"There is no cause for major relief: In effect parliament only decided not to denounce further aid payments at this stage," Commerzbank foreign-exchange analysts said in a note Monday. In particular, the analysts worried whether there would still be the political will to follow through on reforms when Greece gets a new government after fresh elections, which could come as early as April.
No such thing (follow-through) will happen.
Simply put, the politicians are unwilling to have the same honest discussion and debate with the citizens there that we must have here in the United States. The root cause of the problem is the same, the debt trajectory we are on is identical to that which caused Greece to blow, and not only are we not facing it, neither are they.
Olli Rehn, the European Commission's head of economic and monetary affairs, said Greece has been living beyond its means for a decade and must undertake demanding reforms.
Yeah yeah. We ought to re-write that:
Olli Rehn, the European Commission's head of economic and monetary affairs, said Greecethe entire Western World has been living beyond its means for a decade and must undertake demanding reforms.
Reform = you cannot spend more than you take in via taxes.
Period.
So when will we see actual reform? The fact of the matter is that since GDP = C + I + G + (x - i) when "G" decreases (government spending) by cessation of deficit policies GDP will inevitably contract, at least on a temporary basis.
This is why nobody is serious about doing it, but the longer we take to do it the worse it gets as the compounding of artificial demand builds into the system capacity that there is no organic requirement for, nor can the employment and standard of living that goes with it be supported.
The argument is always and forever that we must "grow" out of the mess. The fact is that we never have. In each and every case since 1980 there has never been a time when we have in fact "grown out of the recession." Note that this includes Presidents Reagan, both Bush I and II and Clinton.
Not one quarter folks, up until the crash, and then only because debt defaulted so fast that it fell below GDP's rate of change. The paradox is that while this was being decried and the screaming reached a fever pitch it was actually good from a perspective of sustainability!
In other words the exact opposite of what people claimed "should" be done was the correct path -- do nothing, allow the corrective process to run its course, and in doing so allow sustainability to return. Instead we are desperately trying to prop up the bubbles we blew over the last 30 years.
David Walker was on CNBC this morning again claiming that we "lost our way" over the last ten years. He's lying. What we have here is a geometric series in two dimensions (both slope and time) and I'm going to prove it.
Over 20 years, from 1980 to 2000, the slope of the line of debt accumulation was approximately 12 degrees. From 2000 to 2008, or approximately 9 years, it was 26 degrees (more than double the slope over less than half the time) and from 2008 to today it was 64 degrees or again more than double the slope over less than half the time. Note that this is just the public debt -- the problems in entitlement programs (internal debt) are even worse!
This is a chart of a runaway geometric series.
There is no solution that comes from "slowing it down" -- you must stop this right now.
I recognize that nobody wants to talk about it, say much less do it. But mathematical relationships do not care whether you want to talk about them or not. They just are, and Walker is trying to put this into some sort of perspective that aims at Bush and Obama.
He's full of crap. The problem goes back to 1980 when we crossed beyond fiscal sustainability. Every President since that time and every Congress has been part of a gigantic Ponzi Scheme that will inevitably blow up unless we act to stop it now.
Our policy on reciprocal links: Send us an email with your
information and why you think your blog or news site would make a
good addition - in most cases reciprocal link requests will be
granted.
Legal Disclaimer
The content on this site is provided without any warranty, express or implied. All opinions expressed on this site are those of the author and may contain errors or omissions.
NO MATERIAL HERE CONSTITUTES "INVESTMENT ADVICE" NOR IS IT A RECOMMENDATION TO BUY OR SELL ANY FINANCIAL INSTRUMENT, INCLUDING BUT NOT LIMITED TO STOCKS, OPTIONS, BONDS OR FUTURES.
The author may have a position in any company or security mentioned herein. Actions you undertake as a consequence of any analysis, opinion or advertisement on this site are your sole responsibility.
Looking for "The Best of Market Ticker"? Check out Ticker Classics.
Visit the forum to discuss this and other investing-related topics; see the FAQ on the forum for information about Gold Donor status including access to our technical analysis video server.
Market charts, when present, used with permission of TD Ameritrade/ThinkOrSwim Inc. Neither TD Ameritrade or ThinkOrSwim have reviewed, approved or disapproved any content herein.
The Market Ticker content may be reproduced or excerpted online for non-commercial purposes provided full attribution is given and the original article source is linked to. Please contact Karl Denninger for reprint permission in other media or for commercial use.
Submissions may be sent "over the transom" to The Editor at any time. To be considered for publication your submission must include full and correct contact information and be related to an economic or political matter of the day. All submissions become the property of The Market Ticker.
Leads on stories of current economic and political interest are always
welcome. Our fax tip line is 850-897-9364; please include contact information
with your transmission.
Olli Rehn, the European Commission's head of economic and monetary affairs, said Greecethe entire Western World has been living beyond its means for a decadethree decades and must undertake demanding reforms.
There, FIFY.
----------
Here are my predictions for everyone to see: S&P 500 at 320, DOW at 2200, Gold $300/oz, and Corn $2/bu. "You can't build a house of cards on a shaking table." - Tony Johns The January 2015 AMZN put at $130 (cost $4.25) will be a winner.
Sadly, it won't be addressed until the whole train comes to a crashing halt, there is no way it can be, honest discussion or not.
Any real fixes, requiring actual pain/sacrifice, would last only until the next election cycle.
I believe crashing is necessary if there is to be any real long-term hope for the people of this country. The best most of us can hope in the end is that our local and state governments are up to the task of providing some of the basic protections of consensual government.
Of course this accumulation of debt must be stopped, but it's impossible to find anyone to talk about stopping it person-to-person, except on internet blogs. So yeh, the gigantic Ponzi Scheme will inevitably blow up. It'll be epic. :(
Is it even worth screaming, "Stop it"? It's abundantly clear that democracies cannot willfully limit their budgets. It's a built in weakness of the system.
Honestly, the repeated calls for responsibility are a waste of time. What we should be doing is discussing the best ways to prepare for what's coming.
Standing in stunned amazement as corruption and economic incompetence thrive in a world where everyone votes with their wallet isn't productive. And shouting "stop it" at the relatively microscopic readership of economics blogs (who are the only people in the world who *do* get it, by and large) is just*****ing into the hurricane. There are more productive conversations to have... Like what to do when TSHTF.
Well Bang, there are such discussion here, for those who are donating members. There's the Contrib forum where we talk about trading strategies, there's "Guns N Butter" (which is for various matters related to "what do you do IF TSHTF", and more.
The choice is yours of course but forums don't run themselves and if you wish to be a part of the remainder of the system, you know how to accomplish it.
----------
I don't care if it makes sense -- only if it makes money. -- Me Bank (n): See scam, fraud and theft.Eat a bankster -- they're low-carb. What part of "shall not be infringed" was unclear?
Eighty6thebs
Posts: 4183
Incept: 2007-06-26
It's contained to sub-prime!
+1 Bangkokian I agree this system can’t be changed through the ballot box and we’re wasting our time to try. I’d go so far as to say that by trying, we’re slowing down the eventual reset and thus bringing more pain to future generations and not less. The issue you have IMHO on TF and other forums is most of the people who "get it" also have money and property they would like to protect. In a way, they are also guilty in perpetuating a broken system as they don't want to risk their own prosperity to make the fundamental changes needed. They, just like the bankers and government leaches and the rest, want to "muddle through" this without significant change as that preserves their own standing in society.
This is why the founders of this country were so courageous. They were willing to risk their personal fortunes for the benefit of the entire country. Bottom line, most have it too easy under the current system.
----------
"Sounds to me like you guys a couple of bookies" - Billy Ray Valentine
"No I am not scared, and neither should you be!" - Iraqi Information Minister
All the digital ink Gen can spill will do nothing to stop this. Until we as a people are ready to fill the streets of DC nothing will change. We need someone with balls as big as church bells, the knowledge and understanding of KD, and the time to lead. That's a lot to ask. I don't like our chances until hitting the wall and being forced to do it.
----------
I'm already visualizing you with duct tape over your mouth.
yet of course on MSNBS early they were excited about the market rally and "uptick" for futures based on a Greece deal. What a flop - not a damn thing will change in Greece; actually no it will get much worse. Whatever cuts they actually make they will have to spend in infrastructure that was burnt to the ground.
People in my circle have other priorities. Truly, they don't pay attention to what is going on anywhere in the world. If you mention that Greece is burning or there are people getting killed in Syria and Egypt, they don't care because those countries are 'over there'. Those things can't possible happen in America because, I'm told, we have laws and our constitution and our government would protect us. I'm told there is nothing to worry about, that we'll muddle thru, and there isn't anything to prepare for anyway.
Bluebird, hard reality time. What tangible benefits have you garnered personally from paying attention to what is going on? Not potential benefits in the future, I mean in the here and now.
----------
"The curious task of economics is to demonstrate to men how little they really know about what they imagine they can design." Friedrich Hayek
Landshark
Posts: 11287
Incept: 2008-02-07
The Wild West
Online
Quote:
Honestly, the repeated calls for responsibility are a waste of time.
Yes. Anyone with a shred of hope that TPTB will be struck by lightning, see the errors of their ways, issue a heartfelt mea culpa and come clean with the people is simply ignoring reality.
Everything they're doing says they have no intention of stopping this, none whatsoever. They're going to slam this thing into the wall at mach II.
----------
Success in life is a matter not so much of talent and opportunity as of concentration and perseverance.
Karl, is that three move graph a good example of, I dunno, a parabolic move? How do those end again?
----------
"Let China sleep, for when she wakes, she will shake the world." - Napoleon Bonaparte
"Circulation ceases first at the outer edges [Europe and Japan]. It will take a while yet for the decay to reach the heart [America]." - Foundation & Empire by Isaac Asimov
Everything they're doing says they have no intention of stopping this, none whatsoever. They're going to slam this thing into the wall at mach II.
The reason they aren't stopping it is - the Bezzle. It's as large, or larger, than it was at the top of the housing bubble. The hot money just moved out of real estate and into government, health care, higher education, and corporate cash coffers. It's being deployed on IT projects in corporate America.
A susbstantial portion of the population is being supported by the Bezzle in these areas, and the one percent are making a fortune on the hot money.
Unfortunately, the liberal arts majors that make up the media do not understand geometric series, exponential functions, or the fact that you cannot borrow your way out of debt (basic math).
Those things can't possible happen in America because, I'm told, we have laws and our constitution and our government would protect us.
Bluebird,
That's too funny. I don't talk to anyone about our "situation" or current events anymore. In fact, I can't remember the last time I had a meaningful conversation with anyone. It's a complete waste of my time. Everyone seems to be immersed in nonsense. I focus my energy on just trying to keep my hubby clued in ;-)
Quote:
It's actively learning about the world, not passively being entertained by American Idol.
Tickergroupie said "I don't talk to anyone about our "situation" or current events anymore. In fact, I can't remember the last time I had a meaningful conversation with anyone. It's a complete waste of my time. Everyone seems to be immersed in nonsense."
Yep, it's been a long time since I talked with anyone about anything meaningful. Either people 'get it' by now, or they don't. Most people don't. :(
