One of my recurring themes has been the total lack of thought leadership that attends this ultimate age of greed, gluttony and nihilism. It should come as no surprise to historians (but it does), that denialism and disinformation would be highly prevalent at a time when "extend and pretend" has become the de facto economic strategy of the day.
Today, I almost fell off my chair when I read Doug Kass's "10 More Reasons to Buy American", which I reproduced below with my comments. He is not advocating to buy American products (are there any left?), he is advocating to buy American stocks for the 1% who still have capital available for said purposes. (Doug's text is highlighted in white. My comments follow each point).
Once again, you can't make up this bullshit. Here we are already well into the greatest economic breakdown in U.S. history, and yet fat and happy 1%ers still abound to tell us why everything is basically A-ok. Overall, I can summarize Doug's entire pseudo-patriotic call for the status quo as "Let them Eat Cake":
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Doug Kass: Below are 10 reasons for my optimism.
Kass: U.S. relative and absolute economic growth is superior to global growth. The U.S. economy, though sluggish in recovery relative to past expansions, is superior to most of the world's economies (with the exception of some emerging markets) in terms of diversity of end markets, quality of global franchises, management expertise, operating execution and financial foundations.
Me: I already addressed this nascent "de-coupling" fantasy just recently here. First off, the U.S. is now borrowing 10% of its economy on an ongoing basis and that is just at the Federal level. Moreover, the U.S. is highly integrated in the global supply chain and requires an ongoing flow of funds from the rest of the world to ensure continuous operations. Europe and the rest of the world cannot fall into recession without dragging the U.S. into the abyss. In any case, the U.S. is equally as insolvent as Europe and would be just as bad off if not for having the reserve currency (see below), so this entire point is ludicrous.
Me: Again, this entire point is garbage logic. Bank of America currently trades for $5/share and the vector is towards zero. U.S. banks have a high degree of exposure to Europe, both directly and indirectly - the recent implosion of MF Global being the canary in the coal mine. So far in 2011, 90 banks have failed and the fun hasn't even started yet. Meanwhile, The FDIC Deposit Insurance Fund which backs all bank deposits, went negative for 7 quarters and only recently returned to positive. The goal is to get the fund back to 1.18% reserve ratio i.e. the FDIC's ultimate goal is to eventually back 1 cent for each dollar deposited. Wow, what a great fucking system, Doug !
Me: U.S. Corporations are sitting on huge amounts of cash, because they would rather lay off employees and outsource to China, thereby further bolstering record profit margins, rather than to invest in the U.S. economy and create jobs. Meanwhile, as I pointed out recently, only a moron assumes that the every company can cut costs at the same time without destroying the economy...
Me: Wow, what a timely day for Doug to tell us how well off the (jobless) "U.S. consumer" is relative to the rest of the world. Just today, headline news "Half of U.S. is poor or low income".
Ayn Rand herself couldn't publish something this callous, if she was alive today.
Me: We've gone Full Retard in politics, and the Idiocrats of the day who campaign non-stop have no clue how to fix any of the current set of problems. As far as Doug's defense "security" assertion, the current level of perceived security is just an extremely expensive and totally unsustainable illusion. Worse, the illusion is sponsored by trade flows between the U.S. and those very countries that represent the greatest potential threat (aka. China).
Me: I agree to the extent of transparency, but the level of regulation has become another key factor in this intractable cluster fuck. Too many special interest groups driving policy and regulation. Too many lawyers in the process at all levels of government. Would you ask a barber if you need a haircut? No. Then why would we ask packs of lawyers if we need yet another law to help justify their profession?
Me: Oil is the most important and yet least secure of U.S. resources. The U.S. became a net importer of oil way back in 1970 and in the intervening 40 years has yet to adopt a consistent energy policy to reduce ever increasing reliance on energy imports. Contrary to what Faux News would tell us, "Drill, drill, drill" is not a viable energy policy, when the marginal amount of oil available in the U.S. pales compared to U.S. daily consumption. Meanwhile, among the current top 15 exporters of oil globally are: Saudi Arabia, Iran, Iraq, Venezuela, Nigeria, Mexico and Russia. Relying on this set of countries to ensure a continuous supply of affordable oil, is a latent disaster.
Kass: The U.S. has a functioning and forward-looking central bank that is aggressive in policy (when necessary!) and capable of acting during crisis.
Kass: The U.S. dollar is (still) the world's reserve currency that is far more solid than the euro.
Kass: The U.S. is a magnet for immigrants seeking a better life. This and other factors have contributed to a better demographic profile in our country that has led to consistent population growth and formation of households. (Demographic trends in the U.S. are particularly more favorable for growth than those population trends in the Far East.)
Me: Paraphrasing what Doug is really saying: "We have a Central Bank that won't hesitate to dilute the money supply, generate inflation and otherwise bankrupt the Middle Class via higher food and energy costs, all the while stimulating asset markets to the benefit of the 1%. "
Me: True, in a, wow what cynically fucked up logic, kind of way. In retrospect, having a reserve currency will be viewed as a curse because it has allowed U.S. policy-makers to accumulate debt and future liabilities far beyond what any other country could achieve. It has also allowed the Federal Reserve to pursue Quantitative Easing (money printing) with relative impunity. Therefore, the ultimate collapse will be that much more devastating, because it will reveal that the underlying economy has become an empty shell supported by short-term financing.
Me: Let's get the house in order, so this can continue to be the case
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