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Richard Koo Explains It's Not The Fed, Stupid; It's The Fiscal Cliff!

Tyler Durden's picture


While Koo-nesianism is only one ideological branch removed from Keynesianism, Nomura's Richard Koo's diagnosis of the crisis the advanced economies of the world faces has been spot on. We have discussed the concept of the balance sheet recession many times and this three-and-a-half minute clip from Bloomberg TV provides the most succinct explanation of not just how we got here but why the Fed is now impotent (which may come as a surprise to those buying stocks) and why it is the fiscal cliff that everyone should be worried about. As Koo notes, the US "is beginning to look more like Japan... going through the same process that Japan went through 15 years earlier." The Japanese experience made it clear that when the private sector is minimizing debt (or deleveraging) with very low interest rates, there is little that monetary policy can do.The government cannot tell the private sector don't repay your balance sheets
because private sector must repair its balance sheets. In Koo's words: "the only thing the
government can do is to spend the money that the private sector has saved and put that
back into the income stream" - which (rightly or wrongly) places the US economy in the hands of the US Congress (and makes the Fed irrelevant).


DEIRDRE BOLTON, BLOOMBERG NEWS ANCHOR:  Based on the data points, the economic data points we've got in the past month, how likely is it that the U.S. is heading towards a lost decade? Is it more or less likely than what you told us about four to six months ago?

RICHARD KOO, CHIEF ECONOMIST, NOMURA RESEARCH INSTITUTE: Well, it is beginning to look more like Japan. The amount of house price declines, the commercial real estate price declines there, all following the Japanese pattern very precisely and very slow GDP growth, even with all this monetary easing, QE2, possibly QE3.

So yes, to me, the United States is going through the same process of what I call balance sheet recession, that Japan went through 15 years earlier.

BOLTON: You mentioned the possibility of QE3. What should Ben Bernanke do today in his speech and then what should he do as a follow-up action?

KOO: Well, actually, the Japanese experience told us that when private sector is minimizing debt or deleveraging with very low interest rates, there's very little monetary policy can do.

In fact, Chairman Bernanke has been saying, since the middle of last year that this is no time to cut budget deficit. The fiscal stimulus should be in place because I think he also understands that under the circumstances, there's so little that monetary policy can do.

But there's a lot the fiscal policy can do to keep the U.S. economy from losing its bottom.

BOLTON: Richard, how.

KOO: And so I think he should continue to push that line. Yes?

BOLTON: Continue to push that line and maybe try to subtly encourage Washington to take a little bit more control. Sounds like you think that Congress should do something.

KOO: Yes, because when people are deleveraging even with zero interest rates, that means they are very sick. The private sector is very sick and in need of help because their balance sheets are under water.

And then that's the case, even if Federal Reserve lowers interest rates, puts liquidity into the market, the private sector cannot really respond because they have balance sheet problems.

And the government cannot tell the private sector don't repay your balance sheets because private sector must repair its balance sheets. So the only thing the government can do is to spend the money that private sector has saved and put that back into the income stream.

And that, I think is what the U.S. has to do. And that means this is no time to cut budget deficit. You have to maintain the fiscal stimulus until private sector is healthy enough to start borrowing and spending money again.

And at that point, Federal Reserve will become all very irrelevant. But at the moment, I think the control of the U.S. economy is really in the hands of Congress.



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Sun, 09/16/2012 - 17:09 | 2801264 SGS
SGS's picture

Be aware Mr O'leary is now buying phyzz.  The volcano of institutional buying will be full retard. 

Sun, 09/16/2012 - 17:31 | 2801319 Precious
Precious's picture

-> There will be more QE

-> There will be less QE

Sun, 09/16/2012 - 17:32 | 2801321 Precious
Precious's picture

-> There will be war with Iran

-> There will be peace with Iran

Sun, 09/16/2012 - 17:33 | 2801322 Precious
Precious's picture

-> Fiscal cliff will further damage the economy

-> Fiscal cliff will not affect the economy

Sun, 09/16/2012 - 17:34 | 2801326 Precious
Precious's picture

-> There will be future inflation

-> There will be future deflation

Sun, 09/16/2012 - 17:35 | 2801330 Precious
Precious's picture

-> Equities will be higher in one year

-> Equities will be lower in one year

Sun, 09/16/2012 - 17:36 | 2801334 Precious
Precious's picture

-> Gold will be higher in one year

-> Gold will be lower in one year

Sun, 09/16/2012 - 17:36 | 2801339 Precious
Precious's picture

-> The EU will have fewer members in one year

-> The EU will have the same members in one year

Sun, 09/16/2012 - 17:40 | 2801343 Precious
Precious's picture

-> Bernanke will not be Fed Chairman next year

-> Bernanke will be Fed Chairman next year

Sun, 09/16/2012 - 17:54 | 2801383 Precious
Precious's picture

-> Oil will be over $100 per barrel in one year

-> Oil will be under $100 per barrel in one year

Sun, 09/16/2012 - 21:39 | 2801961 markmotive
Sun, 09/16/2012 - 22:05 | 2802014 old naughty
old naughty's picture

"QE Infinity pretty much guarantees that..."

Ben does not feel like Japan; does not live like Japan; does not look like Japan.

As he and his friends puts it: "The US is not Japan."

Mon, 09/17/2012 - 06:29 | 2802521 GetZeeGold
GetZeeGold's picture



Do you really think so?


Paging Cindy Lauper......she bops.....ain't no law against it yet.


Sun, 09/16/2012 - 17:38 | 2801346 Precious
Precious's picture

-> Housing prices will be lower in one year

-> Housing prices will be higher in one year

Sun, 09/16/2012 - 17:39 | 2801348 Precious
Precious's picture

-> Unemployment will be higher than 8% in one year

-> Unemployment will be lower then 8% in one year

Sun, 09/16/2012 - 17:42 | 2801358 akak
akak's picture

-> Enough up-arrow/down-arrow posts!

-> We need more up-arrow/down-arrow posts.

Sun, 09/16/2012 - 18:28 | 2801455 JLee2027
JLee2027's picture

What fiscal cliff? Congress will just pass a bill and change the rules again. Extend and pray - forever!

Mon, 09/17/2012 - 00:56 | 2802307 boogerbently
boogerbently's picture

Interest at ZERO has NOT inspired borrowing?

Interest at ZERO has NOT inspired lending.

The logic is that more gasoline will eventually extinguish the fire.

Sun, 09/16/2012 - 18:54 | 2801503 Hulk
Hulk's picture

-> you will be one year older in one year

-> you will be one year younger in one year

Sun, 09/16/2012 - 19:16 | 2801538 francis_sawyer
francis_sawyer's picture

<=== Itz da jooze

<=== Itz da goyim

Sun, 09/16/2012 - 20:22 | 2801710 blunderdog
blunderdog's picture

 -> There will be boatloads of SPAM

 -> There may someday be relief from SPAM

Mon, 09/17/2012 - 07:26 | 2802566 Thamesford
Thamesford's picture

-> Red Pill

-> Blue Pill

Sun, 09/16/2012 - 17:39 | 2801341 Michael
Michael's picture

Richard Koo Koo.


All we have to do is eliminate those thousand individual points of light George Bush Sr spoke of.


I just dont think anybody gets what I am talking about with that bold statement.

Note the date of this GWB SR speech.

George Bush Sr. New World Order Live Speech Sept 11 1991

Bush Sr. New World Order Speech Rare


Those 1,000 points of light are the 1,000 people who own us.


I get that Wendell Goler confused look at the end of this video a lot on some of my comments;

Mike Huckabee Challenges Ron Paul on Iraq

Mon, 09/17/2012 - 02:50 | 2802429 Michael
Michael's picture

Dr. Judy Wood - Where Did the Towers Go?

Organic matter reacts differently then in-organic matter when subject to a directed specific type of energy wave. Sort of like that which comes from a Star Trek Phaser. Think Tesla influence.

There were TWO types of demolition techniques used on the World Trade Center Towers on 9/11.

When I release specific info like this, I spread it far and wide to where they would have to shut down the entire Internet to get rid of it.

Twenty-five years after Reagan's Star Wars speech

Reagan launches SDI

(Star Wars-Ronald Reagan ) Strategic Defense Initiative - SDI

Mon, 09/17/2012 - 04:56 | 2802478 Element
Element's picture

Dr. Judy Wood?

Michael ... wtf?... she's the most full of crap 9-11 nut-job around. Take a critical analytical look at what she's saying, and her alleged 'evidence', she's pure snake-oil.  And the Tesla effect bollocks, that may be the lamest crock I've ever seen.  Up to you, but if you're going to read people like that make sure you have your bullshit detector pinned on '11'.

Sun, 09/16/2012 - 21:49 | 2801990 max2205
max2205's picture

Why are we wasting salary on 535 people including POTUS when Ben is the only one running the show

Mon, 09/17/2012 - 00:59 | 2802313 boogerbently
boogerbently's picture

How about we reduce the pensions of all the "ex" 535, currently recieving 100% retirement?!?!

Ben COULD say trillion$$$ should go directly to taxpayers.

Sun, 09/16/2012 - 19:23 | 2801543 q99x2
q99x2's picture

And its off to QE infinity with gold up another $3.80 and silver up $0.12; wheat, sugar, coffee, the markets green across the board. Fuck WWIII we have a rally going on.

Is it any wonder they couldn't pull the traders from their terminals as the world trade centers collapsed.

Time for psychopathic mass hysteria, hookers and another round of coke.

Mon, 09/17/2012 - 01:06 | 2802323 boogerbently
boogerbently's picture

I didn't lose my job, and, until 2008, never participated in the stock market.

I entered just before the bottom (Mar. 2009).

Recession been "belly belly good to me."

If a novice, like me,  could make $$$ in this market, anyone could.

People with their $$$ in "safe" treasuries have only themselves to blame.

Fitting, that in the Wall St. casino, my best "bet" was LVS. (and gold)

Sun, 09/16/2012 - 17:14 | 2801276 Yen Cross
Yen Cross's picture

KOO KOO? I respect the fact that this "Harvard Edukated" "post Doc. can evaluate the obvious.  Grants and "global warming"aside, let's ( lay some pipe, and flow some "nat gas"!   Flush those arab assholes down the drain, and focus on the "United States of America

Sun, 09/16/2012 - 17:39 | 2801349 bank guy in Brussels
bank guy in Brussels's picture

In contrast to a meme among ZH readers - somewhat egged on by Tyler's omissions - Japan is a great success story, thanks to following the policies of Richard Koo. The so-called 'lost decades' were actually quite all right for the Japanese.

For 22 years, despite a huge market crash and asset price collapses of 70% in both stock shares and real estate - life has remained quite all right for most Japanese.

A key element of Richard Koo's thought - which he himself does not emphasise enough - is that in Japan, like Iceland - but unlike the US or the EU in southern Europe - in Japan there was no 'austerity' against common working people. (Austerity in the sense of cutting worker jobs, incomes, pensions and benefits).

In Japan they floated the banks, yes ... but they also kept common people in jobs and incomes and with money to spend ... so life stayed quite okay, and the avoided the depression and trauma that is afflicting life in the USA now, and life in Greece etc. under the brutally unfair 'Troika'.

Richard Koo is a great, compassionate, intelligent guy ... who has been trying to tell both the US and the EU what actually WORKS to preserve the life of common people in our once-in-a-lifetime balance sheet recession.

Yes, Japan has a lot of gov't debt, basically owed to itself (and which it can thus write off to itself as well) ... but they have had 22 years of maintaining good quality of life for most Japanese citizens, Fukushima aside.

When the banks crashed in Iceland, they did not do brutal 'sink or swim' austerity ... they actually increased social support for working and common people.

In the US and EU we should all be lucky to have the same economic success as in Richard Koo's Japan.

Sun, 09/16/2012 - 17:46 | 2801363 Yen Cross
Yen Cross's picture

[Bank guy],in "Brussels" , would you mind answering a question for me.? If you agree I'll ask, as I appreciate " Banking Privacy"

Sun, 09/16/2012 - 18:03 | 2801401 geno-econ
geno-econ's picture

But Japan does not have a Defense budget to worry about. Ours is $700 billion with other costs off budget and inefficient investment policies that promote bubbles that create huge income disparity.  Unfortunatly Koo's compassion is not the American way. 

Sun, 09/16/2012 - 22:11 | 2802030 grid-b-gone
grid-b-gone's picture

Which explains why China is not talking about taking any U.S. islands.

Sun, 09/16/2012 - 18:08 | 2801412 suteibu
suteibu's picture

Japan is a great success story, thanks to following the policies of Richard Koo.

There is so much wrong with your comment but I will start here.  That debt which has given Japan a generation of respite from the damage done by their own asset bubble is about to fuck the next 3 increasingly smaller generations of Japanese through higher taxes, falling incomes, and dwindling discretionary funds and savings. 

Nearly 50% of Japan's workforce is currently either working part time or drawing unemployment.  That figure will rise as the central planners in Japan convert the economy from manufacturing/export to (I kid you not) a service economy - because hotel and tourism jobs are good replacements for manufacturing jobs, I suppose.

Poverty is at such high levels in Japan that the government, rather than dealing with the problem, have merely changed the criteria so that the rate would be more politically digestable.

Divorce, single parent households, suicides, crime, acts of aggression, and homeless rates are rising while the birthrate and incomes are falling.

The pension system is underwater.  And so are private pension systems which will soon be rolled into the government system which will only make matters worse.

The consumption tax was just doubled yet, before it is even implemented, they are looking to doubling it again because the government is spending the money on more Koo-esque type stimulus programs instead of reducing the yearly deficit which is 50% of the "official" yearly budget but much higher when one adds all of the money the government spends. 

I could go on....

Following Koo's advice has kept Japan treading water at best but the nation is on the event horizon of a massive whirlpool.  It will be small consolation for all of those Japanese debt holders to know that foreigners will not be affected when the whole thing gets sucked under.  The cost of modern economic "science," whether it comes from Keynes, Bernanke, or Koo carries a heavy price for people who have little say in the matter.

Sun, 09/16/2012 - 18:40 | 2801434 EvlTheCat
EvlTheCat's picture

please don't quote so we can vote

++++++ to you!

Bank Guy's idea of compassion is stealing from responsible savers and wasting the money on compulsive gamblers who don't have to attend gamblers anonymous meetings because their psychopathic behavior is considered normal in their own circle.  But what do you expect from a "bank guy"?

@bank guy in Brussels

Now I know why you hate the death penalty.  You can't tax the dead in order to socialize your losses.

Mon, 09/17/2012 - 03:38 | 2802453 suteibu
suteibu's picture

Thanks.  I was unaware of the quote/vote issue.

Mon, 09/17/2012 - 01:12 | 2802332 boogerbently
boogerbently's picture


" That debt which has given Japan a generation of respite from the damage done by their own asset bubble is about to fuck the next 3 increasingly smaller generations of Japanese through higher taxes, falling incomes, and dwindling discretionary funds and savings.

Nearly 50% of Japan's workforce is currently either working part time or drawing unemployment. That figure will rise as the central planners in Japan convert the economy from manufacturing/export to (I kid you not) a service economy - because hotel and tourism jobs are good replacements for manufacturing jobs, I suppose.

Poverty is at such high levels in Japan that the government, rather than dealing with the problem, have merely changed the criteria so that the rate would be more politically digestable.

Divorce, single parent households, suicides, crime, acts of aggression, and homeless rates are rising while the birthrate and incomes are falling.

The pension system is underwater. And so are private pension systems which will soon be rolled into the government system which will only make matters worse.

The consumption tax was just doubled yet, before it is even implemented, they are looking to doubling it again because the government is spending the money on more Koo-esque type stimulus programs instead of reducing the yearly deficit which is 50% of the "official" yearly budget but much higher when one adds all of the money the government spends. "

In your statement, remove the word Japan, and insert USA, or France, or Greece.

Mon, 09/17/2012 - 03:40 | 2802456 suteibu
suteibu's picture

Indeed.  The entire developed world is turning Japanese, but nobody does it better.  It is a rather nasty side effect of central planning, central banks and welfare states, although some seem to think these are features rather than bugs.

Mon, 09/17/2012 - 06:01 | 2802504 JamesBond
JamesBond's picture

when the big flush occurs, japan will turn inward once again.  they will 'take care' of their own and all the other

international investors will lose their shirts.  always remember that you're nothing but a gaijin   



Sun, 09/16/2012 - 19:43 | 2801571 GernB
GernB's picture

You have a strange definition of "quite all right." Had they gone through with the deleveraging needed it would have been short and painful and then Japan would have once again prospered. As it is, they have made the pain last 10x as long, though some what less painful, with an economic disaster looming whe the end finally comes. The Japanese people deserve to prosper, but the central planners have taken thst away from them and left them with perpetual struggle.

Sun, 09/16/2012 - 20:05 | 2801625 FreedomGuy
FreedomGuy's picture

Japan had an export based economy which the U.S. and others kept afloat. If we did not keep buying their cars and electronics there would not have been jobs for the nice Japanese to keep their nice people in. The USA and Europe have not been in simultaneous recession with Japan.

Their bill will come due, as well as ours and Europe's.

Where I disagree with Koo's fundamental philosophy is the government spending can somehow replace private spending. As he said in his video, the government must spend the saved money as the people deleverage. What happens is you deleverage because it is the right or even necessary thing to do and the government releverages you with public debt. The difference is the government lets you put if off which appears as the annual deficit. The other difference is the government will spend money very differently than you and I would. They will not replace my spending at REI, Amazon, Kohl's or Walmart. They will repave a road, buy more paper clips, add another neutron bomb, lend money to another Solyndra, subsidize corn even more or pass the money to their political donors. It will not have the same effect on the economy.

In essence, there is no winning this game, because as you deleverage yourself, your government releverages you and moves the money to completely different places. My guess is economic stagnation and fragility. Does that not seem to be about the case right now?

Sun, 09/16/2012 - 20:54 | 2801828 brettd
brettd's picture

USA and Japan are vastly different cultures.

Japan and Iceland similar in homogeniaity.

USA not so much.

Mon, 09/17/2012 - 02:38 | 2802422 StychoKiller
StychoKiller's picture

The declining birthrate in Japan sez:  You are delusional!

Mon, 09/17/2012 - 05:58 | 2802500 EvlTheCat
EvlTheCat's picture

Do you just go around arbitrarily making meaningless comments to well documented information?

Population density is not birth rate.  You might want to look those two ideas up so you can distinguish between them.

Sun, 09/16/2012 - 17:15 | 2801277 Freegolder
Freegolder's picture

The governments of the world have no money, so they mostly have to borrow to spend. To stop rates from rising they use QE to monetise the debt. There is only one end to this (certainly for Japan and the US), and that is currency collapse.

It is now just a matter of time, a few more years perhaps.

And then the world can renew itself a fairer place under a freegold monetary system (and no America throwing its weight around either).

Happy days lie ahead (although I am biased given my gold stocks).

Sun, 09/16/2012 - 17:19 | 2801291 NewWorldOrange
NewWorldOrange's picture

Gold STOCKS? As in PAPER STOCKS, not a "stock" of physical gold?

HAHAHAHA hohohoho HEHEHEHEHE!!!!!!!!!!

Good luck with that, and good luck to your...cough...bankrupt....cough....counterparty.

Mon, 09/17/2012 - 01:20 | 2802341 boogerbently
boogerbently's picture

When they "confiscate" gold, what will happen to yours when you try to sell or trade it ?

HAHAHAHA hohohoho HEHEHEHEHE!!!!!!!!!!

Good luck with that, and good luck to your...cough...bankrupt....cough....thought process.


Sun, 09/16/2012 - 17:53 | 2801381 Overfed
Overfed's picture

Happy days lie ahead? 'Fraid not.

I think this is what we have ahead of us.

Sun, 09/16/2012 - 18:05 | 2801406 NewWorldOrange
NewWorldOrange's picture

Yep. I hope that make that movie. Which kind of begs the question, how the hell did they make such a great trailer w/o making the movie? And how much more would it have taken to just go ahead and make it while making the trailer? I mean, that trailer is of awesome quality. Just odd.

Sun, 09/16/2012 - 23:40 | 2802195 Overfed
Overfed's picture

Seems they're trying to raise funds to get the ball rolling. It's gonna have to be a totally independent film. No way a major studio is gonna pick it up without major changes in the synopsis.

Mon, 09/17/2012 - 01:24 | 2802347 boogerbently
boogerbently's picture

Faulty premise.

It assumes our friends/family/neighbors will be willing to kill us on the "states" orders.

I believe a military overthrow of our corrupt govt. is much more likely, and mutually beneficial.

"They" need all us black ants to keep buying their shit.

Sun, 09/16/2012 - 17:16 | 2801279 dick cheneys ghost
dick cheneys ghost's picture

Check out this story from 2005!


''Gold Rises to 17-Year High on Concern Over Global Inflation''

Sun, 09/16/2012 - 17:28 | 2801280 NewWorldOrange
NewWorldOrange's picture

"And at that point, Federal Reserve will become all very irrelevant. But at the moment, I think the control of the U.S. economy is really in the hands of Congress."

Congress is utterly emasculated. It's barely even a dog and pony show now. The Fed and the White House can do whatever they want and Congress can't do JACKSHIT. Even banksters and department heads (like Holder and Napalitano, or cunts with no office like Elizabeth Warren) can sit and smirk and all but tell them to go fuck themselves.

The Fed can and will prop asset prices via monetization. ASSETS = COLLATERAL. What collateral is the primary variable? Mortgages. What industry did the Fed just promise would take precedence in its QEternal "stimulus"?

So long as there's collateral, even if it's price is only elevated due to monetary "stimulus", the wheels will turn at least for longer than Congress could ever make that happen. Which means it'll all be worse when it collapses, but Congress has ZERO power over any of that in the short term, which is all that's left, and certainly a hell of a lot less than the Fed.

Mon, 09/17/2012 - 06:43 | 2802335 Radical Marijuana
Radical Marijuana's picture

Yeah, I agree!

It is silly to talk about "Congress" unless one considers the power of the shadow government working covertly. There has been a long history of the principles and methods of organized crime talking control of "Congress." There has been plenty of time for the effects of bribery, intimidation and assassination to fully manifest ... I think it is plainly obvious that there has been a hostile take over of the USA by international banksters. Those who would not go along were marginalized, by funding their opponents, or by assassination, etc.. Those who agreed to be bribed, or were otherwise intimidated, had more "successful" poliitical careers. For quite a while, at least 95% of Congress, and always the Executive, (since Kennedy, or maybe Carter, if not many of them before too ... except for those who really resisted the banksters, especially like Jackson, who was miraculously able to survive assassination attempts enough to do significant things) and thus, through controlling the Executive, etc., at least 75% of the Judges too, were all picked to be who they are because they support the established systems, which were fundametnally corrupted, a priori, for as long as anyone now alive.  For a hundred years we have have had the situation that it became more and more extremely difficult to be a successful politician without the backing of the banksters.  After the banksters' friends were able to buy up enough control of the mass media, nobody else had a reasonable chance of changing things, outside of that established system. For a long time, almost all elected politicians have been legalizing more lies, inside the mainstream society built on top of an integrated set of massive legalized lies. (The seeds of the most crucial of those legalized lies go back far further in history, since those orignally became the foundations of the later edifice of the towering steep pyramid of legalized lies that exists NOW!)

I believe that is fairly obvious if one reads the constitution, and then recognizes that there are overwhelming breaches of it! However, all the checks and balances have broken down, since the entire system is now way too corrupt to impeach anyone for deliberately destroying the constitution. The rule of law in the USA is pretty well totally destroyed. The Federal government is almost totally controlled from behind the scenes by an organized crime, which can get away with the most outrageous crimes, and then, control the investigations afterwards to cover that up. Huge legalized lies have been maintained and enforced, decade after decade!!!

Of course, I have no practical solutions, since the banksters have private military companies on call, just like they have lawyers on retainer.  But nevertheless, it is a cruel joke, in the context of such a pathetic, fake "democracy," to assert that Congress, or the President, controls anything, when they are almost all puppets of the money masters. However, what will be happening more and more is that the destruction of the rule of law eventually becomes a vicious cycle that circles around and bites those who did that in the ass. They allow a monster to be created and fed, until it finally devours them too!!!
Sun, 09/16/2012 - 17:18 | 2801285 Schmuck Raker
Schmuck Raker's picture

" "the only thing the government can do is to spend the money that the private sector has saved and put that back into the income stream""



Sun, 09/16/2012 - 18:07 | 2801410 CH1
CH1's picture

The only thing the government can do is spend the money the private sector has saved


They're spending the money that our great, great grandchildren will theoretically save!

Sun, 09/16/2012 - 18:13 | 2801425 LawsofPhysics
LawsofPhysics's picture

There you go, that is the correct answer.  The private sector isn't doing jack shit except what every smart person with any debt is doing, deleveraging.

Sun, 09/16/2012 - 19:11 | 2801527 trebuchet
trebuchet's picture

That guy forgot to mention that as Japan Govt SPENT the money people saved their GOVT DEBT WENT THROUGH THE ROOF!!!!!  


Who gonna buy US debt when its 200% GDP? 




.................. idiot.........................................

Mon, 09/17/2012 - 01:28 | 2802354 boogerbently
boogerbently's picture




Sun, 09/16/2012 - 17:18 | 2801288 Dareconomics
Dareconomics's picture

The Fed will continue its present course of action until the entire system fails. If the music is playing, then Uncle Ben has to get up and dance:

Mon, 09/17/2012 - 06:07 | 2802507 JamesBond
JamesBond's picture

QE3 will result in downward pressure on the dollar against other currencies.  For a brief time, inflation will

be exported again and the USA will avoid paying the piper.



Sun, 09/16/2012 - 17:19 | 2801289 LMAOLORI
LMAOLORI's picture



"The only thing the government can do is spend the money the private sector has saved"

I can't believe he said that it boils down to Code for Raise your Taxes!  Bullshit they could cut spending.

Sun, 09/16/2012 - 17:20 | 2801295 Hype Alert
Hype Alert's picture

It amazes me that the FED has allowed themselves to be responsible for employment REGARDLESS of what policies the administration and congress put in place. Congress has for over 100 years been abusing the commerce clause and basically have killed commerce to the point of our current “lack of employment” situation. How is it the FED's responsibility to offset the administration's mess and exactly how bad does it have to get before the FED says “Hey, wait a minute, you (the administration) are killing the economy faster than the FED can print a cover up.

Sun, 09/16/2012 - 17:45 | 2801335 LMAOLORI
LMAOLORI's picture



In 1977 Congress amended the Fed. Reserve Act to include employment but I agree with you on the commerce clause and I agree the Fed should say it is not their responsibility to fix the administrations mess. I don't think the Fed is doing it for that reason employment since clearly QE has not worked so it's a you scratch my back and I'll scratch yours situation as I see it. The Fed and it's member banks/wall st. continue making money the administration continues spending.  Otherwise the Fed. wouldn't monetize the debt if they were truly non political.

Congress to Bernanke: Do less, not more

Sun, 09/16/2012 - 18:21 | 2801415 Hype Alert
Hype Alert's picture

The point is, it's a dysfunctional relationship and therefore should be suspect of some other purpose.  This should be a flashing blue/red light to everyone when the congress has given the FED a full employment mandate when congress and the administration are responsible for passing laws that control/limit commerce.  Congress and the administration have the power to absolutely STOP commerce (and therefore employment) and there is nothing the FED can do to counter that.  It's a nonsensical mandate when you actually think about it.  People need to wake up, get off their iDevice and start thinking for themselves.


edit: And it should raise even more eyebrows when the FED puts this mandate above their primary mandate, stable prices.  If you believe stable prices was a real mandate in the first place given their near 100 year history.

Mon, 09/17/2012 - 01:13 | 2801504 LMAOLORI
LMAOLORI's picture


We agree



Sun, 09/16/2012 - 17:21 | 2801296 ekm
ekm's picture

Do I have to repeat it again that the Fed is irrelevant?


I do not agree with Koo's solution, though. What I say is: LIFE HAS NO SOLUTIONS. THERE ARE ONLY TRADEOFFS, BUT NO SOLUTIONS.


Sun, 09/16/2012 - 17:22 | 2801302 Yen Cross
Yen Cross's picture

EKM I'm 100% in agreement!

Sun, 09/16/2012 - 17:24 | 2801306 ekm
ekm's picture

Thx a lot, sir.

Sun, 09/16/2012 - 17:30 | 2801317 Yen Cross
Yen Cross's picture

Thank you "Sir". You have a brilliant mind!

Sun, 09/16/2012 - 17:35 | 2801329 Schmuck Raker
Schmuck Raker's picture

I don't agree about the Fed being irrelevant. They can do MUCH more damage than they have already.

Sun, 09/16/2012 - 17:41 | 2801353 Yen Cross
Yen Cross's picture

Agree/ The context/pretext of the thread, was observation of " post facto" thoughts. You have fresh thoughts, and they are "highly welcomed"! :-)

Sun, 09/16/2012 - 18:55 | 2801498 ekm
ekm's picture

A couple of years ago Kyle Bass gave an interview to a wide audience at a Texas university.

He said that he had gone recently to Capitol Hill to speak with congressmen about how to solve the crisis.

All people who spoke with had one single answer: Don't ask us. Fed must fix it.

That made it for me. They have basically told the Fed: It's your fault 100%. You either fix this shit, or you're screwed.


Conclusion: Fed independence never existed. Congress and WH usually blame the Fed when the shit hits the fan, that's why everybody saying: INDEPENDENCE, INDEPENDENCE, INDEPENDENCE.................It's more like propaganda so the politicians could avoid blame.


Sun, 09/16/2012 - 18:59 | 2801507 ekm
ekm's picture

It was Nixon who closed the gold window, not the Fed. The ordered the Fed to paper it over.

It was Clinton and the Republican congress that approved the Community Reinvesment Act that initiated and legalized subprime mortgages, not the Fed. They ordered the Fed to paper it over.


Have you noticed that Fed members are usually ACADEMICS with no clue about the real economy? The reason is that academics can easily be coerced to do what told.


Do you know why Romney says he will remove Bernanke? Because he wants to elect one that will do all and always whatever Romney orders anytime he orders it.


Sun, 09/16/2012 - 20:33 | 2801753 HurricaneSeason
HurricaneSeason's picture

After Obama was elected and before he took office is when the banks got their $700 billion bailout and the Fed and taxpayer backstopped the mortgage backed securities regardless of how many trillions that would be. They told Obama(after they told Bush and congress) to not even go on tv and suggest debating or studying anything about such a huge sum of money or there would be 20% interest rates and martial law. If there will be a war or tax increase or dollar devaluation or any other major decision, it wont be Obama or Romney or congress making it.

Sun, 09/16/2012 - 17:22 | 2801300 stpioc
stpioc's picture

Richard Koo for Nobel prize, the guy has been spot on with Japan, now the US:

Sun, 09/16/2012 - 17:25 | 2801307 MoneyShaman
MoneyShaman's picture

Neanderthal economics. Oh wait, neaderthals were smarter...

Sun, 09/16/2012 - 19:13 | 2801532 stpioc
stpioc's picture

Huh, even Tyler Durden argues his diagnosis is "spot on" and name calling isn't a substitute for economic analysis, it's a rather primitive reaction (dare I say, neanderthaler like..)

Mon, 09/17/2012 - 05:30 | 2802484 Element
Element's picture


Just don't presume Tyler's agreement with the 'diagnosis' equates to agreement with the prescription toward a remedy.

All koo is saying is, you're tapped out, you gotta deal with it, "here's my prescription for that".

I don't see a remedy has emerged in Japan's case though, looks more financially shambolic than ever.

I'm much more interested in the Tyler etal. take on that part.

Last time I looked, being "tapped-out" required a budget, with way more ins than outs.

Is that what Koo proscribes?

In the wacky-world of derbanke the laws of phys... well, ... pretty much all law in fact ... is not what it used to be, Conservation Laws included.

Sun, 09/16/2012 - 17:26 | 2801310 GeorgeHayduke
GeorgeHayduke's picture

It's not the Fed, it's the Too-Big-To-Fail criminals and their financial Ponzi schemes which the US Government regulators, bureaucrats and elected officials ignored. That coupled with a willfully clueless and ignorant society who is too busy watching Keeping Up With The Kardashians to care about the criminals until it might inconvenience them who are the problem.

Add to that problem a decrease in cheap energy inputs due to decreasing outputs from what remains of the giant oilfields and we have a major, multifaceted problem. Plus, we still have people arguing about the left/right paradigm while looking backwards at antiquated social, political and economic ideologies trying to devise ways to go back to an endless growth system which is a freak of nature in itself. Everyone's looking for a fix, but this thing is just getting started. I'm guessing it won't be a good time for folks who are too stubborn or stupid to change and adapt.

Sun, 09/16/2012 - 17:30 | 2801318 LawsofPhysics
LawsofPhysics's picture

It is neither dipshit.  Welcome to the limits of our current energy technology, yet world population is still growing, something has got to give, hey America, the elites will see to it that it is your quality of life.


Now where the fuck are those fusion reactors I ordered?


Bloody sheep.

Sun, 09/16/2012 - 18:11 | 2801416 LawsofPhysics
LawsofPhysics's picture

"Popular mechanics?"  is your "credible source" LMFAO!!!


Seriously though, how many cities are they providing power for again?  Better yet, when will they drive my tractors?

Sun, 09/16/2012 - 18:24 | 2801442 Yen Cross
Yen Cross's picture

Are you "defending your post", or looking at "readibly available knowledge"? I like ya. I was expecting  {even better},

"Scientific Ideas"?

Sun, 09/16/2012 - 22:11 | 2802020 LawsofPhysics
LawsofPhysics's picture

Lots of ideas around, but some point it takes a shitload of capital, energy, and dedicated individuals to actually make something a reality. Popular mechanics had a lot of "moon base" articles in the 70's. Still waiting, hoping...

Sun, 09/16/2012 - 17:37 | 2801332 Ineverslice
Ineverslice's picture

Our goose is Kooked.

(Deirdre, you are such a sweety ;)

Sun, 09/16/2012 - 17:53 | 2801344 buzzsaw99
buzzsaw99's picture

simplistic private balance sheet diagnosis and the prescribed cure is worse than the depressionary disease. what happens when the public balance sheet is pregnant with the devil's spawn as well?

Sun, 09/16/2012 - 17:45 | 2801356 q99x2
q99x2's picture

I noticed Bernanke was limping. They must have added a gas pedal to his printer.

Balance Sheet Depression yes. But the rest is horseshit. Koo's ready to flee Japan with its proven government policies. The country is about to become a wasteland. So if he is saying to do what Japan has done until the economy recovers what the hell is he talking about? He's a psychopath. Arrest him. And, what relevance does Japan's economy over the last 15 years have to do with the US economy in the current economic climate? None, nein, nada, drech.

Sun, 09/16/2012 - 17:56 | 2801364 Waterfallsparkles
Waterfallsparkles's picture

Only option for me is to tighten the belt even more.  I have already cut out all non essentials.  But, now I will have to look at things like the cable bill even more closely.  Cut back on property insurance, either with higher deductables or coverage.

Use lots of sweaters and thick socks this winter to keep the thermostat at 62 degrees.

Pay off the rest of my bills to save interest.  Any savings will go to pay down the Mortgage.  Cannot get any money by having it in the Bank anyway.

Eat more rice and beans.  Cut out ground beef and cut down on all meat, including chicken and pork.

Maybe I will even think about renting a room in my house to cut expenses.

Buy absolutely no clothes or anything for the house.  I will just make due with what I have.

Well that is what Bernanke has created so we have to adapt.

Sun, 09/16/2012 - 18:48 | 2801490 MiltonFriedmans...
MiltonFriedmansNightmare's picture

Jamie Dimon is laughing at you; maybe sneering, as he drives off in his Bugatti.

Sun, 09/16/2012 - 19:21 | 2801544 Whoa Dammit
Whoa Dammit's picture

No. Life is meant to be enjoyed, not to be spent in misery & suffering so some other asshole can live in luxury. Its time for things to change, not for people to cower & acquiesce.

Mon, 09/17/2012 - 07:14 | 2802553 Waterfallsparkles
Waterfallsparkles's picture

Although, I have cut all of my expenses to the bone, that does not mean that I do not enjoy Life.  The beautiful things in Life are free.  Like beautiful sunny days, a walk in the woods, spending time with my Family.  Living without Debt gives one a sense of freedom.

Last Christmas we did not exchange gifts.  Just home made cookies, etc.  But we had a wealth of Joy being together and enjoying the true gift of our Family.  I did not miss all of the time at the Mall trying to find the perfect gift and none of us had the Credit Card hangover from buying meaningless gifts.

I am sure Jamie Diamond thinks he is happy spending money for a fancy car but he does not have the time to enjoy the things that I am free to enjoy without debt and living within my means.  Especially without all of the interest on his loans.

In a way Bernanke has forced us to go back to simpler times.  Times when people grew their own food, baked from scrach, only bought something that the really, really needed with Money saved and not on credit.  A time when people would have Mortgage burning parties, instead of a rolling refinance every few years so you never pay off your Mortgage.  A time when people spent time together doing simple things.   Like going fishing, a picnic, baking cookies together.  Instead of going to the Mall together.

Sun, 09/16/2012 - 17:47 | 2801366 AndrewJackson
AndrewJackson's picture

The federal reserve will continue to print and takeover of an ever smaller private bond market. Eventually, after the inflation beast has been ignited, they will come to a decision that will appear to the average joe to be between these two options: (1) Raise interest rates and stop QE to save the dollar and consequently kill the economy/jobs or (2) Continue QE and low interest rates in order to help jobs and the economy from rolling off a cliff at the cost of keeping inflation. This so called decision will be well stated and known throughout general financial professionals. And put in this perspective, they will continue inflating to apparently help jobs/economy. However,  the real calculus behind their decision will be this: If they stop QE and raise interest rates, the economy will implode and the government deficit will balloon from higher rates and less tax revenue from an already high deficit of 1-2+ trillion dollars. If this were to happen though, government rates (finally free to find their true free market value) would see these ever higher deficits and raise rates making the problem even worse. So in the end, we will either see the government spending and control collapse or see the general population robbed of their purchasing power. Given these two real choices, its quite easy to see why they will continue to door number 2 and continue hyperinflation. Now in order to control the populace while the hyperinflation goes on, they will need something to blame the prices on. When in our history has extremely high inflation been accepted as good and a worthy sacrafice? Why WAR of course. Thats right folks, we are headed to high inflation followed by war and hyperinflation. Prepare accordingly.

Sun, 09/16/2012 - 18:51 | 2801493 MiltonFriedmans...
MiltonFriedmansNightmare's picture

There is hope a Black Swan will appear and ruin their plan.

Sun, 09/16/2012 - 17:49 | 2801367 icanhasbailout
icanhasbailout's picture

"Control of the economy is with the US Congress" = "control of the economy is with lobbyists"


In other words, SSDD.

Sun, 09/16/2012 - 17:51 | 2801373 geno-econ
geno-econ's picture

Me thinks he is trying to say, without sayng it, that Congress has to increase taxes on those in private sector that still have savings/money, but it is okay to bailout banks with poor balance sheets but not individuals who are laden with debt.  Obviously, cutting spending by Congress in meaningful manner would cause continued recession and possible depression so go ahead and print money for now and somehow that will solve the problem for individuals. Also since low interest rates are not working their majic , no need for the Fed, except to print money by buying bonds to the tune of $40 billion a month.  Duh,  Am I missing something ? 

Sun, 09/16/2012 - 21:11 | 2801889 Anusocracy
Anusocracy's picture

He is saying: Save the system, not the individual.

It's alway been that way with government.

You don't think they have bomb shelters for the general public, do you?


Sun, 09/16/2012 - 17:55 | 2801374 reader2010
reader2010's picture

The US needs to build empty cities in swamps now.  Marc Faber says the right way to do it is to give every American household $10 million FEMA card.

Sun, 09/16/2012 - 18:16 | 2801388 Yen Cross
Yen Cross's picture

Unlike < china " swamp-land "Labor expensive"! Good post.

Sun, 09/16/2012 - 17:53 | 2801380 Bear
Bear's picture

Federal fiscal response (i.e Congress needs to spend more money) would be like throwing ethanol on the burning house

Sun, 09/16/2012 - 18:12 | 2801395 Yen Cross
Yen Cross's picture

Hey Bear? I like that "black back/ground" post you produce.  You are fantastic on wave( Williams Curve), charts. I trade shorter time frames, but deeply respect your accuracy on long term charts!

Sun, 09/16/2012 - 18:54 | 2801497 akak
akak's picture

As Peter Schiff cogently stated on CNBC in his verbal joust with that Fed bootlicker Ron Insane-a last week, "the economy needs more stimilus like an alcoholic needs another drink."

Sun, 09/16/2012 - 19:03 | 2801517 Yen Cross
Yen Cross's picture

Akak , why did you intervene? We both love  Mad Men .

Sun, 09/16/2012 - 19:17 | 2801540 akak
akak's picture

Is it time for adult beverages already?

Sun, 09/16/2012 - 19:25 | 2801549 Yen Cross
Yen Cross's picture

  Akak you perplex me? Every question, has a new answer.

 Perhaps the answer to your question, "lies with-IN"?

  i'M TESTING YOU "akak"

Sun, 09/16/2012 - 19:33 | 2801556 akak
akak's picture

Or, under the guise of testing me, are you perhaps in reality testing yourself?

Are we dealing here with congruence or convergence?

Sun, 09/16/2012 - 19:47 | 2801581 Yen Cross
Yen Cross's picture

Lets  do ' Fight Club' reservations later in the week?

Sun, 09/16/2012 - 20:33 | 2801757 akak
akak's picture

A table for four near the fireplace would be splendid.

Sun, 09/16/2012 - 18:06 | 2801386 THE DORK OF CORK
THE DORK OF CORK's picture

If the US spends real money on any old stuff it will suck in more energy and subtract energy from the rest of the world causing global chaos.

Heres how it should work.

Congress creates & gives real money to rail & tram companies so as to take 75% off all rail & bus tickets

The oil saved by not burning it on  Personal consumption is burned to make more rail & tram lines.

Repeat this process for 20 or more years.

Dump the is a vehicle that holds almost limitless externalties.

Sun, 09/16/2012 - 21:01 | 2801857 HurricaneSeason
HurricaneSeason's picture

Congress hasn't passed a budget in years.  No more government projects, haven't we been saved and nurtured enough? The most complicated project should be to build simple rectangular warehouses and fill them with lumber, steel, rare earth minerals, anything the rest of the world will send us while we have a strong reserve currency. They could do it from the Cayman accounts where the $150 billion a month in deficit spending and $150 billion a month in maturing bonds are supported. They just need to stockpile another $150 billion a month in real materials and resources for a rainy day.  The government will probably burn or scrap half of it instead of a monthly inventory, but reminants of it will still be in the country.

Sun, 09/16/2012 - 18:01 | 2801397 buzzsaw99
buzzsaw99's picture

we are not following japan into deflation, they are following us into structural trade deficit hell.

Sun, 09/16/2012 - 18:05 | 2801404 newengland
newengland's picture

$1800 gold this week is likely, and certainly before the November election.


Sun, 09/16/2012 - 18:11 | 2801418 Yen Cross
Yen Cross's picture

I'm thinking 2k before the 1st quarter end!

Sun, 09/16/2012 - 18:35 | 2801467 newengland
newengland's picture


We are more often right than wrong. The balance of money and values says so ;-)

Sun, 09/16/2012 - 18:43 | 2801477 Yen Cross
Yen Cross's picture

The "markets" have a tendency to overshoot! We are ,(humans) more often "Rational"!~

Sun, 09/16/2012 - 18:06 | 2801407 sbenard
sbenard's picture

I'm even more worried about the debt black hole! When inflation eventually hits, the Fed will be insolvent, and the US Treasury will be bankrupt, just trying to pay the interest necessary to quell inflation. There won't be enough tax revenue to even pay the interest, much less all the entitlements, military, etc. The "fiscal cliff" is nothing compared to what's coming in the next couple of years when we are swallowed by the debt black hole!

Sun, 09/16/2012 - 18:11 | 2801417 Landotfree
Landotfree's picture

The system with requires exponential growth to survive is doomed at some point.  

Humans have used an unsustainable equation, which mean rise, unable to rise then collapse... rinse and repeat.

Sun, 09/16/2012 - 18:12 | 2801420 Peter Pan
Peter Pan's picture

I disagree with Koo about the government filling in for spending that the private sector is avoiding due to deleveraging.

The private sector is deleveraging from activities and debt that in too many instances were excessive and unproductive. This may be painful but it's necessary.

The stupid government is now releveraging and in the process is also engaging in activities that are unproductive and excessive and thus undoing what has to be done.

The purpose? They are trying to return to the debt fulled, consumption fuelled paradigm that felt good but only while the debt spigot was wide open.

The result? More shit than the fan can take when people fully appreciate what is going on and start to rush for the exits.

Sun, 09/16/2012 - 18:35 | 2801454 MoneyShaman
MoneyShaman's picture

Mr. Koo doesn't know economics. He understands legends of economic mysticism. He says the savings the private sector has should be confiscated, and spent. He doesn't know the role of interest rates, & savings, and why the private sector deleverages in the first place. He is more like bureaucrat, clueless trying to say that private sector economizing is bad. Basically he is the opposite of what a economy is, he is anti-economy. People like these best called anti-economist.

Sun, 09/16/2012 - 21:29 | 2801933 Anusocracy
Anusocracy's picture

Anti-progress and anti-civilization, like all government minions.

Sun, 09/16/2012 - 18:20 | 2801437 Stuck on Zero
Stuck on Zero's picture

There is nothing the Fed or government can do.  Americans think they have $60 trillion in equity in their homes and investments but there is probably only $30 trillion in true value in these facilities.   A haircut is coming and there's not much that can be done about it.

Sun, 09/16/2012 - 18:25 | 2801446 Pacifico
Pacifico's picture

And now fifteen years later Japan faces a decade of war,  recession and ongoing traumatization (think Fukushima).

Where will the US be in 15 years?

Sun, 09/16/2012 - 18:37 | 2801471 Yen Cross
Yen Cross's picture

Think " Fukishima" ?  Are you 15?

Sun, 09/16/2012 - 18:39 | 2801472 bob_dabolina
bob_dabolina's picture

which (rightly or wrongly) places the US economy in the hands of the US Congress

Crazy to put the economy in the hands of people they elected right?

buh buh buh we can ALWAYS say....

Bush's fault.

Sun, 09/16/2012 - 18:45 | 2801486 Heroic Couplet
Heroic Couplet's picture

ooh, this is sorta like Greece. Greece is a problem for the Rothschilds and the bank cartel. The Fed crap is a problem for the Rothschilds as well. The US spends more on military than the rest of the world combined, so the US cannot possibly be in any danger. I think "Libya" has replaced "Greece" because the US camaign has a gigantic void. Someone said the only thing left of the Republican Party is the dumb, uneducated, Southern white male. We'll find out whether Rush can get Mitt into the White House. The wealthy have one vote. They can try to trick up the Diebold machines, but that's going to be risky with the corruption in place known as the Bush tax cuts creating US jobs.

Sun, 09/16/2012 - 18:48 | 2801488 bob_dabolina
bob_dabolina's picture

I would have a lot of respect for the person (people) who throw us off the fiscal cliff.

We need it.

Sun, 09/16/2012 - 18:59 | 2801508 EuroInhabitant
EuroInhabitant's picture

The new GEAB is out. Americans, you are DOOMED!

Epic quote:
"For these reasons, LEAP/E2020 maintains its June 2012 Red Alert and estimates that, by the end of October 2012, the global economy will be sucked into a black hole against a backdrop of world geopolitics heated white-hot. Suffice it to say that the coming weeks will, according to our team, carry the planet away in a hurricane of unprecedented crises and conflicts."

Sun, 09/16/2012 - 19:03 | 2801518 akak
akak's picture

Meet the new GEAB, same as the old GEAB.


PS: Dear European welfare-statists, in the end you are going to be equally screwed.

Sun, 09/16/2012 - 19:46 | 2801579 EuroInhabitant
EuroInhabitant's picture

Many Americans are at least as much welfare-statist as many Europeans.

Sun, 09/16/2012 - 20:07 | 2801626 knukles
knukles's picture

Oh yeah, well there are some of our welfare-statists who are at least as much as some of your welfare-statists who would out welfare-statist your welfare-statist in the drop of a redistributionist second. 
So there.

As if that has anything to do with who the fuck is screwed.

You're more than welcome to have all of our welfare-statists since you seem so proud of your welfare-statists and our welfare-statists seem to admire your welfare-statism so fucking much they're all yours, thank you.
And you have the French anyhow, so you're doubly screwed.

And no, we will not take the French off your hands for you, Statue of Liberty or no Statue of Liberty.

Sun, 09/16/2012 - 21:41 | 2801968 EuroInhabitant
EuroInhabitant's picture

Question on tv to a senior US voter: "Would you vote for Romney, knowing he wants to cut Medicare?" Answer: "No".

Of course Medicare is great for its receivers. But will it remain affordable?

Sun, 09/16/2012 - 20:42 | 2801511 THE DORK OF CORK
THE DORK OF CORK's picture

A classic 1950s Budd railcar pulls out of Unionstown.,_Pennsylvania,_Pennsylvania


Last chance saloon ?

"Due to a sharp increase in the volume of freight traffic on the "Sheepskin", passenger service will end with the close of our 2012 season.   So while you can; join us for a ride back into history. Experience the Laurel Highlands from a unique perspective. You’ll never see this view from the highway"

Why not save something worth saving ?,_Pennsylvania


These towns could link back into Greenberg again as its station has seen huge declines in passenger numbers....

Every time you consume oil ( using a car ?) you will have less ability to do work , this is currently not reflected in the monetary system.

Waste is growth withen this current monetary system........more cars  = more growth = more depletion , anything which seeks to  reduce the waste  inherent withen the system cannot operate effectivally given the huge credit subsidy for bank credit money which typically produces money credit for cars and shit.


"Amtrak's leader at the time, David L. Gunn, was polite but direct in response to congressional criticism. In a departure from his predecessors' promises to make Amtrak self-sufficient in the short term, Gunn argued that no form of passenger transportation in the United States is self-sufficient as the economy is currently structured.[46] Highways, airports, and air traffic control all require large government expenditures to build and operate, coming from the Highway Trust Fund and Aviation Trust Fund paid for by user fees, highway fuel and road taxes, and, in the case of the General Fund, by people who own cars and do not.[47]

Before a congressional hearing, Gunn answered a demand by leading Amtrak critic Arizona Senator John McCain to eliminate all operating subsidies by asking the Senator if he would also demand the same of the commuter airlines, upon which the citizens of Arizona are dependent. McCain, usually not at a loss for words when debating Amtrak funding, did not reply"

Sun, 09/16/2012 - 20:57 | 2801841 tom a taxpayer
tom a taxpayer's picture

Thanks for the links. All Aboard!

Sun, 09/16/2012 - 19:20 | 2801542 Yen Cross
Yen Cross's picture

 I told ya so! usd/s/t strength. I closed the gap.  The Asian markets, will slowly absorb $.

   See ya in London!

Sun, 09/16/2012 - 19:35 | 2801562 ekm
ekm's picture

For the big money:



They are asking themselves: Something must be deeply, deeply wrong, to go with open ended.

Since MFG collapsed, CME volume is 40% down, as per Janet Tavakoli's interview to Martenson; think about it: 40%

I am thinking at least one if not two of US based Primary Dealers ran out of money due to CDS related margin calls, same as MFG.


Sun, 09/16/2012 - 19:43 | 2801572 Yen Cross
Yen Cross's picture

  Fiat is still " negotiable"? /sarc

Sun, 09/16/2012 - 19:29 | 2801552 caimen garou
caimen garou's picture

US looking more like japan? ha,We made Japan the great country it is today!

Sun, 09/16/2012 - 19:30 | 2801553 ekm
ekm's picture


"Well, actually, the Japanese experience told us that when private sector is minimizing debt or deleveraging with very low interest rates, there's very little monetary policy can do."

"So the only thing the government can do is to spend the money that private sector has saved and put that back into the income stream."


My Question: Is the private sector deleveraging or is the private sector saving? Mr Koo said to opposing things in the same interview.


Sun, 09/16/2012 - 19:37 | 2801564 Yen Cross
Yen Cross's picture

 JAPAN IS HOSED, Ekm, Lexus, Infinity, and Acura were great ideas, that were horribly Mis- Managed!

Sun, 09/16/2012 - 19:48 | 2801584 caimen garou
caimen garou's picture

I deleveraged but I have trouble saving,I collect barbaric relics!

Mon, 09/17/2012 - 00:49 | 2802301 robertocarlos
robertocarlos's picture

Deleveraging and saving are the same thing. If you owe money and pay it off it is called deleveraging but it really is saving. And if you don't owe money then it's called saving. And if you buy gold and silver with that saving it's called ZH smart.

Sun, 09/16/2012 - 19:48 | 2801582 Hedgetard55
Hedgetard55's picture

Fuck Koo, that shit for brains retard, he is just another worker bee in the bankster hive, full of shit.

Sun, 09/16/2012 - 19:57 | 2801590 TWSceptic
TWSceptic's picture

Keynesian bullshit coming from this guy. Government must spend? What money? And how exactly does spending build a sustainable economy?


The fed relevant? Yes for Wall Street and their banker buddies very relevant. For the rest a disaster.


@Tyler: you quoted wrong, he said relevant, not irrelevant at the end.

Sun, 09/16/2012 - 21:35 | 2801856 THE DORK OF CORK
THE DORK OF CORK's picture

"In 2008 a bill was passed that would require Amtrak to study the area and consider returning service to the area, prompting some to believe that there is a great chance of service restoration.[29] Amtrak published a feasibility study in October 2009, which proposed restoring the North Coast Hiawatha to its 1979 route where possible with a daily schedule. Amtrak projected a yearly ridership of 359,800, some of whom would be drawn from the Empire Builder. Amtrak estimated that $1 billion in funds would be necessary to relaunch the North Coast Hiawatha, including over $300 million for new locomotives and rolling stock. It would take four to five years to reintroduce the service if a decision is made to move forward"

Given the huge control that private rail freight companies hold over the rail commons in the US the least Congress could do is massively subsidise the inter state sleeper service system.


Sun, 09/16/2012 - 21:24 | 2801924 gwar5
gwar5's picture

Congress's fault? But, who already owns Congress?


Fed is pumping money and congress is already running perennial Trillion $ deficits. Our money is already being stolen through debasement and being recycled.

I'm concerned that the finger pointing and running away from the upcoming disaster has begun in earnest. Noone is lining up to say they can pull it out of their ass.

Sun, 09/16/2012 - 21:51 | 2801960 THE DORK OF CORK
THE DORK OF CORK's picture

No - the FED is pumping Credit

The system needs a larger debt money base.

Its that or Greenbacks....which would kill the banks so is not likely to happen given they control most things.

The leverage must be taken out of the system

Everthing is hidden withen the numbers.

Sun, 09/16/2012 - 21:29 | 2801934 Stackers
Stackers's picture

Richard Koo translation: Hyper-depression or Hyper-inflation. Those are your choices. You need to do hyper-inflation

Sun, 09/16/2012 - 22:12 | 2802032 Barack Obama
Barack Obama's picture

Yeah, STUPID !

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