Saturday, February 23, 2013

You can't turn fiction into reality for more than brief periods of time

Yeah, we are going to fix this stuff?  Obama has his Mydol out, crying of cramps yesterday, today, tomorrow and forever. Any idiot that had $100 last year, $100 this year and was given an extra $6 out of thin air, could spend $104 instead of $106. Not these mothers. The whole fucking government is going to collapse? They could just not send checks out for a week and solve the whole mess, kicking the expenses to next year and they could do that over a period of months, delaying for an hour a day, the remitting of money. Instead they tell us that a 2 cent reduction in spending what is being borrowed or stolen from us in the first place is going to force them to shut down their meat inspectors? MAKES YOU WONDER WHERE THEIR PRIORITIES ARE, IF THE FIRST THING THEY WOULD CUT IN A MILD REDUCTION IS A PRIMARY PUBLIC SAFETY ITEM? Do any of you see where these fuckers priorities are? The officials, elected or not that made those statements should have their teeth busted out with claw hammers so they can't speak so well, as they are either lying or fronting criminal enterprises that have other ideas of how to steal our money rather than providing the true government services.

Here is the problem Karl. Exponential is linked. Wipe out the mortgages, need to wipe out the assets on the other side of the ledger. Wipe out the assets on the other side of the ledger, there goes the retirement and pension plans. This means prices must fall, which endangers more debt, which endangers more paper assets and we have a downward spiral. We know it needs to happen, but who is going to throw their retirement, their nest egg, their wealth on the pile first? And, when they do, are others going to follow or merely say old Mannfm11 did a noble act, but boy was he stupid.

We have people going to rent to own stores and buying luxury items that can't buy their own cereal for their hungry children. A lot of them. We have kids on their third iphone complaining about the student loans they are racking up. The bull market needs this nonsense to continue or stocks and the related pensions go to a new low level and stay there.

If there was a solution, they failed to exercise it in 2009. They did what the Japanese did, except they had been doing what the Japanese did in the 1980's to get there the prior 15 plus years, goose the economy with money over and over again. This is what they did in the 1920's. Bernanke's model is in solving the Great Depression, but he hasn't allowed it to start, so he is pissing up a rope. Feeding the monster. So is Obama, who has now loaded onto the working class the most punative tax ever passed.

The world has bought a ticket on a losing horse and is holding on because the race hasn't been run yet. Only a very few bet on the favorite and they keep delaying the race, hoping the only horse that can win dies first. That horse is now breeding champions and is out of mind for a lot of people. But, the world can't understand why their horse, which looked so good in the warmups keeps limping worse. They keep pumping more monetary antibiotics into their picks, not understanding that after the first dose, which seemed to work, the medicine is now poisoning their steeds.

How can you continue to put more coins in the fusebox when the wiring is shorting out. Some slots have 5 coins in them now, when 1 was enough.

Government derives every dime out of the real economy. This works well when government does its job, which is provide infrastructure common to all. It doesn't do any good to build something in place of something that already works fine, like tear out a 20 year old sewer system in good shape and replace it. That is flushing your meal down the toilet, thinking you can save a step by putting the shit in the pot ahead of time.

We had the Federal Reserve in 1913, because bankers didn't want to be liable on their own notes. Then FDR took up the gold, so we could have flexible money, leaving it for international trade. Then Nixon debased and defaulted on gold, making the US credit system the standard of world finance. Now the credit system is out of power and we have turned to QE, a system of defrauding everyone involved. In order to continue QE, we need paper, so the government keeps spending and they have to keep spending, because there are tens, if not hundreds of trillions of derivatives dependent on having available 10 year notes. They have built a bomb of epic proportions that is now too unstable to defuse.

I am not saying Greenspan should have let LTCM fail, but instead of loosening credit, he should have liquidated the bubble right then and there. Stocks were at least 100% overvalued in 1998 and letting the market fall back to 1995 or 1996 levels would have not done much damage. Now, we are going to see the market fall to that level, once this nonsense is all done, wiping out 2 decades of gains in a matter of a couple of years. They won't get this up next time. Look at Japan. We will be looking at charts in a few years that have the SPX in territory from 20 years back. It is now getting close to 30 years back for Japan and the yen has been devalued as well. You can't turn fiction into reality for more than brief periods of time.


Christian Gustafson said...

There is plenty of room on the really-long-term DJIA chart for a decline back to mid-1990s equity levels.

I would argue that we won't sit there flat when we make it there, however. The markets will see a BIG bounce ... when the currency collapses.

So we have that going for us, which is nice.

mannfm11 said...

You can't inflate when everyone is broke.