Fake Growth, Economic Collapse, Death...er...Debt Spirals, SOCIALISTS Smelling the End Zone
Stock-Markets / Global Debt Crisis 2012 Jul 24, 2012 - 12:01 PM GMTBy: Ty_Andros
As the politics of HOPE are slowly replaced by the politics of FEAR the demise of the developed world's empire, financial systems and economies continues to UNFOLD. NOWHERE are the lessons of history being EMBRACED as the elite powers that be: socio and psychopaths in power FIGHT to cling to power regardless of the outcomes their policies have sown in the past.
The results of which are ENTIRELY PREDICTABLE as history provides a powerful ROADMAP. With the proverbial gun to their heads the elites, banksters and public servants duck and let the public take the bullet.
Thus the private sector which is the ONLY segment of economies which actually creates wealth lies bleeding to death from the repeated shootings of the Progressive/socialists in developed world capitols who wield the power of their guns and badges.
"The Founding Fathers knew a government can't control the economy without controlling people. And they knew when a government sets out to do that; it must use force and coercion to achieve its purpose. So we have come to a time for choosing." -- Ronald Reagan
But the choosing has not succeeded as Voters have turned out every government in power since the 2008 crisis but to their chagrin the replacements continue the policies that have gone before. The public servants and Bureaucrats of BRUSSELS and the BELTWAY just march on OUT OF REACH from the PUBLIC.
Conservative or liberals are nothing more than the Gotti's and the Gambino's fighting turf wars known as elections to see who get the front row fleecing the publics the were elected to serve. The SOCIALIST something for nothing societies they have created have and are "RUNNING OUT OF OTHER PEOPLES MONEY" as so aptly put by Margaret Thatcher.
Socialism is a philosophy of failure, The creed of ignorance, and the gospel of envy, Its inherent virtue is the equal sharing of misery." -- Winston Churchill
Hunting down and destroying any member of society which can fund their unpayable promises.
"Redistribution divided society into two social classes the beneficiaries of transfer, who are calling ever for more; and the victims, who submit unwillingly. It could hardly fail to injure social peace and harmony." -- Hans Sennholz
Killing/exterminating wealth creation in pursuit of the funds to pay for the UNPAYABLE and inextinguishable promises to pay they believe they are ENTITLED to. Henceforth killing future economic growth.
There simply is NOT ENOUGH wealth being created in the private sector to pay for the squandering of capital by public servants and bureaucrats. Properly measured Western governments are growing like weeds since the Global Financial crisis exploded in 2008, while their policies destroyed what economic growth in the present and the future.
The leader of the free world spends most of his rhetoric directed at vilifying those that create wealth and personal success, telling them that even if they do succeed he will take it from them in the name of FAIRNESS. Not a recipe for ECONOMIC growth, taking a risk, starting a business, making an investment or hiring new employees who the business owner cannot know the cost of because of government unpredictability.
Unaccountable governments throughout the developed world lie firmly in the grasp of these socialists and their bureaucratic thugs. Doing the bidding of the something for nothing constituents their policies and educational systems have created.
Trillions and Trillions of dollars of Cash reserves worldwide in the private sector lie on the sidelines. SCARED to DEATH of Government actions present and future throughout the developed world. Politicians are being faced with being turned out if they DO NOT DELIVER on promises to pay such as entitlements and subsidies which were never budgeted or provided for. Relying on assumptions which are no longer TRUE.
Refusing to reform their policies which have sown the downturn by UBER hi and rising regulation and taxation (also known as centrally planned economies and confiscation of wealth that is breathtaking: higher taxes, compliance, money printing, inflation, etc.).
"Sometimes the law defends plunder and participates in it. Sometimes the law even places the whole apparatus of judges, police, prisons and gendarmes at the service of the plunderers, and treats the victim, when he defends himself, as a criminal...But often the masses are plundered and do not even know it." -- Frédéric Bastiat
Destroying the HUMAN incentives to produce critical to productivity and WEALTH creation. Transferring what wealth that remains to crony capitalists, banksters, corporate and political elites. These are systems of plunder as outlined by Frederic Bastiat in his book "The Law", a must read to people wanting to know the source of the corrupt systems we reside in.
Socialism is the policies of misery spread widely as ECONOMIC growth becomes a memory. Socialist progressives gathering power over others as the crisis they created thru their CENTRALLY PLANNED economies mushrooms like the nuclear bomb to wealth creation it is. This is a collapse of socialist CENTRALLY PLANNED economies NOT capitalist; the names have been changed to FOOL YOU!
As growth recedes the printing press is employed to substitute to further the growth of the welfare state. Robbing Peter (people who have made a success of themselves and conducted themselves prudently: retirees, savers, small businesses and investors, etc.) to pay Paul (something for nothing societies).
"Remember democracy never lasts long. It soon wastes, exhausts, and murders itself. There never was a democracy yet that did not commit suicide." -- John Adams 1814
Of course this is where we find ourselves today. Something for nothing societies signal the end to empire as those that do not produce EAT those that do. Like locusts they eat everything right down to the roots and the seeds for next year's crops.
"When the people find that they can vote themselves money that will herald the end of the republic." -- Benjamin Franklin
In this case they have eaten the seed corn of many generations into the future. Killing present and future SOCIETAL wealth creation and are CANNIBALS of the worst sort. In the case of the developed world please show me one politician who has won election by promising LESS GOODIES than his challenger.
Breton Woods II in August 15 1971 set the world on the path we find ourselves today: Leviathan government and welfare states. Making semi sound currencies whose reserves where redeemable in gold and silver into fiat currencies redeemable in NOTHING except political HOT air and the PRIVATE property of their constituents. There will come a day when private property holders REFUSE to accept IOU's of bankrupt governments in exchange for their labor and property.
The policies of private property, capitalism and individual choice which created the incentives that produced the VAST accumulated wealth of the developed world will not be allowed to revive. Today public servants and the Bankster/elites which control them could not conceive of returning the freedoms they have taken from the public for decades. Properly measured growth in the private sector has been dead for over a DECADE. Economic growth in last 15 years was government spending growing at almost DOUBLE the rate of misstated inflation.
The Developed world are caught in death...er...debt spirals. Their obligations increasing at an approximate 5 to 9% compounded annually versus no REAL economic growth. For example: In the United States since the Chosen one took office the government has borrowed approximately $6.93 cents for each dollar of POSITIVE NOMINAL growth. This is what a public servant will do to create the ILLUSION of a growing economy for SOCIALIST, PR and political purposes.
Here is a picture of the world's 10 largest economies debts not including off balance sheet HIDDEN obligations of 100's of percent more:
Here is a small example of off balance sheet obligations governments have HIDDEN off their balance sheets:
Add these numbers to the chart above and you get the enormity of the unpayable and inextinguishable obligations of the developed world. Just this week a leaked JP Morgan Chase institutional report put unfunded liabilities of States and Municipalities in the United States at $3.9 TRILLION dollars. DO YOU THINK THIS MONEY WILL BE PAID? How about the pensions in EUROPE?
"Men prefer a false promise to a flat refusal..." -- Quintus Cicero
Many more promises to pay are off balance sheet as well swelling the numbers above significantly. How is this going to be PAID? These countries official lies and prevarications make ENRON, STANFORD financial and WORLDCOM look like LITTLE white lies.
Notice that other than South Korea, and Japan the rest of Emerging Asia, China and South America are relatively SOLVENT. The United States off balance sheet pension liabilities dwarf that of FRANCE, combined Medicare, Medicaid and social security have unfunded promises close to $119 trillion dollars or 700% of GDP. If using REAL gdp after subtracting statistical lies it is 1000%
GDP in the United States is an illusion of herculean proportions as the ministry of truth inside the beltway SPINS their failures as success in the eyes of the main stream media and the sheeple in the public that ONLY looks at the headlines. Take a look at imputed growth courtesy of Washington DC and the commerce dept.:
What is imputed GDP you ask? A free checking account may be counted as $25 dollars in business. A OWNER OCCUPIED fully paid for home that would rent for $2000 is counted as economic activity and added to the GDP figures. In the case for 2010 $2.277 TRILLION dollars of economic activity THAT DID NOT TAKE PLACE are counted as they did. Can you say GDP inflated by statistical government manipulation? The ministry of truth from George Orwells 1984 and Animal farm.
Take a look at REAL GDP after using the 1980 formula from www.shadowstats.com for CPI courtesy of www.dshort.com:
In order for the United States to get to a positive GDP number they must understate INFLATION by 8% and borrow $1.3 + Trillion dollars and call it growth, add the two together and the US economy is SHRINKING an incredible 16% a year in real terms. That by definition is a depression(10%+ decline). A great depression is a 20% plus decline. This number DOES not subtract imputed growth so:
When looking at the bottom line for 2010 the US government stated growth was $15+ trillion dollars. Subtract imputed growth, debt called GDP, and understated inflation of approximately 8% and the REAL economic activity in the United States was 30% less than what was reported at about the $10.5 trillion area.
This is how something for nothing societies are created. The middle class is destroyed and thrown into government dependency of one sort or another. Debt to GDP currently in the United States is reported at about 100%, using the government numbers, using real numbers it is about 148% not including OFF BALANCE SHEET obligations!!!
The United States is not alone in using imputed growth. It is an epidemic of the developed world. Mark Grant has compiled a glimpse of the real GOVERNMENT DEBT to GDP ratios if you included promises or guarantees as a government of the Eurozone: I have compiled them with Gordon T. Long www.gordontlong.com into one illustration:
Of course they made these guarantees with the idea they would NEVER have to make good on them. Off course all of them wish to BORROW more, and still have made no provision to pay the money back. They have always expected to only PAY the Interest and roll over old obligations. Keep in mind that the Spanish number just expanded by $125 billion dollars (about 9-10% of GDP) and all unsecured bank and sovereign creditors have been SUBORDINATED to the rescue fund lending.
Look at the 2012 maturity/new lending wall and bond yields for 2012 which is problematic. Look what is required as illustrated by this recent chart by Martin Wolf of the financial times:
Blow outs in interest rates lead to BLOW UPS. There will be no ROLLING of SPANISH or Italian bank/sovereign debt going forward except by domestic lenders under Spanish/Italian government regulatory control or the ECB. This PONZI scheme is ending NOW!
The operative phrase for this currency and financial extinction event is provided by Ludwig Von Mises:
"There is no means of avoiding the final collapse of a boom brought about by credit expansion. The alternative is only whether the crisis should come sooner as a result of a voluntary abandonment of further credit expansion, or later as a final and total catastrophe of the currency system involved." -- Ludwig Von Mises
Public servants, Elites and those in power have chosen the latter route as they have throughout history. This is the fate that that looms larger and larger for the G7 Central Banks, financial and currency systems as they pursue unending credit expansion.
The elites and banksters will try to defy history as they have done in every previous episode. YOU can Count on it, we are in a currency and financial extinction event. The idea that a debt crisis can be solved with more debt and promises to pay directly contradicts ALL the history of the world.
With over $200 trillion of financial assets throughout the world and 75% of them bonds (IOU'S) of one sort or another. And a global economy of $60 trillion growing at best 3% or $1.8 trillion ANNUALLY and there is not enough wealth created to service the debt. Assuming a average rate of 4% the required sum would be about $6 trillion. So MANY LENDERS are not going to get paid.
This are on balance sheet promises to pay, the off balance sheet promises DWARF the official numbers by many multiples. A lot of BROKEN promises are on the HORIZON!!!
The debt crisis is nothing more than rearranging the lifeboats on the TITANIC to see who gets a seat. Banksters, elites, and socialist progressives public servants are assigning them to themselves and the private sector and public are GOING DOWN with the BOAT.
Keep in mind: ALL DEBT IS PAID EITHER BY THE BORROWER OR THE LENDER! Deleveraging and defaults have not really begun so MUCH MORE mayhem lies directly ahead!!!
The Insolvencies of sovereigns and their banking systems will be a game of dominoes (Siamese twins joined at the hip) and work their way from the WEAKEST sovereigns to the STRONGEST.
"No one can know the precise level of net debt...at which the United States will lose its reputation...but a few more years like this one and we will find out." -- Warren Buffett
Reaching their ultimate denouement when the dollar finally falls as people WAKE UP to how many (UNPAYABLE PROMISES TO PAY) have been created and the amount is inconceivable to a human being. As this deception becomes undone societal chaos will unfold that is unimaginable today.
(Authors note: Invest properly for this outcome and GROW RICH, invest looking in the REARVIEW mirror and your wealth will be irreparably DAMAGED. The greatest transfer of wealth from those that hold it in paper and financial assets to those that don't is UNDERWAY. Restoring fiat currencies to sound money and absolute return alternative investments with the potential to thrive in all market (up, down and sideways) conditions is what I do. If you have an interest in learning more and working with Ty: CLICK HERE)
Everything is a derivative of the dollar and it will be the last to fall. It is the one eyed man in the land of the blind. But the DEPTH of insolvency of the world's reserve currency is greater than any other as progressives inside the beltway and banksters have abused it in unimaginable and invisible ways.
ANDS of Zombie banks litter the landscape of the developed world, alive because of the regulatory bankruptcy (the regulators know they are bankrupt but do not make them account the losses properly) they operate in. Unable to lend as risk is something they no longer know how to measure. This accumulation of unrecognized losses has been accruing for DECADES. Underwriting has become systematically FLAWED. Just today Moody's DOWNGRADED 17 Global banks aggressively and the result was a PREDICTABLE bloodbath. The unsupported leverage dam is busting...
In Europe the banking systems are approximately 400% the size of the economies they operate in. Recognizing the approximate 20% plus of their lending that has gone bad would require recognizing losses of almost $12.8 Trillion dollars or printing that amount: at minimum...
Virtually NO LOSSES have been realized in context with what is to come.
Zombie banks throughout Europe and the US are husbanding their capital to offset the losses when the ultimate day comes they can no longer PRETEND they have not occurred. That day is LOOMING large like a freight train headed at you in like a light at the end of the tunnel.
For decades public serpents and their regulatory bureaucracies have looked the other way in exchange for political favors and campaign funds. Any REAL valuation of their holdings and they would descend into bankruptcy instantly OVERNIGHT as their financial holdings VAPORIZE.
Fiat currency and credit systems die in waves of INSOLVENCY and the powers that be in the developed world WILL NOT avoid the fate that has befallen all that have gone before them.
When is a rescue not a rescue? It is when morally and fiscally insolvent public servants and governments issue a statement which is nothing but HOT AIR without any substance to it. These people are LITERALLY out of CHIPS to play. They pretended to ante up over the weekend. Making a commitment to LOAN $125 billion of capital to Spain to BEGIN to address banking system insolvency. Unfortunately 20% of the money for the rescue comes from Italy, what a laugh. They borrow money at 6% and lend it to Spanish banks for 3%. ABSURD.
Unfortunately it is not a capital injection to cover losses. It is just another PROMISE to PAY of entities which cannot pay previous obligations let alone new ones. And the Banks have no ability to REPAY existing debt and cover existing losses let alone REPAY new borrowing. The Markets in the US gapped up overnight, but was lower less than 1 hour into the trading day. The half-life of the can kicking just gets shorter and shorter.
The Spanish banking system has losses of double or triple the bailout number. If you factor in unrecognized losses on Spanish sovereign debt the number mushrooms. The regional Cajas (Banks) were political animals and the epitome of crony capitalism. Expect lots of surprises there as these are political PIGGY and Crony capitalist BANKS FIRST and saving institutions last.
As I covered in the last issue SPAIN is done and Italy is on the MENU. No amount of hot air will change the facts. In overnight most trading markets gapped up on the news of the FAKE rescue, once the details became UNCLEAR the markets voted with their feet.
These are NOT SPECULATORS contrary to political HOT AIR. These are prudent investors getting out now to preserve their capital. Last weekends and Mondays debacle in Spain is only an anecdote of what has gone before and will come in the future.
As I write this Spanish yields are pushing THRU 7% and Moody's has downgraded Spanish debt to one notch above JUNK. Preserving its status as collateral for the European central bank lending window and LTRO funds.
Just this week the US Federal reserve announced that US median household net worth has fallen 40% since 2007, back to NOMINAL levels LAST seen in 1992.
Factor in REAL inflation which reduces the purchasing power by another 50% or more (since 1992) and the middle class is no more. Destroyed by the UNSOUND MONEY from counterfeiters' at the Federal Reserve, banksters and their progressive public servant henchmen in the beltway.
In closing: After several years of gathering power through the politics of HOPE, now the power gathering is through the politics of FEAR. FEAR is a powerful emotion and socialists are EXPERTS at applying it to MANIPULATE the publics (Useful idiots as Lenin called them) they claim to serve. The more it emerges the more freedoms they take to SAVE you.
"Experience hath shown, that even under the best forms of government those entrusted with power have, in time, and by slow operations, perverted it into tyranny." -- Thomas Jefferson
Socialists smell the end zone of COMPLETE domination and control of the economies of the developed world, pushing their policies of centralization as they TAKE what's left of the private sector they do not already control as the crisis mushrooms.
The death er debt spirals continue, with the obligations mushrooming at about 6 to 10% compounded annually and income growing NOT AT ALL properly measured. Governments and their dependents have exploded in size since 2008 and AUSTERITY is a MAIN STREAM MEDIA cover story for it. Its austerity all right but only in the private sector, the governments have continued to MUSHROOM larger.
The Eurozone is caught in a financial WAR between Unelected Bureaucrats in Brussels, the ECB and the debtors. As Mayer Rothschild once said:
"Let me issue and control a nation's money and I care not who writes the laws"
Ask the troika (IMF, ECB and the European commission), United States government, Federal Reserve and Germany if this is true?
It makes no matter as they are ALL BANKRUPT and their economies WILL NOT RECOVER from DECADES of POLITICAL and ELITE MISMAGEMENT which had previously COVERED up by MONEY PRINTING through unrestrained borrowing for CONSUMPTION which was called GROWTH. Ponzi growth thru debasement and leverage is and will continue to FAIL.
At this point the debts of those with access to the printing press are preferred to those that don't with the EXCEPTION of GERMANY. Both will fall as the insolvencies are unresolvable short of MASSIVE defaults either outright and thru the soft default of the printing press.
Debt and tax slavery is on the march snaring more and more people directly and indirectly. As fear mounts in the Eurozone unelected BUREAUCRATS in Brussels and the Banksters at the European Central bank work to GRAB power and enslave the publics through the frenzied propagation of FEAR.
"There are two ways to conquer and enslave a nation. One is by the sword, the other is by debt." -- John Adams
Today the European Union BANNED/removed the future use of CREDIT ratings, shooting the messenger in an attempt to FOOL lenders. Can you say MORALLY and FISCALLY bankrupt? The money printing will equal the insolvencies. The deeper the insolvencies grow, the greater the Quantitative easing required as they are RECIPROCALS of each other. It is that or return to the BARTER system.
The something for nothing societies will DEMAND printing of money out of thin air and attacks on what wealth remains until the cows come home in exchange for surrendering freedom for the empty PROMISE of BENEFITS (see Argentina and Venezuela).
Operation Twist was extended this week to the end of the year, so add this to the list of problems at the year-end as the fiscal cliff and Taxaggedon hit at that time frame. January 1st looms as quite a challenge for the US and world economy and it should be interesting.
A Marie Antoinette moment for Banksters/elites is in sight and they will behave accordingly. Fight to destroy/enslave the public that is coming for them. Faith in the FALSE promises of government will die a gruesome death as illusions of government GUARANTEES of entitlements and pensions are SHATTERED.
(Authors note: Invest properly for this outcome and GROW RICH, invest looking in the REARVIEW mirror and your wealth will be irreparably DAMAGED. The greatest transfer of wealth from those that hold it in paper and financial assets to those that don't is UNDERWAY. Restoring fiat currencies to sound money and diversifying your portfolio into absolute return alternative investments with the potential to thrive in all market (up, down and sideways) conditions is what I do. If you have an interest in learning more and working with Ty: CLICK HERE)
As the headlines mount the public is SCARED into supporting the policies which EXPAND their enslavement by the elites (Banksters, crony capitalists, trade unions, progressive government and public servants).
"Most people want security in this world, not liberty." -- H. L. Mencken
This is known as the politics of PLUNDER into which the developed world has descended (read the LAW by Frederic Bastiat). In the United States the government spends more than $31,000 dollar per household per year. ABSURD. Every citizen OWES $440,000 towards the national debt and UNFUNDED entitlements. In order to meet their obligations they plan to attempt to take everything the private sector HAS.
"A government big enough to give you everything you want is big enough to take everything you have" -- Thomas Jefferson
The socialists in the developed world capitals are planning to do JUST THAT. The G20 meeting has been an abject FAILURE! In today's Wall Street journal David Malpass provides deep insights into the GOVERNMENT dysfunction and misguided/corrupt policy responses since the GFC began in 2008: G-20 Speed Dating in Los Cabos. The obstacles to global growth are clear and need to be addressed in national capitals, not a resort town http://online.wsj.com/article_email...
Plan for the worst and hope for the best. There is no HOPE of avoiding the final denouement. The people in developed world capitals and their banker masters who created this mess have no ability to fix it. May God bless you. Don't miss the next edition of TedBits, subscriptions are free at www.Tedbits.com.
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By Ty Andros
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Copyright © 2012 Ty Andros
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Tedbits is authored by Theodore "Ty" Andros , and is registered with TraderView, a registered CTA (Commodity Trading Advisor) and Global Asset Advisors (Introducing Broker). TraderView is a managed futures and alternative investment boutique. Mr. Andros began his commodity career in the early 1980's and became a managed futures specialist beginning in 1985. Mr. Andros duties include marketing, sales, and portfolio selection and monitoring, customer relations and all aspects required in building a successful managed futures and alternative investment brokerage service. Mr. Andros attended the University of San Di ego , and the University of Miami , majoring in Marketing, Economics and Business Administration. He began his career as a broker in 1983, and has worked his way to the creation of TraderView. Mr. Andros is active in Economic analysis and brings this information and analysis to his clients on a regular basis, creating investment portfolios designed to capture these unfolding opportunities as the emerge. Ty prides himself on his personal preparation for the markets as they unfold and his ability to take this information and build professionally managed portfolios. Developing a loyal clientele.
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