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Friday, June 30, 2006

Thoughts for a July 4th Holiday --

"Defending Democracy"....

'but to defend democracy by military means one must be militarily efficient, and one cannot become militarily efficient without centralizing power, setting up a tyranny, imposing some form of conscription or slavery to the state. In other words, the military defence of democracy in contemporary circumstances entails the abolition of democracy even before war starts.'

---ALDOUS HUXLEY (1894-1963)

Excerpt from this book below--

Slouching Toward Empire--

"Institutions have a way of evolving over time -- after a few years, they no longer resemble the originals. Early in the 21 st -century, the U.S.A. is no more like the America of 1776 than the Vatican under the Borgia popes was like Christianity at the time of the Last Supper... "

"Still, while the institutions evolve, the ideas and theories about them tend to be fixed; it is as if people hadn't noticed. In America, all the restraints inhibitions and modesty of the Old Republic have been blown away by the prevailing winds of the new Empire. In their place has emerged a vainglorious system of conceit, deceit, debt and delusion."

"The U. S. Constitution is almost exactly the same document with exactly the same words it had when it was written, but the words that used to bind and chaff have turned into soft elastic. The government that couldn't tax, couldn't spend, and couldn't regulate, can now do anything it wants. The Executive has all the power it needs to do practically anything. Congress goes along, like a simpleminded stooge, insisting only that the spoils be spread around...."

Empire of Debt (2006), The rise of an Epic Financial Crisis -- Bill Bonner and Addison Wiggin (Introduction)

Tuesday, June 27, 2006

More Scary Economic Stuff

Look At This Chart!

The plunging line shows how much money we're saving right now.
The soaring line shows how much more we're paying just toward the interest on our rapidly mounting debts. Make note, that's just the charges on the borrowed money. Not the payment on the borrowed money itself.
It's like the claws of a gaping trap, getting ready to snap down on the average overexposed American. And when it does, expect financial disaster.

"I am dismayed at the low level of U.S. economic thinking. Elementary insights into economic processes that have been accepted by all schools of thought for more than 200 years are unknown, discarded or even put on their head. The facts are that you have serious structural problems that exclude any possibility of a sustained economic recovery... A profits decline, a record savings shortfall, a capital spending collapse, an unprecedented consumer borrowing and spending binge, a massive current account deficit, ravaged balance sheets and record high debt levels."

--The Richeb├Ącher Letter.

Wednesday, June 21, 2006

Back From Blog 'Vacation'

Hi all! I have been very busy with personal 'stuff' recently. I am going to make an effort to stay current from this point forward.

Since I last posted @ a month ago, the stock market has been in a sharp consolidation and highly erratic, while Gold tries to find a bottom above $550/oz. The dollar has been stable vs. major currencies as the Fed continues to raise short term interest rates.

I have been reading two fascinating books which have been recently published-- "Empire of Debt" and "War Against the Truth". I will do reviews in the next week or so.

Briefly, "Empire of Debt" compares the United States to the Roman Empire and predicts all kinds of catastrophes to come. Among these are the collapse of the Dollar and the Bond Market concomitant with a sharp pullback in housing prices. A few days ago I listened to Ben Stein on Fox News give his opinion that Treasury Securities will be 'Junk Bonds' by 2012-2013, as the Trade and Budget Deficits soar.

One thing I worry about as a Baby Boomer is that the Social Security Trust Fund is made up entirely of Treasury Bonds. The Federal Government spends the money contributed via the regressive payroll tax (paid mostly by middle-class and poor citizens) . So technically there is no 'Trust Fund', just pieces of paper (T-Bonds) backed by the 'full Faith and Credit of the U.S. Government'. Hmmm...
And of course Congress may simply slash benefits at some point or adopt some simple minded 'privitization' scheme.

"Empire of Debt" notes that ALL paper money eventually becomes worthless -- the U.S. Dollar has declined by 95% in the last 100 years. Once a Government breaks the link between their currency and Gold, as Nixon did in 1971, the temptation to spend -- (thereby printing more and more paper money) on 'Bread and Circuses', as well as 'Wars on the Periphery' common to Empires like Rome and the U.S. -- cannot be resisted.

At some point, foreign govts. will cease to continue to accumulate T-Bonds, and begin selling them. Already, some countries are considering or already demanding payment for their oil in Euros. The U.S. Empire is at the point the British Empire was just before World War I-- losing market share to newer and more competitive rivals (the U.S. and Germany at the time) like China and India.

How much debt is there? Last year the number was $8.3 TRILLION! But that number vastly understates the problem. Unfunded Liabilities to Social Security, Medicare and Medicaid raise the real number to $35-75 TRILLION... (depending on whose estimate you use).