Karl nails it!!

By Karl Denninger
The Market Ticker

http://market-ticker.org/


Want to turn the Tide?

If so -- if this is really about "the 99%" -- then you need to understand a few things. 

Some of you already do.  To those, this article is redundant.  To the rest, and to the majority of the people in this nation, it is not.

Last night I appeared on Dylan Ratigan's show.  You can watch the segment, and should.  I used the word financialization, which a few people emailed me about and asked me to explain.

Thus, this Ticker.

So what is financialization anyway?  It is the process by which something very ordinary (say, a TV set) becomes financed. In doing so there is inherently created the use (and usually the abuse) of leverage.

What is leverage?  Leverage is simply the ability to act as though you have much more of something than you really do.  For example, you can use leverage to pry off the lid on a beer bottle.  Your raw strength is multiplied by the lever (the bottle opener) to lift the cap.

But note that there is no free lunch.  While the opener may multiply the force applied to the cap, the distance the opener moves is proportionally reduced compared to the movement of your hand.

In economics, leverage is the use of debt to pretend to have more economic surplus (that is, purchasing power) than you really have.

Let's take a TV set.  If you save up the money to buy one, then go into the store and pay for it, you now own a TV set.  There is no leverage involved; you took your economic surplus from working (which you didn't need for food, energy, shelter and clothing - thus, it's a true surplus to you) and you expend it on a TV set.  The transaction is simple; once it is completed there are no residual effects.  If you lose your job the next day, you still have the TV set and will forever more until it either breaks, wears out or you dispose of it in some way.

But what if the TV set costs $500 and you only have $100?  Well, you could financialize your acquisition of the TV.  That is, you could borrow $400 by buying the TV on installment payments with a $100 down payment, and now you have a TV.

Or do you?

Actually, the bank (or the store) owns a TV.  You may have custody of a TV set, but you don't own a TV set. You owe a debt.  You have promised to work tomorrow to cover the expense of the television. You don't own the TV until you pay it off.

This is all fine and well up until you lose your job.  Now the bank comes after you and wants the TV back, plus whatever deficiency there is on reselling the TV set to cover your debt.  You suddenly discover, much to your chagrin, that you never owned it at all.

This all sounds pretty ordinary, except that the economic effect of financializing that transaction isn't, in fact, ordinary at all.

See, in economics there is this thing called "supply and demand."  The more demand there is for something with a given supply, the higher the price tends to be.  In ordinary times a gallon jug of drinking water in a store is a dollar, and from the tap it costs so little we don't ordinarily put a price on it.  Yet if there was just a hurricane, and there is no fresh water available, what would the price of that same gallon be?  Ah, now we have much demand and very short supply, and as such the price will be quite dear.  Perhaps the price of that water might be several gallons of gasoline (for the seller's generator, of course.)

So what has happened to our economy over the last three decades?

In short, things that never should have been became financialized. And as the goods and services became financialized, demand was shifted upward - people were made "able" to allegedly "buy" things they could not otherwise afford.  The expected response in the marketplace to such a thing, predicted by basic economics, was that prices would rise.

Prices, in fact, did exactly what you'd expect.

If you're wondering why you can't afford to pay for college by flipping burgers or pizzas in your off hours, this is the reason.  It was precisely the distortion of the government making student loan debt non-dischargeable, which made it available to almost everyone at a "low interest rate", that drove up the price of college educations to the moon.  And to the moon they went - up 450% since the 1980s, more than five times as much as average salaries increased.

How about houses?  A middle-class house in 1960 sold for $12,000. It had three bedrooms, one bath, a living room and an eat-in kitchen. The walls were plaster (not drywall) and it was of generally-stout construction.  The average family income in 1960 was $6,691 or about 1/2 of the price of a house.  The average family size was just over 3 persons and about 32% of women were in the workforce; the remainder typically stayed home and raised the kids.  That wasn't so hard to do when you could buy a house at twice the average income.

What happened when we financialized houses?  Prices went up.  A lot.  They went up much faster than did incomes.  First to 3x incomes, and in some parts of the nation in the 2000s they went to utterly ridiculous multiples, like 5, 6 even 10x.  How?  Nobody ever really actually owned the damn house; the bank owned it and you were turned into a financial slave!

How about cellphones?  Oh, they're cheap; we didn't financialize those, did we?  The really nice ones are $199 at the store.  Uh, no they're not.  Ever notice that the price of the service is twice that of prepaid?  Why do you think that is?  That's simple - the difference between $100/month and $50/month is, well, $600/year.  Oh, and that was a two-year contract you signed, so that $500 cell phone that you got such a "deal" on at $199 actually cost you nearly $1,500.  That's right - that nice "smartphone" was financialized and you're paying three times as much for it as a consequence, rather than buying it right now for cash on a prepaid plan..

How about medical care?  In the 1960s your parents wrote a check to the doctor.  If it was really serious they probably had insurance; they got billed and then filed a claim.  Bankruptcy due to medical costs was extremely rare, and you could almost always afford whatever you needed medical attention for by paying with the money in your wallet.

How about now?  Well gee, you've got copays and prescriptions are cheap, right?  The doctor costs $20 to see and the 'script he writes is another $10, and you think this is great.  Uh, not so fast kemosabe.  Ever get laid off?  Ever hear of a thing called Cobra?  COBRA is a law that says that your employer has to allow you to continue your health insurance once you get fired or are laid off for a period of time.  There's only one catch - you have to pay the entire amount of the health insurance premium yourself.  The employer is permitted a 1% (yes, really) mark-up for the service of handling your check.

I cannot tell you how many times someone quit or was fired at my company, got the COBRA paperwork and proceeded to call me and scream that I was screwing them because to keep their "health insurance" they were going to have to fork up $800 a month.  That's $9,600 a year, incidentally, and this was in the 1990s.  They always accused me of ripping them off, never mind that it was black-letter law under penalty of prosecution that I could only charge 1% for handling the money and otherwise had to bill them at exactly what the insurance company billed us!  No, you don't have "free" (or even reasonably-priced) health care folks.  It's insanely expensive, and why?  Because again we financialized it.  Those who have a demand for health care now can (by law) always receive it - it's effectively the ability to write your own infinite leverage on health services.  What has happened to the price?  It's gone to the moon and as a consequence nobody can reasonably afford to show up in a hospital any more for even the most-routine emergency without being bankrupted if they do not have insurance.

Now it is absolutely true that we have treatments and other medical "miracles" that we didn't 20 or 30 years ago.  But that we can do a thing on a technical basis doesn't mean we can afford to do that thing.  We can put a man on the moon, but we can't afford for everyone to take that flight.

By the way, you don't happen to think that all this financialization was an accident, do you?  Of course not.  Shifting the supply and demand curve means there's more money to be had from the transaction. 

Where do you think that money went?

Why, right in the pockets of JP Morgan, Goldman Sachs, Morgan Stanley, Citibank, Bank of America and yes, the bank on the corner.  I'm sure you've noticed that bank buildings tend to be quite nice.  Grand exteriors, high-rise buildings in the middle of cities (very, very expensive real estate), fabulous lobbies with marble floors and other similar visible elements of opulence.  Where do you think all the money came from to buy that stuff?  Why, from you - the rube standing there in the lobby!  Never mind the bankster's bonuses!

Was this all the "free market" at work?  Absolutely not!  Student loan debt was given "special status" and cannot be discharged in bankruptcy.  Fannie Mae and Freddie Mac massively distorted the housing market.  Medical insurance companies are exempt from anti-trust laws, and drug makers were given the ability to legally prohibit you from doing what you'd like with what you own (specifically, reselling things you purchased and paid for.) 

All of this distortion in the market occurred due to the direct acts of government acting at the behest of fat cat banksters and industry insiders, using the threat of force to strip your wealth.

Every morning in the financial media we hear about how horrible it will be if we put a stop to this financial rape and the financial system's size and influence shrink dramatically!

So let's talk about the distortions and what removing them will do for a minute or two, shall we?

If we get rid of financialization in the above things, what happens?

Well, we're told that if we cut out the student loan programs, for example, that nobody would be able to afford to go to college. 

Is this really true? 

Of course it's not true.  You're not dumb enough to believe that tripe out of the mouthpiece at your college or on CNBC, are you?  The college wants you to believe that, and so do the banks.  But what happens if tomorrow all the "free money" loans stop?  Now the college has empty classrooms because nobody comes any more.  Students can't afford to attend, so they don't.

What happens the next morning at that college?

Oh that's simple: See, it doesn't cost much to provide a few desks, chairs, and a roof over head along with a calculus book, does it?  Nor does an instructor cost that much when spread across a student body.  Let's see how cheaply a college can educate you, if they're unable to extract from you promises from the future and must instead talk you into providing them with economic surplus from your current efforts.

Let's assume for a minute that there are 30 Calculus students in this college class and five instructional hours in a day, so we can serve 150 students in one room.  Figure the room is 1,000 square feet, which is more than sufficient (5x5 per student * 30 students plus room for the chalkboard, desk at the front and free space to move around; a 25x40 space should be more than sufficient.)  A buck-a-foot a month ($12/year/foot) is certainly doable in most areas if you're looking for usable space, not gilded BS.  Four months is one term, so this is $4,000 for the space.  Figure another grand for the rental on the chairs and desks and we're up to $5,000.

We have 150 students so the facility costs them $33 each for this class.  What's the professor cost?  We'll pay him $100,000 a year; we're not pigs and this is Calculus, a typical "first year" college class, not a grad school thing.  He therefore makes $33,000 teaching class for this semester (four months.)  That's $220.  We're now at $250 per student for a four hour per week class, or about $60/credit hour.  Note that the professor is teaching four days in the classroom and has one for office work and grading; he works a five-day week of five hour days.  Not a bad gig if you ask me.

If the average student's full load is 15 semester-hours tuition is $900 per semester to cover costs.

Guess what - in the late 1970s and early 1980s it wasn't that much more than that. I remember paying it.

It doesn't have to be today either.  It is because it can be.  Because you can pay due to the financialization, even though you're not really paying -- your promising to pay tomorrow -- prices have gone to the moon.  Supply and demand were distorted, you got screwed and the banksters skimmed off the extra money, along with the college administrators.  Oh, and neither of them were honest with you about what happened either.

The important point here is that if we cut off the financialization of college you will still get an education.  The schools will scream and many will go bankrupt, but soon on the same ground where there was a bankrupt college there will be a new one, and this one will charge $2,000 a semester to attend instead of $10,000 or $20,000.  The difference?  You'll have to pay cash, but you'll be able to work a part-time job for the two grand and thus you'll have no debt!

Who wins?  You do.  Who loses?  The fat cat college administrators with their half-million dollar salaries and the banksters who can't hold your college loans over your head and threaten you with wage garnishments until you're 80!

Houses are no different and neither is medical care.  The screaming about how "nobody will be able to go to the doctor" or "nobody will be able to buy a house" is a lie.  The doctor can set his fee at $100,000 for his services if he wants but if nobody can or will pay him $100,000 then he sells no service.  That doctor goes bankrupt immediately, soon there will be a different doctor (or maybe the same one after he goes through bankruptcy) and suddenly medical care will be much-more reasonably priced!  After all, if nobody can buy then the seller can't make a living either, can he?  Prices will be forced down to what the ordinary person can afford to pay.

When it comes to drugs and devices its even worse.  Our government allows blatant price-fixing.  Viagra is 10% of the cost per pill in America just a few miles away in Canada.  It's illegal, however, for you to re-import it from Canada back into the US.  Why?

Simple: Canada's single-payer health system won't pay more than $2 for the pill.  The manufacturer wants to sell them, so they do.  They make a profit.  But only on the "copy" of the pill - there's no profit for the R&D in that price.  So who gets to pay for the R&D of virtually every drug and device in the medical world today?  You do, and it's literally forced upon you at gunpoint because our government prohibits under penalty of law people from selling that which they first bought and paid for!

There is no way that such a price disparity would hold for more than 10 minutes were these laws to be dropped.  You get screwed on your prescriptions and devices you buy intentionally by our government through their protection of these industries.  You get financially raped so that everyone in the world can enjoy our medical technology at the mere reproduction cost and the banksters and drug companies can get rich.  It's an outrage and again, it happens due to financialization of the medical industry and the force of government coercion, NOT the free market.

Here's the question when you get down to it: Do you want to fix this or not?

If you do then the demand is not for "single-payer health care" or "free college educations" or "debt forgiveness."

Those demands, if you succeed in obtaining them, will make the problem worse.  You will become more of a slave through those demands, not less.

The demand you must issue is that all the special protections that are currently afforded by government are to be dropped.  The government props under home lending are taken away.  The government mandates that people be treated medically irrespective of ability to pay and are able to cost-shift their care to others go away.  The non-dischargable nature of student loan debt goes away.  And government protection prohibiting the resale of anything someone owns that is legitimate (e.g. a truck load of Viagra) goes away.

Now, if you are a student with a lot of debt, you can file for bankruptcy.  Sure, your credit gets trashed if you file bankruptcy (and it should as you did foolishly take the loan) but the entity who loaned the money foolishly with not a care in the world if you could actually pay loses their money!  They will immediately, of course, stop making foolish loans -- like lending kids $75,000 to study history.  The price of college educations will immediately fall back in line with ability to pay via a part-time job just as it was for more than a hundred years before we financialized college educations.

Without Fannie, Freddie, FHA and similar, along with demanding that before you foreclose you must be able to show actual transfer and ownership of the note house prices will collapse.  Yes, you'll need a lot of money for a down payment in percentage terms, but this is good, not bad.  The average home price will be $100,000 or less against an average household income of $50,000, not $200,000, $300,000 or more.  You'll have to save $20,000 before you can buy, but that's ok too.  You'll have immediate equity and you won't be so far in debt.  If you want to buy a house you'd like prices to be low, not high, right?  House prices will return to where they were in relationship to incomes before we financialized them, and you will be able to buy a house!

Without the ability to cost-shift medical care, drugs and devices the price of this care will collapse.  Some advanced technologies will become rare and remain expensive, simply because they are technically very difficult and thus do have an actual high cost.  Most people will not be able to afford these medical technologies.  But routine and expected medical care will become much cheaper, simply because it has to in order for the doctor, hospital and drug company to remain in business!  You will still be able to go see the doctor, your broken leg will still get set, and most medical care and procedures will remain available for far less than is currently charged, simply because the firms and people involved in providing it want to continue to have jobs and as such they must charge what can be paid from your personal economic surplus, not your ability to demand that an "infinite source" of money cover the bill.

You can't fix this any other way folks.  I am well-aware that this goes against the grain of "I need it right damn now" that has imbued our society, but mathematics simply doesn't care about whether you agree or disagree.  It just is.

We can de-fang the banksters.  It's not even particularly difficult to do.  The hard part is understanding that you're not screwing yourself by taking this step and you won't lose. Oh the banksters, the universities, the doctors and the Realtors will all lie to you and claim you'll never go to college, you'll never see a doctor and you'll never own a house, but the fact is that they're all lying.  The fact of the matter is that supply and demand governed the ramp in prices of all three of these categories of goods and services, and when demand collapses that very same economic law will govern the price collapse too!

You can bet the banksters, universities, medical societies and housing industry insiders know this, and they're scared.  They know that if you figure it out their income is cut in half or more.  They are returned to middle-class working people rather than the fat cat status they enjoy today.  Doctors, college professors, home builders, bankers and Realtors used to be middle-class citizens, not gold-clad elites driving around in Lamborghinis and living in mansions!

What's worse (to them) is that if you succeed in breaking the back of financialization these people will lose the ability to enslave you.  You will have returned to yourself the power to choose when you work, how hard you work, and what you do with your own economic surplus, instead of having pledged it to the bank to buy the car, the bank to buy the house, and the insurance company in the event you get sick.

More importantly than your personal interest in this is that as a society we've reached the limits of the ability to financialize our lives.  That's why the markets, housing and economy crashed in 2007.  We had used financial leverage to live beyond our means for the previous decade but in fact the imbalances and intentional distortions in the market date back to 1980.  There has not been one three month period where we have not abused leverage and financialization since that time.  Not one.

This is the choice we have before us.

We did not find ourselves here because of the "free market."  We are here because the rich and powerful demanded special protections from government that allowed them to enslave you, they enticed you into taking that first hit off the crack pipe of cheap money, and then once you were hooked good they used the jackboot of the government to screw you through changes in the law and special protections for themselves so that you could not easily escape.

The solution is not to demand "free stuff" or "fairness."

The only solution is to remove the excess leverage from the economy - to get rid of the debt that has been accumulated and force recognition of the fact that not only are many people bankrupt but the financial institutions are as well.  Only when the balance sheets on both sides are cleared can the economy recover.

This is the choice we face ladies and gentlemen.  We can either demand changes that are mathematically sustainable or we will fail at our goal and the spiral you're seeing right now in Greece will come here.

We are soooo hosed

The trend-line of a shrinking tax payer base verses the increase of those receiving some form of government assistance is not a long term problem, because at this rate we will never make it through the short term.

Intestinal Fortitude

YES, THE EMAIL IS 100% TRUE AND CORRECT

POSTED BY ANN BARNHARDT - SEPTEMBER 29, AD 2011 11:12 AM MST

For some reason I am suddenly getting scads of emails asking to confirm my response to a musloid death threat. Yes, that is 100% real and accurate, and yes, that picture of a rosary-wrapped hand grasping a pink AR-15 is me. It is my very real Colt M4 that has been custom DuraCoated. Yes, yes, yes. Here is the original exchange from July 22 via YouTube. This guy is a musloid over in the U.K., hence the driving directions citing the daily direct flights from Heathrow to Denver:

YouTube user mufcadnan123 has sent you a message:

Watch your back.

To:annbarnhardt

I'm going to kill you when I find you. Don't think I won't, I know where you and your parents live and I'll need is one phone-call to kil ya'll.

Re: Watch your back.
Hello mufcadnan123!
You don't need to "find" me. My address is 9175 Kornbrust Circle, Lone Tree, CO 80124.
Luckily for you, there are daily DIRECT FLIGHTS from Heathrow to Denver. Here's what you will need to do. After arriving at Denver and passing through customs, you will need to catch the shuttle to the rental car facility. Once in your rental car, take Pena Boulevard to I-225 south. Proceed on I-225 south to I-25 south. Proceed south on I-25 to Lincoln Avenue which is exit 193. Turn right (west) onto Lincoln. Proceed west to the fourth light, and turn left (south) onto Ridgegate Boulevard. Proceed south, through the roundabout to Kornbrust Drive. Turn left onto Kornbrust Drive and then take an immediate right onto Kornbrust Circle. I'm at 9175.
Just do me one favor. PLEASE wear body armor. I have some new ammunition that I want to try out, and frankly, close- quarter body shots without armor would feel almost unsporting from my perspective. That and the fact that I'm probably carrying a good 50 I.Q. points on you makes it morally incumbent upon me to spot you a tactical advantage.
However, being that you are a miserable, trembling coward, I realize that you probably are incapable of actually following up on any of your threats without losing control of your bowels and crapping your pants while simultaneously sobbing yourself into hyperventilation. So, how about this: why don't you contact the main mosque here in Denver and see if some of the local musloids here in town would be willing to carry out your attack for you? After all, this is what your "perfect man" mohamed did (pig excrement be upon him). You see, mohamed, being a miserable coward and a con artist, would send other men into battle to fight on his behalf. Mohamed would stay at the BACK of the pack and let the stupid, ignorant suckers like you that he had conned into his political cult do the actual fighting and dying. Mohamed would then fornicate with the dead men's wives and children. You should follow mohamed's example! Here is the contact info for the main mosque here in Denver:
Masjid Abu Bakr
Imam Karim Abu Zaid
2071 South Parker Road
Denver, CO 80231
Phone: 303-696-9800
Email: denvermosque@yahoo.com
I'm sure they would be delighted to hear from you. Frankly, I'm terribly disappointed that not a SINGLE musloid here in the United States has made ANY attempt to rape and behead me. But maybe I haven't made myself clear enough, so let me do that right now.
I will NEVER, EVER, EVER submit to islam. I will fight islam with every fiber of my being for as long as I live because islam is pure satanic evil. If you are really serious about islam dominating the United States and the world, you are going to have to come through me. You are going to have to kill me. Good luck with that. And understand that if you or some of your musloid boyfriends do actually manage to kill me, The Final Crusade will officially commence five minutes later, and then, despite your genetic mental retardation, you will be made to understand with crystal clarity what the word "defeat" means. Either way, I win, so come and get it.
Deo adjuvante non timendum-
Ann Barnhardt

Time is running out. Are you ready?

Prophets Of Doom: 12 Shocking Quotes From Insiders About The Horrific Economic Crisis That Is Almost Here

By Mac Slavo

http://theeconomiccollapseblog.com

retweet

We are getting so close to a financial collapse in Europe that you can almost hear the debt bubbles popping.  All across the western world, governments and major banks are rapidly becoming insolvent.  So far, the powers that be are keeping all of the balls in the air by throwing around lots of bailout money.  But now the political will for more bailouts is drying up and the number of troubled entities seems to grow by the day.  Right now the western world is facing a debt crisis that is absolutely unprecedented in world history.  Europe has had a tremendously difficult time just trying to keep Greece afloat, and several much larger European countries are now on the verge of a major financial crisis.  In addition, there is a growing number of very large financial institutions all over the western world that are also rapidly approaching a day of reckoning.  The global financial system is a sea or red ink, and when we get to the point where there are hundreds of ships going under how is it going to be possible to bail all of them out?  The quotes that you are about to read show that quite a few top financial and political insiders know that things cannot hold together much longer and that a horrific economic crisis is coming.  We built the global financial system on a foundation of debt, leverage and risk and now this house of cards that we have created is about to come tumbling down.

A lot of people in politics and in the financial world know what is about to happen.  Once in a while they will even be quite candid about it with the media.

As I have written about previously, Europe is on the verge of a financial collapse.  If things go really badly, things could totally fall apart in a few weeks.  But more likely it will be a few more months until the juggling act ends.

Right now, the banking system in Europe is coming apart at the seams.  Because the global financial system is so interconnected today, when major European banks start to fail it is going to have a cascading effect across the United States and Asia as well.

The financial crisis of 2008 plunged us into the deepest recession since the Great Depression.

The next financial crisis could potentially hit the world even harder.

The following are 12 shocking quotes from insiders that are warning about the horrific economic crisis that is almost here....

#1 George Soros: "Financial markets are driving the world towards another Great Depression with incalculable political consequences. The authorities, particularly in Europe, have lost control of the situation."

#2 PIMCO CEO Mohammed El-Erian: "These are all signs of an institutional run on French banks. If it persists, the banks would have no choice but to delever their balance sheets in a very drastic and disorderly fashion. Retail depositors would get edgy and be tempted to follow trading and institutional clients through the exit doors. Europe would thus be thrown into a full-blown banking crisis that aggravates the sovereign debt trap, renders certain another economic recession, and significantly worsens the outlook for the global economy."

#3 Attila Szalay-Berzeviczy, global head of securities services at UniCredit SpA (Italy's largest bank): "The only remaining question is how many days the hopeless rearguard action of European governments and the European Central Bank can keep up Greece’s spirits."

#4 Stefan Homburg, the head of Germany's Institute for Public Finance: "The euro is nearing its ugly end. A collapse of monetary union now appears unavoidable."

#5 EU Parliament Member Nigel Farage: "I think the worst in the financial system is yet to come, a possible cataclysm and if that happens the gold price could go (higher) to a number that we simply cannot, at this moment, even imagine."

#6 Carl Weinberg, the chief economist at High Frequency Economics: "At this point, our base case is that Greece will default within weeks."

#7 Goldman Sachs strategist Alan Brazil: "Solving a debt problem with more debt has not solved the underlying problem. In the US, Treasury debt growth financed the US consumer but has not had enough of an impact on job growth. Can the US continue to depreciate the world’s base currency?"

#8 International Labour Organization director general Juan Somavia recently stated that total unemployment could "increase by some 20m to a total of 40m in G20 countries" by the end of 2012.

#9 Deutsche Bank CEO Josef Ackerman: "It is an open secret that numerous European banks would not survive having to revalue sovereign debt held on the banking book at market levels."

#10 Alastair Newton, a strategist for Nomura Securities in London: "We believe that we are just about to enter a critical period for the eurozone and that the threat of some sort of break-up between now and year-end is greater than it has been at any time since the start of the crisis"

#11 Ann Barnhardt, head of Barnhardt Capital Management, Inc.: "It's over. There is no coming back from this. The only thing that can happen is a total and complete collapse of EVERYTHING we now know, and humanity starts from scratch. And if you think that this collapse is going to play out without one hell of a big hot war, you are sadly, sadly mistaken."

#12 Lakshman Achuthan of ECRI: "When I call a recession...that means that process is starting to feed on itself, which means that you can yell and scream and you can write a big check, but it's not going to stop."

*****

In my opinion, the epicenter of the "next wave" of the financial collapse is going to be in Europe.  But that does not mean that the United States is going to be okay.  The reality is that the United States never recovered from the last recession and there are already a lot of signs that we are getting ready to enter another major recession.  A major financial collapse in Europe would just accelerate our plunge into a new economic crisis.

If you want to read something that will really freak you out, you should check out what Dr. Philippa Malmgren is saying.  Dr. Philippa Malmgren is the President and founder of Principalis Asset Management.  She is also a former member of the Bush economic team. You can find her bio right here.

Malmgren is claiming that Germany is seriously considering bringing back the Deutschmark.  In fact, she claims that Germany is very busy printing new currency up.  In a list of things that we could see happen over the next few months, she included the following....

"The Germans announce they are re-introducing the Deutschmark. They have already ordered the new currency and asked that the printers hurry up."

This is quite a claim for someone to be making.  You would think that someone that used to work in the White House would not make such a claim unless it was based on something solid.

If Germany did decide to leave the euro, you would see an implosion of the euro that would be truly historic.

But as I have written about previously, it should not surprise anyone that the end of the euro is being talked about because the euro simply does not work.

The only way that the euro would have had a chance of working is if all of the governments using the euro would have kept debt levels very low.

Unfortunately, the financial systems of the western world are designed to push governments into high levels of debt.

The truth is that the euro was doomed from the very beginning.

Now we are approaching a day of reckoning.  We have been living in the greatest debt bubble in the history of the world, but the bubble is ending.  There are several ways that the powers that be could handle this, but all of them will lead to greater financial instability.

In the end, we will see that the debt-fueled prosperity that the western world has been enjoying for decades was just an illusion.

Debt is a very cruel master.  It will almost always bring more pain and suffering than you anticipated.

It is easy to get into debt, but it can be very difficult to get out of debt.

There is no way that the western world can unwind this debt spiral easily.

The only way that another massive economic crisis can be put off for even a little while would be for the powers that be to "kick the can down the road" a little farther by creating even more debt.

But in the end, you can never solve a debt problem with more debt.

The next several years are going to be an incredibly clear illustration of why debt is bad.

When the dominoes start to fall, we are going to witness a financial avalanche which is going to destroy the finances of millions of people.

You might want to try to get out of the way while you still can.

Winter Reads

Autumn is now upon us, and with that comes the sudden approach of winter.  Time to hunker down to some good reads.  Here is a list of some of the books I read last winter that you might find interesting – at least they will give you a clue of how we have gotten into the mess that we are in today:

1.  10 Books that Screwed up the World:  And 5 Others That Didn’t Help, by Benjamin Wiker.

With a title like that, this book BEGS to be read.  Who can resist picking up a title like that?

2.  Liberal Fascism:  The Secret History of the American Left, by Jonah Goldberg.

A very good book that provides some historical perspective on the left, the kind they would rather you didn’t find out about.  All critiques of this book have been ad hominem attacks against the author.  The left can’t debate the facts, so as usual they try to destroy the messenger.

3.  The Return of the Great Depression, by Vox Day.

A very readable book about our current economy that is actually interesting.  Vox Day is also one of the few people that predicted the mess we are currently in.

4.  The Secrets of the Federal Reserve, by Eustace Mullins.

This one will tick you off.  We have been lied to about the “Federal” reserve since its inception.  There is nothing “Federal” about it.  It is a private corporation that controls your money.  This book exposes the true history of this powerful corporation.

5.  The Politically Incorrect Guide to Islam (and the Crusades), by Robert Spencer

O.K., as an admission I have actually read the Koran twice.  So while not an expert, I know what it actually says.  This is another book that the critics don’t refute but engage in more ad hominem attacks.

I picked up this book after a co-worker was telling me about his special forces neighbor who has been training our “allies” in various Islamic countries.  My friend stated what I was thinking, “why in the green God’s world are we training the enemy in advanced fighting techniques?”  Sadly, I fear those in power have fallen prey to the politically correct mantra that Islam is a religion of peace.

If you want to know more about the true enemy we face, read the Koran, and read this book.

I believe most if not all of these books are available from Amazon in the Kindle format, which makes them even cheaper and handier.

Are you reading anything particularly interesting?  I’m always up for a good read and would love to hear from you.

Loss

The last few days have been ones of sadness.  This past week a co-worker was killed in a river rafting accident, a co-workers dad passed away, and a former co-workers wife passed away from a major heart attack.   In addition to all this, a local officer for a small department was killed in an off duty motorcycle crash.

Taking it all in is impossible.  My thoughts have been with the families of those that are gone and feelings of inadequacy to comfort those left behind.

As they say, life goes on.  It just seems a little lonelier now.

Biff

Some things just rankle me, and I go out of my way not to get rankled.  This is why I seldom watch the news, preferring written text and substance over flash and smilin’ white teeth newscasters.

So there I was checking my Facebook page when a post rankled me.  The fact that I am home with a major head cold and I am very cranky didn’t help.   The post about “cops” shutting down a lemonade stand didn’t at first get me fired up even though that is stupid in and of itself, it was the responses.  Yep, those dang cops cruise around just looking for lemonade stands to shut down.  Not.

Every time I see one of these stories, and admittedly their have been a lot of them lately, whether it be lemonade stands, crosses in peoples yards, bible studies in peoples home, etc; the writer always blames the “cops” for shutting them down, making them remove them or not allowing them to assemble.

Newsflash:  It aint the cops.  It is you.  Yep, you heard me right.  It is you whether by action or inaction.  The Police do not make the laws.  You do by electing representatives to make them for you.  Or you don’t vote an in so doing you have given them carte blanche to do whatever they want.

I know of no Police Officers who revel in the thought of shutting down some 9 years olds lemonade stand.    I would be willing to bet that the Police Officers had probably driven by this criminal enterprise (lemonade stand) several times before someone called and complained, forcing them to reluctantly “do something.”

So here is how the "system" really works:

Biff decides to run for office, say as a City Councilman.  Not so he can serve the public mind you, but rather so he can serve himself for some interest that you the voter never finds out about.  Sorry boys and girls, these folks are not altruistic.  That is a fairy tale.

Biff panhandles around for campaign contributions to help him get elected.  He approaches Bob who owns the Burger Barn.  Bob is all to happy to support Biff, as Biff has promised Bob that with that campaign contribution grease, if elected he will look into certain city ordinances that cost Bob money he would rather not pay.

Biff gets elected and all is well.  Until one day that Bob drives past little Billy’s house notices that Billy is selling lemonade for 25 cents a glass at a stand set up on the sidewalk.  Biff doesn’t want to lower the price of the lemonade he sells at the Burger Barn for $1.25 to be competitive with Billy.  So this same paper bag filled with bovine fecal material, which preaches to anyone who will listen to him about free enterprise and capitalism ad nausea, calls up Biff.  He reminds Biff of that juicy campaign contribution – not coming right out and telling Biff that he owes him, but Biff gets the memo.

Bob tells Biff about Billy, and how Billy (who is actually practicing free enterprise and capitalism) is hurting lemonade sales at Bob’s Burger Barn.  Bob tells Biff how dangerous it is for children to be selling anything that close to the roadside.  Someone is likely to get hurt.  So in the interest to public safety, Bob proposes that Biff scratch out a city ordinance prohibiting lemonade stands within 100 feet of the roadside.

Biff wanting to keep the payola rolling in takes his proposed ordinance to the city council.  He talks it up as a safety issue to "protect the children." Who in their right mind can be against the safety of children right?

The council overwhelmingly approves the ordinance and everyone is happy.  A few weeks go by and Bob sees that the lemonade stand of Billy’s is still operating.  Worse, he notices a local Gendarme purchasing lemonade and chatting with the lad.  Horrors.

Bob then calls Biff, who calls Bloviate, the Chief of Police.  Biff reminds Bloviate that he took an oath to enforce the laws of the City and that he is responsible for the safety of the public. 

So Bloviate sends some of his officers down to Billy’s lemonade stand to explain to Billy that his lemonade stand is violating a city ordinance, and that if wants to stay in business he has to move his stand back 100 feet.  Billy’s dad is understandably upset and explains to the officers that if Billy did that his stand would be in the back yard not visible to anyone and no one would buy the lemonade.

Billy’s dad calls the press, who dutifully reports the actions of the jack booted local police.  Billy’s out of business; the police feel like idiots for upholding their oath; the City Council is happy because they can tell their constituents that they are all about public safety and then question the "actions of the police"; the press gets a story that sells; the public is outraged at the police; Biff is happy because he can continue to receive Bob’s campaign contribution, and Bob is the biggest winner of all as he can continue to charge the residents whatever he thinks he can get away with for his lemonade without the worry of a little free market competition.

If reading about a little boy getting his lemonade stand shut down by the cops upsets you, or if reading about a little old lady who is fined for having a cross in her yard makes your blood boil, do me a favor; stop electing Biffs.  The “cops” are on your side.