NO, can it be?First!

NBC News broadcast an “exclusive” interview with Obama thismorning. One question was about losing weight. His answer was thatI’m not, but my hair is starting to gray.”I worry about people finding jobs, about people getting heath care,about the economy, and about our young men in harms way…that’s aheavy weight on my shoulders.”What a curious answer. Besides self-serving, these “worries” are notsomething that turns a person’s hair gray.What will make your hair turn prematurely grey, and what will makeyou lose weight is being caught in a continuous now-win situationwhere you are f*cked no matter which way you move. It makes onefreeze in fear.If you know there is no more cheap energy, if you know there is no waywe can grow out of our debt, if you know the Fed’s actions will eventuallytrigger inflation, if you know that it will require more and more militarylives to protect our oil interests which can/will slip through our fingersand if you know that the Ukaine virus leaked from our Baxter bio-weaponslab.http://www.zerohedge.com/article/deadly-flu-spreads-across-ukraineNow there are some problems that will make your hair turn prematurelygrey!

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Cold Hearted Trickle Down Theories Never WorkThe water turns to icicles before it gets to the poorer masses.Also, RE: stimulus and job creations, its one thing to give incomes of up to $150K another $6500 tax credit to buy homes [or refinance], whether they paid $6500 in income tax or not….its another thing to feed and employ the 1 in 7 [50,000,000] in America that go hungry every day now. You may think that’s not as bad as the Great Depression was, but bear in mind, we have no Dust Bowl this time.The Democratic Party used to be for the little guy, I said used to be.

Because capitalism and excessive leverage encourage corporations to produce more and more poisonous foods in the fight for profits. Longer shelf life, poorer ingredients means higher profits which means death and obesity for the people – isn’t capitalism wonderful the profit motive cures all!!

I’d like to put in a plug for Charles Morris’s excellent new ‘The Sages’ (on Volcker, Soros, and Buffett), which makes it clear (without saying so) that we are in the grips of a benign (for now) oligarchy (note- not meritocracy), where even these 3 Wise Men can’t shake the power-driven certainty of Tim-Ben-Larry that their policies and assumptions are exactly what go us into this mess. And after the recent sad spectacle of Buffett’s ‘Talk-your-book boosterism’ on Charlie Rose, I’m not so sure he deserves the accolades Morris gives him (I think Bogle deserves his place more than Buffett frankly).

And, back at the start of the Great Depression the population was 150 million.One would have to be blind to not notices that the more stable countries are those with smaller populations: Norway, Sweden and Denmark are leaders as far as quality of life goes; much of that reason is due to their smaller, more manageable, populations. NOTE: I detest governments, ALL governments (right-wing anti-socialism types need not apply for a debate with me).

There is NO “solution/magic bullet.” And no single person or small group of entities is going to resolve things for “US.”We’re losing value. The government cannot/does not add value!We collectively swapped the horse crap, now we’ve got no alternatives other than to spit it out or swallow it (and then crap it back out). Either way, it’s going to get purged.

What’s Wrong With The Economy?The following are the essential problem characteristics of our current economy that have caused it to go awry:1. A huge government debt that can only be repayed (if it ever is) with highly inflated, semi-worthless dollars. Related to this is the issuance of arbitrary and preposterously large amounts of fiat paper money.2. A huge private debt, much of which will never be repayed.3. A non-productive, highly consumptive, poorly structured, and badly damaged economy.4. Unwarranted federal government interference with and manipulation of markets as follows:a: Buy and sell manipulation, especially in the stock and gold markets.b. Suppression and falsification of market data.c. Generation of market statistics that do not measure what the are purported to measure.d. Lending money at negative interest rates, which has caused a large amount of non-productive and dangerous speculation. the formation of the stock and housing markets bubbles the bursting of which caused the current recession, etc.. Recent loaning has resulted in creation of new bubbles and a weakening of the dollar.5. The executive and legislative branches of government are essentially owned by industry in general and Wall Street in particular. For example, Obama could not support legislation that all campaign contributions would have to be made to political parties and not to individuals, as he himself is at the top of industries virtual payroll of politicians.*****The above is not complete, but it’s a fairly good start at a comprehensive problem definition. It describes the disease, and factors like unemployment, banks going broke, export of jobs, etc. and the items mentioned by Dr. Rubini are symptoms of this disease. Bernanke, Obama, et al have been treating (unsuccessfully, I might add) the symptoms of the disease, and not the disease itself. I also find it interesting that during the treatment period, all five factors listed above have not been abated, but most have intensified. These guys have not been making things better, they’ve been making them worse.

Obi put himself in his own box. His ideology is a no win. Disaster’s what you have when a leader has not the fear of God. Obama is his own god. He has no idea how to improve this nation. And he won’t unless he gets down on his knees and really sincerely prays for wisdom.

“Each month, the U.S. Credit system and economy become only more vulnerable to a rise in yields (mortgage and Treasury borrowing costs, in particular). Imagine the U.S. housing market in an environment of much higher mortgage rates and then ponder the scope of the Fannie/Freddie/FHLB/FHA bailouts in the event of a spike in yields. Picture the dilemma faced by Treasury if its borrowing costs jump significantly. How about the fiscal position of state and local governments? Could our frail banking system handle a surprise rise in rates? And imagine the corner policymakers would find themselves boxed into when the Fed loses control over market yields.It is not clear to me whether it will unfold over months or years. But I do expect a more complete Paradigm shift to foster waning influence of the Fed over global market yields commensurate with fading U.S. economic dominance. Unless global reflationary forces dissipate, this implies a future adjustment period for U.S. interest-rate and risk asset markets. And when the Fed eventually loses command over market yields, the risks associated with today’s policy course will likely manifest into a very problematic financial and economic crisihttp://prudentbear.com/index.php/creditbubblebulletinview?art_id=10306s.”

http://business.timesonline.co.uk/tol/business/economics/article6918308.eceIn the bloodcurdling programme notes, the Japanese bond market has a plot, a setting and a cast of characters that should logically guarantee a great horror show.There is the monstrous spectre of public debt –— a bogeyman that has swollen to nearly 200 per cent of GDP and which the IMF predicts could burgeon to 246 per cent within five years. There are the hapless Japanese villagers, too old and weak to fight the debt beast and no longer able to sate its hunger from their gold stashes. There is the spooky old castle of Japan itself — a rickety shadow of its former glory with crumbling walls and dark secrets.The most extreme hypothesis is apocalyptic and ends with sovereign default by the world’s second largest economy as the titanic Japanese Government bonds (JGB) market is finally exposed as the Ponzi scheme some believe it might be. The only happy ending, supposedly, is for those investors bold enough to short Japanese debt — a trade that has only ever led to disappointment and ruination.Quite reasonably, some parts of the market are already worked-up in anticipation of all this financial gore.Japan does owe a spectacular amount of money, mostly to Japanese, and a glance at demographics and economic fundamentals suggest it was always going to be hard to pay off.If the servicing costs rise because the Japanese stop buying bonds, runs the chilling narrative, it all turns nasty. Yields on the 10-year note have indeed climbed to 1.47 per cent in a steady rise since September, although they tumbled to 1.37 per cent yesterday as the five-year auction was well covered and deflation concerns took over. Credit default swap (CDS) spreads have risen sharply and credit ratings agencies, though not actually changing their view, are sharpening their pencils in case net debt issuance takes another wild swing north.Helping the hype is the fact that Japan has been a truly dreadful steward of its debt, postponing fiscal consolidation for 30 long years as the problem turned uglier. But, like so many mediocre horror films, much of the impact is lost in the detail and the plot is actually rather hackneyed. Nothing has changed substantially over the past few weeks, and there is no real reason to suspect that the Bank of Japan will not buy JGBs as disaster looms. With the scary music turned down low, you can see how a lot of the effects were done.To start with, there is the question of whether gross debt to GDP ratio is deadly or even the right number to be looking at. Britain in the 1950s amassed gross debt above the 250 per cent mark and still managed to found the National Health Service. Looked at in terms of debt servicing costs, Japan is not especially more endangered than the US, UK, France or Germany.Secondly, Japan’s debt is almost entirely held by Japanese. That does not remove the risk that JGBs will lose their appeal and yields will rise, but it does mean that the Government knows precisely the kind of investor it is dealing with: all it has to do is what it has always done since 1989 and used the law to make every other investment — from property to the stockmarket — unappealing. CDS spreads too are a financial instrument used mainly by non-Japanese: given that 94 per cent of JGBs are held by Japanese, it is just possible that CDS spreads are not the most accurate predictor of JGB market behaviour.None of this can disguise, however, that Japan’s situation is extreme and fraught with the danger of chronic mismanagement. It does, however, have two potential saviours waiting in the wings.The first would be to substantially lower the threshold where people pay inheritance tax from the current levels of Y60million (£400,000). As matters stand, only a small minority pay death duties: if that balance were shifted to become even a large minority, the fiscal position would quickly improve.The second, says Nicholas Smith of MF Global, would simply be to insist that more companies pay the tax they should already be paying. That requires an acknowledgement that there is a highly abused tax regime in Japan, with the small and medium-sized companies as the suspected culprits. Corporate tax in Japan is the highest in the OECD but tax to GDP ratio is among the lowest. It is explained by the fact that less than 30 per cent of Japanese companies booked a profit for tax purposes in fiscal 2008, though a great many of those are certainly performing better than breakeven. For every company that pays its taxes, 2.4 do not because the regime is sloppy and Japanese politics has always secretly favoured the little guy.It is a horror show, certainly, but if companies stop hiding profits and the dead pay their taxes, the X-rating is not a foregone conclusion.

sorry – havent had time to read the entire thread, so hope i am not repeating anything…. point is very simple: wow japan is in deeper sht than i thought.also – the “black hole” is not gone, only got transfered from private to public/govt (think prof. R said this first), the likelihood of a sovereign default is now significant and japan seems to be a candidate. the japanese scenario of over a decade of debt growth exceeding underlying economic growth is a scenario that could very well be a precedent for the anglosaxon world (US and UK).i am an analyst sitting literally in the middle of a trading floor in london, and last friday there was trader chatter about ukraine defaulting on certain payments. now trader talk always needs to be discounted, but anyhow this demonstrates the mood.also, friday night i had a 3 hour one on one with the CEO of a decent-size london hedge fund who said that he is positioning himself for a sovereign default somewhere not too long from now.And a few days ago, Societe Generale’s Cross Asset Team published a 68 page report titled “Worst-case debt scenario – Protecting yourself against economic collapse”, projecting debt ratios for japan (blasting through 200%), US, UK and others. very depressing. get your hands on that report if you can.also – why is nobody raising the broader question about anglosaxon versus “Rhein”-model, the latter being the Continental European models. Germany seems to have fared very well in this, even though it also had some massive banks defaulting. Could it not be that what happened means that a softer, more long-term approach to economic development is more sustainable than the fast paced high testosterone of the anglosaxon model? and still, the english are angry that tony blair did not get the eu presidency, and somehow we see GM turning around, not selling Opel but instead again trying to force several european governments to hand it a few billions to keep the factories open…to me it looks like people’s behaviours have not changed – so better prepare for the japan scenario.apologies for the rambling:)

You are not rambling. We are on new ground. None of have this worked out.

Why Roubini can’t be right, because the mainsteam news media and BO say we are past the worst and in a strong recovery. Looks at home prices and the stock market, better buy before you’re priced out.Carry Trade and other tricks to suck the public dry.

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