News & Analysis
DB Briefs: EU Crisis Is Real / US Declares War on Pakistan? / Idiot Economists / Phony '60s Missile Gap
EU Crisis Is Real
UK has become a nation of zombie companies ... When it comes to supporting UK manufacturing, the Coalition government's record has so far proved almost as disappointing as the last one's. Britain has become a zombie economy. Capital is no longer being allocated. – UK Telegraph
Dominant Social Theme: When bailouts are implemented, companies are saved. And who cares about price discovery anyway?
Free-Market Analysis: Plenty of explanations for the "recession" of 2008-2011 (and counting) have been advanced over the past years. But here at DB, we've stuck to some fundamental observations to explain what's going on, and we've reported on them numerous times.
For the mainstream press, the US$20 to US$50 TRILLION that was issued into the world's economy in 2008 to "enhance liquidity" has already gone down the memory hole. But we remember. That's a lot of money to forget.
In fact, we're of the opinion that the current economic system – the dollar reserve system – died in 2008. You can't flood the world with multiple trillions and end up with a functioning economy. The human brain is likely incapable of visualizing 50 trillion dollars. It's an incomprehensible sum. And it's gummed up the global economy.
The issuing of this impossible amount of currency has done a number of things, none of which are for the most part acknowledged by the mainstream media or even by the alternative 'Net media. First of all, people (normal people) are aware of the elite money giveaways. To them it doesn't look like a substantive policy – it just looks like a bunch of rich people propping up "their" financial system.
In fact, that's exactly right. This elaborate charade was presented with some level of dignity in the 20th Century but collapsed utterly in the 21st Century when the Internet exposed it. In a single decade, central banks have gone from possessing an almost religious aura to being a laughingstock.
Of course, the "system" still defends central banking and uses the same arguments as ever to justify it. This only shows the essential lack of imagination – and the paucity of justifications – that pertain to the practice.
The elite still doesn't "get it." What's been lost is the moral justification. People see the central banking system as a scam now, even when they can't quite explain it. And that's what's going to kill it eventually. Or at least seriously reconfigure it.
Then there's the issue of exactly what all that money has accomplished. We've argued that so much money propping up so many different industries and companies has virtually severed the relationship between investors and price information.
Investors – institutional or not – simply cannot tell a good company from a bad one. This is the basic fact retarding any recovery that might take place. In the name of "salvaging" the economy, the elites have frozen it. Here's more from the Telegraph:
One of the curiosities of the recession is how few corporate insolvencies there have been for such a sharp economic contraction. Something is getting in the way of the process of "creative destruction" usually associated with recessions – the natural market mechanisms that would allow one generation of companies to be replaced by another. Capital should get reallocated from non-traded goods and services to tradeables when the exchange rate falls as it has, but that's not happened. UK has become a nation of zombie companies ...
The fact that banks dare not recognise large tracts of what are effectively bad debts – this is especially the case in overborrowed commercial property – for fear of the damage it would inflict on solvency may help explain why things aren't changing more swiftly. Britain has become a zombie economy. Capital is no longer being allocated efficiently.
The next step is to discuss WHY the elites felt it was necessary to salvage the system when the smart money at the top of the pyramid knows very well that these salvage operations are fundamentally ineffective. Was it just greed – and fear? Or was it a deliberate attempt to make matters worse? We wait with great anticipation for this article to be written. But we won't hold our breath.
US Declares War on Pakistan?
For the first time in history, an ally – one which has taken $22 billion of American money since 2002 – stands accused of committing an effective act of war against the US. – UK Telegraph
Dominant Social Theme: Pakistan must be punished, and the US intends to do it?
Free-Market Analysis: Is it time to expand the Afghan war to Pakistan? Our belief, stated many times, is that the Afghan war has been a disaster for the US and the City of London, which animates US wars. They didn't mean to lose it but they likely have. The Taliban/Pashtuns both in Pakistan and Afghanistan proved a much harder nut to crack than was anticipated.
Unlike a century ago, the City was going to triumph this time. In fact, the great central banking families have been trying to crush the Afghan Pashtuns for over a century now, as a prelude to global government. The rhetoric now emanating from Washington reveals again that victory in Afghanistan is far away and that frustration is overtaking common sense.
The Telegraph article excerpted above is notable for its angry rhetoric. "We are witnessing the death spasms of an alliance that has been in meltdown from the day it began ... Relations between the US and Pakistan have reached a breaking point. Pakistan's deposed military dictator, Pervez Musharraf, told The Daily Telegraph yesterday that 'the United States must accept the compulsions of Pakistan' in using terrorist groups as instruments of foreign policy."
This is strong stuff and reveals the depth of elite frustration. The article goes on to make the point that whereas 70 percent of American supplies used to come through Pakistan, only 30 percent do now. This is a direct warning – in print – to Pakistan's leaders that they better stop supporting the Taliban and its allies and allow the US to destroy the safe-havens in Pakistan and scatter its enemies.
This will likely never happen, however, as the war has the shape of East vs. West – and the Punjabi elites, along with the Pashtuns, are united against a Western takeover of the "navel of the world." Instead, the Punjabi elite is turning to China as a US counterweight.
The rising rhetoric, then, begins to take on the shape of a new Cold War. Coincidence? Or do Western governments seek to create a new and more formidable series of global tensions? Maybe, as we have speculated in the past, the war on terror is not doing the job. As the world's economy continues to spiral downward, a bigger distraction is needed. A Pakistan/China opponent might fit the bill.
Idiot Economists
Obama's Jobs Plan Prevents Election-Year Recession in Survey of Economists ... President Barack Obama's $447 billion jobs plan would help avoid a return to recession by maintaining growth and pushing down the unemployment rate next year, according to economists surveyed by Bloomberg News. – Bloomberg
Dominant Social Theme: A survey of economists shows that the Obama administration's plan to blow up major cities across the country will reduce joblessness tremendously.
Free-Market Analysis: Just kidding! But really, who are these "economists?" Are these the same economists who predicted that Obama's grossly expensive health care nationalization would somehow save people money? Or that several trillion dollars printed from nothing would "reduce" joblessness?
And here's an even bigger question. Any decent economist knows that price-fixing doesn't work and that it is inherently destructive – so why do virtually all mainstream economists endorse central banking, which in the modern era creates fiat money delinked from underlying assets (money from nothing)? How can economists argue that price-fixing destroys the relationship between prices and value, and then turn around and endorse the wholesale printing of currency, regardless of the economic consequences?
This jobs plan is more of the same. How on earth does printing money to pay people to work meaningless jobs qualify as a well-thought-out "jobs plan"? In fact, "jobs plan" is an oxymoron. Government cannot produce jobs, or not meaningful ones anyway. There's no value to be had in government planning or what it produces.
We know this because of human action. This is why government economics – econometrics – and the programs it spawns don't work. As soon as a program is issued into the larger economy people change their behaviors accordingly. Austrian free-market economists have a word for this, two words actually: "Human Action."
Human action tells us that jobs programs, like other government programs, are ultimately useless. Often they produce results which are simply a waste of money, and if they don't, well ... that's probably just good luck.
These jobs programs are basically large patronage mills, throwing off cash to those lucky enough to be positioned in the right place at the right time. Any economist who's gone through a number of years of graduate school and then worked in professional situations must know this. And yet there is this:
"The plan prevents a contraction of the economy in the first quarter" of next year, said John Herrmann, a senior fixed-income strategist at State Street Global Markets LLC in Boston, who participated in the survey. "It leads to more retention of workers than net new hires."
Really, Mr. Herrmann? Spending money you don't have to create results you don't need ... "leads to more retention of workers than net new hires?" On what planet?
Phony '60s Missile Gap
U.S. Invented Soviet Threat ... According to former CIA agents and historians participating in a forum held at the John F. Kennedy Library in Boston, in the early 1960s the U.S. government invented the so-called "Missile Gap" and wildly over-estimated the number of ICBMs the Soviet Union had. How many ICBMs did the Soviets actually have? Four, according to declassified documents. – InfoWars et al.
Dominant Social Theme: Head for the hills! The Reds are coming! Or at least their missiles.
Free-Market Analysis: According to the good folks at InfoWars, the missile gap was just another concocted subdominant social theme designed to frighten the West – and especially Americans – into giving up wealth and power to the military-industrial complex and the central banking families it serves.
"The Eisenhower administration used aerial reconnaissance and imaging satellites like the Corona Satellite to discover that the Soviets did not have the advanced technology to threaten the U.S.," according to the article.
"The study of the Missile Gap period is especially relevant because it relates to today's situation in Iraq, North Korea and Iran," said historian and author Fred Kaplan and Timothy Naftali, director of the Richard Nixon Presidential Library and Museum and a former Harvard student.
Here's more: "The invented Missile Gap – an extension of the supposed Bomber Gap – is part of a larger reality that we never hear about and is not revealed in most history books: the entire Soviet threat was invented by Wall Street and the international bankers. In Western Technology and Soviet Economic Development 1945 to 1965 written by the late Antony Sutton, we discover that if not for a massive transfer of technology and money to the Bolsheviks in the 1920s and later, Russia would have remained an isolated and backwards rural society. Sutton drew his conclusions after reviewing State Department documents."
The Internet has been a tremendous invention, if only for the patterns it reveals. One can scan necessary information in hundreds of books and articles in a day that might have taken months, pre-technology. The build-up of facts and the relationships between certain names that occur over and over finally becomes inescapable.
The light the 'Net has cast on 20th Century power elite sociopolitical and economic manipulations is truly incredible and disconcerting. In hindsight, it seems more and more clear that a tiny group of families gained control of a mechanism (central banking) that allowed them to print money from nothing and used this torrent of funds – trillions and trillions – to put the rest of the world on a path toward totalitarian globalism.
It wasn't just the missile gap that was concocted, in fact. There is plenty of evidence that both World Wars, the Cold War itself and other smaller, regional wars along with financial panics and the deaths of millions were part of what we have taken to calling "directed history." It was all kinda phony, in other words. Most people won't believe this of course, but the truth is sometimes difficult to acknowledge, let alone internalize. Sorry about that.
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Posted by Rod Farmer on 10/02/11 03:13 PM
If you want me to believe that the Soviets only had four ICBM missels in the 1960's then you will have to give me more source material.
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Posted by Rod Farmer on 10/02/11 03:13 PM
If you want me to believe that the Soviets only had four ICBM missels in the 1960's then you will have to give me more source material.
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Posted by amanfromMars on 10/01/11 02:13 PM
"Or is more of the same old nonsense, leading to more of the same old resulting chaos and collapse, still the idiot master plan? Methinks that would be confirmation of self-harming madness for it is definitely not linked to any sort of brilliant intelligence, that's for sure."
Maybe this is a variation/tweak to that idiot master plan? Another piece of magic paper to be treasuried and exchanged to give the perception of wealth that is real enough to be traded amongst friends as a valuable currency whenever everyone knows it is just an accountancy tricks to cook the books and hide the losses ... .. Click to view link ... .. which is just more of the same old failed methodology surely.
Mr Ponzi sure did start something with his shenanigans, didn't he?
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Posted by amanfromMars on 10/01/11 11:57 AM
And this should be of interest to all here exercising on the Daily Bell ... . Click to view link
It explores the realms of the madness of the asylum too ... .. "Because while insanity may be doing the same thing over and over expeting a different result, sheer idiocy is constantly refusing to learn from the past, and expecting a present which "is different this time.""
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Posted by amanfromMars on 10/01/11 11:41 AM
"Naturally, it's all just digits in a database. They could punch a few keys on a terminal and 'make it all go away'. But then the biggest lie holding the whole Ponzi scheme would be revealed -- the 'con' would be revealed, and the only thing holding the concept of paper money together would be lost, that is, the faith of the victim would be forever destroyed as the cost to him of his ignorance will be measured in the destruction of his savings, hopes, and dreams, and even his ability to feed and house his family. The amount of fake obligations outstanding is so huge that wiping it all away would violate the Prime Directive - "Never question the value of paper money". The 'value' imputed to the paper is what everything relies on. Everything is riding on it, from the legitimacy of government to the ability to trade work for food. A wispy thing for them to rely on. All it will take is a gust of wind to blow it away. If the popped balloon is to be papered over, it must be done slowly, so as not to shake the faith. But the magnitude of it is so large that already the faith is being questioned in whispers, and not even a tenth of the damage has been inflicted on us yet. The proportion is probably impossible to resolve. The banking system is like an opossum surprised in the middle of the road by an approaching car. Frozen, and hoping for a miracle." ... . Posted by John Danforth on 09/30/11 09:12 AM
The deepening/unravelling idiot power elite dilemma in a paragraph, and the information which is travelling constantly around the world and into mass human consciousness and which is ensuring that the system as it now is, will never again be as it was.
What are we to imagine is the reason for the status quo, power elite establishment not grabbing the bull by the horns and doing what is necessary* ... .. "They could punch a few keys on a terminal and 'make it all go away'" ... .. and putting in place another system? Anything other than the fact that they don't have the intelligence themselves to do it, for it is not as if it can said that they don't have enough capital to do it, whenever they would have more than enough and whenever whatever is needed is so easily instantly invented.
The solution to the dilemma? Bring in an outside sub-contractor and cyberspace expert in the field of global perceptions management for that is what they face and have to compete against in others who would be a whole lot smarter than was ever thought possible?
Or is more of the same old nonsense, leading to more of the same old resulting chaos and collapse, still the idiot master plan? Methinks that would be confirmation of self-harming madness for it is definitely not linked to any sort of brilliant intelligence, that's for sure.
And we all know what happens whenever the lunatics try to take charge and control of the asylum, don't we? They very quickly, effectively get wiped out by much more powerful and necessarily ruthless forces over which they have zero control.
* It might also be the case that there is no power elite control and the chaos is as a result of crazy factions vying against each other and trying to set up an overall command and control system without taking into consideration the needs and wishes of others and hence the conflicts.
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Posted by Summer on 09/30/11 05:31 PM
DB: "This will likely never happen, however, as the war has the shape of East vs. West - and the Punjabi elites, along with the Pashtuns, are united against a Western takeover of the "navel of the world." Instead, the Punjabi elite is turning to China as a US counterweight."
Yes, true. However China has traditionally been an ally to Pakistan as Russia has been to India...
DB: "The rising rhetoric, then, begins to take on the shape of a new Cold War. Coincidence? Or do Western governments seek to create a new and more formidable series of global tensions? Maybe, as we have speculated in the past, the war on terror is not doing the job. As the world's economy continues to spiral downward, a bigger distraction is needed. A Pakistan/China opponent might fit the bill."
Perhaps. Since Pakistan is a nuclear power, a cold war would be preferable for CIA lovelies. Either way, unfortunately, I think Pakistan will not be left alone.
I do not think it's paranoia to state that for Western elites all 'Muslim' countries must be crushed. Not only as 'old foes' (crusades, (neo-)colonialism, 'Christian Civilisation' verses 'Islamic Civilisation' and general racism and control) but as a way to attempt to continue to crush and corrupt all religions. As they are inherently anti-subjugation - with a 'Higher Ruler' and rules that do not bow to any globalist. And Islam, of course, is still widely practiced and followed (whether fully or not).
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Posted by Ted Newsom on 09/30/11 12:13 PM
Re: phantom missiles. This is not exactly news-- though unfortunately it IS to most people. The Russians were damned clever poker players. There were-- then, as now-- insane people on our side who wanted nothing less than the unilateral obliteration ofthe entire country.
The Ruskies dummied up hundreds of "missiles" made of concrete and brightly painted. They were quite visible from the sky, whether photographed from a U2 or satellite. Holeee keeriiist! They got thousands of missiles!!
Additionally, the intelligence gatherers, for their own reasons, inflated the numbers by a factor of at least ten. If they spotted 100 missiles, their report would say 1000. That justified their existance, and kept more money flowing into the coffers of both the US missile-makers and the intel outfits themselves.
It was in their best financial interests to create a gigantic boogyman of the USSR, to rationalize the theft of US tax dollars for "defense."
This is not what I remember hearing when I was 9 or 10 years old...
Reply from The Daily Bell
The Ruskies dummied up hundreds of "missiles" made of concrete and brightly painted. They were quite visible from the sky, whether photographed from a U2 or satellite. Holeee keeriiist! They got thousands of missiles!!
Thanks. But isn't is possible Intel knew it was being "suckered" and went along with the game? The whole point is to create enemies after all, whether real or imagined ...
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Posted by rossbcan on 09/30/11 11:09 AM
DB: "Most people won't believe this of course, but the truth is sometimes difficult to acknowledge, let alone internalize. Sorry about that."
... embrace the horror and, "the truth will set you free"
(that it is ALL, or at least 99%, manipulation, pure and simple)
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Posted by oldman67 on 09/30/11 11:06 AM
They talk about a phony missle gap so the US would spend billions and billion to build up the industrial military complex to rule the word and cause depopulation. The real gap is the one between millions of Americans heads.A vaccumm.
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Posted by oldman67 on 09/30/11 11:04 AM
I find it interesting that since the Vietnam War and the bombing by the USAF of Cambodia has killed over five million men, women and children yet talk about terrorist.We worry about Iran getting nuclear weapons when the only people who have and continue to use nuclears weapons are western power nations. We truly are a dumbed down nation. The government has convienced there is a terorist around every corner. depopulation is the answer for all these wars but with 305 of America with some form of mental health problem, as discover by the Mental Health Association, fooling Americans is a simple task for the government. You don't have to convience zombies, they fall in line and follow the leader. Every mean possible is being used to bring the population of the world to less than one thrid. that means more food, more fuel and easier to control the remaining serfs. Congress has never listened to the founders warnings and neither does Americans today. We deserve what we get though stupidity but the five million + men, women and children the US has killed since the Vietnam were innocent as well as the 500,000 children who died in Iraq through US scantions. Another 500,000 deformed babies due to the US use of depleated uranium.Thank goodness, we are a christian with christian values.
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Posted by stas on 09/30/11 09:30 AM
There are too many people on this Earth.
If Pakistan and China become allies of Asia, USA has to leave Pakistan, Afganistan and the rest of Arab countries. The threat is visible and upcoming faster or split. USA can not affort to pay the LOAN of moneys toChina and China is going to become the #1 country in the world. Thus prediction of 1980 will come true.
America you better wake up! Get rid of Obama before distroys our country.
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Posted by John Danforth on 09/30/11 09:29 AM
"These jobs programs are basically large patronage mills, throwing off cash to those lucky enough to be positioned in the right place at the right time."
In addition, it trains and rewards people to be rent-seekers. Well, rent-seekers is an archaic term. In modern parlance, they should be referred to as Tax Pigs. It's not luck that positions them at the trough, it's the politics of pull. It doesn't reward corruption, it IS corruption.
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Posted by John Danforth on 09/30/11 09:23 AM
The U.S. has been carrying out acts of war against Pakistan for years. No doubt the beneficial side effect of this is to solidify hatred of the U.S. by any rational Pakistani.
I distinctly recall Obama, in a debate with McCain, promising to bring attacks against Pakistan, acts of war. These attacks have proceeded on schedule.
The problem is that people aren't afraid of Afghanis or Iraqis any more, nor Muslims in general either. So they need to poke the nuclear hornet's nest to prove how necessary our 'defense' is. Otherwise, there just won't be enough killin' going on.
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Posted by John Danforth on 09/30/11 09:13 AM
Ha, new counter-meme.
ThreatScam.
Love it!
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Posted by John Danforth on 09/30/11 09:12 AM
"People see the central banking system as a scam now, even when they can't quite explain it. And that's what's going to kill it eventually."
What will help is the very real toll it takes as people's lives are wrecked by it. The media is all busy trying to tell the victims whose fault it is -- everyone but the perpetrators. But that's not flying any more.
"One of the curiosities of the recession is how few corporate insolvencies there have been for such a sharp economic contraction. Something is getting in the way of the process of "creative destruction" usually associated with recessions - the natural market mechanisms that would allow one generation of companies to be replaced by another."
If the banks foreclose, they have to 'mark to market' the underlying asset. Right now the only thing allowing them to continue the charade is their ability to put imaginary numbers on their balance sheets. If they foreclose, they end up holding the property forever at the imaginary value because it will never sell at the book price and so the expenses keep mounting, or else they have to sell and reflect the loss in value on their own books which would reveal how far upside down they are. They are stuck between a rock and a hard place, and that's why they are 'frozen'.
Naturally, it's all just digits in a database. They could punch a few keys on a terminal and 'make it all go away'. But then the biggest lie holding the whole Ponzi scheme would be revealed -- the 'con' would be revealed, and the only thing holding the concept of paper money together would be lost, that is, the faith of the victim would be forever destroyed as the cost to him of his ignorance will be measured in the destruction of his savings, hopes, and dreams, and even his ability to feed and house his family. The amount of fake obligations outstanding is so huge that wiping it all away would violate the Prime Directive - "Never question the value of paper money". The 'value' imputed to the paper is what everything relies on. Everything is riding on it, from the legitimacy of government to the ability to trade work for food. A wispy thing for them to rely on. All it will take is a gust of wind to blow it away. If the popped balloon is to be papered over, it must be done slowly, so as not to shake the faith. But the magnitude of it is so large that already the faith is being questioned in whispers, and not even a tenth of the damage has been inflicted on us yet. The proportion is probably impossible to resolve. The banking system is like an opossum surprised in the middle of the road by an approaching car. Frozen, and hoping for a miracle.
Reply from The Daily Bell
Good points, though we were not speaking of foreclosures but of loaning funds.
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Posted by Joe on 09/30/11 08:45 AM
"As the world's economy continues to spiral downward, a bigger distraction is needed. A Pakistan/China opponent might fit the bill."
Yet China holds so much US government debt, having a war against them could plunge the economy into the abyss.
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Posted by Joe on 09/30/11 08:45 AM
"As the world's economy continues to spiral downward, a bigger distraction is needed. A Pakistan/China opponent might fit the bill."
Yet China holds so much US government debt, having a war against them could plunge the economy into the abyss.
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Posted by thebird on 09/30/11 08:17 AM
Threats (fear based) work magic. (Cuban missile crisis = PROPAGANDA)
It is all part of the "threat scam."
