Never Just One Cockroach

H/T Zero Hedge

Taxing Christmas

The government is now taxing Christmas in order to pay for its wrecking of the economy.

In the pre-dawn darkness of a chilly LA morning, my day started off with a chuckle. A friend in the reforestation business sent me an email detailing the US Department of Agriculture’s new ‘Christmas Tree’ tax that was approved yesterday. I thought it was a joke. It wasn’t.

One can only laugh at the absurdity of the government getting involved in such a matter. But it’s happening more and more.

You see, the United States is on a one-way collision course with its financial judgment day; the country long ago passed the historical point of no return– the point at which it has to start borrowing money simply to pay interest on the money it has already borrowed.

Throughout history, countries that passed this point of no return soon defaulted on their debts, entered into extended periods of severe inflation, or both. This is nothing new– the idea of a government going bankrupt is practically as old as the concept of government itself.

The free lunch is over.

Cross Posted at Classical Values

Japan Post Tsunami - It Is Worse Than We Thought

Zero Hedge has an article up by a person who has close contacts with Japan. Especially in the financial markets.

I just got off the phone with several frightened, somewhat dazed survivors of the Japanese earthquake who work in the financial markets, and I thought it important to immediately pass on what they said. Some were clearly terrified.

Japan’s economic outlook now appears far more dire than I anticipated only a day ago. It looks like GDP growth rate is going to instantly flip from +2% to -3%, a swing of -5%, similar to what we saw after the Kobe earthquake in 1995. We have just had a “V” shaped economy dumped in our laps, and we have just embarked on a precipitous down leg. Two very weak quarters will be followed by two strong ones. The initial damage estimate is $60-$120 billion, and that will certainly rise.

Kobe had a larger immediate impact because of its key location as a choke point for the country’s rail and road transportation networks and ports. But the Sendai quake has affected a far larger area. Magnifying the impact is the partial melt down at the Fukushima Dai Ichi nuclear power plant, forcing the evacuation of everyone within a 12 mile radius.

Most major companies, including Toyota, Nissan, Honda, and Sony have shut down all domestic production. Management want to tally death tolls, damage to plant and equipment, and conduct emergency safety reviews. In any case, most employees are unable to get to work because of the complete shutdown of the rail system. Tokyo’s subway system is closed, stranding 25 million residents there.

Electric power shortages are a huge problem. The country’s eight Northern prefectures are now subject to three hour daily black outs and power rationing, including Tokyo. That has closed all manufacturing activity in the most economically vital part of the country.

Panic buying has emptied out every store in the major cities of all food and bottled water. Gas stations were cleaned out of all supplies and reserves, since much of Japan’s refining capacity has been closed.

There is much more at the link.

Now what if the Japanese stop buying US Treasury Notes to pay for the disaster? Or worse they start selling? We have had 20 fat years. We look to be heading into 20 lean years. Bummer.

Cross Posted at Classical Values

Where Were They?

My fellow bloggers and I have been going at the idea that "only social conservatives can be fiscal conservatives" at Classical Values rather hot and heavy. You can read about it here: Only Social Conservatives and here: Did the homos crash the economy?

So let me ask my Social Conservative friends why a Republican Congress spent part of 2005 dealing with Terri Schiavo instead of (in addition to) getting and keeping our fiscal house in order? The fiscal disorder was part of what led to a Democrat takeover of Congress in 2006 and the Presidency in 2008.

The Schiavo case proved there were a LOT of social conservatives in Congress and that they had the upper hand when setting the agenda. So if only social conservatives can be fiscal conservatives wha hoppened? Is it as Cynthia Yockey says:

Fiscal conservative, social conservative (when OUT of power, fiscal promises dominate; when IN power, social vendettas dominate and the majority of fiscal promises are scheduled for the indefinite future, aka, in your dreams)

You know what I think happened? The social conservatives were/are lying. Or maybe to use a kinder gentler term: they are terribly mistaken about the connection between social conservatives in government and a fiscally conservative government.

Of course the Democrats are worse. But that is not the point. Or maybe it is: social conservatism is just (or can justify) socialism lite. Because they really are not at heart fiscally conservative when it comes to their pet projects. Which is to say that despite all their discipline when it comes to social matters such discipline does not translate into conservatism in government economic matters.

Cross Posted at Classical Values

Free Book

Ed Driscoll notes that J. Neil Schulman's Alongside Night is available for free download.

“Just look at TV news or read a newspaper,” Schulman said. “Plot point after plot point is identical. In my 1979 novel I have General Motors go bankrupt — General Motors then files for bankruptcy. I have Europe issue a common currency in my novel called the ‘eurofranc’ — the European Union then goes and issues the ‘euro.’ In my novel I have a European Chancellor, based in France, accuse the U.S. President of having the monetary policies of a banana republic — then the President of the European Union — also based in France — slams U.S. plans to spend its way out of recession as ‘a road to hell’ and says President Barack Obama’s massive stimulus package and banking bailout ‘will undermine the liquidity of the global financial market.’ The copycat nature of all these plot points and dialogue” — says Schulman — “could not be more obvious!”

You can read the Amazon reviews at:

J. Neil Schulman's Alongside Night

Note: there are only about 12,000 more copies available for download. Don't wait if you want a free copy.

Cross Posted at Classical Values

Not What I Want Them To Hear

Senator Chris Dodd has a problem. With Republicans. They are not telling the American people what Dodd wants them to hear.

Senate Banking Committee Chairman Chris Dodd threatened Wednesday to end negotiations with Republicans on a financial regulatory reform bill if they continue to lead what he called a misinformation campaign based on Wall Street talking points.

“My patience is running out,” Dodd said on the Senate floor. “I’ve extended the hand. I’ve written provisions in this bill to accommodate various interests. But I’m not going to continue doing this if all I’m getting the other side is a suggestion somehow that this is a partisan effort.”

That was certainly forthright. Now if he would only explain the connection with campaign donations the circle would be complete.

So what was this "misinformation" he was in a snit about?

Congressional Republicans, led by Senate Minority Leader Mitch McConnell, began an effort Tuesday to paint the bill as doing little to curb future taxpayer bailouts of large financial firms. The White House responded sharply pushing back on the claims all day Tuesday.

The GOP points to the inclusion in the bill of a $50 billion fund, which is paid for by the firms and would be used to wind down a failing institution. But Republicans say it will act as a safety net for Wall Street to continue to push their businesses to the brink of collapse.

And no mention of Fannie and Freddy you Republican cowards.

Government Finance Reform

Now compare what he says near the end of this two minute video to what is said 36 minutes in to the video that can be found here.

And also carefully note that he doesn't hold the Legislature of California totally to blame. He says the voters are driving the problem.

Also note that Bill Lockyer, who is a Democrat, obliquely takes a shot at the Republicans for focusing on the Culture War instead of bread and butter issues like controlling State spending.

H/T Diogenes via e-mail

Cross Posted at Classical Values

The New World Ordering

I do not agree with everything presented in this hour and fifty minute video. I do find a LOT of food for thought though.

You can also watch a larger screen version at YouTube.

H/T commenter RTF 360 at Seeking Alpha

The Oligarchy Controlling Washington

Glenn Beck explains the American oligarchy/government organization chart.


Is your blood boiling yet?

The Greeks have seen all this before. Something like 3,000 years ago. The one thing we have in our favor is that oligarchies are rarely popular when self-government is at least a theoretical option.

Time to take to the streets. See you at the next Tea Party.

Cross Posted at Classical Values

I'm Here To Spread Panic

And why not? Europe is headed for the rocks. And it appears that there is nothing that can save it. The rocks are Eastern European debt.

If mishandled by the world policy establishment, this debacle is big enough to shatter the fragile banking systems of Western Europe and set off round two of our financial Götterdämmerung.

Austria's finance minister Josef Pröll made frantic efforts last week to put together a €150bn rescue for the ex-Soviet bloc. Well he might. His banks have lent €230bn to the region, equal to 70pc of Austria's GDP.

"A failure rate of 10pc would lead to the collapse of the Austrian financial sector," reported Der Standard in Vienna. Unfortunately, that is about to happen.

The European Bank for Reconstruction and Development (EBRD) says bad debts will top 10pc and may reach 20pc. The Vienna press said Bank Austria and its Italian owner Unicredit face a "monetary Stalingrad" in the East.

So let me see are the banks the Russians or the Germans? Would it make a difference?

Stephen Jen, currency chief at Morgan Stanley, said Eastern Europe has borrowed $1.7 trillion abroad, much on short-term maturities. It must repay – or roll over – $400bn this year, equal to a third of the region's GDP. Good luck. The credit window has slammed shut.

Not even Russia can easily cover the $500bn dollar debts of its oligarchs while oil remains near $33 a barrel. The budget is based on Urals crude at $95. Russia has bled 36pc of its foreign reserves since August defending the rouble.

"This is the largest run on a currency in history," said Mr Jen.

In Poland, 60pc of mortgages are in Swiss francs. The zloty has just halved against the franc. Hungary, the Balkans, the Baltics, and Ukraine are all suffering variants of this story. As an act of collective folly – by lenders and borrowers – it matches America's sub-prime debacle. There is a crucial difference, however. European banks are on the hook for both. US banks are not.

And just a while ago the Russians were doing so well. They were making money faster than their elite could steal it. But all the oil producers are in the same fix. Not enough buyers in the market. Too many sellers.

And Europe on the hook for American and Eastern European debt? Priceless.

The real question though is this: why didn't any of the oil producing countries see a threat to their economies when oil went from $100 a bbl to $150 a bbl? And another question. Why is the US Congress restricting drilling in the US which would help stabilize oil markets?

Almost all East bloc debts are owed to West Europe, especially Austrian, Swedish, Greek, Italian, and Belgian banks. En plus, Europeans account for an astonishing 74pc of the entire $4.9 trillion portfolio of loans to emerging markets.

They are five times more exposed to this latest bust than American or Japanese banks, and they are 50pc more leveraged (IMF data).

Spain is up to its neck in Latin America, which has belatedly joined the slump (Mexico's car output fell 51pc in January, and Brazil lost 650,000 jobs in one month). Britain and Switzerland are up to their necks in Asia.

Whether it takes months, or just weeks, the world is going to discover that Europe's financial system is sunk, and that there is no EU Federal Reserve yet ready to act as a lender of last resort or to flood the markets with emergency stimulus.

The Europeans have an excellent system for maintaining the value of their currency. They contract their money supply when their economies turn south (well at least some of them do that). However, that makes them vulnerable to countries that are inflating their money supply (the USA) because they then lose production to the lower cost suppliers. Further weakening their economies.

"There are accidents waiting to happen across the region, but the EU institutions don't have any framework for dealing with this. The day they decide not to save one of these one countries will be the trigger for a massive crisis with contagion spreading into the EU."

It all comes down to this: civilization runs on energy. The higher the cost of energy the less the civilization. So I'm hoping America will do something serious on the energy front. Drill for oil, build more nukes, add more refineries, build a HV DC backbone across the US for electricity, get serious about fusion research. Something.

Because - until we lower the cost of energy we are (at least for a while) going to have to do less with more. Never a cheery prospect.

Why hasn't Polywell Fusion been funded by the Obama administration?
Bussard's IEC Fusion Technology (Polywell Fusion) Explained

H/T Instapundit

Cross Posted at Classical Values