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Guest Post: The Final Countdown
Submitted by Tim Price, Director of Investment, PFP Wealth Management courtesy of Sovereign Man
The Final Countdown
“Under the circumstances, discussions with Greece and the official sector are paused for reflection on the benefits of a voluntary approach.” Debt talks “have not produced a constructive response.”
- The Institute of International Finance, January 13, 2012
“The war situation has developed not necessarily to Japan’s advantage.”
- Japanese Emperor Hirohito after the atomic bombing of Hiroshima and Nagasaki, announcing Japan’s surrender to the Allies.
There is a terrible hubris at the heart of mankind. Like every other living thing on the planet we are products of nature, but we consider ourselves to be well above it. We are beset by regular reminders of our vulnerability, but quickly dismiss them off-handedly to a spiritual plane, calling them “acts of God” as if to show that we could never have prevented them.
In a significant essay for Foreign Affairs, “The Black Swan of Cairo,” Nassim Taleb shows how the efforts of our authorities to suppress volatility actually end up making the world less predictable and more dangerous.
“Although the stated intention of political leaders and economic policy makers is to stabilize the system by inhibiting fluctuations, the result tends to be the opposite. These artificially constrained systems become prone to “Black Swans” – that is, they become extremely vulnerable to large-scale events that lie far from the statistical norm and were largely unpredictable to a given set of observers.”
There is an analogy from the natural world. In the 1960s and 1970s, mid-western American states fell victim to scores of wildfires. Constant interventions by the US Forest Service appeared to have little positive impact – if anything, the problems seemed to worsen. Over time, foresters came to appreciate that fires were a normal and healthy element of the forest ecosystem.
By continually suppressing small fires, they were unwittingly creating the conditions for larger and less containable wildfires in the future. Naturally occurring fires are necessary to remove old forest cover, underbrush and debris. If they are suppressed, the inevitable fire to come has a far greater store of latent fuel at its disposal.
Economist Murray Rothbard jangled the sensibilities of the Keynesians when he wrote his classic study, “America’s Great Depression:”
“If government wishes to see a depression ended as quickly as possible, and the economy returned to normal prosperity, what course should it adopt? The first and clearest injunction is: don’t interfere with the market’s adjustment process. The more the government intervenes to delay the market’s adjustment, the longer and more gruelling the depression will be, and the more difficult will be the road to complete recovery.”
But politicians must be seen to be doing something – like encouraging the construction of a £33 billion white elephant rail link in the middle of an austerity recession.
Not interfering with the market’s adjustment process is simply allowing Schumpeterian “creative destruction” to operate, and cleanse the forest. But that process is anathema to well-compensated entrenched interests that suckle from the teat of the State. Banks, for example.
So while “laissez faire” would accelerate any banking crisis and shorten the resultant economic contraction, it would reveal the identity of too many naked swimmers when the tide retreats. Instead, courtesy of highly paid lobbyists, we get a long drawn out depression. The example of Japan’s zombie banks from the 1990s is still fresh, but ignored in the west.
Rothbard identified the ways in which government can hobble the adjustment process:
1. Prevent or delay liquidation. Lend money to shaky businesses, call on banks to lend further.
2. Inflate further. Further inflation blocks the necessary fall in prices, thus delaying adjustment and prolonging depression. Further credit expansion creates more malinvestments which, in their turn, will have to be liquidated in some later depression. A government’s “easy money” policy prevents the market’s return to the necessary high interest rates.
3. Keep wage rates up.
4. Keep prices up.
5. Stimulate consumption and discourage saving. More saving and less consumption would speed recovery; more consumption and less saving aggravate the shortage of saved capital even further.
6. Subsidize unemployment. Any subsidization of unemployment (via unemployment “insurance”, relief, etc.) will prolong unemployment indefinitely, and delay the shift of workers to the fields where jobs are available.
An iatrogenic illness is one caused by the doctor himself. The economies of the west now face policy measures of the sort highlighted by Rothbard that are stated to be in our interests, but which are more likely to do harm to the patient and prolong the recession.
Taleb uses the example of the turkey before Thanksgiving. The turkey is fed for 1,000 days and every day seems to reaffirm the farmer’s generosity of spirit. Until the last day, when the turkey’s confidence and contentment is at its maximum. The “turkey problem” occurs when “a naïve analysis of stability is derived from the absence of past variations”.
To put it another way, the US property market cannot decline because it hasn?t declined in living memory. As Taleb puts it, as humans we inhabit two systems simultaneously: the linear and the complex.
The linear is predictable and permits the use of mathematical tools of high predictive value.
Complex systems,on the other hand, are marked by an absence of visible causal links between their elements, “masking a high degree of interdependence and extremely low predictability.” They also incorporate non-linear elements often called “tipping points.”
One reason for the severity of the financial crisis, and the losses incurred by banks, is that bankers and financial analysts were using linear tools in a non-linear, highly complex environment otherwise known as the financial markets.The models didn’t work.
The problem we face now as investors will end up being existential for some banking institutions and sovereigns. Our (uncontentious) core thesis is that throughout the west, more debt has been accumulated over the past four decades than can ever be paid back.
The question, effectively to be determined on a case-by-case basis, is whether bondholders are handed outright default (which looks increasingly like the case to come in Greece) or whether the authorities, in their understandable but misguided attempts to keep the show on the road, resort to a policy of inflation that could at some point easily spiral out of control.
As Rothbard wrote, “The longer the inflationary boom continues, the more painful and severe will be the necessary adjustment process… the boom cannot continue indefinitely, because eventually the public awakens to the governmental policy of permanent inflation, and flees from money into goods, making its purchases while [the currency] is worth more than it will be in future.”
“The result will be a ‘runaway’ or hyperinflation, so familiar to history, and particularly to the modern world. Hyperinflation, on any count, is far worse than any depression: it destroys the currency – the lifeblood of the economy; it ruins and shatters the middle class and all ‘fixed income groups;’ it wreaks havoc unbounded… To avoid such a calamity, then, credit expansion must stop sometime, and this will bring a depression into being.”
It may be a new year, but we are beset by the same problems that have been recurring since the crisis began. In most cases, those problems have worsened. One of the few improvements has been in the recapitalisation of Anglo-Saxon banks, but continental European banks seem acutely vulnerable to the potential outcome of a disorderly sovereign default.
Since the problems are the same, so are our preferred solutions: a specific focus on only the most creditworthy sovereign and quasi-sovereign debt (where it offers a positive real return); a specific focus on only the most defensive and internationally diversified equities; genuinely uncorrelated investments; and exposure to objectively the highest quality currencies, namely precious metals.
Euro zone politicians and policy makers have had plenty of time to come to terms with the continent’s problems, and continue to show no willingness to grasp admittedly difficult nettles.
It is symptomatic of the balkanised and adversarial nature of politics in the euro zone (a unified body that exists in theory but barely in fact) that Christian Noyer, chairman of the French central bank, anticipated France’s credit downgrade by suggesting that Britain should be downgraded first.
As the Hildebrand scandal also revealed, most of Europe’s central bankers are not fit to sweep the streets. And still time is running out. Readers of a certain age will recall a late 1980s “big hair” rock anthem called “The Final Countdown.” It was released by essentially a one-hit wonder band.
Its name was Europe.
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Sure they did. It's called debasing the coinage. You can find a chart on the internet showing how silver was gradually driven out of the denarius over a period of a few hundred years.
Buckaroo Banzai
Sure the Romans debased the currency, but that took time and effort.
Bernanke can conjure up $1 trillion before you can blink.
Yes, and maybe my poor widowed mother's life savings, that she counted on to help fund her old age, would start earning interest again. Instead, she has to watch as it dwindles every quarter and she has to give up her little pleasures for the sake of economizing.
Until a large population can't feed their family based upon their income this countdown will last for a long time.
25 million on food stamps. Is that large enough for you??
Being on foodstamps doesn't equate to being unable to feed the family. They are fed with no more effort than a trip to the Wal-Mart and a swipe of the SNAP card. No need to panic, plenty of fats and starch along with football and sitcoms.
What, me worry?
DizzySailor
OOOPs, sorry your only off the real #, it's closer to46 Million.
First, it's a human tragedy of epic proportions that 25 million are on food stamps.
Second, "Is that large enough for you??" Is the wrong question. The fact that 25 million are receiving them and thus eating means that they are not in my calculation. The motivation will come if you have 25 million who can't get enough to eat that will be closer to the final countdown.
Somebody posted something around here to the effect that nothing changes until real hunger, belly protruding grinding hunger sets in.. If your on SNAP, that doesn't happen as long as the frn buys something, see how that works?
47 million. http://usdebtclock.org/
What we pushed around the world through inflation is going to come back eventually. What happened in Egypt for example was definitely at least partly to blame on food prices. It's already happening overseas in other words, and it will happen here too soon enough. Don't you grocery shop? Prices are out of control already here, and we haven't even begun to see the real effects of inflation.
I got a pound of bacon for $3.54, a loaf of bread for $1.99 and a big carton of milk for $1.54 and I live in BFE North Dakota so I see no inflation just cheaper prices. You can still get a ball of coke for $140 (same as it was back in the early 90's) Voxx vodka $23.00 bottle , 300 rounds of 556 for $82.00 , Au ,Ag going up nearly everyday , the mildest winter anyone can remember. shit life is good and no change in the status quo on the horizon, this collapse will take at least 2-3 years yet, even if it happens this summer , so what if it had not been for this collapse most of us on ZH would not of made losts of money from Au AG so thankyou et al in charge for making my life an easy one, even hookers do a" do 2 get one free"
"I live in BFE North Dakota"
-----------------------------------------------------------
Enough said. Sometimes, being isolated is a good thing.
UP here four hours from the nearest interstate, stew meat is $4.99/lb, milk $3.49/gal, layer feed $12.49/40#, gas $3.59, sugar $2.00/4#, yeast $0.74/satchet, cracked corn $10.49/40# and copper line free from foreclosed homes....
$140 for an 8 ball??? not bad...
Acceleration to the Final Countdown;
Obama Considering Summers for World Bank
By Hans Nichols
Jan 18, 2012 11:47 AM ET
President Barack Obama is considering nominating Lawrence Summers, his former National Economic Council director, to lead the World Bank when Robert Zoellick’s term expires later this year, according to two people familiar with the matter.
Summers has expressed interest in the job to White House officials and has backers inside the administration, including Treasury Secretary Timothy Geithner and the current NEC Director, Gene Sperling, said one of the people. Secretary of State Hillary Clinton is also being considered, along with other candidates, said the other person. Both spoke on condition of anonymity to discuss internal White House deliberations.
Lael Brainard, the under secretary of Treasury for international affairs, is compiling a list of potential candidates to replace Zoellick, who was nominated to a five-year term that began in July of 2007 by then-President George W. Bush. By tradition, the U.S. president chooses the leader of the World Bank while the head of the International Monetary Fund is selected by European leaders. The nomination is subject to approval by the World Bank’s executive board.
Oh fuck...
Unfuckingbelievable...
Hire the handicapped, they're fun to watch.
My son is in his late twenties and works at a local restaurant. Most of his friends do likewise....and his friend's friends. Yet when it comes to having some money to run down to Austin and watch a band, get drunk and generallly blow off steam, they ALL have this excess cash that allows them to do it. Upon digging into it a little more, I came to realize that EVERYONE is living off the underground economy (to the total niave.......that is today talk for slinging some weed or pill to 'make ends meet'). Furthermore, when you gaze East and look at Afpoppystan, you suddenly realize just why the Taliban became the 'enemy' and had to be moved. Now that we control the route once again, all is well with the world and that final countdown could be years away...not months as previously thought.
"have this excess cash that allows them to do it" I think you forgot your input to that life style, dont you think? How much it cost you to keep them going, I mean mean, food, wireless and so on?
He's in his late twenties, so your assumptions may or may not be valid.
I'm just happy to know that kids are smart enough to see and choose free markets, despite the heavy hand of the state.
Governments HATE competition and hence all truly free markets are enemies of the state. Same as it ever was.
We are already in a civil war over the inevitable collapse of the welfare state. We have made indentured slaves out of future generations to pay our entitlements - at least we have attempted to do so. But because the young will wise up to this (see Ron Paul's followers), at some point they will opt out of the Ponzi scheme, as will anyone who is independent or self employed. We are only debating when, not whether a revolt will happen because the debt loads are unsupportable.
But when the musical chairs stop, what happens then? It will be a war over debt slavery, but it won't look like Civil War I because 1) territory has shifted to the Inteernet and 2) the army of the regime is not the military but the proxy armies of illegals, unions and anarchists like OWS. We are already in the beginning stages of this civil war. http://www.futurnamics.com/civilwar.php
The only way out for most people, short of moving to Australia, is to Go Galt. That means not only buying gold and silver, but internationalizing your finances and becomming as self sufficient as practical. You can't just drop out of society, but there are dozens of ways to prepare (gardening, fixing your car, doing you own house upgrades, doing light manufacturing, whatever). Bulletproof your lifestyle, the tsunami is coming. http://www.futurnamics.com/goinggalt.php
I am amazed that I am considered crazy by those who know me when I discuss civil war. It has happened already twice if you count the Revolutionary War.
These guys were pretty good live BTW.
The Traveling Salesman: Family
So, the trick to eliminating the insulator is, of course, suspending time, delaying friction with the centrifuge, which means that you must be able to time travel relative to the empire, to complete 5 jobs while the manufactured majority struggles to complete 1, by filtering out empire make-work, beyond the knowledge of the empire, looking ahead to algebraic reduction.
Timing, timing, timing. Get to the gate, pick up the key from the key of keys, unlock it, drop the key, walk through, and lock the gate, as you build the ladder. Orbiting is a function of setting up the centrifuge dimension gaps. Don’t wait in line, unless the empire is watching.
Societies advance when participants learn to migrate through the event horizons elastically, like a flock of seagulls diving in and out of a moving center from all dimensions, learning to become a school. The empire is throwing out bread as bait. The greater the circulation, the greater the economic power.
Creation is the false assumption of false assumptions, distilled into backlash. It’s child’s play; learn to play effectively by playing to learn. Accepting any bipolar assumption calcifies the system, relative to the non-conformers. Balance/moderation in all things.
The economy is a balance between marginal income from organic growth and financial leverage from the legacy balance sheet. What nearly no one in the calcified empire gets, professor, is that the NPV window depends upon confidence in the navigation skills of future generations. Look around at your crop. As the empire passes the tipping point to zero real balance sheet value, because it has cut itself off from the planetary diversity motor for an extended period of time, its denizens begin to wake up to their sunk cost status.
Legacy families employ their children as slaves to the past with increasing desperation to maintain economic power, increasing the empire’s anxious State, promising equal outcomes to an increasingly irrelevant middle class, with viral replication of the example due to the positive feedback in the civil marriage ponzi. Equal opportunity of participation comes from new family formation, which cooperates to emerge from the churn pool flux, initially in a dimension well beyond the empire’s reach, due to quantum advance in the waveform.
It’s a confidence game. The market runs sideways with increasing volatility, in several dimensions, on the probabilities of bifurcation and reintegration (notice bipolar of bipolar requiring less than two bits). New family formation, closest to the planet, steers the ship, upon which legacy families compete for the best birthing, over longer and longer time.
The captain largely supervises harbor entry and exit. In the middle of the voyage, new navigators are trained by granting them freedom to work at the behest of legacy families. Those leaving the deck to do so are distilled out. Ships that continually return to the same port go bankrupt and capsize, captained by the false assumptions of History.
The point of being homeless is to erase the corporate impulse response programming and dump associated nonperforming assets, to increase event horizon choice along with the ability to mimic their impulse responses, just long enough to build each step of the ladder. Begin with the exit, in an exit of exits.
Participate in different areas of the distribution simultaneously, to obtain and drop their keys to your key of keys in the neutral zone. As the empire expends from its balance sheet, fueling mindless economic activity to the end of certifying robot participation, it adjusts the centrifuge chasing non-conformers, braiding the rope of nonperforming assets around its neck.
Real marriage, quantum entanglement in the neutral zone, allows you to perform this operation without many of the risks normally associated with homelessness. Because the drilling process has commenced, the AC cycle begins to flip, and communities grow around them, as confidence momentum builds.
In the beginning, you are together 7/24, helping each other eliminate the impulse cost structure, by bringing each other’s subconscious social voices to the surface, and redirecting them toward effective adaptation, building the root bond. When you fail to smoothly prevent impulse response, move, skipping the next step on the temporary plan. Make a new plan as you go. 0; -1(History) X -1(plan) = 1(future). Simple math beats the empire every time.
Employ/build the new communication system as you go, replacing the social alter egos with an effective alter ego, each other (simple replication across generations in civil marriages, which favor the more irrational spouse, leading to irrational markets). Create time/torque differential by learning to present arguments effectively. Leave the friction behind, with the empire.
“Give Me a Kiss to Build a Dream On”
Yes. Hire the kids to build a reactor to clean up Hanford, and get out of their way. Basically, you are buying the resulting technology.
Europe is fine, we have 27 ways to fall. The US has only one way to fall, as its festering from the head down like a rotting fish; FED head and Congressional body, all in decay. When the lungs go the heart will panic; the lungs being the monetary flow from banks. While Euro melt occurs from the periphery inwards, its consequences on WS construct is to drive a nail to the very heart of American capitalism. The shock on US system, integrated outside as inside, will be ominous; not like Eurozone, which can decouple at individual nation state level. We are seeing a squid trying to stave off the harpoon of banking meltdown from hitting its eye; like in Twenty thousand leagues... While the crew of boat hack off the shackles of the squid's tentacles, sacrificing a sailor here and there, a Greek, a Portuguese. That harpoon is the killer blow and it will be shot like a bolt the minute banking collapse world wide begins. WS/City, the epicentre of the financial squid, its the nerve central eye, will then go berserk.
Jules Vernes had a fertile mind. But where is Captain Nemo...? Calling Merkozy, calling...lol!
"The US has only one way to fall"
Total bullshit. Given the the cultural diversity in the U.S. and Euroland, I see lots of different interests quite willing to fracture into several different ways in both cases. But I digress, who has the natural resources and space to sustain a decent standard of living again? Everything else is fucking noise. Same as it ever was.
The only thing Europeans have in common is envy. Europe is dead first, the U.S. second.
Good try, Serpent Girl.
Envy? Of what? Fiat wealth? Hubris? Sense of humor? Maybe an oscar...now that, yes!
and....its dikkland here, sorry.
tim - your economic analysis is impeccable....however, let me throw a theological challenge to your statement 'but quickly dismiss them off-handedly to a spiritual plane, calling them “acts of God” as if to show that we could never have prevented them.'
therein lies the rub - acts of god can not be prevented and human history is just that....god often uses fucktards to advance his will....so, even though with wise counsel the economic disaster building up for the past 100 years was avoidable, it has not been the pleasure of the almighty to furnish us with wise counsel for reasons only he knows....
the lord gives and the lord takes; blessed be the name of the lord.....the nations are but a drop in the ocean to him...he shall do his good pleasure and none shall stay his hand....the lord is good but his ways are past finding out....bless the lord o my soul - and all that is within me bless his holy name....
Not having time yet, I have only read the title so far. This is about the hundreth or more titles similar to this in recent months. Don't investors/traders know what they are supposed to do-----SELL. My shorts are killing me. And I'm not talking about my underwear.
Amen to Austrian Economics. Invest accordingly
The median home price of a home in Southern California is down to $270,000. Would you like to know the last time we were at this level? You would have to go back to 2002 to find the first crack at the $270,000 mark. To sum it up we have now reached a nominal lost decade for Southern California.
http://www.doctorhousingbubble.com/
If your property is worth the same dollar amount now as it was in 2002, you've lost an additional ~21% of its value to fiat inflation. Send a nice Thank You card to The Bernank.
This article has a couple of things that make me go hmm...
"So while “laissez faire” would accelerate any banking crisis and shorten the resultant economic contraction, it would reveal the identity of too many naked swimmers when the tide retreats. Instead, courtesy of highly paid lobbyists, we get a long drawn out depression."
So, Laissez Faire is the best friend of the little guy? As in, no regulation, fraudulent business that focus on the least informed and least powerful (subprime anyone?), and that when blows up leaves those same people as a naked homeless swimmer? And that's supposed to be the cool thing?
No. While it's true laissez faire, real one, would leave the zombie banks naked; the author fails to understand that when you reach a certain position of wealth and power, the laissez faire is for everyone but you. So while many people support laissez faire, with that same laissez faire, only very few are able to profit from it. It's by no means pareto efficient...
"Subsidize unemployment. Any subsidization of unemployment (via unemployment “insurance”, relief, etc.) will prolong unemployment indefinitely, and delay the shift of workers to the fields where jobs are available."
Well, ok. Let's cut all unemployment benefits in the US so those workers can got to the fields were jobs are available... that's nowhere. I can't believe someone would be so shortsighted and ideologically blinded as to propose somehting like this.
You are zigzagging in your argumentation.
If actual laissez faire is (always?) not a real laissez faire, then no laissez faire is better?
None are good. One leaves the poor bastards with their asses up. The other leaves them and the others too the same. No referee, no playing field, law of the jungle.
So, conclusion(s)?
When you pay people not to work, they don't. People respond to positive reinforcement by doing more of the thing you encourage them to do. I suppose basic parenting is shortsighted and ideologically blind as well.
I would like to know how many here realize what inflaton really is. Its not the official (bogus) CPI and PPI. And not even the 15% or whatever it is on shadowstats. Its much more sinister and devious than that. We, you, me, all of us, are doing the work that others used to do for us. Yes, that is inflation, when you get less for your money, not only when prices go up. You want examples? Tons of them. Travel agents? Thing of the past. You do that. Check in at the airport. You do that. Fill up your tank? You do that. Check out at the grocery store? You get my drift, right? No matter where you look, we are getting less for our money because we do the work others used to do. That is NOT progross dear friends, its INFLATION. And it plays right into the hands of the politicians that exported thousands of our jobs to China, just to keep the actual price level of things down. The ponzi scheme must continue no matter the cost. Never mind we are just consumer robots now. This will end ugly my friends, very ugly.
Those are some good points. I've never looked at it from that persective.
Life is inflated. Before I actually talked to my friends in person now I only text some unknown avatars on a forum.
Banking machines are my pet peeve. The bank charges you for doing the work of the teller. Good business model.
The Count...not sure if you are checking a day old article and comments, but I enjoyed and agree with your ideas, care to expand on it? What are some scenarios you anticipate. I agree but come up with only circular arguments driven partly by the fact that very little seems to have 'happened' yet. Shocking that emergency moves by the Fed over the past several years and perhaps the sheer enormity of the situation has managed to put the whole game into slow motion.......despite living in HFT / Flash Crash capable market environment. Seriously, interested in hearing more about your ideas there.
http://www.infowars.com/ama-make-participation-in-vaccine-trials-mandatory/
http://www.infowars.com/new-york-moves-to-deploy-body-scanners-on-street-in-search-for-guns/
and for laughs:
http://www.infowars.com/white-house-in-lockdown-after-smoke-bomb-threat/
The same question remains? Will the forest burn in 2012, 2013, 2014....
"Is it tomorrow, or just the end of TIme?"
"So while “laissez faire” would accelerate any banking crisis and shorten the resultant economic contraction, it would reveal the identity of too many naked swimmers when the tide retreats"
What a great line.
Bernanke and the Federal Reserve said they have their magic printing presses so prepare accordingly. Bernanke's plan since he formulated back in the 1970's. So far he's been using it. Bernanke will just keep printing until he sees it's negative effects.
And at that point, it will be far, far too late.
The Western World is full of over-specialized over-stimulated apathetic ignoramuses led by parasitic politicians with no balls; there is no way this doesn't end in USD hyper-inflation.
This market is ripping. Volume or not. I have been reading posts on this site from banks for months screaming for QE3 and using a severe downturn was imminent if more LSAP were announced very soon. How in hell can they ever do QE with the sun so bright now and the birds singing? Or do they just not need to?
The Final Countdown -- don't believe the hype. "They" will not let "it" happen.
Great article on the Bernank printing press (they never stopped):
http://www.bullionbullscanada.com/index.php?option=com_content&view=arti...
Looks as if the Bernanke is "losing" the Treasuries that are being sold to the Fed.
Speaking of food stamps, the other day while walking out of a grocery store, a guy in a huge, late-model SUV stops, rolls down the window and asks if I would like to buy some food stamps -$200 dollars worth for $100. All scams will run until the people catch on, will Americans catch on... ever?
He definitely was trying to scam you because food stamps don't even exist anymore, they are all issued on the EBT card.
http://www.bloomberg.com/news/2012-01-18/summers-under-consideration-to-lead-world-bank-when-zoellick-s-term-ends.html
I hate that fucking song. Could you post live Xanadu by Rush?
How about Xanadu by Olivia Newton-John (featuring ELO)? :)~~~~~
More from the Abbot and Costello Show :
Did Italian PM Mario Monti Just Hint At A Policy Bombshell To End The Crisis? Joe Weisenthal | Jan. 18, 2012, 2:25 PM | http://static5.businessinsider.com/assets/images/icons/icons.png); background-attachment: initial; background-origin: initial; background-clip: initial; background-color: initial; color: #f47512; background-position: -100px 0px; background-repeat: no-repeat no-repeat;" title="views">670 |Read more: http://www.businessinsider.com/did-italian-pm-mario-monti-just-hint-at-a-policy-bombshell-to-end-the-crisis-2012-1#ixzz1jqClJvsy
Mario Monti and Mario Draghi, what a team. We now need a MAria Callas to sing us Carmen; tragic heroine who Kills Bernanke and dies for her passion, or LA Traviata who dies for Armand. Dame Aux Camelias, she needed love like the Euro does, please love me, please... You can choose either version to talk about the Euro lady; Carmen or Dame aux Camelias, its all the same...
MArio 1 : We cap.
Mario 2 : We print, but via back door dissemination.
Mario 1 : Well if I cap, and you print on the sly, we get round "Verboten" and "NEin, nicht Eurobonds" of HAuptmarshall fuhrer Merkel.
Mario 2 : What a team ! We are Il DUce squared, And the Market can take the finger. We have saved the Costa Concorde of Eurozone and thousands of lives, nay millions and trillions of EUros!
Mario 1 : Will they give me first class to the Moon on Virgin tours when this thing ends?
Mario 2 : Make sure you take the Bologna sauce, the food is terrible and some good old Grappa!
he is right.the end game is here . The only way out of this mess is to destroy the value of Western cebt via massive inflation/ciurrency devaluation. Germany is a hold out but the ECB via the recent cash injections is sidestepping them(it QE/money printing in all but name).
the banks..custodians of MONEY...have destroyed the value of MONEY.
A very very major re-set is on the way for the £, $ and Euro....followed by significant wage inflation so that private/gov debtors can reduce debt burdens ...and then calm waters again for awhile.
Rinse and repeat. the game will go on.
Meanwhile...own gold and oil.
lol, fiat.
There are only two facets to the current global economy:
Steal and obscure.
The rest is total fabrication and complete bullshit. They want they take, then cook up a massive crock of shit later -- rinse, bailout, repeat.
War on drugs
War on poverty
War on Iran
War on terrorism
War on the Internet
War on wars on things to come
War on human rights
War on the rule of law
War on anything but reality
War on crocks of fabricated bullshit because they say so.
But never a "War on War".
Funny how that works.
The only thing that is going to happen is more of the same, money printing, devaluation with coordinated actions to hold PM's down. EVERY major player in the game is all in for these actions so, nothing else will happen. Ask yourself who wins in a ponzi collapse, a real collapse? Only us and guess what we have NO power, oh as a group we might control some meaningful amount of resources but we are not the .001% that are in control and would not truly benefit from collapse.
The sheep worship the frn or euro and as long as it provides calories and circus they will continue to do so and confidence i na ponzi is all. The merry go round will keep moving oh it will creak and groan but inertia will make it go a long, long time.. There are no rules, laws or regulators it is all an illusion get used to it, the noose will tighten for some time before anything truly substantial happens..
But of course this is all fun and you do not see me knocking ZH off the favs..
There is no debt.
Is it me or does even this site seem bummed out today?
Stress studies make it plain that lack of power over ones situation is a prime condition for extreme stress leading to depression, feelings of hopelessness etc. We have no power to affect any of this, we debate and get pissed and talk peak this and that and not one damn thing is ever going to change unless people get hungry and that day is a long way off..
I am getting me a Gubberment job, some anti-depressants and joining the sheep, adios suckers.
Um, if things don't work out you'll let me back in though right??
Andrew Jackson, July 10th, 1832...veto message for the Second Bank of the United States. Just a bit of courage and bit of desire that the people shall rule, and we can have this back...
How can you take a loss by lending out something worth nothing that you created out of thin air and then not getting it back? Just create more of what you created to lend out that you lost and there is no loss! HELL even if you don't create more of nothing your still not lossing anything because your losing nothing... BUT if people pay you back you are gaining something because you gave them nothing to begin with.
Wait I think I get it now, its like ... the mafia going around a neighborhood robbing people, and when they find someone who doesn't have anything worth stealing they count it as a "loss" because they thought "potentially" they were going to get money out of that person.
So losses = Not gaining?
I guess this is why we have all this "rehypothication" because our entire banking system is "hypothetical" to begin with!
Bank math = 1+1 =0
they will list the potential/missed "-$50" NOT found on the guy, as an ASSET!
Forgive me for not being literate in these financial matters, but how do we profit off this knowledge, Tyler? Buy January 2013 puts on the SPY? Any advice? Thanks in advance.
I found the comments in this article, particularly toward the end of it rather conflicted with the quotes from Rothbard. The statement that:
"One of the few improvements has been in the recapitalisation of Anglo-Saxon banks, but continental European banks seem acutely vulnerable to the potential outcome of a disorderly sovereign default."
flies in the face of Rothbard's:
"Rothbard identified the ways in which government can hobble the adjustment process: 1. Prevent or delay liquidation. Lend money to shaky businesses, call on banks to lend further..."
Confusion here in pointing the finger at Europe as the most unstable situation, when the supposed "recapitalized" banks of Britian and America is one of the very "solutions" Rothbard warned would make matters much worse for a much longer period of time.
Its easy to pick and choose who and what you focus on, which is by its nature what focus is about. But IMO best to be clear about the larger realities.
Europe was no "one hit wonder". You never heard the other singles/videos: "Rock the Night, "Cherokee" and "Carrie" from album "The Final Countdown"? They had popular singles off of their next album "Out Of This World" too: "Superstitious", "Let The Good Times Rock", "Open Your Heart".
Looking over history, certainly hyperinflation has struck individual countries or regions but nothing globally, to date, since maybe Rome ruled the known world. Far more frequently however, on a global basis, has been mass deflation -despite whatever drastic attempts to inflate were made. Interestingly, if you look at global monetary infusions since 2007, you arrive at a staggering and previously incomprehensible number; and yet there is still no hint of any long-term global hyperinflation; and very little local hyperinflation outside of a hand full of countries.
Where are these trillions of fiat? It is important to remember that money is just a means for a more convenient exchange of goods than exchanging the goods themselves. These days, most of it (money, that is) is just electronic bits of data in the "cloud", but the exchange of goods is no different than when Adam Smith wrote about it in the 18th century.
There is therefore a lot of chatter about "consumption" & the need to speed it up or maintain an upward trajectory, but little discussion about what "consumption" actually entails. The creative destruction forest analogy is, while useful and applicable, still just a limb on the tree and not the root cause because consumption, at its root, is innovation. In America, look at the things you own and ask yourself how long they have been around. Many items, like the electric toaster, are just now turning 100 years old. Who still needs a toaster? All products have life cycles. Even though a vast majority of items, like plastic, are not yet 50, they have none-the-less reached a "cash-cow" life cycle status and an economy needs "rising-stars". You may say the Apple product line, for instance, qualifies, but even the I-phone is on version 4, which is re-hash not innovation and while we may not know the difference, the invisible hand of the market does. So, back to the forest and the lack of a wildfire. It is important to consider that such a burn is unlikely to produce new stars but rather new and improved cows, which isn't enough. All innovation is the "Jeopardy" answer to a question of a problem, but what problems are left to solve? Outside of human health or renewable energy, I can only think of a more cost free way of desalinization which would greatly expand the amount of arable land in the world (like all of Australia) which would open up expansion and opportunity and "consumption".
Big money weave a mighty web
Big money draw the flies
Sometimes pushing people around
Sometimes pulling out the rug
RUSH
big Money
The linear models is a good point. But not understanding the long-run implications of Clinton's housing bubble was a big issue too.
HTTP://confoundedinterest.wordpress.com
Rothbard is of course correct assuming you keep the same "system".
But the system can be changed. That's where we're at, because it's going to be changed, one way or the other. Better to do it voluntarily ourselves rather than let the oligarchs mess it up like they have everything else.
http://strikelawyer.wordpress.com/2011/12/27/saving-the-world-revised-ed...
http://strikelawyer.wordpress.com/2011/12/27/saving-the-world-revised-ed...
http://strikelawyer.wordpress.com/2011/12/31/brief-history-of-jubilees/
http://strikelawyer.wordpress.com/2012/01/03/seigniorage/
The key is to stop seeing this as a "financial" crisis and start seeing it as a "rule of law" crisis. Even a constitutional crisis. Because that's what it is. And that's how it can be solved.
If European countries do go belly-up on the Euro, do the host nations have to put up collateral on their debt to the central banks? Will these countries have a fire sale on their ports, land, water systems etc; to satisfy these debts or will the Banks own everything?
ho-hum, another hyper-inflation-is-just-around-the-next-corner.
Yawn, wake me when the 30-yr breaks 5%. In the meantime, I'll just keep raking in my winnings from monetary morons.
Oh, and if anyone doesn't want to foist those evil T-bills onto their progeny, please let me know, and I'll provide mailing instructions for sending that soon-to-be worthless paper to me. I'll take non-interest bearing notes (i.e. dollars, yen, euros) as well I'll even pay the postage. Yes, I'm that kinda guy.
Do you even realise the reason why everybody is rushing into treasuries?
Hint : it's not because they scream solvency.
It was public knowledge where and when one of the REALLY bad guys was going to be located (Hotel Jerome - Aspen). I wonder what would be the long term consequences if someone had showed up and taken him out.
I forgot to note how this article is a two-fer - not only the very old hyperinflation-just-around-the-corner bit but the almost as popular yearning-for-the-big-adjustment shuffle.
I've always found it amusing how those yearning for the big adjustment assume that they would survive it. Something about having survived body piercings and slam dancing makes societal breakdown just a walk in the park. Most folks grow out of it at some point.
Your salsa is evidently tainted with mind-altering substances.
But enjoy your Treasury musical chairs game for as long as it lasts --- but when your one million players rush to sit in 100 empty chairs, it is going to be very, very ugly.
I think Final Countdown is second only to Ice Ice Baby.
There is no such thing as creative destruction. Only fucking idiots believe that fascist nonsensical garbage taught by incorrect textbooks and mindless lackey professors of dogmatic skull fucking.
The author of this article is as clueless as any Keynesian. His way is just as idiotic, and just as loaded with incorrect assumptions based on his own ideological dogma as any Keynesian.
The article should be titled...Why my dogmatic bullshit is better than Keynesian dogmatic bullshit.
Us readers should realize that it is bullshit. Just like the Keynesian bullshit, it is incorrect.
The only way to get out of a system of sophistry lined with incredible fraud is simple, go back to the American System. (besides learn what sophistry is...of course)
Return to Glass-Steagall
Return to the American Credit System
Use that credit, available to be created now, to actually create wealth through known and desired projects whose completion creates wealth for a nation. Water, mag lev, machine tools, space, science, energy, etc. There's plenty of projects to create wealth available to us.
But people still believe money is worth something. Money is a tool, it isn't worth anything.
When wealth creating projects are available, the tool that is money, should not be the issue. The lack of this realization when advocating for a system of economics, especially in America with it's anti-monetarist roots, is amazingly ignorant of reality and history. Instead we CHOOSE to advocate for a system of economics that makes money the biggest issue. Creating all sorts of 'rules' that must be followed. Output gaps this. Welfare queens that. All miss the real point. What endeavors are creating actual wealth? What projects are ensuring a supply in the future? What projects are discovering newer, better processes?
Neither sides focuses on actually creating wealth. None are forward looking. Both Keynesianism and Austrianism are status quo, looking back ideologies. Which is sort of a motherfucker when the point is creating new wealth.
Monetarism creates a bullshit theory that if you follow the dogma, like the narrow righteous path of a religion, you will make it to the economic promised land. Bullshit. Monetarism is based on bullshit. Thus it's path is bullshit. If you benefit, you benefit in spite of the bullshit. Maybe only because of the bullshit. Most likely benefit less because of the bullshit. Sometimes the bullshit even costs you your project.
You can follow bullshit, or actually focus that deficiencies in X, whatever X is, can only be overcome by implementing plans to produce more of X.
We have a monetary problem. A problem of monetarism. No idiot school of monetarist thought is going to get us out of a problem of monetarism.
Real America isn't imperial and it isn't monetarist. Too bad America isn't American. Because America now IS imperial and monetarist in reality. It's not supposed to be beholden to the dogma of Austrian ideology, nor Keynesian ideology....but it is. A nation beholden to monetarists. Or basically what you ancestors left, because they were sick of what? Sick of Bullshit.
America's true economy is the physical economy. It focuses on increasing the ability of the public to engage in and expand the physical economy. It's about manufactures and protecting our manufactures. It's about meeting needs, not covering them over.
It isn't about printing to pay off fraudulent debt.
It isn't about making people starve to death and/or go homeless because of belief that it (no or little unemployment compensation) must be done lest our worthless 'money' be on paper, be worth less. (but inherently money is a tool, it is worthless).
Just because money should be respected, doesn't mean money should be treated like a King or a Prostitute. It should be treated as a tool to create actual wealth. But instead of looking at it like that we have two sides (the major ones) of idiots. One side says money shouldn't be treated as a tool, but as something that can be printed around to cover for misallocation and to keep the fraud going. The other side says money shouldn't be treated as a tool, but as religion, that it has to be 'worth' something so much, damn the people, progress, or any ideas. Because if you don't have the 'money' you don't have an idea to create wealth. Thus you cannot create that wealth, because you don't have any 'money' to create it. That the idea is worthless, because no one wants to risk their money. (not that the two sides never met, or the money was used up on another project...like Greek Bonds).
Personally I'm sick of one sides of dogmatic idiots, claiming because another side of dogmatic idiots have screwed up so much, that now we have to switch to this other side of dogmatic idiots, because if Keynesian is worthless, than Austrianism MUST be the answer. Sorry, Keynesianism fucking up, doesn't mean Austrian is right. It means Keynesianism is wrong.
Just like ZH mentions of correlation as causation being wrong. The same can be said that Austrians are not inherently right, because Keynesians are the current idiots in charge.
Neither of the dogmatic sides are right. The metrics both sides uses is wrong. Neither is in the tradition of America. Monetarism is false. It is not valid. It is not truth. It is not a valid standard. It is bullshit.
Because a monetary ideology says print money for banksters or any 'output gap', we should blindly do so? Bullshit.
Because a monetary ideology says there should be no welfare, lest our 'money' is devalued, we should blindly do so? Bullshit.
Because a monetary ideology (any of them) says there is no money for actual wealth creating projects, we should blindly let wealth creation not occur? Bullshit.
It only makes sense for the status quo to deny needs, to deny opportunities for wealth creation, to perpetuate fraud, because to that staus quo any of these activities (to surpress) benefit the status quo. It's a form of control. Monetarism has been controlling people for thousands of years. Monetarism dictates what is valid economically, not because of reality, but because of dogma. America was the embodiment of a breakaway from the control of monetarists. Until we fell back into the fold. Monetarism detracts from economic activity, it is not an addition.
It's all monetary ideology that is 'telling' us what to do or not do. Not actual reality. Not the obvious benefits of wealth creating projects. Would more water, more power, more jobs, less homelessness, so on and so forth be an actual increase in wealth and living standard? Shouldn't these needs be more important than the ideological dogma of the staus quo? Or are we so used to 'monetarism' we need to see such projects fit into an ideology to agree with engaging in the sensible course of action? Or need to see some BLS numbers to believe it? Our leaders choose to follow ideology instead of meet needs. Doesn't matter if it is Austrian or Keynesian. With them, it's following ideology that will eventually meet your needs.
We can't engage in projects that we need to do, because we don't have enough 'money'? Bullshit. That's actually a choice.
Cancel the fraud, because it is fraud. Not because of some ideology told us so.
Start projects, because there is a benefit to real wealth creation let loose from the project. Not because some ideology told us to fill an output gap.
Cut spending, because it is waste, not because a monetary ideology states ANY spending by gov't is a waste, or psychologically it tethers, or teaches someone not to work.
It is thus our economic policy to ask God to give us a fish (both Austrian and Keynesian). That somehow, someway following the monetarists dogmatic tennets will fulfill our needs.
Here's a clue for the people, if any, don't quite understand it. We need to do what makes sense, because it makes sense. Create wealth when there is an idea to create wealth. Not because some ideologies tell us how we should 'behave'.
We need more regulation. We need less regulation. We need regulation in the right places. (neither of the dogmatic monetarist ideologies get this right). We need Glass-Steagall, not the Hitchhikers guide sized Dodd-Frank (which does little, and nothing on what really matters).
We need more money created specifically to focus on wealth creation. We need less money on frauds. We need to create money where it needs to be created, because those purposes create wealth, and take away from the ability of the money masters to create it where THEY want, because what they create for,(besides being fraud) has nothing to do with creating wealth.
We need more money on real science. Less on faux science. We need real scientific discovery of principles and applications, not pseudo science mixed with bullshit statistics and psychology. Science for the betterment of science, whose discoveries can benefit private business. Not proprietary science, narrowly focused, to serve the interests of CEO'S (quarterly earnings, bonuses) and that's it.
Financial engineering is a made up word. Engineers build real physical stuff that does something. Financial engineers create new fraudulent ways at making money more important than anything else, especially the money specifically utilizing the created 'ways'.
Overall the projects we need to create wealth are there. They've already been thought up. There are many needs going unfulfilled in this world. The ability to create money for wealth creating projects is available. We choose to allow ourselves this ability, or to keep it with the banksters or technocrats. We choose to take a suboptimal path because some various 'monetarist' ideology tells us that their way of 'behaving' is better for wealth creation than actually engaging in actions that create wealth.
So what is better at creating wealth? Projects that create wealth? Or following monetarist dogma?
If you want to create wealth, you need to create wealth, not follow monetarist dogma and believe that some monetarist ideology will create wealth on its own, because like a good lap dog, you followed its dogma.
As if it is really a hard choice.
Like the author says, surpressing volatility, and/or managing the status quo is doomed to failure.
But what the author doesn't realize is that any time you based decisions on bullshit, you too are destined to fail. Decisions based on dogma will have their blowback. Whether they are Keynesian, or Austrian. Because neither Keynesian or Austrian deals with reality. Only with a constructed reality. (which like Reality TV, isn't real).
The only way to deal with the reality of needs going unfulfilled (of all scale and scope) is to actually engage in actions to get the projects going that meets those unfulfilled needs. No ideology will meet a need. Only engaging in actions to fulfill the need, will fulfill it. Thus we need to go about economics in a way where we focus on what we actually DO. We need to go back to a system that created money to DO something. Because in the DOING, came the wealth, came the fulfilling of needs.
Keynesian or Austrian monetarism don't DO anything. Their dogma only gets in the way of DOING something. Keynesianism won't sow a field. Austrianism won't sow a field. Keynesianism won't discover fusion. Austrianism won't discover fusion. But with a credit system, a farmer will have the money to SOW a field and a credit system will fund a project that will discover fusion.
The American Credit System CAN create money for such projects. That is why it was and if again, would be there. This is the type of system we need to get back to.
By not providing the money, both Austrianism and Keynesianism FAIL at producing the wealth that should be. The outcomes we need. This is as a direct result of the dogma of these monetarist ideologies. They won't be done, because these ideolgies won't allow them to be done. Progress is not just hindered, it is in spite of these ideologies. Despite monetarism as an anchor, we have still progressed over time. But this isn't always a given. We're treating it like it is a game, and risking the entire human race. We've got serious hurdles to overcome, but the ideas are there. The economic system to bring these ideas to reality, aren't there.
Because the projects we need to survive will never be funded by Keynesians or Austrians, they are suboptimal compared to a system that does allow such projects to be undertaken. We need to get BACK to the true American way of economics. Because the American way, and the reason our ancestors came here, was to be in a land, where one could actually do something to meet their needs. We cannot do this under monetarism. It's against its rules. Made up, bullshit, arbitrary rules.
Mankind can do anything (that's not idiotic) he needs to do, unless he believes an ideology that teaches him otherwise. We've been taught otherwise. Both Keynesian and Austrian are otherwise.
Impeach Obama
Glass-Steagall
American Credit System
Just HOW MANY fucking times are you going to post that exact same rambling, nonsensical screed already, Lyndon?
You LaRouchites --- just more cultist sheep following a statist, neo-fascist demagogic leader. When are you EVER going to finally give up?
closer to 11.59.59p methinks
Hang these Fuckers. We don't owe you shit!!!!!
Some one mentioned the Grateful Dead...They didn't really sing too well but I did like the lyrics from this one and who isn't a sucker for pedal steel. There is a truth to what Garcia sings about, the trick is to render it meaningless. Get there and all this economic this and economic that will just fade away.
http://www.youtube.com/watch?v=QzGWYShgmfk
This article FTW