Saturday, October 30, 2010

Coupe De Grace

Like many Americans, I spent most of my life distracted. Busy making a living, busy with a wife and kids, spending what time I had on leisure activities. The last thing I thought about back then was politics or the housing crisis. That all began to change in 2007. By 2008, about the time Congress and Hank Paulson ripped our country off, government and politics became the focus of much of my life. It absolutely drew my attention.

I came to believe that like me, most Americans were busy living their lives. Too tired and distracted with the trappings of everyday life. In fact, that apathy if you will, is precisely what has enabled our government to enslave us. If it doesn't have a painful and immediate impact, we simply don't notice.

People call aberrations like the housing collapse a "black swan" event. Perhaps. It has had a painful and immediate impact. People finally began to notice. They became angry. Government and the corporate robber barons that we refer to as "business" absolutely gutted this nation. They may have gutted the world. The incremental steps, and sly moves such as the repeal of the Glass-Steagall act, were hardly noticed. Once all of the roadblocks were removed, the great robbery could take place. Indeed, the repeal of Glass Steagall, is now the only thing holding the stock market up.

In life, it is a certainty that black swan events will occur. That is a given. What really matters is how we respond to those events.

Our response to the events since 2008 have been incredibly poor. So poor in fact, I give it an "F" grade. Fraudulent banks and bankers were allowed to continue. Not one criminal charge prosecution has taken place. Interest rates were slashed to zero- the biggest beneficiaries of that again- are banks.

Then instead of grappling with that series of mistakes, we made more. Piling on cap and trade, Obamacare, and flooding the marketplace with worthless currency. The precipice that we teeter on is here. If Ben Bernanke floods the market with another round of quantitative easing next week it will be officially over. Forget the elections, it is too late. Your anger, although certainly justified, cannot call back all of the events and mis steps of the 109th thru 111th Congress. Once QE II takes place, and a full on currency and trade war take place, our net importer status will leave us powerless. Is two hundred dollar oil possible? How about 3k gold and 50 buck silver? You better believe it. In fact, this coming week is potentially the greatest aftershock since 2008.

This will not be a black swan event. It is fully predictable. Savage austerity measures will be taken. In fact, the sad truth is that we are in no better shape than Greece. We are bankrupt, engaged in counterfeiting. That's all that's left. You are witnessing it now. Government and Ben Bernanke are simply going to counterfeit dollars to pay our bills. They call it QE. We simply lack the capacity to recover. We don't produce anything here.

Let me use a metaphor that is very appropriate. When housing consumers were left with houses that were worth half of what they paid for them, what did consumers do? They quit paying the mortgage. When people realized they couldn't pay their credit card bills, what did they do? They maxed out their cards. Why default on 3 grand when you had another 2 grand available on the card? What difference did it make if you were never going to pay the balance anyway?

That is the logic in play now. If we can't possibly pay our national debt of 20 trillion, why not just print up some more money and take on some more debt? We aren't going to pay it back anyway. Why do you think government would behave any differently than consumers?

I welcome a complete economic collapse, a chance to end the FED and rebuild. Anything is better than limping along and suffering through decades of misery like the Japanese. Paul Krugman, I truly hope you get your wish. I pray that Bernanke goes for the big one. Maybe two trillion. Let's not die a slow and painful death boys, an incremental death, give us the Coupe De Grace.

Man, this is going to be an interesting week. I can hardly wait.

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