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His Rosy Outlook Ignores Reality

By Rick Ackerman Posted on March 9, 2011, 12:01 am EST Last Updated March 9, 2011, 2:48 am EST

(My response to Mario Cavolo’s “rosy” economic outlook kicked off such a spirited discussion in the forum that I am letting it run for a second day.  Let me mention, however, that Mario himself has spurned my “optimist” label and said that he sees no roses, only reality. He lays out his case in a post that, as of early Tuesday evening, could be found at the end of the discussion thread. RA ) 

No one doubts that optimists like you will be essential when it comes time to rebuild the economy.  Might I suggest that you save your energy for later, when it will do the most good, rather than risk squandering even a small amount of it arguing in a forum where you’re outnumbered twenty to one? Much creative destruction remains to occur before America can get back on track, and only a great deal of pain can bring about the epiphany that the illusion of our economic well-being has been sustained entirely by lies.  (Fortunately, that is not true of our economic future, since Yankee know-how can never be counted out. But merely financing Yankee know-how will require re-allocating capital from a still-vastly overvalued financial sector to one that efficiently turns out real goods and services that the rest of the world vitally needs.)

For the present, however, The Great Recession has dealt America’s standard of living a mortal blow, steepening our decline in ways that are likely to continue for perhaps a generation.  The upper strata of earners has not gotten away unscathed, as you would have us infer, even if the fraudulent, Fed-engineered stock market rally launched exactly two years ago has eased the pain of their dot-com and real estate losses. The stock market must now crash too, since it is buoyed by an all-but-irresistible tide of funny money.  Ultimately, however, nearly all classes of assets save bullion, farmland and a few others are destined for collapse as well, since current valuations are based on a money system whose basic unit of measure is an already worthless dollar.  The rentiers and middle class are not going to escape this inevitable phase of our economic cleansing.

Colleges Selling a Hoax

I don’t have the time to refute you point-for-point, but to take just one economic “positive” that you’ve cited – the fact that U.S. colleges are not deserted – it is possible to argue that the colleges are as big a fraud as our money system, channeling more and more undergrads toward worthless graduate degrees (how many more young lawyers, for one, can the system absorb?)  because there are presently no jobs for them.  You of all people should be acutely aware of this problem, since it is hugely worse for China, where even kids with the engineering degrees that their American counterparts have disdained cannot find jobs in the city above the sweat-shot level.  It is not possible to overstate the potentially dire consequences of this for China, especially if exports to the U.S. dry up.

As further regards China, surely they recognize that their USA partner is a Ponzi scheme operator – a book-cooking, funnymoney-printing, lie-peddling swindler who will eventually take them down. Just recently, for instance, following a report in the London Financial Times that the Federal Reserve had supplanted China as the largest holder of Treasury paper, the U.S. Treasury rejiggered the numbers so that China came out on top.  It is disconcerting enough that Treasury can swing these totals by, in this case, more than $200 billion while evidently making it impossible for anyone to ferret out the empirical truth. But what makes the adjustment all the more insidious is that it was intended to make the public believe that China is confident in the U.S.   Bloomberg news, for one, appears to have swallowed this load of crap in toto, reporting that “China’s Treasury holdings underscore the [Chinese] government’s confidence in President Barack Obama’s stewardship of the economy.”  Yeah, sure.  This stench-ridden subterfuge was not reported widely if at all, but it was duly noted in the latest edition of The Privateer, a superb newsletter published twice a month by Aussie Bill Buckler.  China, for its part, has not commented on the “adjustment.”

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  • cosmo March 9, 2011, 9:16 pm

    Thanks Mario for your extensive replies to many questions. To debate is educating, to attack is ignorance.

    It is very helpful to have someone with your perspective join(provoke) discussion. I lived in India for a few years recently and wondered about the differences between Chindia, having not been to China. Now I have a better idea, although, I admit, actually going to China would be better. So thanks…

    A few points: Yes, the USD is the reserve currency and Euro is alternative. RMB may one day be the leader, but without intl acceptance it is just another domestic(soft) currency.

    I understand your “relative” values regarding each currency, but as Steve often points out, the intrinsic value is zero and, therefore, the entire system is built with a foundation of air. The monetary system is nothing more than a means of keeping score where the value of the score keeps changing(down). I will stand with history on the future of the USD. Fiat currency has a 100% failure rate. The USD will be no different.

    You say 100 million folks in the US are doing better than ever. How do you come up with this number? If I were to guess, I’d say 10 million at the most. But, more importantly, for every one that rises to the top, how many fall to the bottom. It is that ratio(which I’m sure has been rising) that has America in decline. Not the number at the top that you claim will save the day.

    I look forward to you continuing to share your unique perspective. BTW, if “your wife’s mother in law is expecting”, congratulations on your new sister in N China? I guess they also have some funny familial relationships too. 😉

    • mario cavolo March 10, 2011, 3:09 am

      Hi Cosmo, thanks for reminding me that its the “relative” value I lean toward in my arguments and i still don’t understand how the USD can go to zero relative to say, the EURO..or shall they both go to zero together while we fiddle?

      Your other question, see my comment above to John, there’s a need for a deep, time consuming analysis….

      Cheers, Mario

  • John March 9, 2011, 7:20 pm

    steve
    everything I’ve said is truth. I never said new hummers. my point was about the price of gas doesn’t seem to bother them. my grandchildren will not owe anything because it will all be erased by the push of a button at some point. its a digital debt.
    Rick
    I live in a middle class to maybe slightly above middle class suburb of a large us city.
    I don’t see soup lines, I don’t see people wearing rags,I do see grocery stores FULL of fresh food, I don’t see people throwing themselves out of windows, I see profits up, I see apple still selling Ipads for $800, I see parents paying thousands for education, I see parents paying thousands so their kids can play club sports, I see lower end car dealers out of business but middle and higher end dealers doing fine.
    lifestyles have not and will not change for the majority of americans. not in the next 20 years anyway, that I can see.
    I understand the need for caution or there are some warning signs. But most of you doom and gloomers ( and I used to be one of them, I just can’t go thru life any more believing the world is going to end “someday very soon” ) are looking in the closet for boogiemen that are not there.
    and as i’ve stated before if it comes to it RESET will be hit. and all will be fine…take a pill. its not happening.
    are we in a hole? yes, but we’ll dig out, one way or another. personally I believe we should take it out of all those scum bags on wall street and government that caused this mess( the debt). out of their wallets and beat the crap out of them. several times a day I ask, WHY isn’t anyone in prison for what happened?

    &&&&&

    If you’re interested in expanding on this in a short essay, contact me at rick(at)rickackerman.com. RA

    • mario cavolo March 10, 2011, 1:40 am

      …great coming Rolling Stone article on that last question of yours John….

      Meanwhile I suspect alot of the arguments here are rooted in not agreeing what % of the population are the ones you and I are referring to in our arguments that there is part of America that is doing fine and in many ways better than ever. I’ve often said something along the lines of “100 million are screwed over, with their lifestyle in decline, and that leaves another 150 million plus in the middle, upper middle and upper income strata doing much better than ever” , suggesting that this group is economically much stronger and larger than others suppose. At its root, same as you, that is what I observe, but of course let’s admit such comments are also in danger of being too general even though I see that same clinical evidence. A thorough treatise and analysis of all the points in question would take months and make a great book, but I’m afraid it still wouldn’t settle the arguments.

      Cheers, Mario

  • Steve March 9, 2011, 7:01 pm

    There seems to be one constant. Where ever the majority are parked, or headed is the wrong place to be.

    The majority believe the U.S. is a democracy.
    The majority believe the stock market is ‘free market’.
    The majority believe federal reserve notes have value.
    The majority in the U.S. believe they are Free Men.
    The majority believe . . . . . .”
    My house is. . . . so everyone else’s cannot be . . . .
    My job is. . .so everyone else is . . .

    Find the majority and; “believe” they are wrong, that is the constant.

    This site does not represent a majority, but; in fact a minority. What is the thinking of the real majority? Find it in real terms. Then run the other way.

    • redwilldanaher March 9, 2011, 7:13 pm

      Great post Steve.

    • mario cavolo March 10, 2011, 1:29 am

      Great Steve…especially the idea that the stock market is a free market…its a freakin’ private swindler’s club…ah! wow, its the ultimate SOE! just like a Chinese stated owned and controlled enterprise. Everyone else like me with a computer and a semblance of intelligent analysis software and advisory sites hooked up to it is like a spectator sitting on the outside of the glass wall trying to get a clue what’s really going on… oh, longing to be a fly on the wall of those hallowed trading desks 🙂

  • gary leibowitz March 9, 2011, 4:22 pm

    Now that the economy appears to be gaining traction I wonder why the dollar isn’t sprinting up from these levels. If you want to try out a conspiracy theory why not one where the US dollar is being held back. A stronger dollar will have very bad consequences for this burgeoning economy. As for the deficit, the idea that we must tackle it with a sledgehammer is one that is being proposed and most likely enacted. It will devastate this recovery. The first and most paramount obstacle to tackle is municipality’s huge deficits. An easy solution is to create union envy and demonize them as lazy. Once unions are busted and pension promises broken the budget will become very manageable. The next to be hit would be the poor and then the old. Medicare and social security will be trimmed within the year.

    Why is everyone ignoring the 2000 pound gorilla? I find it amusing how politicians can play the blame game without bringing to attention the very wealthy. By all measures the top one percent of this country’s wealthiest has made a parabolic move up leaving the largest gap between the rich and poor ever in our history. 10 trillion dollars is not chump change. It certainly can’t be argued that without it this economy would be far worse off. It can’t be argued that studies have shown the trickledown theory is valid. It can’t be argued that they receive the brunt of the pain.

    There is meanness in the atmosphere. The Republican Party has latched onto the public anger and has managed to divert that anger at whatever target they choose. It is sad and possibly a low point in our history. A sense of fairness, empathy, and common sense should eventually come back.

    As for the juggling act between externally induced inflation (commodities and third world countries growing pains), deficit reduction, maintaining a low US dollar, propping up a fragile economy, the end result is always the same. It can’t be done.

    • Steve March 9, 2011, 7:06 pm

      Gary, the start toward a low point was 1861, the extreme in carpet bagger mindset started into action in 1867. The turn to mobocracy started and infringed its way to today, where no one cares as long as they get theirs. Today is the ultimate Carpet Bagger scheme at all levels.

  • Caz March 9, 2011, 12:12 pm

    I talk to everyday people, some with grad school degrees. They don’t know what inflation is, and they don’t even know we live in a republic. The lords of the media can shovel any propaganda they want on this uneducated populace called the USA and get away with it. It will be interesting to see how many generations it takes to regain freedom. Rome had it for 200 years, we had it for 200 years, and there were 2000 years in between. Will history repeat itself?

  • ricecake March 9, 2011, 6:16 am

    Optimism can lead you buy in the high, just like Pessimism can lead you sell in the low.

    I prefer take a nap. Forget about investing at time like this. Too much anxiety, confusion, and uncertainty. Too many crooks scammers out there running.

    As to the “worthless dollars” Well if you think dollar is worthless why not give your dollar to me? I would be happy to take them. The more the better. LOL.

    It’s the coolest thing to do these days to stir the public’s fear of money print and dollar devaluing to zero. But remember all that trillions of dollars went to the “money heaven during the 2008 – 2009 crash? They just simply disappeared over night regardless so much money had been printed by the Green Span Fed. So money does has life expectancy. May be my cash will lose some value over time, still better than their leaving me going to the “money heaven.” going disappearing on me. Or fallen into the pockets of the high handed thieves’.

    Don’t you think?

    p.s1. China’s afraid of the U.S more than the U.S’s afraid of China. The banker is terrified that his trillions borrower can’t pay him back.

    p.s2. The shrinking middle class: Partly they have themselves to blame too. Because too many of them are getting to rely too much on the “talented” and the “Rich” to provide job and security for them. They spend beyond their means. They are pretty selfish. They got to used to, too comfortable to sit on the high horse back so they can’t get down and walk when their horse’s dying.
    Many of them are now waiting for the high pay jobs to come back. Very few of them would do the lower servicing jobs which done mostly by the illegal / legal new comers. I knew a Chinese surgeon was chopping fish head in a supermarket after immigrate to the U.S. So he could send his kids to college and support the family.

    • Cam Fitzgerald March 9, 2011, 8:30 am

      You crack me up Ricecake! I like to go for naps too when it all gets to be too stressful. In fact it is about time for one now.

    • mario cavolo March 9, 2011, 9:03 am

      Rice Cake, you earned the poignant offbeat wit gold star. 🙂

      Cheers, Mario

  • Brad March 9, 2011, 5:37 am

    I suggest we are likely to experience the stock market and precious metals advancing over the next two years or so. Inflation is beginning to show up so both should benefit. The inflation may lessen the possible / coming correction in the stocks to 10/20% and will cause PMs to continue to adjust appropriate to how many dollars it takes to buy them.

    I also wonder, what role religion plays in this. The bible says we need to have a global currency and a global government before we can get to the tribulation / armagedon. If we accept today’s Israel to be the Bible’s Israel, then 1948 is the beginning date for Armageddon to occur within the lifespan of the people alive at that time. A biblical lifespan is 120 years, which makes 2068 the outside edge of the end of Armageddon.

    I think there is very little reason for the stock market to be as high as it is using fundamental / technical logic. All of you are better at charting than I. However, in order for us to biblically fulfill the one world government and currency, we need peace and prosperity amongst all peoples. That will require uncooperative governments to be toppled, which is happening. We need the currencies gradually weakened and replaced by one strong currency that gives all people the chance to buy things equally among the nations, no one nation to have an advantage over the other.

    So, the stock market will go up which will help create a world wide peace….and PMs will go up reflecting the devaluation of the various currencies.

    Mario is therefore correct in his optimism. Not to say what he thinks, I do not live inside his brain, but it seems he is not optimistic for the middle / lower class nor optimistic for the financial elite. But, the markets will go up with little causing delay nor uneven growth.

    • Steve March 9, 2011, 6:40 pm

      Brad, many theory bases which are not supported historically, or factually. QE2 stimulation. How much can one create with fraud? Your unborn child is 450k in debt and a slave “debtor in possession” where 70 years ago a child who quickened was debt free and had the Right of Inheritance to Land, not a Fee. Today the fetus does not have the Right of Inheritance of the Fee (Law of Escheats) until “it” completely exits the womb (14th voluntary political act, or 14th Amendment). Big change in 70 years – Right to Inherit the Common Rights of a Common Man, to the privilege to be enslaved upon exit from the womb into legislative control.

    • Brad March 9, 2011, 8:42 pm

      Steve,

      I’m not sure I understand your points. I think you’re suggesting that religion, because it requires faith in something that isn’t readily quantifiable….doesn’t affect the markets. I must respectfully disagree.

      Millions if not Billions of people around the world believe in bible prophecy…and they’re going to act on those beliefs. Those actions will affect markets.

      I suspect that those at the top of our pyramids, that are controlling the markets, believe in prophecy. I think we have a group of satanist trying to create a situation in which prophecy can be fulfilled. We are in a battle for the souls of mankind, the money and other stuff are side issues that allow manipulation.

      The controller’s actions and reactions can be surmised in advance if we think in terms of what has to be done to fulfill prophecy. Thus, we can make money in the markets based on what we believe those whom believe in prophecy believe.

      I don’t think all the technical charting in the world is going to be all that effective at times…such as when the market went up in 50 pt segments each day over a several month period of time not so long ago. Charting didn’t show that, the plunge protection team did that or whomever but it surely wasn’t random market action.

      Have I missed your message entirely or what? I may need more words to fill in my lack of knowledge. I suspect I don’t know what you know.

    • Steve March 10, 2011, 7:08 am

      Brad, in depth discussions on religion are best kept in another realm, or in a more private setting. The end of times is not to be known by Man, or calculated. The believer is to be prepared NOW. The rest is best left alone, except to say that a flawed theory creates a flawed answer.

  • Gary March 9, 2011, 4:57 am

    I spent 800.00 in gas last month driving a Nissan Titan around the Alberta oil patch, this month will be 1200.00, = to 5.00 a gal US. Our product comes from Houston, transport companies are putting on fuel surcharges which we pass on to our customers.
    Three cords of birch delivered is 1200.00, we heat with wood partially, and it has been a brutally cold winter. Our produce comes from California & Mexico via truck and rail. 28.00 for three Striploins at the grocery store.
    12.00 for a deck of smokes, and 27.00 for a 26 oz of CC
    The Canuck buck is 1.02 right now and buys far less than it used to, plus I have a recycling tax on batteries, oil changes, computers, tires, razor blades will be next.

    Got Gold, Silver, Chickens, Farmland, your going to need them when this Ponzi collapses.

    PS Deposit 8K cash in the bank, they charge you a cash deposit fee 32.50

  • Larry D March 9, 2011, 3:57 am

    Interesting stuff, Mario. If these things are as you say, it seems that China is turning away from some of the things that contributed greatly to their rapid economic rise.

    Do you see your own future as a resident compromised?

    • mario cavolo March 9, 2011, 8:55 am

      Hi Larry,

      Yes, it is troublesome and that is correct. I have had moving to Hong Kong on my mind this past couple of years where society is more civilized and far less constrained in a myriad of ways. Well, even so, tolerating the difficult things yet also benefiting from the advantages, after ten years mostly on mainland China, I admit its getting a bit old. My work follows client/business interests and projects so I would seriously assess all parameters including a possible relocate. My wife’s mother in law up in northern China prevents us from leaving the Pacific Rim. She’s expecting by the way! 🙂

      In terms of compromise, we could say my biz blog site makes me “media” and in that regard, you’ll notice that I make no discussion of anything related to the possibility of protests in China, uprisings, etc. That is a conscious choice, right alongside my close friend who works for a highly visible biz org here who reminded on the phone to not even say the word “Jasmine” on the line, as I was referring to my acupuncturist whose name happens to be Dr. Jasmine. This is real, Chinese believe in and act strong on the idea of nipping things in the bud. Hence, they are control freaks on information. While on the other side of the extreme, America has allowed far too much supposed freedom which has ruined it for everyone else.

    • redwilldanaher March 9, 2011, 6:43 pm

      Hi Mario, I’m not following this:

      “While on the other side of the extreme, America has allowed far too much supposed freedom which has ruined it for everyone else.”

      Could I trouble to elaborate on that? Thanks.

    • mario cavolo March 10, 2011, 2:44 am

      RWD,

      Lots of point here… the excess focus on “individual” freedom and rights in America including the misery from Miranda, gun rights, metal detectors in high schools, screening little old ladies at airports, etc., has made life for the society miserable for the rest of the community to protect the individual to the extreme and unreasonable, all in the name of protecting the individual spoiling the community…I remember a case where a high crime community in Chicago wanted to install metal detectors and the ACLU stepped in saying it was unconstitutional, etc….so meanwhile grandma and her tots live in fear, can’t go for a walk at sunset because the gun-toting drug gangs can be gun-toting drug gangs…ridiculous, unfortunate liberal crap like that…..my friend and partner Dr. Al in Los Angeles two weeks ago reminding me that people really and truly don’t honk at other drivers for fear of being shot, he’s not kidding at all….ridiculous, unfortunate liberal crap like that…the kind of stuff that spoils normal, daily life for good people…not being able to look at a woman’s cleavage, even though she’s showing it to you, for fear of being accused of perversion and then forced into a counseling program or lose your job….ridiculous, unfortunate, twisted liberal crap like that….only in America the land of the free.

      Freedom? Here’s another one: Get on your family motorcycle, your wife hops on the back holding your 2 year old child. How we doing so far? Now weave your cycle in between public busses, cars, tri-wheeled carts and a few thousand other cycles and bicycles. Don’t, by the way, wear helmets.

      Result in America: concerned citizens use their cell to call 911 AND Child Protective Services. You not only get a traffic ticket, you get arrested, labeled an irresponsible abuser and endangerer of your children, an unfit parent, AND your children are taken away from you, split up and put into a group home. In America where there’s more freedom than China?

      In China, in fact, especially in the big cities, you are not allowed to add the 3rd person on the motorcycle, and a really pissed off cop will yell at the driver, probably ticket him, even may be if he’s really pissed, make them get off the bike and pay a fine to go pick it up at the impound lot. Very inconvenient and reminding the driver that the limit on motorcycles is two people, skip the kid. Reasonable?

      The rest of the world laughs in disgust at what America has become and we can go on and on about this kind of lunacy, this kind of outrageous lack of freedom there.

      Freedom: In China, they say to a gang on the street you can’t BE a gang on the street! Amen to that!! This is the rule, “Hey go home now. You standing here with your guns is interfering with the peace and quiet of the family community and we won’t allow that and you don’t have the right to spoil the neighborhood. No guns and what you individually want is not the the most protected thing and not best for the society.” Every apartment complex has security guards, even in what we call “lower” income areas, there is very little crime. No fear, that’s true freedom. If an American wants to save money and move into an apartment for $500 per month, that’s a GREAT idea to save money! But they can’t because that neighborhood is dangerous. So a nice, innocent group of young college students can’t do that to stay on a low budget. That’s NOT freedom. That sucks. And that kind of endemic societal daily life problem doesn’t exist here in China where supposedly we have less freedom than in America.

      Makes sense to me and grandma’s like me alot.

      Admittedly its very tough for any society to find that balance between what is best for the community and what is best for the individual. China is still extreme on one side while America too extreme on the other.

      On my trip to the states last month it was easy to notice how paranoid and hypersensitive people all around me were about offending anyone else or being impolite in some way..I told a friend everyone is being hyperpolite out of fear of offending anyone and getting in trouble…it was quite obvious and weird, its societal, a result of the combo of societal brainwashing and rules which exist there and are mostly fed through the media/TV. Watching and listening to “talking head” America was a very disturbing experience, everyone’s brains being fed all that crap all the time, a dozen shows a day all day long, really nuts…a noticeable, palpable fear in the air that they could get in trouble if they did or said something inappropriate…oh, you need counseling for that!! Good grief America: Counseling Central. Here in China there’s 1.3 billion people dealing with life, where’s the AA and Codependents Anonymous meetings? ….and billions in Prozac being prescribed?…none of it exists here…sorry, not none, very little. Incredible root differences between two societies with implications of the difference between emotional freedom and legal freedom.

      That’s what I meant.

      Cheers, Mario

    • redwilldanaher March 12, 2011, 5:41 pm

      Give it time Mario. Media, Pharma, “culture” etc. haven’t had the time to work their magic in many societies quite yet. The USSA has been a great laboratory and this r&d has already been leveraged many times over.

  • Jim N March 9, 2011, 3:00 am

    Mario, how i so enjoy your posts and learn just a whole lot. I have a couple of comments and also a real question that perhaps you and others could answer as you brought it back to mind.

    First off, i am thankful that your father is doing well in his restaurant. I know of other restaruants that are doing well. In one my prior lives, i directed the construction and development of a well known retailer that had some 600 retail stores throughout the US, Canada and also Japan. As we analyzed how they did on an individual basis, there was just too much “noise” to use an individual store sales data as a gage for how things were going nationally. At best, we could identify and analyze regions. Sometimes we would have well performing stores doing blockbuster business, and the ones around it, who ususally did better than that one, had very poor business. Sometimes that would reverse in a week or month. I think it is a lot like trading a 1 minute chart vs a daily chart. There is just a lot more noise to a smaller sample of data than a larger one. Might be that Dad just has a killer pizza that we should all phone in for take out! Might be that a couple of pizza places nearby just closed. Who knows. What would be a more interesting read is how restaurants are doing in general. Maybe i go have pizza now, which looks good for the pizza place, but i do that instead of the nice sit down restaurant that i used to visit but can’t afford now? Just a thought.

    Now to my questions. You mention that the USD, EUR and RMD are the most important ones. I know the RMD is pegged to the USD and there are so many discuusions about making it free float. So my questions is that as global issues become more intense, why won’t China just let their currency float like the other world currencies? I’m sure they use this for their own trade advantage….but what do you see happening to it when they let it go on the free market. Isn’t that where we REALLY get a price discovery one way or another? In the back of my mind, i remember my travels for many years into e europe and the Soviet Union and how those currencies which were on an official level, pegged to the USD, but at the grass roots level where i interacted and traded $$, the difference could be as much as 25 to 1.
    How can the RNB be so important if we don’t know its true market value and it is only used in one country? It is important in China, but is it really important in other places? Gee, i guess that is more than one question, but i would like to get smarter in this area. I value your perspective.

    my best to all..
    Jim

    • mario cavolo March 9, 2011, 3:42 am

      Hi Jim,

      “…but what do you see happening to it when they let it go on the free market…..”

      Um, snowballs in hell first Jim.

      China will play the global economic gain to their own maximum advantage, they will only play as nice as absolutely necessary to their own ends and interests. There is a no “warm and fuzzy welcome the world to our wonderful country” tune being played. They are fabulously, impressively, dangerously pragmatic and disciplined. Since Beijing Olympics ’08, they are not making things easier to do business with, to do business in their country, to live here, etc; if anything they are making things harder with an increasing political and economic arrogance which has all other parties genuinely concerned. They are now a world player but not acting as a world leader; primarily because they genuinely have still too many domestic priorities to change their focus. This is the tone of the commentary on China from the highest business and gov’t thinktanks, companies, orgs, etc. whose role is to research, appraise and report on such matters.

      Cheers, Mario

  • mario cavolo March 9, 2011, 2:41 am

    Aprov

    You come to this board new? I find myself observing that you offer comments with a rather pronounced level of arrogance, sarcasm and rhetoric that is not typically found here. Save it.

    Meanwhile, that financial system imploding question; two years ago it WAS exactly on that very disastrous edge and within a 72 hour period decisions got made to avert it. (There was a TV interview with a respected insider who was there in the middle of the crisis, though I forget the details and I’m not a banking/economist expert to explain it further)

    Meanwhile there are a very bad systemic dangers in the banking system which could precipitate further nasty Black Swan events and responses…not so far fetched. Even though I believe that such events will not, for example, destroy the USD or other farther extreme results.

    Mario

  • mario cavolo March 9, 2011, 1:44 am

    It is easy to dole out heaps of appreciation for Rick’s insightful and intelligent way of presenting the economic, political and societal problems America faces and has created for everyone else by its banking system shenanigans. But to then throw out the baby with the bath water is just overdoing it a bit, even though the bath water is indeed more foul than ever. The points which he and others here make are so incredibly important to be aware of. Yet, if someone like myself weren’t offering some of the “other” views to stir the pot, I’d like to believe the forum would be perhaps slightly less stimulating and helpful to Rick’s forum readers.

    Why, in a normal, demographically mixed Scottsdale (Phoenix) neighborhood is my family’s 20 year old large pizza restaurant having the best sales ever in years, this month? That’s an inexplicable, accurate micro indicator that somehow, some way lots of economics have improved & shifted, not horribly deteriorated in the “normal” daily life. Those of you who don’t see it, are perhaps filtering too much of the good and are too close to the pain of the bad. Tell my father that business still sucks, he will dismiss you and show you the inexplicable sales report to shut you up. No, there were no special events are sudden changes nearby to cause such an effect. So, don’t ask me to ignore it, notice it and similar realities all around you.

    Rick’s forum is above all a fabulous place to learn, not to be right or wrong. When I take my attempts at intelligent approach and context on topics to the forum, they are met in response by points of view and knowledge we never would have found otherwise. It is valuable to challenge and be challenged. Jim N’s comment yesterday, for example, what a great read on what’s wrong, that really caught me, and that’s not to take anything away from so many of the others too. Being one who has an advisory firm to executives in communications/media/PR, I encourage all of us to never forget how the written word, how media, can so easily spin, mislead, misreport, even brainwash, with Rick today offering a perfect example.

    Some of those nasty problems in America are her own doing, no need to review the litany of offences herein, enough to make one go postal with frustration; others are the result of outside influences, fundamental shifts in the cycle of global socioeconomics. Today’s world stage brings us a dramatic, scary show; a debt-ridden, politically impotent West dancing with a rising East; the rise of Asia led by an increasingly arrogant China.

    I easily disagree with Rick’s description of me as one who has a rosy optimist’s view. I will suggest that I wish to be thought of as a clarifier and a realist, I will notice what others filter.

    I am not an optimist and not a believer in doomsday scenarios, I accept the most likely view which is the moderate view, for example, that the USD will fall in value 15-30% over the next 1-3 years into a new lower range and as it does, the values and costs and yields of other asset classes will also move up and down reasonably, even creating trouble for some and good things for others. That’s not optimism, its just my belief that the whole system does not in fact need to be blown to smithereens to start fresh, which I view as an even worse, ridiculous idealism. I believe that in the end the ups and downs of the various asset classes will balance across the global economy; and that then means along the way certain population groups will get beat to hell and the #1 group on that list is the U.S. lower and middle class. Nothing optimistic for them. But, for example, on planet earth, that’s a group of 150 million against a rising middle-class group of 500 million in the APAC region, people with more cash than anyone in the West can imagine (public and private), a region with an unmeasured cash economy in the trillions. If a couple of asset classes go up or down too far across the globe, others will respond and it will all keep moving, rotating above and below, reverting to “the mean.”, while also spawning new ideas and industry and invention as needed. America will be part of all of that, America is at the center of all of that, even with all her problems. Yet not optimism, America is now morphing into a society something completely different than its post-war vision and dream; we get the sense it is “breaking up” as we know. Its very sad as I think of the immigrants including my family who landed there 100 or so years ago.

    So let’s talk about “the mean” across the global economy. It is a declining or rising mean, its a downward shifting bar for some, an upward shifting bar for others, all the while various asset classes swinging above and below it. Unmistakably the intrinsic value of that mean is declining via inflation/currency devaluation.

    So imagine that the default state of affairs is a steadily falling bar. That’s a key point, symbolizing inflation/currency devaluation across the globe for the past 30 years. Yet while the bar is falling, there are various balls moving all around it. Some of those balls, lots of them in fact, are rotating and ascending upward above the bar, others are rotating and descending to the downside of it. Its all in a state of flux, as all things do become more expensive for everyone, but for different groups of people across the globe, life may be on the rise or on the decline for people relative to that default state falling bar depending on their fate; location, industry, timing, etc.

    Meanwhile, perhaps there is some type of nefarious Illuminati Soros Rothschild Rockefeller Mafia DaBoyz GS Corleone group who truly want and can economically annihilate our existence, the USD to tank, oil to $500, or whatever, to megalomaniacally destroy and rebuild. But for them to think that along the way, that direction will, for example, be passively OK with the Chinese who won’t react and respond in some way, they are in for a rude awakening. Do we remember WHY Fannie & Freddie got saved? Because the Chinese knocked on that door and said you better damn well save them or find someone else to buy your Treasuries. When that whole scenario becomes unsustainable, it will shift into other sets of economic parameters, and I doubt a worthless USD will be one of them. The 3 most important currencies on earth are the USD, EURO and RMB. To suggest that one of them will or should “collapse”, is just so extreme in nature I feel it doesn’t belong in an intelligent discussion that is trying to manage reality. Its like locking your doors and windows because there was a murder in your neighborhood 10 years ago.

    So I’m suggesting is that for every set of economic movements and reactions, there’s a corresponding set of movements and reactions, a scary economic detante, like an atom, will hopefully keep any one particular proton or electron from spinning too far out of the field. Meanwhile, for those who are in the wrong place at the wrong time, which is not everyone, there are in fact many life/society adjustments that will have to be made and which will show many people that they didn’t need much of what they thought they needed to have a satisfying life.

    And so I believe we will see the rise of the normal, minimalist Asia/China/India lifestyle in America, out of necessity, that’s the fate of the lower/middle class there. The government will have to at some point force the rich to pony up much higher share of their wealth to support everyone else in the society who has been marginalized. Very tough stuff.

    Cheers and thanks always to our dear Mr. Ackerman,

    Mario

    • Cam Fitzgerald March 9, 2011, 4:26 am

      .
      God loves you Mario so I won’t be one to jump on you because we need optimists like you more than ever.

      Personally, I often slip into denial about what is really taking place in the economy and especially with regard to decisions made by those governing us. When I really look at the hard numbers it actually makes me sick to my stomach. What the hell can be accomplished by destroying our economies after all?

      You would really hate the conclusion I have come too.

      On the issue of success in the Pizza business at this time I will only add that I think people seek solace in food.

      During the Depression, coffee houses sprang up all over the country and any place for regular stressed out folk that was a place of social gathering was a success (at least relative to much of the rest of the economy).

      I am not sure that a booming trade in pizza is really a sign that everything is improving. But I wish it was.

    • Steve March 9, 2011, 6:31 pm

      Mario, I also appreciate your words. I take exception to a bunch of pent up need to feel good buying pizza with credit cards, in inferior federal reserve notes. Holy Cow ! When I was 21, 500 bucks a month and one could live good without the wife not working.

      Numbers are important Mario, but; reality of how the numbers are created are more important. Arizona, the state of Snow Birds, who’s retirement accounts with the Federal/State Government are OKay and getting better because of QE2 Stimulus that is just about to run out. Winter Arizona population is ‘pumped’ by federal and state retirement folks. Yes, people are creating more debt in a social need to feel good by buying “pizza”. Thanks again for the perspective from China. It is useful.

    • Other Paul March 9, 2011, 6:59 pm

      Mario: “…certain population groups will get beat to hell and the #1 group on that list is the U.S. lower and middle class….”

      Mario,

      I agree with the above assessment.

      Many of those on fixed pensions / welfare have received CPI-related adjustments over the past couple of decades. The last group of the Greatest Generation and the bulk of the Baby Boomers have made those adjustments possible through a steadily rising wage / salary base to support those increases.

      I am afraid that with the passing of the Boomers into retirement, and almost complete gutting of higher wages jobs for JoeSixPack, the remaining US workers will not be able to afford to keep the Boomers living in the style of the Greatest Generation’s retirements.

      A slow erosion in the value of the US$ has been the choice of the US Gov’t and Federal Reserve since 1913 (with inevitable serious breaks from the trendline during those decades). I’m not as optimistic as you as to whether the range will be confined to 15% to 30%, especially with indefinite trillion$ + US budget and trade deficits.

      Thanks for your contributions and respectiveful answers to your challengers’ comments.

    • Ful_karboy March 9, 2011, 7:35 pm

      “The government will have to at some point force the rich to pony up much higher share of their wealth to support everyone else in the society who has been marginalized. ”

      I appreciate your insight Mario but have to object to this. There’s just not enough “rich” people to afford the present welfare state with the ever growing Gov bureaucracy hobbling businesses and competing with business for funding.

      One article I read awhile back stated that if you confiscated 100% of “the rich’s” income we’d still have a deficit. Seems a lot more logical IMHO to reduce Gov spending and handouts to all but the most needy. Lessening the regulatory load on business and increasing energy production here would help increase growth.

      The fallout from Gov tax laws that encouraged housing speculation and community activists forcing banks to lower loan standards will take some time to wear off.

      Cutting Gov red tape, tort reform to lower “defensive Med practices and malpractice insurance would put more spending money in people’s pockets. Some lawyers might then be unable to afford 28,000 sq ft houses, mistress payments and self-financed political campaigns {John Edwards} but perhaps we could remind them that it’s good for the poor and goarbal warming?

      Members of the present administration that aim for us to have euro-style gas prices have no idea of the real world…

    • Robert March 10, 2011, 1:01 am

      “in a normal, demographically mixed Scottsdale (Phoenix) neighborhood is my family’s 20 year old large pizza restaurant having the best sales ever in years, this month? That’s an inexplicable, accurate micro indicator that somehow, some way lots of economics have improved & shifted, not horribly deteriorated in the “normal” daily life. Those of you who don’t see it, are perhaps filtering too much of the good and are too close to the pain of the bad. Tell my father that business still sucks, he will dismiss you and show you the inexplicable sales report to shut you up. No, there were no special events are sudden changes nearby to cause such an effect.”

      Hi Mario-

      I think there IS in fact a perfectly valid cause to the effect of your father’s pizza place seeing increased sales.

      Scottsdale has the highest average per capita income (by a factor of 2) of any incorporated city in the state of Arizona. The towns of Paradise Valley and Fountain Hills are a little bit higher, but both are merely suburbs of Scottsdale so let’s just say that the Scottsdale population complex is the wealthiest region in Arizona.

      Now, here is a short list of SOME the traditional “high end” restaurants that have closed in Scottsdale over the past 24 months:

      El Chorro Lodge- been in business since the early 1960’s
      Cin-Cin
      Mosaic
      Canal Restaurant
      Marquesa’s
      Amarone

      Now, if people in Scottsdale are not paying for dinner at what would be considered more “demographically appropriate” settings, but they are buying more Pizza (I’m sure your family makes some killer pies, but if I remember right, they own a franchised location of a regional chain, and not a brick oven boutique pizza place that one would expect to find in Scottsdale), then what exactly, does that portend for the expected direction of the average standard of living for Scottsdale?

      And if Scottsdale is indeed seeing the effects of reduced standards of living, then what does that portend for the rest of the state or for the Southwest as a whole?

      Your family might be in the right place at the right time- just as I have seemingly been since I purchased stock in Kraft foods in mid 2010, but I hesitate to predict that because things are rosy for the Cavulos, that they will be equally rosy for even 20% of the population as a whole…

      I hope your father is converting his profits into durable savings.

      I didn’t buy Kraft because I like cheese flavored powder mixed with my pasta- I picked Kraft because I expected a lot more powdered cheese purchases by other people.

      BTW, as you may have guessed, I spend lots of time in Scottsdale- let me know the next time you’re in town – the first glass of wine (or beer) is on me.

    • mario cavolo March 10, 2011, 1:22 am

      Robert, you should bill me for that great assessment. 🙂 …I couldn’t have paid a market research consulting firm 5 grand for it. As you know that south Scottsdale has a mix toward the lower income strata of the city, with all the richer folks up to the north…

      Going back also to my weeks earlier comments that Sweet Tomatoes is also very busy, this point is quite clear then, that the family value price level of restaurants is doing better now.

      And for all your other comments too…thanks! Mario

  • John March 9, 2011, 12:59 am

    anyone can say anything is going to happen. unless you put some sort of time table on it you’re no great prognosticator. anyone can say, as a matter a fact I will say “sometime this century we will have a downturn in the economy”, that every century there will be a great downturn. whoa!! news flash! I must be nostradamos.

    • Rick Ackerman March 9, 2011, 2:28 am

      You’re going to be 86’d like your pal Aprov if you don’t state your case rather than merely insisting that all of us gurus were wrong about everything.

    • Steve March 9, 2011, 6:23 pm

      John, disingenuine – inauthentic

      TAR BABY

  • Aprov March 9, 2011, 12:49 am

    I will give you Doom and Gloomers one bone. It’s a comment I’ve pasted from today’s issue of the Daily Reckoning. They write:

    “Today we have fourth place honors for a state whose unions, perhaps the most renowned in the country, work tirelessly to retard the economic progress of its otherwise hard working citizens. Although this state has a slightly lower debt to GDP ratio than 5th place, its projected 2012 budget shortfall, at $10.8 billion, is more than three times as large, making it a much larger problem for the nation if or when it goes down. It’s also managed to stack up some $54.4 billion in unfunded pension liabilities not to mention billions more in healthcare and “other” unfunded obligations. ……
    How did they get to this point?
    Writes one reader, with a clue, ‘I asked a turnpike toll collector what he makes after hearing the waste of money in this state and was told very proudly that he makes $76,000! That [job] is no better than a cashier and that’s not including benefits he receives. No wonder that the Christi administration is looking to privatize it.’
    Congratulations…New Jersey! You receive 4th place honors in this year’s Daily Reckoning Financial Darwin Awards: The State Edition.”

    Is this what you see as part of the problem?

    Regards

  • David R. (Canada) March 9, 2011, 12:43 am

    The Chinese government is buying every ounce of gold they can quietly get their hands on. They’re pushing their citizens to buy it too!

    Do you think they don’t know what’s going on?
    The economies of every western country are tipping on the edge of collapse. Every economy tied to them is going to be affected. You can only reduce the effect by getting ready.
    The food riots around the world are just a taste of things to come. I think that something like the French Revolution will happen but this time it’ll be world-wide.
    God only knows what or who will take over!

  • John March 9, 2011, 12:35 am

    no rick I’m watching people all around me live and prosper. the ONLY asset class that matters lifestyle. their businesses and bank accounts are growing. one guy is buying his and her hummers 8 miles to the gallon.
    like I said it doesn’t matter what asset class your talking about. the reset button will be hit when needed and I haven’t seen any lifestyle changes. I dont see and Im POSITIVE I won’t see anyone running for the hills. and until we do whats it matter??

    • Larry D March 9, 2011, 2:02 am

      You know someone that is buying matching his-n-hers Hummers? New, or used?

      The last Hummers rolled off the line in May 2010.

    • Steve March 9, 2011, 6:22 pm

      Disingenuine – inauthentic

  • fallingman March 8, 2011, 11:33 pm

    I remember getting the same kind of reaction from people when I was figuratively standing on the table, waving my arms, and screaming at people to beware the real estate bubble in 2005 and 2006.

    I was “early,” but not so early as to constitute being wrong. If you hadn’t noticed, timing’s a bitch.

    Oh well, some listen. Some don’t. I say better to be a couple of years too early than a minute too late. And anyone that doesn’t see the writing on the wall isn’t looking very closely.

    What I appreciate is that RA never pulls a punch.

  • Ful_karboy March 8, 2011, 10:37 pm

    So much “class struggle” rhetoric on this site. Not surprising it comes from the comrades of the “vast Left-wing conspiracy” that drove whole industries overseas and hobbled or bankrupted others. Then they bash the surviving companies and successful leaders that managed to make it big, inspite of all the headwinds. How is making America a less and less profitable place to start a company, working out for you? From all the sour grapes, I guess, not well. Why aren’t you “comrades” out showing those capitalists “How it’s done”? Waiting for a “redistribution” of their work ethics?

    Driving up energy costs for everyone and adding to the huge trade deficit? What else would be the result of blocking every decent domestic form of energy for decades?

    Wall Street raking in money {at times} and the banking industry’s former growth? Perhaps because they didn’t have smokestacks {Gaians HATE them}, Union work rules and {at times} were paid for performance.

    Atlas Shrugging? That’s so 50’s-60’s, comrades. He just moved… So hard to keep those Atlas’s “down on the farm” these days {getting milked figuratively and literally} when both capital and entreprenuers have other options in lots of markets and even other countries.

    This isn’t JFK’s America anymore “Ask not what your country can do for you but what you can do for your country” but the BIG GOV nannystate’s creed of “From each according to their abilities, to each according to their needs”.

    Soon, few work to their abilities {the nail that sticks up gets taxed down ;>) and many proclaim their “needs”. Vote for “free money”?

    How long till “The State pretends to pay us so we pretend to work” spreads beyond Wisconsin?

  • Aprov March 8, 2011, 8:45 pm

    Hit a nerve did I? Lol!!
    So, Jimmy Boy, you say I’m dishonest? Yikes! All I said was Rick’s prediction hasn’t come true, a fact btw.
    Hey, Rick, my house price? It’s actually increasing.
    So, Rick, may I ask you something? Is the timeliness of your predictions (eg. Gm) within 10yrs +/-2? It is? Okay, well I guess I’ve got a few more years before I have to worry about the end of the world then. I mean, that’s lots of time for a little more stock market speculation.
    Regards

    • Jim N March 8, 2011, 10:57 pm

      Aprov…

      Actually you did hit a nerve. I teach my kids to tell the truth, and not shade or distort it.

      So here you are, didn’t answer my question about being factual. You just say RA’s prediction hasn’t come true. Which prediction are you talking about? I just want to know.

      I certainly have no beef with you. If you want to invest in the stock market, and make boatloads, good for you. I wish you well in that.

      But your lack of integrity in presenting the facts: It is there. So you say that housing has gone up? If so, since when? Or are you just saying your house went up? Such a statement needs to be backed up. I can certainly see a scenario where your house has gone up. Say you bought in 1950. Could you sell it for more today? Sure.

      But what is your point? You are hinting that the housing market is going up, and using your house as proof. To me, that is absolutely a lack of integrity in presenting an argument to discuss. I suspect those reading this understands this as well. Bring up your charts, or reasoning…but do it in a positive and constructive way.

      The great thing about this forum is that we can have great discussions, and my opinion of things has changed many times as a result of well thought out and reasoned arguments from the people on this forum.

      Your attack is not a positive thing, and i could no longer sit back and say it is OK to behave this way. Maybe in Washington you can behave this way, but i would call this attitude and position out on the carpet there too.

      Jim

    • Larry D March 8, 2011, 11:47 pm

      Aprov- your house price is increasing. Great! My ex-neighbor wishes he were you then, as he had to drop the price on his by $10,000 in real money (not assessed value) to sell it after having been on the market for 180 days. The stress of straddling two mortgages was too much for him. The gal across the street, and the guy next door, both took their FOR SALE signs down, because they can’t sell them for what they owe. Maybe if they wait it out for just another 5 years…

      So speculate away. I see from today’s financial news that the “little investors” are finally putting money back in the market (after selling off at the bottom 2 years ago.)

      I raise a toast to you and precise market timing. It kind of feels like the year 2000 right now.

  • cosmo March 8, 2011, 8:41 pm

    Again, thanks a bunch Rick for the forum of informed and lively debate. Worth every penny 😉

    The idea that one should “go to school to get a job” is one of the biggest fallacies there is. I always thought one went to school to get an “education”, as that can never be taken away from you.

    To me, it is NOT disturbing that things are the way they have become. I could see this all coming from the time I graduated from school many years ago. Now, with that understanding, I have prepared by growing a garden, stashing some PM, and being in community with others that see things as I do. We are watching it all unfold as it will and do not participate in the illusion of paper security. There is much to be gained by living simply, with compassion for others, outside the matrix. Namely, peace.

    The world will continue to spin, governments will try to oppress and control, and the people will eventually rise up and choose freedom(as they are in the ME). We can only hope that once on the other side, once all the cleaning has been done, that peace will prevail.

    Getting there may pose some difficulty, however, strive for peace my friends, strive for peace.

    • redwilldanaher March 9, 2011, 5:10 pm

      😉

  • John March 8, 2011, 8:24 pm

    right on Aprov.
    these guys have been talking about the end of the world for years. at one point I believed them. how many times can you cry wolf?
    I looked around and all the people I know are doing well, some better than ever. If I’d done the opposite I would’ve made millions. Doug Kass got it right when he called a generational low on the naz in march 2009.
    this is nothing more than the old argument keynesian vs friedman. it doesn’t really matter who wins. another push higher and we’ll be above the 2007 peak.
    it doesn’t matter – the printing of money because the world governments and powerful uber rich will just hit the RESET button and say ok we start from here now. and so it will be. and as long as we have our HD big screen tv’s, beer and and our weekends off nothing will change. the powers that be will give us that bone and we’ll be happy. or at least not mad enough do to anything about it. the collapes is NOT coming rick. you seem like a good guy but its not happening.

    • Rick Ackerman March 8, 2011, 8:40 pm

      Interesting that you say a collapse is “not happening” when the collapse itself has been in-one’s-face obvious since 2007. You must be watching only one asset class: common stocks.

    • mario cavolo March 9, 2011, 2:18 am

      John, as I called Rich on the problem of generalizing, I have to call you on it too as you’re trying to argue the point that all is well.

      “I looked around and all the people I know are doing well, some better than ever.”

      No no my friend, all the people you know is far too small a sample, lots of people are doing terribly, worse than ever. The system is not taking care of the country of America. The lives of the American lower/middle income have been and are in decline; less and less opportunity, higher and higher prices and restrictions and blocks to build a future. All while the rich have gotten richer than ever. My arguments here at the board are that indeed as you say, there are plenty of people who are prospering in the current “state” of affairs, more than ever in fact, richer than ever in fact. Yes that is true. But there’s plenty of pain out there too and I advocate the idea that America has become the world’s next great societal “schism” after the Protestant revolt from the Catholic church.

      Cheers, Mario

    • Steve March 9, 2011, 6:18 pm

      Ya John! Your grandchild is 450k in debt and a slave. I was born Free and with Liberty. Funny way of setting the log scale.

  • Aprov March 8, 2011, 7:32 pm

    Dear Rick
    You actually get up every morning to spew this end of the world nonsense? OMG!!

    Btw, as to the end of the world, you’ve been wrong for two years and running. Maybe you’ll be right some day soon. Who knows?
    Regards

    • Jim N March 8, 2011, 7:56 pm

      OK , big guy. Why don’t you tell it like it is and back it up… BACK up your reasoning. We are all waiting.

      Yes, everyday Rick puts his rep and knowledge on the line. His record doesn’t need defending, but i get incensed at a lack of honesty and integrity in these kinds of posts. What i really enjoy about RP is the high level of discussion, disagreement and respect there is.

      So Herr Aprov, add to the conversation.

  • Roger Erickson March 8, 2011, 6:30 pm

    > a money system whose basic unit of measure is an
    > already worthless dollar

    Minor correction. Every currency system, whether commodity-constrained or fully fiat, has ALWAYS been backed eventually ONLY by the initiative & capability of the issuing population. What’s really taken a hit during the last 30 years of rampant “financialization” of our economy is our net Output, our net pubic initiative, and our peak capabilities. All have been squandered in pursuit of nominal financial metrics that have in turn been hoarded by a Harvard-centered economic-policy class that clearly doesn’t understand how something as trivial as a monetary system actually works, or WHY a sovereign population creates one in the first place.

    At this time, the moment of competition is still among nation states, and we’re in an adaptive race to improve our mobilization strategies better/faster/leaner than other nations. Success does NOT lie in the direction of Wall St. You can virtually smell the decay in that direction.

    If China’s CCCP recognizes the proper utilization of fiat bookkeeping faster than we do, that would create our greatest challenge & gravest threat.

    • Rick Ackerman March 8, 2011, 8:45 pm

      Roger, I agree that a dollar can be valued, effectively, as a share in USA Inc. However, I impute worthlessness to the dollar because the debt represented by each and every digital or physical dollar in print is vastly beyond repayment, no matter how industrious and energetic Americans are. On that score, our school system and the teachers union may be speeding us in the wrong direction; for even to re-ignite Yankee know-how will take a lot of engineers and mathematicians that we currently must import from India and China.

      Incidentally, the documentary “Waiting for Superman” is one of the most powerful films I have ever seen. But because it indicts the teachers union and not just America’s pathetic school system, it did not even receive an Oscar nomination, let alone the award it so richly deserved.

  • Oliver March 8, 2011, 6:02 pm

    Whatever comes, whatever goes… the discussions here are just excellent. I am really happy I found this website.

  • Andriyko March 8, 2011, 5:03 pm

    I urge everyone interested in the state of the economy to view the documentary “Inside Job” – This years documentary Academy Award winner. It is film that stoically addresses the causes and effects of the 2007/2008 market meltdown.
    The final section of the Documentary addresses the state of affairs today.

    What is most striking is that the same players that engineered the collapse are at the helm of the economy at this moment. There has been no “cleaning house”.

    As Rick said, “Much creative destruction remains to occur before America can get back on track, and only a great deal of pain can bring about the epiphany that the illusion of our economic well-being has been sustained entirely by lies.” If I may also quote Jim Rogers opinion of Ben Bernanke: “Why does anyone listen to that guy … he has been wrong every time for the last 7 years. He is wrong now.” After the all the gangsters … errr .. banksters and their lacky, Judis economists are purged from financial, institutional, educational and political influence they now command will America rebuild.

    Untill that day, the assets I trust shall be tangible such as, “… bullion, farmland and a few others”

    • redwilldanaher March 8, 2011, 5:15 pm

      “EXACTLY.”

  • Edward March 8, 2011, 4:54 pm

    “The announcements of two days back coming out of that country suggesting a push toward more internal consumption are telling.”

    It’s very bad news for U.S.A. Inc. and it confirms what some have been forecasting is integral to China’s “master plan.” Who can doubt that, even while facing their own formidable internal economic headwinds, the Chinese will succeed at least to a degree sufficient to do substantial damage to the U.S. financial and economic sphere?

    In the meantime, Chinese leadership is happy to have U.S. authorities and their MSM lackeys spread disinformation that asserts The Chinese are on board with U.S. leaders and their, so called-see The Titanic- stewardship. All the better to allow The Chinese to continue to ease their way out of their U.S. bond investments.

    • mario cavolo March 9, 2011, 6:05 am

      Hi Edward, Indeed we all live with masterful, orchestrated disinformation from on high. Woe to those who don’t know it.

      Cheers, Mario

  • redwilldanaher March 8, 2011, 4:50 pm

    Rick, I think you make some great points ( I like them because I try to make the same ones!) and I particularly enjoyed:

    “As further regards China, surely they recognize that their USA partner is a Ponzi scheme operator – a book-cooking, funnymoney-printing, lie-peddling swindler who will eventually take them down.”

    Regarding our friend Mario, it’s difficult to say for sure but I’ve had the sense for quite a while that he may over-relish the pot-stirrer role. It’s almost always a good policy to consider contra-side viewpoints for obvious reasons but I do wonder about Mario’s “RSI” – Relative Sincerity Index – at times. Mario’s argument, viewed another way, seems to be: Things are good for the Mafia and those that pay for protection so where’s the problem? I’ve tired of responding to that line of argumention as I can’t believe that Mario can genuinely look past the absurdities associated with this position. I realize that I’ve opened myself up to likely having to offer an apology to him but I am me, and as me I have to be frank to genuinely be me.

    Maybe I’m being selective but Mario seems to focus on “see, see that, that looks pretty good”. This is a dangerous approach and possibly never has it been more dangerous than now. I’m sorry but you have to look into the lies you’re being FED and beyond the here and now. I’m sure that Fla. and NV Real Estate investing looked infallible too not so long ago to many. But what of the “foundations”? Give me a limitless “Credit Card” and I can make Camden, NJ look Hong Kong. Which is why my simple-minded mantra is “keep your eye on the ball”. As I’ve noted many times here, I believe the right approach is to follow the charts the best you can but keep up on things and store that info in the back of your mind. Don’t trade off of it until the market seems to be recognizing what you’ve long known or suspected. Which is why I rule nothing out as well. DOW 36.000? Can’t rule it out. Why? Well… In my mind there’s something VERY, VERY wrong with what the USSA’s Kleptogarchical rulers are up to (centrally planning a stock market for starters) but clearly they’ve gotten away with it to the tune of nearly doubling things albeit in nominal terms. YES, more people are seeing through the perma-fraud this time around but: http://seekingalpha.com/article/251375-derivatives-the-real-reason-bernanke-funnels-trillions-into-wall-street-banks

    So, clearly, THEY may HAVE to do this again to protect their friends. Too big to fail so they must prevail.

    In closing on Mario, it’s one thing to “make lemonade from TPTB’s lemons” as Mario seems to want do but it’s another thing to cheer on, seemingly with a smile, what reduces to pure evil but to do it in a roundabout way.

    Finally, the “credential mills” have been well documented. I equate them with the ratings agencies as the similarities are clear to be seen. They no longer have any credibility, haven’t for some time in my mind. They’re exorbitantly priced rubber stamps at this point in time, that’s what they’ve devolved into. I’ve often discussed them with my partner and I think a great argument can once again be made for the future to go back to the past which dovetails nicely with yesterday’s “back to the land” information. Learning a craft as an apprentice and filling in and widening out online via online educators just makes so much more sense. I’ve taught myself more from reading, researching, sharing and exploring on my own than I could ever hope to learn from the ridiculously over-priced cookie-cutter education-in-a-box specialists that teach everyone to think alike instead of the ability to think intelligently for themselves.

    This education issue is essentially just another sign of the times and the more I learn the more I realize that very little of any of this is “coincidental”, probabilistically speaking.

    Sorry, have to go there one more time. Are we 100% sure that Mario isn’t a TSA/Treasury Dept. “Persona”?

    We have to emancipate ourselves from all of this. No one else is going to do it for us and that’s the only real solution.

    • Rick Ackerman March 9, 2011, 1:56 am

      Thanks for weighing in on this so engagingly, RWD. This forum desperately needs an indefatigable optimist or two, and I’m convinced Mario is the real deal, even if some of his arguments tip in the direction of your mafia analogy. Having lived through the dark twilight of Atlantic City’s halcyon era, I learned that crooks (i.e., the Republican machine politicians who ran the town, Nucky Johnson-style) were able to achieve a level of success and prosperity that the ostensibly clean, honest Democrats never approached. Meanwhile, much as I like to have a few optimists around so that we don’t spend our days nodding in agreement, I must confess to believing deep down that anyone who is truly optimistic about the direction of the economy is clueless about what is going on.

    • redwilldanaher March 9, 2011, 5:23 am

      In complete agreement Rick. That’s why I bemoan the “cheering on” from time to time here and throw in references to the oft-cited “stockholm syndrome”. I’ll state it again. If you want to argue that the market heads higher and that the great collective cons/hoaxes carry on uninterrupted in perpetuity aided by powerful propaganda “winds” as they always have before, I have no problem with that. It’s when people welcome it cheerfully, see no problem with said scenario or arguably worse are utterly “clueless”, as you wrote, and yet still fill compelled to disabuse those of us that have spent more than 5 minutes reading something aside from USA Today. I suppose I’ll be wrong but something “feels” different to me this time around. With the late 90’s “Zero Gravity” bubble, and the “housing mania”/ commodities bubble pop a few years back, I anticipated some pretty rough stuff that we all know was “warshed” away quickly by the fomenting of the subsequent bubble to further distort the physics of economics. THIS TIME, I feel as though there could actually be an “emperor has no clothes” moment. Before I was very concerned, this time around I’m much more so. The extremely depressing thing this time around is that NOTHING HAS CHANGED for the positive and MUCH has actually gotten worse. Many of the popular MSM writers/figures have touched on this, Taibbi, Farrel, Keiser of course. But seriously, on paper there couldn’t have been a more anti-bankster “president” than this empty finger-puppet pretender and the banksters couldn’t have been caught much more red-handed and nothing has happened. You and I and many of us here aren’t surprised in the least and that’s not why I raise it. It’s because the “public” seems so docile and beaten in response to the “slapping” that they’ve taken that I do. I guess that’s what a really strong “pimp hand” will do for you! So what happens to a “battered” country when it’s no longer supplied with its “fix” and the “johns” no longer look its way?

    • mario cavolo March 9, 2011, 5:59 am

      Hi RWD, never a need to apologize to me but you really do push.

      I offer a viewpoint and approach and I can’t agree it is optimistic as so suggested but in saying that, I think Rick knows he creates more opportunity for debate here. Indeed I am not an optimist, I am a clarifier and observer of reality and I try painfully to not filter what I see.

      As the approaches morph, I realize I’m focusing more on the fact of:

      America: The Great Schism

      That’s not the great destruction or doom of all mankind, but a schism, a fresh, wide, ugly, massive, transforming socioeconomic divide. As when the Protestants had enough of the church stronghold, as the Biblical curtain tears, America is today a completely, different, transformed, divided entity. No change from me that we shall call it neo-America is fine, but that neo-America I refer to is today’s entity socioeconomically excluding and marginalizing and ostracizing a sector of its own, sadly yes.

      Collectively, the govt apparatus and system, pharma, subsidizies, lobbies, banking, insurance, etc….they are all successfully building their own new world. Yes I did use the word successfully. We can even say as Rick has suggested the system already did implode, yes that they have already pressed the reset button, and they are doing great in their world at the expense of others. Yes they are. Its factual. How can you tell me that hundreds, even thousands of companies across the world aren’t doing very well, doing business, generating products, services, revenues and profits? That’s delusion too my friend because they obviously are doing very well.

      Does that mean I am saying there isn’t a cost? No. There is certainly an unfortunate cost which looked at even closer reveals mindboggling greed and illegal activity at the very top of society. Reference, the latest Rolling Stone article on “why aren’t any of them in jail?”

      Good can’t come from bad? It is God’s domain to unravel the mystery, we try and fail. Even seeing in front of our face what these high and mighty A&^%$holes are doing, we are impotent to respond meaningfully.

      Here’s another way to look at it. Yes its nuts that a tollgate operator should make 76,000 per year on an inflated, state salary. But is it wrong to be happy for the guy and his wife, his kids for scoring that? Should we not agree he’s lucky!…that he can afford to send them to college, to provide better, to not be in so much debt, because he is fortunate enough to find a cushy, easy, high-paying job. Doesn’t that extra money he makes end up back into the economy being spent? Is this my optimism? I don’t know…enough for now.

      Cheers, Mario

    • redwilldanaher March 9, 2011, 4:14 pm

      “Collectively, the govt apparatus and system, pharma, subsidizies, lobbies, banking, insurance, etc….they are all successfully building their own new world. Yes I did use the word successfully. We can even say as Rick has suggested the system already did implode, yes that they have already pressed the reset button, and they are doing great in their world at the expense of others. Yes they are. Its factual. How can you tell me that hundreds, even thousands of companies across the world aren’t doing very well, doing business, generating products, services, revenues and profits? That’s delusion too my friend because they obviously are doing very well.”

      I had to isolate that part of your response Mario. I don’t recall ever arguing that these “entities” aren’t doing well. Why wouldn’t they do well in a fascist system wherein they can count themselves as part of the “in” crowd? I also appreciate that the “camp followers” that service the Kleptogarchs can do “well” in the short run. Yet please do realize that the fascist corporations so-called “accounting” is fraudulent through and through and that many of them make more with “off the books” operations than their “front” operations. Again, see Catherine Austin Fitts and others like her and if you’re not familiar with “ghost planes” then I’d suggest you familiarize yourself with them. This surface level stuff that you reference may look pretty but you are in actuality looking at and looking past “something” that reduces to pure evil at its source. Would your eyes be gazing upon all this glorious “stuff” if it weren’t for hyper-manipulation, deception, and, quite frankly, pure evil? I don’t think they would. Again, I’m “stupid” that way but this being as it is will trouble me until I’ve breathed my last breath.

      “Does that mean I am saying there isn’t a cost? No. There is certainly an unfortunate cost which looked at even closer reveals mindboggling greed and illegal activity at the very top of society. Reference, the latest Rolling Stone article on “why aren’t any of them in jail?””

      Just for the record, I referenced Taibbi from RS above with that particular recent piece in mind but I hasten to add that things have become so pathetic that Taibbi and RS actually standout now and are nearly alone in the popular press. Yea, the “fourth estate”. These are simultaneously the greatest of the cowards and the most pathetic of players in the current tragedy. They are the Judas Iscariats of the people.

      I can’t say what good will come from bad but the “cycle of evil” is well-established and clearly its growing exponentially. The relentless slog from what was once a free country into the bowels of serfdom continues unabated. How will you feel when the TPTB pulls a lever or two that hurts a few of the asset classes that you favor? Maybe your forecasting compass will be off and you’ll get pancaked by capriciousness…

      “Here’s another way to look at it. Yes its nuts that a tollgate operator should make 76,000 per year on an inflated, state salary. But is it wrong to be happy for the guy and his wife, his kids for scoring that? Should we not agree he’s lucky!…that he can afford to send them to college, to provide better, to not be in so much debt, because he is fortunate enough to find a cushy, easy, high-paying job. Doesn’t that extra money he makes end up back into the economy being spent? Is this my optimism? I don’t know…enough for now.”

      I want to be clear that my disdain isn’t for the folks that find the best opportunities to provide for their families etc. I’m not particularly happy with your “for instance” scenario above but I can understand why he’d seek the best scenic overlook within the Habitrail. My problem is obviously with the designers, enablers, protectors etc. of the Habitrail. But again, for the record, that’s clearly not an efficient use of capital (as if that will ever matter again) and thus our economy is penalized with reduced opportunity as a result.

      I can’t stop myself even though I should: US Colleges are largely a SAD JOKE to those attending them and especially those paying them. US Public Education is an EPIC TRAGEDY. US popular “Culture”, using the word as loosely as can be imagined, is CORROSIVELY HARMFUL to those exposed to it. This isn’t mere coincidence.

      So, to conclude for now, “NO”, I’m not optimistic simply because deception and evil are triumphing at the moment and that this can be seen at local restaurants, or in teen retailers or a blip in a local housing market or in fraudulent yet “audited” corporate accounting or because US taxpayer monies are being gifted in various and countless ways to completely corrupt corporations that spread evil around the globe in the name of Apple Pie. In place of “optimistic” I’d substitute “sickened” to describe how I feel.

    • Steve March 9, 2011, 6:15 pm

      Mario, I also function under a mental filter created by my experiences in life. I am a realist in every sense of the word. Ultimately, my filter says that what is started in fraud, will end in destruction. The current monetary system is a fraud, a corruption intended to enslave. Enslave it has. If the filter through which one views refuses to examine the loss of Liberty to a good slave state, someone lies in error and their filter faulty. If one believes that good can be based upon corruption, then I cannot argue any point with that person.

  • John Jay March 8, 2011, 3:32 pm

    The cash balance at the US Treasury has gone from $349 billion at the start of February to $108 billion so far this month.
    The February budget deficit of $223 billion was the largest monthly deficit in history.
    We are still wasting trillions on AfPAkIraq wars, and if Saudi Arabia erupts we’ll be caught off balance once again.
    Oil storage in the US is full to the brim, but speculators gaming the situation have run it to over $100, supply and demand no longer matter, just greed.
    DC is in a stupor, is unable to face looming reality, while MIC/Wall Street plan to keep looting right down to the last dime in the Treasury.
    ZIRP and Fed orchestrated Treasury auctions are the only things holding off financial armageddon.
    I could go on with a litany of our problems in the USA, but I will simply say I am deeply concerned for my future here in the USA.
    No one in power has any viable solutions to turn things around, so we will continue on the current course.
    Very disturbing.

    • Cam Fitzgerald March 8, 2011, 4:18 pm

      Disturbing is the right word John Jay,

      What is going on in the House of Representatives, Capitol Hill, the Senate and with all those voted too power to represent the interests of the people?

      Seriously. That is my question. What is going on?

      There is only quiet suspense. We wait. The next shoe will drop soon. As the market finally starts to correct can we assume the start of the end is now in sight?

      Is there no solutions and no answers anymore?

  • Cam Fitzgerald March 8, 2011, 5:24 am

    Good points Rick regarding China. The announcements of two days back coming out of that country suggesting a push toward more internal consumption are telling.

    The Chinese have indeed got the message over there and are in the early stages of learning to live less on export incomes while deriving more of their growth from internally generated transactions.

    Premier Wen Jiabao was very direct in explaining his five year plan. It is intended to move that country towards more of a consumption model and will achieve this through wage increases. The starting point will be to increase basic incomes, (the minimum wage) by double digits for each of the next 5 years.

    Can an end to the USD peg and a freefloating currency that will rise appreciably be far behind? I am certain it is coming very soon. The falling dollar is proving just too harmful to the Chinese economy at this stage in a way that was never really contemplated.

    This act is in my opinion a form of economic decoupling and cannot be an accidental decision. Confidence has been lost that the West can continue to drive Asian growth where production and exports are involved.

    I believe there is a reckoning ahead and the Chinese know it. One that could see consumption of Asian made goods decline precipitously in the US as it is overtaken by the growing economic woes that will arise out of excess debt and a trend, now clearly established, to monetize and inflate away those obligations.

    China is acting in its own best interest to reduce the coming shock to its own economy as the true gravity of the debt situation unfolds here at home.

  • Martin Snell March 8, 2011, 4:57 am

    A “wall” is required before real change can begin, i.e. something that gets hit and impedes continued movement in the current direction.

    Most spendthrift countries are “handcuffed” at some point by international markets rejecting their currencies. Unfortunately for the US the dollar’s reserve currency status has also bought so much extra time that the climb out of the hole will be much harder (gone deeper).

    The benefit of a “wall” is that it can actually get the entire populace facing the same problem (how to save the country), yet provide only a very limited set of options.

    Of course the question is “what will the wall be, and when will it appear?”

    • DG March 8, 2011, 7:12 pm

      The dollar is the perfect wall. Painful, but surefire way to reset all issues:
      Bring back manufacturing job
      Renegotiates government excesses
      Halts deficit spending (can’t borrow anymore)

      At the end of the day, the US is a good piece of dirt, just horribly managed and exploited by massive, non-productive entities…those entities need to be revalued


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