http://www.zerohedge.com/article/its-official-america-now-enforces-capital-controls
"It couldn't have happened to a nicer country. On March 18, with very little pomp and circumstance, president Obama passed the most recent stimulus act, the $17.5 billion Hiring Incentives to Restore Employment Act (H.R. 2487), brilliantly goalseeked by the administration's millionaire cronies to abbreviate as HIRE. As it was merely the latest in an endless stream of acts destined to expand the government payroll to infinity, nobody cared about it, or actually read it. Because if anyone had read it, the act would have been known as the Capital Controls Act, as one of the lesser, but infinitely more important provisions on page 27, known as Offset Provisions - Subtitle A—Foreign Account Tax Compliance, institutes just that. In brief, the Provision requires that foreign banks not only withhold 30% of all outgoing capital flows (likely remitting the collection promptly back to the US Treasury) but also disclose the full details of non-exempt account-holders to the US and the IRS. And should this provision be deemed illegal by a given foreign nation's domestic laws (think Switzerland), well the foreign financial institution is required to close the account. It's the law. If you thought you could move your capital to the non-sequestration safety of non-US financial institutions, sorry you lose - the law now says so. Capital Controls are now here and are now fully enforced by the law." Tyler Durden, Zerohedge
Sunday, March 28, 2010
China: Currency Manipulator (Gee, Really?)
China, U.S. Are on ‘Collision Course,’ Roubini Says
No surprise here, but maybe it will finally be part of the nightly news.
No surprise here, but maybe it will finally be part of the nightly news.
Friday, March 26, 2010
Where too USA?
Given that our economy expanded over the last 20-25 years primarily by consumption financed by debt, and that there has been a steady offshoring and outsourcing of US manufacturing jobs to China and other nations. How are we going to expand an economy that doesn't make much of anything of tangible value to sell anymore, has borrowed against every asset it owns up to its eyeballs, has a government that is a bulging leech that no longer responds to its citizens needs, depends on imported energy to function,and supports the worlds biggest military involved in 2 wars halfway around the world fighting an elusive asymmetric enemy with at least one hand tied behind our back?
Service sector jobs don't matter that much, they are just the symptom! What matters is that unless we start addressing the issues above with real solutions, we are in trouble longterm as a country.
- We need to build and sell real products again. To do that we need to protect American Industry and eliminate government roadblocks/excessive regulation.
- We need energy self-sufficiency yesterday. Globalization is going to die at the base of Peak Oil.
- We need to stop Consuming! We don't need anymore electronic toys.
- We need a government of, by, and for the people again. Not of, by, and for GS,AIG, or Corporate and foreign lobbyists that subvert and corrupt our government.
- We need to stop fighting our enemies with politically correct ideas and strategies. No Quarter. No Mercy. Annihilate them, and leave.
If we don't start doing these things we will continue the slide. What is the point of another ten thousand service sector jobs? Everything based on consumption will fail without economic production. Until we start to protect US Manufacturing and Jobs we are so screwed. National Income comes from selling things. What are we selling to the world that is made in the USA? Goldman Sachs? AIG? Starbucks? Good luck maintaining our status as the sole Superpower with that team.
Government can try to borrow money to create jobs right up until China and the rest of the world stops buying our debt because they know that our system is broken. Then we will try to print $$ to pay the bills and we'll go the way of Zimbabwe. On the way we will see .gov take over our 401Ks, and IRAs to help buy some more jobs with debt.
Name one country that thrived long term while it's manufacturing base was shipped overseas in history?
Service sector jobs don't matter that much, they are just the symptom! What matters is that unless we start addressing the issues above with real solutions, we are in trouble longterm as a country.
- We need to build and sell real products again. To do that we need to protect American Industry and eliminate government roadblocks/excessive regulation.
- We need energy self-sufficiency yesterday. Globalization is going to die at the base of Peak Oil.
- We need to stop Consuming! We don't need anymore electronic toys.
- We need a government of, by, and for the people again. Not of, by, and for GS,AIG, or Corporate and foreign lobbyists that subvert and corrupt our government.
- We need to stop fighting our enemies with politically correct ideas and strategies. No Quarter. No Mercy. Annihilate them, and leave.
If we don't start doing these things we will continue the slide. What is the point of another ten thousand service sector jobs? Everything based on consumption will fail without economic production. Until we start to protect US Manufacturing and Jobs we are so screwed. National Income comes from selling things. What are we selling to the world that is made in the USA? Goldman Sachs? AIG? Starbucks? Good luck maintaining our status as the sole Superpower with that team.
Government can try to borrow money to create jobs right up until China and the rest of the world stops buying our debt because they know that our system is broken. Then we will try to print $$ to pay the bills and we'll go the way of Zimbabwe. On the way we will see .gov take over our 401Ks, and IRAs to help buy some more jobs with debt.
Name one country that thrived long term while it's manufacturing base was shipped overseas in history?
Thursday, March 25, 2010
How secure is your 401K Money?
How secure is your 401K Money?
A month or so ago, the idea of mandating 401K accounts include an option to own government bonds was floated. Now we see this idea. When things like this start to appear, how long do you think it takes before they start inquiring about other workers retirement accounts? The deflation and shortage of money is going to get so bad that government and it's minions will seek to grab cash wherever they can find it.
See Denninger's Post below for more info also:
http://market-ticker.denninger.net/archives/2121-Bend-Over-America-Now-The-SEIU-Wants-Your-401k!.html
A month or so ago, the idea of mandating 401K accounts include an option to own government bonds was floated. Now we see this idea. When things like this start to appear, how long do you think it takes before they start inquiring about other workers retirement accounts? The deflation and shortage of money is going to get so bad that government and it's minions will seek to grab cash wherever they can find it.
See Denninger's Post below for more info also:
http://market-ticker.denninger.net/archives/2121-Bend-Over-America-Now-The-SEIU-Wants-Your-401k!.html
Saturday, March 20, 2010
Assaulting the very pillars of our democracy.....
http://washingtontimes.com/news/2010/mar/19/impeach-the-president/
"The Democrats are assaulting the very pillars of our democracy. As the debate on Obamacare reaches the long, painful end, House Speaker Nancy Pelosi is confronting a political nightmare. She may not have the 216 votes necessary to pass the Senate's health care bill in the House.
Hence, Mrs. Pelosi and her congressional Democratic allies are seriously considering using a procedural ruse to circumvent the traditional constitutional process. Led by Rep. Louise M. Slaughter, New York Democrat and chairman of the House Rules Committee, the new plan - called the "Slaughter Solution" - is not to pass the Senate version on an up-or-down vote. Rather, it is to have the House "deem" that the legislation was passed and then have members vote directly on a series of "sidecar" amendments to fix the things it does not like.
This would enable House Democrats to avoid going on the record voting for provisions in the Senate bill - the "Cornhusker Kickback," the "Louisiana Purchase," the tax on high-cost so-called "Cadillac" insurance plans - that are reviled by the public or labor-union bosses. If the reconciliation fixes pass, the House can send the Senate bill to President Obama for his signature without ever having had a formal up-or-down vote on the underlying legislation.
Many Democrats could claim they opposed the Senate bill while allowing it to pass. This would be an unprecedented violation of our democratic norms and procedures, established since the inception of the republic. Article 1, Section 7 of the Constitution stipulates that for any bill to become a law, it must pass both the House of Representatives and the Senate. That is, not be "deemed" to have passed, but actually be voted on with the support of the required majority. The bill must contain the exact same language in both chambers - and in the version signed by the president - to be a legitimate law. This is why the House and Senate have a conference committee to iron out differences of competing versions. This is Civics 101.
The Slaughter Solution is a dagger aimed at the heart of our system of checks and balances. It would enable the Democrats to establish an ominous precedent: The lawmaking process can be rigged to ensure the passage of any legislation without democratic accountability or even a congressional majority. It is the road to a soft tyranny. James Madison must be turning in his grave." By Jeffrey T. Kuhner
"The Democrats are assaulting the very pillars of our democracy. As the debate on Obamacare reaches the long, painful end, House Speaker Nancy Pelosi is confronting a political nightmare. She may not have the 216 votes necessary to pass the Senate's health care bill in the House.
Hence, Mrs. Pelosi and her congressional Democratic allies are seriously considering using a procedural ruse to circumvent the traditional constitutional process. Led by Rep. Louise M. Slaughter, New York Democrat and chairman of the House Rules Committee, the new plan - called the "Slaughter Solution" - is not to pass the Senate version on an up-or-down vote. Rather, it is to have the House "deem" that the legislation was passed and then have members vote directly on a series of "sidecar" amendments to fix the things it does not like.
This would enable House Democrats to avoid going on the record voting for provisions in the Senate bill - the "Cornhusker Kickback," the "Louisiana Purchase," the tax on high-cost so-called "Cadillac" insurance plans - that are reviled by the public or labor-union bosses. If the reconciliation fixes pass, the House can send the Senate bill to President Obama for his signature without ever having had a formal up-or-down vote on the underlying legislation.
Many Democrats could claim they opposed the Senate bill while allowing it to pass. This would be an unprecedented violation of our democratic norms and procedures, established since the inception of the republic. Article 1, Section 7 of the Constitution stipulates that for any bill to become a law, it must pass both the House of Representatives and the Senate. That is, not be "deemed" to have passed, but actually be voted on with the support of the required majority. The bill must contain the exact same language in both chambers - and in the version signed by the president - to be a legitimate law. This is why the House and Senate have a conference committee to iron out differences of competing versions. This is Civics 101.
The Slaughter Solution is a dagger aimed at the heart of our system of checks and balances. It would enable the Democrats to establish an ominous precedent: The lawmaking process can be rigged to ensure the passage of any legislation without democratic accountability or even a congressional majority. It is the road to a soft tyranny. James Madison must be turning in his grave." By Jeffrey T. Kuhner
Thursday, March 18, 2010
Slaugther Rule: Slaughtering the US Constitution!
www.thestreet.com/story/10706297/1/nations-leaders-failing-firing-line.html
"I find it just slightly ironic that this tactic is known as the "Slaughter rule" after Rep. Louise Slaughter (D., N.Y.) Less ironic and more troubling are the president's comments yesterday that he's not "concerned with process," meaning, of course, the ends justify the means. That kind of mentality moves Obama away from the Jimmy Carter comparisons and lines him up squarely with Richard Nixon." By Matthew Buckley
It seems as if our republic slowly slides away. Consider all the empires gone before that let their standards slide. In times of yore, they have been here before. How did Napoleon consolidate power? How did Caesar become Caesar? How did ex-corporal Adolf Hitler become Der Führer? As we see the machiavellian principles usurping our constitution; the ends justify the means they say....
As a country we need to reject all of these ends justify the means actions. There is no policy, no healthcare, no financial rescue plan so important it must happen unconstitutionally.
We rush to complicate healthcare with a hope of fixing it, but we cast aside the Constitution that has stood the test of time so well. We give away the crowning gift of our country for a box of aspirin? This is a sign that we have already lost so much of our former glory as the greatest country in the world. For some pain pills we surrender our national value system and core philosophy. We stray from the Constitution at our peril.
All of us that swore to uphold it before all enemies foreign or domestic? Where are we now? Have we lost the meaning of the very constitution we swore to defend? Who will fight for it? When our daily life has been overtaken by so many threats to security and fortune that to do so would mean being treated as a crazy man who spent too much time in the internet blog wilderness? To fight against the tide now would require the intelligent common man to fight against the machine and accept total personal loss to make a statement. Where are the leaders that would lead us us in this fight to save our nation's most cherished document?
"I find it just slightly ironic that this tactic is known as the "Slaughter rule" after Rep. Louise Slaughter (D., N.Y.) Less ironic and more troubling are the president's comments yesterday that he's not "concerned with process," meaning, of course, the ends justify the means. That kind of mentality moves Obama away from the Jimmy Carter comparisons and lines him up squarely with Richard Nixon." By Matthew Buckley
It seems as if our republic slowly slides away. Consider all the empires gone before that let their standards slide. In times of yore, they have been here before. How did Napoleon consolidate power? How did Caesar become Caesar? How did ex-corporal Adolf Hitler become Der Führer? As we see the machiavellian principles usurping our constitution; the ends justify the means they say....
As a country we need to reject all of these ends justify the means actions. There is no policy, no healthcare, no financial rescue plan so important it must happen unconstitutionally.
We rush to complicate healthcare with a hope of fixing it, but we cast aside the Constitution that has stood the test of time so well. We give away the crowning gift of our country for a box of aspirin? This is a sign that we have already lost so much of our former glory as the greatest country in the world. For some pain pills we surrender our national value system and core philosophy. We stray from the Constitution at our peril.
All of us that swore to uphold it before all enemies foreign or domestic? Where are we now? Have we lost the meaning of the very constitution we swore to defend? Who will fight for it? When our daily life has been overtaken by so many threats to security and fortune that to do so would mean being treated as a crazy man who spent too much time in the internet blog wilderness? To fight against the tide now would require the intelligent common man to fight against the machine and accept total personal loss to make a statement. Where are the leaders that would lead us us in this fight to save our nation's most cherished document?
Monday, March 15, 2010
Peak Oil, Globailization, and China.
Where we have been, where we are going...
Reading the above plus Krugman's and Karl Denninger's latest goes together nicely. Our deal with the devil has been allowing China to sell us everything at prices that undercut the working American Middle Class. Well, it's been nothing but a downward slide since China got MFN trading status.
I posit that unless we take action to wrestle control of our government back from global corporate interests and Chinese apologists we will continue to slide downwards. it won't end until America is a shell of it's former self. We are almost there. When America has lost everything only then will we start to rebuild, because China and Globalization will have taken everything. Peak Oil is the only thing that will save us. Pray that it comes sooner so that the fuel that powers Globalization wlll run out. I hope Jeff Rubin and Kunstler are right! The sooner we take the fuel of endless outsourcing away, the better for Americans.
Or: As a nation we could vote out entrenched interests that made all this possible and start rebuilding now. Wake up America! Buy American, Vote American.
If you can't buy American, at least don't buy Chinese!
Reading the above plus Krugman's and Karl Denninger's latest goes together nicely. Our deal with the devil has been allowing China to sell us everything at prices that undercut the working American Middle Class. Well, it's been nothing but a downward slide since China got MFN trading status.
I posit that unless we take action to wrestle control of our government back from global corporate interests and Chinese apologists we will continue to slide downwards. it won't end until America is a shell of it's former self. We are almost there. When America has lost everything only then will we start to rebuild, because China and Globalization will have taken everything. Peak Oil is the only thing that will save us. Pray that it comes sooner so that the fuel that powers Globalization wlll run out. I hope Jeff Rubin and Kunstler are right! The sooner we take the fuel of endless outsourcing away, the better for Americans.
Or: As a nation we could vote out entrenched interests that made all this possible and start rebuilding now. Wake up America! Buy American, Vote American.
If you can't buy American, at least don't buy Chinese!
"Free Trade": A huge boondoggle for China!
The Grand Chinese Fraud
In today's post KD discusses exactly how China has manipulated the USA and taken advantage of us in every way. Free trade and Most Favored Nation trading status for China has been nothing other than a complete failure for the USA. There has been nothing 'Free' about it.
It is this simple if buy something 'Made in China' you support everything bad that has happened to the American Middle Class in the past 20 years.
Don't buy China! Buy from anywhere else! Best case: Buy American Only!
Walmart = Chinamart
Krugman agrees with Denninger
In today's post KD discusses exactly how China has manipulated the USA and taken advantage of us in every way. Free trade and Most Favored Nation trading status for China has been nothing other than a complete failure for the USA. There has been nothing 'Free' about it.
It is this simple if buy something 'Made in China' you support everything bad that has happened to the American Middle Class in the past 20 years.
Don't buy China! Buy from anywhere else! Best case: Buy American Only!
Walmart = Chinamart
Krugman agrees with Denninger
Saturday, March 13, 2010
Denninger at his best!
http://market-ticker.denninger.net/archives/2076-Bombshell-We-Now-Know-What-Set-It-Off-2008.html
"Bombshell: We Now Know What Set It Off (2008):
"Does this mean that we're going to get a blow-up tomorrow? Of course not. But it points to a severe danger - when one's assets are impaired - whether due to being "infrequently traded" or because you're carrying them well above a market price - you're asking for it. All it takes is for the securities you can pledge to be drained and you're doomed.
Now take a look back through the last few Tickers. I keep seeing evidence that the banks are not only holding things above reasonable recovery value in the HELOC space they're doing it everywhere else too, whether it be not foreclosing on homes, making bogus reports to credit bureaus about payments that are not being made or accepting ridiculously small payments that are a tiny fraction of even "interest only." Why? There's only one reason that makes sense - to claim (falsely) that their assets are worth more than they are - that they're "performing", "have collateral value of X" or "paying" when in fact they're not.
How long will it be before the next large financial institution goes to post a repo and has no good collateral?
I have no idea.
But this I do know: If it happens again "they" won't be able to stop the crash with promises and BS. In fact, they won't be able to stop it at all." Karl Denninger
Also look at this from earlier today:
http://market-ticker.denninger.net/archives/2072-What-The-Lehman-Report-Proves-Financial-Insolvency.html
"If we apply the FDIC's own metrics to the expected losses from such a revelation that would "immediately appear" we get a number between $2 and $3.5 trillion that would have to be paid to depositors of the failed institutions - equal to somewhere around one full year's Federal Budget and dramatically exceeding what the FDIC and Treasury could cover - by more than 10 times.
The consequence of such an event would be literally catastrophic. Having squandered over $3 trillion in the last two years in new borrowing by The Federal Government to prop up the economy (instead of clearing this bad debt through resolving the bankrupt financial institutions) it is highly unlikely that The Government would be able to, on short notice, raise another $3 trillion.
I'm out of all long positional trades as of this morning and will not be back in them until this issue is resolved. Even if there is a potential 10 or 20% advance that I will miss by doing so, the downside risk of 85% is so extreme and the facts that we now have available strongly suggest that not only are all the large banks insolvent but that the government has been and is complicit in covering it up - not just temporarily, but as an ongoing practice, just as occurred with Lehman.
I'm sure many will call me crazy for this analysis.
We will see if you still think so in a year or two." Karl Denninger
"Bombshell: We Now Know What Set It Off (2008):
"Does this mean that we're going to get a blow-up tomorrow? Of course not. But it points to a severe danger - when one's assets are impaired - whether due to being "infrequently traded" or because you're carrying them well above a market price - you're asking for it. All it takes is for the securities you can pledge to be drained and you're doomed.
Now take a look back through the last few Tickers. I keep seeing evidence that the banks are not only holding things above reasonable recovery value in the HELOC space they're doing it everywhere else too, whether it be not foreclosing on homes, making bogus reports to credit bureaus about payments that are not being made or accepting ridiculously small payments that are a tiny fraction of even "interest only." Why? There's only one reason that makes sense - to claim (falsely) that their assets are worth more than they are - that they're "performing", "have collateral value of X" or "paying" when in fact they're not.
How long will it be before the next large financial institution goes to post a repo and has no good collateral?
I have no idea.
But this I do know: If it happens again "they" won't be able to stop the crash with promises and BS. In fact, they won't be able to stop it at all." Karl Denninger
Also look at this from earlier today:
http://market-ticker.denninger.net/archives/2072-What-The-Lehman-Report-Proves-Financial-Insolvency.html
"If we apply the FDIC's own metrics to the expected losses from such a revelation that would "immediately appear" we get a number between $2 and $3.5 trillion that would have to be paid to depositors of the failed institutions - equal to somewhere around one full year's Federal Budget and dramatically exceeding what the FDIC and Treasury could cover - by more than 10 times.
The consequence of such an event would be literally catastrophic. Having squandered over $3 trillion in the last two years in new borrowing by The Federal Government to prop up the economy (instead of clearing this bad debt through resolving the bankrupt financial institutions) it is highly unlikely that The Government would be able to, on short notice, raise another $3 trillion.
I'm out of all long positional trades as of this morning and will not be back in them until this issue is resolved. Even if there is a potential 10 or 20% advance that I will miss by doing so, the downside risk of 85% is so extreme and the facts that we now have available strongly suggest that not only are all the large banks insolvent but that the government has been and is complicit in covering it up - not just temporarily, but as an ongoing practice, just as occurred with Lehman.
I'm sure many will call me crazy for this analysis.
We will see if you still think so in a year or two." Karl Denninger
"Nations rise on economic nationalism; they descend on free trade"
"How many know that every modern nation that rose to world power did so by sheltering and nurturing its manufacturing and industrial base -- from Britain under the Acts of Navigation to 1850, to protectionist America from the Civil War to the Roaring Twenties, to Bismarck's Germany before World War I, to Stalin's Russia, to postwar Japan, to China today?
No nation rose to world power on free trade. From Britain after 1860 to America after 1960, free trade has been the policy of powers that put consumption before production and today before tomorrow.
Nations rise on economic nationalism; they descend on free trade." Patrick Buchanan
http://www.realclearpolitics.com/articles/2010/03/12/the_disemboweling_of_america_104747.html
So, just keep shopping at Walmart America.....NOT!
No nation rose to world power on free trade. From Britain after 1860 to America after 1960, free trade has been the policy of powers that put consumption before production and today before tomorrow.
Nations rise on economic nationalism; they descend on free trade." Patrick Buchanan
http://www.realclearpolitics.com/articles/2010/03/12/the_disemboweling_of_america_104747.html
So, just keep shopping at Walmart America.....NOT!
http://www.oceanenergy.org/default.asp
http://www.oceanenergy.org/default.asp
The Ocean Energy Institute, founded in 2007 by Matthew R. Simmons of Simmons & Company International, is a think-tank and venture capital fund addressing the challenges of U.S. offshore renewable energy. OEI approaches energy R&D and investment from a systems point of view; not just generation, but usage, storage and transmission all together as an interdependent set of opportunities and the next driving force of the international economy.
"Oceans are the last energy frontier, yet we know so little about how to harness them. The Ocean Energy Institute’s mission is to quickly fill this knowledge void and let our oceans supply us the energy that fossil fuels have provided for the last hundred years."
Matt Simmons
Pretty interesting ideas at this website. It will be part of the energy solution in the future.
This link is a great podcast that features Matt Simmons discussing energy issues recently. He speaks about 10 minutes in for about 30 minutes.
http://www.netcastdaily.com/broadcast/fsn2010-0306-2.mp3
The Ocean Energy Institute, founded in 2007 by Matthew R. Simmons of Simmons & Company International, is a think-tank and venture capital fund addressing the challenges of U.S. offshore renewable energy. OEI approaches energy R&D and investment from a systems point of view; not just generation, but usage, storage and transmission all together as an interdependent set of opportunities and the next driving force of the international economy.
"Oceans are the last energy frontier, yet we know so little about how to harness them. The Ocean Energy Institute’s mission is to quickly fill this knowledge void and let our oceans supply us the energy that fossil fuels have provided for the last hundred years."
Matt Simmons
Pretty interesting ideas at this website. It will be part of the energy solution in the future.
This link is a great podcast that features Matt Simmons discussing energy issues recently. He speaks about 10 minutes in for about 30 minutes.
http://www.netcastdaily.com/broadcast/fsn2010-0306-2.mp3
Friday, March 12, 2010
Consciousness.....
Interesting Times. Speaking to people while flying recently it has become clear to me that there is a greater consciousness of the reality of our economic situation. Pardon my ramblings tonight:
Free Trade is Farce! It is a scam concocted by large international corporations that no longer are corporate citizens of the USA. They have been so successful in outsourcing production away from us , their host, that they have broken the cardinal biological rule all parasites live by; Don't Kill the Host!
We live in world where "Free Trade" means that China gets to peg their currency to the Dollar and we ship all of our jobs to them as a result. Pegging your currency to another is Protectionism. What we need to do is start protecting our jobs and penalizing those companies that outsource US jobs overseas.
As Karl Denninger discussed so accurately in a recent post on the Market Ticker, Total US Credit is headed South, way south! Given our economic situation where debt based economic growth has halted due to falling credit, there are only 2 options: Either we find a way to grow our national exports to increase GDp and support our debt load, or we will see our economy continue to decline as credit creation continues to fall, and our national income continues to drop. So either we become like Germany and get our exports into balance, or we go the way of some second world country, Mexico comes to mind.
Sure we can try to print $, quantitatively ease, or otherwise bamboozle people into buying our debt, but that works as long as you don't turn into Weimar. Once you are Weimar, the party is over. The core problem of declining income will be back in any case.
The formula for GDP is:
Y = C + I + E + G
where
Y = GDP
C = Consumer Spending
I = Investment made by industry
E = Excess of Exports over Imports
G = Government Spending
So take a look at the formula:
Given Consumer Spending is in the tank and declining, Industry Investment is unknown, our trade balance is negative, and Government Spending is growing thanks to lots of bond sales. To get Y to go up we might see some help from Industrial Investments if the globalizers of the world realize they better invest in the US in order to help preserve GDP enough for us to continue to patronize them. But, really there is not much choice in the matter as far as getting our exports to grow and provide national income to increase. If we don't GDP will just continue to slide downhill towards.
Free Trade is Farce! It is a scam concocted by large international corporations that no longer are corporate citizens of the USA. They have been so successful in outsourcing production away from us , their host, that they have broken the cardinal biological rule all parasites live by; Don't Kill the Host!
We live in world where "Free Trade" means that China gets to peg their currency to the Dollar and we ship all of our jobs to them as a result. Pegging your currency to another is Protectionism. What we need to do is start protecting our jobs and penalizing those companies that outsource US jobs overseas.
As Karl Denninger discussed so accurately in a recent post on the Market Ticker, Total US Credit is headed South, way south! Given our economic situation where debt based economic growth has halted due to falling credit, there are only 2 options: Either we find a way to grow our national exports to increase GDp and support our debt load, or we will see our economy continue to decline as credit creation continues to fall, and our national income continues to drop. So either we become like Germany and get our exports into balance, or we go the way of some second world country, Mexico comes to mind.
Sure we can try to print $, quantitatively ease, or otherwise bamboozle people into buying our debt, but that works as long as you don't turn into Weimar. Once you are Weimar, the party is over. The core problem of declining income will be back in any case.
The formula for GDP is:
Y = C + I + E + G
where
Y = GDP
C = Consumer Spending
I = Investment made by industry
E = Excess of Exports over Imports
G = Government Spending
So take a look at the formula:
Given Consumer Spending is in the tank and declining, Industry Investment is unknown, our trade balance is negative, and Government Spending is growing thanks to lots of bond sales. To get Y to go up we might see some help from Industrial Investments if the globalizers of the world realize they better invest in the US in order to help preserve GDP enough for us to continue to patronize them. But, really there is not much choice in the matter as far as getting our exports to grow and provide national income to increase. If we don't GDP will just continue to slide downhill towards.
Tuesday, March 9, 2010
Complexity and Collapse.. Niall Ferguson
Another great Niall Ferguson article:
http://www.foreignaffairs.com/articles/65987/niall-ferguson/complexity-and-collapse
He gives some great examples of previous empires collapsing relatively quickly, and warns the US that we could face the same fate due to our financial situation.
http://www.foreignaffairs.com/articles/65987/niall-ferguson/complexity-and-collapse
He gives some great examples of previous empires collapsing relatively quickly, and warns the US that we could face the same fate due to our financial situation.
Monday, March 8, 2010
Complex Zerohedge Post - Worth the read
http://www.zerohedge.com/article/gary-gorton-shadow-banking-system-run-and-interplay-shadow-and-traditional-banking
"Yet should shadow baning disappear, the tranche above it (or below it by seniority) would disappear as well. And with 90%+ of global liquidity gone, and no additional source of "credit" money to fill the Fed's infinite demand for monetary supply, asset prices will explode (forget about gold - one apple will be $6,000 an ounce). Deflationists are right that ceteris paribus asset prices will decline, and that the Fed is powerless to stop this. Yet deflationists take one huge variable for granted: that the existing liquidity pyramid will persist. It is obvious that should another systemic stress episode emerge and money contract by a massive amount, the end consumer will matter little when total global credit collapses from $600 trillion to mid double digits, thereby decimating the real shadow monetary base, and realligning global assets with a liability side in flux. After all, the key offset to CPI going stratospheric over the past 30, 50 and even 100 years has been precisely the emergence of the alternative banking system, with its influx of tens if not hundreds of trillions of "shadow" dollars, which almost ceased to exist in the 2007-2009 crisis. The netting of intangible money to tangible currency in circulation would be a forced explosion in the money multiplier by the same amount as the shadow economy has sucked out in a vacuum of expiring credibility overnight." - T.D.@Zerohedge
"Yet should shadow baning disappear, the tranche above it (or below it by seniority) would disappear as well. And with 90%+ of global liquidity gone, and no additional source of "credit" money to fill the Fed's infinite demand for monetary supply, asset prices will explode (forget about gold - one apple will be $6,000 an ounce). Deflationists are right that ceteris paribus asset prices will decline, and that the Fed is powerless to stop this. Yet deflationists take one huge variable for granted: that the existing liquidity pyramid will persist. It is obvious that should another systemic stress episode emerge and money contract by a massive amount, the end consumer will matter little when total global credit collapses from $600 trillion to mid double digits, thereby decimating the real shadow monetary base, and realligning global assets with a liability side in flux. After all, the key offset to CPI going stratospheric over the past 30, 50 and even 100 years has been precisely the emergence of the alternative banking system, with its influx of tens if not hundreds of trillions of "shadow" dollars, which almost ceased to exist in the 2007-2009 crisis. The netting of intangible money to tangible currency in circulation would be a forced explosion in the money multiplier by the same amount as the shadow economy has sucked out in a vacuum of expiring credibility overnight." - T.D.@Zerohedge
The people that actually make our society work!
The airline industry in the USA is a great example of the constant decay we see in our country. Speaking with some fellow pilots in Denver yesterday we chatted about the constant slow death of the airline pilot career. Older pilots are refusing to retire, airlines are slowly devolving and losing money. There are no decent paying flying jobs available right now in the US; they are all overseas in China, India, the Middle East, etc. Yet, somehow the airlines find plenty of young kids to fly for sub $20k a year to fly people around in RJs and Turboprops, while the top paying flying jobs have now all moved overseas. If you are a highly experienced pilot the only way to get a reasonable income is to go overseas. Yet, for those starting out they have to spend $50-100K to get the training they need to be a new hire pilot. Go figure! One of the pilots remarked, after telling me that his company will shut its doors in September, that one of these days they will stop using the phrase "going postal" and start saying "going airline".
Consider the situation we face in our country when well meaning Air Traffic controllers face losing their jobs for letting their kids say "Adios" to an airplane on a take kids to work day? There was no threat to the flying public, the ATC controllers in JFK are top-notch. What happened is that some no-nothing and do-nothings on TV decided to have a field day at the expense of some Dads that help keep everyone save and make America actually work on a daily basis. Until we as Americans wake up and start to value these people that sustain the daily functions of our society, we will see a continual decline in the status quo. What does it say about a country where those that are celebrated are those that contribute absolutely nothing to the functioning of the society ? Meanwhile those that do make this society work are continually harassed and punished for small liberties that actually help sustain the overall economic machine.
In the future, I predict that the people that made their riches skimming profits from transactions, and others that only take value from our society will see their fortunes decline. Where we are headed it will be those that add value to society that actually get ahead again. Firemen, Police, Garbage-men, Mechanics, Teachers, Pilots, Bus drivers, Train Engineers, Air Traffic Controllers, Farmers....these will be our heros again someday. I just hope it happens before we see our society collapse under all of the weight of all the leeches the productive people are forced to carry.
Want success in the future? Start with actually doing something that helps society: Build something, Grow something, Do something. If you don't prepare to suffer.
Consider the situation we face in our country when well meaning Air Traffic controllers face losing their jobs for letting their kids say "Adios" to an airplane on a take kids to work day? There was no threat to the flying public, the ATC controllers in JFK are top-notch. What happened is that some no-nothing and do-nothings on TV decided to have a field day at the expense of some Dads that help keep everyone save and make America actually work on a daily basis. Until we as Americans wake up and start to value these people that sustain the daily functions of our society, we will see a continual decline in the status quo. What does it say about a country where those that are celebrated are those that contribute absolutely nothing to the functioning of the society ? Meanwhile those that do make this society work are continually harassed and punished for small liberties that actually help sustain the overall economic machine.
In the future, I predict that the people that made their riches skimming profits from transactions, and others that only take value from our society will see their fortunes decline. Where we are headed it will be those that add value to society that actually get ahead again. Firemen, Police, Garbage-men, Mechanics, Teachers, Pilots, Bus drivers, Train Engineers, Air Traffic Controllers, Farmers....these will be our heros again someday. I just hope it happens before we see our society collapse under all of the weight of all the leeches the productive people are forced to carry.
Want success in the future? Start with actually doing something that helps society: Build something, Grow something, Do something. If you don't prepare to suffer.
Thursday, March 4, 2010
Classic Denninger! Deflation
Classic Denninger! Read the article at the link:
http://market-ticker.denninger.net/archives/2035-Its-Called-DEFLATION-Folks.html
"You cannot continually offshore your better-paying labor to China for the purpose of being able to have a $30 DVD player, destroying the $40/hour skilled job base and replacing it with $7/hour burger flippers and espresso-shot-pullers, and maintain the ability to commit compound annual growth rates of 5, 6, 7% or more to public-sector employees. Doing so inevitably destroys the tax base necessary to meet those commitments, and once the destruction has occurred it cannot be un-done." Karl Denninger
My sentiments exactly! We must become a productive country again, or we will not see our GDP grow. What will it take? Reduce government overhead on business, reduce taxes, become protectionist again, kick out illegal immigrants and defend our borders, and become energy self-sufficient as much as possible. Until we start doing these things our income base will continue to shrink. It is that simple!
http://market-ticker.denninger.net/archives/2035-Its-Called-DEFLATION-Folks.html
"You cannot continually offshore your better-paying labor to China for the purpose of being able to have a $30 DVD player, destroying the $40/hour skilled job base and replacing it with $7/hour burger flippers and espresso-shot-pullers, and maintain the ability to commit compound annual growth rates of 5, 6, 7% or more to public-sector employees. Doing so inevitably destroys the tax base necessary to meet those commitments, and once the destruction has occurred it cannot be un-done." Karl Denninger
My sentiments exactly! We must become a productive country again, or we will not see our GDP grow. What will it take? Reduce government overhead on business, reduce taxes, become protectionist again, kick out illegal immigrants and defend our borders, and become energy self-sufficient as much as possible. Until we start doing these things our income base will continue to shrink. It is that simple!
Wednesday, March 3, 2010
Where to invest now?
I have been trying to decide how I want to invest some new money, and I am having a very difficult time doing it. The current investment climate is just bad. On every front I see risks like Sovereign Default, Deflation, Inflation(not so much right now), Overwhelming debt at all levels of the economy, the list goes on and on. I find myself leery of putting more money into an IRA or 401K that goes on to support the Goldman Sach's of the world. I don't want a pile of Gold or a bunch of new in box guns in my closet either. Do I pay down debt, when I might lose my job in the Fall, and then lose the underlying asset anyway because I can't pay? I want to keep cash on hand in that scenario. So I find myself feeling an interesting conundrum, and I have to believe that this feeling is not only mine. What makes it hard is that I don't want to spend it either. I think this is probably a feeling penetrating our economy right now. It helps explain why our economy may be in a true deflationary spiral. People are holding on to their cash, and monetary velocity is almost nil. Don't want to spend, don't want to invest, until this feeling abates I see our economy slowly sliding downhill.
I do have some general investing thoughts:
Don't use the 'Too Big to Fail' Banks. You just feed the Borg if you do. Credit Unions are a relative island of peace and tranquility.
Avoid investing in Funds. Invest in stocks directly. You cut out the investing middlemen. You get to vote as a shareholder. You can still get a good yield if you look for it. You minimize the support of too big to fail, and you eliminate a lot of derivatives exposure. But, buying stocks implies you understand the company, and believe in it. Not easy to do.
Don't buy US bonds. The only place for US interest rates to go is up. Worldwide Sovereign Debt is a Volcano waiting to explode.
Everything I read says Peak Oil is real, and I believe in the theory. Investing in energy is a good bet. Buy energy stocks. Make your own life more energy efficient. Expensive oil will return.
If you don't a strong reason for owning an investment sell it.
That is all for now.
I do have some general investing thoughts:
Don't use the 'Too Big to Fail' Banks. You just feed the Borg if you do. Credit Unions are a relative island of peace and tranquility.
Avoid investing in Funds. Invest in stocks directly. You cut out the investing middlemen. You get to vote as a shareholder. You can still get a good yield if you look for it. You minimize the support of too big to fail, and you eliminate a lot of derivatives exposure. But, buying stocks implies you understand the company, and believe in it. Not easy to do.
Don't buy US bonds. The only place for US interest rates to go is up. Worldwide Sovereign Debt is a Volcano waiting to explode.
Everything I read says Peak Oil is real, and I believe in the theory. Investing in energy is a good bet. Buy energy stocks. Make your own life more energy efficient. Expensive oil will return.
If you don't a strong reason for owning an investment sell it.
That is all for now.
Tuesday, March 2, 2010
Hire illegal aliens and go to jail! About time!
http://www.cnbc.com/id/35605707
Utah just passed a law that sends you to jail if you hire illegal aliens.
Excellent idea to put Americans back to work.
Utah just passed a law that sends you to jail if you hire illegal aliens.
Excellent idea to put Americans back to work.
Monday, March 1, 2010
The "Walmart Model of Self-Destruction"
"The Wal-Mart Model of Self-Destruction is simple: low prices are all that matters.
The devolution of the American citizen into a self-destructing consumer starts with the devolution of a value system into an monomaniacal obsession: "the only thing that matters is the lowest price," regardless of the true costs or consequences." Charles H. Smith
http://www.oftwominds.com/blogjan10/self-destruction01-10.html
My sentiments exactly. This article discusses the social and economic consequences of the 'Walmart-Model' on our country.
Buy American!!!!!
Consequences:
Buy American: American Jobs, American Income, American Taxes, USA all the way. Success for you and me.
Buy Chinese: Chinese Jobs, Chinese Income, Chinese Taxes. Great for China, Shipping Companies, and the possibly if it isn't copied an American might get some design income.
Buy Chinese long enough, and the US economy tanks, like it is right now.
The devolution of the American citizen into a self-destructing consumer starts with the devolution of a value system into an monomaniacal obsession: "the only thing that matters is the lowest price," regardless of the true costs or consequences." Charles H. Smith
http://www.oftwominds.com/blogjan10/self-destruction01-10.html
My sentiments exactly. This article discusses the social and economic consequences of the 'Walmart-Model' on our country.
Buy American!!!!!
Consequences:
Buy American: American Jobs, American Income, American Taxes, USA all the way. Success for you and me.
Buy Chinese: Chinese Jobs, Chinese Income, Chinese Taxes. Great for China, Shipping Companies, and the possibly if it isn't copied an American might get some design income.
Buy Chinese long enough, and the US economy tanks, like it is right now.
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