Most Popular
1. Banking Crisis is Stocks Bull Market Buying Opportunity - Nadeem_Walayat
2.The Crypto Signal for the Precious Metals Market - P_Radomski_CFA
3. One Possible Outcome to a New World Order - Raymond_Matison
4.Nvidia Blow Off Top - Flying High like the Phoenix too Close to the Sun - Nadeem_Walayat
5. Apple AAPL Stock Trend and Earnings Analysis - Nadeem_Walayat
6.AI, Stocks, and Gold Stocks – Connected After All - P_Radomski_CFA
7.Stock Market CHEAT SHEET - - Nadeem_Walayat
8.US Debt Ceiling Crisis Smoke and Mirrors Circus - Nadeem_Walayat
9.Silver Price May Explode - Avi_Gilburt
10.More US Banks Could Collapse -- A Lot More- EWI
Last 7 days
Stock Market Volatility (VIX) - 25th Mar 24
Stock Market Investor Sentiment - 25th Mar 24
The Federal Reserve Didn't Do Anything But It Had Plenty to Say - 25th Mar 24
Stock Market Breadth - 24th Mar 24
Stock Market Margin Debt Indicator - 24th Mar 24
It’s Easy to Scream Stocks Bubble! - 24th Mar 24
Stocks: What to Make of All This Insider Selling- 24th Mar 24
Money Supply Continues To Fall, Economy Worsens – Investors Don’t Care - 24th Mar 24
Get an Edge in the Crypto Market with Order Flow - 24th Mar 24
US Presidential Election Cycle and Recessions - 18th Mar 24
US Recession Already Happened in 2022! - 18th Mar 24
AI can now remember everything you say - 18th Mar 24
Bitcoin Crypto Mania 2024 - MicroStrategy MSTR Blow off Top! - 14th Mar 24
Bitcoin Gravy Train Trend Forecast 2024 - 11th Mar 24
Gold and the Long-Term Inflation Cycle - 11th Mar 24
Fed’s Next Intertest Rate Move might not align with popular consensus - 11th Mar 24
Two Reasons The Fed Manipulates Interest Rates - 11th Mar 24
US Dollar Trend 2024 - 9th Mar 2024
The Bond Trade and Interest Rates - 9th Mar 2024
Investors Don’t Believe the Gold Rally, Still Prefer General Stocks - 9th Mar 2024
Paper Gold Vs. Real Gold: It's Important to Know the Difference - 9th Mar 2024
Stocks: What This "Record Extreme" Indicator May Be Signaling - 9th Mar 2024
My 3 Favorite Trade Setups - Elliott Wave Course - 9th Mar 2024
Bitcoin Crypto Bubble Mania! - 4th Mar 2024
US Interest Rates - When WIll the Fed Pivot - 1st Mar 2024
S&P Stock Market Real Earnings Yield - 29th Feb 2024
US Unemployment is a Fake Statistic - 29th Feb 2024
U.S. financial market’s “Weimar phase” impact to your fiat and digital assets - 29th Feb 2024
What a Breakdown in Silver Mining Stocks! What an Opportunity! - 29th Feb 2024
Why AI will Soon become SA - Synthetic Intelligence - The Machine Learning Megatrend - 29th Feb 2024
Keep Calm and Carry on Buying Quantum AI Tech Stocks - 19th Feb 24

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Let's Hold Hands and Jump Off the Fiscal Cliff

Politics / US Politics Dec 02, 2012 - 11:29 AM GMT

By: Money_Morning

Politics

Shah Gilani writes:
"I saw my problems and I'll see the light
"We got a lovin' thing, we gotta feed it right
"There ain't no danger we can go too far
"We start believin' now that we can be who we are.
"Grease is the word..."


That's the opening verse of the Bee Gees' title track from the movie "Grease."

They go on to sing "Grease is the way we are feeling." Well, if you change the spelling of the word to "Greece," that's how I'm feeling about America's debt.

Both Greece and the U.S. are on a slippery slope, greased by too much debt.

And, like the song says, we are both in danger of thinking that because we see the problems, we see the light. We are both feeding it right - our debt, that is.

We're similarly deluded in believin' there ain't no danger we can go too far.

But that's wrong. The danger is incredible.

You see, something just happened in Greece - something that is going to happen here and, in fact, is already happening, but doesn't have to. We can still stop it.

In fact, what's brilliant is that Greece is an easy lesson for us.
We now know how to solve the riddle about how to fix the debt mess we're in and what exactly to do about the dreaded fiscal cliff.

Jump off of it...
That's right. Man up, get behind it, and stop "believin' now that we can be who we are." We already are who we are - hopelessly in debt.

Let me haircut this for you right here: We aren't going to fix our debt and spending problems in the next couple of weeks, or in January, or by the first quarter of 2013, or next year. We aren't going to fix them by the next mid-term elections.

So let's all hold hands and jump off the fiscal cliff.

Don't be afraid. Yes, it's a long way down, and we may never hit bottom. In fact, there is no bottom. We won't get there.

We will feel our stomachs rise in our throats on the way down, and we may even vomit a bit. But once that passes, something remarkable will happen. Something thousands of Wall Street Insights & Indictments readers tell me they want more than almost anything.

I'll get to that.

But first: Here's the reality about Greece. They're "you-know-what" (rhymes with "screwed," kind of). They can't get past the debt they've accumulated. They keep adding to it, in fact.

The ECB, the Eurozone euro currency group, the IMF, and Europe's banks are all playing the "extend and pretend" game with Greece. As if the country is going to pay back its debt. Newsflash: It can't - EVER.

Greece's debt-to-GDP ratio is now more than 170% (the U.S. ratio is around 102%). By now it was supposed to be down to about 140%. Who are they kidding?

What happened is that politics intervened. Politics and another thing called reality - which is kind of like politics, only not as surreal.

After several rounds of bailouts, and restructurings of those bailouts, and the buying back of new debt that Greece issued by Greece itself at a discount (which means the buyers of that debt got screwed), so they had less debt outstanding (for a second), so they could issue a ton more debt (at lower interest rates, of course), so their debt burden and debt-to-GDP ratios would fall... all because they had to fall to meet IMF and ECB and lender criteria to be able to borrow more in the future (because by then, of course, they would be a better bet to pay back what they were then going to borrow), after all that jockeying of debts and bailout loans, and even after two general elections and a lot of political backstabbing...

Guess what.

Greece hasn't done anything to meet the criteria that its lenders demanded for them to get any more loans.

So, what happened? Consequences? The end of the road?

No. Greece just got approved for another bailout tranche. It starts now and runs through March.

There's no need to get into the specifics. It's always the same.

The banks that borrow the money from central banks (who print it or say they have promises of member governments to pony up the money if the central banks get into their own trouble with all their lending) buy the debts that Greece and the other sick Eurozone countries vomit up to keep the extend and pretend game going so they don't all end up insolvent, which technically most of them are.

How so?... Because they don't have anything near to the amount of money they've lent out and never will. That's not how they work. They work on the belief system.

You know, if you believe they have it, they are safe and solvent. Yep, it's kind of like: "We start believin' now that we can be who we are, grease is the word..."

So here's what we have to learn from Greece.

The extend and pretend game sucks the life out of everyone. Except the bankers, of course, they get a permanent reprieve, kind of like a perma-stay of execution for their criminal lending policies.

Greece has been in a recession for seven years. That's what's ahead for us (or worse).

The U.S. had a more diversified economy, to be sure. But so does Japan, and look what happened there. They're well into their second "lost decade."

The funny thing that isn't funny is that Japan ended up where it is because of what happened there. What's not funny is that what happened to Japan is exactly what is happening to us.

First, an uncontrollable housing and property boom made people feel rich. So they borrowed against their property to invest in the stock market, which, of course, rose with all that money chasing rising share prices. Then the bubble popped and the markets collapsed, both of them, the stock market and the property market.

The same thing happened here in the U.S. The only difference here is that the Fed pumped so much money into the banks - which has gone into the stock market - that the stock market recovered. And now the property market looks like it's starting to recover. So far, so good.

But then there's all this debt. We're looking like Greece, playing a never-ending game of extend and pretend.

But it does need to end.

So I say let it end here. Let's jump off the fiscal cliff.

Our politicians make Greek politicians look like Greek Gods. There's no way our federal fools are going to get us out of this without getting themselves into a position to be elected or re-elected. It's about them, not us.

So let's all be the brave Americans we are and jump together.

If we do, again, we won't ever hit bottom. We will find a cloud somewhere on the way down that will break our fall and we will start floating. Why? Because here's the amazing silver lining...

Once we stop stupid spending, once we raise enough revenues, our debt problems will diminish. They won't go away completely. But if we go over the cliff, do you really think we're not all going to look at our politicians, all of them, and take them all to the woodshed?

This could be our chance to change the way we are governed.

This could lead to the revolution we need to throw all the bums out, to shut down the Federal Reserve (so it doesn't keep printing money for the banks to get into more and more trouble that we end up having to bail them out again by, guess what, having the Fed stuff them with more money), and to revisit what kind of America we want for the future of all our children and their children, and the world.

There, I said it. Let's all go jump off a cliff.

Who's with me?

Source :http://moneymorning.com/2012/12/02/lets-hold-hands-and-jump-off-the-fiscal-cliff/

Money Morning/The Money Map Report

©2012 Monument Street Publishing. All Rights Reserved. Protected by copyright laws of the United States and international treaties. Any reproduction, copying, or redistribution (electronic or otherwise, including on the world wide web), of content from this website, in whole or in part, is strictly prohibited without the express written permission of Monument Street Publishing. 105 West Monument Street, Baltimore MD 21201, Email: customerservice@moneymorning.com

Disclaimer: Nothing published by Money Morning should be considered personalized investment advice. Although our employees may answer your general customer service questions, they are not licensed under securities laws to address your particular investment situation. No communication by our employees to you should be deemed as personalized investent advice. We expressly forbid our writers from having a financial interest in any security recommended to our readers. All of our employees and agents must wait 24 hours after on-line publication, or after the mailing of printed-only publication prior to following an initial recommendation. Any investments recommended by Money Morning should be made only after consulting with your investment advisor and only after reviewing the prospectus or financial statements of the company.

Money Morning Archive

© 2005-2022 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Comments

Lunch
04 Dec 12, 13:43
Jump

Maybe the Jump movement can come out of this. Much more sensible than the occupy movement. Polititions and central bankers can jump from uncle Bens helicopter with crowds cheering them on.


aubygene
05 Dec 12, 02:33
Jump off the Fiscal Cliff

We may have to "jump" off the fiscal cliff in order to release the members of Congress who have signed Grover Norquist's pledge. By "jumping" revenues increase, debt and spending reductions are achieved, and Norquist loses control over his "pledgees." Then the Congress and the administration can negotiate to minimize the effects of the "jump"


Post Comment

Only logged in users are allowed to post comments. Register/ Log in