Price of Gold

Why is the price of everything going up and up? Could it be that the modern economic fantasy of perpetual motion growth is climaxing in its inevitable failure?

So, while the end-game lasts, why not stave off that nagging sense of futility by piling your gold ever higher and higher and paying off security guards to chase away any poor people who might get hungry and try to get a few crumbs off you, the filthy scrounging bastards!

Check out your investment ...

Yes, this is how the 'libertarians' 'real world' operates. Their sickness can only be cured by gold.

Bottom Massage

“… 200 years of abundant energy have allowed us to build an extremely complex civilization based on dozens of interrelated systems without which we can no longer live - at least not in the style to which we have become accustomed … Those who believe that ten years from now we will be able to get along with much reduced government have little appreciation of how modern civilization works or how bad things are going to get as fossil fuel energy fades from our lives …”

Read more at “peak oil crisis: the future of government” by Tom Whipple.

And more on 'bottom bouncing' at Shadowstats, where Walter J. "John" Williams notes that "despite minor changes to the system, government [economic] reporting has deteriorated sharply in the last decade or so." Can this be purely accidental? Surely not. After all, covering the hideous truth in a cheering blanket of confusion always helps, leaving only a few suspicious buggers to write dry headlines like  "November Jobs Increase Was Statistically Indistinguishable from Decline."

The Ever-Elongating Minsky Moment

There’s just no second-guessing the cold hard uncertainty of life is there?

From Wikipedia: “The financial crisis of 2007 to the present was triggered by a liquidity shortfall in the United States banking system … The collapse of the housing bubble, which peaked in the U.S. in 2006, caused the values of securitities tied to real estate pricing to plummet thereafter, damaging financial institutions globally."

I seem to remember that last year it was only “the financial crisis of 2007 - 2009.”

These economists! Just grasping through the mist for any substantial thing, can somebody, anybody, explain to me intelligibly whether Paul McCulley was advocating, mocking or merely predicting when he said “"There is room for the Fed to create a bubble in housing prices, if necessary, to sustain American hedonism”?

And Paul Krugman, NYT in 2002?

One economist who truly did have the wit to see what to many of us non “masters-of-the-universe” was horrifyingly obvious, namely that what goes up must come down, and that perpetual growth is as impossible as perpetual motion, was Ann Pettifor:

“There were some unkind comments on my column of August 29 2006. In it, I argued that last summer's fall in house sales in Florida and California were canaries in the deep vast coal mine of US credit; that the impact of a credit/debt crisis in the US would have a much greater impact on us all, than the crisis in Lebanon ..."

"The scale of the crisis is beginning to be grasped. However, deniers are still at work, spreading disinformation, delusions and, in some cases, downright lies about the real state of the international financial system. "

But if I may venture to disagree with Pettifor, it seems to me that the full scale of the crisis has NOT been grasped.

There is no going back to business as usual. You can try, but it won't work.

Revolutionary Fire

What the hammer? what the chain?
In what furnace was thy brain?
What the anvil? What dread grasp
Dare its deadly terrors clasp?

When Blake rhymed his metaphorical Tyger, it was early days of plutonomic revolution. Now the "choice is between who will be destroyed the banks, or labor" says Michael Hudson a trifle apocalyptically, perhaps.

“From Brussels to Latvia ... The aim is to roll back wage levels by 30 percent or more, to depression levels, on the pretense that this will “leave more surplus” available to pay in debt service. It will do no such thing, of course. It is a purely vicious attempt to reverse Europe’s Progressive Era social democratic reforms achieved over the past century. Europe is to be turned into a banana republic by taxing labor – not finance, insurance or real estate (FIRE).”

“'Join the fight against labor, or we will destroy you,' the EC is telling governments. This requires dictatorship, and the European Central Bank (ECB) has taken over this power from elected government. Its “independence” from political control is celebrated as the “hallmark of democracy” by today’s new financial oligarchy. This deceptive newspeak evokes Plato’s view that oligarchy is simply the political stage following democracy. The new power elite’s next step in this eternal political triangle is to make itself hereditary – by abolishing estate taxes, for starters – so as to turn itself into an aristocracy.”

“... Europe is ushering in an era of totalitarian neoliberal rule.”

Read full post here.

The FIRE economy pretty much works on thin air, thaumaturgically creating what we now call money, out of nothing more tangible than pixels, paper and debt. Here in the West we've almost entirely given up making anything real, and have tied our future, such as it is, to Finance, Insurance and Real Estate. Nice clean office jobs with no nasty iron-pumping testosterone or sweat or anything horrid like that. Just what Mother would approve.

Unfortunately for us though,  a "collapsing FIRE Economy is accompanied by debt deflation, falling demand, debt defaults, business failures, and rising unemployment. The Great Depression in the US in the 1930s is a famous example of a debt deflation that followed the collapse of a FIRE Economy. That debt deflation ended with WWII …" according to fireeconomy.com.