Several readers have asked what my thoughts are on the Money Morning report “Economist Richared Duncan: Civilization may not survive “Death Spiral“ so I thought we could begin with that today.
A confidential source has been passing me some of the “inside” stuff going on in Washington about upcoming sequestration which begins in the New Year, but which was never really expected to happen. The whole plan behind sequestration was to paint such an ugly and painful picture that no one in their right mind would want to go there…so there’d be an incentive to step-up to the bar and do some real budget wrangling and just get ‘er done.
Unfortunately, you’ll note my use of the words “in their right minds.“ Since near as we’ve found, no one in Washington qualifies as level-headed, common-sensical, we can look forward with near-certainty to a death-dance on the edge of the financial precipice in 2013.
As a handy-dandy dance card, the folks in the Congressional Budget Office have been eyeing this mess with some discomfort, too. And they have put together a graphic which sums up what fiscal disaster here will look like. You can click it for the larger source version.
The right hand side of the graphic is what happens if you take three hits on the breakfast bong and believe that spending can be held near current levels and that no one will catch on….we’re not Greece, after all. The left side shows that to whack at the stalk of the budget beasty, we’ll have a higher unemployment rate and much more serious cuts. Choose method of death.
Naturally, the THROW THEM ALL OUT people who are jawboning for voter approval are not particularly forthright about how they are hiding the sausage until they get reelected and further into their pension plans which dwarf what us regular people get. But that’s the train and we’re the train wreck.
Message from God Dept.
I’m sure if there was the possibility of a major storm hitting the Democorp convention that the right would be claiming Divine Providence – message from God. But how are those Republicorps going to cope if their convention is a rain-out? Some other kind of message?
Worth A Thousand Words
On the other hand, Reuters is getting notice for its less than complimentary picture of Barack Obama…
Civil War Warning
Meantime, a teevee interview on channel 34 in Lubbock, Texas is getting noticed since a county judge and sheriff are warning of “civil war” in America. Their solution? Raise taxes….uh huh….
The Raub Case
Then there’s the matter of various groups like Oath Keepers who are rallying to the defense of a veteran who was hauled into psychiatric evaluation over his Facebook posts. And this morning the Washington Times is wondering “Can the government detain yiou over Facebook posts?“ Duh! So far the answer is yes…
The difficult legal boundary is when someone says on their FB page “I’m here to severe heads” is that a pre-crime, statement of intent to harm, or trying to raise up insurrection or just flowery writing? Send your essays, 50-words or less to….
Its All About Money
A lot of the talk afoot in the country today is really about economics. And what’s going on now is that the ultra-rich are continuing to get richer while the rest of us are facing benefit cuts in the future. One place you can see this is in the collapse of the velocity of money:
What’s going on is that money at rest doesn’t create jobs or growth. It’s like inventory turns in a warehouse: If there’s no turnover, there’s no sales and not much to do on the forklift. But if there’s a high turnover rate (i.e. velocity) then moving is turning over, changing hands, and creating economic activity.
As this chart shows, both political parties have blood on their hands because they were both promising free lunches and now all those past-due debts are coming up for payment.
Worse: It’s not like there’s a simple choice (“Should we stiff the people or the rich?”) because a lot of that money-at-rest is in things like retirement funds and so forth. Truly a nightmare we’ve seen coming for 15-years but which is being revamped as only a partial replay of events of the Great Depression. We’re spreading ours out a lot.
And On It Goes
The rest of this morning’s headlines are droll. Except maybe to note that the West Nile virus is up to 26-dead now in the Republic.
Syria is still there, Israel is still itchy trigger finger, and Egypt is still trying to sort how the Bros will roll…so come on back tomorrow when I may be in a better mood.
More after this…