09/01/11 Poitou, France – Who’s the moron?
The month of August came and went. It was full of sound and fury — with big whipsaws in stocks — but what did it signify? Nothing?
Yesterday, nothing happened. Stocks were as flat and placid as a democrat’s brain scan.
But the activists aren’t dead. Fed governors. Newspapers. Economists. All are pushing for more intervention. It is just a matter of time; they’ll get it.
As Dear Readers know, The Financial Times is the voice of the economic elite. If the FT doesn’t tell you what they are thinking now, it tells you what they will be thinking, after they’ve had an opportunity to read the paper.
And right now, they’re thinking that they need to find a way to get back on top of things. They need to get in control of the situation.
In his latest remonstrance, Ben Bernanke practically recused himself. He said he wasn’t doing anything (he has members on his committee who are opposed to more Fed action). He passed the ball to the Obama Administration and Congress.
The Fed is out of the game. At least temporarily.
But here is The Financial Times:
Waiting for QE3…
Who’s waiting for QE3? The bankers. The economists. The speculators.
And now, here’s Clive Crook, in The Financial Times of course, telling the Bernanke Fed team what morons they are.
Revised figures show the sluggish US recovery has been even slower than previously believe, and this calls for fresh monetary stimulus.
Right. More stimulus! More QE! More money!
But the figures don’t show what Mr. Crook thinks. They don’t show a weak recovery. They show no recovery at all. This is not a recession from which an economy recovers. It’s a correction, which an economy suffers.
If it is allowed to.
Nor do the figures show that the feds haven’t intervened quite enough. They show that their trillion-dollar interventions have been worse than worthless.
The problem, as we keep saying, is debt. The private sector is getting rid of it. Households paid down $50 billion worth of debt in the last quarter. Not much, but at least, they’re doing what they ought to do. The feds, meanwhile, added about $500 billion worth of deficits.
What Mr. Crook, and most of the elite economics professoriat, asks for is government intervention to short-circuit the process of de-leveraging. Their view of an economy is as simpleminded as Thomas L. Friedman. (More below…) In their view, an economy is either growing at a healthy speed. Or it is not. If it is not, they have to do something.
But what can you do when an economy needs to unload debt? Well, you could help it out. You could raise interest rates and push all those millions of Humpty debtors off the wall. You could raise taxes; those suicidal householders…now standing on the ledge…could be encouraged to jump.
At least, those cures might help get de-leveraging over with faster.
Or, you could declare a Debt Jubilee, as they did in ancient history…cancelling all debts…and re-starting everything at zero. Or, how about this… You could print up trillions of dollars and drop them from helicopters all over the country. That is the cure Mr. Bernanke himself, perhaps jokingly, suggested. In a few hours, debts would be worthless.
Again, these ‘cures’ are focused on the real problem. Trouble is, they cause more problems than they solve.
Why not just let nature take care of it? Withdraw all federal intervention. The markets will sort it out quickly. And without causing further distortions and economic grotesqueries.
It’s not going to happen. Instead, after the economy and stock market sink…Bernanke and the feds will swing into action. The morons.
Since we’re discussing morons this morning, we will focus on one of our favorites: Thomas L. Friedman.
The common mistake made by all world-improving jackasses is to think that the world is so simple that they can make it better. In economics, it’s obvious to anyone who has ever thought about it that there are no knee-bones that aren’t connected to anklebones…and to foot-bones. You can move them around, but you’ll get kicked in the derriere.
“It’s either control…or money,” says our friend John Henry.
You can control an economy — to some extent — but it’s going to cost you. Every manipulation, every jury-rig, every fix…slows it down, imposing additional friction and costs.
But to Friedman life is a series of challenges, to which he must come up with a solution. Hardly a column with Friedman’s photo appears but that it does not include another gimcrack solution to one of the problems he imagines.
Poor Friedman now sees big problems. He has to put his thinking cap on. The world cracking apart — China, Europe, the Mideast…all are breaking up, he says. That’s why it’s vitally important, to paraphrase the sage himself, that we keep America strong! How do we do so?
“…the only way to dig out [of our deep hole] is with new, hybrid politics that mixes spending cuts, tax increases, tax reform and investments in infrastructure, education, research and production.”
Hey. That sounds pretty easy. Our representatives just have to get together on the right mix of ‘hybrid politics.’ A little education…a little infrastructure….a little this…a little that.
What does Friedman really want? Control, of course. He wants to hold onto the illusion that half-bright hustlers can actually control events…and that they can get the outcome that they want, rather than the outcome they deserve.
Regards,
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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So Friedman claims ““…the only way to dig out [of our deep hole] is with new, …… investments in infrastructure, education, research and production.”
Ahh yes, like the $500 million the government lost by guaranteeing the loan to that just today bankrupt Solar manufacturer (headed by an Obama campaign contributor).
Plastics, Mr. Friedman…
Plastics.
So “push all those millions of Humpty debtors off the wall”…OK…these are people, however ill-adviced ang gullible (they bought the oversold “American dream”). Will it be “off to living in your cars, you miscreants”? What’s the Christian thing to do? This libertarian stuff is going too far. Blame the politicians, maybe. Not an easy job if one is not in it for one’s self. Probably arder than devoting oneself to money, its symbols (fine wines and cigars, automobiles costing more than houses, etc) and little else. You, Mr. Bonner, have inted at a return to monarchy as a better political system than this malfunctioning Democracy. Charles Dickens lived and wrote in XIX century England. Is that what you want? Me, I’ll take FDR any day. And, ho, what’s comming to us has existed before under the form of the Austro-Hungarian Empire, that’s the model for the New World Order in the plans for after the coming crash. Down with Nations’ sovereignty. Miscreants should not be allowed to vote on the important stuff: the monied elites know better. Really? Libertarians where spawned by aristocrats to sap democracy. That was planed, and you’re repeating this stuff. The only difference with the mistakes of simpler gullible people is that their mistakes are more obvious, they’ve been taken in by crooks in cheap suites. But I guess it’s the winning side nowadays and you’re not going to loose your house(s)… Ah, fell better now.
Thanks for including TLF in your article. TLF has a simple message: reform.
Guy,
U knead to spell bedder. And ewe kin halve FDR an he’s gold grabbin grubbies, to.
For decades, the supermoron has patronized the feeblemorons over the planet. So that the sick morons grow up in line with the superone, in short for their self-serving desire. That has brought wreckage to the planet, destroyed the ecologic equalibrium and wrecked the livelihood of many benign species. Eventually, what survives would only be the moron dinosaurs.
“In their view, an economy is either growing at a healthy speed. Or it is not. If it is not, they have to do something.”
their economy is debt. they make their living off of ever increasing debt. in their view, debt is either growing at a healthy speed or it is not. if it is not then their debt pyramid scheme is about to implode and they have to do something.
“But what can you do when an economy needs to unload debt?”
as a banker or infestor you don’t care what it needs. you need it to keep paying on existing debt and also to take on more debt. if it won’t then you force it to take on more debt. if it can’t then you get the politicians to confiscate money from anyone who has it and hand it to you directly.
The Grand Canyon, the great debt, the simmering obligations and debut of titanic the second.
Most deplorable if the proceeds of debt is channelled to zombie grazing. (If) from grazing progression to wayward intensive moron cultivation. Negative benefit for any planet development. if such is the case… most saddening .. most disheartening … the millennium sadness.
Conversely, if funds are purposely utilised, accommodation from top, middle or bottom,surely either one will come by.
“This is not a recession from which an economy recovers. It’s a correction, which an economy suffers.” – Bill gets it right, this is a correction. After all the outsourcing and shipment of jobs offshore, 9.1% is the new 5.1% unemployment and its here to stay.
Many of us have been looking for a way to describe this situation without recycling the ‘Great Depression’ label. Bill’s comment about a correction provides a great moniker for this nasty situation. It should be labeled “The Great Correction”.
It is hard being a Bonnerite. Back when I was an elite things were so simple. Great men and institutions had the world in control and money magazine told me what to invest in. Now I have to think and compare things, the great men and women at the top do not seem to have a clue and money magazine (and others) appear to be a marketing tool. Bonner makes it harder since he seems to be all over the place yet it all makes sense if you think about many of the things he (and the other DR folks )say. I still wish for simpler times but I am glad I found this web site. Bill you still give me a headache sometimes. At least Mogambo made the world changes funny. I hope he is doing well, responding to therapy and they can take the restraints off soon.
Whoaa…Guy. I’m a Christian and I find that Bill’s dead-on. Nowhere in the Bible do you find the encouragement to take on debt. In fact the Bible would encourage the “owe no man anything” concept. Believing in deception is a sin, so don’t they deserve to get tossed out of houses they never really owned in the first place? That, sadly, is what they deserve for not using God-given common-sense and wisdom to perceive the fraud. Why feel pity for those who refuse to see the light even when people like Ron Paul and others wave it right in front of their faces? These idiots prefer and choose to wander in their own delusions. Let them suffer the consequences!
my father used to tell me that there was no education in the second kick of a mule (not that we had a mule, but it was saying passed down by his father) – and that is the way i feel about all these interventions trying to stop the inevitable correction. Mr Bonner has it right – its sad we have come to this, but denying it won’t change it. spending money we don’t have and devaluing the dollar until its worthless and inflation eats us and all our savings alive won’t change it either. time to face the facts and do our best to survive.
LOL. The big money is fled to Treasuries. Yet some small minded folks are still saying it’s going to be a hyperinflation.
“Believing in deception is a sin, so don’t they deserve to get tossed out of houses they never really owned in the first place?”
since the bankers never really owned the loan money they printed up out of thin air, don’t they deserve to “lose” it?