I read this article this morning and found it interesting. Just a brief about the author: he is a financial analyst covering gold & silver, and he is usually spot on w/ his analysis, I've been reading his work for years... But this week's post strayed a little off topic. I have one fundamental disagreement w/ his 'options' but I think his analysis is correct. What are your thoughts?
September 25, 2009
Death of the American Empire...
by Clive Maund
Originally published September 24th, 2009.
The general public, who never understood the global financial crisis in the first place, have been hoodwinked into thinking it's over. It's not. None of the underlying structural abnormalities, distortions and excesses within the global financial system have been addressed and rectified, because to do so in a meaningful way would involve allowing a constructive depression to purge the system of dross and parasitic elements (like much of government itself) in what would amount to a teardown and rebuild. Instead, the same crew who got us into this mess are still in charge, and their "solution" to the global financial crisis has been even more extravagant helpings of what created the mess in the first place - namely money and credit creation. This shameless procrastination has not and will not fix anything - all it has done is postpone the day of reckoning and guaranteed an even worse crisis later.
Recession, depression and deflation have their rightful place in the scheme of things, which is to straighten the system out after a prolonged period of profligacy. The willful obstruction of these forces is ultimately counterproductive and futile. Almost all of you will be aware of the longstanding inflation versus deflation arguments, which still rage. What happened last year is that the deflationary forces that had built up to explosive proportions suddenly burst into the open. However, instead of allowing these cleansing forces to do their grim work, The US Fed and government and then Central Banks worldwide decided to beat them back with a massive inflationary frontal assault of money and credit creation. There should by rights have been many more bloated carcasses like Lehman Brothers floating down the river, but instead we have the legacy of an army of zombie corporations, hopelessly corrupt and mismanaged, lurching towards us like the figures in the The Night of the Living Dead. The same rotten management with their crony connections in government, the same leeching off shareholders and the public purse, and the same soaking of gullible foreigners with share and bond issues. However, there is a limit to everything, and as made clear by Karl Denninger in his recent article "WARNING: Deflationary Collapse Dead Ahead", the US debt is continuing to accelerate into the stratosphere, racing way ahead of GDP so that it is effectively unserviceable already. Any significant increase in interest rates would make it blatantly obvious that it is unserviceable and lead to default - this is why interest rates have been held at such an artificially low level for so long, but this itself is creating massive problems. For a start it is undermining the dollar which is threatened with collapse, and extremely low rates and inflation of the money supply are also encouraging another carry trade boom in commodities and other assets. Another big danger is that the US can no longer count on dull-witted foreigners to keep buying increasingly large tranches of Treasuries to keep the party going. Foreigners are slowly wising up and refusing to fall for it, which means that in order to meet its funding requirements the US Fed and government are having to buy their own garbage, which is of course hugely inflationary. So what we have is a bizarre stagflationary situation, where an attempt is being made to beat back massive deflationary forces by means of further money and credit creation. This continues to ramp up the national debt to astronomic levels requiring a continuance of zero interest rates to avoid default. The zero interest rates and continued expansion of the money supply threaten to destroy the dollar, but if rates are raised significantly default will rapidly ensue. This is a classic Catch 22 situation and it is quite clear that the United States is on its way to becoming a third world country. If default occurs and the banks in the US close their doors things could get ugly really fast, with the prospect of 100 million people with guns going on the rampage looking for food and essentials - and someone to blame. Martial Law and a curfew with a "shoot to kill" policy would have to be declared instantly - fortunately this has been catered for by the provisions of the Patriot Acts.
There is however one escape route that might enable the US to avoid the indignity of ending up like Zimbabwe, and that is for it to "surrender" to its creditors and submit to being economically carved up by them. In effect sovereignty would be lost, but face-saving measures might be permitted such as allowing the inhabitants to continue to celebrate Independence Day, and to fantasize that the Constitution of the US still applies and to plaster flags everywhere, provided that the "Made in China" reference in the corner of the flag is clear to see. On the plus side the paranoid nonsense at airports will probably be curbed and meals may even be reintroduced on flights, with curries and sushi as an option. The creditors will call the shots and the US military machine will be neutered, so that there will be no more military adventures on the other side of the planet to secure geopolitical objectives. US military bases will all be closed down or maybe refurbished as schools. Israel could find itself with a sudden severe funding crisis. Major US corporations will effectively be run by foreigners who will restructure them as they see fit - which could be good news for US waistlines as workers start their day with Tai Chi and a session on the treadmill. Large tracts of Real Estate and other assets will be taken over in lieu of debt repayment. The Hamptons may be largely peopled by Asian entrepreneurs. There will be work for Americans in their own country, however, with plenty of vacancies bagging groceries and stacking shelves in supermarkets at decidedly modest rates of pay and plenty of other service opportunities for their new masters such as gardening and window cleaning. "Green cards" may even be permitted for the lucky few - not to enter the country but to leave.
Since those in control of the US have demonstrated their unwillingness to allow recessionary forces to do their necessary work of correcting the extreme imbalances within the economy, there are only two options left - default and deflationary implosion - ruin, or a comprehensive takeover of the country by its creditors, both of which options probably occurring after a period of runaway inflation as the Fed and government desperately try to stop the inevitable. If the former occurs the shockwaves will reverberate around the world, like last year, and we can expect a collapse in commodity and stock markets. Until that happens it will be case of inflate and inflate, to forestall rising rates and liquidity problems, which will make gold and silver probably the best investments around, but you sure don't want to be around once the music stops. It is therefore to be hoped for the common good that the US authorities make the right decision and surrender to the mercy of their creditors before it's too late. Either way the American Empire is finished.
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How else can the New World Order Take over the World ?
ask GW Bush he was the one planning it ,him and his Father and the G8
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The great day of the LORD is near, it is near, and hasteth greatly, even the voice of the day of the LORD: the mighty man shall cry there bitterly. Zephaniah 1:14
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Sounds more than a little over-the-top. History does not support the scenario where a preeminent power becomes a no count power overnight. Germany remains a major power, notwithstanding losing two world wars. ***an is a world power, notwithstanding losing a world war. France remains a world power, notwithstanding the loss of its colonial empires. Ditto with England. I guess I'm saying I'm not going to hold my breath waiting on this scenario to occur.
On the other hand, I do agree that the underlying problem that caused our financial crisis last September has not yet been fully addressed. Many toxic assets (remember "TARP" stands for toxic asset relief program) remain out there. I just don't think that we are going to be eating our house pets and cutting bark off of trees to get some nourishment.
If default occurs and the banks in the US close their doors things could get ugly really fast, with the prospect of 100 million people with guns going on the rampage looking for food and essentials - and someone to blame. Martial Law and a curfew with a "shoot to kill" policy would have to be declared instantly - fortunately this has been catered for by the provisions of the Patriot Acts.
This seems rather presumptuous. I highly doubt this would happen in such a simplistic and abrupt manner. I certainly hope not anyway.
And for his solution? Surrendering sovereignty is simply not an answer ever. Period. I'd much rather have a civil war than a surrender to creditors.
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While you rest, someone, somewhere, is training. When you meet, you will lose.
If default occurs and the banks in the US close their doors things could get ugly really fast, with the prospect of 100 million people with guns going on the rampage looking for food and essentials - and someone to blame. Martial Law and a curfew with a "shoot to kill" policy would have to be declared instantly - fortunately this has been catered for by the provisions of the Patriot Acts.
This seems rather presumptuous. I highly doubt this would happen in such a simplistic and abrupt manner. I certainly hope not anyway.
And for his solution? Surrendering sovereignty is simply not an answer ever. Period. I'd much rather have a civil war than a surrender to creditors.
Bingo - This is where I disagree w/ him, I dont think the gov't will let things get that bad, because then they loose power, I think they will socialize all liquid assets (think 401k's, IRA's, bank accounts) to pay the creditors and use fear of 'loss of sovereignty' as their tactic to allow this to happen, then they would force socialisim down our throats and we'd have no way to stop it. On the other hand if we change leadership before this happens, we may opt or threaten to goto war instead of surrendering our capitalizism... Ideally though we get an administration that can control spending and start paying down our debt to avoid this all together...
__________________
Hoyt VTEC 28" @ 74# 283 ft/s
GTProHunters 5575 wraped and Blazed
100 Grn Rcky Mtn Snypers & Stinger 4 Blade
STS, QAD Ultra Rest Pro
If default occurs and the banks in the US close their doors things could get ugly really fast, with the prospect of 100 million people with guns going on the rampage looking for food and essentials - and someone to blame. Martial Law and a curfew with a "shoot to kill" policy would have to be declared instantly - fortunately this has been catered for by the provisions of the Patriot Acts.
This seems rather presumptuous. I highly doubt this would happen in such a simplistic and abrupt manner. I certainly hope not anyway.
And for his solution? Surrendering sovereignty is simply not an answer ever. Period. I'd much rather have a civil war than a surrender to creditors.
Seriously, this guy lost me at the word surrender. Dont frickin think so buddy.
Death of the American Empire...
Aint no drug getz me more pumped--Bowhunter fer life!!
