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The "Muddle Through" Has Failed: BCG Says "There May Be Only Painful Ways Out Of The Crisis"

Tyler Durden's picture


Denial. Denial is safe. Comforting. Religiously and relentlessly abused by politicians who don't want nor can face reality. A word synonymous with "muddle through." Ah yes, that "muddle through" which so many C-grade economists and pundits believe is the long-term status quo for the US and the world just because it worked for Japan for the past three decades, or, said otherwise, "just because." Well, too bad. As the following absolutely must read report, which comes not from some trader of dubious credibility interviewed by BBC, nor even from an impassioned executive from a doomed Italian bank, but from consultancy powerhouse Boston Consulting Group confirms, the "muddle through" is dead. And now it is time to face the facts. What facts? The facts which state that between household, corporate and government debt, the developed world has $20 trillion in debt over and above the  sustainable threshold by the definition of "stable" debt to GDP of 180%. The facts according to which all attempts to eliminate the excess debt have failed, and for now even the Fed's relentless pursuit of inflating our way out this insurmountable debt load have been for nothing. The facts which state that the only way to resolve the massive debt load is through a global coordinated debt restructuring (which would, among other things, push all global banks into bankruptcy) which, when all is said and done, will have to be funded by the world's financial asset holders: the middle-and upper-class, which, if BCS is right, have a ~30% one-time tax on all their assets to look forward to as the great mean reversion finally arrives and the world is set back on a viable path. But not before the biggest episode of "transitory" pain, misery and suffering in the history of mankind. Good luck, politicians and holders of financial assets, you will need it because after Denial comes Anger, and only long after does Acceptance finally arrive.

First, let's recap why BCG thinks all the alternatives have been exhausted

We believe that some politicians and central banks - in spite of protestations to the contrary - have been trying to solve the crisis by creating sizable inflation, largely because the alternatives are either not attractive or not feasible:

  • Austerity - essentially saving and paying back - is probably a recipe for a long, deep recession and social unrest
  • Higher growth is unachievable because of unfavorable demographic change and an inherent lack of competitiveness in some countries
  • Debt restructuring is out of reach because the banking sectors are not strong enough to absorb losses
  • Financial repression (holding interest rates below nominal GDP growth for many years) would be difficult to implement in a low-growth and low-inflation environment

Inflation will be the preferred option - in spite of the potential for social unrest and the difficult consequences for middle-class savers should it really take hold. However, boosting inflation has not worked so far because of the pressure to deleverage and because of the low demand for new credit. Moreover the inflation "solution" while becoming more tempting, may come to be seen as having economic and social implications that are too unpalatable. So what might the politicians and central banks do?


Since the publication of Stop Kicking The Can Down The Road, a number of readers have asked us what would happen if governments persisted in playing for time. To what measures might they have to resort? In this paper, we describe what might need to happen if the politicians muddle through for too much longer.


It is likely that wiping out the debt overhang will be at the heart of any solution. Such a course of action would not be new. In ancient Mesopotamia, debt was commonplace; individual debts were recorded on clay tablets. Periodically, upon the ascendancy of a new monarch, debts would be forgiven: in other news, the slate would be wiped clean. The challenge facing today's politicians is how clean to wipe the slates. In considering some of the potential measures likely to be required, the reader may be struck by the essential problem facing politicians: there may be only painful ways out of the crisis.

At this point BCG goes into the details of why it is long overdue for reality to be finally acknowledged. We will skip this part as any regular readers of Zero Hedge are all too aware of reality, and how it is masked constantly by the mainstream media and its agents in all walks of life. The truth is far, far uglier than anything anyone in a position of power will tell you because acknowledgment would imply the need to come up with solutions that involve more than merely extending the event horizon for a little longer. Alas, even politicians now realize there is only so far that the can can be kicked.

There is one thing we would like to bring to our readers' attention because we are confident, that one way or another, sooner or later, it will be implemented. Namely a one-time wealth tax: in other words, instead of stealth inflation, the government will be forced to proceed with over transfer of wealth. According to BCG, the amount of developed world debt between household, corporate and government that needs to be eliminated is just over $21 trillion. Which unfortunately means that there is an equity shortfall that will have to be funded with incremental cash which will have to come from somewhere. That somewhere is tax of the middle and upper classes, which are in possession of $74 trillion in financial assets, which in turn will have to be taxed at a blended rate of 28.7%.

And if the prospect that very soon a government near you will force you to hand over a third of your wealth, here is the rest of the terrifying analysis of what will happen to the world in order to get it back in order:

A Program for the United States

The situation in the U.S. is different from that of the euro zone and, in a way, would be less complicated  to resolve.  The U.S. has all the levers with which to address the crisis and would not need to coordinate 17 countries with divergent interest. But some facts would need to be acknowledged before decisive action could be taken:

  • In spite of massive intervention by the Fed and the US government, growth remains anemic
  • The deleveraging of private households will have to go on for many years
  • The real estate market has not yet stabilized. About 11 million US households suffer from negative equity (their mortgage outstanding is higher than the value of their home). And the supply of homes is still in excess by 1.2 to 3.5 million (depending on the data used to estimate this number).
  • The US government deficit is not sustainable and will need to be brought to acceptable levels, which will slow growth and amplify the problems of the private sector.
  • In spite of a significant weakening in the dollar, the U.S. is still running a trade deficit that cannot be blamed on China alone. It reflects a lack of competitiveness in some key markets and the low proportion of manufacturing in the U.S. economy compared with countries such as Germany and Japan.
  • There is a striking similarity between the US and Japan in the development of stock and real estate prices (See chart below). A correlation does not mean causality, but it is a sobering picture should Ben Bernanke and his team fail to reflate the economy.
  • The interventions of the Fed, notably the programs designed to buy financial assets, have created a monetary overhang that could be the basis for sizable inflation in the future.

Addressing the debt overhang.

The US would also  need to reduce the debt overhang of the government, of consumer loans besides mortgages, and of non-financial corporate sector in the same way as in Europe. As exhibit 2 shows, the total debt overhang in the US equals $11.5 trillion or 77% of GDP. In the somewhat unlikely event of the US following the same path that Europe might pursue, a one-time wealth tax of 25% of financial assets would be required. As in Europe, this would also require the following initiatives.

  • Cleaning up the banking sector by calculating the losses and recapitalizing as needed – even if it means wiping out existing shareholders.
  • Additional taxes on real estate, including an increased capital-gains tax to offset the support for the real-estate market.
  • Creating an incentive for corporations to invest in R&D and new machinery by taxing profits not reinvested.
  • A commitment by the government to restrict its debt level and to prepare for the increasing costs of an aging population by either limiting benefits or raising the retirement age.

Addressing the fundamental issues of the US Economy.

We have argued for a long time that the US economy needs to address some fundamental issues in order to become globally competitive again. In putting an end to muddling through, the government might also embark on a major restructuring of the economy:

  • Reindustrialize and grow the share of the manufacturing sector from the current low of 12% of GDP to 20% of GDP . This might then allow a rebalancing of trade flows.
  • Revisit income distribution.  Most U.S. families cannot make up for their income shortfall with increased credit – and 41 million Americans are officially considered to be below the poverty line.
  • Take action to reduce dependency on imported oil by investing in new technologies and modernizing existing infrastructure.
  • As in Europe, an administration that truly bit the bullet would take a long-term view and invest more in education.

All this is still speculation. But history shows that the US economy, like no other, is capable of adjusting and implementing quite radical changes. And in our view, some of the actions described above might be pursued by the US government if things do not improve soon.

BCG's conclusion:

The programs we have described would be drastic. The would not be popular, and they would require broad political coordinate and leadership – something that politicians have replaced up til now with playing for time, in spite of a deteriorating outlook. Acknowledgment of the facts may be the biggest hurdle. Politicians and central bankers still do not agree on the full scale of the crisis and are therefore placing too much hope on easy solutions. We need to understand that balance sheet recessions are very different from normal recessions.  The longer the politicians and bankers wait, the more necessary will be the response outlined in this paper.  Unfortunately, reaching consensus on
such tough action might requiring an environment last seen in the 1930s.

Full report:



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Thu, 09/29/2011 - 21:19 | 1724496 Phil Free
Phil Free's picture

Space aliens?  Of course.  If one listens to the curiously popular Scientologists, we owe all our money to XENU.  Which is why we are to give all our money to the Scientologists for reparation.  Or because El-Ron needs to upgrade his saucer.  Or something.

Thu, 09/29/2011 - 18:57 | 1724115 RichyRoo
RichyRoo's picture

Problem with this analysis is that it fails to describe where the money to pay the tax will come from. Trying to 'tax' financial assets would just lead to asset devaluation and deflation as EVERYONE tried to sell at the same time for cash to pay the tax. And of course nobody would be buying becuase they need their cash to pay the same tax! Its pretty stupid really.

Fri, 09/30/2011 - 03:00 | 1724986 Mister Ponzi
Mister Ponzi's picture

Correct, but there is even more. Deciding to follow the outlined road of debt deflation and default would cause the market value of financial assets to plunge dramatically even before any forced selling sets in. Therefore, calculating the required tax rate on the basis of today's market value of the assets is at best misleading, as the tax rate on the market value of the financial assets at the time of implementation will be much, much higher (and may exceed 100%). And I haven't even mentioned the (most likely violent) public resistance against such a program. This whole idea doesn't make any sense.

Thu, 09/29/2011 - 19:00 | 1724120 pain_and_soros
pain_and_soros's picture

Actually, the problem has been that politicians in general haven't had the balls to deal with the problems as they arose, particularly over the past decade. 

It's been much easier to pass the buck, since that won't cost them an election, so ultimately the problem lies with the electorate - they are generally too self-absorbed to even consider the common good & thanks to some wonderful focus group statistical analysis, campaign managers have been able to define meaningless wedge issues important enough to energize their political bases to cast decisive, tho uninformed votes, believing that by doing so, they are preserving democracy.

And the media in general, ZH excepted, is as afflicted with self-absorbed catering to the mainstream mindlessness and becomes part of the problem since it is profitable to do so - witness the earlier posting featuring a pretty reporter claiming gold is being dumped in favor of US dollars which are backed by the Fed!

Unfortunately, unless & until there is a viable 3rd party candidate who will stand up to Wall St, and return government to the people, the US will continue on the path to the fascist state it is rapidly becoming.   If Ron Paul & Ross Perot were 30 years younger...well there might be some cause for hope...


Fri, 09/30/2011 - 00:01 | 1724790 OneEyedJack
OneEyedJack's picture

Keep a eye on Marco Rubio

Thu, 09/29/2011 - 19:02 | 1724124 Hal M
Hal M's picture

The 5 stages of dealing with a great loss are:

1) Denial

2) Anger

3) Bargaining

4) Depression

5) Acceptance

While the sheeple are just passing from denial into anger. The financially savy are already into bargaining, trading what they have for what will retain value. And we all know what those things are.

Thu, 09/29/2011 - 20:38 | 1724394 DogSlime
DogSlime's picture

I only really ever get Anger + Depression.   I don't do denial.  I will not bargain.  I will not accept.

Fuck 'em all.

Thu, 09/29/2011 - 23:30 | 1724735 Syrin
Syrin's picture

I think most here are at the acceptance phase.   We all KNOW something bad will happen, we just don't know when, the severity and how it will manifest.

Fri, 09/30/2011 - 07:24 | 1725168 DogSlime
DogSlime's picture

Yeah - I accept that the shit is going to hit the fan.  I don't accept that we need to be sacrificed to save the financial elite.  I don't accept that we need to pay while they still keep everything (and get more, at fire-sale prices).

I'll accept my share of the pain when the people who caused this get their pain.  Until then I will rage and feel pissed-off.

Fri, 09/30/2011 - 19:51 | 1727847 bid the soldier...
bid the soldiers shoot's picture

: o )

Fri, 09/30/2011 - 19:48 | 1727849 bid the soldier...
bid the soldiers shoot's picture

I have gone through all five and was in acceptance for 5 or 6 months. I just turned turned back down to anger. I can't wait till I get back to denial again. :o)

Thu, 09/29/2011 - 19:01 | 1724125 SILVERGEDDON

I don't have any debt, but that banker down the street is sitting on a shit ton of it, and so are my members of Congress, and state representatives - those bitchez are sitting on a giant swollen asshole full of debt - not my problem! Hasta la vista, debt ridden mothuhfuckas ! Your bitch asses need to be shipped off to the Big House, where you can fuck each other over for life without messing up reality for the rest of us!

Thu, 09/29/2011 - 23:30 | 1724737 Syrin
Syrin's picture

I prefer Gitmo personally

Fri, 09/30/2011 - 19:40 | 1727831 bid the soldier...
bid the soldiers shoot's picture

Be careful what you wish for etc. etc.

Thu, 09/29/2011 - 19:08 | 1724138 Canuckistan Al
Canuckistan Al's picture

World Wide Margin Call..................bitchez!!!!!

Thu, 09/29/2011 - 20:18 | 1724161 Bastiat
Bastiat's picture

Why not let the holders of bad paper eat it and fail if they must.  The counter parities of those failing entities can eat it and fail too. This is exactly what should have been allowed to take place in 2008.  Then we could have used whatever real assets we had left to create a new system. 

Why should the cost of failure be passed on to all citizens, ie. socialized, while profits were privatized? Let them fail and let the resulting lawsuits claw back inflated bonuses as fraudulent transfers of funds from enterprises KNOWN by the parties to the transfer to be bankrupt.

An inflationary holocaust one can somewhat defend against; the state thuggery suggested above destroys not just the wealth of the prudent but the social contract, fabric of society.  And who exactly will get the confiscated money? the criminal banks--to cover losses incurred in their racketeering activities?

Thu, 09/29/2011 - 19:20 | 1724163 Unprepared
Unprepared's picture

In BCG's Matrix, do they identify Taxpayer as the Cash Cow?

Thu, 09/29/2011 - 19:34 | 1724200 Mr_Wonderful
Mr_Wonderful's picture

Another excellent report.

The Tylers are really outdoing themselves.

Can´t wait to see what they produce next month as alll hell breaks loose.

It´s a bit of a mystery to me why they don´t cover the 5000% increase in put options against the stock market but then they did it indirectly through the VIX report.

All in all great job.




Thu, 09/29/2011 - 19:41 | 1724228 Dezperado
Dezperado's picture

The world inflates and the golden chinese emerge... once and for all

Thu, 09/29/2011 - 20:06 | 1724294 Waterfallsparkles
Waterfallsparkles's picture

The so called Debt was created from Zero Capital.  Money created from thin air.  Let the Debt go back into thin air where it came from.

There is no reason anyone should have to pay interest to International Bankers for so called Debt created from Zero.

Thu, 09/29/2011 - 20:06 | 1724295 Waterfallsparkles
Waterfallsparkles's picture

The so called Debt was created from Zero Capital.  Money created from thin air.  Let the Debt go back into thin air where it came from.

There is no reason anyone should have to pay interest to International Bankers for so called Debt created from Zero.

Thu, 09/29/2011 - 20:11 | 1724307 slewie the pi-rat
slewie the pi-rat's picture

well, when tyler sez a report is a must read, slewie dutifully goes ahead and reads it...

now i gotta kill tyler!

Thu, 09/29/2011 - 21:52 | 1724557 anynonmous
anynonmous's picture

but which one?

Thu, 09/29/2011 - 20:21 | 1724331 Stares straight...
Stares straight ahead's picture


Thu, 09/29/2011 - 20:25 | 1724356 Buck Johnson
Buck Johnson's picture

We have to take the pain, but the politicians and there cronies are afraid because of what they have done to their people especially in the US.  When you have dumbed down a people and allowed them to become essentially delusional to not even consider bad things can happen to them also, you have a crazy populace.  When you have one of those and all of a sudden you take away those govt. checks and savings and even pensions, they will go nuts and attack.  You can't bargain with them and you can't talk to them, the only thing you can do is to either divert their hatred to another fill in or crack down hard.

It's to late, and I think many know it.

Thu, 09/29/2011 - 20:35 | 1724380 Bicycle Repairman
Bicycle Repairman's picture

Get bent.

Thu, 09/29/2011 - 21:47 | 1724549 slewie the pi-rat
slewie the pi-rat's picture

you know, buck, your basic view is not invalid, at all

dumbed-down, delusional, and crazy:  the american trifecta!

just ask the libyans! 

we like to think we're crazy, but we're not insane, ok?  we like to get the benefit of the doubt, there...

as far as dumbed-down & delusional, think world-wide, but, yes the US has the reserve currency, #1 economy or what's left of it, and is cowboyed-up pretty fuking severely and eternally, too...

but why the hell should we go too ape-shit on each other over some debt?  then again, why the hell not, huh?

so there is this global wondering about credit, what insolvency means, and how tf we ever did something this styoooopid in the first place?  is there any doubt in anyone's mind that the "system" is being used to enrich special interests?  the idea that public wealth can be privatized for private gambling debts and loan frauds is something even mark twain wouldn't have believed

as far as dumbed-down goes, that's outstanding, doncha think?

Thu, 09/29/2011 - 20:27 | 1724361 mr1963
mr1963's picture

You could give them a do-over and in 25 years you would be right back where you are now. The wealth tax no doubt will exempt politicians and government workers. If you ain't holding something outside the system, this would be a wakeup call to start.

Thu, 09/29/2011 - 20:34 | 1724374 SwingForce
SwingForce's picture

You know what? Its not MY problem, its not Apple's problem, or Exxon/Mobil's, or Microsofts', IBM's, Chevron's, Costco's or Google's, so shut the front door! Its JPM's problem, its Timmay Jeethner's problem, its Larry Summers and Robert Rubin's problem. Hey, don't make THEIR problems MY problems. Just like Congress forges my name on the cosigner line for their massive overspending and BORROWING. "The Painful Way Out" descibes only your Bankster friends, nobody else. Rot in Peace.

Thu, 09/29/2011 - 20:37 | 1724391 vipmoneymachine
vipmoneymachine's picture

Buy stocks now, Greece will be bailed out. Otherwise how are they going to pay Israel ?


Thu, 09/29/2011 - 20:59 | 1724450 sangell
sangell's picture

With a net worth around $1 million I guess I'd get a 25-30% haircut on this deal but I could live with it IF I also got some benefits.

I'd suggest that those over 30 be reclassified into either Donors or Consumers and get a D or C attached to their identity, licenses plates etc. HOV lanes would be for D people as would the best parking places. D's would get priority for medical services C's would take what was left. We do this for 10 years or so after the debt jubilee so as to make sure the C's contribute their 'fair share'.

Fri, 09/30/2011 - 05:20 | 1725036 Anonymouse
Anonymouse's picture

Screw that.  I never signed any social contract just by being born.  I voted against the bastards who did this.  Why should I (or you) live with it, benefits or not?

Thu, 09/29/2011 - 21:33 | 1724525 mikmid
mikmid's picture

WE THE PEOPLE: stop frequenting our repesentives and senators business. Make them fell the effects that we feel. This an action of our frustration.

Thu, 09/29/2011 - 21:42 | 1724530 blindman
blindman's picture

the debts are all fraudulent, this is why jubilee
is an established historical precedent. sanity demands
recognition when insanity runs amok.

Thu, 09/29/2011 - 21:46 | 1724546 Moneyswirth
Moneyswirth's picture

This has to be good news right?  RIGHT?

Cash Short, US Weighs Asset Sales

Thu, 09/29/2011 - 21:48 | 1724548 rwe2late
rwe2late's picture

 Judging by the comments, many ZH posters implicitly support the staus quo.

They paralyze themselves politically by unreservedly and reflexively backing "property" rights. Changing the staus quo entails changing the distribution of wealth and power. The extremely wealthy are not so "productive" as many suggest.

With regard to the "muddle through" article, many seemed incensed at the idea of a 30% assets tax to restructure debt.  With some justification if the productive "middle" class is so taxed.

But what if they are not taxed? If:

the top 1% of the population has 60% of the wealth,

and the next 50% has 30% of the wealth ...

Then 30% of the total assets could be garnered either by a 33% flat tax,

or by a 50% tax on the top 1%, and a zero tax on the middle class.



Thu, 09/29/2011 - 23:32 | 1724740 Syrin
Syrin's picture

Do you whack it more to your Stalin or Marx doll?

Fri, 09/30/2011 - 07:52 | 1725221 rwe2late
rwe2late's picture

 For some, as I wrote, their guiding first principle  boils down to protecting the bankster's wealth.

Thu, 09/29/2011 - 21:48 | 1724550 mikmid
mikmid's picture

ACTION OF THE PEOPLE: Stop using the businesses of our representaives and sentors and let them feel the the downturn.

Thu, 09/29/2011 - 21:53 | 1724559 blindman
blindman's picture

the basis of the debts are fiat, made of confidence that
was never earned, for the most part. systemic exploitation
of labor, ingenuity and sacrifice; ongoing. man cannot
calibrate and nominally calculate the unknown and unknowable
spirit that sustains him and the gifts of nature are not
commodifiable for the elite to dispense at interest. imo

Thu, 09/29/2011 - 22:02 | 1724576 honestann
honestann's picture

Holy crap!  Enough "predator think".  Anyone who believes this kind of nonsense is practical is utterly insane.  Have they not looked at how things work now?  The "government" is 100% captured by the central bank, their owners (JPM, Goldman, etc), the large financial corporations, and other large corporations.  ANY large scale events implemented BY government would in practice be yet another massive enrichment of the predators-that-be and collaborative predators in government, central banks, financial institutions and large corporations.

The rich would make out like bandits.
The poor would continue to be paid for being non-productive.
The common denominator is this: those who consume more than they produce WIN, and those who consume less than they produce LOSE.

The author and his company, and everyone else who talks about grand plans to impose "fixes" on "the economy" can go straight to hell.  You are our sworn ENEMY, and will be in our crosshairs if you try to steal the savings we have accumulated slowly over years and decades by being highly productive and frugal.  Our answer is NO, hell NO, no way, no how.

Every plan is designed to let the irresponsible off the hook and suck prudent producers dry.  This is not surprising, because only prudent producers have accumulated liquid (as in "easily stolen") wealth.

Any honest, ethical, benevolent human being will understand the actual solution to the world economy.  That is precisely the opposite of all proposals.  The solution is to leave these prudent productive beings free to continue being prudent and productive, to leave them free to see opportunities and attempt to take advantage of them, to leave them free to figure out how to find work less capable, less prudent, less thoughtful people can perform that are net productive.

But instead, every plan is to DESTROY the only people who can possibly turn the world economy around.  Well, our answer to all you "central planners" is... up yours!

Thu, 09/29/2011 - 22:38 | 1724646 DoChenRollingBearing
DoChenRollingBearing's picture

I wish it were possible to give more than one green.  Excellent comment.

Thu, 09/29/2011 - 23:34 | 1724743 Syrin
Syrin's picture

I agree with everything you say, but they will electronically remove your property from thousands of miles away, well out the reach of your rifles.   That's why we have to band together and be mobile.   White's of their eyes and that sort of stuff.

Fri, 09/30/2011 - 01:11 | 1724885 honestann
honestann's picture

Which is why I and every sane human always keeps 95% to 100% of our savings in physical gold and silver burried where nobody could ever find it.  I own no real-estate, I own no stocks or bonds, I own no paper assets, I own nothing they could grab by simply telling some [financial] corporation to cease.  If they came to my "residence" with a SWAT team, they could get my car, clothes and computers - that's it.

Yes, we should "band together", but as far as I can see, nobody is.  I've tried several cooperative/collaborative endeavors, but nobody ever shows up (except people who never bothered to save a penny, and now want someone to take care of them).  This is a huge problem, but I don't see a solution - as in "serious people with at least some assets willing to take serious steps".  Human beings have become utterly disabled... they refuse to act.

Thu, 09/29/2011 - 22:02 | 1724579 wattsnotsaid
wattsnotsaid's picture

Having only read your summary of the report I don't see where it solves the same problem that the fed appears to be trying to solve. If we implement the BCG 30% tax on wealth, the fed will still be spending money in an attempt to create jobs creating the problem all over again. Likewise government will continue spending beyond its means in fact the 30% wealth tax will just accelerate government spending.

I don't see where the BCG 30% wealth tax solves much.

Question: so how do I hide my gold from the wealth robbers?

Question: since my limited "wealth" is attempting to create what government employees get as retirement will they be asked to take a 30% hit on their retirement?


Thu, 09/29/2011 - 22:04 | 1724582 blindman
blindman's picture

just end the fed and the phony notes.
sing it loud. p does not equal p + I.
never will. same as it ever was. usury

Thu, 09/29/2011 - 22:24 | 1724619 High Plains Drifter
High Plains Drifter's picture

how do you propose we do this. we have a president that is captured by the enemy. we have a congress that is captured by the enemy. we have courts that are not subject to english common law and we have government agencies that do not listen to us anymore as if they ever did. we are ships loose in the sea without anchors and set adrift...........we must come together as one and do what needs to be done........and soon.........this will require a lot of disconfort for the amerikans, but it is necessary. and long overdue.....


take for instance the matters that took place during the time of woodrow wilson..........

i tell you , here lately uncle miltie has been hitting them out of the park every time he is at bat. if he keeps this up, we are going to have to move him to cleanup in the order.....

Thu, 09/29/2011 - 23:18 | 1724721 blindman
blindman's picture

politicins come and go. people stick around.
arrest the fed and everything that hangs off it.
treasury notes at no interest.

Thu, 09/29/2011 - 22:19 | 1724603 htp
htp's picture

The banks that have stolen trillions from tax payers are now saying, everyone needs to hand in their silver to cover national debt.

By the time everyone forked over 30% of their wealth, there'll be another $50 trillion debt hole to fill.

Why don't we just all go on food stamps and get it over with? There'll be the 0.1% rulers and the rest are all serfs. That's the end game anyway.

Thu, 09/29/2011 - 22:30 | 1724634 High Plains Drifter
High Plains Drifter's picture

you damn right. like governments , after they get all of this money suddenly are going to change and be fiscally conservative and shit........i say bullshit on this entire report................

Thu, 09/29/2011 - 22:15 | 1724605 High Plains Drifter
High Plains Drifter's picture


what amuses me about these types of reports is that they think somebody that is running the financial world gives one good shit about what they think.....or any of us for that matter. they always say well we have to become more competitive and we have to reindustrialize etc and then he says the old standby...we must invest more in education. oh good grief.......hey numbnutts,.... check it out. the same people who run the financial world are the same people who shipped all of our industry to china , idiot. they have all of the money and now they want what is left. they were the ones that caused these debts and now they want the rest of the money that is in the baby boomer retirement funds........and like carlin said........they are going to get it too unless we stop them one way or the usual these types of reports never stop to realize just what kinds of people and who they are dealing with or the danger we are in..........they have no idea.......none......

Thu, 09/29/2011 - 22:24 | 1724618 Double down
Double down's picture

What!  "Invest more in education"


Thu, 09/29/2011 - 22:25 | 1724621 prophet
prophet's picture

G-20. BINGO.  The Great Intervention continues to take shape.  Many here will be upset that TGI will be "the collapse" they have been hoping for but that in the end all the same powers that be will be.

Thu, 09/29/2011 - 23:09 | 1724703 blindman
blindman's picture

@ "painful.." what, no bonuses?

Thu, 09/29/2011 - 23:53 | 1724779 jomama
jomama's picture

drive that thing into the ground until the wheels fall off! 

we all know that:

a) the gov ain't taking the welfare punch bowl away or their power would be gone shortly thereafter

b) there won't be a massive levy on people, considering the majority of average citizens are barely pulling it as is.

c) the can will be kicked as long as possible.  there will be no reform before a collapse.  

Thu, 09/29/2011 - 23:54 | 1724782 Uncle Keith
Uncle Keith's picture

Democracy = Steep Progressive Taxation = Path of Least Resistance.


How steep? 90% inheritance taxes on estates over $7 million; 90% income tax rate on income over $3 million.


It will be palatable to the majority of voters. It will perpetuate the Political Status Quo. It already has popular support - even in the U.S..


You read it here first.

Fri, 09/30/2011 - 00:09 | 1724797 HAL 9000
HAL 9000's picture

A "Must-Watch" Doug Casey interview to go along with this 'must-read' report.  Casey suggests "It's going to be worse than what happened in the 1930's".

On the bright side, he does give some good investing tips too


followed immediately by Dylan's 'A Hard Rain's a-Gonna Fall'

Fri, 09/30/2011 - 00:13 | 1724804 frank888
frank888's picture

Casey as other here is trying to make money in getting customers !

Fri, 09/30/2011 - 00:12 | 1724802 frank888
frank888's picture

Someone could explain me why this would be good for gold ?

I have the tendency to just think the opposite !

Fri, 09/30/2011 - 00:27 | 1724821 High Plains Drifter
High Plains Drifter's picture

talking heads...........once in a lifetime...

Fri, 09/30/2011 - 00:30 | 1724826 bid the soldier...
bid the soldiers shoot's picture

If there is Peak Oil, it's not "Back To Mesopotamia"

It's Back to Neander Valley.

Fri, 09/30/2011 - 01:00 | 1724870 Ben Bermonkey
Ben Bermonkey's picture

But, do not forget: It's not an easy job!

I just had the chance for a one-to-one interview with our beloved Trichet:

Fri, 09/30/2011 - 01:13 | 1724888 Troy Ounce
Troy Ounce's picture


Tyler, the 5 "DABDA" stages of grief of Kuebler-Ross sequence are:

  1. Denial
  2. Anger
  3. Bargaining
  4. Depression
  5. Acceptance

You can skip a few, but the end result is a certain death.

Fri, 09/30/2011 - 01:21 | 1724898 Dirtt
Dirtt's picture

Debt Jubilee.  

Fri, 09/30/2011 - 01:28 | 1724904 Joaquin Menendez
Joaquin Menendez's picture

I like the analysis except BCG are not admitting something important.  There can be no growth because the price of oil goes through the roof everytime the economy tries to recover.  It's like hitting our collective heads on the ceiling which keeps getting lower and will keep getting lower until it crushes us.  BCG knows this but, like all the economists refuse to admit that the market has constraints.  

Fri, 09/30/2011 - 01:43 | 1724928 Yen Cross
Yen Cross's picture

Anyone starting to look @ .9550- .9480 in aud/usd? Those cds swaps are getting big, and the nzd downgrade.

  Who was that netherling on CNBS today, that had the where with all to mention the disfunction of the "  levered' EFSF?

Next week it will be  " RIPLEYS BULLSHIT or NOT", circa the TROIKA!!!

   When do the achronyms end?

Fri, 09/30/2011 - 01:47 | 1724931 ddtuttle
ddtuttle's picture

I know we all consider ourselves to be very smart for being loyal ZH readers.  I know I do.  And Mr Bernanke has been called every epithet I know of (and some I don't) on these pages.  But what do you think the chances are he has not had this scenario explained to him in detail? (zero)  Of course, he's not ready to act on it, and still hopes he can fix things in a more traditional manner.  But he knows the game is up, he just hasn't told us what he's going to do about it.

My guess that right now he's worried that Europe could go down in flames just due to sheer incompetence.  So he's keeping his (our) powder dry in case he needs massive intervention to keep the global financial system afloat.  But he is looking way past that, to severe situations where marshall law and confiscation will be the least of our problems.  Although B is smart, he has only one instinct: grab more power.  The idea that some extra taxes and debt repuidiation will be enough for TPTB is naive.

Do not underestimate  guys like Bernanke. DO not call him a stupid f*%&, because he's not stupid.  We'll all wake up one morning and it wil lbe too late, because they will have executed on a plan we've never heard of and never thought of. 

Fri, 09/30/2011 - 01:52 | 1724935 Bear
Bear's picture

There is no politican in the world that would make that call and since it would require all of them to do it after much debate and 90% polling against it ... Ben will just print to bail out the globe and instead of helicopters he'll use satellites

Fri, 09/30/2011 - 01:55 | 1724938 RobertMugabe
RobertMugabe's picture

Alessio has infiltrated the cultural superconciousness. He's becoming a bigger meme than "Winning". Like Charlie Sheen, his time in the online media space may be fleeting, but his message is important in affecting the mass psychology of the crowd

Fri, 09/30/2011 - 01:59 | 1724942 Yen Cross
Yen Cross's picture

 I think " Respectfully", That  ddtuttle was out of the game for many years, and decided to re-engage when his life savings were being "WHITTLED" away...

Fri, 09/30/2011 - 02:12 | 1724956 reader2010
reader2010's picture

Krugman says the solution is global warz.

Fri, 09/30/2011 - 02:21 | 1724967 Lord Koos
Lord Koos's picture

Back to rebellion... pilots have joined the Occupy Wall St protests, next, the NYC transist union has pledged to join them.

Fri, 09/30/2011 - 05:14 | 1725033 Anonymouse
Anonymouse's picture

The more you tighten your grip, Tarkin, the more star systems will slip through your fingers

Fri, 09/30/2011 - 02:27 | 1724972 hooligan2009
hooligan2009's picture

to be clear, the debt of banks are the "assets" of savers...savers and investors. to "restructure" this mess, savers will have to lose half their deposits so that debtor banks and governments can reduce their "debt" burden. that means deposits we have are halved or redecued by 75%. its either do it now or wait for inflation to erode the value of deposite/bond savings by inflation and tax. those people with deposits in banks have already lost, its a question of when they pay. the fed and the government may be trying to delay the date of reckoning, but only that date. no politican or group of politicians or federal reserve is competent to run a 15 trillion dollar economy, let alone one that will increase debt by 1 trillion a year. how much would you pay to have someone run a 15+ revenue business? pay peanuts get about the issues, get zero hedge!

Fri, 09/30/2011 - 11:33 | 1724974 pebblewriter
pebblewriter's picture

It's simple, really.  $3.5 trillion in expenses, $2.1 trillion in tax receipts....all we have to do is increase receipts by 66% or reduce expenses by 40%.  Then get Greece, Italy, Spain, Portugal, Ireland, Iceland, Russia, most of Africa, a handful of Asian countries to do the same.  Oh, and keep interest rates at all-time lows so we can afford the $200 billion a year in interest.  Oh, and keep the global economy out of a depression.  Oh, and keep OPEC from raising oil prices and farmers from raising food prices, and...

Screw it.  Let's just apologize to China for blowing through their trillions and wish them better luck next time.  Like it or not, someone's gonna have to hit the big red reset button. 

It should happen somewhere around S&P 350, at the end of 2012.

Fri, 09/30/2011 - 03:14 | 1724990 Yen Cross
Yen Cross's picture

 Is any one watching "CNBS" Europe? What happened to guidance? In Q1 and Q-2 it was all the buzz! Where is Q-4 guidance?


     Not that it means " JACK SHIT".   The 'Real money Guys, are trying to bend over the speculators! Let's not forget barrier options, DNT's and Vanilla's. Where are the month end flows, and repatriations?

     Is N.Y. just another month end clearing house today?

Fri, 09/30/2011 - 04:35 | 1724998 BlackholeDivestment
BlackholeDivestment's picture

Pretty ...uh ...amazing time to see all this global market madness; risen from the strong delusion of the New Wolrd Order global agenda and the politica and banking crowd of evil bastards and new age occult bastards behind the nations they are drunk from the wine of wrath in Chairsatan's Cup of Fornication, falling upon labor as a devouring beast, at the same time we are entering the 2012 Dark Rift ...and if you were to look up to the sky at Virgo, as she is clothed in the Sun, Venus and Saturn are now in her womb and the New (dark) Supermoon is under her feet, as the Comet Elenin (which just left the Sun on 9/11/11) is sweeping through her head ...well, you might think having it also be Rosh Hashana too is a bit willd also, sinse that's happening right now ...all at the same time and then some. <<< eclipes timing too


One thing I do know, in Mesopotamia ...there is a lot of ruin.



Fri, 09/30/2011 - 03:52 | 1725002 props2009
props2009's picture


China CDS is 3 Year high and Germany at 106 bps highest in 3 years.


Fri, 09/30/2011 - 05:32 | 1725028 jharry
jharry's picture

Have a nice day!

Fri, 09/30/2011 - 05:11 | 1725029 Anonymouse
Anonymouse's picture

So let me get this straight.  We have to steal from the public to save the banks.

Once again, those who saved get screwed, while those who took risks with other people's money get bailed out (offset by additional tax).

I grew up poor.  I worked hard.  I served my country for seven years.  I saved.  I support my family.  I don't cheat on my wife.  I don't cheat on my taxes.  I give to my church and to charity.  I adopted two children who needed parents.  I have no debt because I live prudently.  I made a little money with my investment business and made good returns for my investors.  I have already been screwed by inflation, ZIRP, and banking fees.  I get screwed by my kids 529 plans which allow only one change in investment per year.  I get screwed by the Fed's attempts to devalue the dollar and Washington's failure to curb spending.  I'm screwed trying to find a job (I quit my last one because the new owners were dishonest and I would not be a part of that) because of the economy they screwed up.

They whine: Austerity is too hard!  We can't ask people to save and cut their spending!  Hey, why don't we just take more from the savers?

These pinheads have the audacity to float a trial balloon (and that's what this is) making me the bad guy who has to be fleeced to cover their butts one more time? 

Hell no!  I've had enough

Fri, 09/30/2011 - 06:31 | 1725102 BlackholeDivestment
BlackholeDivestment's picture

Anonymouse, what you just wrote is ...the writing on the wall.

Fri, 09/30/2011 - 05:15 | 1725034 MRSAP
MRSAP's picture

It's always the same. The gentlemen politicians throw out the money who they never had! Accumulate debt over years and years. After all Now that all possibilities have been exhausted to get on the property cashing! Great idea! Money which is always taxed already ten times.

Fri, 09/30/2011 - 20:36 | 1727927 frevd
frevd's picture


First, what's the purpose of robbing those that were intelligent enough to somehow own something off 30% of their assets? That's helping nobody, since the real problem is not the depth, but the system! This will just repeat.
Second, you can't just do that in countries where assets are property and property actually has the meaning of constitutionally owned-by-individuals.

The only solution to ever stop that noneconomic depth bullshit is to make the system unsustainable - and here is how: if I'm deep in depth and cannot pay, someone is going to take anything from me I happen to own still, or at least anything that I'm going to earn in the future (rather than me robbing the bank I owe to). Translated to a bankrupt country that would actually mean to sell any assets available (including land) to those able to buy it, and not to rob those buyers by forcing them to burn one third of their capital now and the next third some 10 years later. That and only that wouldn't be sustainable for too long, since those assets are limited. Once the whole state is owned by private individuals caring a bit more about their property and its economic reliability, it will work again. Of course we'd have to deal with different problems then, although that still would split up power even more, so can't be that bad. At some time things just have to change somehow or will simply break. I'd prefer this much more peaceful solution, it also sustains itself for any period of time.


Mon, 01/23/2012 - 22:30 | 2091186 wanwer
wanwer's picture

What about World War III?  That would certainly mix things up and get some people off the hook.

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