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Dr. Chris Martenson is an independent economist and author of a popular website, ChrisMartenson.com. His Crash Course video series explores the intertwining significance of the “three E’s”—the economy, energy, and environment and offers articulate, dynamic insight into the workings of our... More
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  • Interview with Ted Butler: The End of Silver Price Manipulation

    2010 has been an exceptional year for silver. The price has increased over 50% to-date, and the CFTC (the US commodity regulatory body) issued a statement last month admitting that the market price of silver may have been (and still may be) fraudulently manipulated. An investigation is underway.

    Ted Butler is one of the pre-eminent commentators on the silver market. In addition to his decades following the metal, he's spent years raising suspicions about silver’s suppression by a few large banks taking on egregiously large short positions. The current CFTC action is a direct result of Ted’s activism.

    In the podcast below, I conducted an in-depth interview with Ted focusing on the most important aspects that anyone interested in silver needs to know now. In short, Ted predicts the imminent end to the manipulation will ultimately send the price higher - much higher.

    The podcast covers:

    • Why silver has such a compelling value story
    • The coming silver supply crunch
    • The argument behind the allegations of silver price manipulation
    • Drivers behind the recent price action in silver
    • Why price volatility will increase
    • The expected outcome of the CFTC’s investigation and why Ted thinks it will be "a bombshell for the silver market"

    To listen to the interview:
    Download/Play the Podcast
    Report a Problem Playing the Podcast

    Within the podcast, Ted mentions how the CFTC is actively soliciting ideas and opinions from concerned citizens regarding its investigation. Those interested can weigh in by clicking here.



    Disclosure: Chris Martenson is long gold and silver
    Nov 19 4:21 PM | Link | Comment!
  • Straight Talk with James Howard Kunstler: The World is Going to Get Rounder and Bigger Again

    "Straight Talk" features thinking from notable minds the ChrisMartenson.com audience has indicated it wants to learn more about. Readers submit the questions they want addressed and our guests take their best crack at answering. The comments and opinions expressed by our guests are their own.

    This week's Straight Talk contributor is James Howard Kunstler, author and social critic. His better-known works include The Long Emergency, in which he argues that declining oil production will result in the decline of modern industrialized society and compel Americans to return to smaller-scale, localized, semi-agrarian communities; World Made By Hand and its sequel, The Witch of Hebron, all published by The Atlantic Monthly Press. He writes a weekly blog is also a leading proponent of the movement known as "New Urbanism."

     

    1. When will the average US citizen wake up to the perils of peak oil?

    JHK:  When a crisis comparable to the 1973 OPEC embargo -- with lines at the filling stations and hefty price-hikes --  whaps them upside the head. For now, what I call the psychology of previous investment is a massive impediment to the public's ability to think clearly. By this I mean mainly our sunk costs in suburbia, including all its furnishings and accessories. That's where we put so much of our "wealth" over the past sixty years. I regard these as tragic mis-investments, of course, because the wealth has gone into a living arrangement that has no future. The housing bubble crash is greatly aggravating the problem, because it is de-valuing the whole kit-and-kaboodle. But the net effect for now is only to generate more anxiety among the public, which leads to more confusion, more cognitive dissonance, more static in the collective imagination, and more political noise -- in short, more obstacles to clear thinking. 

    2. There seems to be no political will to tackle the reality of peak oil. What might tip that balance (before we hit the proverbial wall)?

    JHK:  Leadership in America has been abysmal on these issues -- and not just in politics, but in business, media, education, the enviro community, even the clergy. For the politicians, I have to suppose that the implications of peak oil are just too painful to face. They simply do not compute into any winning formula. They won't go near it.

    I'm quite convinced that Dick Cheney and George Bush were informed about the oil situation, in particular its relation to the national defense. After all, Robert Hirsch arrived on the scene loudly in 2005 with his report, commissioned by the US Department of Energy, which was quickly suppressed because its conclusions were so stark. Bush made occasional remarks about our "dependence on foreign oil" but he didn't have the guts to spell it out further, and he was a tool of Big Oil, after all, which has run a PR campaign for ten years denying the peak oil story. Anyway, he didn't want to interrupt the fabulous credit-driven boom of the years leading to his final months in office, when things really did go south.

    Obama is another story, of course. He couldn't be so poorly informed as to not know about peak oil in most of its contours and implications, especially vis-a-vis the military, which has issued more than one report while he's been in office. So I conclude that he is a kind of charming bounder. I'm not necessarily sorry I voted for him, because I think McCain would have been worse, entwined as he is with the lunatic right-wing and its toxic aura of paranoid unreality. 

    It's unclear whether the media is too dumb to get the complexities of our oil predicament, or if they are just bought-off lackeys of the various corporate interests. Probably a combo on that. It is rather hard to understand, for instance, the vapidity of The New York Times -- in particular its op-ed pundits, Krugman, Friedman, Brooks. The Times's straight reporting on the oil scene has been scant and fatuous. The Wall Street Journal, ditto. TV news operates in its own special sewage canal of idiocy, so one might not expect much from there.

    Since business in America has resolved more and more into a set of rackets, one can't expect plain-dealing from that sector these days.

    I've seen the failure of the environmental community up close. Two years in a row at the Aspen Environmental Forum, I listened to the cream of the Green movement rhapsodize over all the cool new "green" ways you can run cars other than on gasoline. You see, their base assumption -- like everyone else in this society -- is that driving cars incessantly is a God-given entitlement. They were in a techno-rapture over electric cars, bio-diesel, and so on. They didn't once mention walkable communities or public transit. They're just not into it. I consider their position utterly disgraceful. 

    The clergy is an interesting case. Notice especially how the Sunbelt born-again crowd are perhaps the staunchest defenders of suburbia -- and everything that goes with it, including car dependency and and huge volumes of oil imports from unreliable foreign nations. They conflate suburbia with the constitution and Jesus and, really, their belief system is so incoherent and ridiculous that it must really frighten the educated folk of other nations who see how we carry on. 

    3. If you were President and had free reign, what would be your energy plan?

    JHK:  

    • I would commence a public debate on whether we go forward with a nuclear power program, to weigh the hazards involved -- but, frankly, there may be no other ways to keep the lights on in a decade or so. It may turn out that we are too short of capital to carry out such a program, or our society may be too disorderly in the years ahead to run it, or we may decide the hazards are not worth it, but the discussion must start now.
    • I would direct major capital resources to repairing the conventional passenger railroads in the US, because commercial aviation as we know it will not continue another ten years, and ditto Happy Motoring, and this is a big continent-sized nation. If we don't get regular rail running, we may not be able to go anywhere. We should just put aside our fantasies about high-speed rail or mag-lev. We're too broke for that, and we need to temper our techno-grandiosity. But, believe me, Americans will be deliriously happy ten years from now if they can go from Des Moines to Chicago at 80mph on-time. During the Obama years, we've stupidly poured our dwindling capital resources into building more highways. This foolishness has got to stop. I would promote public transit at the smaller municipal scale as well, to go with regular rail.
    • I'd begin the task of rehabilitating our inland waterways so we can move more goods around the nation by boat -- and in particular the port facilities that have been mostly removed in places like St. Louis and Cincinnati and around the Great Lakes.
    • I would put an emphasis on walkable communities. I would prepare the nation for the possibility of gasoline rationing, since events could shove us into criticality at any time.
    • I would begin closing down scores of unnecessary overseas military bases and I would terminate the nation-building project in Afghanistan since there is no possibility that we can control the terrain or the population there for anything more than the shortest run.
    • I would direct the Attorney General of the US to mount investigations of the Bank of America, JP Morgan, Goldman Sachs, and other big banks in connection with the massive swindles and frauds in house lending and the securitization of mortgages -- because the rule of law requires that somebody be held accountable for the demolition of the banking system.
    4. Now take out your crystal ball. What is the most likely scenario you see playing out in global energy supplies over the next few decades?

    JHK:  I see the USA getting blind-sided by events. We import nearly three-quarters of the oil we use and much of it comes from very dodgy places. The ideas derived from Jeff Brown's Export Land Theory tell us that oil export rates are certain to go down very steeply and soon. Before long, exporting nations will have to ask themselves whether they ought to keep some of their oil around for their own people.

    In the meantime, China is very busy spending its foreign exchange reserves on "favored customer" oil contracts, more or less cornering a lot of the market. I think that will lead to conflict between them and us. We may even invoke the Monroe Doctrine over Chinese oil purchases out of Canada.

    Also meanwhile, we'll see the feedback loop of demand destruction leading to supply destruction as the oil industry becomes starved of capital to get at new production to offset worldwide depletions, and that will result in wildly gyrating oil prices -- all of which will shove the global oil industry -- production and markets -- into fatal instability. Nicole Foss's rap on this dynamic is an excellent reference.

    The prospects for gross geopolitical mischief around this are huge, of course, meaning war in some shape or form -- and it will clearly be a war over dwindling resources. Also, of course, you can't overstate the potential for disorder in the Middle East. The king of Saudi Arabia is well over 80 years old now and his successor is also old and ill. I'd suggest we may see a Shia uprising on the western rim of the Persian Gulf (that is, the Arabian side) that would bring down the Saud royal family and ignite a major struggle all over the region. 

    There is currently a lot of hoopla over shale gas in the USA, but I think that will disappoint us, since it requires gigantic ongoing capital investment, and capital will be in ever-shorter supply. And this is not to mention the other problems and hazards associated with shale gas "fracking," such as the extreme forms of groundwater pollution and cancer clusters.

    Bottom line: in ten years or fewer the USA will be starved for energy resources and probably on its ass in one way or another.

    5. The economy's a mess.  What's the best possible outcome to this and how does it come about?

    JHK:  The best possible outcome would be a peaceful re-set to a lower scale of activity -- the whole downscaling and re-localization package. It's hard to see that happening smoothy.

    It will be very painful because we're talking about liquidation and de-leveraging beyond even Great Depression levels. We have to allow a clearing of mis-investment. Unfortunately, this means not just the "toxic" paper from the colossal frauds and swindles of Wall Street but much of the infrastructure of suburbia itself, which is losing value now even despite massive government efforts to prop up house prices and pretend that losses in commercial real estate haven't occurred. That clearing process is so tremendous that it is hard to imagine a way that it could occur without leading to gross political disorder -- including the possible breakup of the USA into smaller autonomous regions. We're looking at institutional failure at never-before-imagined levels: pensions and social security lost, insurance companies and banks collapsing, the medical system in disarray, really the whole social safety net and beyond just dissolving. This is a comprehensive economic collapse beyond the scale even of the Soviet collapse which, Dmitry Orlov tells us, at least allowed people to stay in their homes and get around on public transit when all else failed.

    One much-fretted-over outcome is authoritarian government in the USA. We can see the larval stage of that now with the tea baggers and the theocratic right-wing and a Republican Party that has made itself hostage to the John Birch Society -- but I maintain, as I wrote in The Long Emergency, that it's more likely the federal government will become impotent and ineffectual, and therefore unable to carry out a "corn-pone Nazi" program, even if such characters got a hold of the offices.

    In any case, America will be faced with rebuilding all the major pieces of its economy at a lower scale: farming, commerce, transportation, education, banking, you name it. This re-set will occur naturally -- if we don't blow ourselves to Kingdom Come -- but there's no telling how long the process might take. We do know that following the collapse of Rome, Western Europe endured nearly a thousand years of relative hardship. I'd add that societies are essentially emergent organisms and that this economic re-set would therefore be an emergent phenomenon -- not something that required centralized planning or anything like it.

    One notable side effect of all this will be a "time out" from technological innovation, which is destroying the ecosystem of the planet Earth, our only home. The human race needs a time out from all this techno-magic-mischief, a period to reflect on what we've done and how we ought to behave with this stuff. I don't even know for sure whether it's a time out or a game-over for technology, and I'm not convinced that we need to know at this point.

    6. What steps are you currently taking in preparations for the upcoming “post-peak” years? What do you advise to those simply looking to protect the purchasing power of their current wealth?

    JHK:  Well, at 62 I've already outlived Babe Ruth, Mozart, Abe Lincoln, and George Gershwin,  so however long I go from here is "gravy."  But I do all I can to maintain good health. I eat mostly plants, as Michael Pollan would say. I get a lot of exercise. I lead a purposeful daily life. I stay current with the dentist. I made the formative decision of where-to-live over thirty years ago when I settled in a "main street" small town in upstate New York. My surplus wealth is invested for the moment in hard gold, the Sprott Physical fund, Australian and Canadian short term bond funds (cash equivalent), and Potash mining. I am renting my dwelling, sitting out the housing collapse. I acquired the NY State handgun permit (not so easy). I have some tubs of brown rice, lentils, and curry powder, etc., stashed away. Alas, I didn't have the capital twenty years ago to get hold of forty acres and a mule -- but that's not a bad idea for other people.

    7. Are you able to tell (either based on your website viewership or book sales, or from any other source) in which parts of the country/population your teachings are gaining the most traction?

    JHK:  My only index of that is the size and mood of audiences where I speak around the country. The Pacific Northwest is always a lively spot. The people who show up are intelligent, informed, and interested. In Southern California I seem to be utterly unknown. Parts of the Midwest, such as Wisconsin and Minnesota, seem to be organizing for a different economy, but other parts (rural Illinois, Indiana, Ohio) are sheer zombie-land. New York City and Washington exist in bubble-fantasylands of their own. Rural New England is pretty peak oil aware, though the Boston-Cambridge hub is locked into transports of techno-rapture, probably due to the techno-grandiose culture of MIT. The baleful influence of Harvard shows up in the urban design and architecture field, where they are preoccupied with narcissistic careerism rather than repairing the human habitat. Dixieland is hopeless, what with their thrall to the born-agains and the misfortunes of their demographic (namely, "Cracker Culture" which celebrates ignorance and violence). I don't follow my book sales, frankly, and my website manager knows more about the activity on my site than I do.

    8. You speak to a lot of audiences and groups.  What has shifted over the years and what, if anything, gives you hope in those trends?

    JHK:  I must tell you that I think almost nothing has shifted among the body politic except perhaps the levels of angst and desperation for individual citizens brought on by personal calamity involving job losses, debt, house repossession, family breakup, and related effects of our economic collapse. Meanwhile the distractions from all this pain and stress are ever more moronic -- Dancing with the Stars starring Bristol Palin -- can it get any worse?

    Mr. Obama, who I voted for, has done almost nothing to address our energy predicament, and the 2200-page financial regulation bill he signed does little to reform the problems in capital finance -- so, here we are eight months after Fin-Reg entering another stage of the banking crisis. We are still absolutely sleepwalking into the future.

    9. It seems inevitable that the suburbs (with 60-mile commutes) and places like LA will suffer badly in a peak oil future.  Do you still hold the view that some regions are going to fare substantially better than others?

    JHK:  It ought to be self-evident. I mean, compare Phoenix and Portland, Oregon. Phoenix is utterly toast in a few years. They can't grow any food there without expensive and heroic irrigation. They have water problems. They're slaves to their cars. They're in a place where even the hamburger flippers need air-conditioning to survive. It's quite hopeless there. Portland, on the other hand, has turned itself into one of the finest walkable cities in the USA and the Willamette River Valley is one of the most productive farming micro-regions in the world. Human beings will continue to live and thrive to some extent there. Similarly, I think the Great Lakes region is undervalued these days. It is whole lot of good ag land surrounded by the world's most extensive inland sea -- kind of a Mediterranean of fresh water. I remain pessimistic about Dixieland, which I think will be prone to violence and political disorder. In the longer run I believe it will become what it was before World War 2: an agricultural backwater. But, really, everybody in every region of the country will be touched by the problems of the long emergency.

    10. What question didn’t we ask, but should have? What’s your answer?

    JHK:  Will China dominate the world further into the 21st Century?  

    A lot of people think so. I'm not so sure about that. They have problems that are orders of magnitude greater than ours with population overshoot, dwindling fresh water, industrial pollution, relatively little oil of their own, and legitimacy of governance. They've become net food importers.

    We look at them and their recent accomplishments in awe -- and they've come a long way from the point thirty years ago when most Chinese lived like it was the twelfth century. But they came to the industrial fiesta very late. They are making some rather dumb choices -- like, trying to get their whole new middle class in cars on freeways, putting up thousands of skyscrapers. Their banking system is possibly more corrupt and dysfunctional than ours -- since it's run by the state, with very poor accountability for lending. As a Baby Boomer, I well remember China's psychotic break of the 1960s, when the country went cuckoo under the elderly, ailing, paranoid Mao Tse-Tung -- which is to say, they're capable of flipping out on the grand scale under stress. They are reaching out these days in a resource grab using their accumulated foreign exchange reserves. At some future time -- say, if the global banking system implodes, and their forex reserves lose value -- I wonder if they will reach out militarily for resources, and how the world might react.

    In any case, I take issue with the Tom Friedman notion that the world has become permanently flat. The world is going to get rounder and bigger again. We'll discover -- surprise! -- that the global economy was a set of transient economic relations that obtained only because of a half century of cheap energy and relative peace between the big nations. Ahead now, I think you'll see the big nations shrink back into their own corners of the world. I'm not saying we'll see no international trade, but it will be nothing like the  conveyer belt from China to WalMart that we've known the last few decades. And the prospects for conflict are very very high.

     


     

    If you have not yet seen the other articles in this series, you can find them here:

    ChrisMartenson.com readers can submit their preferences for future Straight Talk participants, as well as questions to ask them, via the Straight Talk forum.

     

     



    Disclosure: Chris Martenson is long gold and silver
    Tags: FED
    Nov 17 10:50 AM | Link | Comment!
  • In The Dark Of Night - Debt Limit To Be Increased
     

    There is no means of avoiding the final collapse of a boom brought about by credit expansion. The alternative is only whether the crisis should come sooner as the result of a voluntary abandonment of further credit expansion, or later as a final and total catastrophe of the currency system involved.

          Ludwig Von Mises

    It's time to face facts. Washington DC is out of control. Spending is breaking all records, the deficit is climbing higher and higher, and the general populace is voicing graver doubts about the deficit and mounting debts even as politicians drag the country even deeper into a financial pit.

    In 1981 the federal debt first crossed the $1 trillion dollar mark, never to look back. And now, here in 2009, lawmakers are considering boosting it by as much as $1.9 trillion in one fell swoop with the hope (fingers crossed) that nobody will notice if they do it over the holidays.  Their calculations in deriving the $1.9 trillion number appear to not involve any considerations about what is best for the long term fiscal health of the country but whether the amount will be sufficient to make it past the mid-term elections.

    Yes, the debt and deficit are not only large but embarrassingly large. And they should be. Congress should be absolutely ashamed of its role in failing to impart or enforce any regulatory or fiscal discipline. In fact the entire edifice of power in DC ought to be ashamed.

    Sorry, I can't seem to write about this issue without climbing up on a soapbox. Let me turn to the facts.

    Here's the data.

    Debt Limit to Be Increased By Up to $1.9 Trillion

    Dec. 11 (Bloomberg) -- House Majority Leader Steny Hoyer said the chamber will vote next week on increasing the U.S. debt limit by $1.8 trillion or $1.9 trillion.

    The debt limit increase, raising the legal cap on government borrowing to about $14 trillion, would be the fourth in 18 months. A $1.8 trillion boost would probably be enough to prevent lawmakers from having to raise the limit again before next year’s midterm elections.

    Such an increase would be more than twice the size of each of the past three debt limit increases, each of which lifted the cap by $800 billion or less.

    We can expect three things here.

    1. Some lawmakers will make blustery noises about how the deficit should be reduced, possibly by attaching "pay as you go" amendments to the bill.
    2. Those amendments will be watered down to the point of uselessness by inserting such 'outs' as "unless it's an emergency" or other such rhetorical escape pods.
    3. The bill to raise the debt ceiling by nearly $2 trillion will comfortably pass by a wide margin.

    This is not some genius political insight I am offering here, merely a summary of the last three debt limit shenanigans. Here's what I read in 2004 when the debt limit was being raised: 

    Sen. Judd Gregg (R-N.H.), who will chair the Budget Committee next year, said the measure of his success will be "putting in place a very definitive budget with strong enforcement mechanisms on the discretionary and entitlement [spending] side."

    Of course no such mechanisms arose in 2004 and neither did they arise in 2006 after a similar pronouncement was made by Gregg, and he's making the same noises again here in 2009.  Which is not to pick on Gregg necessarily, there are others providing themselves with the same political cover, but nothing ever seems to result from such apparent concerns so I tend to doubt their sincerity and view this as political posturing rather than real concern. 

    The political strategy surrounding the debt ceiling was laid out very clearly in a piece in Politco:

    Democrats to lift debt ceiling by $1.8 trillion, fear 2010 backlash

    In a bold but risky year-end strategy, Democrats are preparing to raise the federal debt ceiling by as much as $1.8 trillion before New Year’s rather than have to face the issue again prior to the 2010 elections.

    The leadership is betting that it’s better for the party to take its lumps now rather than risk further votes over the coming year. But the enormity of the number could create its own dynamic, much as another debt ceiling fight in 1985 gave rise to the Gramm-Rudman deficit reduction act mandating across-the-board spending cuts nearly 25 years ago.

    I am hoping that at least some public debate, if not a full-blown game of political football, erupts over this incredibly large proposed surge in the debt ceiling. It deserves to be seriously debated and considered. How much is too much? When will we stop? If now is not a good time to balance our spending with reality, when will it ever be?

    Such questions are now finding their way into the public consciousness, which I am glad to see:

    Surplus of worry over national debt

    Debt is the essential fuel for a superpower that spends billions of dollars more than it receives in tax revenue — every day. The job of the debt auctioneers is to keep things humming smoothly. It's a boring process, but maybe not forever. When adjusted for inflation, the United States' publicly held debt is nearly $8 trillion. That number could more than double in a decade. The projected growth of the federal debt is widely viewed as unsustainable. It's unlikely that the nation will ever default, but neither is that any longer unthinkable.

    Whopper budget deficits for so many years will mean that the cumulative debt will creep up as a percentage of the nation's gross domestic product (NYSE:GDP). How much debt the country can handle is debatable. The problem is that, if investors believe the United States isn't fiscally responsible, they could start demanding much higher interest rates when they bid on Treasury securities. The feedback loop could get ugly. The nation could have to borrow hundreds of billions just to pay interest. This has been touted as a classic path to irreversible national decline.

    "Right now, this year, we have 1.6 trillion in debt coming due. That's roughly twice individual income-tax revenue. Our only plausible strategy for paying that back is to borrow more money," said Leonard Burman, an economist at Syracuse University.

    It has been projected recently by the CBO that the cumulative deficit over the next 10 years will be an additional $9 trillion. I am convinced that that the deficit will almost certainly be higher than $9 trillion and the CBO will have to revise those estimates higher and higher over time (a theme I have consistently noted in past articles such as here).

    Here we might note that the budget deficit for November alone came in at a reported $120 billion.

    Federal budget deficit for November hits $120.3B

    The federal deficit for the first two months of the new budget year is piling up faster than last year's record imbalance.

    Economists worry the flood of red ink could push interest rates higher and raise the cost of borrowing for consumers and businesses, a potential drag on the fragile economic recovery.

    The November deficit totaled $120.3 billion, the Treasury Department said Thursday. That's less than analysts had expected and down from a $176.4 billion imbalance in October. It was a record 14th straight monthly deficit.

    Even with the improvement, the deficit is 5.7 percent higher than the first two months of the 2009 budget year when it hit a record $1.42 trillion. The Obama administration expects the 2010 deficit will set a new record at $1.5 trillion.

    While this news was largely spun in the media as an improvement over October's dismal results, the truth of the matter was somewhat obscured by the headline.  Underneath the covers we saw the government's receipts fall by -7.7% yr/yr while outlays were suppressed by a trick related to the accounting of bailout funds. As a quick comment, isn't it interesting that the government can report that the economy is growing while federal receipts continue to fall yr/yr?

    The real deficit can be easily measured by going to the Treasury website and looking at the increase in the debt held by the public. That figure stands at $224 billion for the month and, most intriguingly, shows that the 'intragovernmental holdings' (Social Security and Medicare trust funds mainly) fell for the month indicating that our entitlement programs have become a net drain on the federal budget far earlier than projected (this is really big news folks).

    The debt held by the public represents the additional cash needs of the government for the month and they were more than $100 billion higher than the reported budget deficit.  While it's true that there might be some additional funds left kicking around from the Treasury auctions that can spill over into the next month, these are not large enough to foil this statement; the true federal deficit is far larger than is being reported.

    The complicating factor for lawmakers this year is that it is an election year and voters have figured out that they've pretty much been sold down the river:

    Americans Are Furious at Wall Street

    Wall Street firms are recovering—but their standing with the American public is not. The public rage directed at Wall Street banks and brokerages remains at high levels, according to a Bloomberg National Poll of 1,000 U.S. adults conducted on Dec. 3-7 by the Des Moines firm Selzer & Co.

    Two-thirds of Americans say they have an unfavorable view of financial executives. More than half say big financial companies, which are expected to pay record yearend bonuses, are out only to enrich themselves and also should not have received government aid.

    Banks that got taxpayer help through the Troubled Asset Relief Program—the $700 billion financial rescue plan passed by Congress last year—shouldn't pay any bonuses, according to 75% of those polled. And this includes 39% of respondents who say they disapprove of bonuses even when the banks have paid the government back.

    "The fact that they're even in existence should be bonus enough," says Cassie Swihart, a 58-year-old retired registered nurse from Warsaw, Ind. Adds Elijah Brown, 42, an unemployed union contractor from California: "Why would you want to give somebody a bonus who put us into this situation?" Brown is among the 64% of people who said bailing out banks was a bad idea.

    But this anger goes farther and deeper than a rightful indignation at the offensive bailouts of undeserving banks. People know that we are on an unsustainable economic path that could end in the financial ruin of the dollar and by extension this nation.  To many this is an unacceptable and unnecessary risk to run.   I'd like to see a couple of surveys run that ask questions about something besides the banker bailouts.  IF we did, perhaps we'd find that the headline could be rewritten as "Americans Are Furious At Congress."

    The bottom line is that a crisis rooted in debt cannot be solved with more debt.  Jim Rogers put it very well recently when he said, "Papering over the problem is not going to solve America's problem.  The idea you can solve a problem of too much debt and too much consumption with more consumption and more debt defies belief. I cannot believe that grownups would stand there and say that."

    It will be an interesting election cycle and I am mindful of the idea that there could be some significant upsets at the polls if the current leadership does not appreciate the extent to which we "get it" and wish to see our nation put back on a safe and sound path towards sustainable and true prosperity.

    So I will keep a close eye on how the debt-ceiling debates and outcome are managed. If it turns out to be yet another "in the dark of night" act that gets passed by an embarrassed group of legislators at a moment designed to shield it from public view

    My strong preference here would be to either reign in federal spending (I have a lot of targets in mind beginning with a 'defense' budget that is more than the rest of the world combined) or to raise taxes enough to cover our wish-list of expenditures.  Don't get me wrong, I have no desire to see my taxes hiked by 100%.  I am instead confident that any move to raise taxes by any such amount would rapidly lead to genuine efforts to control spending (or lead to a lot of fired legislators).

    This is not a trifling issue. It is vitally important that we not bequeath to our children our debts. We need a serious change in attitudes in DC.

    "It is incumbent on every generation to pay its own debts as it goes. A principle which if acted on would save one-half the wars of the world."

         ~Thomas Jefferson   (to A. L. C. Destutt de Tracy, 1820. FE 10:175)

    Disclosure: No Positions

    Disclosure: No Positions
    Dec 12 10:13 AM | Link | 3 Comments
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