Bernanke is a disingenuous liar with a memory problem. He is also an economic dunce who does not understand the cause of great depression nor could he spot a housing/credit bubble visible to nearly every blogger in the country. However, like his mentor Greenspan, Bernanke believes that every problem can be cured by throwing money at it. Finally, he is a creative, political power grabbing hack who gives memorable speeches about throwing money out of helicopters.I could say that about everyone working in the government's economic and data reporting system. Still, Bernake will, and should be, reappointed. He has done exactly what was asked of him.
"Savoir-Faire is Everywhere!" Klondike Kat
I have no faith in the data coming from the government, World Bank, or IMF. Not that I think they are trying to deceive us. I don't. Nor do I think that the world stock markets will bang through to new lows this year - there is simply too much stimulus cash sloshing around. But stimulus cash won't solve the state and local tax revenue declines (or that of the Federal Government). I have laid out the declines of Oil supplies to the importing nations over the next 5 years, and I do not see any of the big data aggregators taking that into consideration. That does not mean that markets cannot surprise to the upside in any given year, and any such surprise would likely come in the next year or 2.
I see the possibility of some kind of systemic shock in the Muni Bond market as EXTREMELY high. Not that I know what it is going to look like... it won't be as simple as what we are all expecting (California to default) - things are never that simple - yet California WILL default, and so will a number of other Muni bond issuers.
If I am correct in this, money will come flying out of the Muni bond market. Where will it go? THAT, is the $64 question. How ironic would it be if the money fleeing Munis went into Treasuries who then turn around and bailout the state and local governments. Delicious!!
"Savoir-Faire is Everywhere!!"
The Oil import numbers I covered in my recent post "A Review of the Data", along with media reports and manipulations, agricultural data, and the body politic have left me with a rather unpeaceful, uneasy feeling (from the unEagles).
I will be covering this over the next several posts, as I want to speak with my brain trust, but I will touch on it here.
The numbers I laid out in the Review of the Data post could easily have a lull (flatlining rather than declining supplies), but they could also have a downdraft (black swan, war, whatever/what may). Donal Lang pointed out to me recently that rarely is the the problem outright/absolute shortages of Ag products - the problem is an inability to pay for them (lack of money). That rang true with me. I have been conducting independent research into self sufficiency over the past 4 years. At first I thought, "hey, this is doable"... but the more I think about it, it is only doable IF you have significant means (the ability to own the small holding with no mortgage and furnish the homestead with all of the tools, implements, and equipment needed without borrowed money), are incredably motivated, are in excellent shape (relative to today's average obese person), and have the support of your wife and family. As a statistical repreresentation of the populace, this number is NIL.
So that ain't gonna work on a macro level.
The media comes into play here with their reports of assumptions from the economist community. "Green shoots", an economy that is "leveling out", etc... might even be true, BUT, the economist community is assuming that the Oil will be there to support growth - and the data says otherwise.
How can I be so sure of the Oil supply data? "Sure" is not a word we use in probility mining. We are looking for the most likely outcomes - not what we "want" to happen nor "wish" would happen - but that which is most likely to happen.
The Peak Oil Community, in my humble opinion, has been worried about the wrong thing(s) (at least for the next 10 years): "The 3,000 mile ceaser salad", lack of fuel for farm equipment due to fuel shortages, transportation costs for food... while these energy inputs are a significant protion of the industry's energy footprint - when compared to the larger economy that become quite manageable (at least for 10 years).
SO..... here comes the body politic's contribution to the "fine mess we are in"...
It seems to me that we have become a nation of James Carville's (Bill Clinton's BRILLIANT operative)... running a personal war/quick response media room to spin every issue that comes up: Our guy/group f*cked up here (Obama and Iran)... so we are going to counter with XYZ and 123 (he's a wonderful family man!) - but we are not going to fix our error. No, that would require us to admit the error in the first place... we can't do that! That would be, well.... UNAMERICAN!!
Talk is cheap. Programs and agencies are expensive. What, exactly, has the department of energy done that is worth its $28 BILLION budget? What have they done that is worth a $1 BILLION budget? And where, exactly, does the money come from for the $28 Billion? Do you have any idea how many of these worthless programs we have? But that ain't the bad part... The bad part is we have TENS of MILLIONS of people that have been so addicted to certain social programs and policies (this includes the pensions and disability payment for people that worked for these worthless programs... in addition to the usual suspects). These people have little to no idea how to do anything for themselves, and the policiy response has been non-existant, and when you bring that fact up... the James Carville wannabee's come out of the woodwork and bring up all of the ghosts of administration's past.
It looks to me that the U.S. will lose about 25% of its total daily Oil supply into the system between the end of 2007 and the beginning of 2013. That's 25% over 5 years, and we are a third of the way through those 5 years. Now throw in a $2 TRILLION budget per year deficit that just isn't going away, at a time when the unemployment rate is 10% (and the U6 number is 16%) and climbing, savings are at a historical low (so the idea that folks can go out and buy the equipment - fencing, tools, amendments, seeds, livestock, etc... - they would need to become more self-sufficient just is NOT GOING TO HAPPEN)... Where are the resources going to come from for the transition? After all, as Donal so correctly (IMHO) pointed out, the problem will be an inability to PAY for it all.
This would have to be the most impressive balancing act EVER.