Financialization’s Self-Destruct Sequence

Financialization’s Self-Destruct Sequence

Submitted by Charles Hugh Smith from Of Two Minds

Financialization’s Self-Destruct Sequence

We are in the latter stages of financialization’s self-destruct sequence.

Like all systems that follow an S-curve of growth and decay, financialization cannot return to its growth phase. I addressed the impossibility of reflating asset and credit bubbles in Let’s Pretend Financialization Hasn’t Killed the Economy (March 8, 2012).

But there is another dynamic at play: a self-destruct sequence triggered by central bank and Central State efforts to reflate asset and credit/leverage bubbles. All central bank and State policies aimed at driving capital into risk assets boil down to reflating phantom assets purchased with debt by issuing more debt that is based on newly issued phantom assets.

Phantom assets purchased with debt cannot be reflated by issuing more debt that is based on newly issued phantom assets. Piling more debt/leverage on a sandpile of phantom assets (CDS, bonds that cannot possibly be paid back, empty condos in the middle of nowhere, etc.) only heightens the probability that the unstable pile will collapse.

The implicit Central Planning campaign to trigger “mild” inflation is part of the self-destruct sequence. Central planners metaphorically fight the last war, or at best the last two wars, and so they remain blind to any dynamics that did not exist in their case studies.

In the 1970s, central bank easing and Central State stimulus sparked a nasty bout of accelerating inflation. This reduced the weight of debt because wages inflated along with goods and services.

Now that labor is in surplus globally, wages are not keeping pace with inflation. This completely changes the dynamic of “mild” (3%) inflation: as the purchasing power of earned income declines, servicing debt becomes more burdensome. Inflation only renders debt less burdensome if wages rise at the same rate as the cost of goods and services.

In a decade of “mild” inflation and stagnant wages, households will experience a very real-world 30+% decline in their income. Meanwhile, their debt payments remain unchanged.

Mild” inflation in an era of stagnant earned income will crush households, forcing liquidation or renunciation of debt. What happens as debt service costs rise as a percentage of real net income? There is less cash for consumption, and so the consumer-dependent economy spirals down. Credit is poured into the banking sector, but little trickles down to high-debt, stagnant-income households. This is deleveraging writ large.

What happens when central bank financial repression–lowering the yield on cash to near-zero–causes pension plans to fail and savings to earn negative real returns? Households must save more income to compensate for the destruction of yield by Central Planners.

These mutually reinforcing dynamics feed the self-destruct sequence’s inevitability. Add up the self-destructive forces: declining purchasing power, negative real returns on savings, rising debt based on newly issued phantom assets, and promises unbacked by real assets or based on declining national surpluses.

As Central Planning reflation of phantom assets fails, the credibility of the Status Quo institutions that promised success will crumble. I have described the dynamics of Heightened Expectations and the Collapse of Credibility and discussed The Keys To Understanding the Collapse of the Status Quo: Credibility and Expectations.

In the euphoric blow-off top phase of financialization, expectations of security and wealth were raised by political Elites anxious to mask the systemic looting of national wealth by financial/political Elites. Promises were even easier to issue than paper money.

But issuing promises, credit and leverage did nothing to expand the national surplus or the resources that ultimately back the promises and credit.

We can characterize the sudden, explosive convergence of fantasy (phantom assets and promises) and reality as Snapback! (October 9, 2008). The entire project of Central Planning (central banks and States) is to “extend and pretend” the Status Quo in the hopes that the gargantuan divergence between fantasy and reality will magically close as the result of “aggregate demand” or a new business cycle, or some other version of renewed “animal spirits.”

But “animal spirits” require trust in the transparency and fairness of markets and Status Quo institutions. As markets are rigged and manipulated to manage perceptions and enable vast skimming operations to continue, the credibility of the markets, politicos, State oversight agencies and the financial sector is eroded.

As central bank/State reflation of phantom assets fail, the credibility of the entire political/financial Elite and the institutions they control will be irrevocably lost.

Financialization’s self-destruct sequence has been triggered, and there is nothing anyone can do to stop it. The workings of the machine are opaque, and the interactions complex. We cannot know when the sandpile will collapse, or what the proximate cause of the collapse will be, but we can know that the unstable pile will collapse under the weight of the system’s illusory assets, fraud, collusion, embezzlement, corruption and corrosive dependence on artifice and lies.

We also know that self-serving vested interests will continue their pillaging until the destruct sequence’s final implosion brings the entire rotten edifice down in heap of empty promises.

In a word: Snapback!

Advertisements
Posted in Uncategorized | Leave a comment

Zerohedge: Behold The Fed’s Takeover Of The Bond Market

Behold The Fed’s Takeover Of The Bond Market

Submitted by Tyler Durden on 08/16/2012 19:48 -0400

The must see time lapse video below courtesy of Stone McCarthy shows the distribution across the entire curve of the US marketable debt, as it was held by either the Fed, or the private sector over the past three unconventional monetary policy programs: starting in 2003 and concluding yesterday. In one short minute, this clip demonstrates very vividly how the Fed effectively took over the US bond market.

Some things to note:

  • The reason why the Fed no longer holds any debt with a maturity under ~3 years is because of the “ZIRP through late-2014” language which means there is no point for the Fed to hold that debt. For all intents and purposes it is the equivalent of cash. Debt maturing between now and 2014 amounts to just under $5 trillion.  Which means the Fed only has about $5.5 trillion in marketable debt with a maturity over 3 years to work with, and already owns about a third of it. It also means that as all the Fed’s holdings in the under 3 year category are sold, Twist will have to be extended, and with it the ZIRP language to beyond 3 years – most likely 5 or so.
  • What is very visible is how the Fed had no choice but to expand its SOMA limit holdings per CUSIP from 35% to 70%. Soon, once the Fed owns 70% of every longer-dated Cusip, it will have no choice but to again extend the maximum permitted holdings, this time to 100% as it gradually become the entire market.

If after watching this clip anyone still believes that the biggest bond market in the world resembles anything even close to fair and efficient or which would have clearing prices anywhere near to where they transact now, they may want to double down on the FaceBook IPO allocation now.

Initial marketable debt distribution by holders starting back in2003 when the first Fed monetary policy started:

And most recent.

Average:
Posted in Uncategorized | Leave a comment

A Waiting Game

This is written from a European perspective but applies just as well to US banks. Banks are hoarding cash because their survival depends on it. They are all technically insolvent.

A Waiting Game

by Golem XIV

Governments, so they tell us, want the banks to lend into the real economy to get people working, earning, buying and paying both their taxes and their debts. Problem is, I do not think the financial industry shares this desire. They say they do. They say they are doing their bit. But they are not. The abject failure of the UK’s 2011 ‘Project Merlin’ is a good example. Project Merlin was the voluntary agreement between UK banks and government to set and meet targets for lending to small and medium businesses.  The big five UK banks all agreed to lend. The data showed, however, that they all lent less in every quarter. I talked to the CEO of a UK bank which specializes in raising capital for medium sized businesses and he told me there was less and less funding around. He said the big banks and the big funds simply didn’t want to know. They had other plans.

Of course if the banks had no money to lend then the mystery would evaporate. The story would be they’re not lending because they can’t, because they have no money. But the banks do have money. Lots of it. We are so mesmerized by those banks which are close to the edge – like the Spain’s moribund Bankia and the rest of Spain’s Cajas that we forget others have lots of cash. I’m not saying the headlines aren’t correct.  They are. Spain’s banks are now totally dependant on massive loans from the ECB. The amount they have to borrow from the ECB has gone up every month for the last ten. Last month they borrowed €402.19 Billion. Nearly half a trillion. The rest of Europe’s fine banking system borrows another €600 billion or so.

BUT at the same time as Europe’s banks are sitting on and dependant for their survival on over a trillion euros borrowed from the ECB they also deposited about €860 billion of that money back at the ECB. Until recently the ECB (read tax payers) actually paid the banks interest on this money. Which means we, Europe’s tax payers,  have been forced to give the banks money. The banks have then refused to lend any of it back. Instead they put it in the ECB where they claim interest which we have to pay. We pay twice and get nothing.

Recently the ECB tried to ‘encourage’ the banks to move this money out and lend it by lowering the interest it pays to zero. So the banks could leave the cash in the ECB and get nothing. Or they could lend it out and earn something.  The banks, all of them, chose the former. They simply shifted the money from where it was no longer welcome and put it instead in another part of the ECB which was still accommodating.

Remember not a single one of those euros was earned by any of Europe’s banks. The entire amount is tax payers money. It is bail out money. It is the money the banks were ‘given’ in order to ‘save’ them, restore their finances and allow them to once again lend in to the real economy so that ther rest of us could also get a little help. That has been the only policy allowed anywhere in America, Japan and Europe for the last 4 years and it has failed. The banks are not healed, they  are not lending and the rest of us are now told we must accept a decade of austerity to off-set the levels of debt, that the bank bail outs have massively inflated.

But angry as that makes me it’s not the point. The point is to ask why all the banks are hoarding cash? Why are they willing to accept zero return rather than put it to work?

The standard answer is that the banks know they have many more bad loans and rotten ‘assets’ whose value could suddenly plunge if they are ever forced into the open and valued. So it is prudent to have cash around to cover any sudden forcible recognition of losses. Hidden losses are fine. A bit like illegal libor rates or money laundering. All in a bankers day and fine as long as it never comes to light. It is only getting caught which is frowned upon.  Mea culpas are so irritating after all and some of the fines are actually large enough to nip a little out of the bonus pot!

All of the above has certainly been the case over the last 4 years and to some extent still is. The German banks in particular are still sitting on a mountain of assets they have still not marked to anything like market value. Those ‘assets’ and loans are presently sitting in off-balance sheet vehicles registered in Ireland.

How can I say this? A long conversation with a former Landesbank CEO that’s how. All banks are guilty of hiding losses by refusing to mark their ‘assets’ to market. But the person I talked to said the German Landesbanks in particular are still hiding rather large unrecognized losses in their Irish registered, off-balance sheet vehicles. Safely hidden away from the prying eyes of regulators and citizens.  The joys of regulatory arbitrage!  But should any of these dirty secrets be exposed to the harsh light of market pricing then the banks in question must have either cash hoarded away or feel they can cry to friends in government and the ECB will bail them out.

That is the traditional answer for why banks might hoard cash and it seems it is still partly correct. I should also say it’s not just in Europe that the big banks are hoarding cash. Recent figures from the FED estimate that US banks are hoarding about $1.6 Trillion in cash. Most of it earning interest.

But I have felt over the last few weeks that something about this on-going debacle and attack on our democracy and sovereignty has changed. I do not believe the banks and other financial entities are hoarding cash just as a safety measure.

Let’s look at where we are. According to ECB board member Benoit Coeure, speaking officially in July,

Europe may be sliding back into its second recession since 2009 and growth is also slowing in the United States and China.

“I don’t think we are moving toward a global recession; we are moving toward very low growth or no growth at all,” he said.

A masterful, mouthful of understatement. Rates have been held at close to zero for a couple of years now. The so called extra-ordinary measures have become fixtures, without which the chances of  the big, debt-riddled banks surviving, is zero. The problem is, while essential for their survival, such low to zero rates are also killing them. Long periods of very low rates mean the banks can’t find a return on their money through any sort of regular lending.  Thus the very measures which keep the banks alive, so they can ‘start lending again’, guarantee they won’t.

On top of which this lack of lending and general crippling of the real economy has meant real growth – as opposed to accounting ‘growth’ by means of moving numbers from one column to another column, has not only not recovered but has decreased.  Having opened the public vein for on-going transfusions into the banks, the self same banks have insisted the poor slobs who are being bled for them, must also go on an austerity diet.  And thus nations already crippled by private debt made public liability, are now also being starved.  The Greek and Spanish people have no chance of ‘recovering’. All that awaits them is a boot stamped into their faces over and over and over.

Not that the financial class cares. What they do care about is the lack of ‘yield’ available to them on their money. No ‘yield’ means no profits.  And many banks and funds are not profiting the way they would like. For example this Zerohedge article reports how 68% of Growth Funds which invest $278 billion are underperforming. For ‘underperform’ read not making a profit for their investors who will therefore soon chose to leave.

So what do you do if you can’t get no yield satisfaction? Yes, you reach for the bottle marked ‘Yield’ and ignore  the warning which reads, “Caution: Use sparingly. Contains high levels of risk.”

Here is how an article in International Financing Review put it earlier this month,

The downward pressure on yields has continued, intensified by the ECB’s slashing of interest rates…. Real-money managers are returning to exotic derivatives strategies not seen since the start of the 2008 financial crisis in an effort to boost yields in an increasingly low-returning environment.

What could go wrong? The article continues,

Real-money managers in the eurozone core have all but exhausted conservative means of boosting returns and – faced with negative yields in sovereign markets – they are now ploughing money into riskier assets, often using exotic derivatives to increase value.

“Low yields have really become a big problem over the past eight months and it’s gone from bad to worse,” said Adrian Bracher, head of rates structuring for Europe at Credit Suisse. “These big investors are now opening up for more risk tolerance.”

“Over the past six months we’ve seen the return of relatively exotic structures, and we’re not talking small-fry bets. We’ve seen a number of Northern European managers taking significant views on inter-currency spreads – things we saw a lot three to four years ago but haven’t seen a lot since,” he added.

Exotic derivatives. Big bets. Sounds great.

Then let’s add in this headline from The New York Times (15.August.12),

Risk Builds as Junk Bonds Boom

The market for junk bonds, risky corporate debt that pays high interest rates, is red hot….Fueling this frenzy are investors of all stripes — including individuals, mutual funds and state pensions — who are desperate for returns in their bond portfolios and willing to take more risk to get them. Demand is insatiable, even as analysts warn that the market has become overheated and is ripe for a fall.

Exotic derivatives, big bets and junk bonds. Booyah!

Now it might seem that hoarding cash is the opposite of all this and that the renewed growth in risky investments, argues against the idea that banks are hoarding. Surely searching for return somewhere, even if not by not lending in to the real economy, is still the opposite of hoarding. Actually I don’t think it is.

I think banks and other financial institutions are, as the above quoted articles say, desperate for return. They all need cash flow to stay alive and profit to keep clients. Bank bail outs have largely taken care of cash flow for the last few years. That, and not what we were told, is what the bail outs were for.  And with the cash pile they have hoarded they could continue to use this public money-mountain to pay off their debts for years to come. But that will not bring growth.

So there is a search for yield and a growing belief that risk is back on the menu. The hoarding is, I believe, part of this strategy. The hoarding is not just for safety. As this article from Bloomberg reports,

Hedge funds and private-equity firms have amassed an unprecedented 60 billion euros ($74 billion) to invest in distressed debt in anticipation that Europe’s sovereign-debt crisis will push banks into the biggest fire sale in history. The problem is few are selling.

I don’t think it is just Hedge funds and Private Equity firms that are looking forward to profiting from vast fire sales from bankruptcies and sovereign defaults. I think the big banks are waiting too.

The banks aren’t using their bail out money to help the real economy because they think there is a real chance the real economy isn’t going to recover the way our idiot politicians tell us it is going to. At least not before a wave of corporate bankruptcies and one or two huge sovereign defaults.

Look at it this way. Strategy A) the bank plays nice like the government says and lends at a pathetically low rate to a viable but cash starved business. The business gasps with relief, wins orders for more widgets and pays back the loan. This strategy provides employment and therefore a success story for the politician. The banks gets a pitiful return over the life of the loan. Strategy B) the bank quietly refuses to loan to the widget maker or any other business in the real economy. It might agree to short term funding via high yield bonds. With bonds the bank gets a higher return, can agree to a short duration bond only and can sell the  bond on if necessary. All round better than ‘lending’ the money to the business. But generally strategy B) says, ‘Don’t loan. Wait.’

Wait for the struggling business to collapse and then lend the money to a buy-out fund who will buy up the bankrupt business for a fraction of what it was worth as a going concern, be able to shrug off many of the old debts in bankruptcy protection, renegotiate terms and conditions with the workforce who will be desperate and worried and sell on the ‘restructured’ company for a quick and large profit.

Which strategy would a banker chose – help the economy or help themselves? The same Bloomberg article reports,

Apollo Global Management LLC (APO), Oaktree Capital Group LLC (OAK), Avenue Capital Group LLC and Davidson Kempner Capital Management LLC are among U.S. firms that have flocked to Europe, setting up offices and raising funds to benefit from the most severe period of distress in the region. The money raised for distressed-debt funds gives the firms about 100 billion euros to spend on deals including leverage, according to PricewaterhouseCoopers LLP.

But as the article says, while the vultures are gathering the problem is that no one has yet died. The European banks and their sovereigns who hold so many of the potentially juicy bad loans and ‘assets’ that could end up in a fire-sale, have so far been propped up with endless ECB money. The article quotes Elliot Management which is significant since Elliot Management are part of Elliot Associates who are one of the world’s largest and most aggressive vulture funds.

“The troubles in Europe have not yet created the volume and types of bankruptcy and restructuring opportunities that might be expected from difficulties of such monumental proportions, most likely because the governments and banks are essentially holding each other up and keeping the private sector afloat — for now — with lots of freshly minted paper money,” Elliott Management wrote in a letter to investors in April.

And so we have a strange situation where the big banks are sitting on piles of bad assets. Should they have to sell, or should a whole sovereign be forced to sell at knock down prices in a disorderly collapse – or even in an orderly looting organized by former bankers who are now running in to the ground every austerity-wracked nation they have been given – then there will be epic fire-sales. Those with cash on hand could make the killing of a generation. Possibly by killing a generation, but why lower the tone by mentioning those who don’t really matter?

So I think the big banks are hoarding and waiting. Each hopes not to fall first. Those who do fall will be pciked clean by those still standing. This is what the bail out money is being used for.

I don’t think the banks will lend in to the real economy because they calculate that such a socially useful strategy gives low returns to them. Should they ‘defect’ from this generous strategy and chose instead the selfish strategy of ‘hoard and wait’ then they could make not just a large return but an epic one. They could emerge as owners of everything people will need in order to rebuild their lives. Water, power, rail, hospitals, you name it.

This is what the banks are waiting for. And our politicians are giving them our money so they can.

Posted in Uncategorized | Leave a comment

41 Years After The Death Of The Gold Standard, A Look At “How We Ended Up In This Economic Purgatory”

by Tyler Durden

Via Kenneth Landon, JPMorgan… Yes, JPMorgan

Landon Lowdown: “Brother, Can You Spare $1.37”?

As we await the latest developments out of the Eurozone and Washington, I take a moment to look back on this very important day in history. If you want to understand current events, then you first have to understand history. How did we get here? More specifically for financial markets, how did we end up in this mess — this economic purgatory? The answer boils down to a simple proposition on the philosophical level, which I will leave to the reader to identify because my doing so would likely ruffle a few too many feathers. So I will keep the discussion on the concrete-bound level. However, I am willing to say that the political philosophy that drove us to the current state of affairs was responsible for the respective concrete measures implemented over the years. The crisis in confidence that we observe today resulted from cumulative effects of those measures. 

This being August 15, 2012, students of the history of monetary economics no doubt are aware that this is the 41th Anniversary of the breakdown of Bretton Woods. It was on this day 41 years ago that President Nixon defaulted on the promise to exchange gold for paper dollars presented for exchange by foreign central banks. Aug 15th marks the anniversary of the collapse of Bretton Woods and the gold-exchange standard that was established after WW II. (Notice that dollar debasement has been bipartisan over the years: Republicans Nixon and Bush and Democrats Carter and Obama have all presided over major declines in the value of U.S. money.)

The current crisis in the global monetary system pales in magnitude to the sundering of gold from central banks’ fiat paper currencies in 1971. That is, we are not witnessing the wholesale dismantling of an entire monetary system. What we are witnessing is a loss of confidence in the current monetary system, which, of course, is equivalent to a loss of confidence in central banks’ ability to restore stability. However, the decision to renege on the gold-exchange standard that was made 41 years ago is still reverberating today. In *fact*, many or most of the problems observed today are the direct result of wrong-headed discretionary monetary policies.

What was it that made the current morass inevitable once the paper dollar was severed from gold?

 The answer is simple: fiat paper money that is not grounded in any objective standard can be manipulated at the whim of the issuer. Without the requirement to exchange fiat money for gold or some other commodity, the central bank can issue unlimited amounts, thus making its value subject to extreme volatility and, as we have seen, perpetual debasement.

Chart 1 (above) shows the extent of debasement of the value of U.S. money since 1913 when the Fed was established. To summarize in simple terms, a child with 4 cents in his pocket could buy the same amount of candy in 1913 as his descendant could with $1 in 2012. Today, it takes a quarter to buy what a penny did in 1913. The dollar has lost 96% of its purchasing power since 1913! (using CPI statistics) Once the dollar lost all linkage to gold, its value plummeted at an accelerated rate. Since 1971 when Bretton Woods was intentionally dismantled, the dollar has lost 82% of its purchasing power. 82%! Because Nixon sabotaged the last vestige of honest money, a child in 2012 would need $1 to buy the same amount of candy purchased by children for just 18 cents in 1971.

Monetary debasement has rendered obsolete the expression “brother, can you spare a dime?”, which was the title of a 1930’s Depression-era song that became a common refrain of panhandlers in those days. In 2012, the equivalent would be “brother, can you spare $1.37?”

An honestly governed gold standard eliminates “discretionary” monetary policy by centralized authorities (i.e., central banks).

Gold is an honest check on the amount of leverage that can build in the financial system and it limits the amount of money the government can borrow. A government that does not have a captive central bank and fiat paper currency cannot borrow massive amounts of money (think Greece). Fiat paper money managed by complicit central banks remove any discipline of free-spending politicians. Thus, central banking and huge deficit spending go hand in hand.

Let’s turn to a former Chairman of the Fed to give some added explanation:

“Under a gold standard, the amount of credit that an economy can support is determined by the economy’s tangible assets, since every credit instrument is ultimately a claim on some tangible asset. But government bonds are not backed by tangible wealth, only by the government’s promise to pay out of future tax revenues, and cannot easily be absorbed by the financial markets. A large volume of new government bonds can be sold to the public only at progressively higher interest rates. Thus, government deficit spending under a gold standard is severely limited. The abandonment of the gold standard made it possible for the welfare statists to use the banking system as a means to an unlimited expansion of credit.

 

They have created paper reserves in the form of government bonds which — through a complex series of steps — the banks accept in place of tangible assets and treat as if they were an actual deposit, i.e., as the equivalent of what was formerly a deposit of gold. The holder of a government bond or of a bank deposit created by paper reserves believes that he has a valid claim on a real asset. But the fact is that there are now more claims outstanding than real assets. The law of supply and demand is not to be conned. As the supply of money (of claims) increases relative to the supply of tangible assets in the economy, prices must eventually rise. Thus the earnings saved by the productive members of society lose value in terms of goods.

 

In the absence of the gold standard, there is no way to protect savings from confiscation through inflation. There is no safe store of value. If there were, the government would have to make its holding illegal, as was done in the case of gold [in 1933]. If everyone decided, for example, to convert all his bank deposits to silver or copper or any other good, and thereafter declined to accept checks as payment for goods, bank deposits would lose their purchasing power and government-created bank credit would be worthless as a claim on goods. The financial policy of the welfare state requires that there be no way for the owners of wealth to protect themselves.

 

This is the shabby secret of the welfare statists’ tirades against gold. Deficit spending is simply a scheme for the confiscation of wealth. Gold stands in the way of this insidious process. It stands as a protector of property rights. If one grasps this, one has no difficulty in understanding the statists’ antagonism toward the gold standard.”

 

Alan Greenspan, 1966

When Greenspan later rose to a position of prominent political power when named Chairman of the Fed, he disavowed his essay about gold. However, that disavowal does not detract from the truth of his written word. His words stand on their own. (What changed since 1966 was Mr. Greenspan and not the truth.)

We are currently witnessing in both Europe and the U.S. a crisis relating to the financing of the modern-day Social Welfare State that goes to the core of the generally-accepted political philosophy upon which they rest. The resolution of the problem is therefore not as simple as coming up with a new policy that is a derivation of previous ones (e.g., using debt to solve debt). The real resolution will come only after a major shift in political power, if seen at all, that results in a significant reduction in spending of the respective governments. Otherwise, it will be more of the same: a continued decline in living standards and individual liberty in countries experiencing this rot. Profligate central banks are a symptom and enabler of the political rot. They are not the cause.

 

The chart 2 (above) shows the gold content of one U.S. dollar. Today, one dollar buys a pitiful 0.0006 ounce of gold, which compares to about 0.05 ounce a hundred years ago just before the Fed existed. The deprivations that Mr. Greenspan wrote about are illustrated in the sharp decline in the gold content of the dollar.

 

For point of historical reference, Chart 3 (above) shows the silver content of the Roman Danarius between 64A.D. and 270A.D. You can draw your own conclusions.

Paper money has had the effect in your state that it will ever have, to ruin commerce, oppress the honest, and open the door to every species of fraud and injustice.”

 

George Washington, in letter to J. Bowen, Rhode Island, Jan. 9, 1787

Sadly, few people understand the process by which paper money leads to “fraud and injustice” as President Washington accurately warned in 1787. If they did, then perhaps days like Aug 15, 1971 would never have happened.

To end with one last quote, this time from a Socialist who knew the importance of gold:

 

You have to choose between trusting to the natural stability of gold and the natural stability of the honesty and intelligence of the members of the Government. And, with due respect for these gentlemen, I advise you, as long as the Capitalist system lasts, to vote for gold.”

 

George Bernard Shaw

Shaw wanted to end the Capitalist system and knew, like Greenspan, that gold stood in the way of a Socialist government from achieving its objectives.

August 15, 1971: A day that will live in infamy.

 

h/t Wallstreetmane

Posted in Uncategorized | Leave a comment

Guest Post: A Matter Of Trust – Part Two

» ZeroHedge …===…===…

Guest Post: A Matter Of Trust – Part Two

…—…—… Tyler Durden
…—…—… Aug 7, 2012 17:38 more » …—…—…

Posted in Uncategorized | Leave a comment

Guest Post: It’s A Matter Of Trust – Part 1

Guest Post: It’s A Matter Of Trust – Part 1

Submitted by Jim Quinn of The Burning Platform,

“All the world is made of faith, and trust, and pixie dust.” ? J.M. Barrie – Peter Pan

Faith-Trust-Pixie-Dust_6E9B819C.jpg photos%20of%20wall%20street%20bankers%20associated%20with%20us%20financial%20disaster%2011f9xin.jpg

“The issue which has swept down the centuries and which will have to be fought sooner or later is the people versus the banks.”Lord Acton

Who do you trust? Do you trust the President? Do you trust Congress? Do you trust the Treasury Secretary? Do you trust the Federal Reserve? Do you trust the Supreme Court? Do you trust the Military Industrial Complex? Do you trust Wall Street bankers? Do you trust the SEC? Do you trust any government agency or regulator? Do you trust the corporate mainstream media? Do you trust Washington think tanks? Do you trust Madison Avenue PR maggots? Do you trust PACs? Do you trust lobbyists? Do you trust government unions? Do you trust the National Association of Realtors? Do you trust mega-corporation CEOs? Do you trust economists? Do you trust billionaires? Do you trust some anonymous blogger? You can’t even trust your parish priest or college football coach anymore. A civilized society cannot function without trust. The downward spiral of trust enveloping the world is destroying our global economy and will lead to collapse, chaos and bloodshed. The major blame for this crisis sits squarely on the shoulders of crony capitalists that rule our country, but the willful ignorance and lack of civic accountability from the general population has contributed to this impending calamity. Those in control won’t reveal the truth and the populace don’t want to know the truth – a match made in heaven – or hell.

“Most ignorance is vincible ignorance. We don’t know because we don’t want to know.” – Aldous Huxley

The fact that 86% of American adults have never heard of Jamie Dimon should suffice as proof regarding the all-encompassing level of ignorance in this country. As the world staggers under the unbearable weight of debt built up over decades, to fund a fantasyland dream of McMansions, luxury automobiles, iGadgets, 3D HDTVs, exotic vacations, bling, government provided pensions, free healthcare that makes us sicker, welfare for the needy and the greedy, free education that makes us dumber, and endless wars of choice, the realization that this debt financed Ponzi scheme was nothing but a handful of pixie dust sprinkled by corrupt politicians and criminal bankers across the globe is beginning to set in. A law abiding society that is supposed to be based on principles of free market capitalism must function in a lawful manner, with the participants being able to trust the parties they do business with. When trust in politicians, regulators, corporate leaders and bankers dissipates, anarchy, lawlessness, unscrupulous greed, looting, pillaging and eventually crisis and panic engulf the system.

Our myopic egocentric view of the world keeps most from seeing the truth. Our entire financial system has been corrupted and captured by a small cabal of rich, powerful, and prominent men. It is as it always has been. History is filled with previous episodes of debt fueled manias, initiated by bankers and politicians that led to booms, fraud, panic, and ultimately crashes. The vast swath of Americans has no interest in history, financial matters or anything that requires critical thinking skills. They are focused on the latest tweet from Kim Kardashian about her impending nuptials to Kanye West, the latest rumors about the next American Idol judge or the Twilight cheating scandal.

Bubble, Bubble, Toil & Trouble

Economist and historian Charles P. Kindleberger in his brilliant treatise Manias, Panics, and Crashes details the sordid history of unwitting delusional peasants being swindled by bankers and politicians throughout the ages. Human beings have proven time after time they do not act rationally, obliterating the economic teachings of our most prestigious business schools about rational expectations theory and efficient markets. The only thing efficient about our markets is the speed at which the sheep are butchered by the Wall Street slaughterhouse. If humanity was rational there would be no booms, no busts and no opportunity for the Corzines, Madoffs, and Dimons of the world to swindle the trusting multitudes. The collapse of a boom always reveals the frauds and swindlers. As the tide subsides, you find out who was swimming naked.

“The propensity to swindle grows parallel with the propensity to speculate during a boom… the implosion of an asset price bubble always leads to the discovery of frauds and swindles”Charles P. Kindleberger, economic historian

The historically challenged hubristic people of America always think their present-day circumstances are novel and unique to their realm, when history is wrought with similar manias, panics, crashes and criminality. Kindleberger details 38 previous financial crises since 1618 in his book, including:

  • The Dutch tulip bulb mania
  • The South Sea bubble
  • John Law Mississippi Company bubble
  • Banking crisis of 1837
  • Panic of 1857
  • Panic of 1873
  • Panic of 1907 – used as excuse for creation of Federal Reserve
  • Great Crash of 1929
  • Oil Shock of 1974-75
  • Asian Crisis of 1998

Kindleberger wrote his book in 1978 and had to update it three more times to capture the latest and greatest booms and busts. His last edition was published in 2000. He died in 2003. Sadly, he missed being able to document two of the biggest manias in history – the Internet bubble that burst in 2001 and the housing/debt bubble that continues to plague the world today. Every generation egotistically considered their crisis to be the worst of all-time as seen from quotes at the time:

  • 1837: “One of the most disastrous panics this nation ever experienced.”
  • 1857: “Crisis of 1857 the most severe that England or any other nations has ever encountered.”
  • 1873: “In 56 years, no such protracted crisis.”
  • 1929: “The greatest of speculative boom and collapse in modern times – since, in fact, the South Sea Bubble.”

Human beings have not changed over the centuries. We are a flawed species, prone to emotional outbursts, irrational behavior, alternately driven by greed and fear, with a dose of delusional thinking and always hoping for the best. These flaws will always reveal themselves because even though times change, human nature doesn’t. The cyclical nature of history is a reflection of our human foibles and flaws. The love of money, power, and status has been the driving force behind every boom and bust in history, as noted by historian Niall Ferguson.

“If the financial system has a defect, it is that it reflects and magnifies what we human beings are like. Money amplifies our tendency to overreact, to swing from exuberance when things are going well to deep depression when they go wrong. Booms and busts are products, at root, of our emotional volatility.”Niall Ferguson

Not only are our recent booms and busts not unique, but they have a common theme with all previous busts – greedy bankers, excessive debt, non-enforcement of regulations, corrupt public officials, rampant fraud, and unwitting dupes seeking easy riches. Those in the know use their connections and influence to capture the early profits during a boom, while working the masses into frenzy and providing the excessive leverage that ultimately leads to the inevitable collapse. As the bubble grows, rationality is thrown out the window and all manner of excuses and storylines are peddled to the gullible suckers to keep them buying. Nothing so emasculates your financial acumen as the sight of your next door neighbor or moronic brother-in-law getting rich. As long as all the participants believe the big lie, the bubble can inflate. As soon as doubt and mistrust enter the picture, someone calls a loan or refuses to be the greater fool, and panic ensues. This is when the curtain is pulled back on the malfeasance, frauds, deceptions and scams committed by those who engineered the boom to their advantage. As Kindleberger notes, every boom ends in the same way.

“What matters to us is the revelation of the swindle, fraud, or defalcation. This makes known to the world that things have not been as they should have been, that it is time to stop and see how they truly are. The making known of malfeasance, whether by the arrest or surrender of the miscreant, or by one of those other forms of confession, flight or suicide, is important as a signal that the euphoria has been overdone. The stage of overtrading may well come to an end. The curtain rises on revulsion, and perhaps discredit.” – Charles P. Kindleberger – Manias, Panics, and Crashes

When mainstream economists examine bubbles, manias and crashes they generally concentrate on short-term bubbles that last a few years. But some bubbles go on for decades and some busts have lasted for a century. The largest bubble in world history continues to inflate at a rate of $3.8 billion per day and has now expanded to epic bubble proportions of $15.92 trillion, up from $9.65 trillion in September 2008 when this current Wall Street manufactured crisis struck. A 65% increase in the National Debt in less than four years can certainly be classified as a bubble. We are currently in the mania blow off phase of this bubble, but it began to inflate forty years ago when Nixon closed the gold window. This unleashed the two headed monster of politicians buying votes with promises of unlimited entitlements for the many, tax breaks for the connected few and pork projects funneled to cronies, all funded through the issuance of an unlimited supply of fiat currency by a secretive cabal of central bankers running a private bank for the benefit of other bankers and their politician puppets. Crony capitalism began to hit its stride after 1971.

FederalDebtBalloonedAfterGoingOffGoldStandard_1.jpg

The apologists for the status quo, which include the corporate mainstream media, intellectually dishonest economist clowns like Krugman, Kudlow, Leisman, and Yun, ideologically dishonest think tanks funded by billionaires, and corrupt politicians of both stripes, peddle the storyline that a national debt of 102% of GDP, up from 57% in 2000, is not a threat to our future prosperity, unborn generations or the very continuance of our economic system. They use the current historically low interest rates as proof this Himalayan Mountain of debt is not a problem. Of course it is a matter of trust and faith in the ability of a few ultra-wealthy, sociopathic, Ivy League educated egomaniacs that their brilliance and deep understanding of economics that will see us through this little rough patch. The wisdom and brilliance of Ben Bernanke is unquestioned. Just because he missed a three standard deviation bubble in housing and didn’t even foresee a recession during 2008, doesn’t mean his zero interest rate/screw grandma policy won’t work this time. It’s done wonders for Wall Street bonus payouts.

The growth of this debt bubble is unsustainable, as it is on track to breach $20 trillion in 2015. The only thing keeping interest rates low is coordinated manipulation by Ben and his fellow sociopathic central bankers, the insolvent too big to fail banks using derivative weapons of mass destruction, and politicians desperately attempting to keep the worldwide debt Ponzi scheme from imploding on their watch. Their “solution” is to kick the can down the road. But there is a slight problem. The road eventually ends.

thelma.jpg

At some point a grain of sand will descend upon a finger of instability in the sand pile and cause a collapse. No one knows which grain of sand will trigger the crisis of confidence and loss of trust. But with a system run by thieves, miscreants, and scoundrels, one of these villains will do something dastardly and the collapse will ensue. Ponzi schemes can only be sustained as long as there are enough new victims to keep it going. As soon as uncertainty, suspicion, fear and rational thinking enter the equation, the gig is up. Kindleberger lays out the standard scenario, as it has happened numerous times throughout history.

“Causa remota of the crisis is speculation and extended credit; causa proxima is some incident that snaps the confidence of the system, makes people think of the dangers of failure, and leads them to move from commodities, stocks, real estate, bills of exchange, promissory notes, foreign exchange – whatever it may be – back into cash. In itself, causa proxima may be trivial: a bankruptcy, suicide, a flight, a revelation, a refusal of credit to some borrower, some change of view that leads a significant actor to unload. Prices fall. Expectations are reversed. The movement picks up speed. To the extent that speculators are leveraged with borrowed money, the decline in prices leads to further calls on them for margin or cash and to further liquidation. As prices fall further, bank loans turn sour, and one or more mercantile houses, banks, discount houses, or brokerages fail. The credit system itself appears shaky, and the race for liquidity is on.” – Charles P. Kindleberger – Manias, Panics, and Crashes

Despite centuries of proof that human nature will never change, there are always people (usually highly educated) who think they are smart enough to fix the markets when they breakdown and create institutions, regulations and mechanisms that will prevent manias, panics and crashes. These people inevitably end up in government, central banks and regulatory agencies. Their huge egos and desire to be seen as saviors lead to ideas that exacerbate the booms, create the panic and prolong the crashes. They refuse to believe the world is too complex, interconnected and unpredictable for their imagined ideas of controlling the levers of economic markets to have a chance of success. The reality is that an accident may precipitate a crisis, but so may action designed to prevent a crisis or action by these masters of the universe taken in pursuit of other objectives. Examining the historical record of booms and busts yields some basic truths. The boom and bust business cycle is the inevitable consequence of excessive growth in bank credit, exacerbated by inherently damaging and ineffective central bank policies, which cause interest rates to remain too low for too long, resulting in excessive credit creation, speculative economic bubbles and lowered savings.

Low interest rates tend to stimulate borrowing from the banking system. This expansion of credit causes an expansion of the supply of money through the money creation process in our fractional reserve banking system. This leads to an unsustainable credit-sourced boom during which the artificially stimulated borrowing seeks out diminishing investment opportunities. The easy credit issued to non-credit worthy borrowers results in widespread mal-investments and fraud. A credit crunch leading to a bust occurs when exponential credit creation cannot be sustained. Then the money supply suddenly and sharply contracts as fear and loathing of debt replace greed and worship of debt. In theory, markets should clear through liquidation of bad debts, bankruptcy of over-indebted companies and the failure of banks that made bad loans. Sanity is restored to the marketplace through failure, allowing resources to be reallocated back towards more efficient uses. The housing boom and bust from 2000 through today perfectly illustrates this process. Of course, Bernanke declared housing to be on solid footing in 2007.

2011-Case-SHiller-updated.png

The housing market has not been allowed to clear, as Bernanke has artificially kept interest rates low, government programs have created false demand, and bankers have shifted their bad loans onto the backs of the American taxpayer while using fraudulent accounting to pretend they are solvent. Our owners are frantically attempting to re-inflate the bubble, just as they did in 2003. Our deepest thinkers, like Greenspan, Krugman, Bush, Dodd, and Frank knew we needed a new bubble after the Internet bubble blew up in their faces and did everything in their considerable power to create the first housing bubble. If at first you don’t succeed, try, try again.

nasdaq.png

Human nature hasn’t changed in centuries. We have faith that humanity has progressed, but the facts prove otherwise. We are a species susceptible to the passions of power, greed, delusion, and an inflated sense of our own intellectual superiority. And we still like to kill each other in the name of country and honor. There is nothing progressive about crashing the worldwide economic system and invading countries for “our” oil.

HistoricalMarketManias.png

History has taught that there will forever be manias, bubbles and the subsequent busts, but how those in power deal with these episodes has been and will be the determining factor in the future of our economic system and country.

Humanity is deeply flawed; the average human life is around 80 years; men of stature, wealth, over-confidence in their superior intellect, and egotistical desire to leave their mark on history, always rise to power in government and the business world; this is why history follows a cyclical path and the myth of human progress is just a fallacy.

“That men do not learn very much from the lessons of history is the most important of all the lessons that History has to teach” – Aldous Huxley

In Part 2 of this three part series I will examine the one hundred year experiment of trusting a small cabal of non-elected bankers to manage and guide our economic system for the benefit of the American people.

Posted in Uncategorized | Leave a comment

Guest Post: Has The Perfect Moment To Kill The Dollar Arrived?

Guest Post: Has The Perfect Moment To Kill The Dollar Arrived?

Submitted by Brandon Smith from Alt-Market

Has The Perfect Moment To Kill The Dollar Arrived?

skull%20dollars.jpg

The idea of “collapse”, social and financial, comes with an incredible array of hypothetical consequences ranging from public dissent and martial law, to the complete disintegration of infrastructure and the devolution of mankind into a swarm of mindless arm chewing cannibals. In an age of television nirvana and cinema overload, I have found that the collective unconscious of our culture has now defined what collapse is based only on the most narrow of extremes. If they aren’t being hunted down by machete wielding looters or swastika wearing jackboots, then the average American dupe figures that the country is not in much danger. Hollywood fantasy has blinded us to the tangible crises at our doorstep.

The reality is that collapse is not a singular event, but a process. It is a symphony of doom, composed of a series of exponentially more powerful crescendos. If the past four years since the implosion of the derivatives bubble have proven anything, it is that catastrophe has the ability to drown a nation slowly like a river of molasses, rather than sweep it away like a flash flood. That said, almost every recorded collapse of modern societies in the past century has been preceded by a primary trigger event; a moment in which the mathematical certainty of failure becomes clear, even if the psychological certainty is muddled.

In 2012, we still await that trigger event, which I believe will be the announcement of QE3 (or any unlimited stimulus program regardless of title), and the final debasement of the dollar. At the beginning of this year, I pointed out that we were likely to see such an announcement before 2012 was out, and it would seem that the private Federal Reserve is right on track.

Last month, the Fed announced that it was formulating a plan to “expand its tool kit”. This includes an openly admitted possibility of a third round of quantitative easing starting as early as September:

http://www.reuters.com/article/2012/07/24/us-usa-fed-tools-idUSBRE86N1G120120724

This timeline appears to coincide perfectly with the breakdown of the EU, which may also see a climax event in September. In that month, EU policymakers will return from summer holiday. German courts will make a ruling which could put an end to any chance that the country will support a eurozone rescue fund. The Dutch, which are anti-bailout, will vote in elections. Greece will be attempting to renegotiate its financial lifeline. And, the ECB will have to assess the impending chaos in Spain and Italy:

http://www.reuters.com/article/2012/07/29/us-eurozone-crisis-idUSBRE86S05J20120729

As far as the Fed’s ability to remedy the fiscal situation goes, let’s clear something up right here; the Fed has NO TOOLKIT. Sorry, but central banks have only two options when attempting to shift the tide of the economy: They can lower interest rates to zero, and, they can print-print-print. That is it. We’ve had TARP, numerous bailouts, QE1 and QE2, Operation Twist, and interests rates have been kept near zero for years! These so called solutions have been strapped like millstones around our necks and absolutely nothing has been accomplished since 2008.

Real unemployment still stands at over 20%. The housing crisis remains an unstoppable juggernaut. Europe is on the verge of meltdown (despite the trillions in American taxpayer dollars handed to EU banks). The national debt continues to grow at a pace far beyond what the Obama Administration and mainstream economists (who should have been fired long ago) predicted in 2010. There are no secret magic tricks up the sleeve of Ben Bernanke. Even if the Fed actually wanted to save our financial system, and our currency (which they don’t), there is nothing they can do except make the situation worse. Central banks are perhaps the most useless institutions ever devised, unless, of course, their true purpose is to diminish the financial health of a country and siphon away its economic sovereignty…

Enter the death of the dollar.

The IMF has been consistently calling for the end of the dollar as the world’s reserve currency, and for its replacement by the SDR (Special Drawing Rights):

http://money.cnn.com/2011/02/10/markets/dollar/index.htm

http://www.imf.org/external/np/pp/eng/2011/010711.pdf

The new president of France, Francois Hollande, has recommended the expulsion of the dollar as the go-to reserve, a deeper relationship between France and the BRIC nations:

http://www.atimes.com/atimes/Global_Economy/NE08Dj06.html

China has been demanding an end to dollar primacy for years:

http://online.wsj.com/article/SB123780272456212885.html

And so has Russia…

http://news.xinhuanet.com/english/2009-04/01/content_11109506.htm

And so has the UN…

http://www.telegraph.co.uk/finance/currency/6152204/UN-wants-new-global-currency-to-replace-dollar.html

It’s not as if it’s a big secret that the dollar is on everyone’s hit list. Until recently, alternative economists could only point out circumstantial evidence that this sentiment was a product of collusion between the world’s central banks and elements of various governments. Suggesting that China, Russia, the UN, the IMF, and the Federal Reserve were working in tandem to devalue the dollar and replace it with a global currency has always elicited at least a few jeers and the ever present standby catch-all accusation of “conspiracy theory”. However, the times they are a’ changen’…

With the exposure of the Libor Scandal, we now have definitive proof and even open confessions from international banks, the Federal Reserve, and the Treasury, admitting that the true debt problems of major institutions have been hidden, deliberately, in tandem with multiple agencies in multiple countries, from the general public, with the full knowledge of numerous governments. The most vital and shocking element of the Libor Scandal is that it shows, beyond a shadow of a doubt, that there is indeed a conspiracy which has melded the corporate world and the political world into a single ominous creature.

The collusion has become so brazen, central banks around the globe now institute policy initiatives within the same hour of each other:

http://www.reuters.com/article/2012/07/05/us-centralbanks-action-idUSBRE8640RN20120705

Years back, I wrote an article about the most important signs to watch for when facing a heightened state of collapse. One of those signs was the advent of openly admitted corruption on the part of the banks. When criminals become absolutely transparent and nonchalant about their criminality, it is usually because they no longer fear the threat of justice or reprisal. This is exactly the atmosphere we have in 2012. But, what could possibly have made the banksters so confident that they are willing to flaunt their racket to the world? I can only surmise that an event is on the horizon. One so distracting that the hucksters believe we will forget all about them.

Looking at it from another perspective; if I was a globalist hell bent on undercutting the dollar as the world reserve and replacing it with a centralized standard while turning the U.S. into a third world pit in the process, I would probably pull the plug soon. Here are some reasons why:

Drought Crisis Provides Inflationary Cover

The drought which has struck half of the U.S. agricultural centers and which has also hit Russian production is the perfect cover event for dollar devaluation. The full view of crop production and yields will be revealed this autumn, and according to the mainstream, the numbers will be dismal. Maybe they will be, maybe they won’t, but the likelihood of inflation in food prices all over the planet is high. If the Fed announces QE3 and sets an implosion of the dollar in motion, the price spikes this will cause in commodities, especially grains and other foodstuffs, can be easily blamed on drought, rather than the destruction of the greenback. At least for a time.

Syria And Iran Theater

If the UN pulls observers from Syria, expect an attack by either the U.S., Israel, or both is on the way. Expect Russia to be quite unhappy. Expect China to respond with financial warfare. Expect Iran to fulfill its mutual defense pact with Syria and come to their aid. Expect hard core catastrophe. I have been warning about Syria as a catalyst for global crisis for quite some time. Long before anyone ever heard the name “Assad”:

http://www.alt-market.com/neithercorp/press/2010/01/will-globalists-trigger-yet-another-world-war/

Every time I catch a glimpse of the MSM, whether it be MSNBC, CNN, or FOX, they are all spewing the same rhetoric: The U.S. should have invaded Syria months ago. It would seem that the American people are being psychologically prepped for a new war, but in reality, they are being prepped to be distracted from the banking sector’s primacy in the economic calamity that is about to unfold.

European Seesaw Of Destruction

With the EU in shambles, and only getting worse, the ECB has been attempting to work around the rules of its own charter which forbid the infusion of capital directly into governments. The latest weapon in the fight against the financial stupidity of EU member countries? European stimulus! That’s right folks, the U.S. is not the only country that will be raping its own currency this year! Be sure to catch the euro-sized version of QE:

http://www.washingtonpost.com/blogs/ezra-klein/wp/2012/08/03/maybe-draghis-speech-wasnt-a-disaster-after-all/

http://www.bloomberg.com/news/2012-06-01/berlusconi-says-ecb-must-print-euros-or-italy-may-say-ciao-1-.html

I believe, in keeping with the collusion central banks have already shown, that the Federal Reserve and the ECB will announce new stimulus measures very close to each other, if not in tandem. The continued devaluation of the Euro will help to hide the effect of the falling dollar as the two currencies seesaw back and forth, allowing for a delayed reaction from the public as well as investment markets. Investors looking for a safe haven currency will be scrambling in confusion.

Stocks Ready To Bust

Finally, it is very likely that the Fed will wait for markets to dive in the wake of faltering demand for goods and raw materials in all major economies, as well as declines in manufacturing. As I have said in the past, the Fed wants us to beg for QE3. The only reason this decline has not occurred yet is because investors that are still participating are salivating for new stimulus and expect it shower them with riches soon. So, to put this in perspective, the Dow is above 13,000 right now because investors have already priced in a QE package not just in the U.S., but in the EU as well. If they do not get it fast, they will pull out, and stocks will plummet. The market addiction to fiat injection is so pervasive now, I cannot imagine how they would react if the pipeline was cut off. It would probably induce a fiscal bloodbath.

What Will Collapse Really Be Like?

I expect the event will be spectacular in some ways, but subdued and subversive in many other ways. Triggers may be swift and startling, but the reactions of the populace slow, uncertain, and presumptive. There will be fissures in our foundation, but the complete extent of the danger may take a few more years to become evident. While the public continues to maintain its fixation on some Mad Max nightmare scenario, the real collapse will be taking place right under their noses in the form of 25%-50% increases in food and fuel, tightened job availability with pensions swallowed by austerity, food lines hidden by food stamps until the government finally defaults and pulls the rug out from under entitlement programs, etc. For a time, it will look and feel like a slightly darker version of today, and not the cinematic melodrama that we have come to envision. The worst of times that we often find extolled in the pages of history books come at the cost of years of almost equal disparity, and usually, the lead up is far more difficult to handle than the finale…

Posted in Uncategorized | Leave a comment