Let's prolong the pain as long as we can, even though it will suck out loud in the end because of our abject irresponsibility."

Quit stealing from my son so you can numb your mind with bread and circuses, ASSHOLES!

Tue, 03/13/2012 - 00:37 | 2249606 GMadScientist
GMadScientist's picture

If the San Andreas was driven by a private corporation in charge of plate tectonics, perhaps.

Mon, 03/12/2012 - 22:43 | 2249409 masterinchancery
masterinchancery's picture

How much would you like to bet on that ridiculous proposition?

Mon, 03/12/2012 - 22:59 | 2249455 Lednbrass
Lednbrass's picture

Personally I love hate, particularly when directed at a juvenile with a worldview that has Nickelodeon and Disney Channel as its primary shaping forces and little to no comprehension of what they say.

Not you though of course.

Mon, 03/12/2012 - 21:54 | 2249309 redpill
redpill's picture

"I agree. So why do people clamor for cancelling government programs?"

Because: "There is no means of avoiding the final collapse of a boom brought about by credit expansion. The alternative is only whether the crisis should come sooner as the result of voluntary abandonment of further credit expansion, or later as a final and total catastrophe of the currency system involved."

Mon, 03/12/2012 - 22:05 | 2249335 Renfield
Renfield's picture

You started with italics, so I couldn't vote you up for quoting Mises. So here's a green arrow for you beside this comment.

Mon, 03/12/2012 - 23:10 | 2249459 redpill
redpill's picture

Thanks for the sentiment :)

Mon, 03/12/2012 - 23:15 | 2249490 TBT or not TBT
TBT or not TBT's picture

Dear jm, it's not "if" government programs are cancelled, it is WHEN.   When something cannot go on forever, it will stop.   The longer this particular unsustainable madness carries on the worse the damage will be when reality comes rushing back in, as it must.

Tue, 03/13/2012 - 00:29 | 2249599 vast-dom
vast-dom's picture


Balestra Capital: "If Government Programs Were Cancelled, The Economy Would Collapse Back Into Severe Recession"

NO FUCKING SHIT!

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