$16.4 Trillion

Well, we’ve just raised the US Debt “Limit” to $16,400,000,000,000.00 and rising. (Yes, it’s really $16.39xxx but I’m rounding; not that it matters.)

This is why I find Republicans “sucky”

Sporadically I have folks assert I’m some kind of hard core conservative Republican. I protest that I’m not, and trot out a list of things where my beliefs are clearly in the “independent” camp and not at all in line with the Republicans; but it does no good. I get painted as Republican anyway. No, I don’t have a problem with many Republican positions (mostly financial / business ones) just like I’m often fine with various Democratic positions (mostly social ones – like women ought to own their own bodies and having a war on drug users is kind of stupid). But, at the end of the day, I find both parties more “sucky” than not. I am, absolutely, an Independent. I pick MY position on each issue, I do not subscribe to ANY party “platform” and find the whole “planks” metaphor tiresome. In this case, it’s the Republicans I’m blaming.


I can hear someone thinking: “But it’s Obama and the Democrats that wanted to raise the debt ‘limit’ and the House Republicans voted against it!” And that is exactly why.

Think back to the end of 2011. We had a “debt limit crisis” and congress could neither vote to RAISE it, nor vote to LEAVE IT AS IS. It was a potential SHTF moment, and they could only duck. Congress appointed a Stuporcommittee to hide behind. Even number of Dimocrats and Republicrims. They “cut a deal”. The deal raised the debt limit “just this once” (or so it was painted in the news of that time). The reality is what we see today. The “deal” had some Kabuki Theatre in it. The Republicans sold their soul for theatre.

Today we have the Senate voting to raise the debt “limit”. A few weeks ago we had the House voting NOT to raise the debt limit. The Senate is dominated by Dimocrats. The House is dominated by Republicrims. They were acting as Republicans, prior to the “debt deal”; now we see their true colors. The reason is “the deal”. You see, prior to “the deal” it took both houses voting to spend to raise the debt “limit”. The voters put Republicans in the House for the purpose of controlling spending and putting a brake on the more radical leanings of “Obama and the Dims”. So what did they do? They voted to give away that power and authority. In “the deal”, they chose to have the theatre of voting against the debt “limit” rise, while knowing full well debt would rise. It was a way to provide a back-door debt limit rise agreement, while getting the theatre of a show-vote against it.

So, you see, the Republicrims happily conspired with the Dimocrats to keep on spending like crazy and to hand all control on that spending to the President and the Senate in exchange for being able to posture as though they were really against it.

For lying and abuse of process, the Repulicrims get the blame for this debt increase. (And any future ones that happen under this same set of rules).

Look, you Bozo’s (no offense meant to honest hard working clowns…) you were elected to have a spine and vote not to run, hide, pretend, play kabuki theatre, and most certainly not to LIE to the public. And if you think this is anything other than a flat out lie then you are prone to self delusion as well. Knowing full well that the senate is Democrat dominated, you handed THEM the keys to the vault because you wanted that outcome.

So just watch the various Republicrims posture and complain about those Horrible Spendy Democrats – and every single time remember that it was the Republicans who handed them the keys to vault and said “Here, you drive; I’d rather sit in the back and complain about what’s on the radio.”

In related news, Gold is rising nicely…


Has a nice chart of gold. It shows a new “buy” signal as of some week or two ago and is now above the moving averages.

Here’s the live chart. You can also see that Silver is taking off even faster:

Gold and Silver vs currencies

Gold and Silver vs currencies

In related news, The Fed announced that until 2014 they are going to hold yields down near nothing. (Formally they said to expect the Fed Funds Rate to hang around 1/4% for the foreseeable future, that being about 2014).

THAT means that ‘savers’ can expect to be screwed for at least 2 more years and inflation in everything you buy, but not in your wages to pay for it, will continue. (Thus the jump in all things metal and real).

Yes, we’re all “Speaking Japanese” now. Back a few decades ago Japan tried the “Keep central bank funds rate near zero” strategy. It resulted in what is euphemistically called “The Lost Decade”… But hey, who needs to learn from the past or from watching others. We’re absolutely certain that “This Time Is Different” and “We are better and brighter” than they were.

So, OK, “Never Fight The Fed” and The Fed has said it’s a Risk On world and that the dollar is not going to hold value longer term. We know that the Euro is also in for a long rough ride. That points to “other currencies” and other locations and it points to Real Assets and Things With Yield.

I’ll be cooking up a longer posting over the weekend, but for now what all this means in summary is: Look at metals and minerals (all of them), oils and energy stocks, land and REITS, and ANYTHING with a large and stable dividend. “Resource Currencies” such as the Canadian and Australian Dollar have an advantage (though you still have to watch out for home grown stupidity by THEIR governments – so pick Canada over Australia right now) as will more out of the way places like New Zealand (that has risen from 50 cents / $NZ to 80 cents (US) per $NZ already). It also argues for Russia doing better (modulo THEIR “sovereign risk” issues – and that they have a ‘flaky customer base’ in the Euro zone right now…) and for places that are producers of resources in general to benefit (so Chile has a nice future, as does Brazil – if THEY can reduce their urge to Socialism and their new more socialist President can be limited).

At any rate, the summary is “risk on world” and “assets & dividends”. Stocks tend to rise then (though often not enough to overcome the incipient inflation) but I’m expecting the “real stuff” to do better. With Treasuries at fractional percents for the foreseeable future, expect things like utilities and tobaccos with high dividends to benefit. Wisdom Tree has a nice line of ETFs with a dividend focus and that would be a reasonable place to start looking.

All in all, we have a generally “Progressive” government bent at the moment, a clear willingness to bugger the $Dollar and raid the piggy banks of the nation for the benefit of the government, and The Fed is happy to be complicit as are the Repulicans. So time for a Real Assets bias and a OUTUS Dividends bias (Out Of The US) or at a minimum a bias to dividends in the US that are inflation protected.

Sidebar On Energy

Natural Gas started the week at about $2.20 and rose to about $2.5 before falling again. This is incredibly cheap. This will make production of chemicals in the USA relatively cheap and also will push toward using more natural gas for things like electricity generation and trucking. There will be many ‘plays’ develop in this area, but one is CLNE the T.Boone Pickens company that is building natural gas gas stations and doing conversions of long haul trucking to natural gas. That chart shows a new run taking off too:

CLNE Natural Gas for road use

CLNE Natural Gas for road use

Realize that this can be a fairly volatile stock, but it is likely to grow long term (while the wobbles can also be traded). So “buy the dips” and expect that any oil shock will also reflect here (in either direction).

Here is a chart of the chemical names. DD is Dupont. DOW is Dow Chemical. EMN is Eastman Chemical. Vs. GLD and SPY as benchmarks.

Selected Chemicals vs Gold and S&P500

Selected Chemicals vs Gold and S&P500

So, is everything all rosy now? Nope. Wage growth is still problematic and hiring is still not doing well. Overall we have a lot of risks still in front of us. This is NOT a broad endorsement of all stocks. For example, Panama is expanding the Panama canal to bypass the rails (for carry of goods from China to the East Coast). As that completes, California ports will “take a hit”. (Gee, folks looking for ways to avoid California costs and taxes… I wonder why… /sarcoff>)

So in a year or three, rails will suffer some lost haulage and we’re likely to see some reduced long haul trucking as well. But that will be a few years out. For now the Rails are hauling coal to ship to China and the long haul truckers are eying cheaper natural gas as fuel.

OK, enough for today, more when I do the next WSW. For now you can look at the last one, and “click through” it to the charts in the infrastructure postings to survey “what’s hot and what’s not”. While the ‘news flow’ is generally about the potential for a ‘dip’ soon as things have run up a bit off a bottom: Remember the rule about bottoms… Price crosses the SMA stack then returns to touch it from the top side. That’s the safest buy point. I’ll buy a partial position on the expectation of a crossover (as a trade) then can double it if the position performs as expected and we have the SMA stack crossover. If it’s already had a crossover and is NOT at the SMA stack (but above it), you can still do the ‘scaling in’ wiht 1/2 a position now (so if it just keeps running you have some position) but if it returns to the SMA stack you ‘fill out the position’ then with a buy of the other 1/2. The general market rule is “buy the dips, sell the rips”; but sometimes the “rips” can be ripping for a fairly long time. Right NOW the fast money traders are bidding things up on The Fed news, and I’d expect a bit of a dip in a few days, but remember too that at the end of each month “new money” flows in from folks with investment plans at work. Buying now and selling in the first few days of February would be a reasonable trade expectation. In any case, exact timing can come from reading the charts. What we know is that real stuff is going to beat bonds and $US for the next couple of years.

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About E.M.Smith

A technical managerial sort interested in things from Stonehenge to computer science. My present "hot buttons' are the mythology of Climate Change and ancient metrology; but things change...
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22 Responses to $16.4 Trillion

  1. TIM CLARK says:

    It’s all depressing when you think about it.

  2. Pascvaks says:

    Had to send a webmail to each of my Senators and my Representative this morning, futile I know, but I had to do something other than sit and fume and flash and burn. It amounted to a dry-spit at a thirteen state Western Wildfire. FWIW –

    “Getting real concerned about all the stupidity in D.C. these days. I’ve come to the conclusion that the Republicans are just going to continue to tread water and do nothing until they get their own man in the White House. That while the House is ‘prepared’ to do something to confirm the results of the last election, their friends in the Senate are playing an old man’s game of twiddle-their-thumbs. Senator, I’m just one little voice, I don’t jump up and down on street corners with a picket sign, or write nasty little emails to everybody everyday. I’m telling you I’m just about as fed up with this President and this Congress as I’ve ever been with anyone ever. I blame the GOP and the DNC equally now, usually I‘m so mad at Democrats I can‘t see straight, and say I‘m Independent and NOT a Republican. I’m so mad at all the B.S. that I’m ready to vote anyone who’s been in federal elected office more than a year out the window and re-boot the federal government back to 1789. What I’m telling you, from way down here at the bottom of the mountain, shouting as loud as I can, is that you’re all as guilty as sin for where we’re at and what we’re NOT doing to fix the problems with the Federal Budget. I can’t hear you Senator, you’re coming through very weak and garbled, there’s no reason in the World for me to think you’re doing anything. Now, it seems, you’re just as much a part of the problem as every other member of Congress regardless of party. If you and the other members of the US Senate can’t fix the problems, why should I ever vote for you again? If you aren’t even seen or heard to be fighting for a fix, despite the stupidity of the White House, why should anyone vote for anyone anymore? After 64 years I’ve come to the conclusion that those most responsible for the Civil War were the members of the US Congress before 1861. I’m getting the impression that those who will be “most” responsible for the collapse of the US tomorrow are Members of Congress today!

    “I’m really not looking forward to hear or see what, if anything, comes of all this party insanity while the country is flushed down the toilet. Are you? Please, re-read Washington’s Farewell Address sometime soon. The Old Man really knew what he was talking about, didn’t he? Have a nice day, Senator! Have a real nice day!”

    (Tar and Feathers, anyone?)

  3. kakatoa says:

    Nice summary of the way the game is being played in Washington. Maybe we need a few more pennies made like this one-
    “Vintage 1974 NIXON Penny GETTING SMALLER Political Novelty Washington Humor Coin”

    for the current players in Washington.

  4. adolfogiurfa says:

    @BTW: Did the Mayans know about this? :-)

  5. gallopingcamel says:

    While I ran for office as a Republican I resigned from the party owing to Bush II’s crony capitalism, TARP and bail outs.

    In the 2008 election I would have voted for Obama if he came out against the bail outs. When both Obama and McCain embraced the bail outs I turned to a “write in” candidate, Boris Johnson, the Lord Mayor of London.

    Boris (the thinking man’s idiot) at least met the constitutional requirement of being “Born in the USA”.

    Will there be anyone I can vote for in the 2012 presidential elections? Sarah Palin did not run and the conservatives like Herman Cain and Michelle Bachmann have already been driven out. While Rick Santorum is a conservative I would not recognise him if we met in the street,

    While Ron Paul makes more sense on economic issues than any of the remaining candidates for the Presidential nomination his ideas on foreign policy are scary.

    I can’t see myself holding my nose long enough to vote for Romney or Gingrich so it looks like another “write in” election. Boris will not get my vote this time even though “Red Ken” Livingstone may make him available soon.

  6. R. de Haan says:

    Blue Republicans?

    Following the debates, Paul is the only candidate who makes any sense on financial, economic and personal freedom issues.

    As for his views on foreign policy I think they can’t be worse than any of the past policies and cutting the spending is a perfect solution to eliminate the deficit in the shortest period of time.

    We have invaded Iraq eliminating Iran’s biggest enemy. Clever move.
    We have supported the Arab Spring revolution the Middle East and North Africa only to see the rise of extreme Islam. Egypt, judging from the election outcome, will become a second Iran and Libya is going along a similar path.

    In the mean time we have sold Saudi Arabia a fleet of the best fighter jets in the world which combined with the Eurofighters create an armada bigger than the Israeli Air Force. Israel is very pleased with this development.

    Obviously our leadership hasn’t considered the fact that the 9/11 attackers came from Saudi Arabia. Besides that, the country is the biggest sponsor of terrorism.

    The billions we squander on financial support of corrupt regimes including the Karzai clan in Afghanistan who have become one of the bigger real estate investors in Dubai.

    To make a long story short, I have concluded that we’re better off doing nothing, which is what Paul proposes, than to continue the catastrophic foreign policies of the past decade.

    Besides that, the priority for every American citizen today is to get his civil rights and freedoms restored. No other candidate but Paul will do that.

    Four years of Paul can’t be worse than the clown we have to put up with today. I am also confident that Paul can handle Obama in any debate.

  7. R. de Haan says:

    I mean, if a climate blog is publishing an article about the TSA and personal freedoms, there must be something seriously wrong.

  8. George says:

    10 year notes of Mexico sovereign debt yield about 6.3% which isn’t bad right now. India 10 year notes are closer to 9%. Pakistan debt was closer to 12.5%. So you can spread your risk around and make some money.

  9. Matthew W says:

    I don’t bother watching the “debates”.
    $1.5 trillion deficit this year and two guys are pissing at each other about who got more Fannie and Freddie money.
    Obama is the issue

  10. Jason Calley says:

    Most of you have probably seen this. It is by Charley Reese, formerly a writer for the Orlando Sentinel. The first version appeared way back in 1985, and though the article has been altered and updated several times, the facts remain the same.


    The 545 People Responsible For All Of U.S. Woes

    BY Charley Reese

    Politicians are the only people in the world who create problems and then campaign against them.

    Have you ever wondered why, if both the Democrats and the Republicans are against deficits, we have deficits? Have you ever wondered why, if all the politicians are against inflation and high taxes, we have inflation and high taxes?

    You and I don’t propose a federal budget. The president does. You and I don’t have the Constitutional authority to vote on appropriations. The House of Representatives does. You and I don’t write the tax code. Congress does. You and I don’t set fiscal policy. Congress does. You and I don’t control monetary policy. The Federal Reserve Bank does.

    One hundred senators, 435 congressmen, one president and nine Supreme Court justices – 545 human beings out of the 235 million – are directly, legally, morally and individually responsible for the domestic problems that plague this country.

    I excluded the members of the Federal Reserve Board because that problem was created by the Congress. In 1913, Congress delegated its Constitutional duty to provide a sound currency to a federally chartered but private central bank.

    I excluded all but the special interests and lobbyists for a sound reason. They have no legal authority. They have no ability to coerce a senator, a congressman or a president to do one cotton-picking thing. I don’t care if they offer a politician $1 million dollars in cash. The politician has the power to accept or reject it.

    No matter what the lobbyist promises, it is the legislation’s responsibility to determine how he votes.


    Don’t you see how the con game that is played on the people by the politicians? Those 545 human beings spend much of their energy convincing you that what they did is not their fault. They cooperate in this common con regardless of party.

    What separates a politician from a normal human being is an excessive amount of gall. No normal human being would have the gall of Tip O’Neill, who stood up and criticized Ronald Reagan for creating deficits.

    The president can only propose a budget. He cannot force the Congress to accept it. The Constitution, which is the supreme law of the land, gives sole responsibility to the House of Representatives for originating appropriations and taxes.

    O’neill is the speaker of the House. He is the leader of the majority party. He and his fellow Democrats, not the president, can approve any budget they want. If the president vetos it, they can pass it over his veto.


    It seems inconceivable to me that a nation of 235 million cannot replace 545 people who stand convicted — by present facts – of incompetence and irresponsibility.

    I can’t think of a single domestic problem, from an unfair tax code to defense overruns, that is not traceable directly to those 545 people.

    When you fully grasp the plain truth that 545 people exercise power of the federal government, then it must follow that what exists is what they want to exist.

    If the tax code is unfair, it’s because they want it unfair. If the budget is in the red, it’s because they want it in the red. If the Marines are in Lebanon, it’s because they want them in Lebanon.

    There are no insoluble government problems. Do not let these 545 people shift the blame to bureaucrats, whom they hire and whose jobs they can abolish; to lobbyists, whose gifts and advice they can reject; to regulators, to whom they give the power to regulate and from whom they can take it.

    Above all, do not let them con you into the belief that there exist disembodied mystical forces like “the economy,” “inflation” or “politics” that prevent them from doing what they take an oath to do.

    Those 545 people and they alone are responsible. They and they alone have the power. They and they alone should be held accountable by the people who are their bosses – provided they have the gumption to manage their own employees.

  11. kuhnkat says:

    R de H,

    I would whole heartedly agree with you, except, RP doesn’t seem to be able to recognize Islam and Sharia as a domestic problem either. An RP presidency would probably just add White Supremacists to the list of people we AREN’T allowed to profile!! 8>)

    Mathew, Obie can only get reelected by massive voter fraud that should see an uprising, if he is still actually on the ballot in enough states. Georgia will probably take his name off encouraging other states to follow their lead. It is finally sinking in to people’s minds that Obie isn’t a Natural Born Citizen because his father wasn’t a citizen. This disqualifies him no matter WHERE he was born!! The worry now is Hitlery again.


    “…in the 1875 unanimous Supreme Court ruling of Minor v. Happerset, the Supreme Court explicitly held a “natural born Citizen” to be a Citizen whose parents were both U.S. Citizens at the time of the person’s birth.”

  12. kuhnkat says:

    In the interests of Conspiracy Theorists everywhere, I should mention that people who use the Justia.com DB claim that this case was apparently not indexed correctly or had references tampered with and is why it wasn’t found before the election!!


    The owner of Justia.com was part of the Obama ’08 group. As most of us don’t have access to Lexis or Westlaw, and those who do mostly either supported Obie or wouldn’t have even considered the possibility that he ISN’T a citizen, this pretty much stifled action against him.

  13. Jason Calley says:

    @ kuhnkat

    Let us suppose that it were proven that Obama is NOT a “natural born US citizen.” Do you really think that it would make a difference? I do not see any convincing evidence that the US Constitution is in effect, nor any evidence that it has been in enforced for some decades now. If BO came out and said, “Hey, you got me! I was born in Kenya!”, the courts would not rule against him, the House would not impeach or convict him, and the US military would continue to obey his orders. None of those groups, neither courts, House nor military have shown any action to uphold the Constitution in the last fifty years. Why should they start now?

    I disagree with him strongly on this, but even President Bush said that the Constitution “is just a G-d d–n piece of paper!” That is what the folk running this nation agree on, Dems and Repubs. Proving that something violates the Constitution will accomplish exactly zero. Heck, even most citizens don’t really want to see it enforced. “Too old fashioned, too radical, too scary!” I wish it were not so, but look at the recent past.

  14. E.M.Smith says:

    @Jason Calley:

    Or the more distant past…

    At one time not too long ago (20 years? 15?) I was P.O’d at the current band of thieves for not following the good example of our “Founding Fathers” and being as moral, honest, and bound by the constitution as they were.

    Then I spent a bit more time re-learning the history of the Louisianan Purchase and how Jefferson was instrumental in making it happen despite it being unconstitutional for the Federal Government to buy the land.


    Jefferson and the Louisiana Purchase
    Jefferson Compromises His Beliefs for a Huge Achievement

    By Martin Kelly, About.com Guide
    The Louisiana Purchase was one of the largest land deals in history. In 1803, the United States paid approximately $15 million dollars for over 800,000 square miles of land. This land deal was arguably the greatest achievement of Thomas Jefferson’s presidency but also posed a major philosophical problem for Jefferson.

    Thomas Jefferson the Anti-Federalist

    Thomas Jefferson was strongly anti-federalist. While he might have written the Declaration of Independence, he definitely did not author the Constitution. Instead, that document was mainly written by James Madison. Jefferson spoke against a strong federal government and instead advocated states’ rights. He feared tyranny of any kind and only recognized the need for a strong, central government in terms of foreign affairs.

    Jefferson’s philosophy concerning the role of the central government can be most clearly seen when investigating his disagreement with Alexander Hamilton over the creation of a National Bank. Hamilton was a staunch supporter of a strong central government. While it a National Bank was not expressly mentioned in the Constitution, Hamilton felt that the elastic clause (Art I., Sect. 8, Clause 18) gave the government the power to create such a body. Jefferson completely disagreed.
    He felt that all powers given to the National Government were enumerated. If they were not expressly mentioned in the Constitution then they were reserved to the states.

    Jefferson’s Compromise

    How does this relate to the Louisiana Purchase? By completing this purchase, Jefferson had to put aside his principles because the allowance for this type of transaction was not expressly listed in the Constitution. Waiting for a Constitutional amendment might cause the deal to fall through. Therefore, Jefferson decided to go through with the purchase. Luckily, the people of the United States basically agreed that this was an excellent move.
    America did not have the money to pay the $15 million outright so they instead borrowed the money from Great Britain at 6% interest.

    Importance of the Louisiana Purchase
    What were the effects of Jefferson’s decision to go against his own philosophy concerning a strict interpretation of the Constitution? It can be argued that his taking liberties with the Constitution in the name of need and expediency would lead to future Presidents feeling justified with a continual increase in the elasticity of Article I, Section 8, Clause 18.
    Jefferson should rightly be remembered for the great deed of purchasing this enormous tract of land. But one wonders if he might regret the means in which he earned this fame.

    So if the very folks who WROTE all those grand documents went right out and violated them and founds ways to make them more rubber… what hope is there for folks 200+ years later with no vested interest?

    Oh, I note in passing that the constitution specifically forbids the Federal Government from owning land other than for Washington DC, Post Offices and Post roads, and military bases. It wasn’t just a quibble over ‘enumeration’ as the article implies, it’s a specific “you can only own these kinds of lands”. Talk about an ignored clause…

    It was at that moment that I abandoned all hope of a truly constitutional government and realized that our current crop of crooks are at least as bound by the constitution as those who founded the country, as sad as that statement is when correctly understood…

    BTW, it’s been a very long time since I’d seen that article about the 545. It was good to be reminded…


    At this point, with the Dimocrats all vested in him as the first Black Messiah, if he WERE found to be ineligible, they would simply amend and move on… It would be accomplished in one weekend…

    @R. de Haan:

    At the risk of turning this into a “Birther” thread, that link you gave:


    sites an asserted AP article that has pretty much been shown to be a hoax. Not that it would matter anyway…

    But in general, yes, I agree with Ron Paul more than most of the other folks on the Republican Debating Team… They’ve slowly pruned out all the ones I liked most, and of what’s left, the two front runners are not on my “most interesting” list…

    We’ve got Gingrich: An insider’s insider playing the suck money out of Fanny and Freddy game just like his friends all over DC. Polarizing and likely to offend just about everyone on the left and at least 1/2 of the middle.

    Or Romney: I’d call him ‘boring’ but that would require that I be inspired enough to have an opinion about him.. Placid? Empty Suit? Having made money the old fashioned way; by shaking down companies via the old buyout-pillage-dispose route. Ready to scoop up more government cash as an insider and with about as much devotion to principle as the next Big Deal requires…

    Santorum is a decent guy with OK ideas – if only he didn’t come across as a recent college graduate who’s trying to look important as he whines about the other folks positions.

    And Ron Paul, who has generally had a good handle on what is actually going on and what is actually needed; but fails utterly to realized that 75% or so of the population doesn’t want his ‘follow the constitution’ as that would reduce their cut of the take… Oh, and he comes across like someone’s crazy uncle from a remote rural county without a lot of TV or internet access.. Also, of the 25% who does want his ‘follow the constitution’ method, at least 1/2 of THEM don’t like him telling them to be nice to foreigners and respect their sovereignty; they WANT to go bomb people and blow things up…

    Would I take any of them over Obama? In a heartbeat.

    Inspired by any of them? Not at all…

    Oh Well.

    All I can figure is that the ‘vetting’ process that picks who gets to be in the primaries (i.e. who can be manipulated and / or bought by the power structure) selects for pretty lame options; then they only let on the “least likely to succeed” populist candidates so it LOOKS like you have a choice… but really have nothing better than their hand picked “junk” as reasonable “choice”. I know, it sounds like a ‘conspiracy theory’. But if it’s real it’s not a theory, and party politics is all about ‘conspiring’.

    The alternative, that THIS is the best we’ve got, just seems very implausible to me…

  15. gallopingcamel says:

    It is truly shocking to see our debt at $16+ trillion. Much worse to realise that none of the likely candidates for presidential office will do anything about it.

    It is not the fault of the candidates; they are pandering to the electorate. The majority of the electorate wants the hand outs and bail outs to continue even if it means balooning debt.

    When the USA defaults on its loans the consequences will be much more severe than the Greek default. The “Austerity” that will follow will lead to civil unrest on a terrible scale that won’t be confined to the USA.

  16. gallopingcamel says:

    Someone pointed out that Apple’s net worth just rose to over $400 billion, slightly more than the net worth of Greece.

    Just to get things into proportion, Obama in his second term may be able to hamstring the US economy but companies like Apple will succeed in spite of everything he does.

  17. E.M.Smith says:


    The USA will never ‘default’ on the debt for the simple reason that it has the printing press. It will print all the pretty paper needed to nominally pay the debt. It has been using this technique since about 1970. During that time the dollar has lost 95% of it’s then common value. That was a 95% write down of any debt carried forward (substantially all of it was rolled forward, not paid off). That is WHY sovereigns use the printing press instead of austerity and discipline. That is also why the EU is in such trouble: Their central bank can not create cash by expanding it’s balance sheet infinitely and loaning it to the printers… and the individual countries have limits on what they can print.

    Does that really reduce the damage of the ‘default by inflation’? Not really, but it hides it so folks don’t know who to blame quite so well… It shows up in huge price increases (inflation) dropping savings value and dislocations of investment activity as interest rates skyrocket. Still painful, but the politicians of the left can blame the banks and capitalists then…

    Will any politician walk away from a system that lets them buy votes and grease the palms of powerful supporters with Government Favors at the expense of an unknown future class? Nope. (Well, maybe an ‘almost nope’, Reagan DID do it to some extent via very high interest rates; yet even he increased the size of government long term, so it was more a ‘tuning the process’ of handing out favors than ending the growth of government spending.)

    At any rate, that is WHY we have an ‘only gold and silver shall be money’ in our constitution, to prevent just what is happening. But in the 1970s Nixon finally just walked away from that part of the constitution (though others had damaged it in prior years via issue of paper that was nominally backed by metal but in reality was not.)

    Short form: Countries with a sovereign paper currency print and inflate instead of doing ‘austerity’. Countries with a shared currency and central control on their printing, overspend and borrow into ruin, then have ‘austerity’ and social unrest. Countries with a currency based on gold or silver tend to be cyclical with demand for metals, but stable long term.

    Per Apple:

    And where are all those Apple products made?

    Not in the USA…

    Foxconn in China.


    So is it America that is enabling Apple to grow so much, or China?

    Basically, Apple puts its high end design in the USA along with some administrative functions, but all the production is from China. You can interpret this in either of two ways:

    Apple is getting manufacturing from the lowest cost place, but it is the Apple design based on an American System that matters.

    China is borrowing American design to dominate manufacturing.

    IMHO, it’s a blend of both. BUT, the bottom line for me is that America has driven all the non-specialized parts of Apple to China…

    So yes, American business has found a way to survive. By moving ever larger parts of their operations somewhere outside the country and leaving here their Name Plate, Headquarters, Marketing / Sales, and some Engineering. Oh, and a very large Legal / Tax / Compliance department…

    That can only go on so long before folks decide to just ‘re-candle’ and move the whole thing somewhere else. We’ve already seen a couple of those (though the names escape me at the moment… only had my first cup of coffee ;-)

  18. adolfogiurfa says:

    @E.M. Unless….US importers being asked to pay in a different currency or in the event there is a sales run of US debt papers. You know more than us of these probablilities. In any case it is not advisable printing money like being crazy.

  19. Chiefio,

    Companies that move their headquarters and white collar operations “Off Shore” are usually highly profitable ones. They move to enjoy low corporate tax rates that a few countries offer (e.g. the Republic of Ireland with 18% corporate tax). Recently some ex-Comecon countries have reduced corporate taxes to ~10% so it will be interesting to find out if any of them land a big fish.

    Gingrich, Paul and Romney advocate lower corporate tax rates in the USA. Would any of them make good on that promise?

  20. E.M.Smith says:


    Presidents promise anything and everything, but only congress can deliver.

    Unless a large Tea Party / Independent / Stop Spending group of folks end up in Congress, it will just end up ‘spending as usual’…


    Oddly, it doesn’t really mater what currency you have to pay in. Heck, you can get a Swiss checking account that lets you write in the currency type at the moment you write the check… (US Checks have a pre-printed “Dollars” at the end of the line. Swiss banks can print them with a blank line and you write in Euro or Dollar or Yen or…)

    All that matters is quantity of excess spending above revenue by Congress and the way The Fed packages / disposes of it. Everything else is just artifacts…

  21. Pingback: WSW, Saturday, 25 February 2012 « Musings from the Chiefio

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