I just read this article on ZH stating that we are doomed to suffer an endless cycle of bubbles and financial crises. Unfortunately, this bubble/bust hypothesis is not a prediction, it's an investment strategy. The current bubble resulted from Wall Street's massive bailout, a stooge Fed, a corporate class willing to throw their colleagues under the bus, and politicians and media willing to turn a blind eye to the entire fiasco. Anyone who thinks that these same factors will obtain after yet another financial collapse, has their head up their own ass. Only the elites don't understand that this time will be "different"...
Last Season of the Kardashians
No surprise, the people at the top of the pyramid haven't figured out what is really going on with this economy. As long as the Dow is soaring ever higher and their wealth accounts are increasing, then everything happening far down the ladder is of no apparent concern. Unfortunately what is really happening, is that with each bubble and bust the developed world is converging on the Third world's standard of living. Lower overall employment, fewer good jobs and falling wages. And to think that this is all occurring at the peak of the business cycle. What does that portend on the other side of another crash when all of the millions of temporary jobs vanish in an instant as they did back in 2008. Of course, then the Idiocracy will finally wake up to the fact that global elites sold everything that wasn't bolted down, and the fact that Bernankenstein is no more than the Wizard of Oz. At that point, I highly doubt that the masses will be standing by idly watching yet another asset bubble being created so the ultra-wealthy can trade Tesla shares back and forth while everyone else's lifestyle is collapsed down to that of a Chinese factory worker. This will be the last season of the fabulous Kardashians for the Idiocracy.
Bailouts are History
No surprise, the people at the top of the pyramid haven't figured out what is really going on with this economy. As long as the Dow is soaring ever higher and their wealth accounts are increasing, then everything happening far down the ladder is of no apparent concern. Unfortunately what is really happening, is that with each bubble and bust the developed world is converging on the Third world's standard of living. Lower overall employment, fewer good jobs and falling wages. And to think that this is all occurring at the peak of the business cycle. What does that portend on the other side of another crash when all of the millions of temporary jobs vanish in an instant as they did back in 2008. Of course, then the Idiocracy will finally wake up to the fact that global elites sold everything that wasn't bolted down, and the fact that Bernankenstein is no more than the Wizard of Oz. At that point, I highly doubt that the masses will be standing by idly watching yet another asset bubble being created so the ultra-wealthy can trade Tesla shares back and forth while everyone else's lifestyle is collapsed down to that of a Chinese factory worker. This will be the last season of the fabulous Kardashians for the Idiocracy.
Bailouts are History
Just yesterday we were again reminded of the overwhelming stupidity behind the Wall Street bailout. Hank Paulson one of the master engineers of the bailout and Goldman Sachs alum admitted that handing out $140 billion in bankster bonuses one year after the financial crisis may have been a mistake. Then he goes on to say that there was no way to punish Wall Street and save Wall Street at the same time. Apparently that is the only line of business where keeping your job (without bonus) is not incentive enough to keep working. Well, we won't have to worry about that huge dilemma this next time.
Never Re-invest in a Ponzi Scheme
Without bailouts there will be no Wall Street. At that point the investor class will realize they will never get paid back on the $33 trillion they foolishly lent back into the global financial system - not that they really had a choice. That $33 trillion will be gone, and never coming back. At that point, I suggest that the marginal propensity to lend will be the limit approaching zero. Meanwhile, in a deflationary environment, owing money is a crushing burden. Prices and wages go lower while nominal debts stay the same. Therefore, the marginal propensity to borrow also goes to zero. No borrowing, no lending, no bubbles. End of story.
[Deflation, least considered, most likely]
A Purging of the Excesses
I am not saying that a deep deflation will be a walk in the park. Far from it. We've all heard stories of what it was like during the Great Depression, and many people across Eastern Europe suffered depression-like economies much more recently in the early 1990s after the fall of the Berlin Wall. Undoubtedly Eastern Europeans will be a lot better prepared for a collapse in globalization than most Westerners. Even within the Western nations however, a large number of people have been suffering ever greater poverty over the past decades which is why we need to end this cycle of boom and busts inflicting ever-greater poverty on the majority while a minority reap ever-greater benefits. The main benefit of the economic reset will be to wipe out the majority of debts via bankruptcy and default, giving people a chance to start over again. It will also level the playing field between small businesses and multinational companies the latter of which enjoy massive cost advantages due to their offshore outsourcing strategy. New tariffs will prevent the relentless inflow of goods from countries that have no labour or environmental standards. In addition of course, the great reset will purge the sociopathic buffoons from their ensconced leadership positions. The age of salesmanship and buffoonery will largely be over. We will suffer the odd demagogue to be sure - since times of tribulation have a way of propelling dark figures to positions of prominence, elevated by a clutch of false promises. Lastly, many people will have to learn all over again what it's like to be a human being and not an undifferentiated corporate drone. The competitive rat race to nowhere will be over, forcing people to consider life beyond Prozac, American Idol, and ESPN. The field of human interest will broaden and deepen once more, the way it has in the past during times of human renaissance. This latter part may well be wishful thinking of course, since some will be tempted to bury themselves in ignorance and otherwise pray to their false idols for a return of the days of shopping malls and mass consumption-oriented gratification. The part about the economic reset however, that is lock solid and already primed for ignition...
Looking forward to it.
[Deflation, least considered, most likely]
A Purging of the Excesses
I am not saying that a deep deflation will be a walk in the park. Far from it. We've all heard stories of what it was like during the Great Depression, and many people across Eastern Europe suffered depression-like economies much more recently in the early 1990s after the fall of the Berlin Wall. Undoubtedly Eastern Europeans will be a lot better prepared for a collapse in globalization than most Westerners. Even within the Western nations however, a large number of people have been suffering ever greater poverty over the past decades which is why we need to end this cycle of boom and busts inflicting ever-greater poverty on the majority while a minority reap ever-greater benefits. The main benefit of the economic reset will be to wipe out the majority of debts via bankruptcy and default, giving people a chance to start over again. It will also level the playing field between small businesses and multinational companies the latter of which enjoy massive cost advantages due to their offshore outsourcing strategy. New tariffs will prevent the relentless inflow of goods from countries that have no labour or environmental standards. In addition of course, the great reset will purge the sociopathic buffoons from their ensconced leadership positions. The age of salesmanship and buffoonery will largely be over. We will suffer the odd demagogue to be sure - since times of tribulation have a way of propelling dark figures to positions of prominence, elevated by a clutch of false promises. Lastly, many people will have to learn all over again what it's like to be a human being and not an undifferentiated corporate drone. The competitive rat race to nowhere will be over, forcing people to consider life beyond Prozac, American Idol, and ESPN. The field of human interest will broaden and deepen once more, the way it has in the past during times of human renaissance. This latter part may well be wishful thinking of course, since some will be tempted to bury themselves in ignorance and otherwise pray to their false idols for a return of the days of shopping malls and mass consumption-oriented gratification. The part about the economic reset however, that is lock solid and already primed for ignition...
Looking forward to it.
