hvactec
VIP Member
A big sell-off yesterday. The Dow down 283 points. The 10-year T-note yields only 1.87%. And the price of gold barely budged.
In our opinion all three should be going down. Because the world is edging towards a global depression
with the US consumer unable to spend
the Chinese economy slowing down
and Europe preparing for defaults
Assets should be going down. Except for US Treasury debt which should be going up. Thats what happens in a depression.
All of which is making our solution to the financial pile up of 08-09 look better and better all the time. Youll recall that we promised to tell you how you could fix the problem in our last exciting installment. This must have left you on the edge of your chair. It sure left us on the edge of our chair; we had to think of a solution overnight!
But it is really very simple: give collapse a chance.
Remember how desperate officialdom was to prevent a catastrophic collapse? Both in Europe and America. The European banks bailed out their speculators. Then the governments bailed out their banks. Then, they bailed out the countries that had bailed out their banks.
In America, the government bailed out the banks the insurance companies the automakers About the only industry that wasnt bailed out was the financial publishing industry. Guess we didnt send them enough campaign contributions
Then, the Europeans and the Americans bailed out each other.
And theyre still bailing. The US is running a budget deficit so large that weve lost track of it was it $1.5 trillion? $1.8 trillion?
And the Europeans are preparing another big bailout for Greece Italy and who knows who else.
And every bailout makes the world poorer. Because its clearly bad money after good. Greece does not suddenly become a good credit risk just because you lend it more money. And Americans wont be made richer because the feds offer them more debt at an even cheaper rate!
The problem is that doing more of something that doesnt work is not a good idea. When you lose money on every sale you cant make it up on volume! Nor is it a good idea to put more money into an investment that isnt paying off .or to allocate more resources to an industry that stopped producing real benefits a generation ago.
Yes, thats when the education industry turned sour in the 1970s. Since then, its gotten sourer and sourer with more and more money spent on education but not a bit of progress to show for it. The youngsters are as dumb as ever.
And the oldsters are even dumber. They want to continue to bailout, subsidize, give credit where it isnt due, and otherwise funnel huge amounts of money to worn out, unproductive institutions. And for what? So they can avoid a catastrophic collapse.
Well, here at The Daily Reckoning we say bring it on. Lets have that catastrophic collapse and get it over with. Better now than later. It will only be worse if it is postponed.
But seriously, how would we fix the situation? Well that is how wed fix the situation. We were being serious. Were always serious. And earnest. And trying to do our best to help.
But thats not all we would do. The problem really has two parts to it.
One part is natural, inevitable it cant be fixed. When you borrow too much money, you have to pay it back. Or default. Better to do it as soon as possible.
read more http://www.marketoracle.co.uk/Article30618.html#comment119254
In our opinion all three should be going down. Because the world is edging towards a global depression
with the US consumer unable to spend
the Chinese economy slowing down
and Europe preparing for defaults
Assets should be going down. Except for US Treasury debt which should be going up. Thats what happens in a depression.
All of which is making our solution to the financial pile up of 08-09 look better and better all the time. Youll recall that we promised to tell you how you could fix the problem in our last exciting installment. This must have left you on the edge of your chair. It sure left us on the edge of our chair; we had to think of a solution overnight!
But it is really very simple: give collapse a chance.
Remember how desperate officialdom was to prevent a catastrophic collapse? Both in Europe and America. The European banks bailed out their speculators. Then the governments bailed out their banks. Then, they bailed out the countries that had bailed out their banks.
In America, the government bailed out the banks the insurance companies the automakers About the only industry that wasnt bailed out was the financial publishing industry. Guess we didnt send them enough campaign contributions
Then, the Europeans and the Americans bailed out each other.
And theyre still bailing. The US is running a budget deficit so large that weve lost track of it was it $1.5 trillion? $1.8 trillion?
And the Europeans are preparing another big bailout for Greece Italy and who knows who else.
And every bailout makes the world poorer. Because its clearly bad money after good. Greece does not suddenly become a good credit risk just because you lend it more money. And Americans wont be made richer because the feds offer them more debt at an even cheaper rate!
The problem is that doing more of something that doesnt work is not a good idea. When you lose money on every sale you cant make it up on volume! Nor is it a good idea to put more money into an investment that isnt paying off .or to allocate more resources to an industry that stopped producing real benefits a generation ago.
Yes, thats when the education industry turned sour in the 1970s. Since then, its gotten sourer and sourer with more and more money spent on education but not a bit of progress to show for it. The youngsters are as dumb as ever.
And the oldsters are even dumber. They want to continue to bailout, subsidize, give credit where it isnt due, and otherwise funnel huge amounts of money to worn out, unproductive institutions. And for what? So they can avoid a catastrophic collapse.
Well, here at The Daily Reckoning we say bring it on. Lets have that catastrophic collapse and get it over with. Better now than later. It will only be worse if it is postponed.
But seriously, how would we fix the situation? Well that is how wed fix the situation. We were being serious. Were always serious. And earnest. And trying to do our best to help.
But thats not all we would do. The problem really has two parts to it.
One part is natural, inevitable it cant be fixed. When you borrow too much money, you have to pay it back. Or default. Better to do it as soon as possible.
read more http://www.marketoracle.co.uk/Article30618.html#comment119254
