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Guest Post: You Don’t Need A PhD In Economics– You Just Need To Understand Basic Arithmetic

Tyler Durden's picture




 

Submitted by Simon Black of Sovereign Man

You Don’t Need A PhD In Economics– You Just Need To Understand Basic Arithmetic

We recently received a note from a German journalist writing for a national paper there. He asked, “Simon, German politicians swear to support the well-being of the German people. Given this, what would you advise the German government about the euro– keep saving it? Or let everything fail regardless of the consequences?”

Europe and the United States have much in common in that their sovereign debt problems are really quite simple to understand. You don’t need a PhD in economics– you just need to understand basic arithmetic.

In the US, for example, the government does not collect enough tax revenue to cover even the most basic services that society deems sacrosanct: defense [offense], social security, and Medicare.

In 2010, the federal government collected $2.2 trillion in tax revenue and spent north of $2.5 trillion just on those three programs– already $300 billion in the hole. Everything else– the post office, Homeland Security, the FAA, the FDIC, even the light bill at the White House– is funded by debt.

That includes the most peculiar debt-funded item– interest on the debt. The US government has to borrow money just to pay interest on the money it has already borrowed. This is unsustainable, it’s simple arithmetic.

Europe’s problems can also be explained as simply. Greece effectively has no money, and its only access to capital is continued bailouts. There are four options for the country being discussed:

1) Austerity. Not only is this politically unpopular, it causes social unrest. People won’t stand for it… nor will they be able to pay enough police officers to beat them back with batons. The populist uprising will squash any meaningful austerity plan.

2) “Grow its way out”. Not possible. When you count public and private debt together (roughly 260% of GDP), Greece is spending roughly 15% of its entire GDP just on interest payments. That’s an incredibly high barrier to growth.

3) Inflation. Ordinarily, governments would just print their way out… but this isn’t even possible right now because Greece doesn’t control its own printing press.

4) Default. Result? Set off a chain reaction of banking failures and a derivatives meltdown. Utter financial carnage. Nobody wants to see this.

Germany is particularly focused on #4. Many German banks would suffer or fail as a result of a Greek default, sending a terrible ripple throughout the economy.

It’s understandable that politicians want to avoid this scenario and are willing to pay a high price to do it. Hence the bailouts. But they’re completely ignoring the fact that the other options (growth, inflation, austerity) aren’t even possible.

If German politicians are really sworn to support the well-being of their citizens, the best thing they can do is look everyone in the eye and say, “Buckle up, people, we’re about to swallow a nasty pill… better we get it over with now than drag it out for years.”

The same goes for the United States.

All of these countries have seen the face of disaster before; there’s not a single nation on this planet that hasn’t been through a terrible period in its history. People suffer. They survive. And then they move on.

On a brighter note, we received a comment from reader Seneka who wrote, “I just spent 3-months living in South America. Mostly Argentina with some time in Chile.
Words that come to mind to describe Chile? Clean, advanced, polite, friendly, orderly. It is a world away from its neighbors.”

I couldn’t agree more. Look, no place is perfect. Chile has its problems too. But of all the places I’ve been to in the world (more than 100 countries on 6 continents), there are few places in the same ballpark when it comes to a free, civilized, advanced society with plenty of opportunity for all.

 

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Fri, 10/14/2011 - 13:31 | 1774413 Snakeeyes
Snakeeyes's picture

Or write for a business news show. The media reports retail sales up 1.1%. We're out of the recession!

Try look at the data. We were actually DOWN 5%\

http://confoundedinterest.wordpress.com

 

The seasonal pattern indicates that retail sales will rise in Oct and Nov, then SPIKE in December before collapsing in January.

 

Fri, 10/14/2011 - 13:36 | 1774438 LawsofPhysics
LawsofPhysics's picture

Thanks for the link.  Down is the new up, don't cha know?

Fri, 10/14/2011 - 14:09 | 1774575 Fish Gone Bad
Fish Gone Bad's picture

Math is soooooo hard.  Even Barbie knows that.  http://www.youtube.com/watch?v=NO0cvqT1tAE

Fri, 10/14/2011 - 14:47 | 1774710 donsluck
donsluck's picture

My favorite class of all time was Calculus. English and history were tough. Math is truth, you are either right or wrong, it didn't matter if the teacher didn't like you.

Fri, 10/14/2011 - 14:49 | 1774719 sqz
sqz's picture

At the end of the day, the world is a worse off place if countries, like individuals, are unable to declare their insolvency. CDS or not. ECB or not. Euro or not. It's all irrelevant against this core tenet of capitalism.

Germany, of all the states in the world, should understand the importance of frugality and dangers of debt.

Fri, 10/14/2011 - 15:03 | 1774808 Moe Howard
Moe Howard's picture

It is not a core tenet of capitalism that countries cannot declare their insolvency. 

It is a core tenet of banksterism, which has nothing to do with capitalism.

 

Sat, 10/15/2011 - 06:57 | 1776619 jeff montanye
jeff montanye's picture

the core tenet is that it is bad if x cannot declare (or attempts to hide) its insolvency.  that is sqz's point.

Fri, 10/14/2011 - 13:33 | 1774424 ImNotExposed
ImNotExposed's picture

4) Default. Result? Set off a chain reaction of banking failures and a derivatives meltdown. Utter financial carnage. Nobody wants to see this.

 

Like hell no one wants to see this.

Fri, 10/14/2011 - 13:35 | 1774435 LawsofPhysics
LawsofPhysics's picture

No shit.  Bring it.

Fri, 10/14/2011 - 14:32 | 1774662 Fish Gone Bad
Fish Gone Bad's picture

The banks are all unloading their own stock and shorting what they can.  I assure you, the banks will be fine even if there is complete failure.

Fri, 10/14/2011 - 15:15 | 1774859 LawsofPhysics
LawsofPhysics's picture

Again, no shit. I would expect nothing less, in fact I would expect them to engineer it.

Sat, 10/15/2011 - 07:02 | 1776621 jeff montanye
jeff montanye's picture

it is a false choice between endless bankster bailout and lehman style chaos.  that is bankster propaganda.  fdic routinely reorganizes failed banks with little chaos and no depositor or counterparty defaults.  of course shareholders are wiped out and bondholders lose, but that is a core tenet of capitalism.  for more detail see http://www.hussmanfunds.com/wmc/wmc111003.htm

Fri, 10/14/2011 - 13:43 | 1774476 SheepDog-One
SheepDog-One's picture

'Everyone but the bankers want to see the banks melt down' is the proper sentence.

'Financial carnage' to the bankrupt and unemployed masses is a big *YAWN*

Fri, 10/14/2011 - 13:36 | 1774442 dumpster
dumpster's picture

2x2=7

Fri, 10/14/2011 - 13:44 | 1774487 economessed
economessed's picture

2x2=7

 

....for extremely high values of 2.

Fri, 10/14/2011 - 15:01 | 1774790 Cpl Hicks
Cpl Hicks's picture

Well, of course.

All you have to do is use the rounding techniques used by the OMB, DOD, FED, BLS, et.al.

Fri, 10/14/2011 - 16:23 | 1775124 SAJ
SAJ's picture

+10.

Best comment in weeks.

 

Fri, 10/14/2011 - 21:08 | 1775942 trav7777
trav7777's picture

...or low values of 7

Fri, 10/14/2011 - 13:39 | 1774444 hambone
hambone's picture

Failed premise to begin with...

German (any) politicians swear to support the well-being of the German (any) people

Start w/ a different premise, maybe self interest of TPTB and you'll get a more sensible answer (no more palatable but logical).

Fri, 10/14/2011 - 13:42 | 1774470 Popo
Popo's picture

The even *more* absurd premise is that some German journalist ever asked Simon for advice on what his country should do.

Give me a fucking break.  No one is asking lame-blogger Simon Black for advice on how to run a country.  

Anyone who believes this charlatan is a sucker.

Fri, 10/14/2011 - 13:48 | 1774503 hambone
hambone's picture

Dear Simon,

my name is Dr. Evil and I run a world wide ponzi scheme engulfing all economies and peoples of the world.  Lately. I've found new investors are harder to come by and seems this job is requiring more actual work than I anticipated (prefer to leave it to my minions so I can enjoy the high life). 

Anyway, appreciate your thoughts on how I can stretch out the ponzi a bit further or would you suggest we collapse it now and restart it under a different premise?

Fri, 10/14/2011 - 16:36 | 1775191 RichardENixon
RichardENixon's picture

Or maybe he got this e mail:

Dear Sir,

Good day and compliments. I am Dr (Mr) Benjamin Bernanke, Chairman of Federal Reserve of United States of America. This mail will surely come to you as a great surprise, since we never had any previous correspondence. My aim of contacting you is to crave your indulgence to assist us in securing some funds abroad to prosecute a transaction of great magnitude.

Due to poor banking system in America, many subprime borrowers are not paying back mortgages and banks have lost ONE TRILLION TWO HUNDRED BILLION UNITED STATES DOLLARS ($1,200bn) so far. This calamity has caused much suffering in my country. To help remedy this situation, our president, Mr Barack Obama, has authorised to be spent a sum of EIGHT HUNDRED NINETY SEVEN BILLION DOLLARS ($897bn) on stimulus plus many other good deeds like cash for clunkers. Unfortunately, since that time, we are being molested and constantly harassed by bond vigilantes who do not care that their reckless and vicious behaviour could ruin our hopes and plans.

To this effect, last year I authorised the printing of ONE TRILLION TWO HUNDRED AND FIFTY BILLION ($1,250bn) of United States currency to purchase government securities. To my great shock, this was not enough so I am now buying another SIX HUNDRED BILLION DOLLARS ($600bn).

If you forward a modest sum to purchase Treasury notes then I can buy many more of them with my unlimited printing press and their price will rise. I am absolutely positive that this arrangement will be of mutual benefit to both of us. I can offer you generous interest rate of EIGHT TENTHS OF A PERCENT after taxes.

I want you to immediately inform me of your willingness in assisting and co-operating with us, so that I can send you full details of this transaction and let us make arrangement for a meeting and discuss at length on how to transfer this funds.

Yours Faithfully,

Dr (Mr) Benjamin Bernanke

N/B: Please contact Mr Timothy Geithner on this e-mail address for further briefing and modalities.

 
Fri, 10/14/2011 - 17:07 | 1775312 defencev
defencev's picture

Once again SB shows that he has no clue. You need to ask yourself what is he talking about. Everybody understands that Greek default is inevitable (otherwise , why all pundits talk about hair cut on Greek bonds and why would one need to recapitalize European banks if there are no losses on sovereign bonds) . The real question whether new facility (leveraged if necessary) will be sufficient to fence off other weak links like Spain and Italy. If not, the monetization of debt will become inevitable (through practically unlimited ECB money printing).

In my opinion, people like SB have serious problems with arithmetic let alone any kind of PH D.

Fri, 10/14/2011 - 13:38 | 1774446 Zedge Hero
Zedge Hero's picture

Occupy Dame Street in Dublin, Ireland and a preview of the World Wide Protest tomorrow.  Is Ireland the next Greece?

http://www.youtube.com/user/zedgehero

 

 

Fri, 10/14/2011 - 14:31 | 1774660 Implicit simplicit
Implicit simplicit's picture

Well done.

Fri, 10/14/2011 - 13:38 | 1774448 mjk0259
mjk0259's picture

One of the best run governments in the history of Earth is asking Soverign Man for advice?

Fri, 10/14/2011 - 13:47 | 1774498 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

Germany is one of the best run ever?  Compared to what?  All the other best governments? 

 

I'll take the United States of America from 1700-1900, and any second place is far down the pole.

Fri, 10/14/2011 - 14:02 | 1774548 Deadpool
Deadpool's picture

Stalin ran a good "government" just lacked style. Mussolini had the trains running on time and Hitler had a well oiled machine of a "government". this article is so stupid why bother?

Fri, 10/14/2011 - 14:06 | 1774565 kito
kito's picture

....rumor has it simon black is actually george soros.....

Fri, 10/14/2011 - 13:38 | 1774450 SheepDog-One
SheepDog-One's picture

Who needs math when youve got *cntrl-alt-print* keys?

Fri, 10/14/2011 - 13:39 | 1774459 tony bonn
tony bonn's picture

"4) Default. Result? Set off a chain reaction of banking failures and a derivatives meltdown. Utter financial carnage. Nobody wants to see this."

i want to see it....the lying, flith, racketeering, and economic terrorism of the plutocrats will only end with Bis ans Ende der Welt

Fri, 10/14/2011 - 13:40 | 1774461 SheepDog-One
SheepDog-One's picture

No possible way out, bitchez. So may as well just stage some more market melt-up rallies!

Fri, 10/14/2011 - 13:44 | 1774482 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

There are ways out, they are just to simple for Ivy League scholars to understand. 

 

It is hard to see one's feet with one's nose in the air.  So, let's ask, what type of ground is the financial system standing on?

Fri, 10/14/2011 - 13:46 | 1774493 SheepDog-One
SheepDog-One's picture

Well, of course 'no way out' means the bankers would have to take huge haircuts otherwise, most of them going right thru their necks.

Fri, 10/14/2011 - 13:50 | 1774515 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

Why give them a haircut when their heads could be chopped off?

Fri, 10/14/2011 - 14:06 | 1774564 SheepDog-One
SheepDog-One's picture

Well, thats what I just wrote!

Fri, 10/14/2011 - 14:23 | 1774632 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

Oh, haha

Fri, 10/14/2011 - 15:22 | 1774877 FatFingered
FatFingered's picture

Why trim the doos when when you could send some noggins a rollin'?

Fri, 10/14/2011 - 14:08 | 1774574 Deadpool
Deadpool's picture

the way out is so painfully obvious as to be invisible to central planners....roll up all the debts outstanding while the world still accepts US dollars into the central banks and close them. (same shit done with S&Ls in 70s). The world hates central and mercantile banks? fine, blow them up and let the world live again...yes hyperinflation will bloom, but that's a short lived horror vs. this slow mo train wreck of bank bailouts to infinity. Let the bond holders lose on their awful bets that Greece will be capitalist and pay back what they owe and move on (no 20-50% haircuts; 100%). the longer this takes the more deep the depression the more starvation, corruption and disease. Rip the band aide off quick so the healing can begin, preferably with a gold backed currency (one world or state issue, doesn't matter if accepted everywhere you want to be). Too bad it'll never happen this way. WWIII more likely.

Fri, 10/14/2011 - 14:22 | 1774624 Deadpool
Deadpool's picture

no practical way out on the table, lots of possible ways out. Nobody has the courage to act on them. Even Slovakia caved.

Fri, 10/14/2011 - 13:41 | 1774466 abugarance
abugarance's picture

book me a one-way to Santiago please...

Fri, 10/14/2011 - 13:42 | 1774472 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

Or we recapitalize the Treasurie by ending the Fed, stop bailing out the Major Banking Houses, and then use gold reserves to fund the curencie.

Gold apreciates, the Treasurie is fully operational, the Fed doesn't get to steal 1/3 of the income tax with the usury of interest, or even get to issue the unconstitutional Income Tax.

Yes, it's really simple.

End the Fed

Fri, 10/14/2011 - 14:14 | 1774578 Deadpool
Deadpool's picture

Mr. John Jimmi,

I agree, as written above, but they'd nationalize the mines and confiscate the gold (and make it illegal to trade in) except with fiat printed gold "backed" notes and we'd start all over again.

Fri, 10/14/2011 - 14:26 | 1774645 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

I don't think they could confinscate it, too many people with too many guns would not have that.  I also don't think any future government could have the where with all to enforce people from not trading with gold.  They would have trouble enorcing them; there are always ways around government measures.

Fri, 10/14/2011 - 13:45 | 1774492 Börjesson
Börjesson's picture

The dude doesn't answer the question, which was "keep saving the euro or let it fail". Default may be the only option, but there are still many ways to do that, and many ways to deal with the ensuing mess.

Fri, 10/14/2011 - 13:47 | 1774499 SheepDog-One
SheepDog-One's picture

Yep...for instance starting a world war with Iran.

Always the endgame for this financial mess which is nothing new at all, just more technologically advanced...better weapons.

Fri, 10/14/2011 - 19:33 | 1775738 StychoKiller
StychoKiller's picture

I'm in favor of Gladitorial games, two Banksters go in, only one (preferably bleeding and barely alive!) comes out! :>D

Fri, 10/14/2011 - 13:47 | 1774500 twotraps
twotraps's picture

The Fed will protect what it has, we will need to see an out of control melt-down before they consider ending it.  Even then....it will seem a great excuse to start the game again their way.  When the biggest player in the world has an unlimited account and makes the rules, anyone really think that a little reason, logic or basic understanding of history/economics will help you come up with a reasonable scenario??  Not likely.  Perhaps a whole new industry gets created trading some twisted aspect of the giant debt that will never be repaid........we'd need a catchy name of course, something fierce and complicated sounding, a good strong short name with some historic bullshit behind it.  Sounds good.

Fri, 10/14/2011 - 14:21 | 1774609 g
g's picture

A crisis of such depth will be the catalyst for QE to infinity, they are just waiting for the excuse. Why do you think those Wall st assholes put 'we are the 1%' on their building, because they know what is coming. That is why idiots like Schumer and co., do not care if they piss off China by starting a currency war, no one buying our debt is once again just the catalyst they need for QE to infinity.

 

What a screwed up mess, to bad most of us had no clue how anything worked, at least I did not until just before the last crisis. At least OWS is out there brining it out into the open.

 

It is true, mathmatically none of this works, it has not for a long time actually. Was it Albert Bartlett, that said, (paraphrasing here) "...[the inability of the human mind to understand the exponential function is one of its greatest shortcomings]..." how true.

Fri, 10/14/2011 - 13:50 | 1774511 Tadross
Tadross's picture

Amen.  Our debt is growing 10%+ a year but inflation is less than 5%.  There is no way we can inflate out of it.   It's game over folks. 

Fri, 10/14/2011 - 13:56 | 1774533 twotraps
twotraps's picture

real question is what does anyone think can happen?  Bank holiday?  New Dollars issued?  Debt re-set?  Can't control what they do, only what I do with what I have left.  Hate to stand around and get clipped with the crowd if there were steps to take to hedge somewhere somehow.  The 'Outside Event' scenario has merit since the govt can claim they were taking proactive steps given the situation....its not anyones idea, not political, just a convenient crisis to take action.   Everyone is off the hook!   That still leaves us with the question of what steps to take to protect assets.

Fri, 10/14/2011 - 14:19 | 1774615 Deadpool
Deadpool's picture

in a Depression EVERYONE's standard of living falls. you cannot out run the train. You'll starve to death waiting to profit from your gold and freeze to death eating thru your freeze dried foods before the recovery. the Dark Ages lasted 100s of years, Russia's Depression lasted from 1917 to 1990s, China had one from 1948 to 1980. a long time.

Fri, 10/14/2011 - 13:52 | 1774524 Peter K
Peter K's picture

Math caught up with the Soviet Union, and it's only a matter of time until it catchs up with Soviet Europe:)

Fri, 10/14/2011 - 14:07 | 1774569 SheepDog-One
SheepDog-One's picture

And USSA as well!

Fri, 10/14/2011 - 14:07 | 1774544 PaperBear
PaperBear's picture

YouTube Bulletin by TVZNETonline
LIBYA BREAKING NEWS 14.10.2011 ALL TV AND RADIO CHANNELS ARE JAMMING BY NATO ZIONISTS PLEASE SPREAD THIS MESSAGES URGENT OVER THE WORLD !!!!
YouTube Bulletin by TVZNETonline
REVOLUTION START
GREEN FLAG OVER SIRTE, BANI-WALID, SEBHA, TAJOURA, TARAGHEN, IM AL-ARANEB, MARZUK, BOV SALIM?

Other YouTube channels telling the truth about Libya are 1VSMRK and AfriSynergy.

Fri, 10/14/2011 - 15:08 | 1774834 Cpl Hicks
Cpl Hicks's picture

Don't let your aluminum foil turban get too tight.

Fri, 10/14/2011 - 14:19 | 1774559 Rob Jones
Rob Jones's picture

The huge catastrophe that all the bankers claim must be prevented at all costs: derivatives meltdown.

OK, so why isn't anyone proposing to ban derivatives? Warren Buffet (pre-senility) called derivatives "financial weapons of mass destruction". (Which would surely make Blythe Masters, inventor of the CDS, a financial terrorist).

Banking deregulation changed bankers from boring, conservative guys into compulsive gamblers. Any plan to pour more money into the banking system without fixing the underlying problem that caused the crisis in the first place is pure folly. It is like loaning more money to a compulsive gambler.

Reregulate banking, THEN you can think about recapitalizing the banks.

Fri, 10/14/2011 - 14:06 | 1774562 Louie the Dog
Louie the Dog's picture

more than 100 countries on 6 continents

Wish I could afford to go to 100 countries in 6 continents.  That's not fair.  Guess I'll go to NY and join the protest.  

Fri, 10/14/2011 - 14:20 | 1774616 Motley Fool
Motley Fool's picture

Why ignore option number 5? :P

Fri, 10/14/2011 - 14:22 | 1774625 Syrin
Syrin's picture

So the author says there are four ways out but none of them will happen?   Sorry chief, one or more WILL happen because as you said, it doesn't take a PhD to do the math.   Economic reality doesn't just suspend itself because kids are crapping on cop cars at Sesame Street.

Fri, 10/14/2011 - 14:29 | 1774627 stiler
stiler's picture

A Little Night's Math:

Given: 70 sevens (7=7yrs) from Israel's captivity to Millenial Reign of Messiah

7 x 7 = 49yrs  (for rebuilding the Temple)

threescore and two x 7 = 434yrs  (from rebuilding Jerusalem to Messiah's crucifixion)

------------++ cut off for you & me

1 x 7 = 7yrs remaining until Messiah returns

No one knows when this 7 years will begin. But it will begin with the signing of a peace treaty between Israel and another prince. Other names for this 7 yrs are "the Day of the Lord", "the Day of Jacob's trouble", the Tribulation period.

source: Daniel 9:24-27 " (weeks" should be sevens)

Sorry,its a little off topic, but then is anything really? less and less so as things get crazier. 

Fri, 10/14/2011 - 15:03 | 1774806 donsluck
donsluck's picture

Who cares? What is a Lord? Who is Jacob? Who is Daniel? The concept God is irrelevant in this discussion.

Fri, 10/14/2011 - 16:52 | 1775206 stiler
stiler's picture

-- most people care about God. Just because it is removed by time in the case of the prophet, not really, 7 yrs is not much time. You seem offended and if so it is bec the topic of God goes against your passions.

On the other hand, you are right. God is so high and his righteousness so far exceeds anything we could reach, creating everything for himself, gave power of sanctions and blessings to himself, why would we be interested?

Self-interest?

 

Here's another math problem for you:

 

We know that there is an infinite, but we do not know its nature; as we know that it is false that numbers are finite, so therefore it is true that there is an infinite number, but we do not know what it is: it is false that it is even and false that it is odd, for by adding a unit it does not channge its nature; however it is a number, and all numbers are even or odd (it is true that this applies to all finite numbers)

So we can clearly understand that there is a God without knowing what he is.

 

Pascal, Pensees

 

Fri, 10/14/2011 - 19:37 | 1775750 StychoKiller
StychoKiller's picture

You're just angry because He doesn't talk to you!

Fri, 10/14/2011 - 14:23 | 1774629 eddiebe
eddiebe's picture

Basic arithmetic might work if you could trust any of the figures.

Fri, 10/14/2011 - 14:31 | 1774657 nantucket
nantucket's picture

I really don’t think “failure’ would lead to total financial meltdown/catstrophe, etc.

Here’s why (hat tip to hussman):

Using BofA for example. Reported assets are $2.3 trillion. Against that, they have liabilities to depositors of less than half that; about $1.0 trillion.  There are additional liabilities of $525 billion (for securities they are obligated to repurchase, trading account and derivative liabilities, and accrued expenses).

So, all outside liabilities add up to $1.6 trillion…and they have assets of $2.3 trillion.  The remaining $700 billion of liabilities is money owed its own bondholders and equity shareholders.

That $700 billion is more than enough to buffer losses the company might take on its assets if sold in bankruptcy, while still leaving customers and counterparties completely whole.  When the government says that BofA can't be allowed to "fail" is really just saying that its bondholders can't be allowed to bear a loss…and that the US taxpayer will be forced to bear that loss.

What "failure" is supposed to mean is that equity holders typically get wiped out and bondholders take a haircut…but the operating part of the institution is taken into receivership, sold for the difference between assets and non-bondholder liabilities, and recapitalized under different ownership. Often the only thing that customers and depositors notice is that there is a new logo on top of their statements.

Why does the government continue to protect bondholders and force the losses upon the taxpayer?

Fri, 10/14/2011 - 19:39 | 1775754 StychoKiller
StychoKiller's picture

Educated guess:  The Bondholders fund election campaigns!

Fri, 10/14/2011 - 14:37 | 1774683 Little John
Little John's picture

Just a thought - We should all stop referring the Fed as just the “the Fed”.  the term “corporation”

needs to be tacked on so folks will start to understand that this is NOT a branch of government.

Federal Reserve Corporation -  Your trusted transferrer  of wealth since 1913.”  has a sorta ring to it, kinda  like a zinc penny.

Fri, 10/14/2011 - 14:40 | 1774689 Bill Brasky
Bill Brasky's picture

"Sovereign debt" is an oxymoron.

Sat, 10/15/2011 - 15:53 | 1777413 falak pema
falak pema's picture

no it is not. Sovereigns can have debts to others over whom they do not exercise sovereignty. Like foreign bankers.

Fri, 10/14/2011 - 15:00 | 1774779 Implicit simplicit
Implicit simplicit's picture

We're not too smart, but we have a lot of fun

selling leveraged derivatives to suckers by the ton.

Who cares if they fail, as they probably will,

the next group of suckers, the taxpayors, will pay the bill

I'm a bank 1% shrill, never get my fill, live on the blue pill, did the Glass Steagle kill bill, never enough- its the thrill of the kill, just don't send me the bill... type of guy.

Fri, 10/14/2011 - 15:30 | 1774908 New American Re...
New American Revolution's picture

Your fucking nuts, and I'll wager every answer on this page shares the same feeling.    Time for the New American Revolution to get rid of the people and their clamps and tourniquets they have around the US Constitution.    Let freedom and the Open Forum back into the daily function of the American government and watch it grow.    That's the answer, not some bullshit capitulation to restoring the assholes that run this bus off the road for more of the same.   You've got to be out of your mind.

Fri, 10/14/2011 - 15:32 | 1774915 topcallingtroll
topcallingtroll's picture

I have never been to chile, but the rest of south america is pretty good too. It is alive! The cities and people are passionate, intense, sophisticated with plenty of luxuries in reach for the average american. They are free, wild, and a bit dangerous at times, but that is the natural result of freedom, some degree of danger.

People from well ordered european countries think america is free, disorderly, chaotic, and dangerous. I cant imagine what they would think if they spent some time in latin american metropolitan areas.

A hundred thousand dollars per year in the united states barely gives a family the good life. In south america with that money you live like royalty, with every conceivable debauchery available to you.

Rules? This is latin america. We dont need no stinkin rules.

Fri, 10/14/2011 - 15:36 | 1774924 New American Re...
New American Revolution's picture

Dear Tyler,

    What is it with you and this Simon Black guy, is he blowing you, or what?   This asshole is so out of touch with the rest of the world he does nothing but piss everyone off with his imagination.   I'll wager this guy is some frustrated loser who sits in front of his TV consuming 4000 to 6000 calories a day, living vicariously through your obliging website.    Get a fucking life.

Fri, 10/14/2011 - 18:55 | 1775629 letitgo
letitgo's picture

I know we're not meant to talk about fight club, but what makes you so sure Simon Black isn't one of the Tyler Durdens posting other stuff you love under the pseudonym?  Maybe tone it down a little, I wanted want to see you figuratively cop some PMs where it hurts.

Fri, 10/14/2011 - 16:12 | 1775076 SeventhCereal
SeventhCereal's picture

yup basic arithmetic is all that is needed to understand a short seller's negative P/L statement.

Fri, 10/14/2011 - 16:53 | 1775266 AchtungAffen
AchtungAffen's picture

"there are few places in the same ballpark when it comes to a free, civilized, advanced society with plenty of opportunity for all."

Ha! Don't make me laugh. As a southamerican Argentinian myself, I know better. And you should too, if you've been in Chile.

But I guess you look it from a reality detached perspective of the moneyed people. In fact, opportunities in Chile are for the wealthy. If you're not, the only way to get those "opportunities" is through debt.

And that's what exploded recently with the student protests: years of your beloved neoliberal policies have privatized enough to make people indebted serfs.

While they're not in a critical position, like let's say the US, that's not due to their privatization-deregulation schemes, but rather from a favourable international environment (for Chile). But that free lunch is about to be over. For Chile, Argentina and all those who mostly benefitted from the "1st world"'s meltdown.

Simon, you travel to a lot of places, but I get the impression you rarely put your feet on the ground and watch it all from above, from the clouds of your ideology. The real world for everyone else doesn't look like what you describe. We're not the 1%.

Sat, 10/15/2011 - 09:04 | 1776702 Grand Supercycle
Grand Supercycle's picture

SP500 / DOW daily charts remain choppy but bullish.

A reminder that SP500 / DOW weekly indicators now give bullish warning. If confirmed, it suggests significant equity rally this year.

Importantly, monthly charts remain bearish.

http://stockmarket618.wordpress.com

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