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  • in reply to: What Ben Bernanke Is Really Saying #7998
    rapier
    Participant

    In 07 as some Mortgage Backed Securities started to blow up I imagined that every night Bernake would go home and curl up in a fetal position. I am sure he didn’t of course. Fully confidence in the Feds ability to instill confidence with liquidity, from which all good things economic growth wise would follow. Some are now suggesting he has lost faith but I am not so sure.

    We can be sure his replacement will have the faith, otherwise they won’t take the job. Those possessing the requisite faith for the most part have to be considered dumb. The rest, Larry Summers, are so full of ego and hubris nothing will alter their faith.

    in reply to: Money. Religion. Power. #7972
    rapier
    Participant

    rapier post=7702 wrote: American itself is an integral part of American Christianity. It is hardly unique that a nation sees itself in some way as playing a special role in let’s call it God’s plan. The very first kings did it, all kings in all places have always held that their station and authority were conferred by God. The Lutheran church as Nazism arose in Germany found common ground with them in advancing the power of The Nation.

    The civic religion that is America was always closely entwined with it’s dominant branches of Protestantism to some degree. The melding of religion and The Nation have only accelerated the last 40 years to the benefit of the Republican party and ministers and preachers some of who have gained great wealth and power from the marriage. Even as religion faded away in European socialites and politics.

    All elites here, even corporate, where nary an executive committee member in any of its largest corporations is religious to any degree much less a Christian fundamentalist, are perfectly happy to claim belief in America as a secular religion. Always claiming what’s good for them is good for The Nation.

    Oddly the most religious citizens buy it. The now endless reproachmont between nativist, fundamentalist Christians and even the financiers of Wall Street is a sharp break from the past. In the 1890’s populism and fundamentalism met in the person of William Jennings Bryan who ran for President twice essentially as a Socialist, and came semi close to winning once and he and his followers hated Wall Street. Times have change. The denizens of the lavish parties now going on in the Hampton’s where wrenched excess abounds find common cause with the Tea Party and the Southern Baptist Convention. Both willing and now eager to insure a growing underclass and a desire to control if not crush them. The leaders of the opposition joining in semi reluctantly, seemingly, but join in they do.

    in reply to: Five Stonking Crashes #7757
    rapier
    Participant

    The ‘liberal’ school of denial is matched by the ‘conservative’ school. I am speaking in US political terms.

    For our purposes conservative means the populist or pseudo populist Tea Party conservatives. The conservative school is only partly economic however so it gets very muddled.

    At heart conservatives want a proper, conservative, social order where people know their place. It is more than seeping into conservative minds, its how a healthy flow, that austerity means a large and growing underclass. What is only seeping in is the knowledge that a large and growing underclass precludes growth. They are getting OK with that however because they think a large underclass living in fear of losing everything will be more conservative. Will keep their heads down, know their place.

    That is why there is no direct conservative argument with Krugman. Krugman has a plan for growth. We all agree here it won’t work but that’s his story.

    You never hear a conservative argument for growth that addresses policy, besides cutting taxes of course, which is a non sequitur. Obviously 35 years of tax cutting has not caused growth but no matter. That’s their story and they are sticking to it. Their advantage is that there is no alternative to austerity. So they are, if only by coincidence, more in tune with reality, on this score.

    Their problem is non growth is a political loser. Well that’s the problem for both sides. In my history of recent US politics there was a brief moment in the late 80’s where Carter gently suggested limits. The American people crushed any talk of limits. Saudi Arabia pumped a hundred years worth of oil in 20 years in the denial of limits and everyone else embraced debt as the substitute for cheap oil.

    in reply to: Japan : It's Not A Bet If You Can't Win #7636
    rapier
    Participant

    Nothing has changed until interest rates rise. When they do rise everything will change. The bond bull is 31 years old. A bond bull market is the ultimate tailwind for the financial world since it means the value of all existing paper is rising so it can be sold at a profit or marked to market as a gain.

    The belief that central banks control interest rates is nearly universal. They effect them for sure but that isn’t the same as control. The loss of belief in their control would be the largest and worst loss of faith possible for the system.

    One can see the last few weeks a hint that the long long overdue turn in Treasuries may be upon us. I am not saying the turn is here but it could be and identifying that trend is the key to ID’ing the whole big enchilada.

    in reply to: What Do We Want To Grow Into? #7482
    rapier
    Participant

    Some kind of historical and political context is needed to find what ‘we’ want to grow into. Pepe Escobar, perhaps your familiar, supplies some, with sources.

    https://atimes.com/atimes/World/WOR-01-260413.html

    in reply to: Dutch Delusion: Europe's Core, She Rots Some More #7401
    rapier
    Participant

    I am sorry I do not want to hijack this thread. Still what the Fed does in its Open Market Operations, ie. money printing, has to be understood to understand a crucial part of Nicole’s points. The point about debt.

    We all, or most of us hear that money today is debt, and we shake our heads in agreement, but it doesn’t sink in. The part that doesn’t connect in peoples minds is the existence of the balance sheet or what that represents.

    “Just double entry bookkeeping” isn’t just a game, a trick, a ruse. It is the entire basis or our economic and now monetary system. If the books don’t balance, ie Equity=Assets-Liabilities then an error, or fraud, has occurred.

    Now there is no room here to describe the stupendous fraud involved in the entire system. Oddly, to its credit, the Fed keeps honest books. It’s assets are the SOMA. Its portfolio of Treasury securities. When the Fed credits the sellers bank account with dollars for the assets it buys those assets are understood to be the ‘backing’ for the money. Get it. They are not printing money for nothing. The give out the money in return for a real asset. Thus their books balance.

    Now the amounts or now the way it conducts its business through the giant banks is debased but the accounting is correct. The money created is ‘backed’ by its assets.

    It is that the money flows mainline into the financial system to be hypothocated and rehpothocated and sliced and diced thus claim upon claim is made on a tiny sliver of assets. Thus the books don’t really balance, unless everyone pretends the loan underlying the loan underlying the loan is money good. 100% sure to be repaid. A pretense that can be maintained as long as a bid for the paper can be found. Thus the worlds central banks are ‘printing’ furiously in order to supply the liquidity to maintain a bid under the markets. What they failed to do with MBS in 07-08 leading to a momentary collapse, freeze up, of the entire system. Why. Because the assets were suddenly understood to be no good. What was on the books as $1 went to 50 cents and then, functionally to zero when no buyers could be found.

    I hope this is getting through. The debt paper when it trades freely at near full price has the quality of money. It is fungible. Liquid. Money good. It is a store of value.

    Oddly it is the Modern Monetary Theory boys who are calling for the ultimate debasement of the money. For they say forget about SOMA. Forget about assets backing the money. They say money has only an exchange function. It doesn’t need a store of value function. They say let the Fed burn its Treasury bonds so the government doesn’t have to repay. Perhaps but I doubt it. Somehow, some way, somewhere, a consensus will always develop about what the basic store of value, of wealth is. If it isn’t money what might it be?

    Sorry I run on and probably made a few mistakes. Anyway it behooves everyone to think these thing through over and over and over again until you understand, you really get, that debt is money. If debt defaults then money, liquidity, disappears.

    in reply to: Dutch Delusion: Europe's Core, She Rots Some More #7399
    rapier
    Participant

    I am a bit confused about this boards structure. I am answering in regard to Fed operations.

    The confusion about how the Fed conducts it business is perhaps understandable, to a point.

    Firstly the Fed buys existing Treasury paper, and now MBS, and in the distant past other forms of interbank notes, and pays for them not with money printed as paper bills but by allowing the creation of a bookkeeping entry, a deposit, in the sellers account. So it is not printing money but rather creating bank deposits.. These transactions are called Open Market Operations.

    The Feds balance sheet, ie it’s portfolio of securities it buys, is called the System Open Market Account, SOMA. The SOMA is the foundation of what is called the Base Money Supply. When the Fed buys securities it is adding money or that tricky but apt word liquidity to the financial system.

    The Fed only deals with its Primary Dealers who are the worlds banking giants and near giants, and even the occasional criminal operation like the now dead Countrywide. Since the sellers are the banking giants or the customers of the giants for who the banks act as agent the deposits must instantly or soon be reinvested it in other financial securities. (They are not buying from Joe Sixpack who goes out and buys a car and case of beer thus boosting the economy) Inevitably stocks are part of this mix and the Feds various gigantic QE operations are directly causal in the stock market run up since March 09 as a result.

    When the Fed sells its held securities it is withdrawing money, liquidity, from the system. (a thing the system cannot abide now, details below)

    The Fed traditionally purchased only short term securities. It rarely sold them back to market. Starting in 08 the Fed began huge purchases of longer term Treasury paper, and various other total crap paper, and MBS. Before that a $5 billion Open Market Operation was big and its total portfolio of paper, the SOMA, was around $800 billion, after being in operation since 1913. It is now around $2.6 trillion. In 2010 the Fed pretended that it was going to start to unwind its holdings, ie, sell and shrink its porfolio, ie reduce the SOMA. Why it pretended it was going to do that I cannot say. At any rate by mid 10 the markets were under stress so instead of selling they began more QE.

    There is some odd confusion about, well I don’t know how to characterize this

    “If the MBS matures, though, the holders deserve a payment according to its terms. Up until now, the FED has created something out of nothing (but close to cash) in exchange for some collateral, however bad. I have no idea, but maybe the FED can sell some U.S. Treasuries (UST) to pay the MBS holders. After all, the FED was (and still may be) selling UST last year during “Operation Twist.”

    The Fed in this case is the MBS holder. Just as it is the holder of the Treasury paper it buys. As the holder of the securities it is the one who receives the interest payments and principal repayments. As bonds, and notes, are payed off in increments the money is remitted by the Fed to the Treasury. So yes it is a circle (jerk) of sorts, ie the Treasury pays the interest due on the Treasury paper held by the Fed. The Fed the turns around and give it back to the Treasury.

    In the case of MBS, QEIII or QE2.5, is dedicate to reinvesting the interest and principal payments of MBS to the purchase of new MBS, thus not allowing the SOMA to shrink.

    As the Fed is buying $80 billion a month of new Treasury paper under QE4 this dwarfs the amount of maturing Treasury paper in the SOMA so SOMA continues to grow. The Fed will never never ever be able to shrink the SOMA now. Well so say I and others. It may never in any forseeable future be able to let it even stay level.

    I am sure this all will more confuse than enlighten.

    in reply to: The Only Way Forward For Europe Is Splittsville #7360
    rapier
    Participant

    In the 1890’s the US was on a solidly metals based monetary system. At the same time wealth distribution reached its most extreme point. The so called Robber Barrons, the owners of the first great industrial enterprises, and some others, the top 10% held 90% of all assets. Now under a monetary system based upon the most ephemeral money ever conceived wealth distribution is again reaching the vast imbalance, Banana Republic level of the 1890’s. One has to look beyond the monetary system to account for extreme wealth inequality.

    Any system is doomed to be captured by the few for their own benefit. My Catholic upbringing, my faith lost but the moral and ethical foundational teachings intact, says that no system is perfect or perfectible for human are imperfect. The problem is, as is always is in any system, that we are told we must do this and that to serve the system. A system that has evolved which serves the interests of the fewest so serving it has it exactly backwards. Any system must serve the maximum number of people.

    It is not a feature of pure fiat money to serve the interests of the few just as the gold system was not designed to serve them. In either case the system has been captured to serve them and so it will ever be with any system. If justice and fairness demand the system be torn down to serve the many it will not be the design of the system which would produce that result but rather it would be the wresting of power from the few by a change.

    in reply to: Bank Run in Cyprus; Who's Next? #7194
    rapier
    Participant

    Well it seems they chickened out and the deal won’t go down. At first I thought they did it out of a belief in their strength. Then I started to think they did it because of frustration and exhaustion. Unable to think of a real solution, because there isn’t one, and sick of pretending and just wanting to go home. It looks like the second and now they look weaker. Still they have a knack for winning even when they lose. In this case it does bring Russia into the mix and so perhaps a new source of some money to throw at the banks.

    in reply to: The Cyprus Deal is Already Under Threat (Of Course) #7163
    rapier
    Participant

    Reason? How about

    “A last-resort desperation move, born of an unholy combination of procrastination, blackmail, and sleep-deprived gamesmanship”

    From some blogger whose name I don’t know and can’t link to. In other words not part of some grand strategy, just the opposite.

    in reply to: Bank Run in Cyprus; Who's Next? #7144
    rapier
    Participant

    6.75% isn’t so bad in the big scheme of things. I sort of think one way or another, currency and/or flation, in or de, are set to give most everyone a 50% haircut but I can’t define a timeline. If I were a big shot Global Strategic Thinker my plan would be for a haircut like that in steps. Over a decade would be good. Little steps people and the system can tolerate and adjust to. It’s the big leaps that can’t be tolerated. What could be a smaller step than Cyprus?

    in reply to: What's More Important To You, Italy or the Dow? #7101
    rapier
    Participant

    On the subject of US stocks; no matter what the question is among the asset holding class world wide, the best answer is USA. I didn’t say the final answer but the best under unsettled conditions. In all thing financial the US is the house and everyone is playing US chips, the dollar. It still has the vast oceans to insulate it from the rabble. It has a government, a legal system and a central bank that are finely attuned to the needs of asset holders. With the full intent of providing them and their assets with safe haven.

    Every time Europe wobbles money flows to the US. I have not seen it documented but I would be shocked if quite a bit of the money leaking out of China is finding a home in the US. Drug and organized crime money loves the US asset markets especially high end real estate which is in the throws of a boom. A fact which in itself confirms my points I think.

    For all I know the DOW could lose 50% but if it does you can count on it that other place will lose a lot more and there won’t be any rabble here storming the gated communities and high rises. If the 1% lose half of their marked to market wealth most everyone else will lose more and it is really relative wealth and power which is the object.

    in reply to: Time To Stop Monsanto And The US Supreme Court #7017
    rapier
    Participant

    The market and profit is the highest and purest organizing principal and the law is there to serve it. At least that is the view of most of our elites. It’s ‘conservatism’ now stripped down to the level of absurd. David Epstein a professor and Federalist Society major domo has said it is the duty of CEO’s to break the law to enhance profits. Now the government agrees and refuses to charge them with crimes or post facto absolves the or otherwise eliminates the crime itself from the books or in this case codifies a principal that lacks all principals, save profit, for the few.

    This case was allowed to stumble all the way up to the Supreme Court so the court can put its stamp of approval on corporate ownership of life.

    The law is obviously a fruitless method of fighting whatever you want to call this historic turn of events. Only nature of some other historic turn of events will render Monsanto and its seed meaningless.

    in reply to: Time To Stop Monsanto And The US Supreme Court #7010
    rapier
    Participant

    This court always finds for corporations against individual citizens. It also always finds for the government vs individual citizens. It usually finds for corporations vs the government.

    Or stated another way it virtually always finds for the largest institutional interest unless that be government in which case it finds for the profit making institution or for their interests . Chief Justice Roberts in not a conservative ideologue of the current fashion but rather is all in with institutions, particularly profit seeking ones.

    There is zero chance he or Alito will find for Bowman and most likely neither will the rest of the conservative block. The chances the rest will find for Monsanto are fairly good as well. Each will make arguments, which they probably believe, that are based upon law or precedent but actually they will decide based upon deference to institutional power and profit.

    in reply to: Deflation Arrives In The Eurozone #6948
    rapier
    Participant

    I should add as an addendum to the below post #6658 this blog post from 10 years ago about American conservatism. Don’t get me wrong I have no partisan purpose. Not along accepted American lines at any rate.

    Dead Right by John Holbo

    “The thing that makes capitalism good, apparently, is not that it generates wealth more efficiently than other known economic engines. No, the thing that makes capitalism good is that, by forcing people to live precarious lives, it causes them to live in fear of losing everything and therefore to adopt – as fearful people will – a cowed and subservient posture: in a word, they behave ‘conservatively’. Of course, crouching to protect themselves and their loved ones from the eternal lash of risk precisely won’t preserve these workers from risk. But the point isn’t to induce a society-wide conformist crouch by way of making the workers safe and happy. The point is to induce a society-wide conformist crouch. Period. A solid foundaton is hereby laid for a desirable social order.”

    https://examinedlife.typepad.com/johnbelle/2003/11/dead_right.html

    in reply to: Deflation Arrives In The Eurozone #6947
    rapier
    Participant

    Deflation arrives on little cats feet, silently in other words. Until proven otherwise I will continue to believe in Nicole’s definition of deflation which includes the a decline in the amount of systematic credit.

    It has occurred to me that deflation is evidencing itself not in the decline of prices but the decline of the number of people participating in the economy or participating less, or to put it simply becoming poorer. This is the sort of deflation which the system can exist with. Truth be told it is the deflation the Anglo speaking political elites embrace. They want a growing underclass in the belief that this will lead the underclass to be more ‘conservative’. Of course there would come a point where either the deflated class becomes too large for corporations to garner profits, ie. Walmart, or where the underclass revolts. Well such is an impossibility in America. In America the losers hide away by choice or are hidden away by force. As for the EU in this regard I have no clue. I would add Mitt Romeny put his finger on the accepted number for the underclass, 47%. We will see.

    in reply to: France Is Dead Broke, But At Least Its GDP Came In Positive #6867
    rapier
    Participant

    The US GDP number was bogus. Now far be it from me to defend GDP as a measure of well being but the number is sure to be revised upwards. Tax receipts have been quite strong, job growth decent or as decent an can be expected. These are not the signs of faltering GDP.

    By accident or design the suddenly poor numbers, GDP and unemployment, give perfect cover for the Fed to continue printing and have knocked a little starch out of the risk on rallies in most market. Perfect. If one were managing expectations and the market one could not possibly have done a better job as the sudden near universal bullishness of just last week along with buoyant oil prices were on the verge bringing voices calling for halt to QE4 to the front. So some bad news was needed and presto, it came. Lucky? Who knows and doesn’t matter.

    in reply to: How To Spot A Zombie #6842
    rapier
    Participant

    The current generation does not believe debt exists. Well let me put it another way. They don’t believe balance sheets exist. Particularly bank balance sheets. They could care less what the market value of the debt on the balance sheet is. It doesn’t matter to them. What matters is the money is created and what that money does is real. What is on a balance sheet of a bank or the Feds is just an abstraction. This is the root of MMT and MMT is ascendant .

    If balance sheets don’t matter to citizens (never did in America), accountants, bankers, the central bank, the wealthy and financial elite and finally the government then how is it going to matter in the real world. I mean MMT has a point in that balance sheets are an abstraction and so is money. Money has always been an abstraction. The thing is the abstraction has simply become ever more profound. Everyone knows money is backed by nothing and they have no problem with that.

    I cannot imagine what economic event or events occurring which would shake peoples faith in money, the dollar specifically. They have an unshakable faith in it now for no possible reason that would be understood for the previous thousands of years in the history of money. I simply cannot imagine what could force a society and culture to suddenly reject it. A few million committed action oriented anarchists perhaps but at this date there are none. (I am not encouraging or hoping for such, just saying)

    in reply to: The Last Remaining Store Of Real Wealth – 1 #6819
    rapier
    Participant

    The political classes plan for pensions is the same as The Streets. Keep the money coming in. What about the other side, paying it out? That isn’t much of a concern, as long as the money is coming in. What can’t be taken care of by inflating assets, DOW 36,000, a distinct possibility all things remaining equal, and deflating the payouts by Cost of Living inflation can be taken care of by the rolling defaults of plans which has been going on for 50 years. When pension plans are stripped from hundreds at a time it’s a little story which goes away quickly. As I said it has been happening for 50 years. 30 years ago the government took a stab at it with ERISA and still so many plans are held together with duct tape and hope, and lies such as here with CalPERS and do you see any protest? Hell no, as long as the money keeps coming in. That is the important thing. Keep the money coming in, always coming in. For if the money is coming in the risk of financial and other asset deflation is reduced and that is everything, as 2008 showed. The markets are the system and we must serve it.

    in reply to: The Last Remaining Store Of Real Wealth – 1 #6811
    rapier
    Participant

    If the WSJ isn’t going to ask then who is? Perhaps the contradictions have escaped them. The WSJ used to have good reporters, the best. It was the editorial page that was off in some alternative universe. I don’t pay attention to it anymore so maybe after Murdoch some of their reporters don’t think or ask questions anymore.

    As for if anyone else is asking questions pertaining to their returns I can easily accept nobody does. Why should they. It seems the smart people who run CalPERS go home and sleep soundly at night. Not worried about the $238 billion under their care or is it $260 billion or $167 billion, whatever. It’s a big pile of money and only the best people are allowed to run that much money so why worry? The Fed is going to make sure assets inflate and everyone will be made whole. Right?

    Anyway I have no clue and there is apparently no way to find out. Is CalPERS going to answer the phone and supply the information to me or Illargi? I think not. So how can we know if the WSJ doesn’t ask or think to?

    in reply to: Tim Geithner, the King of Cloud Cuckoo Land #6807
    rapier
    Participant

    RE muddle through at less than 2 percent growth? Can we do that without the wheels falling off? It seems like below 2 percent will create a crash. I hear some people say 6 months some say 2 years what say you?

    Well first as someone else said just below GDP is a poor measure of things. i would say it is worse than poor. GDP is a sickness, a pathology. We in the US are stupendously wealthy but of course that wealth is poorly distributed. Expectations are out of wack. And finally as Ghandi said, approximately, the earth can provide for all our needs but not all our greed.

    That said any GDP growth above population growth in the US should not be expected. Hell it shouldn’t be desired. The thing we need are mostly outside GDP measures. Thus our sickness.

    Can we muddle through with 2% growth? I have no clue. Well sure we could economically, it is socially, culturally, politically where the issues are which are of main concern to me, and dare I say us. But GDP growth is growth, no crash. Crash enters the picture any time GDP is negative. Which of course means if total systematic credit falls. Same same.

    in reply to: Tim Geithner, the King of Cloud Cuckoo Land #6802
    rapier
    Participant

    RE
    I don’t know if this has been discussed but I have yet to see it….If your take out government spending what would the real GDP look like?

    That is simple and fundamental. In the US government borrowing and spending peaked at 12% of GDP and is now around 8% Since nobody else could, or wanted to borrow in those amounts it figures that GDP would be lower by comparable amounts.

    It is the growth of debt, credit taken and spent, which causes economic growth or contraction. Period. Doug Nolands guess it takes about $2 trillion a year just to keep GDP from falling. At any rate if you pay attention that is why we went from panic about the debt to panic about the fiscal cliff. Of course most commentators don’t quite realize or can’t admit to themselves that government borrowing and spending is an existential necessity for the economy.

    Now in other times it was private credit growth which drove the business cycle but now and for the forseeable future that will never be enough. The old countercyclical government, Keynesian, spending used to peak at maybe 6% of GDP. Maybe we get there again with low sub 2% growth and muddle through. Or maybe not. Eliminate the deficit? No way.

    in reply to: Obama Has Once Last Chance To Become A Great President #6641
    rapier
    Participant

    America’s elites have a shared project and that is to keep and expand the United States as the dominant global power for this century and beyond. Obama is on board with this project 100%.

    There is a problem with my simple assertion however in that among the elites are corporate ones, including banks of course, and global corporations have no home, no country, except by the accident of where they are incorporated. (corporations are I maintain the emerging predominant global organizational model which is superseding or co opting nations) So the complication for them, and the Nation, and thus Obama is how to merge their interests. That is being accomplished by making the US the very very best place for corporations to operate. Most importantly by the forbidding of criminal prosecution of corporations or their executives. The US has suspended the rule of law for major corporations, obviously and proudly, and this will resonate more and more as time goes on. If global power politics and its struggles including military ones are of no direct interest or benefit to individual corporations most of the time by being part of the team guarantees that when specific help is needed for the corporation by the Nation the help will be there. Also by active blending of corporations executives and boards into America then corporate strategic decisions can be informed and shaped by America. The other part is by the virtual elimination of corporate taxes and continued minimization of them for corporate leaders.

    For American ‘conservatives’ and a majority of Americans the most important thing outside their daily lives is living in the knowledge that America is the worlds #1 power along with the belief that we deserve to be, are fated to be and have been chosen to be, by God. American exceptional ism is alive and well, perhaps more powerful than ever. So called liberals and alt. thinkers of various stripes believe such is absolutely wrong but I maintain no matter if it is wrong America can simply not function politically without that belief being carried by our president. Illargi’s idea of a great president is an impossibility. Now events may force some absolute decline of American power, as defined by exceptional ism but no President will go there willingly. No person can be president who falls outside the bounds our elites in any case.

    It is still not apparent evidently that Obama’s project is to meld elites into a more perfect union under the US flag and thus make America greater. By the way 50% of the population has nothing to do with that. I suppose the view is that those who don’t believe in American exceptional ism are simply naive and don’t understand that their life such as it is is totally dependent upon America as a Great Nation. Those citizens are not even secondary, even to Obama. Romney’s 47% comment could have been spoken by Obama really.

    in reply to: Impotence, Leverage and Central Banking #6588
    rapier
    Participant

    I think US society and its political economy could survive in a form similar to the current one or recognizable as related to the current one with the same institutions and elites for a decade or even two more. More I think than your “much extra time”. Or to put it another way I foresee devolution and not a quick dislocation.

    I freely admit that I suffer from the familiar bias of extrapolating from the recent past. So be it. I am intimate with Nicole’s logic, her story, and accept it could happen. My thinking is centered on how corporations are becoming the ascendant mode of human organization replacing or co opting nations.

    If corporate assets deflate 50% or more but governments and most citizens go totally broke then somehow, I think, the system can remain sort of intact. There is zero indication that the citizenry will revolt. The power of revolt in the US, such as it is, is aligned with corporate power after all. If they know it or not. See the Tea Party. While alternately a Liberal revolt is an absurd idea. When the GOP can gleefully discount, denigrate and prepare to abandon nearly half of the citizenry and nary a Western European government save Iceland’s, not sure about the other slightly less tiny Scandinavian ones, has an operational plan that doesn’t do the same I see the outlines of a New World order that works, sort of, based around corporate structures.

    Well it’s all so poorly stated by me. Sorry.

    in reply to: Impotence, Leverage and Central Banking #6585
    rapier
    Participant

    Consciously or unconsciously, intentionally or unintentionally, the United States overarching strategy is to reinvigorate it’s global dominance by attracting more and more global free liquid capital to our shores or within the grasp of our giant financial institutions. With an additional detail of the British acting as partners. Our great global strategic thinkers and our leaders in every sort of institution, military/security, government or corporate, may not want the rest of the world to go to hell in a hand basket but as long as it is that makes their project easier.

    The ongoing flood of liquid capital into the US is already causing the obvious divergence in economic outcomes as most of the rest of the world slows the US is growing GDP wise at around a 2% pace. The tax withholding numbers speak for themselves.

    My point is that the US will likely remain the last Ponzi standing. Eventually one can assume that will require our bombs, including the big ones. So be it. All the better actually, to become the worlds defacto safe haven. In the meantime Chinese mega millionaires and Mexican drug cartels know the score. So I am suggesting that AE’s analysts should be a little more granular. What is bad for the rest of the world is, by design, good for the US. If not for all it’s citizens then at least half of them.

    rapier
    Participant

    I accept that Nicole’s textbook deflation on a global scale could happen, and have built that possibility into my mind, I just don’t think it is likely to happen in textbook fashion. That doubt centers on the things like the simultaneity of the events. The sudden, even over the course of a year, of the freeze of the global financial/trade/monetary systems.

    The US has engineered a very strong ‘last Ponzi standing’ position. It is the attractor more and more of the capital of the global uber wealthy and it’s doors are open to them in person to. Even if the relative wealth among Americans declines for a significant plurality, America’s relative wealth seems likely to improve over the middle term. A situation which allows the likelihood of the continuation of the political system with the same players on top.

    I have no standing so take my feelings with a grain of salt.

    In addition, or tangentially, the issues transcend nations as corporations are becoming the new sovereigns or they are trying to be. As I sense things, it would be the collapse of corporate capitalism which would seal the global deflation and collapses of political systems and nations. As long as the corporate system remains intact then to my mind America remains intact in current recognizable form with the strong trend to political reaction and government expansion of police power.

    in reply to: What Happened To The Debt? #5228
    rapier
    Participant

    You must understand that nobody believes anymore in central bank balance sheets. Most don’t know they exist and the rest don’t care. The central banks it is understood can always print more to buy new paper to pay off the old. No harm no foul as they say here.

    No harm because there is no inflation, among other things. Other things being as I said the idea of a CB balance sheet meaning a thing.

    The stodgy Germans still pretend central bank and bank balance sheets mean something. They don’t mean a thing. Not against the prospect of the death of the system. The political and economic system.

    in reply to: How the 'Hedge' Has Shifted on QE #4744
    rapier
    Participant

    There are two interrelated factors in the Feds non QE decisions not mentioned here. The big one is that Bernanke knows another QE announcement would spike commodity prices and at least temporarily break the bond market. In addition it would almost certainly cause at least a short term melt up in stocks. After all the promise of blessed liquidity, and then its appearance at the Primary Dealers would be Risk On big time.

    Now Bernanke may not mind all that but it is too near the election now. Rising markets are virtually always good for incumbents. He nor the Fed want anything to do with being seen as helping an incumbent president. Especially a non ‘conservative’. To be seen as such is political poison for the Fed and as time passes could be an existential threat to them. I mean that literally.

    in reply to: Ruminations: Faith and Humanity #3932
    rapier
    Participant

    Organized religion is only partly related to spirituality. The degree to which they are related rises and falls over time and at this point it is hard to imagine it getting any less related. In the US organized religion is now dedicated, if they know it or not and most don’t, to finding someone to pay the price for ongoing decline.

    To the extent the decline is anywhere near the scale envisioned by TAE, or Kuntsler and the like, the amount of suffering that will rain upon the chosen victims is going to be stupendous. The apotheosis of spirituality is at hand.

    in reply to: Please Don't Listen to Ambrose #3349
    rapier
    Participant

    Prichard first entered the mainstream in the US by performing a dirty and valuable service to the purveyors of Clinton scandals. He would take the latest salacious rumor cooked up by the army of professional Clinton hunters and publish them in the UK. Stuff nobody in the MSM in the US would touch since it was just rumor. At least they wouldn’t touch it until it was published in the UK by the guy with 3 names. Given this patina of respectability the rumor got fed into the MSM.

    Don’t get me wrong I have no torch to carry for Clinton but the entire Whitewater and offshoot ‘scandals’ and the impeachment were an exercise in propaganda and disinformation. A successful attempt to control public discourse and really the population. Prichard was a knowing cog in the machine to his own great benefit.

    One would be hard pressed to make a coherent case that he is serving any particular interest group with his financial reporting over the last couple of years but every story by him should be read with the question of who that might be in mind.

    in reply to: Are You Going to Believe Your Masters or Your Lying Eyes? #1677
    rapier
    Participant

    International corporations and their assets, and debt perhaps, are somehow going to become the worlds base store of value. Assuming that is that TAE’s and JH Kuntler’s word does not descend upon us. At any rate that plan, or should I say the current movement of history suggests that corporations since they are supercedeing government as the acendent human organizing model will somehow create a system where their value is the base of all value.

    Let’s recall that it is governments who are going broke while corporations are flush with gigantic stores of cash or near cash or are at least allowed to claim so and there is nobody in authority to contradict them.

    Mulitnational corporations are already, essentially, sovereign. Untouched or untouchable by government. They write the laws and choose who they are enforced against.

    Don’t bet against corporations or alternately bet with them to a degree as a hedge. The degree to which the devolution of the modern world goes in TAE’s direction is not certain and the speed certainly isn’t. However as the process advances, if it advances, we know that our elites are 100% dedicated to maintaining and advancing the prices and ‘values’ of corporate assets. Nothing else matters to them. There seems no limit to number of tens, of millions, of former middle class people in the developed world who are being shoved under the bus who have roused the slightest sympathy from our elites after all. Since all the political and military power in the West, and it allies and clients elsewhere are all in on the project of corporation over people it’s rather silly to bet against them.

    in reply to: TAE Needs a Logo! #1259
    rapier
    Participant

    It occurs to me that TAE should avoid branding, if you get my drift.

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