No shortage of readers have been asking “So, what happened on August 22nd?? We go back to the linguistics for a discussion of reading. First, and perhaps foremost, the predictive linguistics were not predicting and event – only that the nature of what will come-a-calling this fall would become much more visible by August 16 to August 22. Specifically, what’s been in the forecast has been visibility which in turn leads to the erosion of confidence.
Oh, and about this period we get the leading edge of the ‘new war’ which is coming along this fall.
Do the headlines line up? Of course.
The federal deficit jumped $2-trillions on Friday, a number that is incredible – and enough to drive the nonpartisan Congressional Budget Office to suggest that without the imposition of radical spending cuts (8%, or so) the stability of government will not be assured. Naturally, this was one of the hot topics at the Federal Reserve’s retreat up at Jackson Hole this weekend, too.
All of which leaves America in a very messy financial state. We know there are ballooning federal spending plans (only something like 10% of the so-called stimulus has been spent so far, most of it won’t really hit the economy until the 2010-2011 timeframe) and in the usual showing of solidarity and unity, the republicorps leadership are saying via John McCain ‘Nope, no tax increases’.
What’s coming into focus for millions on Social Security is that there won’t be a cost of living adjustment next year. That’s because the cost of living adjustments (COLA) have been buried in shady statistical reporting from the government which says on average, prices haven’t budged in the past year.
But wait! My truth detector is screaming “BS!” Know why? First, since the amount of money being printed up continues to increase, just holding Social Security payments steady amounts to a purchasing power reduction. Secondly, John Wi8lliams’ “Shadow government Statistics” site reports that actual inflation has been running more than 4% higher than officially reported inflation.
Then we had the latest bank failures report this weekend, including Guaranty Financial Group’s operations in Texas and California. If you’re keeping track, that’s a total of 3,610 branches involved in failure and reorganizations since the IndyMac crisis last July.
From my view of the bank failure data, I would not be surprised to see as many as a thousand more bank failures in the next year or two. However, there are some optimists left on this front, such as Richard Bove of Rochdale Securities who sees only 150-200 more U.S. bank failures. We should be so lucky. Or, I think the old Yiddish expression goes something like “His lips to God’s ears…” We should be so lucky.
So, what’s become visible in the past week or two? Bank crisis is ugly, Social Security recipients are getting the Big BOHICA, and government will have to ‘go Zimbabwe’ at the printing presses.
Nouriel Roubini writes in the Financial Times this weekend that “the risk of a double-dip recession is rising“. Quick – look surprised.
But Wait! There’s still more!
Remember that in the linguistics we’re supposed to see the next round of new war breaking out this fall? How does this sound for going down that road, too?
Hmmm. Let’s see here: The Fed will continue buying Treasuries through at least October, the new war will be costing lots of dough, as will little goodies like stimuli plans.
A reasonable question for this hour on a Monday is “Will the public confidence break at some point? “ Or, a little more directly “Isn’t the Federal buying Treasury products a lot like writing yourself a check, cashing it, and then spending the result before anyone catches up?
Oh sure, it is! Why, ifs you and I were to do that, it would be called “check kiting” and we’d go to jail. How does it work?
“Check kiting is the illegal act of taking advantage of the float to make use of non-existent funds in a checking or other bank account. It is commonly defined as writing a check from one bank knowingly with non-sufficient funds, then writing a check to the other bank, also with non-sufficient funds, in order to cover the absence. The purpose of check kiting is to falsely inflate the balance of a checking account in order to allow checks that have been written that would otherwise bounce to clear.”
Just so we’re really clear on this: If you or I were to go on a check kiting spree, we’d be tossed in the Big House for 3 to 5. However, when government does it, it’s passed off by the mindless MainStreamMedia [MSM] as “sound financial policy.” Doesn’t anyone have to pee in a cup in Washington?
The only – and I mean the only silver lining to all this is that it supplies my pastime of documenting how the Second Depression rolls with an unlimited amount of material to write about.
Greasers and Greasees
You saw where the price of oil is up to around $74 on hopes of an economic recovery? Good news and bad here: First, it’s a sign the happy talk is working (so don’t think too long on the check kiting deal, OK?) but the downside is that the ‘get out of inflation jail’ free card now turns and as energy prices recover, the cost of living will soar, which will screw over fixed income retired and Social Security recipients just that much harder. You be the greasee.
All kinds of grim videos come out of Greece where wildfires are burning out of control.
Still working on your garden? Getting food is about to become globally challenging – which is why I’ve been writing about the need to learn gardening skills. In California, “Water cops crack down in drought areas” and in China, 5-million people are critically short of water due to drought.
Another sign of Depression 2: America’s crazy, no make that insane purchases of bottled water are slowing and economic reality drives home that tap water is just as thirst quenching as designed water.
Of course, you’re not alone in your suffering. China’s premier Wen Jiabao is on major economic stimulus plan of his own. It’s becoming the thing to do if you run a country and there’s a Global Depression emerging.
A little study will suggest that the whole globalist economy was designed and built on the ‘constant expansion model’ which presumes that growth can continue in perpetual motion machine-like fashion. Well, don’t tell anyone this, but at some point, given constraints and bounds, the only way out is check kiting. Robert Mugabe just happened to go hyperinflationary first. He won’t be the last.
Let me see: Gordo the Gold-Seller Brown meets with Libya’s Gaddafi, gets oil and gas deals signed (since the North Sea oil fields are in fast decline now) and then releases the Lockerbie bomber who gets a hero’s welcome in Libya.
You were wondering why I don’t bow to royalty and view Brown with contempt?
News From the Throne Room
Reader’s Digest is going through a restructuring. Not sure, but based on an informal survey, I think this may be the most-read publication in bathrooms across America…Would have thought they’d have been flush enough to avoid bankruptcy. (rimshot)
You see where a rogue wave from Hurricane Bill dragged 20-people out to sea off the coast of Maine? Killed a seven year old girl…
Wanna But A Gun?
Here’s a new kind of circular reference: Police in Colorado Springs have seized enough guns from the bad guys that the cash strapped city is looking at selling them at auction. $10-grand a year or more, they’re figuring.
Wonder if the city fathers (& mothers) have considered a City eBay & CraigsList Office? You just know that such offices would more than pay for themselves in the big towns like L.A., Chicago and Dallas. Far too simple, I’m sure. Let’s appoint a committee to study this for five years, first.
See? I’m not a gloomster – always ready to lend fresh thinking and positive courses of action, LOL…
But, seriously, why aren’t GSA disposers of stuff putting it on eBay so the rest of us can get a shot at the goodies without middlepersons making the phat?
Certainly oughta be looked at in Philly where a doomsday budget is being eyed.