Guest Post: Why You Should Be Excited About National Bankruptcy

Tyler Durden's picture

Submitted by Simon Black of Sovereign Man blog,

One of the great absurdities of our modern financial system is that a nation living within its means, i.e. spending less than what it confiscates in tax revenue, is no longer the norm.

Living within your means is now considered ‘austerity’. And unfair.

Whether in the UK, Europe, or North America, many voters have become so accustomed to the government’s massive role in the economy, they can’t begin to imagine how it could be scaled back.

You usually hear heavy objections from people like– “What about roads? If we start cutting budgets, there would be no more roads!”

The ‘road argument’ is one of the most widely misused defenses of government… as if there are no private roads in the world.

Chile comes to mind as a great example– the country’s very modern toll-based highway system is privatized, and the operators have a huge profit incentive to keep the roads in top condition.

In fact, the 2 1/2 hour ride from Santiago to our farm is along one of these roads, and it’s smooth sailing the whole way.

A few years ago when Chile had its major earthquake, portions of the highway system were damaged. This meant that the operators were missing out on toll revenue… so they found a solution and were back up and running in a matter of days.

It was amazing how fast they were able to pull it off when so much of their profit was at stake.

When you think about it, just about everything that government provides either is already, or could be, provided by the private sector. That there is presently a private vessel docked at the International Space Station in Low Earth Orbit is the finest testament to this concept.

SpaceX has twice succeeded in launching a vessel into space in its 10-year history with a total of just $1 billion in funding, averaging to $100 million each year… roughly 5.6% of  NASA’s massive budget.

Then there are things like the court system… where the wheels of injustice grind away at such a pedestrian pace that it can take years for a case to even be heard, let alone resolved.

Enter 21st century technology: there’s a relatively new service called Judge.Me, an online arbitration service whose decisions are legally binding in 146 countries, from Afghanistan to Zimbabwe… and yes, including the US, Canada, and Western Europe.

At just $299, disputes can be settled in a matter of days, and the firm’s case history shows that 96% of all arbitration awards have been honored.

This is the sort of thing that makes me very excited– the private sector displacing the public sector. And there’s going to be a lot more of it coming.

The more insolvent governments become, the more they’re going to be forced to axe all the things they can’t afford. We’re already starting to see this in places from California to England that can no longer hide from their fiscal reality.

With the government monopoly out of the way, the private sector will mop up every service that it can turn a profit on– trash collection, security, fire, prisons, libraries, etc. This forces competition, higher quality service, and lower prices for everyone.

The people who protest against austerity, or think it’s a tragedy when a courthouse closes down due to budget constraints, are really missing the larger point: the sooner this corrupt house of cards collapses, the better off we’ll all be.

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Banksters's picture

I don't think the premise is incorrect.  However,  I think that for many years, the US has misappropriated and misallocated funds against the wishes of the electorate- see endless war and defense spending.   Taxation without representation!  Bitchez

walküre's picture

Nevermind the wars and defense spending. at least that created jobs. In the end of course the biggest paycheques are handed out to the oligarches as well.

How about the heist of the millenium? The fucking banker bailouts were a fucking farce!

They got so greedy, they didn't even take the detour and let the money trickle up through the normal channels. No, they couldn't be bothered and now you have Massa Benmosche sitting in Croatia and lecturing us peons from his quaint seaside retreat about a later retirement age.

Imagine how many fucking jobs could have been created (not saved!! bullshit) had the money gone to entrepreneurs or just at least an official debt jubilee to restart the game.


john39's picture

but the wars are just more banker bailouts in another form.  you don't honestly argue that these wars benefitted hummanity in general, or even the U.S. citizen...  banker blood money, nothing more.

walküre's picture

Wars are a racket. At least with a war the bankers are decent enough to trickle down some of the plunder. I'd never argue that wars benefit anything but the corporate bottom line.

My point was that the banker's bailouts went STRAIGHT into the banker's pockets. Nobody (excluding perhaps their political whores) was allowed in on that heist.


illyia's picture

So kill off the banksters: Make the 700+ Trillion in Over The Counter Off Balance Sheet Derivatives retroactively illegal.

Watch how fast the banksters (and their government accomplices) fall...

The OTC Off Balance Sheet derivatives are the problem. This is Fraud perpetrated by banksters with corpgov backing. Mark to Make Believe results in insane misallocation and ultimately the fleecing of the sheeple. The shysters know that the taxpayer can still be wrung out further and they won't come clean until there is nothing left.

As long as this charade is allowed to continue the burn will as well.

Expose the virtual-paper fakery for what it is - make the fraud illegal. Set the "free markets" free!

walküre's picture

Yep, it's gotta be done. Probably need a junta to take over and reestablish some sense of law and order before handing power back to the people. It won't be easy and it will be painful. Very painful.

The OTC derivatives have been a banker's free for all gimmick to write themselves one hefty paycheque after another. The money is not real but their wealth certainly is and they use every opportunity to remind us of that, ie Benmosche's remarks.

What they don't seem to grasp is that we don't need them. They are obsolete and not only that, they've created themselves so much wealth that it is impossible for us to support them anylonger. Not even at 0.25%.

AldousHuxley's picture

WARs are the reasons why Americans pay less for gasoline, enjoy cars, McMansions in faraway suburbs, etc. It also stimulates demand by destroying infrastructure in foreign lands....

"Hey Iraq, we bombed your power plant. Looks like you are gonna need a new one. Why don't you pay for HAlliburton's services with 30 year cheaper-than-market-rate oil contracts?"


Banksters are the reason why investments happen in US....they not only fool Americans, but also foreign dictators, slave owners, and elites into investing into America instead of their own damn lands and people. CONgress knows this so they can't punish the thieves for stealing from foreigners, because they need to keep the CON game going. . .They need wall st. to hand over the bag of ponzi crap when the music stops. wallst. flips to insiders, insiders flip to American public, American public flip to foreign investors...











James_Cole's picture

Wow Simon outdoes his stupidity once again.

"SpaceX has twice succeeded in launching a vessel into space in its 10-year history with a total of just $1 billion in funding, averaging to $100 million each year… roughly 5.6% of  NASA’s massive budget."??

So one of NASA's >>COMMERCIAL PARTNERS<<< manages to make spaceflight cheaper by... using technology developed by NASA! Shocker!

Next thing we'll hear a DOD technology has been handed over to the private sector for free and the genius entrepreneurs there managed to turn a profit with it!

And quick note on capitalism, it doesn't magically use competition to make things better and cheaper - profitable companies have traditionally relied on controlling the means of production and sourcing cheaper labour to operate machinery. This continues to be the case for most profitable areas of industry.

A different model would be something like wikipedia or the internet generally (the internet again being a taxpayer endeavour).?Let's face it - 90% of the posters on zero hedge will find their ability to work obsolete within the next 10 - 15 yrs, all replaced by technology innovations.

So what economic model do you favour in a scenario where you have no hope of finding a living-wage job?

Technology is removing jobs like the black plague and those jobs will never come back. The agriculture jobs never came back after the dust bowl, but there were other opportunities for work. That's over (for most).

Dismantling government in favour of corporate control of all infrastructure is not going to do many people favours.

Quisat_Sadarak's picture

No need to kill anyone. Allow competing currencies and the bogus currencies will be exposed and shunned. Two willing private parties should be able to make a contract for payment in dollars or gold or wheat or whatever they choose. If dollars are bogus, they will not be used, and if dollars are sound, they will be used. Unfortunately, the current system has encumbered gold (and all precious metals) with taxes for exchange... which makes the transaction cost prohibitive.

Our constitution still states the government debts shall be paid in only gold and silver coin. Article 1 Section 10. We need to remind our fearless leaders of this fact. Remove transaction cost and we are on our way to sound money.

AnAnonymous's picture

Competition is hinged around one directive: eliminate the concurrence.

The elimination act includes decreasing the competitiveness of the concurrence.

Currencies are allowed to compete.

Michael's picture

Starving the beast by complete and total worldwide economic collapse is the only solution.

AldousHuxley's picture

or feed the beast so much junk that beast explodes and the results becomes obvious. - Sheila Blair approach.


Best way to have your kids stop begging for candy is to feed them a pound of candy every meal until they throw up.



Quisat_Sadarak's picture

Implementing "Sound Money" is actually a very very good way to starve the beast.

No ability to print... no more sneaky hidden tax funding military industrial complexes and endless wars, and entitlement programs. Politicians would be forced to raise funds directly through up front taxation... and that's when the peasants will bring out the metaphorical (or physical) torches and the pitch forks! That would be a time to throw some popcorn on and watch the show!

Thisson's picture

Nice Engrish.  WTF are you trying to say?  "Concurrence"? Wtf do you mean?

squeal's picture

Created Jobs? WTF, man?

Millions of people have died, millions more displaced from their homes, but this is all OK because it created jobs?

Check yourself...

walküre's picture

Be cool. You can't deny that much of the US economy directly DEPENDS on wars and the military industrial complex.

That is a fact and it should be accepted as truth. It's ugly but it's true.

Taking it one step further. Military equipment that's parked and not actively used (leave that to your imagination) is not breaking down and doesn't require repairs or replacement. Worse yet. Ammo that doesn't get shot, doesn't need to be reordered.

Again, how much of US GDP is directly DEPENDING on a WORKING military and what would happen if a President ordered all troops home and to go on leave. How many percentage points would the US fucking GDP drop as a result? Not to mention the increase in unemployment from active military and all related industries.

It's a fucking shit show and we're no better or more sophisticated than cavemen.


Ima anal sphincter's picture

All that weaponry that you say is SO important to the economy does what????

It kills innocents. There is absolutely NO need for young Americans to be all over the world. Power by force, what a joke.

I've got a better idea.....Bring them ALL home. Their job is to protect us here. Not there. "War on Terror" my ass. "Murder for the Bankers" is more like it.

This country was founded by good men with good intentions. All that good has been subverted.

This country has always had the potential to be the greatest ever. Even in the sorry state it is in now. We can better ourselves and spread that "love" abroad.

Not my line but a good one......We need a Department of Peace.

There are true good men (women) out there who can set the world straight. How many are in Washington right now???? Very few.

The evil ones and the bankers who control them must go. I care not the means in which it is done.

AldousHuxley's picture

"This country was founded by good men with good intentions."


Are you a product of American educational system?


Here is America's road to wealth:

  1. kill natives and take over land and force rest into middle of nowhere
  2. bring African slaves and force them to work on the land
  3. kill amongst each other to "free" slaves. (aka. civil war)
  4. Use "free" slaves to work in factories in middle of nowhere midwest.
  5. Use Japanese slaves on sugar plantations in Hawaii then take away their land and force them into concentration camps middle of nowhere
  6. Use Chinese slaves on building the rail road then ban them from owning land or marriage
  7. Use European immigrants to force them to settle in middle of nowhere and work the land
  8. Use German scientists to develop nuclear bomb and other military technologies to prep for imperialism.
  9. Colonize Phillipines
  10. Use Mexican illegal worker slaves to farm
  11. Use Chinese factory slaves for production work
  12. Use Jews to swindle capital all over the world
  13. Use Arab opression of their own kind to get cheap oil


American puts a women as statue of liberty, but once immigrants arrive, white capitalist father is there to exploit labor as much as he can before they revolt and move on to next batch of immigrant slaves suckers.


Only people who are allowed to rise up are the ones who sell themselves out to the man.



Dr_Dazed's picture

That's just incoherent.  Making a list of "bad" historical events and assertions about events doesn't make your point - if you have a point.

Thisson's picture

Perhaps, but you should be thinking about what we could have instead if we spent the people's money on productive things instead of weaponry, or better yet, if we let the people spend it instead of the government!

AldousHuxley's picture

government is elected by her people.


stupid politicians mean stupid people.


Americans  in general are stupider than the elected politicians.


At least politicians are smart enough to get elected. Look at the voting public...

Remember less than majority even went to college!!!....they were so stupid they couldn't even get into podunk southern state university and to major in basketweaving.

Harbanger's picture

" Look at the voting public"  No.  There's nothing wrong with the voting public.  But that's what liberals think of their voting BLOCKS (and the entire population).  As fools to be endlessly lied to for Votes.  Guess what? The BS from the left is becoming so thick even fools can see it.  Information changes everything.


Harbanger's picture

BTW Genius, the word 'stupider' does not exist in the English language.  So give back all of those fake Trophys and go back to 3rd grade.

James_Cole's picture

Only a slim majority of people actually vote and for good reason, a lot of people recognize it as a sham. I have faith in the majority of people making the correct decision on what happens to them locally so long as they have correct information and real options.

A lot of the problem in my mind is the very effective PR campaigns run on both sides which rarely have the electorates interests at heart but manage to divide and conquer. 

skipjack's picture

WTF is "the people's money" ?  Do you mean theft by taxation?

DCFusor's picture

The trick the gov uses when asked (or forced) to be more austere is simple, and I've seen the wheel turn enough to know it's a planned pattern.

First cut the things people care about the most - fire, police, teachers, trash pickup.  Never, ever, cut things like how many secretaries the jerk in the corner office has.  Never cut the HVAC in a government building.  Never cut new office furniture for themselves. 

Never cut anything that they spend on themselves, or cronies.  Just the actual pointy end of the service spear.  Then people start saying "this isn't good, go ahead and take more of our money and give us what we want".  It works every time.

My county government just completely rebuilt the courthouse from the inside out - the most expensive possible way, then cut teachers etc, and raised taxes complaining they didn't have enough money...yet, there are 6 girls at the pay tax window in a county that only has 20k people total (much fewer taxpayers) and never has a line.  Sound familiar?

aheady's picture

Yep. Totally familiar.

Quisat_Sadarak's picture

Yeah, in my area the thieving school district built a new district office complex on prime expensive ocean-front land because you can't get bull crap administrative paper pushing work done unless your are within 1000 yards of the ocean!

They don't even need 65% of it because the empty offices are up for lease, but no body wants to rent overpriced ocean front office space because the millions of cheap sqft avail inland is just fine thanks. Then these pieces of work declare they don't have enough money and are going to lay off teachers instead of legions of 6-figure-do-nothing useless administrators filling up their parking lots with their 600SL Mercs and 7-series BMWs. Then the friggin teachers go on strike and shut down the schools to protect their jobs, so now kids aren't even in school anymore.

The solution was to stick it to the taxpayer. WTF! True Story. It's all for the kids though. SSDD.

Harbanger's picture

It depends on where you live and who you vote for.  Cutting basic necessities is the usual establishment fear tactic.  Wisconsin voted for austerity twice and they're doing just fine without raising taxes.  During good times, people didn't bother holding politicians accountable.  So we did it to ourselves, fortunately our system allows for a course correction with the efforts of informed citizens.

Clashfan's picture

Whatever austerity comes our way (USA), we won't be cutting drones. Some folks like to watch the attacks (prez?). I'm not sure what to think of this. Just posting it b/c I read it, and it's interesting. If anyone else has any feedback either way about the credibility of this piece or the intriguing (and sickening) thread, please, chime in. I'm all ears:

GottaBKiddn's picture

The premise is a totally false misinformation trick by the TPTB. The reason  that they can pull off this incredible lie is that the public doesn't realize that all the governments, small and large, are keeping two "sets of books".  Read up on the "Comprehensive Annual Financial Report",, and discover how they play the sheep. They aren't going broke at all, they're simply preparing the suckers for the next round of increased taxes that, unsurprisingly, won't quite be enough for us to have all the benefits to which we have become accustomed. Don't fall for the same old DemRep baloney, in which both parties actually agree that we need increased taxes. California is pretending to be some $16 Billion in trouble when the reality is that they have hundreds of billions in off-books private investments. Anybody who believes the premise has simply swallowed the lie.

Thisson's picture

You're crazy, dude.  There's no way these governments are actually solvent.  Government is about spending other people's money, not about saving and investing.

KK Tipton's picture

He's not crazy. Did you even go read the article?'s an article from TODAY:

Federal gov't sitting on $70 billion in unspent cash - Washington Times -

Now...go read his linked article...the whole thing...and see how much cash California has laying around.
It's the same in every state. They take tax collected from "the people" and bank little chunks of it...for 70 odd years now.

They grow govt. way out of size then finally run out of cash in the "budget" account...then cry and threaten to cut services.
Raising taxes collected the next year is the only solution...of course.

Now what about the "other" tax cash squirreled away over those years? It's been quietly making them money.
Money they say is separate from "budget" cash and can't be used to cover the shortfall.
Then why was it collected in the first place? Who says they can make profits on the sly with the public's money?

We aren't talking tiny amounts...we are talking HUGE dollars.
This amounts to a gigantic money laundering operation of sorts.
Think about it. Or don't. It's still going on.

PS - wonder why jobs went to China etc.? Well, the govt's use the squirreled away cash to invest. Corps. are duty bound to get shareholders a whopping return on investment. So...biggest profits come with slave labor workforce.

Your US govts. (state, local) are literally one of the main drivers of offshoring. Using "your" tax money to boot. Nice.

Governments DO save and invest. ALL THE TIME. With YOUR cash. And there IS a paper trail.



Clashfan's picture

Or ask whistleblowers like Catherine Austin Fitts about the black budget.

withnmeans's picture

Like I have been preaching for 10+ years WITHNMEANS.   I am not a minimalist, however you can live quite well without the use of credit. Buy only the things you really need not want, only buy it if you have the money to. Then you will be amazed how much you can buy if you don't have all the debt interest payments. 

Add up all of the interest payments you make a year, then think of all of the crap you can buy!



withnmeans's picture

Oh, and as I have said before on here "et al".  The Great Resetting is about to begin.

When you screw with the open market, you get to where we are now. Just like bumping up the minimum wage to get the economy moving "what a sham", this is a false market practice. The laws of the market forces will show you what rate you will be paid, I bet you would say nobody would work at McDonald's ever again, even at $2.00 an hour. Maybe, but the market forces will name a price "not the government".

Soon we all will be getting paid less, this is not totally bad, just as long as everything goes down in price "lock step".

Lost My Shorts's picture

You must be joking.  If you haven't heard of the term "crony capitalism," let me just assure you that privatized services will be in no way competitive, efficient, or good.  Once services are privatized, the looting really takes off.  Simple Simon is just a  bean brain right wing kook aid monger.

Biosci's picture

Absolutely.  Handing a government monopoly over to a private one is not an improvement.

With the government monopoly out of the way, the private sector will mop up every service that it can turn a profit on– trash collection, security, fire, prisons, libraries, etc.

This part is certainly true.

This forces competition, higher quality service, and lower prices for everyone.

This does not follow.  Are there going to be rival trash companies bidding for your service, or is the mayor going to sell the concession to his buddy, who then hires the mayor after his term ends?  If you think the former, then you've probably never had cable TV service.

Nobody For President's picture

Some of this COULD work out if true competition were allowed (a big if), but I kind of scratch my head at higher quality service in prison management. 

Does this mean less taxpayer dollars per head? Would the private system have a vested interest in more prisoners? Keeping individuals in prison longer to keep head count up?

Or would the prisoners be better served: softer beds, piped in music, better food?

And if you have private fire departments, if you forget to pay the annual fee, does the department respond and watch your house burn down (this happened last year some damn place with an all volunteer department)?

I can certainly imagine a number of government services that could be successfully outsourced, but some services just seem to overall be best left with the government, and watched by the taxpayers more carefully than what we have now.

SilverIsKing's picture

BINGO - competition is a must.  If not, then some form of regulation would be necessary although not ideal.

Umh's picture

Strange but true; I have seen competing trash pickup companies in 1 locality. It is sort of surprising considering how governments usually operate.

johnQpublic's picture

n delaware...

five different trash companies service my neighborhood of 18 houses

no joke

PianoRacer's picture

People, PLEASE!

A free market is NOT THE SAME THING As a government-granted MONOPOLY, backed by the GUNS of the STATE. Your mayor example is perfect, because you acknowledge that the problem is STILL the goddamn STATE!

If roads are privately owned and there is NO STATE MONOPOLY, and a given road-owner didn't keep it up or respond to his customers wants, he will MAKE LESS PROFIT, and thus be susecptible to being bought out by someone who can RESPOND BETTER TO THEIR CUSTOMERS NEEDS and MAKE MORE MONEY! That's how the free market works!

You need to get your shit together and do some fucking RESEARCH to UNDERSTAND what free markets really are, and to UNDERSTAND how the VIOLENCE of the STATE is ALWAYS the problem.

The worst part is that it doesn't fucking MATTER. Thinking that it is right and good that assholes in uniforms and robes and suits have the power to point fucking GUNS at us and steal our MONEY for MURDER and SPYING, to lock us in CAGES (more black men in cages than at any point in US history!) if we don't obey their reams and reams and REAMS of bullshit OPINIONS ("laws")... it's absolutely retarded, on every level, with only a cursory examination, if you know how to fucking THINK. A decade in state prison indoctrination centers ("schools") will cure you of THAT malady, unfortunately, and I see we've got a few of those types here at ZH.

Wake the fuck up people, PLEASE, or we will continue to live this statist nightmare FOREVER.

AnAnonymous's picture

If roads are privately owned and there is NO STATE MONOPOLY, and a given road-owner didn't keep it up or respond to his customers wants, he will MAKE LESS PROFIT, and thus be susecptible to being bought out by someone who can RESPOND BETTER TO THEIR CUSTOMERS NEEDS and MAKE MORE MONEY! That's how the free market works!


Due to space properties and zero sum game included in private property, there is de facto monopoly on the best route from one point to another point. You own it or not.

Infrastructures are a difficult thing in Smithian economics (the core of US economics), leading to the way that the best funding method is to get someone else pay them for you.

In many cases, there is an incentive to let infrastructures decay. This best interest is shared by the supply side against the demand side.

For example: water pipeline. If a customer wants water, he has to be pay for the delivered volume and the loss during water travel. Meaning that leaks in pipes gives extra profits.

ffart's picture

That last part makes absolutely no sense to me. Actually none of that makes any sense to me. 

blunderdog's picture

May want to do some work on your reading comprehension.  AnAnonymous is an asshole, but what he wrote makes sense.

The point is that there is a discrepancy between the services a provider BILLS FOR and the services the customer actually literally RECEIVES. 

There's currently law about many products/industries/etc that require concessions from providers because they've already demonstrated that they're perfectly willing to rip off the buyers. 

AnAnon's example of a water pipeline isn't so good, because it doesn't demonstrate the issue too well, but the idea is valid. 

Example: ISPs.  When the cable companies first got into the ISP business, they had a lot of problems.  Customers were paying for 24x7 access to the Internet, but weren't receiving it.  Sometimes it was because of infrastructure failure--if a cable goes down, the cable company (obviously) can't provide access until that's repaired.  But customers used to be billed for their service AS IF they'd received a full month of access to the Internet.

In that environment, the cable company has legitimate profit incentive NOT to fix an outage too quickly--any time you can bill the same rate for services you don't have to provide, you can increase your profit by using the money you didn't spend on repair and maintenance on expanding territory, trading financial products, or lobbying lawmakers.

ffart's picture

Re: your example. I've never heard of a fucking SLA that guaranteed unflappable, 100% uptime and the ISP is still paying to maintain their cabling and the contract they have with their own ISP whether you have a connection to them or not. If they lose your business to some other company they don't recoup the costs they incur connecting you to their network either.

There are concessions in contract law because it's physically impossible to guarantee with 100% certainty that some utility being passed to your home will never fail. I will leave you to ponder why this is, it is a physical phenomenom and it is not some product of our exploitive capitalistic economy. If they really are billing you for a service which they are intentionally not providing to it's fraud and they'll lose their business and probably get time in federal pound-me-in-the-ass prison for it to boot.

There would be a greater economic incentive for a monopoly to provide no service to you than to intentionally provide degraded service to you just to collect some imaginary vig.

blunderdog's picture

   There would be a greater economic incentive for a monopoly to provide no service to you than to intentionally provide degraded service to you just to collect some imaginary vig.

Why would you pretend not to understand what he was writing?  Obviously you do.

ffart's picture

Ok fine. I think a better example of this type monopolistic behavior would be the public school system. We spend more money per capita on public schooling than a lot of other countries but students but we've consistently been ranking near the bottom in terms of standardized test scores, so clearly the public school system has been providing inadequate service. They then use this underperformance as a justification to ask for more funding via levys and tax hikes. To make things worse, in most areas you are paying for a K-12 education whether or not you intend to have kids enrolled in it.