Different Stories

punditman says...As promised, Punditman is trying to fill Peacenik's shoes while Peacenik is off in the wilderness at Peacenik's compound learning how to make dandelion tea or wine or whatever he feels will help him in the near-to-medium-to-long-term-to-weird future.

Since Peacenik usually covers the Ilargi front, Punditman offers up this rather bleak picture of the so-called economic recovery. Punditman is not sure what to think, but Punditman tends to think things are going to get weird in America and most places in the not-to-distant future. It is hard to dispute the following figures: 25% of US homeowners will be underwater by 2010, and 30% by 2011 (or, according to the Deutsche Bank, 50% by 2011). Punditman was just reading another article that says tent cities are appearing all over America, full of homeless unemployed. Please let me know if you are reading this on your laptop in your tent, because, while Punditman surely knows about the tent cities, Punditman would not get a reminder of this by turning on Punditman's television, would Punditman? Punditman tries not to turn on his television lately.

Meanwhile the Obama administration is spending $1 billion to build a mega-embassy in Pakistan (not to be out-done by Dubya who did the same in Iraq). At the same time, by Christmas, 1.5 million Americans will have run out of unemployment benefits while unemployment continues to rise. When in doubt, time for some more Pentagon socialism to the tune of a $636 billion defense bill. It is hard to understand how any recovery based on reality can happen amidst all this. Here's Ilargi.


Ilargi: Right. So government spending, as we've of course mentioned before, is going through roofs never dreamt of until recently. The request for a higher government debt ceiling is but one of the many signs of this. One that may be far more important is the roles played by Ginnie Mae and the FHA, roles that both have been stealthily increased by stunning percentages since the present administration took office.

The idea, undoubtedly, is to take all that's bad and suspect on Fannie Mae and Freddie Mac's elusive books, wrap it up in glitzy fancy gift paper, and throw it in a vault somewhere that still has space left on top of or beneath the toxic paper it already holds. And sure, it will look good at the surface. Just propose an opaque bad bank construction for Fannie and Freddie, so you can keep hiding the losses from view, and continue the policies that led to their inevitable demise through other (semi-private) enterprises.

There's something terribly wrong here. And since it threatens to transfer additional trillions of dollars in losses to the taxpayer, that taxpayer had better beware.

Somewhere behind these ideas is the faith that the economy, and hence home prices, will rise again. It's slightly reminiscent of Hank Paulson claiming 11 months ago that the taxpayer would actually make a healthy profit off the TARP rescues. That went well, didn’t it? We’re all much better off.

Keep Reading...

Obamageddon

punditman says...Many of you may have noticed the absence of Peacenik. You would be right; he is off in the wilderness once again training for the collapse of everything—and vacationing at the same time until the 20th. In the meantime, Punditman will try to fill Peacenik's shoes. Punditman has trouble finding a pair of tennis shoes to fit Punditman's quirky feet, so filling two people's shoes simultaneously should prove challenging.

I'll give it a shot.

The article below is a good place place to start, because it deals with several crises all at once: President Obama's escalating war in Afghanistan, the threat of war with Iran, the collapse of the "bailout bubble" and finally, the mother of all bubble burstings, the collapse of the American hyper-power empire. That outta keep your neurons firing for awhile.

The Celente thesis: war as the "solution" to economic depression
by Justin Raimondo
www.antiwar.com

An American president is launching the most ambitious, the most expensive, and certainly the most dangerous military campaign since the Vietnam War – and the antiwar movement, such as it is, is missing in action. After a long and bloody campaign in Iraq and the election of a U.S. president pledged to get us out, our government is once again revving up its war machine and taking aim at yet another "terrorist" stronghold, this time in Afghanistan. Yet the antiwar movement’s motor seems stuck in the wrong gear, making no motions toward mounting anything like an effective protest. What gives?

We shouldn’t doubt the scope of the present war effort. Make no mistake: the Obama administration is radically ramping up the stakes in the "war on terrorism," which, though renamed, has not been revised downward, as the Washington Post reports:

"As the Obama administration expands U.S. involvement in Afghanistan, military experts are warning that the United States is taking on security and political commitments that will last at least a decade and a cost that will probably eclipse that of the Iraq war."

There are always "warnings" in the beginning, aren’t there? For some reason, however, they are never heeded. Instead, we just barrel ahead, undaunted, into the tall grass where ambush awaits us. War opponents predicted the Iraq invasion would prove unsustainable – and we were right. We said that, far from greeting us with cheers and showers of roses, the Iraqis would soon be shooting at us and demanding our ouster – and we were right. We said the rationale for war was based on a series of carefully manufactured and marketed lies – and that was the truth, now wasn’t it? Yet it seems we are caught in an endlessly repetitive nightmare, where the same prophetic voices are being drowned out by a chorus of "responsible" voices – to be followed by an all-too-familiar disaster.

The problem, however, is that the scale of these disasters seems to be increasing exponentially. As Gerald Celente, one of the few economic forecasters who predicted the ‘08 crash, put it the other day, "Governments seem to be emboldened by their failures." What the late Gen. William E. Odom trenchantly described as "the worst strategic disaster in American military history" – the invasion of Iraq – is being followed up by a far larger military operation, one that will burden us for many years to come. This certainly seems like evidence in support of the Celente thesis, and the man who predicted the 1987 stock market crash, the fall of the Soviet Union, the dot-com bust, the gold bull market, the 2001 recession, the real estate bubble, the “Panic of ‘08,” and now is talking about the inevitable popping of the "bailout bubble," has more bad news:

"Given the pattern of governments to parlay egregious failures into mega-failures, the classic trend they follow, when all else fails, is to take their nation to war."

As the economic crisis escalates and the debt-based central banking system shows it can no longer re-inflate the bubble by creating assets out of thin air, an economic and political rationale for war is easy to come by; for if the Keynesian doctrine that government spending is the only way to lift us out of an economic depression is true, then surely military expenditures are the quickest way to inject "life" into a failing system. This doesn’t work, economically, since the crisis is only masked by the wartime atmosphere of emergency and "temporary" privation. Politically, however, it is a lifesaver for our ruling elite, which is at pains to deflect blame away from itself and on to some "foreign" target.

Keep Reading...

People Get Ready

In the twilight of the Bush days, in the twilight of the twilight season, a consensus has formed that we are headed into a long, dark passage leading we know not where. Even CNBC's Lawrence Kudlow has been reduced to searching for stray "mustard seeds" of hope on hands and knees in a bleak and tortured financial landscape. Half the enterprises in the land are lined up for some kind of relief bailout and a blizzard of pink slips has cut economic visibility to zero.

The broad American public voted for "change" but they thought that meant a "changing of the guard." Out with the feckless Bush; in with the charismatic Obama... and may this American life now continue just as it ever was. The change actually coming will be much more than they bargained for, namely our transition from a wealthy society to a hardship society. The sharp break is a product of our years-long failure to reckon with the energy realities of our time. We're still confused about that, but it's hard, otherwise, to ignore the massive disappearance of capital, asset values, livelihoods, domiciles, comforts, and necessities.

Read on...

Its Monday morning. Do you know where your money is? Is your bank still in business? Do you still have a job. Is your government on vacation? Peacenik thinks Kunstler is almost optimistic in this post. At least he acknowleges the possibilty that people may react to the current depression with kindness rather than cruelness. Small mercies.

We've Been Down This Road Before: A Great Depression Quiz

by Jacob Savage

Half of these quotes are taken from Arthur Schlesinger Jr.'s "The Crisis of the Old Order," about the Great Depression and the coming of the New Deal; the other half are taken from media sources during the last four years. All proper names and specific dates are underlined and have been replaced with their generic counterparts. A small portion of the text has been edited for concision and clarity, with any obvious anachronisms removed.

Your task is to decide what era and person each excerpt refers to: a) Herbert Hoover, Calvin Coolidge, Franklin Roosevelt, and the events of 1929-1933, or b) George W. Bush, John McCain, Barack Obama, and the events of the last four years.

Read on...

Peacenik was caffinating the cobwebs from Peacenik's mind when Peacenik came across this quizz. Are we in a depression? What metrics would you use to decide? Peacenik took the quizz. Peacenik had fun. Peacenik is posting from a new location on a new computer. This is a test.

Debt Rattle, November 19 2008: Full Metal Coffin

Ilargi: Hmmmm. It’s starting to look like we're about to see a harbinger moment of sorts, isn't it? I see no indication that the Motown Big Three will get what they want. Flying in on private jets may well be the last nail in the full metal coffin.

A free hand-out now seems to be entirely off the table, and that would leave only the option of a loan. But what could the Three put up as collateral for that loan? For every million dollars a factory might be worth, and that is a big if once the stones start a-falling and a-rolling, there are many millions more in obligations.

Read on...

Peacenik has never seen so much bad financial news as there is today, November 20. Yesterday the DOW closed below 8000 and now there is talk about it going to 6400. GMAC wants to reclassify itself as a bank so it can get financial aid. The North American auto industry is on the verge of disappearing. Banks and Insurance companies are bankrupt but hiding the information from he public. Consumer confidence is at record lows. The people trying to solve the problem....Bernake, Paulson, Harper etc. are flopping around like fish on a dock. There is no plan. There is no leadership. Peacenik thinks Peacenik needs some escapist entertainment.

Will Beer Be the Next Casualty of the Crisis?

The downturn could hurt high-end brewers

By Kimberly Palmer
Posted November 18, 2008

The beer industry is often described as immune to economic downturns. After all, when people get laid off, they want to nurse their sorrows with a cold one, right?

It turns out that, as the beer industry has gone increasingly upscale, the answer to that question is no longer simple. In recent years, beer sales have been relatively flat except in one category—craft beers, which are made by small, independent brewers. Amy Mittelman, author of Brewing Battles: A History of American Beer, says that the heyday for such high-end, specialty beers could soon be over as consumers look to cut costs. Mittelman spoke to U.S. News about the future—and history—of the American beer industry. Excerpts:

Read on...

Peacenik is shocked. The auto industry, the insurance industry, the banking industry, all fall down. But beer? Peacenik senses total meltdown by Friday. Peacenik may start brewing Peacenik's own beer.

It's a Beer Market!

The days of wine and Rose's may be over, but the hoisting, historically, continues apace, good times or bad

by Tom Acitelli

What drink best complements a recession?

"The prevailing view is that beer isn't affected that much by economic ups and downs," said Paul Gatza, director of the Brewers Association, in a Friday email.

The trade group measured taxable beer barrels produced by domestic brewers from 1985 through 2005. In 2001, during the tail end of the last national recession, breweries produced more beer barrels than they had annually in any of the seven years before--over 180 million or a watering 5.58 billion gallons. To find a year when breweries last cleared that mark, you'd have to go to the early 1990s, in and around another recession.
In a time of timorous spending habits and inflated costs amid shrinking job security, beer remains virtually recession-proof.

Read on...

Peacenik found some good news! Peacenik found some good news!

All Fall Down

by Jim Kunstler

God knows what manner of deals went down this past weekend in the Hamptons wine cellars and below-decks among the Chesapeake Bay sailboat fleet. All these hidey-holes must have been dank and fetid with the sweat of mortal fear. Will the US Government declare itself a subsidiary of General Electric? Will Vlad Putin be roped in to save Goldman Sachs? Meanwhile, the whole noisome rat maze of international counter-party deals was taking on sewer water and rodents of every nationality were seen leaping for daylight all over the fusty old motherlands of Europe. A cascading collapse of international finance is underway. While many fixers may jump heroically into the tumbling wreckage hoping to rescue this-and-that, the outcome by Friday is liable to be an unrecognizable smoldering landscape of the G-7's hopes and dreams.

Some big questions for the week: will the Euro survive as a currency? Will the rush into the US dollar continue even as the US financial system dematerializes in a Fibonacci fever of accelerating de-leveraged infinitude? Will the remaining Big Boyz, Goldman Sachs and JP Morgan succumb to the counter-party hemorrhagic fever? Will great rows of lesser banking dominoes now start clacking onto their faces? Will all fifty states follow the leads of California and Massachusetts and line up at the US Treasury's hand-out window. Will the entity that calls itself the civilized world be left at week's end with anything resembling money?

Read on...

While Peacenik continues to look for some cheerful good news, have a look at Kunstler's point-of-view. Peacenik has a question: after the events of last week, does Kunstler's article sound like the ravings of a doomsdayer, or the considered opinion of a realist? A week ago no one thought the world economic system would be where it is today. What do you think?

Rx: Depression

John Michael Greer

By the time you read these words they will have been sitting on my computer for most of a week; the chance to attend the annual ASPO peak oil conference in Sacramento was too good to pass up, and I’ll be on the road during the window of time I normally use to compose these essays. It’s an interesting time to be second guessing the future, too, for as I type these words, the world’s financial markets are in chaos. The collapse of Lehman Brothers, one of the longest established brokerage houses in the New York market, followed by the forced sale of Merrill Lynch and the near-collapse of insurance giant AIG, seem finally to have made it clear to the world’s investors that the mountain of unpayable debt weighing on the global economy is a problem that can no longer be ignored.

Just how bad that problem will become is anybody’s guess. Stock markets worldwide are down steeply but, at least as of this writing, not yet in freefall, and massive government intervention in the credit markets has staved off a liquidity crunch. Over the longer term, though, investments supposedly worth trillions of dollars are going to have to be written off, and companies that padded their balance sheets with those investments are now facing a scramble for survival that many will fail. An entire economy built around the exchange of exotic IOUs is coming apart at the seams, and the economic structures that will replace it are not yet in sight.

Read on...

While Punditman plays hockey, Peacenik will sneak in this post from the Archdruid Report. Peacenik loves counter-intuitive points-of-view, and in this article Greer points out some of the possible benefits that might result from a depression. Peacenik doesn't think there will be a depression, but it is time to start looking creatively at how the present financial chaos could be harnessed for some postive outcomes.