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Page added on May 3, 2015
There Is No Solution To The Crisis
A long ,long time ago…
it was the 16 September 1992, Black Wednesday, when the British Government was forced to withdraw the pound sterling from the European Exchange Rate Mechanism(ERM) after it was unable to keep the pound above its agreed lower limit in the ERM. A certain Mr.Soros, made over £1 billion profit by short selling sterling while costing the Treasury £27billion of foreign currency reserves trying to prop up the Pound and a tidy £3.4 billion loss.
Fast forward to now and one of the upshots of the 2008 crisis was that central banks eunuchized the commercial banks through Dodd Frank and other such regulations, for such embarrassing situations could never be repeated for a central bank. So they took full control without impunity.
Now initially I believe that it was with good intent. Too big to fail was something unacceptable. That governments should not have to foot the bill for the ineptitude of banks and hedge funds who invested in other funds because they had a good “name” (a nice name with words in them like “enhanced” or “high”, not because they were of reputable background),without the faintest idea of what they were investing in was indeed a joke.
And it could be argued that the Fed and ECB were correct in hiding all the problems from the general population. The idea being that the economy is entirely built on sentiment.
Tell people every day that things are OK, fudge economic numbers and plaster over the cracks in the hope that eventually it will all rectify itself, then people will actually start believing ,spending and therefore improving the economy and that the debt can be repaid via tax receipts. This coinciding with a technology boom where there is a serious lack of talent and available staff and it would be tempting to think that this may have possibly worked. That the central banks have saved us from a perilous depression….however, as it has been said…with great power comes great responsibility.
As is the case with many movies…our hero always faces a tipping point, where the area between good and bad becomes very grey and the choice is which path to choose…the light or dark…..unfortunately it would seem that our heroes at the Fed and the ECB have most certainly chosen the path of the dark side…and they know it too….
Something, something dark side….
Recently the ECB began their own QE program. These purchases will be paid for “with the printing press,” or more technically, an expansion of the monetary base. This comes on top of the Bank of Japan’s own stepped-up money-printing scheme.
It has not been very well appreciated that the Fed’s own QE program, was largely offset by a similar size contraction in the ECB’s base money supply during the same time period. This was caused primarily by the runoff of the ECB’s “long-term refinancing operation” direct bank lending.
The US annual deficit should total $468 billion for the 2015 fiscal year however the improving deficit numbers are temporary. Budget deficits are projected to begin going up again in 2018, and to nearly double by 2024 as retiring baby boomers strain the health and retirement systems, the economy grows more slowly and interest on the nation’s outstanding debt rises.
The federal government is expected to spend $277 billion on interest on the debt in the current fiscal year. That’s projected to soar to $827 billion by 2025. As a percentage of the economy, it would more than double from 1.3 percent in 2015 to 3 percent in 2025.
Simply put, it will cost the government more to borrow in coming years to pay bills already incurred. Consequently, the $13.4 trillion in debt held by the public projected for 2015, which would be akin to 74 percent of the overall economy, is projected to swell to $21.6 trillion by 2025, when it would total 79 percent of the economy. As recently as 2007, before the Great Recession (this term has been used a lot lately, as if it was something of our past not our present, which is in itself laughable), it was equal to about 35 percent of the economy.
It’s as if for every $100 you earn, you have outstanding debts equal to almost $80.
The end result of Fed policy appears to be to keep us in perpetual economic malaise, to keep us all confused. They keep interest rates low masking the huge structural issues of huge federal budget deficits and whenever the economy appears to be picking up a bit, they threaten to take away the government props of QE and low interest rates faster thereby slapping down the economy. All this happening while the ticking time bomb of huge Federal Debt accumulates more potency.
But if they know this ???
With all this information at their fingertips are they unable to do anything about it or is there something darker afoot…
So lets see what they are doing to help us…
More than a fifth of property sales in Central London are now being secured by wealthy foreign buyers. Houses and apartments are increasingly being sold to Russian, Italian, French and Middle Eastern owners.
Since 2008, around 30% of condo sales in large-scale Manhattan developments have been by buyers with overseas addresses or through secretive LLCs.
Gold and other physical assets are being repatriated more and more every day.
At Cheyenne Mountain the Pentagon is beefing up its communications setup inside a hollowed-out section of Colorado’s Rocky Mountains less than a decade after it had largely abandoned the site.
The chess pieces are being moved around the board in preparation for what may come,it is as if they have already given up….
So the reason this time it WILL be different us that all the world’s economies are so closely intertwined. Previously with such events as the South Sea Bubble, the Dutch Tulip bubble and even the great depression, to a certain extent, we were not as “global” as we are now.
So how will it end then spoiler-boy?
There are alternate endings…..
1. There will be massive defaults at all levels of society including individuals, corporations, municipalities, states and finally the Federal government itself. They all have too much debt to pay back and it will be defaulted on.
2. They can default by not paying the loans back and we get a sharp and painful, but not endless period of deflationary debt collapse where all the bad decisions of the past Fed induced business cycles are finally accounted for. It is easy to forget that Germany’s government, like the governments of the U.S. and Britain, printed money to fund World War I for five years, 1914-1919, and suffered no particular adversity as a result. It worked great! Until it didnt!
3. World War III….as scaremongering as this may sound there are many historical precedents for this and we are not exactly in the most stable geopolitical arena.
The Oligarchy will not do what is best for the people. This is still about trying to retain power as is and protecting their own.
I will leave you with a quote from president Lincoln;
“The money powers prey upon the nation in times of peace and conspire against it in times of adversity. It is more despotic than a monarchy, more insolent than autocracy, and more selfish than bureaucracy. It denounces as public enemies, all who question its methods or throw light upon its crimes. I have two great enemies, the Southern Army in front of me and the Bankers in the rear. Of the two, the one at my rear is my greatest foe.”
Lincoln then prophetically added:
“I see in the near future a crisis approaching that unnerves me and causes me to tremble for the safety of my Country. Corporations have been enthroned, an era of corruption in high places will follow, and the money power of the Country will endeavor to prolong its reign by working upon the prejudices of the People, until the wealth is aggregated in a few hands, and the Republic is destroyed.”
There is no solution to the crisis, merely a choice of which roads to choose, a deflationary debt collapse, or a hyperinflationary dollar collapse or World War III. Pick your poison…
26 Comments on "There Is No Solution To The Crisis"
James Bond on Sun, 3rd May 2015 7:29 pm
It’s zerohedge. LOL.
apneaman on Sun, 3rd May 2015 7:39 pm
That’s right 007, in a Zerohedge world all we need is the right libertarian economic policy and all the worlds problems will melt away……. oh and you also have to say either freedom or liberty every fifth word so no one forgets. Dead Austrians said so.
Northwest Resident on Sun, 3rd May 2015 9:12 pm
James Bond — The article may have originated on ZH, but the quotes by Abe Lincoln are solid gold. And hey, while we’re at it, who said that “Love of money is the root of all evil”? Seems like some people have the bankers and the big money men figured out.
The analysis and logical conclusions arrived at by the article seem obvious to me. What exactly is it that you disagree with in the article, if anything?
apneaman on Sun, 3rd May 2015 9:43 pm
Thoughts on TPP
“I find it tragically comical that the usual suspects are fuming about UN black helicopters and Chinese military takeovers while the single greatest threat to U.S. independence and sovereignty is being rapidly pushed through Congress as quickly as possible with unprecedented secrecy and with bipartisan support (including Tea Party Republicans).
In fact, the Republican party, which has been tirelessly depicting Obama as a powerful dictator intent on seizing people’s guns and imposing Sharia law on the Heartland, is desperate to vote him MORE power in the guise of “fast-track,” giving him unilateral power to create U.S. law when it comes to trade. Is the Jade Helm paranoia an attempt to distract the Heartland rubes who really believe in the Republican/Democrat kayfabe from getting wise to the real game (enhancing corporate profits and worker immiseration)?”
“If you listen to the Congressional Dish episodes you will quickly realize what lies “free trade” and “Laissez-faire” actually are. This is no dismantling of rules to set us free, instead it is hundreds and hundreds of ultra-complex new rules and laws (which are secret from the public who will live under them), and the setting up of massive new bureaucracies to enforce them.”
http://hipcrime.blogspot.ca/2015/05/thoughts-on-tpp.html
marko on Mon, 4th May 2015 12:21 am
I earn 10.000$ per year. I spend 50.000@ per year. I swear I ‘ll cut my deficit in half by 2050. hahahhahaha
This is fantastic
apneaman on Mon, 4th May 2015 12:22 am
Perfect demonstration of how the MSM portrays events in a manner befitting the 1% er/government narrative. Listen to the CNN reporter lady desperately and clumsily explain/speculate on what happened instead of just showing the whole clip. Then watch the RT footage with no words spoken at all. For those who are still able to think for themselves. This is why they are panicking about RT. See for yourself.
Two Videos of the Same Arrest in Baltimore Shows How MSM Does Not Give You the Whole Truth
http://thefreethoughtproject.com/videos-arrest-baltimore-shows-msm-give-truth/#x9kvPAQ8Og9omr7Z.01
Stephen on Mon, 4th May 2015 4:31 am
I think there are only a few ways out:
1) Raise Taxes. Close all loopholes for the top payers. Such debt increases cannot be solved by simply slashing the non-war, domestic sector, according to David Walker, the guy who stared in the move I.O.U.S.A. I know the big companies and CEOs lobby against this, but in reality it could happen.
2) Debt Default / Jubilee. This means that some or all the debts will not be paid. This means higher interest rates to borrow, or a situation where 100% of the taxes go to programs and not debt, and we are limited by the incoming money.
3) Serious cuts in benefits / entitlements. This might leave our seniors having less benefits for retirement and health care, or other programs get cut, or perhaps even cutting back on war and military spending. The public is already protesting more cuts.
4) Perhaps the government will fail at some point.
Stephen on Mon, 4th May 2015 4:33 am
5) As to consumer debts, I think there will need to consider a jubilee for student loans, some credit card debt, and even some mortgages in the future.
apneaman on Mon, 4th May 2015 4:48 am
Here you go Davy. I found a feel good American story for ya at Dave Cohen’s blog. I don’t even like Cohen, but I do agree with him on most things about the human condition. John Angelos, someone in a well paying prominent position actually took a big risk and spoke out – spoke the truth.
//////////////////////////////////////////////
John Angelos Tells It Like It Is
John Angelos is the Chief Operating Officer for the Baltimore Orioles. His recent statement about the riots in Baltimore appeared on The Atlantic Magazine affiliate quartz.com on April 28, 2015. I’ve reprinted the introduction and the statement below.
http://www.declineoftheempire.com/2015/05/john-angelos-tells-it-like-it-is.html
Davy on Mon, 4th May 2015 6:31 am
Ape Man said “Here you go Davy. I found a feel good American story for ya”. Thanks Ape Man for acknowledging blanket attacks on Americans in general without the occasional inclusion of positive news is down/up IOW talking up yourself and your buddies and talking down the Americans. Thanks for the Ape Man (Sarc) gift.
I AM anti-American establishment, dress, entertainment, food choices, sprawl, energy intensive lifestyles, media, and foreign policy. That is not the end of the list I could go on and on. This is not enough for the hard core anti-Americas. I feel I need to post a video of me cutting off my ear to show my anti-American cultural, political, and policy issues sincerity and put it on YouTube.
There is another America smaller than the rot but significant that is questioning all of this. IMA we Americans were among the first to question all these American and global issues. We are also 10 times your Canadian’s population. You Canadians are like a California and no bigger than a state. Sure we have millions of numb nut Sheeples but I am sure we have more counter culture people in aggregate than the amount of Canadians involved in the counter culture movement.
So when I hear Canadians do a blanket put down of America and talk up Canada I say Cat Piss hypocrisy. Plus I have seen very little in Canada worth crowing about. You all do have Americans beat on cultural quality but barely. This is for a variety of reasons one being smaller population, maybe less corporate/political hijacking, and less MIC.
I say barely because Canada is full of the same numb nut sheeples that could give a shit about the real issues of the train wreck and brick wall ahead. Canada is full of the same establishment criminality. So blanket anti-American trashing and bashing is a hypocrisy in action. You can crow it goes with the territory and I agree but to a point. After a point it just obsessive anti-American hypocrisy. I you were from Costa Rica I would have a different opinion but Canada no. I still like you Ape man because you are a hard hitting well researched obsessive anti-American Canadian hypocrite.
Davy on Mon, 4th May 2015 7:02 am
Stephano, your prescription for a way out is not a way out for BAU it is the end of BAU. BAU cannot be reformed. BAU cannot degrowth and it cannot have major limb transplant IOW debt jubilee, benefit cuts, and higher taxes.
When the pie is shrinking these policies have consequences and unintended consequences. The slightest drop in growth or no growth is enough to destroy BAU with its huge debt load, exploding consumption pressures, and exploding population.
BAU is global and interconnected. BAU is only held together by global confidence. Confidence is human nature. There is only partial scientific basis to human nature. The other part of human nature is irrational, primitive instinct, and animalistic violence. We are talking a global complex energy intensive system that is supporting a global group of delocalized locals in broad based overshoot. Human nature is all that is holding this supposedly human exceptionalism in action together. Is that not a joke!
This whole BAU project that we humans look upon as divine manifest destiny is held together by the thinnest of glue of the combination of human rational and irrationality. So Stephano, your prescription cannot work anymore. Maybe in the 70’s or 80’s but not now. We are in a brittle strait jacket of required growth and human confidence in a world falling apart as it speeds along towards a brick wall just ahead.
J-Gav on Mon, 4th May 2015 7:20 am
There is no pleasant way out of our predicament(s). I have no trouble agreeing with the author on that point.
Among his suggestions on what course may be taken by TPTB as a substitute for a ‘solution,’ one stands out prominently in history and that is War.
steve on Mon, 4th May 2015 8:07 am
J-I think you are right after TPTB figure out that there is no way out the only option left will be a Major War…too many people too few resources it happens over and over…
J-Gav on Mon, 4th May 2015 8:52 am
Re: the little Davy-Apnea spat above.
I think you’ll both agree that totting up the comparative percentages of brainwashed dolts in this or that society would, in the end, be a fruitless effort. There are plenty to go around just about every place I’ve been on the planet.
The more important thing to see is how it’s done … I mea
J-Gav on Mon, 4th May 2015 9:01 am
Re: the little Davy-Apnea spat above.
I think you’ll both agree that totting up the comparative percentages of brainwashed dolts in this or that society would, in the end, be a fruitless effort. There are plenty to go around just about every place I’ve been on the planet.
I believe the more important thing to see is how it’s done … I mean how TPTB keep people poor and dumb virtually everwhere, whether it’s the Ps, North America, Europe or elsewhere.
As an illustration, I’ll quote an article written by Charles Hugh Smith a few years ago: “Aldous Huxley foresaw a Central State that persuaded its people to “love their servitude” via propaganda, drugs, entertainment and information overload.”
Doesn’t that describe “Western civilization” pretty well and isn’t it something we all need to realize before we have any chance of moving forward?
JuanP on Mon, 4th May 2015 10:00 am
Davy “I say barely because Canada is full of the same numb nut sheeples that could give a shit about the real issues of the train wreck and brick wall ahead. Canada is full of the same establishment criminality.”
Darn, Davy! I have never been to a place that wasn’t full of numb nuts. As Jgav pointed out above, I don’t think such a place exists. Uruguayan numb nut sheeple were the reason I originally left my country and the reason I don’t want to go back. They exhausted my patience when I was a small kid and I never recovered, I am still frigging tired of them, even after a 25 year break. The world is full of numb nut sheeple. IMO, more than 90% of human beings everywhere fit that description, but then, I am a misanthrope, so you know where I stand on this one. 😉
Davy on Mon, 4th May 2015 10:07 am
I agree completely Gav. On occasion I have to remind the likes of Ape Man & Mak they are pissing in the hypocritical wind. I also realize when one criticizes others one must accept criticism and especially be able to live up to one’s standards used to criticize.
That said my criticism opens me up to critisism which I deserve being a flag waiver and extremist doomer. I will clarify the flag waiving. I waive an upside down flag. My doomer stand is also in the hopes of legitimate, realistic, and solid hopium of any kind.
Davy on Mon, 4th May 2015 10:17 am
Alright, Juan, agreed, but to be fair and balanced there are more in the U.S. than most other countries.
Here in the Ozarks of Missouri dwell some of the ugliest creatures on earth. Seriously, a trip into Walmart is an experience. The obesity, education level, and choice of clothing is shocking even to a native Missourian like me.
Yet, these are good people that would give their shirt off their back. If there is guilt in me it is thinking I am superior to these people. Many had a good simple life until the corporate and progressives hijacking that has destroyed American culture. These people used to be poor, simple, and hard working by necessity. Now they are Frankenstein creatures.
JuanP on Mon, 4th May 2015 10:40 am
Davy, I know I come across as an arrogant prick sometimes, too, and with good reason because I am one. I gave up on moderating my arrogance a whiles back. In spite of my misanthropy, I think most people are intrinsically good, it’s just that being good is simply not enough in today’s world. One of my favorite sayings is “The road to hell is paved by people with good intentions”. Sometimes it is necessary to be a cold calculating bastard to do the right thing.
J-Gav on Mon, 4th May 2015 11:04 am
Davy – I’m not at all sure Mak and Apnea are the monstrous hypocrites you make them out to be but thanks for those last two posts which help me to see where you’re comin’ from.
There’s a good laugh or two in there as well: Loved “the Walmart experience” and the “upside-down flag-waving.”
Spent a year in rural Missouri myself as a kid, among other places (a little town called Richland), but I mainly grew up in rural Michigan (also near a little town named Richland – both of them were anything but ‘rich.’
And many of the locals were a sight to behold! Many of them racists (without ever having met a black person! Just gave ’em an excuse to make jokes at somebody else’s expense). Quite a few dropped out of school early to help support their families so yeah, by IQ standards, “dumber ‘n dogshit’ as the local elites’ sons used to say. But also, as you rightly remind us, willing to give you the shirt off their back, intervene to help out with a car problem, a garden problem, a house repair problem, just about any concrete problem you can imagine…
So yeah, I see where you’re comin’ from.
Davy on Mon, 4th May 2015 11:53 am
Gav, Ape Man and I bicker like a married couple. I like the guy and enjoy jumping his butt when he gets excessive. More people need to do that to me. Ape Man does and I like him for that.
Mak, on the other hand is no good by me. Others here like him which is OK I never get between friendships. That is not my business. Mak, and I have so much in common we should be close. I can tollorate some of his anti-American agenda but not what he is proselytizing currently. I told him to lighten up and I will look the other way but he could give a rat’s ass about me. So now I am a constant thorn in his side.
Mak is hell bent on gross anti-American propaganda. He routinely mentions his hope the U.S. Will be destroyed in a NUK war. I can’t tollorate it. Call me weak and lacking maturity but I dislike the guy tremendously.
Davy on Mon, 4th May 2015 12:00 pm
Sound wisdom Juan. You are in the top 10 of those I respect on this site that should be enough said. We have different bias but both legitimat.
apneaman on Mon, 4th May 2015 1:50 pm
Davy, yabut I is fair N balanced. Look at my comment from yesterday on the Canadian story thread where I rip my own country and am kinda rude to fellow Canadian paulo (who is a nice man). I even upset a Canadian red neck who then, through his own words, proved my point.
apneaman on Sun, 3rd May 2015 12:52 pm
“paulo1- reasonable Oil Sands development? That’s like reasonable child rape. WTF are you talking about? Have you ever been there? It sounds like you have fallen prey to the years of propaganda TV commercials and bought and paid for opinion pieces. Your a perfect example of how a better standard of general education only makes for better rationalizes. Us Canadians are fucking phonies. The minute it came time to actually prove that we held ourselves to a higher level we caved and went straight for the consumer savior – Stephan Harper. A spineless nation of privileged super consumers. In fact, I have to say on a per capita basis, more Americans have stood up for doing the hard thing (at personal risk) than Canadians. I’m not saying we are the worst humans on the planet, but those Canadians who forged our reputation as critical thinking peacemaker diplomats of a nation of moral and fair citizens are long gone. Were pacified and cowed and have stood silently by while The Harper gang has sold out this country to his neo liberal/neo con ideology and 1% masters. Many have even cheered it on. I know many university educated people here who’s biggest concerns are trying to eat at every food truck and out remodel the “Jone’s”. At this point I try not to blame too much. These people are my family and customers. They have kids and it must be hard to admit that most of them will not see middle age.”
Davy on Mon, 4th May 2015 4:10 pm
Alright Canadian Ape Man, I have been mean and slanderous with you. But I love when you show me attention and don’t ignore me like others. It shows how much you care about your American cousin.
Apneaman on Mon, 4th May 2015 4:51 pm
Davy, I love humanity. It’s the people I can’t stand.
Davy on Mon, 4th May 2015 6:02 pm
Ape Man, I feel for you if you hate people with 7Bil people and growing by 80mil yr.
I can no longer stand a big city for over 3 or 4 days. I can’t find humanity in a city. I guess we got some commonality with that.
I don’t hate people I just would prefer to be out where the hoot owls screw the chickens and you can piss where you please.