12/13/10 Baltimore, Maryland – Lies, lies, lies…
The days are dwindling down fast now. There are only a precious few left in 2010. The Dow rose 40 points on Friday. Gold fell off $7.
But let’s forget the market action for a little while…most of it is noise anyway.
It is time to relax a little. Time to think.
“Everybody is so busy now,” said a colleague in Australia. “No one has time to think. Instead, we’re busy answering our email or checking our Blackberries. It’s amazing. You get in an elevator and everyone pulls out a phone. No one talks anymore. Or looks at anyone. Or has a thought.
“I don’t even think we writers bother to think anymore. We’re too busy. We have to produce too much material. We don’t really have anything to say…but we say a lot.”
Of course, that’s been true at The Daily Reckoning for years. We were always ahead of the trend. We write every day, whether we have something to say or not.
Do we have something to say today? To tell you the truth, we don’t know yet. But let’s begin by thinking about this…a quote from The Daily Bell we passed along on Friday:
“The problem with where America is now is that the country has been built on one lie after another for the past decade and the lies show no signs of slowing down.”
And then, there’s this from Charles Hugh Smith via Marc Faber:
“…the status quo would collapse were systemic fraud and complicity banished. Rather than the acts of evil conspirators, they have become the foundation of the US economy and financial system…”
You will recall how Goldman Sachs wowed the whole world with its dazzling trading. Day in, day out…the traders at Goldman made money. The firm turned in “perfect” trading quarters, with not a single day showing a loss.
Surely, one of the junior traders would have miscalculated at least once? Or a seasoned old pro, after a well-irrigated lunch, take his fat finger and hit the wrong button? Nope. Not once did Goldman’s trading machine err. It was uncanny. Almost unnatural.
Who was on the other side of those trades, we wondered? Trading is a zero sum game. One side wins. The other loses. So some poor schmuck must have taken a loss for every gain earned by Goldman’s geniuses. Imagine him taking his lumps day after day…and still coming back for more. How could anyone stand so many losses? What kind of fighter could take that kind of beating and still be on his feet? And yet, there were no major new bankruptcies announced during that period. How was it possible? Who was losing all that money?
We don’t know. But we know who the schmuck was …the poor sap was us! Had it not been for Senator Bernie Sanders from the Green Mountain State, who was curious enough to insist, we would never have known what had happened to the Fed’s $1.3 trillion in bailout cash. Now we know. Goldman helped itself 212 times – roughly every business day – during the 12 month period beginning in March ’09, all the while telling the world that it needed no bailout.
Lies, lies, lies…
The first lie was the biggest whopper of all – that you could get rich by spending money rather than saving it.
The second was that the stock market would make you rich. All you had to do was to buy a well-balanced portfolio and hold for the long run.
When that one ran into a wall, along came the lie that you couldn’t lose money in real estate.
There was also the lie that the free market would make people rich…and if it didn’t, the authorities would force it to do so!
Then there was the lie that an economy saturated in debt could be stimulated to heights of prosperity by splashing on more debt.
And then there was the lie that you didn’t need real money in the system; the authorities could manage a flexible, paper money system so as to help maintain full employment.
And then, after half a century of adding cash and credit, when the Wall Street speculators cried and moaned, we were told that they were “too big to fail.” They needed to be saved.
Then came the lie that monetary and fiscal stimulus would lead to “recovery.”
When recovery didn’t come, we were told that QEI would do the trick – so they pumped hundreds of billions of dollars into Wall Street’s failed institutions. When it didn’t work, we got QEII.
And now, the federal government is headed to bankruptcy. We are told not to worry. No need to change course. Tax. Spend. Overspend. Stimulate.
The same goofballs, liars and incompetents who have brought us this far say they’ll take care of us.
Which is what we’re worried about.
Bill Bonner
for The Daily Reckoning
Bill Bonner
Since founding Agora Inc. in 1979, Bill Bonner has found success and garnered camaraderie in numerous communities and industries. A man of many talents, his entrepreneurial savvy, unique writings, philanthropic undertakings, and preservationist activities have all been recognized and awarded by some of America's most respected authorities. Along with Addison Wiggin, his friend and colleague, Bill has written two New York Times best-selling books, Financial Reckoning Day and Empire of Debt. Both works have been critically acclaimed internationally. With political journalist Lila Rajiva, he wrote his third New York Times best-selling book, Mobs, Messiahs and Markets, which offers concrete advice on how to avoid the public spectacle of modern finance. Since 1999, Bill has been a daily contributor and the driving force behind The Daily Reckoning. Dice Have No Memory: Big Bets & Bad Economics from Paris to the Pampas, the newest book from Bill Bonner, is the definitive compendium of Bill’s daily reckonings from more than a decade: 1999-2010.
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t.y., sir.
some people do seem to have trouble staying focused and thinking through things.
then they spend thousands surrounding themselves with stimuli, bells, whistles,
and “e-friends with similar interests”!
that other stuff can just wait!
we all know people like this, i’ll wager.
some of the people dearest to me are having trouble understanding, except to “feel” some malaise, some dread that something is terribly wrong.
i send my peeps stuff from agora quite frequently. if i sent them this, they might feel that i was just being mean.
Bill, you’ve pretty much summed the whole situation with this article. Unfortunately your words will go wasted because apathetic Americans don’t want to change. They’d rather swallow the lies of their leaders and not think. The Wikileaks saga is exemplary of this. The powerful elite declare who the enemy is (for Bernanke it’s deflation) and then it becomes the enemy of all American’s. An enemy who must be destroyed at all costs – financial or otherwise. Nevermind that these “information leaks” show up the leaders’ actual incompetance or corruption in any number of diplomatic or war incidents. Nevermind that they can’t even kept their own secret cables secure. Nevermind that they have got no idea how to handle a crisis. These clowns dance around declaring anyone a terrorist who shows them up for what they are – fools. America needs not only need financial leadership, the whole system needs to change.
Amen Brother !
Spot on Bill.
Enjoyed yours Dean
But what of the real world?
In the real world are the people of this earth not increasingly well-fed, well-sheltered and well-clothed.
Is the standard of living, on average, not at a record high and rocketing forward?
Surely someone is doing something right?
the “real” world?
you mean the one where one employed adult could provide for a family of 4.8 people, relatively easily, handily, and we11, in 1960?
in baltimore; or syracuse; or detroit; or reno; or portland?
the one where the currency hasn’t lost 40% of its value in less than a decade, and over 50% of its value against silver in the last 50 weeks?
oh, TheInvestorsFriend, what planet are YOU from? are you talking about sri lanka?
iceland? poland? tibet? mexico? mauritania? thailand? japan?
or are you just referring, “ON AVERAGE” to some data which supports your cock-eyed biases?
…like ME?
peace.
well, if so, good 4 y
The high standard of living in the West has been paid for with CREDIT and CHEAP labour from the East.
Politicians are only interested in getting themselves re-elected. People vote on the basis on what a politician will give them.
So while a populace lives in the delusion of somebody else footing the bill nothing will change. They see government money as FREE but the in truth it is Public money of every tax payer in a country.
The piper needs to be paid eventually.
This attitude not only applies to Americans but to most of the western world.