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The Government Wouldn’t Lie to Us… Would They?

16 Apr

San Diego – This might be a long one so get a cup of coffee and setle in a bit…

I’ve been asked,  since I claim only to be an image maker, where I come up with the ideas and conclusions I espouse in this blog and in personal discussions.  How is it that nearly all of my colleagues in the arts and in education, are almost diametrically opposed to me.  It’s a fair question.  I cannot speak for my colleagues and how they arrive at their own conclusions, but in my case I have experience in the real world that most of them lack and I try to follow the advice of my old philosophy instructors in college now summed up nicely by John Mauldin, a major financial figure in this regard when he explained his willingness to quote from those with whom he disagreed by saying,

“… if we only read what we already think, then how can we learn? It is only when your ideas are challenged and you seek (honestly) to determine why the other guy is wrong and you are right, that you can either become more firm in your beliefs or change [as the facts dictate].”

So I try to keep abreast of as many perspectives as possible, assuming hyperbole from each according to their obvious biases, and seek first to find any common ground, which is nearly always correct, or to find the dots that need to be connected whether the piece i am examining has done so or not.  In addition to online versions of the NY Times and Wall Street Journal, I check out the online English versions of La Monde (French), Der Spiegel (German), Daily Mail (England), and even Al Jazeera and Al Arabiya.  I read the political drivel from all sides ranging from NewsMax to Huffington to Politico.  I also devour intelligence reports, especially from Stratfor, financial ideas from John Mauldin’s “Outside the Box” newsletter which as noted above presents ideas all across the spectrum, and, when I am home to do it, try to scan the blather from MSNBC, CNN, and Fox.

Unlike mainstream channels those sources do not seek to hide their biases so you can hear ideas “from the horse’s mouth” so to speak and not hear just an edited version of it.  And finally, my personal library contains many of the foundational documents of the various political philosophies and also the texts driving theocracies such as the Koran/Qur’an or however one choses to Anglicize the spelling.  I have read all of them, sometimes several times.

Of course I cannot read everything out there so I search quickly for articles in the areas that interest me: geopolitics, oil, security and terrorism, and sovereign finances for the most part.  Obviously I cannot do it every day since I have a real job that is, itself, taking more than normal times.  But I can spend a few minutes here and there, cut and paste parts i think are salient into a file and then at my leisure on weekends, such as now, try to make sense of it.

Is it possible I have missed something important?  Of course. But I would argue that whatever else I may be or may not be, I am not completely uninformed as to the events transpiring around us in this most dangerous (in my opinion) of times.

I would dearly love to posit that I think the greatest danger to our country, society, and culture is, as it used to be, an external threat and those certainly do exist in abundance.  But I have come regretfully to the opinion that our greatest threat is internal and that we are, as one financial pundit phrased it, “…trending toward unwitting self-destruction.” Those external dangers, while all very real, poised, and waiting their opportunity, would never have that opportunity if somehow we did not, through internal idiocy or malice, open the gates for them and haul in the modern versions of the Trojan Horse.

You really should re-read (I’m making a possibly invalid assumption about the quality of your education here) the section of the Iliad describing what the Greeks did to entice the Trojans to accept and embrace the vehicle of their own destruction, and then look for the parallels to our current situations.  The only difference is the “Greeks” in this case are not outside the walls, they are already in the walls and in the palace.

Sometimes I feel like Cassandra in this regard.  (Oh, all right, for God’s sake, I’ll just tell you. She was the Trojan oracle who spurned Apollo and was cursed to always tell the truth and never be believed.  She warned Priam and Hector about the Greek trick but was not believed.  No wonder we are such “fair game.”)

So here is my “Cassandra Report.”  Our economic situation is dire and getting worse and if we do not turn this ship around, quit dealing with symptoms and short-term political feel good “solutions” while carefully avoiding addressing the cause of it because the solution is viewed as political suicide and painful in the extreme, we will see our great culture self destruct and open the gates for all of the dangers out there who seek to destroy us and see us join them as just another third world country that is just a bit bigger and see the Orient once again take its place as the major world power.

Whatever horrid pain we will have to face to solve the current problems because we waited too long, are nothing compared to the pain we will all suffer if we do nothing.  And the solution begins by admitting the problem.  You cannot — CANNOT — solve a problem that you will not acknowledge exists.  Period.  And we have a huge problem that in the last few years has been exacerbated to an extreme degree and is now being covered up with a combination of lies, band-aids, and panaceas in the form of misdirections.  We hear each side blaming the other for setting this in motion when the truth is both had their hands in it and there are no innocent parties here.  Good Lord, get over it.  The point, in the end, at least at this desperate point, is NOT who started it… history can sort that out later.  The point is what are we going to do about it and it appears to me our deadly partisanship will prevent this group of so-called law makers from really doing anything.

The problem that the problem is causing is that it is generating such angst that we are losing our ability to keep an eye on the powder kegs in the middle east where the fuse is already lit and inching toward disaster.

(As a teaser, when the current king of Saudi Arabia dies or is killed and if Khamenie is still the high Ayatollah in Iran, keep your heads down because all Hell is likely to break out led by Iran.  Ah but that is a story for another day because it really will not make any difference to us if we are, by then, at a place we are sure to be if we do not reverse course and quickly.)

So what is about to — or at least likely to happen on the economic front?  Well, here is a quote from David Gallard of the Casey Report, a widely read financial newsletter whose conclusions have rarely been wrong:

“The Fed has been extremely supportive of the U.S. government’s insane spending, polluting its own balance sheet by buying up toxic loans by the hundreds of billions and by pumping enormous quantities of cash into the money supply.

” …(you) don’t have to look very hard to understand why we have seen some small recovery in the economy, much of which has been driven by the financial sector that has been the recipient of so much largess – it was bought and paid for by the government, working hand in glove with the Fed.”

Why is this a problem?  Because to support a flawed economic policy, it has resulted in what even Keynes himself feared, a “debauchery” of the currency.  The monetization of the debt by printing money and loaning it to one’s self via purchasing your own bonds, called, euphemistically,  “Quantitative Easing” or QE, is (a) inflationary on the face of it because it debauches (debases) the value of the currency and (b) should it stop after it is depended upon and fundamental problems are not solved, will generate, in, at most (if history remains true) a couple of years, a secondary market collapse because the whole scheme was not used to address the real problems but to prop up the parties complicit with government policy in fomenting the collapse in the first place.

And it appears highly likely that as they approach the end of QE2, the Fed, ever terrified of inflation even through their own filters, will not immediately go to QE3 but will stop to assess the success of the plan.  Success or failure, it will be labeled as a success because it is what King Barrack and Count Bernanke wanted to happen. Given a little time though, the incredible problems impacting our economy will resurface so that the economy will be back in the tank in a way impossible to cover up.

At that time the Fed will be forced to do some further monetization, though they will likely try to pretend it is something else other than more quantitative easing when they describe and label it.  It is all they know to do and have little choice since the politicians at ALL levels are refusing to address the core issues are looking to them to somehow, magically fix it so they (the politicians) can claim innocence of the pain and thereby keep their jobs.  And it appears that the public, on both sides of the aisle, is dumb enough to buy into it so long as they keep being promised protection from their own pain.

I believe however that QE1, 2 or 3 or 4 or 28, by any name or label, are all stop-gap measures that in the end will backfire badly and the inflation feared will come at us like an onrushing freight train and make Japan’s experience look like a Sunday School picnic… unless we change course.  They are treating the symptoms not the cause.  It is like putting a bandaid on a festering wound… it hides the reality for a while until the gangrene sets in to force some really ugly decisions that could have been avoided early on.

So why do I believe that?  I believe it because i believe we are being lied to on so many levels that it is nearly pathological in occurrence.  And that if you look beneath the curtain of this well-woven fabrication all of the signs of disaster are there to be seen clearly.  Here again is David Gallard,

“…the problems that made the economy stumble in 2008 have not been solved. As I said before, most have gotten worse. Have the impossible levels of sovereign debt and trillions in unresolved bad mortgages embedded in the balance sheets of Fannie, Freddie, the Zombie Banks and even the Fed been resolved? Hardly.

“Is there any real sign coming out of Washington that the deficits will be substantively tackled? You don’t have to be as active a skeptic as I to understand that the deepest spending cuts being discussed don’t even scratch the surface of the $1.5 to $2 trillion deficit. As for the $60 trillion or so in debt and unfunded obligations, forget about it.

“The U.S. government and the governments of most large nation-states are fundamentally bankrupt. In time, they will have to default on their obligations. While there will be some overt defaults, I expect most of them to follow the path of least resistance, which is to try to inflate the problem away.”

The truly worrisome deficit is the deficit of government accountability.  Here’s another dot for you to connect.  On February 10th CNNMoney reported the IMF issued a report encouraging replacing the US Dollar as the world’s reserve currency.   China has said, “we don’t want to make any more foreign exchange reserve of any paper currency, because all the paper currencies are government debt currencies.” In southern China, the “BRICS” group, Brazil, Russia, India, China, South Africa, recently met in a sort of mini-summit and agreed “to transact all of their mutual trade and investment in their own currencies” effectively minimizing the need, at least in the short-term, for a global reserve currency and because of, in their view, the volatility of the US Dollar under current fiscal policies.  They didn’t replace the dollar as reserve, they sidestepped it.  But the result is the same.

In a wonderful bit of political misdirection the Administration’s pet sycophantic “economists” have rushed to assure us that the dollar is not in danger of collapsing.  I think they are probably right.  But that is not the issue: it does not have to collapse per se to have a catastrophic effect on our economy.  All it has to do is devalue significantly due to inflation and the spiral is on.  But we are also assured by the anointed one that the economy is back on track and inflation is not a problem.  And if you just slightly cook the books, that is more or less true.  But to do it you have to change the rules of how such things are measured and that is precisely what has just happened.  And Bernanke assured us recently that deflation was not likely.  Duh.  But deflation is not the problem yet everyone read into that, “Hey the Fed said there was no problem so relax; it’s all under control.”  That is the equivalent of the lookout on the Titanic telling everyone, “No problem, we’re made of steel and that is just frozen water so there will be no problem.”

First of all, a “jobless recovery” is NOT a recovery at all.  Unemployment remains very high.  Of course if you are a blind partisan and buy into the government’s figures, it is moving steadily in the right direction. But the government has never entertained any reservations about juggling actual figures to suit itself. One telling statistic they avoid like the plague is, unfortunately, the only real way to look at it: unemployment as a percentage of the employable population, which screens out many of the government’s self-serving adjustments to its official figures. Looked at that way, you can see that unemployment is continuing to rise alarmingly, even though the government is reporting that it’s falling markedly.  What is the basis of their declaration: the number of people applying for unemployment.  Period.

Plans to help solve problems (especially as in California) by raising productivity, which means raising the tax base, are simply pie in the sky when, in fact, the tax base of employees is going down because business — you know, those nasty entities that actually hire people –are being driven to places like Texas.  Anyone willing to do the research to find the real numbers can see that both unemployment and inflation is going up. With the web at hand it is incredibly simple to do the research.  For example, just pull up a chart of the CRB (Commodities Research Bureau) Index for Commodities which tracks the prices for the real stuff required for life – and one can see it has been on a steep upwards trajectory. Inflation is very much here and alive.  As I noted a few posts before, oil is rising rapidly and with it the costs of food production so food cost is also going up.  And so is most everything else.

John Williams’s (another high level financial consultant/analyst) “Shadow Stats” chart (www.shadowstats.com) reveals that inflation is at nearly 10%, while the Bureau of Labor Statistics is reporting 2.1%.  But, and here is a really interesting kink in all of this,  even Williams’ statistics don’t report actual percentages but rather what it would be if the government reported inflation the way it used to, before it started “improving” its reporting in the 1980s. It’s still an incomplete view, because the government’s original reporting was flawed to begin with and skewed to minimizing the numbers even back then.

How can the government skew these figures? Easy, they added in Housing to the CPI (Consumer Price Index). In 2008 housing was dealt a huge blow and it will be there for a very long time, because government had (and continues to) encourage and facilitate bad decisions on the part of both lenders and borrowers. This has left trillions of dollars of bad debt hanging out there, much of it now in the government’s ledger.  So the inclusion of housing prices, which plummeted as that bubble burst, as a component of official CPI, pulls the official inflation figures down, even though those figures don’t sync up with the actual cost of living.  And et viola, a magical and instant drop in inflation numbers.

i once did work for a Fortune 100 company whose CEO made the balance sheets look wonderful by selling off core business departments of the company until there was nothing left to sell.  That company then went under, no longer exists, and to the end the stockholders, told only of the incredible “revenues” while costs dropped, kept voting for HUGE annual bonuses for him.  Hmmmmm, sounds like the government to me…

This is precisely the same approach used to indicate global warming by eliminating, from the list of gathering stations, those that are in colder areas.  And if you leave that little important bit of data out as  you are calculating the figures, they do seem quite plausible.  Ah but now we are bumping into another topic for another time. But is it possible there is a trend here?  Surely not.  Say it isn’t so… and then back that up with some hard data.  Please, go for it.

Many economists from different perspectives are predicting oil prices to continue rising.  Some blame speculators not fully understanding the difference between spot markets and normal market speculation, some blame foreign issues, and others note that in addition to those influences on oil prices, our government seems to actually be facilitating it by refusing to allow us to get at our own reserves or refine what we have in order to push its green agenda onto the backs of people who are trapped in their positions.  With inflation gobbling up large chunks of one’s paycheck, King Barrack’s laughing while telling a worker he needed to trade in his SUV for a hybrid van, is like Marie Antoinette telling the starving French who could not afford bread to “let them eat cake.”

I do hope some of you remember the French Revolution and not only what led up to it but the Reign of Terror that followed.  The next time you ‘neocons’ want to set in motion some protective law please re-read Robespierre’s letter that allowed him to set up the security apparatus that led to job security for Madame Guillotine and see if you recognize any of it.  And you far left people wake up and see the revolution that is possible when you get the people mad enough because they are feeling helpless because that is where you want them to be to justify your creation of the government village to take care of them.

People underwater with their homes and vehicles could not trade up to a hybrid vehicle even if they wanted to.   What a stupid, irresponsible response that was but it is totally revealing of the agenda and of the connection King Barrack has with real people. Telling the people here in southern California to use public transportation where a 20 minute commute by car would then take 2-3 hours — assuming it was even an option — is ridiculous and out of touch. But then so are the proponents of such ideas.

Before you can demand that change you have to build a workable system and that takes… oh wait, I’m beginning to see it now… that takes higher taxes to pay for it.

Why no, they wouldn’t lie to us… much…
.

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1 Comment

Posted by on April 16, 2011 in Uncategorized

 

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One response to “The Government Wouldn’t Lie to Us… Would They?

  1. shamtest

    May 14, 2011 at 2:43 am

    I can’t seem to access this site from my iphone!!!

     

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