LLPOH’s SHORT Stories # 1

In recent days, there have been several discussions recently on this site regarding unions and their activities. I have had a bit of experience in dealing with unions over the years – and none of it has been positive. Following is one of my experiences with unions.

In 1988 I joined a major international company, and was brought in, along with several other senior managers, to turn around a failing major consumer goods facility located in a small, rural town of 10,000 in the Midwest. The facility employed approximately 2000 people, and was heavily unionized.

The history of the facility was this: the original company was established approximately 60 years prior. A range of products – all heavy metal goods – were manufactured over the years. The original company was privately owned. The founder passed the company to his only son in the 1950’s. The son married, and the couple was childless. The company was by far the major employer, and the couple treated the employees as though they were family, and never attempted to maximize profit. The employees took advantage of this, and made substantial demands, always granted, during each contract negotiation.

The couple of course aged, and there were no heirs. In the early 1980’s the man died, and the wife sold the business to the multinational, as she wanted to ensure its continuation, for the welfare of “her family”.

At this point, the company employed approximately 2,000 people. The average wage for, primarily, unskilled assemblers was a bit more than $20 per hour. The company was by far the biggest employer in the area – the town was almost 100% reliant on the company. House and property prices were near the highest in the state. Schools were well funded. There were signs of prosperity everywhere – cinemas, restaurants, beauty parlors, etc. flourished.

Unfortunately, the facility was not making a profit – it had begun to lose money owing to overseas competition and the steadily rising costs associated with granting the employees their every demand. The new owner had bought the company not for its profits but for its customer base. The new management team was brought in to make it profitable, or to close it down. The men in black hats arrived.

Within several weeks we had come up with the solution. The parent company was prepared to let the facility continue, but it had to generate an appropriate profit. Wages needed to drop to a more appropriate level of $15 per hour, and serious investment in current technology needed to be done to drop the workforce substantially – to approximately 1000 employees. The savings looked for were in the vicinity of $50,000,000 per year. Otherwise, the facility would be closed, and a new facility would be opened in North Carolina, with wages of $10 per hour, and where generous subsidies from state and local governments existed. It was expected that the savings from moving to North Carolina would be approximately $65,000,000 per year. The parent company was prepared to keep the Midwest facility open and wear the $15,000,000 difference – a testament to its goodwill, in my opinion.

We had a contract with the union that was expiring inside of a year. We called the union representatives together, and laid this out for them – exactly as above. We told them it was a non-negotiable situation, and the company had to start making a profit. They laughed at us and walked out. A few weeks later, we got together with them again. By this time they had put together their list of demands – a six percent a year increase over current wages, better benefits, etc. Again we told them what was required – $15 per hour, etc. Again they laughed at us and walked out. They said it was nothing more than a bargaining ploy.

We then organized an off site meeting with the entire workforce. We put together and presented the facts as laid out above – serious restructuring of wages, work rules, and reductions in workforce numbers would be required, or the plant would be shut and production moved to N.C. We gave them 2 weeks to consider, and then met again offsite for their vote. The union representatives -local/state/national – told them that it was a negotiating ploy, that the factory would never be shut, and that they must never take a backward step. All 2000 employees voted to reject the terms.

We immediately implemented the plan to move to North Carolina. We signed contracts and the plant began to be built. We had no further conversations with the union or the employees. Six months later, a few months before the contract was to expire, the union showed up to negotiate the new contract, and had their same demands.
We told them that the plant was to be closed, per our previous meeting, and that we would continue under the current terms until that time. They laughed at us once more, and said it was a bargaining ploy. They did, however, decide to check out whether the plant was actually being built, and sent a team down to N.C. to inspect and take film. What they found was that the entire shell of the facility was up, and some equipment was actually moved in. This of course panicked them.

The came back the next week to meet with us, and had dropped their demands, and wanted us to sign up to an extension of the current contract. We told them the plant was being closed. Word got out to the membership that the factory was indeed being closed, and the place exploded in a major crisis. The next week they came back again, under enormous pressure from the membership, offering to accept our original terms of $15 per hour, etc. We told them so sorry, the plant is being closed – it is too late.

About 12 months later we fired the first 500 employees. We fired another 500 two months after that, another 500 two months after that, and the final 500 two months after that. We padlocked the gate and walked away.

I revisited the town several years later. Property prices had plummeted. The town center resembled a slum. The entire town had gone to rack and ruin. The decision not to renegotiate terms destroyed the entire town and its surrounds.

These are the lessons I learned from this experience:
1) Unions do not care about the health of the company.
2) Unions do not care about their local membership. Unions believe they must hold the line at every facility less it flow through to their national organization.
3) Unions believe that the jobs lost at one facility will ultimately be picked up at another, as the total work will stay the same. This has proven to be absolutely false.
4) Management is prepared to give away almost anything in order to keep the peace. When it comes unstuck, it will be someone else’s problem.
5) Unions are prepared to lie to the local members in support of their national and state goals.
6) Members will listen and believe almost anything the union says.

Does this sound familiar? These kinds of mistakes are being made everywhere by our “leaders”. People everywhere are being mislead about the consequences of decisions being made. People believe what they are told, and the more outrageous the lie, the more likely they seem to believe it. People hang on to failed causes at their long-term detriment. It is happening today, everywhere.

I was the guy in the black hat. I closed the facility, but the one in North Carolina is thriving. Where are the guys in the black hats that we so desperately need right now to address the critical issues facing the country? Who is going to tell the people the truth before it is too late? Would they even listen if told? I do not see it happening. The scenario above will play itself out on a large scale throughout the country. It will be a painful experience.

PUMP IT UP

Down in the pleasure centre,
hell bent or heaven sent,
listen to the propaganda,
listen to the latest slander.
There’s nothing underhand
that she wouldn’t understand.
Pump it up until you can feel it.
Pump it up when you don’t really need it.

Elvis Costello – Pump It Up

I had been planning an article based on the Green Day song – Static Age – about the propaganda, lies and misinformation that are endlessly directed at the American people by the government, the mainstream corporate media, and the wealthy elite that control the levers of our society. Then Barack Obama presented his 2012 Budget proposal, including his 10 year projection for our country. I know you’ve heard the term Peak Oil, but the term that came to my mind when I saw Obama’s budget was Peak Bullshit. I thought that would be a great article name, but some sites wouldn’t like the foul language. I was in a quandary until the Elvis Costello song Pump It Up came on the radio while I was driving to work. Down in the pleasure center of Washington DC, the propaganda, slander and most blatant lies are spoken without a hint of guilt or even the faintest whiff of shame. The politicians in Washington DC on both sides of the aisle believe the American people are stupid, gullible, apathetic and easily manipulated. They may be right, but there are a few people out there who can cut through their bullshit and find the truth.

Obama, Wall Street, and the corporate mouthpieces in the mainstream media have been pumping up the American people for months with false data, unwarranted optimism, bank profits created out of thin air by accounting fraud, and attempting to create an economic recovery built on a foundation of sand, supported only by lies. The Obama budget is worse than a joke. It is a tragic joke. It amazes me that he can stand in front of the American people and present such a lie. The liberal media then unquestioningly presents the budget as a frugal cost cutting proposal that will reduce deficits and inflict painful cuts upon the poor American people. It would be laughable, if it wasn’t so sad. One look at Obama’s deficit projections for FY11 and FY12, presented one year ago, should be enough to convince you that no one in Washington DC has a clue what they are doing.

	Federal	(Deficit)
Year	Spending	Surplus
2011	$3,834	-$1,267
2012	$3,755	-$828

Obama projected a two year deficit of $2.1 trillion. His current projection, just one year later, is $2.75 trillion. He missed it by this much.

The rocket scientists running our country underestimated the deficit by 31% in the space of one year. I suppose that is considered highly accurate for a government drone. Now let’s get some perspective on Obama’s projected FY11 deficit of $1.65 trillion. This is the projected DEFICIT. Do you remember back to the Clinton administration? Did you feel like your Federal government wasn’t spending enough? In 1998 the TOTAL SPENDING of the Federal government was $1.65 trillion. We now run deficits that equal the entire budget of the United States in 1998, without blinking an eye or questioning how we got here. The politicians have scared the populace into thinking that the country will collapse without the Federal Government spending $3.8 trillion of your money, every year.

Static Age

Can you hear the sound of the static noise?
Blasting out in stereo
Cater to the class and the paranoid
Music to my nervous system
Advertising love and religion
Murder on the airwaves
Slogans on the brink of corruption
Vision of blasphemy, war and peace
Screaming at you

I can’t see a thing in the video
I can’t hear a sound on the radio
In stereo in the static age – Green Day – Static Age

The politicians prefer their actions be bathed in shades of grey. The corporate payoffs, backroom deals, union arm twisting and selling of votes to the highest bidder are how business is done in Washington DC. They believe that if there is enough static noise being generated by the mainstream media, then the American public will be distracted and not notice they have destroyed the country. When analyzing Obama’s budget we need some perspective. Below is a chart showing actual Federal spending and deficits from 1999 through 2010 and projections from 2011 through 2021. My assessment is that the Great American Empire peaked in 1999-2000. The unemployment rate was 4% and 64.4% of the working age population, or 137 million Americans, were employed. Corporate profits were surging, along with the stock market. The Federal government was spending $1.8 trillion and generating budget surpluses of $236 billion. The National Debt of $5.7 trillion was only 57% of GDP.

The decline of the American Empire can be seen in the chart of woe. The unemployment rate today is 9%. Only 58.4% of the working age population is employed. Eleven years after peak empire, the working age population has grown by 26 million people and the number of employed Americans has grown by 2.4 million. At least 64.4% of the population would like to be working. This means that there are 14.4 million people who would work if the jobs were available. The Federal government is spending $3.8 trillion and generating deficits of $1.6 trillion. The National Debt is $14.2 trillion, or 94% of GDP. Except for Wall Street banks and mega-corporations, small business profits are weak and the stock market is at the same levels reached in 1999. These are the truths you won’t hear from politicians or the mainstream media.

	Federal		(Deficit)
Year	Spending	% Change	Surplus
1999	$1,702		$125
2000	$1,789	5.1%	$236
2001	$1,863	4.1%	$128
2002	$2,011	7.9%	-$158
2003	$2,160	7.4%	-$378
2004	$2,293	6.2%	-$413
2005	$2,472	7.8%	-$319
2006	$2,655	7.4%	-$249
2007	$2,729	2.8%	-$161
2008	$2,983	9.3%	-$459
2009	$3,518	17.9%	-$1,413
2010	$3,456	-1.8%	-$1,293
2011F	$3,819	10.5%	-$1,645
2012B	$3,729	-2.4%	-$1,101
2013B	$3,771	1.1%	-$768
2014B	$3,977	5.5%	-$645
2015B	$4,190	5.4%	-$607
2016B	$4,468	6.6%	-$649
2017B	$4,669	4.5%	-$627
2018B	$4,876	4.4%	-$619
2019B	$5,154	5.7%	-$681
2020B	$5,422	5.2%	-$735
2021B	$5,697	5.1%	-$774

So now let’s assess the reality of Obama’s ten year budget. If you were to believe the reports in the media, you would think that Obama is cutting deficits and making hard choices. Amazingly, deficits plummet all the way down to “only” $600 billion to $800 billion after 2012. In the chart above, I ignore the revenue side of the equation, because Obama’s assumptions are beyond ridiculous. His assumption of the GDP growing from $15 trillion in 2011 to $24.6 trillion in 2021, a 64% increase, is a fantasy. During the last 10 years, GDP grew by only 51%. So, despite mind numbing debt levels, structurally high unemployment, peak oil, and a rapidly aging population, GDP is going to surge over the next ten years? I certainly believe that. Under the Obama budget, tax revenues will grow from 14.4% of GDP in 2011 to 20% of GDP in 2021. By comparison, the historical average is only 18% of GDP. Some of Obama’s tax revenue assumptions are as follows:

Raising the top marginal income tax rate from 35% to 39.6%. This is a $709 billion/10 year tax hike
Raising the capital gains and dividends rate from 15% to 20%
Raising the estate tax rate from 35% to 45% and lowering the estate tax exemption amount from $5 million ($10 million for couples) to $3.5 million. This is a $98 billion/ten year tax hike
Capping the value of itemized deductions at the 28% bracket rate. This will effectively cut tax deductions for mortgage interest, charitable contributions, property taxes, state and local income or sales taxes, out-of-pocket medical expenses, and unreimbursed employee business expenses. A new means-tested phase-out of itemized deductions limits them even more. This is a $321 billion/ten year tax hike
Massive new taxes on energy, including LIFO repeal, Superfund, domestic energy manufacturing, and many others totaling $120 billion over ten years
Increasing unemployment payroll taxes by $15 billion over ten years
Increasing tax penalties, information reporting, and IRS information sharing. This is a ten-year tax hike of $20 billion.

It is an absolute certainty that the Democrats will lose control of the Senate in 2012. Obama will never get any of his tax increases through a Republican controlled Congress. They are DOA. Therefore, his revenue assumptions are overstated by hundreds of billions every year. Even using his optimistic assumptions, the National Debt would reach $18 trillion in 2015. Using real world numbers, the National Debt will exceed $20 trillion in 2015. In what must be a gag, Obama says that interest on the debt will “only” be $500 billion in 2015. Hysterically, this would mean our debt holders will only require a crumbling empire to pay 2.5% on our debt. How about 5% as a minimum and 10% as a more likely rate? This would put interest on the debt between $1 trillion and $2 trillion per year. The collapse of America is a certainty if Obama’s budgeted spending and deficits play out. Somehow, the majority of Americans are overwhelmed with indifference.

Overwhelmed By Indifference

Some of my friends sit around every evening
and they worry about the times ahead
But everybody else is overwhelmed by indifference
and the promise of an early bed
You either shut up or get cut up;
they don’t wanna hear about it. – Elvis Costello – Radio, Radio

Do you remember when the politicians of both parties were making dire predictions of Great Depressions, economic collapse and 10% unemployment if we didn’t pass their “save an investment banker” rescue package and the $800 billion “jobs creation” stimulus package? They assured the American people that these expenditures were temporary and were only being made to save the country. Before the crisis, Federal spending was $2.7 trillion. The talking heads at the Fed and in the White House assure us they saved the world. GDP is growing and Obama told me we’ve added over 1 million jobs in the last year. Sounds like the emergency is over. The $400 billion per year of emergency spending should now be rolled back, since it was temporary. Therefore, Obama’s budget surely must going from $3.8 trillion back down to a pre-emergency level of $3.0 trillion in 2012. Not quite. You see, government spending never goes down. His proposal shows $3.7 trillion of spending in FY12. Emergencies never end for a politician in Washington DC. Spending equals power and control over our lives. There will always be another emergency that requires more spending.

You are now hearing the spin from the ideologues on both sides of the aisle about their cost consciousness and desire to restrain spending. It’s all a load of bull. Bush and the Republicans added $4.3 trillion to the National Debt during their reign of error. Obama has matched Bush in the space of 2 1/2 years by adding another $4.3 trillion. There is no effort to cut spending. Obama’s budget shows spending rising from $3.7 trillion in FY12 to $5.7 trillion in FY21. The propaganda and misinformation being spewed from these corrupt politicians is mind numbing.

Again, some perspective is needed to realize how out of control our Federal Government has become. According to the BLS, inflation has risen by 33% since 1999. Real GDP has grown by 23%. The population of the U.S. has grown by 10%. The number of employed Americans has risen by 1.8%. The average pay for a Federal drone (aka worker) has risen by 58%, while the average pay for real workers has risen by only 30%. Therefore, the average non-government employee has seen a decrease in their standard of living as inflation has risen faster than wages. As you can calculate yourself, Federal government spending surged by 124% between 1999 and today. Have you noticed a doubling in service level, competence, educational scores, new energy solutions, or safety and security? What did we get for an extra $2.1 trillion of spending?

What we got was exhausting wars of choice, less freedom, less liberties, less safety, more rules, more regulations, more bureaucrats, more corruption, a financial collapse, and a government that has put us on a path to fiscal ruin. We’ve almost tripled spending on Defense. Are we safer? We’ve more than doubled spending on healthcare. Are we healthier? We’ve more than doubled spending on welfare. Are the poor less impoverished? We’ve more than doubled spending on education. Are our children smarter? The Federal government is out of control. When you hear a politician or pundit detailing the horrors of “spending cuts”, please keep in mind they are lying. There will be no cuts until they are forced upon the government by the looming collapse of our economic system.

Year	Defense	Pensions	Health Care	Welfare	Education
1999	$333	$431	$332	$165	$56
2000	$359	$454	$352	$171	$60
2001	$366	$481	$390	$183	$64
2002	$422	$503	$427	$224	$78
2003	$483	$518	$469	$242	$91
2004	$543	$537	$509	$238	$96
2005	$600	$565	$549	$246	$106
2006	$621	$591	$583	$250	$128
2007	$653	$636	$642	$254	$102
2008	$730	$669	$671	$313	$102
2009	$794	$739	$764	$407	$91
2010	$847	$756	$821	$496	$140
2011F	$965	$801	$882	$488	$130
2012B	$925	$813	$866	$424	$121
% Increase	177.8%	88.6%	160.8%	157.0%	116.1%

Now the question is what do we do about it? I know my first inclination would be to do what that Iraqi reporter did a few years ago during a Bush press conference in Iraq. I’d love to throw my shoes at Obama and every lying corrupt politician in America, but the momentary feeling of pleasure would be snuffed out in seconds by a hail of bullets from the Department of Homeland Security thugs guarding these traitors to the American republic.

Below is my CHART OF DOOM. Using real world assumptions, the National Debt will reach $25 trillion by 2019. That level of debt would be 130% of a realistic GDP figure. The interest on this level of debt would likely exceed $2 trillion per year, more than the entire Federal spending budget in 2002. This chart will not come to pass. Our economic system will collapse well before we reach a $25 trillion debt level. This is already baked in the cake. There are not enough politicians willing to tell the truth and not enough citizens that want to hear the truth. The result will be default, insolvency, currency collapse, vaporization of wealth, chaos, and pain.

The only way to avert the coming financial catastrophe is to go Egyptian on their asses. Maybe mobs of Americans surrounding the White House, Federal Reserve building and Wall Street bank headquarters would get their attention. It wouldn’t take a majority, but a minority of angry Americans willing to fight for the future of the country. The anger is building. More people are becoming aware. The internet is working its magic, just as it is doing in the Middle East. Those in control can keep pumping out their lies and propaganda, but the truth is plain to see, if you open your eyes.

“It does not take the majority to prevail, but rather an irate, tireless minority, keen on setting brush fire freedom in the minds of men.” – Samuel Adams

KEEP ON ROCKIN IN THE FREE WORLD (Oldie but Goodie)

With all that is going on in the Middle East, I thought this would be a nice repost. I originally wrote it in April 2009 after the stock market had dropped 50%.

The American Republic is 226 years old. The Roman Empire lasted 13 centuries before collapsing. The Roman emperors attempted to stave off the collapse by providing bread and circuses to the masses. Feeding Christians to lions worked only for so long. I picture Caligula “Mad Money” Cramer exhorting the masses that the worst was over and not to worry about the Vandals and the Huns. Nero “Mustard Seed” Kudlow probably saw a recovery on the horizon as Barbarians were at the gates of the city. Cleopatra “Money Honey” Bartiromo was proclaiming that the stupid masses didn’t know what was best for the system. Caesar “Glimmers of Hope” Obama was sure that if they just distributed more bread and added a few more circuses, things would improve by the Ides of March.

The false prosperity we have been experiencing for the last thirty years has come to an abrupt conclusion in the last 18 months. The amount of wealth destroyed is beyond comprehension. Household net worth has declined by $12 trillion in a matter of months. It will take years for average Americans to restore their wealth to 2007 levels. If your investment portfolio has declined by 50%, it will need to increase by 100% to break even.

According to the Wall Street shills on CNBC, it should take at least 3 months. An honest financial advisor would tell you 10 to 15 years. Americans have no choice but to substantially increase their rate of savings. Think back to yesteryear in 1981 when the savings rate was 12%. Back then, Americans accepted as a truth that hard work and a saving ethic led to long-term success. I can’t look at this chart without questioning why this happened. It always brings me back to the dreaded Baby Boomers. Their delusional belief that somehow they could borrow and spend today with real estate wealth funding their retirement came crashing down around them in the last 18 months. The bailing out of these delusional boomers with tax dollars has generated incredible anger in the country. Those who followed the rules are being compelled by the authorities to pay for the sins of those who didn’t follow the rules.

The stupendous fabric of the country is straining and in danger of yielding to the immense pressure building up in our society. I believe the actions taken by politicians and Washington bureaucrats in the last year have marked a point of no return. If we continue on the chosen path, time or accident will ultimately result in the demise of the Great American Experiment. I’m irate at the government for choosing to bailout excessive risk takers at my expense. There are millions of other Americans who feel the same way. This is why tea parties are taking place across the nation. I truly believe that every American has the right to make his or her own financial decisions. While I do not judge individuals on how they live their lives, I feel entitled to pass judgment on clusters of people whose individual decisions have negatively impacted my life. With the support of Congress, the Treasury and the Federal Reserve, these individuals are seizing my tax dollars as compensation for their idiotic behavior.

Don’t Feel Like Satan

There’s colors on the street
Red, white and blue
People shufflin’ their feet
People sleepin’ in their shoes
But there’s a warnin’ sign
on the road ahead
There’s a lot of people sayin’
we’d be better off dead
Don’t feel like Satan,
but I am to them
So I try to forget it,
any way I can.

Keep on rockin’ in the free world,
Keep on rockin’ in the free world
Keep on rockin’ in the free world,
Keep on rockin’ in the free world.

Neil Young –Rockin in the Free World

Neil Young wrote the song “Keep on Rockin in the Free World” in 1989. It is an angry song and I believe its lyrics are more relevant today. Neil and a member of his band, Pancho Sampedro, were glancing at newspaper photographs of the funeral of Ayatollah Khomeini in Iran as the angry mob set American flags on fire and chanted death to America. These Iranians thought America was the great Satan. Sampedro commented, “Whatever we do, we shouldn’t go near the Mideast. It’s probably better we just keep on rockin’ in the free world.” I wish we had made this guy our Secretary of State.

When Iraq invaded Kuwait in 1991, President George Bush decided it was America’s responsibility to protect Saudi Arabia’s oil fields and liberate Kuwait from the clutches of the dictator we had previously supported. The American military crushed Saddam Hussein’s Republican Guard and liberated Kuwait. After the Gulf War, the U.S. left 4,000 American troops in Saudi Arabia, eventually growing to 7,000 troops. These troops became a rallying point for Muslim fundamentalists, who charged the U.S. was trying to increase its influence over the Saudi royal family and the nation’s oil reserves. “The presence of the U.S. forces gave a lot of fuel to the virulent, anti-American Islamic forces that certainly commanded an audience in Saudi, and in the broader Arab world,” said Jamil Khoury, an Arab specialist and business consultant who teaches at the University of Chicago.

The U.S. has spent $7 trillion on Defense since 1991. Most of these funds were used to develop offensive weapons, not defensive weapons. The Heritage Foundation will argue that military spending as a percentage of GDP was only 4% in 2007, well below the 45 year average of 5.5%. This period includes the Cold War, Korean War, and Vietnam War. The 2010 budget spending will increase it to at least 5.6% of GDP.

The real question isn’t what percentage of GDP is proper it is whether $7 trillion could have been spent more intelligently. Would $4 trillion have been sufficient to defend the country? The military launched approximately 1,000 cruise missiles during the Iraq War at a cost of $1 million per missile. This was a choice to spend $1 billion blowing up bridges, water plants, and electrical facilities in Iraq rather than spending it repairing our 156,000 structurally deficient bridges, replacing our decaying water pipes, and upgrading our electrical grid. Would the $7 trillion have been better spent by private individuals? Could it have been better spent jump starting efforts to wean ourselves off Middle East oil? I don’t know the answer. But, I do know that the vast majority of the $7 trillion was borrowed from China, Japan and my grandchildren.

Kinder, Gentler, Machine Gun Hand

We got a thousand points of light
For the homeless man
We got a kinder, gentler,
Machine gun hand
We got department stores
and toilet paper
Got styrofoam boxes
for the ozone layer
Got a man of the people,
says keep hope alive
Got fuel to burn,
got roads to drive.

Keep on rockin’ in the free world,
Keep on rockin’ in the free world
Keep on rockin’ in the free world,
Keep on rockin’ in the free world.

Neil Young –Rockin in the Free World

Neil Young’s cynical view of our President, national priorities, and future was well founded. He saw the social fabric of the country ripping apart in 1989. I believe everyone has a right to live their lives as they see fit. This is America, land of the free, home of the brave. When powerful government bureaucrats choose to subsidize the conscious blunders of others through the utilization of my tax dollars, I’ve got a big problem. There are approximately 308 million people living in the United States. 75 million of these people are under 18 years old and 40 million are over 65 years old. They are generally off the hook regarding the current financial crisis. That leaves 195 million people. The 80 million Baby Boomers (the pig in the python) are at the root of most problems in our society today. As I walked from the parking garage to my office the other day I noticed a license plate on a parked BMW 335i. It read 335-4-NOW. This boomer’s goal in life was to move up from a $40,000 automobile to a $60,000 automobile. Very noble goal, but it reflects that the priorities for many in this country have become warped.

Approximately 12% of the U.S population (36 million people) is considered poor and is totally dependent upon the State to keep from starving. The working class makes up 40% of the population, the middle class 45%, and the ruling elite class 3%. All of these classes made dreadful mistakes in the last decade. The poor pretended to be middle class. They were able to buy $200,000 houses, lease $30,000 cars, own cell phones, get monthly cable, and eat out three times per week. Their friendly neighborhood banker loaned them the money to live this fantasy life. The working and middle class were able to buy $700,000 McMansions, go on trips to Europe, lease $50,000 cars and generally live the life of the rich and famous. A different banker in a nicer neighborhood also loaned them the money to live like rock stars. A portion of all these classes were the extremists that led us down the erroneous path to destruction.

Extreme behavior by individuals throughout our society, encouraged by banks, the government, Federal Reserve, and the mainstream media have pushed our country to the brink of disaster. Half of the households in America make less than $46,000 per year. I can guarantee you that the household incomes in the neighborhoods of West Philadelphia that I drive through to work every day are much lower than $46,000. Half the houses are boarded up, and rats are the predominant tenants. When I see a middle aged lower income woman driving an $87,000 Mercedes SUV or a young punk driving an $85,000 BMW, I know something has gone seriously off course. The auto financing companies were willing to make 7 year 0% interest loans or $400 a month leases available to these people. They did it because they were able to parcel these awful loans into a package, get it rated AAA by Moody’s and sell the toxic stench bomb to pension funds and life insurance companies. Meanwhile the deadbeats cruising around in the luxury wheels got to live the Fake American Dream for awhile.

Extremism was not relegated to only the poor. The lifestyles of the rich and famous are nauseating and revolting to the average middle class American. Watch one episode of Housewives of Orange County or New York to understand the shallowness and pretentiousness of the privileged rich. Across America there are millions of people whose sense of worth is tied to the McMansion they live in, the brand of car they drive, the school they send their kids to, and the number of electronic gadgets they can accumulate. The majority of these people can be found on the East Coast and West Coast. Wall Street and Hollywood are the Mecca for these arrogant, vain, self centered snobs. The powerful few in our society took extreme risks in the casinos of Wall Street. AIG, Goldman Sachs (GS), Lehman Brothers, and Bear Stearns, among others were inhabited by multi-millionaire gamblers. They had already socked away millions in bonuses and stock options, but their arrogance and pride led them to take even more extreme risks. They ultimately destroyed the financial system. Now they want you and I to come to their rescue, for the good of the country.

Let’s See How Far We’ve Come

Said where you going man you know the world is headed for hell
Say your goodbyes if you’ve got someone you can say goodbye to

I believe the world is burning to the ground
Oh well I guess we’re gonna find out
Let’s see how far we’ve come
Let’s see how far we’ve come

How Far We’ve Come – Matchbox 20

I believe the world is burning to the ground. The United States is spending trillions per year propping up social safety nets and waging foreign wars while borrowing the funds to do so. The currency is being debased day by day and will eventually be worthless. Our current path will lead us to hell. I think I can address the anger and disillusionment of the vast majority of hard working Americans:

The materialism and wastefulness of our society is reflected in how our minimum living standards have changed since 1970. The average household size has declined from 3.1 to 2.5, a 20% reduction. Our average home size has increased from 1,400 sq ft to 2,600 sq ft, an 86% increase. The average number of vehicles per household has increased from 1.1 to 2.3, a 109% increase. Bigger is better has been the American mantra for decades. These figures are skewed, as many people live in 6,000 sq ft McMansions and drive 4 or more cars. It is clear that millions cannot distinguish between a need and a want.

I bought my home in 1995. The minor upgrades (finished basement, hardwoods) we’ve made over fourteen years were paid for in cash. The other major expenditures were to replace appliances that broke. When the value of the house miraculously doubled between 2000 and 2005, I opened a home equity line of credit with my Credit Union as an emergency fund. It has not been used to take vacations, buy a new car, or install a $25,000 kitchen. The extreme risk takers bought houses with 105% leverage, lied on their mortgage applications, attempted to flip multiple condos, used the appreciation in their home value to live the lifestyle of Madonna and vacationed on the French Riviera. Now the politicians running our government are using my tax dollars to insure that these extreme risk takers stay in their homes. Rewarding reckless behavior leads to more reckless behavior.

I drive a paid for 7 year old CRV with 120,000 miles. My wife drives a paid for 9 year old Minivan with 95,000 miles. I have never been a car person. My Dad always bought used cars. I don’t see the point in spending money on a depreciating asset. My self esteem is not tied to the car I drive. I’ve owned 2 new cars in the 30 years I’ve been driving. I’ve financed my cars over four years. Every month that I don’t have to make a car payment allows me to put that money towards my kid’s college fund or my retirement account. GMAC, Chrysler Financial, and Ford Credit have been the credit drug pushers that have permitted luxury addicts all over the country to tool around in a Mercedes, BMW, or Porsche of their choice. Shockingly, lending money to subprime borrowers led to billions in losses. GMAC rationally decided in October 2008 to limit loans to people with credit scores above 700. In December the government delivered $5 billion of taxpayer TARP funds to GMAC, who then decided to again lend money to subprime borrowers with 620 credit scores. Their plan is to lose money on these loans, but make it up on volume. When you see an 18 year old punk driving a BMW, you are probably making his car payment.

We use a credit card to pay for virtually all of our monthly expenses. 1% of the charges go into my son’s 529 college account. I have not paid an interest charge since 1990. I’m a credit card company’s worst customer. No interest income, no late charges and I’ve received maximum rewards. I’m not the average American. The average American owes $9,000 on their credit cards. In a fair world, when these people couldn’t repay their debts the bank would take a major loss and the consumer face bankruptcy with the inability to borrow for years. The top credit card issuers JP Morgan (JPM), Bank of America (BAC), Citicorp (C), and Capital One (COF) issued credit cards to anyone with a pulse because they just sold the package of bad debt to widows and the Chinese. Then they drank their own poisoned Kool-Aid. Now our clueless Treasury Secretaries (Mr. Paulson & Mr. Geithner) have shoveled $78 billion of your tax dollars to these banks so they can continue to send out 5 billion credit card solicitations per year to more deadbeats. Loaning money to people incapable of repaying you is generally not a good business practice, except in the America of today.

Every individual in the United States has right to live any way he or she chooses. Many have chosen to borrow and live the good life today and not worry about tomorrow. They will vote for the politician that promises them bread and circuses without requiring them to sacrifice, save for a rainy day, take responsibility for their future or exercise any self control. This is where reality and fantasy meet. People can only borrow and spend if the Federal Reserve and bankers provide the funds to do so. By creating money out of thin air and handing it out to people with no legitimate means of repaying, the bankers who run this country have put this country on the road to ruin. The government solution is to confiscate your tax dollars, give it out to bankers, who will lend it to new subprime borrowers, who will not repay these debts. They are doing this in a last ditch attempt to retain power and control.

The people of our great country must heed the words of David Walker, unless we want it to collapse into a heap of smoldering ashes.

The US government is on a ‘burning platform’ of unsustainable policies and practices with fiscal deficits, chronic healthcare underfunding, immigration and overseas military commitments threatening a crisis if action is not taken soon. There are striking similarities between America’s current situation and the factors that brought down Rome, including declining moral values and political civility at home, an over-confident and over-extended military in foreign lands and fiscal irresponsibility by the central government.

Let’s see how far we’ve come. I guess we’re going to find out.

EVILNESS IN THE CATHOLIC CHURCH – UPDATED

UPDATE

I am updating my post from yesterday and making it my featured post. I’m so infuriated by this story that I’m seeing red. The local radio station was reporting the story this morning and they said that the reason the Grand Jury did not indict Cardinal Bevilacqua was because he is 86 years old and in poor health. Since when does your age have anything to do with whether you have committed a crime. And make no bones about it, this man committed a horrific crime. He knowingly allowed deviant evil predators to rape 10 year old boys. He transferred these fiends to other parishes, allowing them to rape again. This man should be thrown into prison like a common punk criminal.

The evil acts of these priests is almost beyond comprehension. You need to understand the point of view of a 10 year old boy in Catholic school. You are in 4th grade. You still play with army men. You play little league baseball. You are taught from 1st grade on that priests are Jesus Christ. You are in awe of priests. You are a little bit afraid, because they have the power to forgive your sins. A priest is an all-powerful figure. Now imagine your ten year old son with a priest’s dick in his mouth and the priest sticking his dick in your ten year old son’s ass. THINK ABOUT THAT!!!!!!!!!!!!!!!

If anyone had done this to my sons, I would get a gun and I would kill these deviant fuckers. I would not care about the consequences. First I would beat them within an inch of their lives and then I’d put a bullet in their heads. Then I’d go to confession, say I’m sorry, say 5 Our Fathers, and then according to the Catholic Church everything would be OK.

Think about the fact that Bishops, Cardinals, and even the Pope not only covered up these acts, they shipped these deviants to other parishes. When told of these acts, Cardinal Bevilacqua’s first question was whether the statute of limitations was up. THINK ABOUT THAT!!!!

I was born Catholic. Do I believe in God? Yes I do. I do wonder how he can allow this to happen, but I do believe in God.

Do I believe in the Catholic Church? NO I DO NOT. The Catholic Church is an Institution made by men for the benefit of men. The MEN who run the Catholic Church care about power and money. They are no different than Wall Street Bankers. These MEN have not been brought to justice. The Catholic Heirarchy is Evil because they have committed evil acts. Until they are brought to justice anything the Catholic Church does or says is suspect.

YESTERDAY

It has been many months since my last post about the Catholic Church Sexual Abuse coverup. The Phila Archdiocese had been shaken by a priest abuse scandal a few years ago. When the list of evil child fucking priests was revealed, I saw the name Father Shea on the list. He was the assistant pastor at my parish when I was a kid. Not only did this little boy fucker not go to jail, Cardinal Bevalaqua didn’t even defrock him. He lives out his days in the St Francis Home for elderly priests in Darby, PA. It seems that the statute of limitations was up for all the abuse cases put forward by the Grand Jury.

The part that infuriated me was not that there were child fucker deviant priests. There are sexual deviants all over the place. The heirarchy of the Catholic church – Pastors, Bishops, Cardinals and even the Pope, covered up this sexual abuse. They did not turn these evil scum over to the police. They knowingly transferred them to other parishes where they could satisfy their evil urges again and again. For these acts, the heirarchy of the Catholic Church deserve to burn in the hottest part of HELL.

The Catholic Church PR machine assured the public that they had rooted out the evil sexual predators and the scandal was a thing of the past. Pass the collection plate please. No one in the Catholic heirarchy went to jail. No Cardinal or Bishop was defrocked. The Pope has been implicated in the coverup. The Catholic Church is the richest church on earth. They fight every accusation. They pay hush money to the families of the victims. They close parishes and don’t build new high schools because they have to keep paying millions to the victims. All done in secret.

But the truth keeps being revealed. Below is one of the most disgusting stories you will ever read. The Grand Jury has just issued a 128 report of evilness that will make your blood boil. I have provided a link to the report, but I’ve posted the first 5 pages below for your enjoyment. This evilness permeates the Philadelphia Archdiocese. The current and past Cardinals of Phila should go to jail.

I spent 12 years in Catholic School. I went to church every week. I’ve sent all three of my boys to Catholic School. In the past year, I’ve become so disgusted by the leadership of the Catholic Church, that I stopped going to Mass and giving them any money. I will never give another dime to this corrupt evil organization. They are no better than the mafia or the criminal banks that I rail about.

I judge people and organizations by their actions, not their words. The actions of the Catholic Church are vile, evil and disgusting. These MEN portray themselves as holy and representing Jesus Christ. Nothing could be further from the truth. May they all burn in hell.

http://www.phila.gov/districtattorney/PDFs/clergyAbuse2-finalReport.pdf

4 priests charged in sex abuse investigation

By David O’Reilly

Inquirer Staff Writer

Monsignor William Lynn, former head of the Archdiocese of Philadelphia’s Office for Clergy, has been charged for allegedly failing to protect children from sexual abuse by priests, District Attorney Seth Williams announced today.

Two felony counts of endangering the welfare were lodged against Lynn follow a grand jury investigation, Williams said at a news conference.

Williams also announced the Revs. Charles Engelhardt, 64, and Edward Avery, 68, and Bernard Shero, 47, a former 6th grade teacher at St. Jerome’s School in Northeast Philadelphia, had been charged with raping and sexually assaulting the same boy in the parish between 1998, when he was 10 years old, and 2000.

Another priest, the Rev James Brennan, 47, is charged with raping and sexually assaulting a 14-year-old boy in 1996.

All five men were arrested today, official said.

Williams said Lynn, who was the Archdiocese’s Secretary of the Clergy from 1992 to 2004, “supervised two of the abusers . . . knew they were dangerous and chose to expose them to new victims.”

Since 2004 Lynn has served as pastor of St. Joseph’s Church in Downingtown, a parish of nearly 4,000 families.

As head of the clergy office, Lynn oversaw all priest personnel issues, which included advising Cardinal Anthony Bevilacqua and his successor, Cardinal Justin Rigali, on the assignment of priests; interviewing persons who reported sexual abuse by a priests; and overseeing the treatment of clergy known to have abused children.

In a message to church deacons, Rigali said he could not comment directly on the grand jury report because he had not yet received it.

But, he added: “I know the release of this report will be painful and my deep concern is for all of those who have been abused. I urge all the faithful of the Archdiocese to pray for, to extend every concern for and remain open to understanding the experience of the victims. It is in that spirit that we reflect upon the grand jury’s actions and the recommendations they make.”

At Lynnn’s church in Downingtown, workers in the parish office declined comment, abruptly referring reporters to Donna Farrell, the archdiocesan spokeswoman.

When an Inquirer reporter began to speak with a female parishioner outside the building, one of the workers ran out, grabbed her, and pulled her inside.

Several other parishioners expressed shock at news of the charges but declined to give their names. A man arriving for choir practice said he did not have enough information to comment. A woman who pulled up at the adjacent church school – which her daughter attends – said she did not want her remarks to reflect adversely on the school.

“We love this school,” she said. “I’m absolutely stunned; we totally trusted him.”

Today’s charges come nearly 5 1/2 years after a Philadelphia grand jury excoriated the Archdiocese of Philadelphia for an “immoral cover-up” of its sexually abusive clergy, and for creating what it said was a climate that exposed hundreds of children to assault.

Although the 2005 report directed much of its ire at Bevilacqua, the Roman Catholic archbishop from 1988 to 2003, it mentioned Lynn 652 times – more than any other member of the archdiocesan hierarchy, including Bevilacqua.

“Secretary for Clergy Lynn . . . treated victims as potential plaintiffs. Not only did they not receive apologies acknowledging their abuse, but many were bullied, intimidated, lied to, even investigated themselves,” the report said.

It also accused Lynn of repeatedly failing to investigate abuse charges, reassigning abusive priests, and concealing their crimes from civil authorities and the Catholic laity.

“It became apparent to the Grand Jurors that Msgr. Lynn was handling the cases precisely as his boss [Bevilacqua] wished,” it said.

The assistant district attorneys who wrote the scathing, 468-page report in 2005 said their office had sought ways to bring criminal charges against several archdiocesan leaders but were frustrated by Pennsylvania’s “inadequate” state laws, such as the statute of limitations.

OPENING PAGES OF THE GRAND JURY REPORT

In September 2003, a grand jury of local citizens released a report detailing a sad history of sexual abuse by priests of the Archdiocese of Philadelphia. That abuse was known, tolerated, and hidden by high church officials, up to and including the Cardinal himself. The previous grand jury was frustrated that it could not charge either the abusers or their protectors in the church, because the successful cover-up of the abuse resulted in the expiration of the statute of limitations. Now, measures taken in response to the previous report have led to new information about more recent abuse, which this grand jury was empaneled to investigate. The fact that we received that information, and from the church itself, is some sign of progress; and this time there will be charges. The present grand jury, however, is frustrated to report that much has not changed. The rapist priests we accuse were well known to the Secretary of Clergy, but he cloaked their conduct and put them in place to do it again. The procedures implemented by the Archdiocese to help victims are in fact designed to help the abusers, and the Archdiocese itself. Worst of all, apparent abusers – dozens of them, we believe – remain on duty in the Archdiocese, today, with open access to new young prey.

Billy and Mark

This grand jury case began because two men came forward, while still young, to say what was done to them as children. By no means do we believe that these are the only two parishioners who were abused during this period. It remains an extraordinarily difficult thing for adults to tell authorities that they were taken advantage of, in the most intimate, shameful ways, by people they trusted. Their stories must be told, however, because they reveal a great deal about the current treatment of sexual abuse in the Philadelphia Archdiocese.

Twelve years ago, Billy was a 10-year-old altar boy in the fifth grade at St. Jerome School in Philadelphia. “Billy” is a pseudonym; he is still reluctant to name himself publicly, although he knows he will have to do so soon. While alone with him in the sacristy, Father Charles Engelhardt began to show Billy pornographic magazines. Eventually, the priest directed Billy to take off his clothes, and to put his penis in the priest’s mouth. Then the priest reversed positions, until he ejaculated on the boy. After that, Billy was in effect passed around to Engelhardt’s colleagues. Father Edward Avery undressed with the boy, told him that God loved him, had him engage in oral intercourse, and ejaculated on him. Next was the turn of Bernard Shero, a teacher in the school. Shero offered Billy a ride home, but instead stopped at a park, told Billy they were “going to have some fun,” took off the boy’s clothes, orally and anally raped him, and then made him walk the rest of the way home.

That was the beginning of a longer journey. Billy stopped talking with friends and started smoking marijuana. He would often gag and vomit for reasons the doctors could not discern. He checked books out of the library about sexual abuse. By high school he was taking pills, and then heroin.

The second victim, Mark, was only nine when he first met Father James Brennan, a parochial vicar at St. Andrew Church in Newtown. Father Brennan became a family “friend” who often visited the house. Mark, though, was the subject of special attention from the priest, who persistently wrestled with the boy, rubbed his back and shoulders, and openly brought up sex talk. When Mark was 14, in 1996, Father Brennan was finally ready to make his move. He arranged with Mark’s mother for a “sleepover” at an apartment the priest was renting. Once he had the boy there, Brennan showed him pornographic pictures on his computer, bragged about his penis size, and insisted that Mark sleep together with him in his bed. Then he lay down behind the boy and put his penis into the boy’s buttocks. Mark told his parents what happened, and they confronted Brennan, but he denied it and they believed the priest. From that point, Mark suffered depression, dramatic weight loss, and drug and alcohol addiction. Ultimately he attempted suicide.

FACES OF EVIL

Above is a description of the evil acts of evil people. The worse part is the coverup by the heirarchy of the Church. This man, Cardinal Bevilacqua knowingly allowed boy raping priests to be shielded from authorities and transferred to other parishes, while using the legal system to protect the Catholic Church from crimes. He authorized the payment of millions in hush money to keep the families of victims silent.

The exploits of Father Lynn are detailed above.

Cardinal Krol was the head of the Phila Archdiocese when I was a kid. He confirmed me. He also knowingly moved deviant rapists from parish to parish where they could prey on little 10 year old boys.

Father Thomas Shea was the asst pastor at St. Joseph’s parish in Collingdale when I was a kid. He had raped boys at St. Huberts. They transferred him to St. Josephs where he raped at least two boys, one who later committed suicide. He resides in an old priests home, never being charged because of the statute of limitations.

TBP Survivor Game: Vote RE On or Off the Island!

We had a pretty serious Altercation here resulting from my Population Triage Thread. Our Admin got thoroughly pissed off at me, and then additionally LLPOH and myself Napalmed the Living Shit out of each other, as we often do. I took a couple of days of “vacation” to ponder on whether I want to continue writing for TBP.

Stuck meanwhile made the case for why I should continue posting here, since I provide an alternate opinion for discussion, even though he often does not agree with my perspective. Other regular posters like LLPOH and Smokey rooted for Admin to get so pissed off at me he would BAN me from posting on the board.

For my part, I pushed the envelope of Free Speech, attempting to get Admin to COMMIT to whether he would Ban me or Not if I did not follow his injunctions on what I could write. Free Speech believer that he is (and I counted on this in pushing the envelope), Admin would NOT make it explicit that he would Ban me if I continued on the path I took to needle him. However, it remains an implicit THREAT.

I do not accept Censorship in any form, and Admin blustering at me “DO YOU UNDERSTAND?” was Implicit Censorship, the same kind of thing Jason pitched at me, which was that I had to Self-Censor if I expected him to put up a Platform for me to write on. Admin was threatening to BAN ME, even Stuck picked up on that, I am sure most of you did as well, I certainly did. The Mods on Peak Oil also implored me to self-censor. Karl on Ticker Forum made it clear if I wrote certain things he would Ban me. Needless to say, I have been Banned REGULARLY from posting on many forums because I do not accept any form of Censorship. If I get THREATENED with it, I just push the envelope further. LOL. I write what I write, regardless. In this case, I took a vacation to think on this before I pushed it so far as to getting Banned.

However, we still do have a quandary here to resolve. As we last left this altercation, Admin’s last post was something like “Go ahead and QUIT! Who CARES!” So I decided to take a Vacation at his request. The stock in trade of what passes for debate on the board has become quite tiresome and grown quite stale, so I was up for the Vacation anyhow. In any post that has more than about 20 replies, its mostly the same folks pitching the same old napalm. I like to write about the topics of the ongoing Collapse with my spin, then I like to debate them, but nobody can debate realistically when you have Thermonuclear Napalm spit all over the thread every time you post. So should I really bother posting here when this is the result I get all the time?

So herein lies the foundation of this post. I really would like to know “who cares?” if I continue posting on TBP or not. Should I stay or should I go?

I’m going to start this off by jumping outside my role here and trying to look at this dispassionately. I’ll present some positive and negative aspects of my continuing to post on this board. Anybody else can also present their opinions on why I should stay or go. Then you can all VOTE RE Off the TBP Island; or vote for me to Remain a Contributor. I promise to ABIDE by the Tribe Decision. If I am SHUNNED here, I will DISSAPEAR and DIE, in the Cyberspace sense on TBP anyhow of writing articles. Maybe I will Poach with an occasional Comment, but no more 10,000 word Articles.

What are my Positive Contributions to the Group? As I see it, they are the following:

1-I present a very different spin to consider on the problems we all recognize
2-I write many Original Articles you won’t find anywhere else on the net
3-I help keep the board active in discussion by being a magnet for napalm (though I would prefer more substantive discussion)

My Negative Contributions:

1-I can be positively NASTY when I get pissed off.
2-My posts are criticized as too long for people to read and respond to.
3-My presence on the board makes Napalm Artists like Smokey & LLPOH even more annoying than they already are, since they cannot help but troll my threads and napalm them persistently.

Anyhow, I will put it up for a Vote here as to whether I stay or go. If you want me to stay and keep posting Articles, give me a thumbs up. If I should quit doing this, thumbs down. If I get more Thumbs Down then Thumbs Up, I will leave the pages of TBP and head for the Great Beyond as a Contributor, and just do Ghost Poaching. One vote to a Member, no Anonymous voting. You must post up under your own screen ID and declare “Thumbs Up” or “Thumbs Down” in WRITING. No using the automated buttons.

Voting closes when this post falls off the list of recent posts. In the event I get more Thumbs Down here, I will See You on the Other Side. Best of Luck when the Big Show comes to Theatre Near You. In the event I get a Thumbs Up, I’ll keep churning out the prose for you all to chew on as you see fit. I got a BIG ONE Ready and Waiting. I have had a couple of days to work on it, and you all KNOW what that means is coming down the pipe. LOL. Your choice, TBPers.

MARCH 10, 2010 – THE DAY OF INFAMY

With my little run in the other day with Reverse Engineer, I was reminded of a time not so long ago. I had to go back through my emails to see when exactly the world came to an end on TBP #1. The bickering between RE and myself is chicken shit compared to the flaming end of TBP #1 that occurred on March 10, 2010. What most TBP members did not know was that my relationship with Jason had been going downhill for months behind the scenes. He wanted me to fly to London with him to meet some big shot investor. I said no. Glen Beck had asked me to be on his show and I had declined. Then I did an article that trashed Fox News. Jason got really mad about that. Jason was looking for a big payoff. I was looking to write good articles.

I showed tremendous restraint for months in dealing with Jason’s desire to control my site. Then I got copied on some emails that showed me he was trying to lure TBP regulars over to Raging Debate. I posted an article stating that he was doing this and the fireworks began. He immediately shut down my site and began to trash me on his site. I responded by posting some of his crazy emails to me on my Seeking Alpha instablog. He threatened to sue me for defamation. I responded by saying how could it be defamation if it was his own email. The vitriol swirled as he banned my IP address so Robmu1 would post my responses on Raging Debate. RE wrote a 10,000 word divorce article.

By the end of the week, we were worn out and agreed to bury the hatchet and move on. We have had no contact since. Here are some comments about the divorce. Smokey was very disappointed with the quick ending to the feud.

Smokey: Perfectly good feud—ruined. A damn shame. Screw this. I’ve never seen such shocking wimpiness in all my born days. From now on I’ll watch my niece’s Mary Poppins DVD or reruns of The Waltons or The Brady Bunch. I mean, we had nasty innuendos and threats straight out of the gate, and just when it starts to get good, we get this wavering and backpedaling. This reconciliation is totally unacceptable. Please reconsider this grave mistake.

Smokey: @SanDiegoGuy: Hilarious. Never heard that. That buzzard cartoon reminds me of a cartoon I saw a few years ago. It was snowing, and two pigeons were sitting side by side high up on a tree limb. Directly underneath them was a kid with his big mouth wide open to catch the falling snow. One pigeon said to the other, “Are you thinking what I’m thinking?” When Quinn opens his new site, look for me to get some shit started right from the jump. In particular, RE, Dee, David Pierre, and a couple of anons have a rendezvous with me for a battle of insults and they don’t even know it yet. It will be the good old days.

Stuck: Hey Smokey, go fuck yourself you batshit neocon.

Just thought I’d get things started ……….

Smokey: @ReverseEngineer: It’s ON. Bring it!!! Just remember, no second thoughts allowed. No holds barred. No changing your mind. No equivocation. No I’m sorry’s. No apologies. No truces. We will do battle as men, not as pussies. We will serve as an affirmation to all observers that heated conflicted dialogue serves no purpose whatsoever, and only inspires more of the same. Stuck In NJ—-You’re out. You repeatedly refused to engage me on TBP. I refuse to waste my time on someone who refuses to engage. I will no longer tolerate your partiality. You ignored the best of my insults, but on several occasions wanted to duke it out with Quinn. How fair is that? That is the most vile form of discrimination possible.

Here is a picture of what has happened since the breakup:

I posted a pictorial display at the end of that fateful week on Seeking Alpha:

A week in the life of Jim Quinn:

JIM & JASON Tuesday Morning

Jim & Jason Tuesday Afternoon

JIM & JASON Wednesday

JIM & JASON Thursday Morning

JIM & JASON Thursday Night

FRIDAY MORNING – Mission Accomplished

IN SEARCH OF A PIN

This one is dedicated to Smokey with love.

All booms bust. The only question is when.

by Simon Black

February 8, 2011
Santiago, Chile

Somewhere in China, an economist lost his job today… it was the poor guy who had been predicting manageable levels of inflation despite rapid headline GDP growth and even more rapid monetary expansion.

Yet, staring at reports which show inflation at a 28-month high, officials at the People’s Bank of China realized that they need to do something about inflation. Now. Especially in light of what’s going on in the world… hence today’s 25 basis point rate hike.

Inflation in China is coming from all sides. Certainly there is the country’s speedy economic growth, commonly reported in the press as ‘overheating’. Then there is the constant battle against America’s #1 export (inflation) as many of Bernanke’s trillions of new dollars have found their way into China’s economy.

Moreover, what a lot of people forget is that China has heavily engaged in its own stimulus programs, which, as a percentage of GDP, dwarf the stimulus packages in most developed countries (including the United States).

Given these genuine inflation fears and the brakes that Chinese policymakers are applying in terms of interest rates and property taxes, it is now almost a “consensus view” in the financial markets that China will face an economic crisis sometime in the next few years.

A recent survey of market participants published by Bloomberg indicated that 45% of those surveyed believe it’s inevitable that China’s boom will turn to bust sometime in the next 5 years. Another 40% said they expect it to happen sometime after 2016.

The arguments for why China’s economy is a train-wreck waiting to happen are not new. Prominent short-sellers such as Jim Chanos cite forests of empty apartment towers, deserted shopping malls with no stores or customers, and the empty city of Ordos as proof that China has massively overbuilt.

They argue that the economy is built on a foundation of quicksand, as construction accounts for the biggest single slice of GDP, and at some stage there simply won’t be a need to build anymore.

I can’t disagree. At some point, perhaps in the not-too-distant future, building in China will slow, and subsequent rate hikes will curtail new expansion.

The way I view it, China has compressed 100 years of economic growth into 30 or 40 years, so naturally the annual growth rate has been fast. One thing that history has taught us, though, is that the free market cannot be continually outperformed by a central planning authority that inflates its money supply.

Rapid credit expansions can definitely give the appearance of strong economic growth, but no credit expansion has ever lasted permanently. In the long run, an economy can only continue to move forward at strong growth rates via increases in savings, productivity, technology, and innovation.

China’s technology sector is advancing rapidly– the country has developed the world’s fastest supercomputer and churns out three times as many engineers as the United States. China’s manufacturing sector has also shifted away from unskilled production to high tech manufacturing based on homegrown designs.

Knowledge is cumulative, however, so it will still take some time for China to be the genesis of the next generation of technological breakthroughs… and hence justify its huge growth rates based on innovation and technological advances.

For now, we can continue to marvel at the rapid pace of economic development in China. But, let’s not make the same mistake people made with Japan in the 1980s and assume that the Chinese have stumbled across some superior economic perpetual motion machine.

The truth is, nobody knows what China’s real growth rate is. I remember spending time in the country’s gray markets– huge roadside, makeshift shopping malls with tens of thousands of people engaging in off-the-books transactions– thinking to myself ‘no way GDP numbers account for this…’

The fundamentals for growth are definitely there… but we would be foolish to not consider the disastrous effects of a cleverly disguised credit bubble masquerading as ‘the Chinese miracle’, or the consequences of an unsustainable exchange rate policy.

Nothing goes up or down in a straight line, and in the words of one of my most influential mentors, “All booms bust. The only question is ‘When?’”

The reality is, nobody knows when… and more importantly, what happens next.

DOES 2 + 2 = 22?

CoreLogic reported this morning that home prices fell 1.8% in the last month and have now declined for 6 straight months. This means that home prices are falling at an annualized rate of 21%. The post bubble low will be breached next month. Yesterday the MSM was excited by the fact that mortgage delinquencies declined again. The rate had peaked in January 2010 and has been steadily declining.

Now this is the part that requires some thinking. So anyone reading this post that works for CNBC, Seeking Alpha, or any other MSM outlet can go back to your mindless propaganda mode and exit stage left. The hundreds of billions in tax dollars thrown at housing in 2009 and early 2010 for home buyer tax credits and mortgage modification programs temporarily stopped prices from falling. Shockingly, when prices stopped falling, mortage delinquencies started to decline. OK. Got that?

The government’s efforts to prop up the housing market have failed miserably. The hundreds of billions were pissed down the toilet. The prop has been removed and home prices will fall to the level they were always going to fall to. Supply and demand determine price. Prices are now in freefall again. Guess what? In the next few months, mortgage delinquency rates will begin to rise again. Even Larry Kudlow could see this if he knew how to add 2 + 2.

As an added benefit, we are about to enter the huge reset stage for Alt-A fraudulent mortgages. These resets are occurring just as mortgage rates are hitting the highest levels in a year. This will give an added kicker to the foreclosure tsunami on the way.

So, you can listen to your favorite real estate broker who tells you it is the best time to buy, or you can add 2 + 2 and get 4.

According to LPS, 8.83% of mortgages are delinquent (down from 9.02% in November), and another 4.15% are in the foreclosure process (up from 4.08% in November) for a total of 12.98%. It breaks down as:

• 2.56 million loans less than 90 days delinquent.
• 2.12 million loans 90+ days delinquent.
• 2.2 million loans in foreclosure process.

For a total of 6.87 million loans delinquent or in foreclosure.

BIGGEST FOREIGN POLICY BLUNDER IN HISTORY

The hubris of a bankrupt imperial empire is not a pretty sight. Luckily, we educated the Chinese hackers at our best schools. The scenario may seem far fetched to linear thinkers. It is not far fetched during a Fourth Turning. Wait until a hard line Prophet Boomer moves into the White House in 2013. Paul Farrell writes some pretty provocative stuff.

Secret China war plan: trillions in U.S. debt

Commentary: Today an economic battle; later, combat

By Paul B. Farrell, MarketWatch

SAN LUIS OBISPO, Calif. (MarketWatch) — Yes, Americans love war. Yes, wars cost money. And pile on debt, new taxes. Still, we love war. Why else let the military budget burn 48% of your tax dollars? But why is it “off the table” when the GOP talks “deficit cuts”?

Why? We love war. We’d rather attack with a macho battle cry like “damn the torpedoes, full speed ahead!” than listen to a warning from historian Kevin Phillips: “Most great nations, at the peak of their economic power, become arrogant, wage great world wars at great cost, wasting vast resources, taking on huge debt, ultimately burning themselves out.”

Which dominates our Congressional deficit hawks? Which is China’s military strategy?

Admit it, we love war. Marine Corps posters grabbed me as a kid. Trained me as an aviation weapons system tech. So I couldn’t resist Erik Sofge’s edgy thriller, “China’s Secret War Plan,” about a China-U.S. war. Like a fast-paced Tom Clancy thriller. In Popular Mechanics: One of my favorites as a kid working in a small-town magazine store.

Yes, war’s popular. Locked in our DNA long ago. Sofge’s thriller was based on war games played by Pentagon generals and Rand Corporation strategists.

Americans love war. Can’t resist videogames, war movies: “Hunt for Red October,” “Platoon,” “Dirty Dozen,” “Star Wars,” “Terminator.” War turns us on, a testosterone virus in our brains. Our love blinds us to costs, collateral damage, unintended consequences, new debt for our kids. Besides, they’ll grow up loving war. DNA is passed on. Can’t resist.

That hot button was pushed recently with “secret” photos of China’s new stealth bomber exposed during the state visit of China’s President Hu Jintao. Sofge’s thriller begins:

Aug. 9, 2015, 0400. China’s war for “Taiwan starts in the early morning. There are no naval bombardments or waves of bombers … 1,200 cruise and ballistic missiles rise from heavy vehicles on the Chinese mainland … Taiwan’s modest missile defense network. a scattered deployment of I-Hawk and Patriot interceptors, slams into dozens of incoming warheads … a futile gesture. The mass raid overwhelms the defenses as hundreds of Chinese warheads blast the island’s military bases and airports.”

Do taxpayers have a choice? Plan for big wars, get bigger deficits?

The GOP wants to cut America’s massive debt. But “off-the-charts” military spending is “off the table.” Back in the ‘40s, WWII consumed 57% of our GDP. Today, war eats up about half America’s budget.

We’re sinking under Iraq war debt. Nobel economist Joseph Stiglitz estimates Iraq at $3 trillion, with $2 trillion for future costs, like VA medical. The Afghan war, maybe another $3 trillion. Plus endless terrorist threats. Future wars are “planned” years, even decades in advance, strategies based on Pentagon-Rand war games.

America talks peace. But deep inside our collective brain is a dark monster: We’re little kids who love playing war. Age 10 I had a collection of model fighter planes, played air wars. Age 15, owned three guns for hunting. Then the Corps. Like a moth to the flames, we cannot resist our destiny in war. Sofge brings alive the action in our brains:

“Taiwan’s air force is grounded … Taiwanese troops mobilize in downtown Taipei and take up positions on the beaches facing China, just 100 miles to the west. But they know what the world knows: This is no longer Taiwan’s fight. This is a battle between an old superpower and a new one.” Games or reality, it’s all in our heads.

Or is this how WWIII starts? Between an aging America that loves war, won’t surrender without a fight, and the world’s rapidly emerging superpower, predicted to have a population one billion larger than America’s by 2050. Plus an economy 40% of the world’s GDP, dwarfing America’s GDP predicted to fall to just 14%. Yes, China’s the emerging new superpower, a crafty enemy laughing as we waste our economic resources.

Listen as Sofge quotes retired Rear Adm. Eric McVadon, former naval attaché in Beijing: “They are obsessed with Taiwan. On some given day, it’s entirely possible for people to be standing around a table in the Politburo in Beijing, and someone gets the ball rolling. And when it stops, we’re at war.”

Warning: That toxic thinking may well happen again when new neocons, a future Rumsfeld/Cheney team, gets the same paranoid itchings at the same time as China’s generals, all driven by inflated egos, irrational obsessions and a propensity to make the same kind of misjudgments that launched the Iraq War.

Warrior mindset sabotages our economy and superpower status

”Right now the Chinese seem to have taken the lead in this new arms race,” warns Sofge: “When Rand released a report in 2000 describing the potential outcome of a Sino-American conflict over Taiwan, the United States won the war handily. Nine years later, the nonpartisan think tank revised its analysis, accounting for Beijing’s updated air force, its focus on cyber warfare and its ability to use ballistic missiles to take out American satellites. Rand’s new conclusion: The United States would ultimately lose an air war, and an overall conflict would be more difficult and costly than many had imagined.”

Warning, just nine years from 2000 to 2009: The Iraq-Afghan Wars were supposed to make America stronger. Wrong. Those nine years are a perfect example of how war distorted America’s collective brain. Our neocon mindset about the Iraq war resulted in what’s now the “biggest foreign policy blunder” in history. Sofge captures this insanity:

”Ever since 1949, when Nationalist forces retreated to Taiwan following the Communist victory in the Chinese Civil War, Beijing has regarded the island as a renegade province of the People’s Republic. Now, in 2015, only the United States can offer Taiwan protection.” But “the nearest aircraft carrier is the U.S.S. Nimitz, which had just left the Japanese port of Yokosuka on Tokyo Bay … at least two days for the carrier to reach the strait … The closest other carrier group, near Pearl Harbor, is six days out.”

Yes, too late: The war’s over in less than 24 hours. Ironically, the Iraq/Afghan wars have not only weakened our economy and weakened our ability to fight future wars, they weakened America’s superpower status by indirectly handing the war-game victory to China. Worse, our irrational, neocon war brain is now demanding Americans “double down,” insisting defense cuts are “off the table.” Yes folks, America loves war; in that mindset, we will take on trillions new debt, even go down in flames.

Powerful new war strategy: China’s army of “cyber-attack” hackers

Suddenly, Sofge’s thriller exposes China’s fabulous new high-tech strategy: “Until the Nimitz arrives, it’s up to Kadena Air Base in Okinawa, 400 miles northeast of Taiwan, to defend the island. By 0515 hours, Air Force pilots are taking off in 40 F-15E fighters … airborne when Kadena comes under attack.

Error messages begin popping up on computer screens. Modern air defense systems share sensor information but this connection is going to become a liability. An army of hackers operating throughout China swarms the base’s networks, tying up communications with gibberish and cluttering the digital screens of radar operators with phony and conflicting data.”

Future wars: New “army” of hackers, tech geeks, game players, search-engine geniuses. Today Chinese compete with Google, X-Box, Facebook. Later they’re China’s cyber warriors, trained by China’s war-loving generals. The Pentagon knows: They’ll add trillions to our budgets, taxes and deficits, preparing for future wars. Forget cuts.

Hackers score many victories disabling Taiwan: “Early-warning satellites detect the infrared bloom of 25 ballistic missiles launched from the Chinese mainland. Five detonate in orbit, shredding American communication and imaging satellites … partially blinds U.S. forces.” So much for all that money wasted on a satellite defense system.

The pace of Sofge’s thriller accelerates like the final swift dogfight in “Top Gun:” China’s “20 remaining missiles re-enter the atmosphere over Okinawa … Kadena’s Patriot batteries fire missiles … but they are off-network … in disarray. Ten missiles are struck by multiple interceptors … equal number slip through … hit Kadena. … GPS-guided warheads contain bomblets … crater the base’s two runways … air-bursts devastating barracks, radar arrays and hangars … F-15s on the way … F-22 stealth fighters now cannot land on the bases shattered runways … Kadena’s satellites gone, the Nimitz and its flotilla of eight escorts … Aegis-guided missile destroyers … submarines … steaming toward an enemy possessing one of the world’s largest submarine fleets … an arsenal of land-, air- and sea-launched anti-ship missiles.”

Want more? Read Sofge’s “China’s Secret War Plan” thriller in the December 2010 Popular Mechanics. See how America could lose WWIII to China … in less than a day.

But Sofge hedges: “Chances are that a war between China and the United States will not happen in 2015, or at any other time. Under normal circumstances, a war for Taiwan would simply be too costly for either side to wage, especially given the chance of nuclear escalation. But circumstances are not always normal.”

In fact, history tells us wars are never “normal,” always unpredictable. Imagine this new cyber war, with an “army of Chinese hackers” beating America’s high-tech and very high-cost military.

China vs. USA, WWIII. Too costly? That never stops nations. Especially when leaders on both sides have macho egos, love war, act irrational. Add up China’s new stealth bomber, the deterioration of America ego losing those Pentagon war games and a resurgence of neocon war-loving politicians and you have to conclude that taxpayers will keep spending trillions preparing for the next global war, years in advance.

If not with China in 2015, then with some other boogeyman lurking the dark shadows of our collective brains, bad guys that will dominate the thinking of military generals for decades to come, for as the Bush Pentagon put it: “By 2020, warfare will define human life.”

So to be ever-vigilant, we’ll spend trillions, prepare for anything, anyone, anytime. Why? We love war!

MURDER HE WROTE

I came downstairs this morning to a horrific murder scene. There on the family room floor was the lifeless body of goldie, our priceless 3 year old goldfish won at a local fair through the herculian efforts of one of my sons throwing a ping pong ball into his bowl. He had survived countless days of us ignoring him and forgetting to feed him. He learned to survive eating his own shit. But he never learned to live outside his tank, the poor bastard.

It seems our two cats had formulated a master plan. They would hover above his tank for hours watching his every move. They were always drinking the water in his tank. We thought it was harmless, so we ignored it. Little did we know it was part of their murderous plans. In retrospect, it seems so obvious. They eventually drank the water down to a level where escape was futile. Then under the cover of darkness, they attacked. I have concluded that Cookie was the lookout and Smokey committed the dastardly deed. Both are denying all involvement and claim that goldie leapt to his death on his own. They have both lawyered up.

Smokey claims it was Colonel Mustard.

The saddest part of this story is that Avalon will never experience the joy of transporting goldie to the shore or her mother’s house again. She would utilize an old lemonade container for these trips. Once while coming home from the shore she thought goldie needed more air, so she took the lid off the container. As she was turning to get on I-95, the bowl tipped over and goldie went under the car seat. Avalon pulled over and tried to find him to no avail. She gave him up for dead, but he flopped out and she was able to put him in the 2 inches of water left in the container. When we went on our cruise, she used the same container to transport him to her mother’s house and it fell over and broke, spilling most of the water. Now you know why I don’t like to drive in our minivan.

So ends the sad story of Goldie the goldfish. RIP

SMOOT-HAWLEY REDUX (Featured Article)

This article originally appeared in the November 2010 edition of the Casey Report.

As the Greater Depression continues along a parallel pathway with the Great Depression of the 1930s, Congress is about to commit the same blunder it made in 1930. The rocket scientists in the House of Representatives in September passed the Currency Reform for Fair Trade Act, which aims to crack down on Chinese currency manipulation by targeting imports from China and other countries with currencies that are perceived to be undervalued.

The vote was 348 to 79, with more than 100 Republicans voting in favor of the bill. It died in the Senate before the mid-term elections, but Representative Sander Levin, Representative Tim Ryan and Representative Tim Murphy are expected to reintroduce the bill when the House returns in February from a congressional district work break. Senators Shumer and Casey are also planning legislation to punish the Chinese for unfair trade practices.

The head rocket scientist, Nancy Pelosi, declared:

“For so many years, we have watched the China-U.S. trade deficit grow and grow and grow. Today, we are finally doing something about it by recognizing that China’s manipulation of the currency represents a subsidy for Chinese exports coming to the United States and elsewhere. We owe that to American workers.”

This legislation is part of the Democrats’ “Make It in America” initiative that endeavors to increase domestic manufacturing and creating new American jobs. In classic congressional fashion, they are attempting to pass a bill that will make them look good in the eyes of their constituents, but will exacerbate already dangerous world trade imbalances.

You can count on Congress to pander to unions, protectionists, and America Firsters with hollow legislation, when 40 years of bad decisions, bad policies, and bad choices placed us in this situation. When you have made legislative choices that will require the U.S. government to borrow another $6 trillion in the next four years and you already owe someone $868 billion, it is not a good idea to punch them in the nose.

The U.S. is running an annual trade deficit exceeding $500 billion per year. It has not run an annual trade surplus since 1975. The trade deficit peaked at $769 billion in 2006, subtracting 5.7% from GDP. The enormous trade deficits are a result of government spending policies, Federal Reserve monetary policies, and corporate outsourcing that have gutted the industrial base of the U.S. These policies resulted in personal consumption expenditures surging from 62% of GDP in 1970, to 71% of GDP in 2009.

The trade deficits are not the fault of the countries selling goods to American consumers. Trade subtracted 3.5% from growth in April through June, the most since 1947, as imports surged at the fastest pace since 1984.

The trade deficit with China reached a record level in August of $28 billion, as imports skyrocketed. The U.S. is on track to exceed the 2008 record trade deficit with China of $268 billion. The facts that you don’t hear from the protectionist crowd is that exports to China are on track to reach $84 billion in 2010, 20% higher than the previous peak in 2008. Exports to China have increased by 525% since 2000, while imports from China have increased by 340%. The storyline about China not allowing U.S. imports into their country is false. Putting tariffs or quotas on goods coming from China will not create jobs in America and will only deepen and lengthen the current depression, just as it did in the 1930s.

Protectionism During the Great Depression

The complete collapse of worldwide trade during the 1930s, with its root in trade protectionism, did not cause the Great Depression, but it certainly didn’t help. In 1929, exports totaled $5.9 billion and accounted for 5.7% of GDP. By 1933, exports had plunged to $2.0 billion and accounted for only 3.5% of GDP. Imports plummeted by an equal amount. Global trade declined by 60% as tariffs were imposed and retaliation created a downward spiral. The U.S. provoked the trade war with the passage of the Smoot-Hawley Tariff Act.

Senators Reed Smoot and Willis C. Hawley sponsored the bill, and it was signed into law on June 17, 1930, by Herbert Hoover. It raised U.S. tariffs on over 20,000 imported goods to the highest levels since 1828. The new tariff imposed an effective tax rate of 60% on more than 3,200 products and materials imported into the United States, quadrupling previous tariff rates. According to the U.S. Statistical Abstract, the overall effective tariff rate was 13.5% in 1929 and 19.8% by 1933.

It seems politicians never change. During the 1928 presidential campaign, Herbert Hoover promised to help beleaguered farmers by increasing tariffs on agricultural products. After getting elected, Hoover asked Congress for an increase of tariff rates for agricultural goods and a decrease of rates for industrial goods. The Republican-dominated House and Senate did him one better and increased tariffs across the board.

In May 1930, a petition was signed by 1,028 economists asking President Hoover to veto the legislation. Henry Ford begged him to veto the legislation. Hoover opposed the bill and called it “vicious, extortionate, and obnoxious” because he felt it would undercut his pledge to international cooperation. Then he proved that he was a standard-issue weak-kneed politician by signing the bill. Hoover’s initial instinct proved correct. The international community levied their own tariffs in retaliation after the bill became law. Canada, Britain, and other European countries immediately imposed their own tariffs. World trade came to a grinding halt.

Germany, with its war reparations, was particularly vulnerable to this contraction. Ironically, the U.S. was the lender to the world during the 1920s. American lending propped up the entire world economy. Former allies paid war-debt installments to the U.S. chiefly with funds obtained from German reparations payments, and Germany was able to make those payments only because of large private loans from the U.S. and Britain. Similarly, U.S. investments abroad provided the dollars, which alone made it possible for foreign nations to buy U.S. exports.

By killing world trade with the Smoot-Hawley tariffs, the U.S. shot itself in the foot and contributed to worsening the Depression in Germany. This inadvertently led to the rise of Hitler. Talk about unintended consequences.

Decades of Bad Choices

Blustering politicians like Nancy Pelosi and Chuck Schumer are attempting to ram through populist legislation in order to appear to be on the side of the American people. The Treasury secretary of the United States has declared China a currency manipulator. Chinese Premier Wen Jiabao responded in kind:

“If we increase the Yuan by 20% to 40%, as some people are calling for, many of our factories will shut down and society will be in turmoil. If China saw social and economic turbulence, then it would be a disaster for the world.”

They are playing a high-stakes game of chicken, and the ante is much higher than it was in 1930. Exports account for 12.5% of our GDP today, versus 5.7% prior to the Great Depression.

The United States was a net exporter when the 1970s started. Our enormous trade deficits, which subtract from GDP, were not imposed on us by foreign countries. We are in this predicament because we made appalling choices.

We chose to allow the Federal Reserve to inflate away 95% of the purchasing power of the USD since 1971. We chose to elect politicians that have driven the national debt from $371 billion in 1970 to $13.6 trillion today. We chose to support “free trade” legislation that allowed corporate CEOs to gut our industrial base and ship good-paying jobs to China, while filling the pockets of these executives with millions. We chose to spend rather than save and invest in our country. We chose to become a consumer debt-centered society, relishing in the cheap goods we could buy from China on credit. We chose low prices at Walmart over small-business owners and sustainable domestic production of goods. Decades of bad choices cannot be reversed through taxation, tariffs, and quotas.

The Chinese have pegged their currency to the USD since 1995. For a decade, the U.S. was just fine with the peg, as American consumers got cheap goods, American corporations reaped huge profits from outsourcing, and banks raked in billions by lending money to everyone. Now that we have entered the Greater Depression, the finger pointing and accusations have begun.

Politicians and the people who elected them want someone to blame for their bad choices. The Chinese are the bogeyman that forced Americans to buy on credit. They forced American corporations to offshore millions of U.S. jobs. If the U.S. had a strong dollar policy, ran surpluses, and lived within its means, the Chinese peg would be meaningless.

U.S. GDP has grown by 335% since 1985. Over this same time frame, exports to China have grown by 1,800%, and imports from China have grown by 7,700%. Do politicians actually believe that imposing 30% tariffs on all Chinese products will magically create new manufacturing jobs in America? The 42,400 factories that have closed since 2001 and the 5.4 million manufacturing jobs lost are not coming back. A 30% upward revaluation of the yuan or 30% tariffs on Chinese products would devastate an economy that is still 70% dependent upon consumer spending. Just as in 1930, protectionist measures would boomerang and smack America in the back of the head.

If the pandering politicians in Washington D.C. are myopic enough to ignore the lessons of the past and start a trade war with China and/or the rest of the world, the possible implications would be:

An immediate increase in the prices of goods from China, which would proportionately hurt the lower and middle classes who shop at Walmart.
Retaliatory tariffs and protectionist policies by other countries, resulting in a decline in U.S. exports.
A net loss of U.S. jobs as the decline in consumer spending-related jobs will far outweigh any benefits to exporting businesses.
A decrease in world trade, resulting in a deepening of the current worldwide depression.
Possible unintended consequences similar to what happened in Germany after the hyperinflationary collapse of their currency (dictators, war, chaos).

The investment implications of trade barriers, tariffs, quantitative easing, and currency debasement are clear. Gold, silver, and virtually all commodities are likely to soar in this environment. To find out how to profit from this certain trend, check out Casey Research’s BIG GOLD REPORT.