The Great Debate continues:
Deflation? Or Deleveraging? My bet is on the later, and we will know soon enough. If the monetary stimulus and liquidity injections working its through our system work and re-inflate... well, we will know it was massive de-leveraging. If not, then it was deflation.
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Remember all that debate on weather or not the U.S. should "Bail Out" the banks? Not much debate anymore. Europe, Asia, the U.K., Australia, the IMF, etc... all seem to think we should "do something"... and now they are.
You can argue all you want about moving the world financial system away from a credit based system, but if and when you actually do it - the Great Depression will look like a warm up. It WILL happen at some point, but so do death and taxes.
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It would seem that the financial crisis will lead to a Democratically controlled White House, Senate, and Congress. Though I have been a life long Republican, this might actually work out for the best. The energy crisis is coming, and soon. We will need a government that can get things done without having to compromise. The Democrats are going to get an opportunity to show that they are competent, and not just reward their constituents (not that the Government will have the money to do so, but that never stopped anyone before).
I have much to say about how the Bush Admin's attempts to rally the US$ and depress Oil prices had some pretty significant unintended consequences - like a world wide financial collapse and handing the Presidency to the Dems complete with a yellow ribbon - so stay tuned.
Back soon,
Mentatt (at) yahoo (d0t) com
7 comments:
Obama will take office in January, and in 1-2 years, will be found to be helpless because we are too far gone. The world banks will not allow the bad banks to fail, and that will prolong what phase we are entering now. It is not a liquidity problem -- the banks are choking on cash and credit even now. The problem is no one wants to borrow with their jobs threatened, and you can't pass a law saying people have to take out loans. The newest facet to this is we are gonna end up borrowing even more money (and at some point, possibly start printing dollars) to try to get this phase over with. That will fail. And when this phase is over, peak oil will be waiting for us at the end, as some here have suggested. Not happy at all.
And by the way, if this season has shown anything, Republicanism is a fraud. We have fatuously proclaimed to the world that being a capitalist democracy is the way to go. While we, like a bunch of slugs, are crawling to the government to bail us out and "socialize the losses." Republicanism is a nice concept, up until it hits the wall called reality. It is a fraud, which the voters here will verify shortly. Bailout nation. Pathetic.
Cheer up. The shopping malls and video fantasy empire have been pretty meaningless. The whole "consumer" trip is getting a bit jaded.
It's time for Mercans to move on and figure out something new and better. We don't need to be sucking down 30% of the planets resources to have a quality existence. Besides, that 30% is courtesy of the US military enforcement of the global resource and dollar reserve currency arrangement which we are fast becoming too broke to afford.
Bureacrat:
I have heard the "you can't push on a string" argument since I was too young to get lucky...
This might be the first, but it has never happened before.
The problem, though, is that the energy crisis might show up, and screw up everything.
Bureaucrat:
The Republican party has been hijacked by a bunch of spendthrift religious zealots.
I am an Agnostic, libertarian - and 30 years ago most Republicans were of this ilk.
If it weren't or the spending policies and government interference, I would likely have been a Democrat.
But let me ask you something... Do you REALLY think it a good idea to have only ONE party? The Democrats? Even if that happened, (at some point that party would biforcate anyway), it would not last long.
No, a new group will likely seize power in the Repubs, and it can't happen too soon.
>The problem, though, is that the energy crisis might show up, and screw up everything.<
Jeffers- the world is probably on mid-late plateau as global depletion goes. But the US is presently exchanging a lot of US financial paper for 13,000,000bbs/day of the world's most valuable resource.
And the US financial paper is NOT wanted any longer- and only used as a matter of necessity for global trade. What do we trade for all that imported oil when US paper is no longer accepted? The US financial sector is violently contracting now. A basket of currencies ie yen, euro, gold ruble, gold arabian dinar has been suggested as a replacement global currency and is being worked on.
Military protection services can be traded for oil ie keeping Saudi monarchs from being overthrown. But this is a mixed bag as oil exporters see us as unable to prevail in any of the current conflicts- Iraq, Afghanistan, Georgia. And they know that the US military presence causes as many problems as it solves. The 800 military bases around the globe will soon be unaffordable.
I am guessing that if the US Treasury market implodes that this could advance the US far down on the advanced depletion curve almost instantaneously- unless we find a way to fight for those imports without causing even less oil to be available.
Trading agricultural products for that much oil would not seem to make up for the shortfall- especially as ag products will be getting more expensive to produce.
In response,
I'm sure a bunch of Democrats like me also have Libertarian viewpoints (I think the wars/regulation on drugs, guns, alcohol and prostitution are hopeless) and also "Republican" viewpoints (I don't believe throwing money at people does much good, nor am I big fan of criminals). It is the hardcore Repubs who have a prob with reality. They are wrong about: abortion, stem cell, low taxes as an answer to everything, picking fights with other countries, male dominance, capital punish, etc etc. Just cause you are a Democrat doesn't mean you are a political pushover. And yes, 2 political parties is preferable, though this time around, one of them is destroying itself.
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