Tuesday, January 17, 2012

Well if we are falling into the abyſs: At leaſt Europe is fallling faſter ſo when we hit bottom Europe's corpſe will ſoften the blow.

Last year at this time I wrote an article “The DOOM that came to the United States” where I outlined the risks of uncontrolled sovereign debt: Wherein I warn of a credit downgrade that would result in monetization of debt that would eventually drive inflation to new highs. 6 months later that little scenario took another step closer to being reality when S&P did downgrade the United States’ bond rating.

Well while the first half of last year was focused on our debt woes; another canary was snuffed out in Europe. A couple of months prior to the US’ downgrade while the Kabuki Theater of the debt standoff was in high swing, Greece was downgraded from B to CCC. In the second half of the year, the US busied itself in alternately flooding the M1 with near zero interest from the Fed, recycled straight into the M3 as US bonds to keep the government funded, where only the sluggish speed of the money is insulates us from hyperinflation, during that time Europe was struggling to contain the sovereign debt problem to Greece. With all of their struggles and failed compromises to fix Greece however were predicated on the assumption the sovereign debt problem not spread to other weak nations specifically Portugal, Spain, and Italy. All the efforts to save the EU hinged on keeping the train wreck confined to the somewhat limited economy of Greece and not the larger nations of the EU. On Friday, the EU lost that battle, and came one step closer to losing the war on their currency. S&P based on financial outlook downgraded nine European nations.

France AAA => AA+

Austria AAA => AA+

Italy A => BBB

Spain AA- => A

Portugal BBB- => BB

Malta A => A-

Slovakia A+ => A

Slovenia AA- => A+

Cyprus BBB => BB+

If that wasn’t enough, yesterday the S&P Downgraded the EFSF from AAA to AA+. For those not familiar with the EFSF here is a blurb from their website.

The European Financial Stability Facility (EFSF) was created by the euro area Member States following the decisions taken on 9 May 2010 within the framework of the Ecofin Council.

The EFSF’s mandate is to safeguard financial stability in Europe by providing financial assistance to euro area Member States.

EFSF is authorised to use the following instruments linked to appropriate conditionality:

Provide loans to countries in financial difficulties

Intervene in the debt primary and secondary markets. Intervention in the secondary market will be only on the basis of an ECB analysis recognising the existence of exceptional financial market circumstances and risks to financial stability

Act on the basis of a precautionary programme

Finance recapitalisations of financial institutions through loans to governments

To fulfill its mission, EFSF issues bonds or other debt instruments on the capital markets.

Europe looks to be trying to live out my dire warning way ahead of the US. It makes sense that I append my warning at this point. The two economies, Europe, and the United States, are inherently linked and dependent upon each other. If one goes the other goes with it. If Europe, and their monetary system falls apart, the US will not be far behind. Perhaps this is why we allowed the European Central Bank to join the US Federal Reserve system (That’s right we let the central bank of Europe, join our central bank system) so they could directly auction US dollars into the European financial system to ease the stress on the Euro.

The dollar auctions on Wednesday were the ECB's first since joining the Federal Reserve and other major central banks on Nov. 30 to provide cheap, emergency U.S. dollar loans to banks in Europe and elsewhere, in a coordinated effort to ease strains in the global financial system stemming from the European debt crisis.

But as we buy into the EU to reduce the strain on their currency, propping up a sick and possibly dying currency, with one slightly less sick, we become further impacted if the Euro collapses.

With no credible plan even proposed to grapple with the European debt crisis, the Euro collapse looks to be a matter of time, and not very much time. The DOOM is ON!

Monday, January 16, 2012

The Diſappointment

With all the time spent in the political sphere in the last couple of years, you would think that I am hopeful for the future given the huge concessions we have gained; In fact though my outlook is drearier than ever. Eventually in a free Republic the rubber must hit the road and what is ideology must manifest in real world leadership in the form of a politician who would in practical terms put legal ideas to paper and forward an ideology not just in the world of laws and writs, but also in the real world of concrete, iron, and lead.

The clock in running out on the massive debt assigned not just to the US, but the whole of the western world, and accumulated not in the most part in war mongering, but vote mongering with entitlements. The collapse of our fiat monetary systems seems at this point almost assured. A guarantee of a generation of suffering that will make the Great Depression look like a mild downturn. The scope of which may include a break down in social order, and perhaps an end to free society here in the US. It depends on a lot of factors, but when faced with a crisis on this scale, it would be hard for those in government to avoid the temptation to use the crisis as a mechanism for dismantling what few restraints they have left, and seizing totalitarian power; and at the same time it will difficult for the people to avoid the temptation of demanding that they do so in order to bring order. Certainly a recipe for tyranny has already been mixed. All we have is it is not yet done cooking.

Now the fact that the crisis has not yet hit, does mean that there is some hope of averting it. With aggressive changes to the spending of government DOOM can be avoided. But all the reasonable options have been passed up in favor of the option to kick the problem down the road to be dealt with later. Legions, of the apathetic, the cowardly, and the sinister, who claim to have led the US have led us to this point, in which only the radical has any hope of success. Very seriously: This country will not survive a mediocre administration

And in the end we have a whole field of challengers produced by our two party system that embody mediocre. Containing at least one fatal flaw, of either excessive cowardice, or recklessness, none of them seem ready to challenge the incumbent president, defeat him, and then….now this is that practical part….and then actually do what is necessary to save the US. Now a huge part of the problem is the American people, whom in the very critical middle, don’t want to hear the truth about our dire position, and would rather the candidates take a non-radical moderated approach with small reasonable change to nudge the US gradually back on the road to prosperity.

But we passed up all those chances to do those reasonable things. Now there is only the extreme and radical that has any hope. And so, we were hoping for a superman, that could convince a middle ground apathetic electorate, that wants a politician to whisper sweet nothings about how it isn’t that bad into their ears, those whom would bury their head in the sand to hide from certain DOOM, convince them that in fact big changes are needed now.

And we are met, with candidates either off-putting to the middle unable to convince them of the crisis and needed changes, or themselves tacit approvers, or even partial architects of the course we are on.

I haven’t lost all hope yet, but at this point I possess little. If America doesn’t come to its senses, right now, then freedom will not see the end of the decade. In the end if we lose our freedom, we will have deserved to have lost it.

Remember some wise words as difficult times and hard decisions bear down upon us.

If we lose freedom here, there is no place to escape to. This is the last stand on Earth.