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 depressionÂ…
Â…with the US consumer unable to spendÂ…
Â…the Chinese economy slowing downÂ…
Â…and Europe preparing for defaultsÂ…
Assets should be going down. Except for US Treasury debtÂ…which should be going up. ThatÂ’s 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. You’ll 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 banksÂ…the insurance companiesÂ…the automakersÂ… About the only industry that wasnÂ’t bailed out was the financial publishing industry. Guess we didnÂ’t send them enough campaign contributionsÂ…
Then, the Europeans and the Americans bailed out each other.
And theyÂ’re still bailing. The US is running a budget deficit so large that weÂ’ve lost track of itÂ…was it $1.5 trillion? $1.8 trillion?
And the Europeans are preparing another big bailout for GreeceÂ…ItalyÂ…and who knows who else.
And every bailout makes the world poorer. Because itÂ’s clearly bad money after good. Greece does not suddenly become a good credit risk just because you lend it more money. And Americans wonÂ’t be made richer because the feds offer them more debt at an even cheaper rate!
The problem is that doing more of something that doesnÂ’t work is not a good idea. When you lose money on every sale you canÂ’t make it up on volume! Nor is it a good idea to put more money into an investment that isnÂ’t paying offÂ….or to allocate more resources to an industry that stopped producing real benefits a generation ago.
Yes, that’s when the education industry turned sour – in the 1970s. Since then, it’s 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 isn’t 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.’ Let’s 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 we’d fix the situation. We were being serious. We’re always serious. And earnest. And trying to do our best to help.
But thatÂ’s not all we would do. The problem really has two parts to it.
One part is natural, inevitableÂ…it canÂ’t 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 depressionÂ…
Â…with the US consumer unable to spendÂ…
Â…the Chinese economy slowing downÂ…
Â…and Europe preparing for defaultsÂ…
Assets should be going down. Except for US Treasury debtÂ…which should be going up. ThatÂ’s 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. You’ll 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 banksÂ…the insurance companiesÂ…the automakersÂ… About the only industry that wasnÂ’t bailed out was the financial publishing industry. Guess we didnÂ’t send them enough campaign contributionsÂ…
Then, the Europeans and the Americans bailed out each other.
And theyÂ’re still bailing. The US is running a budget deficit so large that weÂ’ve lost track of itÂ…was it $1.5 trillion? $1.8 trillion?
And the Europeans are preparing another big bailout for GreeceÂ…ItalyÂ…and who knows who else.
And every bailout makes the world poorer. Because itÂ’s clearly bad money after good. Greece does not suddenly become a good credit risk just because you lend it more money. And Americans wonÂ’t be made richer because the feds offer them more debt at an even cheaper rate!
The problem is that doing more of something that doesnÂ’t work is not a good idea. When you lose money on every sale you canÂ’t make it up on volume! Nor is it a good idea to put more money into an investment that isnÂ’t paying offÂ….or to allocate more resources to an industry that stopped producing real benefits a generation ago.
Yes, that’s when the education industry turned sour – in the 1970s. Since then, it’s 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 isn’t 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.’ Let’s 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 we’d fix the situation. We were being serious. We’re always serious. And earnest. And trying to do our best to help.
But thatÂ’s not all we would do. The problem really has two parts to it.
One part is natural, inevitableÂ…it canÂ’t 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
