pipefit

 
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  • in reply to: Potential Consequences of a Greek Exit #3371
    pipefit
    Participant

    Hard to believe Greece leaves the Euro. Far more likely it is Germany. Once Greece exits, it is all over for the other PIIGS, Belgium, France, and maybe even The Netherlands.

    Not that there are any easy fixes, but ‘Austerity’ has been voted down. It’s really not even on the table any more.

    in reply to: Planet Earth – F.U.B.A.R. #3336
    pipefit
    Participant

    hircus said, “How about looking at gold as your base monetary unit? From that point of view, the cost of American goods and American labor is decreasing. You can buy more stuff with the same number of ounces. That’s textbook deflation.”

    Finally, someone gets it. Exactly, from the perspective of the holder of real money, we have massive deflation over the last 10 or 11 years, even with this recent severe correction.

    Here’s the deal. The headline federal deficit is $1.3 trillion. But that doesn’t include interest on the tens of trillions in unfunded liabilities, off balance sheet items, and any other funny business going on. John Williams (shadowstats) estimates the GAAP measured deficit is $5 to $7 trillion per YEAR!! Take the mid point, $6 trillion. That is 40% of GDP!!!!!

    The defaltionists will reply that the government will default on social security, medicare, federal govt. worker pensions, military pensions, VA benefits, etc., so whether they are keeping track of how much interest owed is an unnecessary exercise. They are probably right. But the aftermath of that default will be FUBAR, not deflation.

    in reply to: Planet Earth – F.U.B.A.R. #3331
    pipefit
    Participant

    TheTrivium4TW post=2942 wrote:

    Hyperinflation in the drachma could easily be deflation in dollar terms.

    When Argentina hyperinflated their currency, did that mean that an American with dollars lost purchasing power or gained purchasing power?

    It depends on one’s perspective. Think about it for a bit, I’m sure you’ll get it..

    So, you are predicting that, no matter the size of the budget deficit of the USA federal govt., the US dollar will INCREASE in purchasing power? In that case, why don’t they run a deficit of a million dollars per person (320 trillion) and give a million dollars to every person in the states?

    You are quite out of date with your prediction. We are on the wrong side of the social security and medicare ponzi schemes, and their fictitious ‘trust’ funds. Apparently, you trust in the ‘trust’ funds, lol.

    All the chatter about eliminating the Bush tax cuts, restoring the prior social security tax rate, etc. is just that. I don’t think it will happen. But let’s say that it does happen, as a talking point. It won’t shrink the size of the federal budget deficit. Has austerity worked in Spain? In Greece? You shrink your deficit with economic growth, not by forcibly creating an economic contraction.

    in reply to: Discovering the "End" in "Extend & Pretend" #3317
    pipefit
    Participant

    “The reason I did is that what you said austerity meant for you seemed quite different than the term’s accepted usage.”

    ‘Austerity’ is a good, average, ordinary, common word that is used occasionally by English language people. But in the context of the PIIGS’ survival, or failure to do so, it has taken on a new shade of meaning that cannot possibly be confused with the garden variety meaning.

    Let me sum it for you. The PIIGS version of ‘austerity’ goes like this, lol:You SHALL set your retirement age higher than that of your German benefactors, or you won’t have a retirement.’

    However, if you have been reading sites like TAE and Zero Hedge, surely you now by now that this is a moot point, and no amount of austerity, regardless of the meaning, will salvage the Western version of ‘retirement’. There isn’t going to be retirement for the bottom 95%.

    This is whole point of the self sufficiency articles. A few years (or months?) from now, there either won’t be any social security checks, or their purchasing power will be nil. Sure would be nice to have a huge garden, your own source of clean water, etc.

    in reply to: Planet Earth – F.U.B.A.R. #3298
    pipefit
    Participant

    Let’s assume, as a talking point (a strong talking point, lol) that you are dead on about China/Japan. At some point, presumably soon, they are going to have to call in their chips, which are held mainly in the form of US Treasury bonds. The alternative would be to fiddle while Tokyo/Shanghai burns.

    So I think this is the crux of the biscuit. How does this particular bubble get unwound? I know there is a quadrillion of OTC derivatives, but JP Morgan just lost a bundle fooling around with them, and not only are they still standing, they are still profitable. And someone else just put two billion in their back pocket. So I don’t think that is the bubble that does us in, but rather the biggie will be US Treasuries.

    Quite frankly, I’m having trouble even coming up with a bluff here. How on Earth does this bubble get unwound? I mean, China says, “we need half a trillion to buy up every soy bean in Brazil, and half your corn. Where do we exchange this script you gave us a while back?”

    What is Ben supposed to say? “Just dump them on the open market.” Or, “here’s the phone number of a buddy of mine in the Cayman Islands. He was just telling me the other day that he was in the market for a half trillion in treasuries, lol.”

    I just don’t see the dollar surviving this.

    in reply to: Discovering the "End" in "Extend & Pretend" #3296
    pipefit
    Participant

    YesMaybe post=2900 wrote: pipefit:

    I’ll assume you’re not a troll (even though the claim you can’t find anyone who wants to work is pretty suspect), and merely suggest that what you picture as austerity is just your own misconception. To remedy it, I offer here some examples of measures which fall under that term, and you can figure out for yourself which of them have been implemented or proposed and where:

    — Firing teachers and increasing class size.
    — Cutting funding to public universities.
    — Cutting pensions for people who have no other income.
    — Raising the retirement age when there are already too many people for the jobs available.
    — Decreasing the minimum wage.
    — Large increases in utility prices.
    — Cutting funding for health services.
    — Cutting unemployment benefits.
    — Increasing sales tax (which is generally regressive).
    — Freezing public sector salaries in the face of inflation.

    I said that I had sympathy for folks that want work, but can’t find it. But if a Greek garment maker can’t compete with a Chinese counterpart making a dollar of two per day, that is not ‘austerity’, at least in terms of what the Germans are asking of Greece. That is ‘globalization’ in play.

    You are trying to oversimplify the Greek problem, and that is why you are so off base. Yes, the Greeks are suffering, due to globalization, just like the USA. But the Germans aren’t focusing on that. In fact, the Germans can probably sympathize with Greek businessmen that are undercut by Chinese low wage workers. Rather, the Germans are focusing on the gravy train of PUBLIC sector bureaucratic workers that are sucking at the public teat (not teachers). And Greek millionaires that aren’t paying taxes.

    This is why Greece hasn’t left the Euro. Once they leave the Euro, Greece will descend into chaos as they rape their millionaires, or the latter attempt to escape the country, or there is some sort of civil war, with the wealthy protected by paid militias.

    Greece just had a historic election. Where is the talk of ‘tax the rich’ to pay for starving people that are out of work? They are hinting at leaving the euro, but they haven’t done so yet. That is what will set off ‘austerity’, over and above the punishment of globalization.

    in reply to: Discovering the "End" in "Extend & Pretend" #3276
    pipefit
    Participant

    TheTrivium4TW post=2882 wrote:
    If I’ve missed something here, do share the details of how wishing austerity will go away will actually make it go away.

    What austerity? Don’t get me wrong. I’m not an evil goon, and I have a tonne of sympathy for folks that want to work, but can’t find any. I not trying to play word games, but I wouldn’t call high unemployment ‘austerity’, in and of itself.

    When I think of ‘austerity’, I think of a worthless Greek government bureaucrat that does no work getting fired. Or a Greek millionaire paying just half the tax his American counterpart would pay. That hasn’t happened, yet. But it will when they go off the Euro.

    Massive austerity in the West is inevitable, regardless of what the handlers want. All the easy to produce oil has been produced. Interest rates have been cut to zero. Our factories have been exported to the low cost producer, China. We’re at the end of the line.
    The title to the article says it all.

    There’s no way out. People that don’t work, historically don’t eat. I’m not against food stamps, but it is not a good sign that 1/7 of the USA population receives them.

    in reply to: There Is Not Enough Money On Planet Earth #3250
    pipefit
    Participant

    ashvin post=2844 wrote: But that does not mean the oil trade is the ONLY function the debt-dollar serves, or the financial system in general. Imperialism and wealth extraction come in many forms – the oil trade just makes it really easy.

    True, Ash. The problem is that the world reserve dollar is being asked to do too many things. Since it is no longer tied to gold, the USA can (and does) run perpetual trade deficits. The cumulative total is so great that we can no longer afford the interest payments.

    As our debt is rolled over, our trading partners find themselves, increasingly, in a vendor financing scheme where they don’t even get much interest on the outstanding balance. This is part of their cost structure, and it is inflationary, from the perspective of the customer of goods. China (for example) receives revenue from sales, but also interest payments on the outstanding balance of vendor financed goods in the past. As this latter source of revenue shrinks, the other revenue stream, the wholesale price, must rise in order to maintain the same total revenue stream.

    in reply to: There Is Not Enough Money On Planet Earth #3230
    pipefit
    Participant

    Ash said–“However, not every issue that arises within the former is directly a function of the latter, as evidenced by the theories of people like Marx, Fisher, Keynes, Minsky, etc. which accurately describe the dynamics of the economic/financial system but do not directly rely on the functions of the energy/oil industry to do so.”

    How does one accurately describe how oil has traded at least a 200% premium to natural gas (and recently as much as 600%, and currently 450%) on a btu equivalent basis for three years?

    For the same reason we threw away $3 or $4 trillion in Iraq. They cannot and will not let oil trade in anything buy dollars, as Saddam threatened to do. The oil trade is all that is propping up the dollar. Without it, it is completely worthless.

    in reply to: There Is Not Enough Money On Planet Earth #3196
    pipefit
    Participant

    Steve said, ” I can’t foresee what is going to happen with currencies: it’s completely non-linear.”

    I’m in the inflation camp, but it really doesn’t matter what happens to currencies. When you reach a certain critical mass, you (plural) CANNOT store your wealth in the midst of a population bubble!!!!

    With the USA being 25% of the global economy, we are easily over the limit. The baby boom is the population bubble that has caused all the trouble. The boomers have been working hard, in high paying positions, with great education, and low unemployment, so where is their wealth?

    They cannot possibly sell their houses, stocks, bonds, or anything else without pushing the price against themselves. Incredibly, they haven’t even started selling in earnest, and already most of their asset classes have rolled over, except US Treasuries. They are just barely starting to draw social security and medicare benefits, and both programs are completely unfunded. And, what little wealth they do have is callable collateral for $15 trillion in federal debt and $100 trillion in unfunded liabilities. The boomers, collectively, are many tens of trillions underwater, as they barley start to enter retirement.

    Specific boomers might have cleverly stored some wealth, or a lot of it, but collectively they (we, lol) have negative wealth. No amount of currency, interest rate, or tax policy manipulation can create enough wealth to cover the perceived wealth that boomers THINK they have.

    Consider the case of a small, isolated island. For centuries they store their wealth by teaching their children not to over fish, to practice sustainable agriculture, to take care of old folks, to right size their families, based on available land/fishing rights, etc.

    Then, by whatever accident, they get a period of below normal childbirth, followed by a period of above normal childbirth. As the big generation moves into the workforce, things go swimmingly. Instead of two workers for each retiree, there are four. But then, eventually, there are way too many houses, fishing boats, tractors, etc. In an attempt to mitigate the mal investment, the government prints money for social programs and to bail out banks, which creates a form of Greenspan put, and it is risk-on all around. You know the rest of the story. It all starts with a population bubble.

    in reply to: There Is Not Enough Money On Planet Earth #3181
    pipefit
    Participant

    “But wait, it gets worse. He reminded the audience of the numerous “cliffs” the country faces at the end of 2012 when the George W. Bush tax cuts expire: More than $1.1 trillion will be cut from the budget, about half of which will come from defense because of the infamous “sequester” of last year; the payroll tax cut will expire, as will the “patch” in the alternate minimum tax. “If you add all those up,” he said, “it’s probably $7 trillion worth of economic events that are going to occur in December. And there’s been little to no planning for that.” [..]”

    In my opinion, none of those things will happen. The Bush tax cuts will be extended, perhaps with a little tweaking. The payroll tax cut will be continued in 2013. They will not cut defense spending. Instead, they will cut something else, in the year 2050, or there about, to get around it. I’m not sure about about alternate minimum tax.

    If deflation was the most likely outcome, we could just collect food stamps and watch our ‘take home pay’ increase in buying power. However, I think inflation is the more likely outcome. This is why I like the idea of producing my own food. Right now I have a backyard garden. But I’m working on some experimental farming methods, using rain barrels on a moderately large scale. Since I’m using only gravity flow, the energy requirements are very low, compared to other methods of farming.

    in reply to: Creating Community in the Modern World #3167
    pipefit
    Participant

    With the collapse of the housing bubble, the mobility of the American population has collapsed along with it. 11 million home owners are under water on their mortgage. I would estimate another 15 to 20 million don’t have enough equity to sell their homes and buy another. And no one can reasonably expect to sell their home quickly.

    Theoretically, a key element should be in place for your tribe formation to begin. Quite frankly, I’m skeptical, as I think that folks are retrenching within their ‘man caves’, rather than reaching out to like minded people. I have seen a few community gardens, however.

    You mentioned the word ‘gasoline’ I think. That is a good point. Most of the country doesn’t have good enough public transportation to support much tribal action. Most cities don’t have the population density, but far flung suburbs instead.

    in reply to: Spain Has Been Shut Out #3166
    pipefit
    Participant

    I have a friend from Spain that lives here in the USA that I see about every 4 months or so. Over the last several years I would ask him about Spain and Europe, and he seemed to think that things were bad, but not significantly worse than here. Following Spain’s victory in the 2010 World cup soccer tournament, he said that the Spanish people were deliriously happy.

    When I saw him at a party a few days ago, he didn’t wait for me to ask about Spain. He came right out and said that the situation there was horrible. Apparently, the economy has deteriorated significantly over the last 6 months.

    There is no reason they can’t purchase oil. All they need to do is produce something one of the oil exporters wishes to purchase. I don’t think subdivisions of empty houses would fall in that category, nor airports in small cities. Supposedly the soil and climate is almost perfect for growing oranges. Oranges for oil, yeah, that’s the ticket, lol.

    in reply to: RE: Intuition #3012
    pipefit
    Participant

    Hi Tri, you said-“www.keepandshare.com/doc/3324744/wmdebt-graph-3-79k?tr=77

    Nobody who understands that chart could ever take Ben Bernanke or anyone else at the Fed seriously. “

    Maybe all your convincing talk about the evil ones has made me paranoid, because I’m a bit reluctant to click on a link to a link to a link, lol. Maybe you’re one of ‘them’, and found out I voted for Ron Paul, lol? If this chart is critically important to your analysis, why not just post it directly, or at most post a link directly to it? If you’re one of ‘them’, could I have 2-bedroom suite with a terrace at Gitmo?

    in reply to: RE: Intuition #3011
    pipefit
    Participant

    RE said, “The system will collapse due to its own complexity and energy dependence.”

    I pretty much agree with that. The difficult thing is to predict the trajectory. Think about it. Here we are, five years into the collapse, and as far as I can tell, the online community is split almost 50-50 between hyper inflation and deflation trajectories.

    What does that tell you about the ‘worth’ of the information on the web. Take a guy like Ash. He is obviously very bright. But so is Jim Sinclair, James Turk, and 100 OTHER inflationists. Half of these very smart guys are dead wrong, and yet, they are all looking at the exact same information. The information can’t be very good. Or at least MOST of it is no good.

    in reply to: RE: Intuition #2992
    pipefit
    Participant

    Ben said, “pipefit. correct me if i’m wrong, but i expect you’ve been lugging around your condescenCheneysion towards castaneda for decades. you ever consider putting down the baggage?”

    Gawd, Ben, are you ever horrible at reading people. Castaneda is my favorite author. As usual, the original is so much better. This is one thing about the web that really bothers me. Folks copy sheeit, almost word for word, without any attribution.

    “peter being of the mind that its control function far outweighs its revolutionary potential.”
    Duh, by several orders of magnitude. By posting a few photos on facebook, they’ve got you completely figured out, down to the nitty gritty. Think how easy it is going to be for them to confiscate the peoples’ gold, should they decide to do so. I’m just hoping they decide to let the price run up a couple more thousand dollars per ounce before pulling the trigger.

    in reply to: RE: Intuition #2991
    pipefit
    Participant

    RE said, “There probably will come a time in the not too distant future where the Internet overall is not serving as a good control conduit and will be shut down or altered. There are also the energy issues involved in keeping it running which likely give it a limited lifespan here..”

    You don’t understand the purpose of the internet. It’s purpose is to gather information on us. All of us. It is not replaceable. Mighty cost effective too. It pays for itself with side uses: selling junk that helps to run up debt, lol.

    “Anyhow, your Catch-22 issue doesn’t really exist here..”
    I agree that the ‘self reliance’ theme here is entertaining and agreeable (to me), but it has been around for eons, and is no threat to the evil ones, whoever they are. I was speaking generally.

    If ‘they’ have an Achilles heel, you won’t read about it on the internet. That is the catch 22. Kind of like those big rock festivals of the late ’60s. If you remember it, you weren’t there, lol.

    Getting back the OP’s message on subliminal stuff, the anti-Romney stuff during the primary wasn’t really that subtle. You understood what was going on, I assume. That was part of Obama’s reelection campaign. Newt, Santorum, Cain, etc never were serious candidates. The hidden message is that he isn’t ‘one of us’.

    The people running the show, behind the scenes, absolutely adore Barrack, and he’s gonna get reelected. Period. Did you notice how, once Romney virtually clinched the Republican nomination, the media, including mainstream sites on the web, were given permission to mention Ron Paul’s name, lol?

    in reply to: RE: Intuition #2987
    pipefit
    Participant

    I think maybe you have spent too much time reading Carlos Casteneda books, lol.

    You do make some valid points. Specifically, I would ask, what do you think is the point of the masters providing us this internet? Certainly it is the medium whereby we willingly divulge our every hope, dream, desire, flaw, and danger to the ruling oligarchy.

    If you agree, then don’t you think the whole point of these ‘off mainstream’ web sites gets a bit catch 22ish awfully fast. Get it?

    If Anyone, such as Automatic Earth, wasn’t doing the bidding of the masters, or at least harmless, then the plug would pulled by the powers that be, correct?

    So we have this absurd juxtaposition whereby the web is filled with these ‘anti-establishment’ sites that can’t possibly be onto the real deal, or the monolithic state would have shut them down on whatever pretext, if the ‘evil state’ theory is true.

    If you start with the assertion that the ‘evil state/Rothchild/Bildeberger/yadaYada’ is true, and you are the one true voice that knows the score and what to do to defeat them, the last thing you want to do is post on the web.

    in reply to: "If Only" They Had Listened #2977
    pipefit
    Participant

    Steve in VA–I agree with much of your post. In particular, I have a huge garden, and I’m looking into one of those high mileage small motors to mount on my bicycle.

    However, I have to wonder about the following:
    “They [USA and China]can import fuel demand from countries without organic credit …”
    Aren’t petroleum imports falling, and petroleum refined product exports RISING? And of course, adjusted for inflation, natural gas at the wholesale level is basically free.

    Yes, if you go to the mall in a prosperous city, there is a lot of sales of Chinese/Guatemalan/Bangladeshi clothing. But not much is being created here. This is the logical outcome of globalization.

    Since wages tend to be sticky, they must therefore just go sideways until the rest of the world catches up to us. Bernanke is doing his best to speed up the process with his destruction of the currency through dilution and ZIRP.

    in reply to: "If Only" They Had Listened #2952
    pipefit
    Participant

    RE said, “No matter how this is played, the Spanish are screwed 6 ways from Sunday. However, on the good side here if/when they hard default they’ll likely take the entire European Banking system down with them and we can get on with the Big Show here already.”

    Yeah. If you’re stuck in quicksand, and are gonna die soon, you probably aren’t going to jab a sharp stick in your eye 4 or 5 times. You might blow your brains out, but there is no point in torturing yourself, and no will to do so.

    For some odd reason there is this irrational fear of leaving the Euro zone. Like there is a hope that someone is walking to our quicksand pit with the intention of pulling us out. As long as the Greeks and Spaniards have this delusion of Godot arriving to save them, they will grasp the prickly Euro vine with a death grip.

    Obviously, it is mathematically impossible for the Germans, Chinese, or Americans to bail out the PIIGS (plus Belgium and France, etc.).

    The main problem is one of demographics. All these old farts (and I’m getting sort of close myself), in EU and USA, have been promised so much that is not there. So the politically expedient path is to pretend the problem is small until it is apparent to all that it is unsolvable, and then and only then throw all the monopoly money back in the box and start over.

    Have you ever dealt with a teenager on anything? They deny a problem exists right up to the point of discovery. Why is Bernanke, Obama, Romney, Pelosi, etc. acting the same way, lol?

    in reply to: "If Only" They Had Listened #2916
    pipefit
    Participant

    “Austerity is not suicidal.”

    Spain has an unemployment rate of 25%. Now, you are proposing that they lay off thousands of government workers?

    I don’t think that that is a viable option, in Greece or Spain. It would probably be better to exit the Euro Zone, take a 50% currency devaluation, but I have to admit that I’m just guessing.

    Perhaps I’m wrong and austerity is the way to go. Seems like Iceland went the default route and they seem to be a lot better off than all the PIIGS that are going the austerity route. I suppose you could argue that Iceland is both small and isolated and therefore doesn’t count as an example.

    Maybe there are no good solutions at this point. But in that case, it doesn’t matter what they do, so there is no harm in trying something different.

    pipefit
    Participant

    I’m very interested in this topic, especially in terms of the use of water. At my suburban home I have a rain barrel that is filled from roof gutters. I then use the collected water to water a vegetable garden.

    Here are some of the energy savings from this process:
    1. less water pumped to my house by the utility.
    2. no energy used to purify my irrigation water, since I use straight rain water.
    3. the system at my house is entirely gravity feed-no energy use.
    4. upon harvesting (and eating) food from my garden, I’m saving trips to the store.
    5. I’m buying less food that would otherwise have to be transported an average of a couple of thousand miles.

    in reply to: Spain, Land of Magical Financial Realism #2688
    pipefit
    Participant

    If you follow futbol (soccer, if you’re an american), then you know that two of the top half dozen teams in the world are Real Madrid and Barcelona (Barca). They employ some of the wrold’s highest paid players, such as Christian Ronaldo and Lionel Messi.

    Watching their games on cable tv, you would think that Spain was in no trouble what so ever. How can there be trouble, since Spain is the reining World Cup champion, lol?

    These teams are worshiped all over Latin America. But in 3rd world countries, the kids are wearing knock-off jerseys that cost $5. In Spain or the USA, a Messi jersey fetches almost $100. It is my understanding that ticket prices for their games remain high, to support the extravagant payroll. How can a country with 23% unemployment fill these vast stadiums, week after week, year after year?

    The multiple layers of denial are typical of a crisis of this type that hasn’t come to a head. Give it a bit more time.

    in reply to: Downstream Demand Destruction for Oil #2637
    pipefit
    Participant

    The high price of crude oil is certainly a strong piece of evidence in favor of the hyper inflation case. But what makes it even more dramatic is the oil to natural gas ratio. You can see up to 3 years of this ratio plotted at stockcharts.com, with the symblo $wtic:$natgas.

    You can see that the ratio broke out of a lengthy sideways consolidation phase last November, and has not even paused since.

    The oil:ng ratio is a very good proxy for an inflation/deflation fear index. Here’s how to read the ratio. The first thing you need to know is that the btu equivalent for the two fuels, when sold 42 gallon barrels (oil) and 1000 cubic feet (gas) is a 7:1 ratio. In other words, one 42 gallon barrel has about the same number of btu’s as 7000 cu. ft. of natural gas.

    For the 20 years from 1980 to 2000, the ratio averaged 9:1. In other words, oil fetched about a 30% premium. At the current prices, $2 for ng and $103 for crude oil, the ratio is over 51:1. Incredibly, oil is fetching a 600% premium. This ratio is saying that a hyper inflationary blast off is imminent.

    If you are a TAE deflationist, ask yourself, ‘when were deflatkion fears the strongest in the last couple of decades?’ Everyone knows that, in late 2008 and early 2009. And at that time, the oil:ng ratio dropped all the way to 6:1, below par, signalling extreme deflation fear.

    So there you have it. Investors are o afraid of holding fiat currency, they are buying crude oil at a 600% premium to ng.

    in reply to: Downstream Demand Destruction for Oil #2623
    pipefit
    Participant

    RE-Your mention of Chinese ‘toast’ reminds me of a funny Gary Larson cartoon, in the ‘Far Side’ series.

    There is a parrot in a tree, and he is looking down at two safari hats sitting on a pile of quicksand in the middle of the jungle. He saying something like ‘Stanley, let go, you’re pulling me under’.

    So let’s walk through this. The Chinese get in a bind, if they are not already in one, and their people are starving and rioting. They try to sell some of their huge pool of US Treasury Bonds. Presumably, as they sell, bond prices fall and yields rise. What happens to the USA?

    Alternatively, Ben B. could buy up all of the what the Chinese sell. In that case, the market for treasuries vanishes, and the dollar is………….? (hint: your favorite word).

    Logically, you would think Ben B. would be trying to negotiate some sort of world power sharing agreement with the Chinese to avoid this problem. With our demand for oil dropping, you would think that would help matters, since there would one less point of contention.

    in reply to: Downstream Demand Destruction for Oil #2618
    pipefit
    Participant

    The assumption is that all oil fields are like Ghawar or other aging Saudi giants. You just drill a few holes and a million barrels a day of oil rush out of the ground. There have been almost no discoveries of that type in 40 years.

    Most new fields are smaller, in water, and more recently, deeper water, have more technical challenges, must deal with more regulatory compliance, or produce a lesser quality oil, such as the Canadian tar sands bitumen.

    The idea that the price of oil will fall below the costs of production, refining, and transportation is absurd. And those costs are skyrocketing. Yes, USA demand is dying. What else would you expect in the middle of a hyper inflationary depression.

    No matter how many refineries close, that will have very little effect on the cost to explore, drill, produce, and transport oil.

    As another poster mentioned, Asian demand is picking up the slack for Western demand destruction. But if, at some point, total worldwide demand for oil drops significantly, with a 15% contraction in USA GDP, then relatively high cost oil fields would be shut in, and the overall average cost to produce oil would drop. But by then, the dollar will have completely failed as a currency, and the dollar price of oil will be meaningless.

    in reply to: Spain WILL Need a Bailout Soon #2594
    pipefit
    Participant

    “but it is the THE CARTEL that will make the decisions – “

    They could have booted Greece out of the Euro Zone, and chose not to. Or did they really have a choice? I think not. I think a disorderly Greek B.K. would have exposed the cartel as themselves bankrupt.

    Look at it this way. The USA has a $15 trillion economy. Take out the government, and it is maybe a $8 trillion annual GDP, private sector. Then take out retail, finance, education, and how much wealth is actually produced. Just a wild guess, I’d say 2 or 3 trillion per year.

    And how many trillions in claims are there on that 2 or 3 trillion? There’s nothing here to take. Yeah, they can seize people’s houses, then do what? Rent them out? To whom?

    And of course Spain is even worse.

    The main thing the cartel has going for it is the military industrial complex, but the ability of the USA to fund that is diminishing quickly. They could start a nuclear war, I suppose, but in that case, you and me won’t have to worry much about earthly matters……………..

    in reply to: Spain WILL Need a Bailout Soon #2592
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    The Tri-“Someone claimed I was wrong when I claimed the debt holders would make the debtors pay, not themselves.”

    You are wrong. You’re focusing too narrowly. The main creditors are the Asians, and the main debtors are the developed nations of the West. How is china gonna make us pay?

    We can’t pay, so we won’t. The question is if we can default in a manner that doesn’t bring down the world’s economy by 30% or 40%. Quite frankly, I don’t know.

    Look what happened to Japan, when we inflated away 2/3 of our debt to her. The Japanese were in a bind and needed that money, and then, poof, it wasn’t there. Given the state of the Chinese banking system, it looks bad.

    At some point, China is going to demand geopolitical concessions for being cheated out of their currency reserves.

    in reply to: Spain WILL Need a Bailout Soon #2584
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    Spain will need a bailout, but they won’t take the same austerity package that Greece took, Greece style, lol. Spain’s unemployment is way too high already.

    Gonzalo Lira thinks Spain will be the first out of the Euro, but he’s usually wrong. My guess is that they get an ‘accommodation’, of some sort.

    They’ve already broken every treaty they have over there, so it won’t be that difficult to shovel several hundred billion Euros into the Spanish coffer on a Sunday night.

    in reply to: The Central Banks are Irrelevant #2575
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    Jack, “I thought if we knew how the dollar behaved during the last depresion thant that would mean the same trend might happen again …..”

    In the middle of the last depression, gold was officially revalued upward against the dollar from $20/oz to $35/oz in 1934, a 75% increase. Or looking at it from the vantage point of bagholders, er I mean dollar holders, each dollar went from buying 1/20 of an ounce of gold to 1/35 of an ounce, a 43% reduction in buying power, with respect to gold.

    Obviously, you can see a similar loss in buying power in this modern day depression, just spread out over a longer time period.

    in reply to: The Central Banks are Irrelevant #2558
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    The Tri-“Remember, a dollar isn’t a dollar… it is an interest bearing debt receipt… You have to pay up – AND YOU HAVE TO DO SO IN DOLLARS.”

    Wrong. Why do you think Japan is so bad off. They watched, helplessly, as the Yen strengthened from 300 per dollar to 100 per dollar during the late 80’s and early 90’s. The USA inflated away 2/3 of our debt to Japan.

    We’re gonna do the same to China, and Saudi Arabia, and every other moron holding dollars.

    You deflationists need to do a little simple addition and subtraction. The federal government owes $15 trillion, plus unfunded liabilities of over $60 trillion. that OVER $75 trillion that WILL be printed. AND they are running up way over $1 trillion in new debt every year. Actually, about 5 trillion every year, using GAAP accounting.

    Or, they could just fold up shop and start over with a new currency. Either way, the dollar goes to zero pretty fast.

    in reply to: The Central Banks are Irrelevant #2549
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    The Tri-“They own trillions in debt and trillions in cash.”

    They also own a quadrillion in OTC derivatives. What do they care which way it goes? They already own the whole shebang. And even if the masses get their homes for the price of a loaf of bread, in the coming hyperinflation, they will lose them in property taxes and other taxes and fees levied by the elite and their minions.

    They will NOT allow a deflationary bust, in my view. So what if inflation destroys their (and everybody else’s money). Unlike everybody else, they can just create much more for themselves out of thin air. If a deflationary bust was the preferred outcome, it would have happened in 2009.

    in reply to: Austerity is Alive and Well in America #2516
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    FrankRich-Thanks for the update. I knew most of that, but not all. I think the point is that the ‘pink slime’ is the sort of thing one would expect in hyper inflationary environment.

    If we were in a deflationary environment, you would hear stories about how companies are cutting prices or increasing quantity, or improving quality, at no extra cost, in order to win market share. None of that is going on. Just the opposite.

    in reply to: Austerity is Alive and Well in America #2513
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    The Tri-“this is off topic, but this is the last week (through April 15th) for people in CA to sign a petition to force Big Finance Capital Agra / Chemical to label genetically engineered pesticide “food””

    Actually, it is not entirely off topic. Surely you have been following the recent news item on ‘pink slime’ in ground beef. Many retailers are pulling the slime containing product out of their meat coolers, because of the out cry. This will force most others to follow.

    The ‘pink slime’ is a form of austerity. Without it, meat prices will be higher. They failed the public relations game. Whether it is safe to eat or not is in the same realm as your ‘Con Agra’ situation, I think.

    Inflation is so bad, at the wholesale level, the food marketers are having to pull out all the cost cutting stops to avoid giving consumers sticker shock. Whether it is ‘pink slime’ in beef, or deceptive package size, or other forms of filler and reduced quality, they will do what it takes to deceive the customer, or be pushed off the supermarket shelves by more marketing savvy competitors.

    in reply to: Austerity is Alive and Well in America #2509
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    ash–“You also seem to be assuming a deflationary process is not already underway, when it actually is. That’s what job losses, lower incomes, fewer benefits, lower profits/revenues in private/public sector, lower property valuations, lower investment/spending, etc. means – deflation. “

    I think most people agree that there are inflationary and deflationary forces at work, and the debate is about which ‘side’ will win the tug-of-war. Certainly, the destruction of pension wealth and jobs is one of the deflationary forces.

    Let’s think this through. As a person’s state or local (or private) pension (or employment) gets destroyed or reduced, that will result is a loss of purchasing power. It will also push that person closer to food stamp eligibility. Food stamps are about as close to ‘money’ as anything out there. Given the strength of the farm state lobby, working in concert with advocates for the poor, this is one program that will NOT be cut, but rather expanded.

    This process of state/local/private pension destruction will make millions even MORE dependent on social security, medicare, military pensions, VA benefits, federal govt. worker pensions, etc. This increased dependency will make even HARDER to reduce these programs. And since these programs will be funded almost entirely with ‘out of thin air’ money, the result will be hyper inflation.

    As to your statement that we are already in a ‘deflation’, then why are consumer and producer prices galloping higher? House prices are down, and hundreds of other things are higher. You go to shadowstats and you can see an honest summary of where the composite is going. Maybe, at some point, the deflationary forces will over take the inflationary ones, but they haven’t done so yet.

    in reply to: Austerity is Alive and Well in America #2495
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    The idea that state and local government budget problems will be a big driver in a deflationary depression is misguided. Look at it this way. All state and local govt. pension plans COMBINED, are estimated to be UNDERfunded by somewhere between $1 trillion and $3 trillion. Since these entities can’t print or coin money, there is a max $3 trillion of deflationary forces, as perceived pension wealth is destroyed.

    On the other hand, the federal govt. has over $60 trillion in unfunded liabilities, and they CAN print money. Hello hyper inflation.

    in reply to: Learning to Think in Multiple Scales #2476
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    Eugene–“it is obvious to me that the vast majority of commenters and bloggers are living a standard of living far beyond the masses.”

    Probably accurate. Another thing that really stands out on these monetary/financial/gold/inflation-deflation boards is that you almost never see any mention of God, religion, or spirituality. Do get me wrong, I’m not a bible thumper, but I do belong to a spiritual program.

    You wonder why most of these people posting are so pessimistic, and then it becomes clear: they have no God or higher power to turn to in times of stress. Will God save us? Beats me, but it seems like a slam dunk that no human force will avert the looming train wreck.

    The human race has survived many prior hyper inflations, so why can’t we survive the current one? Those that have no spirituality, and therefore focus strictly on economic losses, will be miserable, but some of us will be o.k. with it.

    in reply to: Learning to Think in Multiple Scales #2348
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    “Perhaps with such a multi-scale perspective, the Eurozone Mafia would be less prone to confront any and all issues with more bank bailouts, more austerity for the masses,………..”

    What would have them do? Now I’m a firm believer in the old adage ‘if you are in a failed strategy, do something different, even if you think it is wrong, because you KNOW what you currently are doing is wrong.’ But in their case, what?

    I’m trying to take your advice and put myself in their shoes. They get GM worker (pre-B.K.) benefits, like a couple of months off at full pay, but they don’t want austerity? They must not think they are in B.K. So they want their cake and the ability to eat it too. Until Newtonian physics are rendered null and void, that is impossible.

    Regarding your other comment, about things being reversible, I wonder if you think that applies to Chinese (or Viet Nam , Bangladesh, etc.) made garments/electronics sold in EU/USA. I’m sure that is reversible, once the dollar loses its World Reserve Currency status. So I think that is the first order of business, trying to figure out how to gracefully reverse that. The UK did it 80 years ago, why can’t we? Just the small matter of giving up an empire, lol.

    in reply to: Thoughts on the Suicide in Greece #2344
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    Most modern day conspiracy theories fall apart fairly quickly, with only minimal prodding. The best example is the 911 conspiracy theory that states that it went down differently than the government’s assertion that Bin Laden acted alone. In other words, according to the theory, they are lying about Bin Laden. But if our government is lying about Bin Laden, why didn’t Bin Laden set the record straight? Mighty convenient that he kept silent all those years.

    Then there all the Bildeberger/Rockfeller theories about world dominance. The problem with most of these theories is that they have had all this power for years. If they want to do something, all they have to do is do it. They don’t need to wait for an excuse to stamp out 5 billion lives, or any other evil outcome. They could do it tomorrow, if they wanted to. What are they waiting for?

    in reply to: Thoughts on the Suicide in Greece #2321
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    Hard to blame the dude for not wanting to eat out of garbage cans. But that is what is going to happen to many of them, whether they pull out of Euro today or two years from now. You cannot make stuffed grape leaves out of rolled up fiat notes and hyperbole.

    The sooner the Greeks (and the rest of the PIIGS) ditch the Euro, the sooner they can find the bottom and start digging their way out. Incredibly, the majority of the Greek people still think they are better off in the Euro Zone!!!

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