Additional Pages

Wednesday, February 16, 2011

As An Apocolypse, It's A Pretty Good Show

It doesn't take but a cursory glance at the headlines of any newspaper to figure out that the gig is up. Yesterday there was news that Americans were spending more. The official number was .6% in January over .3% in December. Hurrah! It sounds like we just turned the corner on this danged old recession and are progressing quickly to the recovery so well documented at every Obama press conference. One little problem and it's so minor I hate to be a downer by bringing it up, but increased spending does not mean increased economic activity. In this case, it means inflation, which is what the Bernank wants because at least it isn't the more terrifying deflation.

If you were looking for an end to the old America, I think we have found it. Here's how it plays out from here: In a few days or weeks the congress is going to hold a vote to raise the debt ceiling. That vote is the starter pistol to the final sprint toward oblivion. From there, there are only two things that can happen: A) we raise the debt ceiling that will signal to all of our creditors that we will never stop spending and U.S. Treasury bonds start to wobble. To stabilize the bonds the government increases the interest rate paid to those still gullible enough to purchase our debt. Every auction sets a new, higher interest rate to attract buyers and consumer credit begins to reflect this and soon purchasing on credit comes to a halt as the going rate for an auto loan (even to those with good credit) shoots up to 20% or more; B) We don't raise the debt ceiling and checks either start to bounce or are never issued, no cops, no commuter trains, no welfare. This leads to Egypt. I mean, when those on unemployment and welfare can't get paid all hell will break loose.

So, the government, being made up of hearty souls willing to endure any criticism in order to do the right thing, decides to take the soft-landing approach in which the economy is squeezed between high interest rates, inflation and an already high unemployment rate hoping that the self-anesthetized will just go back to their video games, their weed and extra-marital affairs to keep their minds off the fact that the day will come when they will be pulled off the couch by Sheriff's deputies and put on the lawn with the rest of their household goods.

Here's the problem, to lay blame for all of this one would have to go so far back it would be pointless. This is the fundamental problem with democracy that the founders so detested, it leads to populism and populism denies the existence of responsible governance. When success is gauged in spoils brought back to the district, there is no room for fiscal discipline and every election becomes an auction. The very system itself works against responsive government. There is no better example of this than the economic meltdown threatened in 2008. When the government tried to be responsive, it had to abandon the most intricate safeguards against tyranny and tyranny is all that it ultimately produced. Of course, you will never get George Bush to admit to that, but it is true.

So, here we are with a debt that cannot be paid and promises that cannot be met. We have a president more intent on demonizing, belittling and threatening industry on behalf of his socialist and labor union cronies than he is on solving the problems of the economy. Unleashing oil drilling across the nation on public lands and in the gulf would immediately affect spending, the unemployment rate and taxation, but he won't do it because it isn't green and it isn't (for the most part) unionized. He is not a difficult man to understand. If it does not benefit labor unions, government employees, or (hopefully) both, he won't do it.

Sit back, pop some corn and watch it all unfold on television while you try to ignore the deputy banging on the door. Do you really think you are safe?

Graciously linked and quoted at Refreshing The Tree of Liberty.
Graciously linked at Western Rifle Shooters Association.
Graciously linked at Ramblings From Oz.

14 comments:

  1. No I do not feel safe at all, yet I have most everything needed, skills, preps, weapons etc.
    All that stuff probably not meaning more than a current mental security blanket !
    Gonna be another wild ride. Really feel for those caught unaware, stupid is, as stupid does.

    TL, I gather you knew what a WW was....

    May we live in interesting times, a pledge made long ago is one made for life.

    ReplyDelete
  2. Spud, yeah. I was a crew chief on an F-15. I thought that might have been what you ejected out of. I knew a pilot, the only one to survive an F-15 eject at the time, who had to correct all of his medical records to show he was about 2 inches shorter after the eject.

    ReplyDelete
  3. This comment has been removed by the author.

    ReplyDelete
  4. There's a scene in the Bruce Willis land-on-an-asteroid movie where another character, played by Steve Buscemi, realizes their mission to divert or destroy the asteroid before it hits Earth will fail.

    He raves, in best Buscemi fashion, "It's time to embrace the horror...."

    Clip here.

    Yup.

    ReplyDelete
  5. This comment has been removed by the author.

    ReplyDelete
  6. Getting closer to that free-fall stage(if we are not already there).It's that Sudden Stop, when Creditors and Investors just Will Not Buy Government bonds at ANY Price/Interest Rate. I have seen some articles about how it appears that Congress is going to stick to their promise of cutting that 100 Billion from the Budget, But I believe it will have to be more that Double that amount to have any real effect on this Debt Bubble.

    Dennis
    III
    Texas

    ReplyDelete
  7. I agree with your sentiments, TL.

    We're in for a hell of a stop.

    What is necessary, then?

    The means to produce.
    The means to defend.
    The means to resist.

    Your tribe. Family. Trust. Knowledge.

    Everything else is waste.

    Everything.

    Resist.

    AP

    ReplyDelete
  8. I don't concern myself with 'thinking' I'm safe. I concern myself with the probabilities of making it through the 'first big die off'.

    Having a clear objective helps keep things in focus.

    And Buscemi's better when he's riding the nuke out of the crawler.... :-)

    ReplyDelete
  9. Damn good piece, T. L.! If it weren't for the horror of it all, the freak show aspects of this could be entertaining: the bulk of our national leadership acting as if they are the spawn of a union between Al Capone and Alfred E. Newman's retarded sister.

    The other movie scene that comes to mind is from Kubrick's "Dr. Strangelove":

    http://www.youtube.com/watch?v=wcW_Ygs6hm0

    ReplyDelete
  10. The really bad times have been put off for 10 years. The Baby Boomers have breathed a collective sigh of relief as "the problem" has been pawned off on Gen X to fix. By then it will be too late.

    ReplyDelete
  11. Nothing to worry about. The new season of DWTS will start soon and in the meantime we have American Idol to keep us entertained.

    Is there anything we can do to stop the never ending increases in cable rates? FGS it's getting ridiculous.

    Oh yea, OMG, have you seen the New Crimimal Minds show. OMG! OMG! OMG!

    Diamondback

    ReplyDelete
  12. Gonzolo Lira has done some great work to show that the Fed is buying 67% of T-bills for the rest of the year. (ie: QE2)

    Thus, TEOTWAWKI will not be brought on by higher interest rates on T-bills. First off, anyone buying 67% of a market controls the price. Secondly, the move to buying 100% from 67% would not be any more noticable then the move from 0% to 67% was in the last year.

    So, the wheels may indeed come off the train, but the T-bill auction will not be the proximate cause.

    Hyperinflaction seems even more likely, though. We are already following the path that others have blazed toward currency destruction. That is: we are monitizing the debt, or put more simply we are printing money out of thin air to keep the government afloat.

    The signs of inflation are all around us now, from wheat to silver ($32 an oz).

    ReplyDelete