Off The ZIRP Cliff We Go

 

Stocks fell nearly 500 points today and we have to ruminate about how rich people who control most of the stocks, really think.  They thought, it would appear obvious to anyone, that they could have their economic cake and not pay for it, too.  That is, free money from central banks at near 0% interest coupled with vast tax cuts and evasions would lead them to a glorious world where they would have all the wealth and everyone else would have to pay for this, one way or another.

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This very foolish, stupid and ridiculous idea that they could all evade responsibility for governments and economies running smoothly is just as ridiculous as the day, in France, the ruling class there decided they had no social obligations to run things and basically let people suffer the horrors of crop failures or inflation caused by royal debts.  This was fixed via guillotine.

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The specter of this reasonable end to ridiculous, childish behavior of the elites was a sharp one and not learned at all.  Instead, anyone who gets rich suddenly wants to hoard it all and keep it for their own purposes and ends up neglecting bigger social purposes of all sane societies and this, in turn, leads to destruction of everyone, especially those who have a vested interest in maintaining the status quo, namely, the rich elites themselves.

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It seems that they are copying Japan’s crazed elites who evaded taxes so much, they drove their country relentlessly towards an inevitable bankruptcy.  No nation comes near Japan when it comes to owing money vis a vis the GDP.  Japan is now at a record, amazing number, over 230% government debt sitting on top of a very sick economy.  The catastrophes slamming Japan are getting worse, not better.

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This story doesn’t surprise me at all, the nuclear catastrophe there is even worse than Chernobyl and it is now definitely a ‘China Syndrome’ in that the nuclear rods, which blew up and melted down, have finally worked their way through the cement and has entered the underground water table so thanks to Cracked Fukushima reactors: Radioactive steam escapes danger zone.

And here near my home is this delightful story:  Vermont Yankee Nuclear Plant Shoreline Contains Small Amounts Of Tritium.

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Unlike the panicky stock brokers, this is all about harsh reality.  ZIRP lending won’t fix Fukushima.  I visited a Japanese nun here in NY today and she said, ‘Japanese people try to leave Japan, come here, they are all scared.’  That is, people are contacting her and asking for help, where to run off to to get the hell out of Japan.

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The Japanese disaster was triggered by Mother Nature but it was set up in a precarious situation by humans who should have never, ever done it in the first place.  The two last places on earth where one should build a nuclear power plant is Japan and California.  Yet, people built them in these geologically active zones and this, despite many loud warnings from concerned scientists and quite a few citizens who figured out the obvious.  There is no way any nuclear power plant can be safe from all potential disasters in these two places.  It is impossible.

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Just as it is obvious, humans can’t possibly run a global free trade and floating fiat currency regime for very long, especially if it is totally lopsided, we see desperate humans clinging to the ancient value rafts, that is gold.  The price of gold goes up and up as people freak out over the catastrophe of a floating fiat currency system driven by desperate governments trying to drive the value of their own currencies down against the dollar so they can export to the US.  The US has tried to overthrow various governments which have gold reserves and one of them has been Venezuela, a major oil seller to the US markets.

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Venezuela is so worried about the value of the declining US dollar, they are now going ‘turtle’, that is, pulling out all their holdings held by their customers, that is, the US and UK.  Since the US and UK have disarmed both Saddam and then Gaddafi, then viciously invaded and destroyed the social system and economies of both countries, Chavez is very understandably worried.  So, Chavez Orders $11 Billion of Gold Home – Bloomberg

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Venezuela, which holds 211 tons of its 365 tons of gold reserves in U.S., European, Canadian and Swiss banks, will progressively return the bars to its central bank’s vault, Chavez said yesterday. JPMorgan Chase & Co. (JPM), Barclays Plc (BARC), and Standard Chartered Plc (STAN) also hold Venezuelan gold, he said.

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“We’ve held 99 tons of gold at the Bank of England since 1980. I agree with bringing that home,” Chavez said yesterday on state television. “It’s a healthy decision.”

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I would warn all oil pumping nations who let oil consumers hold gold so they could sell oil to countries running huge trade deficits (the US and UK are amongst the worst in this regard!) are now giving up and pulling out, especially since their new mainstay, China, is both solvent and runs trade surpluses.  China is ‘going gold’, too.

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As I frequently warn gold savers in the US, the history of governments confiscating gold when in a currency/trade crisis is written in large, fat letters: they ALWAYS do this.  Without exception.  When only nobility held all the gold, the ruler would find some excuse to accuse various gold holders with treason and then attack and loot them.

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When the Church grew too rich and fat, it became a huge target of government looting which is exactly what Henry VIII quite cheerfully did.  There is no way around this: there are only two ways a government can fund itself.  Cease caring for any citizens or tax those which have property and wealth.  You can’t tax the poor very much.  They have little and end up fighting ferociously if hassled too much.

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The rich could also refuse to fund the government and guess what this does?  Couple it with unhappy poor people out to gain something via fighting, looting and burning and a bankrupt government that can’t stop this and you get huge revolutions.  In Japan, there are no riots.  The people are way too quiet and too docile but this is because they are dying off.  Literally, not figuratively.

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But the US teems with young people and this is a serious problem that will blow up much larger when we have a 25% or greater unemployment rate for young people.  Young people tend to get very rowdy indeed.

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The hopelessness of this situation is stark:  Bank of America Names Ron Sturzenegger Head of Unit Managing Foreclosures – Bloomberg

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Bank of America Corp. (BAC), the biggest U.S. lender, named Ron Sturzenegger to stanch losses at its unit managing about $1 trillion of shaky or soured home loans after Terry Laughlin was promoted to chief risk officer.

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A trillion dollar catastrophe indeed.  The Bank of America thought, lending was all about handing out pieces of paper backed by nothing, telling people of various shady backgrounds, they could buy or put even more debt onto their homes.  Illegal aliens, people in prison, housewives wanting to flip houses for extra loot, all got these immense mortgages when none of them had anything resembling a steady income.

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Even as Mortgage Rates Hit 50-Year Low, the market can’t revive because houses are nearly uniformly priced way above incomes.  As incomes fall and inflation of all necessities continues relentlessly, the ability to afford expensive homes falls faster than the price of the homes, themselves.  This ALWAYS happens when a real estate bubble pops.

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The fact is, our bank regulators went away years ago and let thing passively slide or rather, they refused to see the obvious hockey stick graphs growing to infinity and then, deduce that this would cause a classic crash.  We have seen plenty of crashes in the past in history and it is painfully obvious to see these and no one ever stops a bubble simply because rich people love bubbles and poor people go crazy in bubbles and everyone thinks they will be billionaires during bubbles.  So they continue until they pop.

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Even as our own government teeters on the edge of destruction, Obama Calls for Syrian President to Step Down.  Oh my, he is acting like many of our allies and killing his own people! Wow!  Amazing.  I say, all rulers of all countries that have civic unrest and I do mean you, Cameron, should resign in disgrace.  Of course, they won’t.  Not one of them.  Neither will Obama hand over the government to someone who has more leadership ability.

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The GOP and DNC leaders want to palm off the ugly business of cutting off American citizens from all social services by having this corrupt and evil committee of old white men tell us who gets to die.  Of course, Goldman, Citigroup Employees Big Givers To Deficit Super Committee – Forbes.  The super-rich corrupt the government and like the Israeli Jews, demand they get all their goodies, all the time, to hell with the rest of us.  This desire to have their own way via bribes is why we saw virtually no reforms after the crash made it painfully obvious, there must be reforms.

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In desperation, Four European Nations to Curtail Short-Selling but even this slight change caused markets there to nosedive because the rich need to play ‘shorts’ to win more, more, more because they hate investing their own loot, they prefer these games whereby they ‘borrow’ for free and if the stocks do what they want (go down in this case), they are happy.  So, it has to go down, they want it to go down but this drives down everything including things they do not want to go down so they are caught like a monkey with its fist in a cookie jar.  They can’t let go and they can’t get the cookie anymore so they smash the pot.

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The US is negotiating with the Chinese dragon, hoping that Hu will save us even as we strut and fret all over the China Seas, sneering about how we can nuke China at 30 times the speed of sound, hahaha.  And we expect China to bail us out.  The clever and dangerous Chinese dragon is also having big discussions with Japan:  ASEAN to consider Japan-China proposal for Asia-wide FTA (Free Trade  Association).

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While China grows its economy, the US Postal Service plans to cut 220,000 jobs which will please the Tea Party but anger even more workers.  Many in the military get first dibs with postal jobs (thus, after the Vietnam War, some went ‘postal’) so we are basically going to lay off our military guys who will probably go postal, big time.  I heard while in the hospital, the news saying that word leaked out that the Super Six were planning to cut military pensions.  This caused an instant backlash from the Pentagon.

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Nothing is being cut there at all.  Nothing is being cut in our Muslim wars, either.  Nothing is being cut in aid to Israel.  The body on the operating table that will be cut up like my poor husband was cut up this week, will be the entire US public minus the very rich who will bribe the doctors to wield a mean knife on the rest of us.  This bodes ill for the future, forget stocks or the value of gold.  All gets blown away by raging mobs in the bitter end.

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