15 December 2010

APOCALYPSE NOW? No . . . but Soon Enough

Fiscal train-wreck racing round the bend...

Congressional Republicans gain the most seats in 40 years, and what we get is a trillion-dollar Porkulus II -The Sequel? At a total cost that again exceeds the entire cost of the Iraq war?

Discouragingly, Curt at Flopping Aces sees the package already a done-deal... with a weaker-than-circus-lemonade GOP throwing away recently hard-won political capital to bring us more spending, pork, and class warfare. You're excused if you naively thought all this is precisely what America just massively rejected... so did I.

As the GOP inexplicably caves to a weakened Obama/Reid, congressional Republicans are quick to stress that this sort of deal with the White House -which again exposes all previous pay-as-you-go platitudes from the President as flat-out lies- would never see the light of day after the first of the year.

And all parties are understandably keen to avert an immediate economic disaster by allowing the Bush tax cuts to expire- which Art Laffer predicted would put us right-over the cliff somethime in 2011... but both tax cuts and a trainload of pork with zero offsets...? 

Tellingly, the bond market is appalled- T-bills tanked hard yesterday, with the biggest sell-off in two years... worst since the Lehman Bros collapse. This horrendous month has seen borrowing costs soar for America, Europe, and Japan by more than 25%... you do the math on times-a-few-trillion to see just what that means- bond investors seem to have it sussed.

Small wonder then a growing number of serious people now speak of the previously-unthinkable: a comprehensive economic collapse in the United States of America.

Nouriel Roubini -who foresaw the 1990s emerging-economies debt crisis and earned much credibility by accurately predicting the occurrence and scale of the subprime debacle- sees weak US growth and NO will to tackle the deficit crisis until "the next administration". He also expects unemployment stuck at 9.5% for the foreseeable future.

But that's in the short-mid term... the spendthrift fiends running the US today are doing all they can to bring far-darker long-term predictions of a financial apocalypse to reality... via unrestrained hyperinflation leading to a dollar collapse.

Dr. Roubini himself warns of a "US fiscal train-wreck waiting to happen"- and he's not the only one:
Economists peddling dire warnings that the world's number one economy is on the brink of collapse, amid high rates of unemployment and a spiraling public deficit, are flourishing...

"The US has run out of bullets," Roubini told an economic forum in Italy earlier this month. "Any shock at this point can tip you back into recession." 

But other economists, who have so far stayed out of the media limelight, are also proselytizing nightmarish visions of the future. Boston University professor Laurence Kotlikoff ... unveiled a doomsday scenario -- which many dismiss as pure fantasy -- of an economic clash between superpowers the United States and China, which holds more than 843 billion dollars of US Treasury bonds. 

"A minor trade dispute between the United States and China could make some people think that other people are going to sell US treasury bonds," he wrote in the IMF's Finance and Development review. "That belief, coupled with major concern about inflation, could lead to a sell-off of government bonds that causes the public to withdraw their bank deposits and buy durable goods." 

Kotlikoff warned such a move would spark a run on banks and money market funds as well as insurance companies as policy holders cash in their surrender values. "In a short period of time, the Federal Reserve would have to print trillions of dollars to cover its explicit and implicit guarantees. All that new money could produce strong inflation, perhaps hyperinflation," he said. 

"There are other less apocalyptic, perhaps more plausible, but still quite unpleasant, scenarios that could result from multiple equilibria."

Deranged Obama Administration fiscal policy also has PIMCO founder Bill Gross scratching his head:
Check writing in the trillions is not a bondholder’s friend; it is in fact inflationary, and, if truth be told, somewhat of a Ponzi scheme. Public debt, actually, has always had a Ponzi-like characteristic. 

Granted, the U.S. has, at times, paid down its national debt, but there was always the assumption that as long as creditors could be found to roll over existing loans – and buy new ones – the game could keep going forever. 

Sovereign countries have always implicitly acknowledged that the existing debt would never be paid off because they would “grow” their way out of the apparent predicament, allowing future’s prosperity to continually pay for today’s finance. 

Now, however, with growth in doubt, it seems that the Fed has taken Charles Ponzi one step further. Instead of simply paying for maturing debt with receipts from financial sector creditors – banks, insurance companies, surplus reserve nations and investment managers, to name the most significant – the Fed has joined the party itself. 

Rather than orchestrating the game from on high, it has jumped into the pond with the other swimmers. One and one-half trillion in checks were written in 2009, and trillions more lie ahead. The Fed, in effect, is telling the markets not to worry about our fiscal deficits, it will be the buyer of first and perhaps last resort. There is no need – as with Charles Ponzi – to find an increasing amount of future gullibles, they will just write the check themselves. 

I ask you: Has there ever been a Ponzi scheme so brazen? There has not.

What to expect subsequent to a US economic implosion/hyperinflation crisis? The Department of Defense has been preparing for civil unrest in the wake of a crisis for two years now...
"Widespread civil violence inside the United States would force the defense establishment to reorient priorities ... to defend basic domestic order and human security," the report said, in case of "unforeseen economic collapse," "pervasive public health emergencies," and "catastrophic natural and human disasters," among other possible crises.

No paucity of frightening implications in that... but others are being far more specific:
As you are now well aware Fannie and Freddie are going to punish people who have stopped paying their mortgages, who can pay them, and who are paying other bills instead. This leaves lenders with foreclosures and much more inventory than they ever imagined. This additional problem will bring on the double dip that Wall Street and Washington so fear. As a result of this and other failures we are about to experience the worst economic collapse since 1348. 

The stock market is topping out readying itself for its most disastrous fall in history. The fall will be followed by years of depression, all of which has been deliberately created to bring the world economically and financially to its knees in an attempt to bring about world government by Illuminists
There are always these lone voices in the wilderness, which at best – some 15% of the populace – listens too. You had better listen this time because it could well cost you not only your assets, but your life, especially when another war is being prepared for you to engage in. 

Nothing is really as it seems to be and there are no coincidences. You are about to enter a world of chaos from which few will survive unscathed. A world of no banks, no public facilities, no food and rampaging gangs of desperate people. Unemployment of 50% and little law and order. Violence will be rife. 
We are now entering the next to last phase of our journey. The wanton creation of wealth, inflation and perhaps hyperinflation, which will rob you of your assets. A stealth attack on what you have left by the people who control your government. Such monetary creation is the only way these people can keep the game going. They know it won’t last, but they proceed anyway. 

For awhile they’ll keep the multitudes at bay with extended unemployment and food stamps, but that will fade in time for lack of financial control, as the system begins to break down. You already see all fiat currencies under fire, as is sovereign debt. 

Can it get any worse? Of course it can, and it will. Implosion is the word everyone is going to discover and understand...

When it's all said and done -and we're trying to come up with new, creative recipes for K-rations in our bunkers- at least the TEA Party patriots will be able to look their children in the eye and say they tried to derail this country's wholly-unnecessary self-destruction.

What a crying shame... let's hope and pray we can find a way to avoid it:


Pierro said...

well stated. We are preparing and helping others to prepare as well!

Conservative Pup said...

Wow, James. I'm sorry to say that I share this belief that soon we will see this happen, and we will experience what this country hasn't ever gone through before. It's scary to me to think about, so consequently I don't dwell on it, but am trying to be a realist about it and prepare accordingly.

Good job, you put a lot of work into this. Will link this later today or tomorrow.

Take care, and thanks.

Reaganite Republican said...

I hear you, Pierro

And thanks Pup... unsettling, by why hide from such a devastating potential reality, eh

Anonymous said...

Yeeeech. And I thought gold was too expensive at $1000/ounce

Aurelius said...

Thanks Obama!

Randy-g said...

Terrific post RR, I fear we have crossed the magic line and this wreck is no longer stoppable.

Reaganite Republican said...

Don't tell me that Randy... I'm still praying we can hang on till 2013!

And I mean praying every week~

Bob Belvedere said...

Merry F'ing Christmas, eh?

How about some Music For The Apocalypse.

Matt said...

There be holiday cheer here!

Seriously though, that is some pretty dark news man. I'm going to have to accelerate my prep.

Government Mess said...

Yes my friend it's about time to think about stocking up non-perishables and ammo...lol! I aint goin to no damn prison camp for holding my beliefs! My Dad has a whole room dedicated to food storage because he thinks the financial system is going to collapse. People don't want to think about it but it is almost inevitable that it will happen.

I think you have out done yourself James, this piece is masterful and so spot on to what true conservatives see as well.

I hope you and yours have a Blessed Merry Christmas and an Optimistic New Year!

Reaganite Republican said...

Thanks GM, but I know you must be joking about the ammo... you're already armed-to-the-teeth lol

Maybe the next step is a couple artillery positions... keeping up with the Joneses and all!

Christopher - Conservative Perspective said...

RR, It would seem we are on the same page!

Reaganite Republican said...

I'm getting there, I'm sorry to say... tough times for optimists lol

Doomed said...

I came to your blog via Conservative Hideout 2.0.

One of the things I have been doing in the last couple of years is discovering the links, ties and sinister weaving of communists/socialists and progressives over the last 5 decades. They have chosen to instill their agenda via dark and sinister motives of legislate and then REGULATE using the power of the American Constitution, Federal Courts, Judges, Supreme Court and the full weight of the federal government to DEFEND their agenda against attacks by those of us horrified at its implications once fully realized.

I submit this as entered into the Congressional Record in the early 60's:

24. Eliminate all laws governing obscenity by calling them "censorship" and a violation of free speech and free press.

25. Break down cultural standards of morality by promoting pornography and obscenity in books, magazines, motion pictures, radio, and TV.

26. Present homosexuality, degeneracy and promiscuity as "normal, natural, healthy."

27. Infiltrate the churches and replace revealed religion with "social" religion. Discredit the Bible and emphasize the need for intellectual maturity which does not need a "religious crutch."

28. Eliminate prayer or any phase of religious expression in the schools on the ground that it violates the principle of "separation of church and state."

The author of this work was scorned and laughed at. Then in the early 70's a USSR KGB bureau chief defected...in an interview he literally held up this list and said this was.........

EXACTLY the communists plan to.........

I once said, "We will bury you," and I got into trouble with it. Of course we will not bury you with a shovel. Your own working class will bury you.
Nikita Khrushchev

The times are dire and the challenges ahead are daunting. America must first recognize the threat and then they must begin the process of taking back America from the 10-15 percent of fanatics trying to socialize and then turn communist America by............

29. Discredit the American Constitution by calling it inadequate, old-fashioned, out of step with modern needs, a hindrance to cooperation between nations on a worldwide basis.

30. Discredit the American Founding Fathers. Present them as selfish aristocrats who had no concern for the "common man."

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