John Ryskamp

Shorting the Double Dip

National income drives consumer spending, which is contracting due not just due to falling national income but rapidly contracting credit lines and a near 40% loss of accumulated wealth in the property and equity markets. And while consumer spending ostensibly is 70% of the economy, this includes spending on health care - love those government statisticians - so contraction has an incredibly outsized impact on consumer discretionary spending - luxury goods, travel, restaurants, unnecessary goods, expensive goods - anything you can trade down from to a lower level of price with equivalent functionality.

BUT ISN'T 60% OF CONSUMER SPENDING DONE BY THE TOP 40% INCOME EARNERS. THE UNDEREMPLOYMENT RATE AMONG THOSE WITH A BACHELORS DEGREE OR HIGHER IS ONLY 10%. THE REASON YOU HAVEN'T HAD ANY CHANGES--EXCEPT FOR THIS CORPORATIST GAMBIT--IS THAT SUBURBIA IS STILL WORKING. YOU WON'T SEE ANY CHANGE UNTIL THE B.A. UNDEREMPLOYMENT RATE IS 40%.


There are too many factories around the world, too many shopping malls an stores, too much commercial real estate - and at levels beyond all historical norms or comparisons. The first several legs of a rebound needed to absorb this capacity before we see any uptick in business investment that materially helps the economy.

THAT CAPACITY DOESN'T NECESSARILIY NEED TO BE 'ABSORBED.' IT CAN SIMPLY BE DESTROYED. AND THAT IS WHAT IS HAPPENING. NOTHING WILL CHANGE IN THIS RESPECT UNTIL SUCH CAPACITY DESTRUCTION VERY SIGNIFICANTLY UNDERMINES THE SUPPLY CHAIN.

LOOK FOR THIS TO OCCUR IN AGRICULTURE, WHICH IS HIGHLY LEVERAGED JUST LIKE COMMERCIAL REAL ESTATE.

WHAT YOU DON'T UNDERSTAND IS THAT THE WEST COAST HOTEL V. PARRISH "SCRUTINY" REGIME NEVER OUTLAWED MELLON'S "LIQUIDATE LIQUIDATE LIQUIDATE." THAT IS WHAT IS HAPPENING NOW, AND IT HAPPENS IN TWO PHASES:

1. CIRCLE THE WAGONS--PROTECT THE POWERFUL, BACKSTOP BONDS.

2. SHOOT OUT AT THE INDIANS--THE FEDERAL GOVERNMENT WITHDRAWS FROM AMERICAN SOCIETY.

EVERYTHING IS GOING RIGHT ON SCHEDULE. YOU SHOULD STUDY THE DEPRESSION MORE CLOSELY. THE FEDERAL GOVERNMENT IS PROGRESSIVELY, STEP BY STEP AND ACCORDING TO THE MOST APPROVED MELLON PLANBOOK, WITHDRAWING FROM THE COUNTRY.

THE QUESTION IS, WHERE WILL THE NEW REGIME COME FROM. IT WILL BE THE "MAINTENANCE" REGIME--NEW INDIVIDUALLY ENFORCEABLE RIGHTS (SUCH AS TO HOUSING AND MEDICAL CARE) IN SUPPORT OF A GOVERNING DOCTRINE WHICH SAYS THAT POLICY MAINTAINS IMPORTANT FACTS (BY THE WAY, THE "SCRUTINY" REGIME DOCTRINE IS THAT POLICY RATIONALLY RELATES TO A LEGITIMATE GOVERNMENT PURPOSE--AS ANY LAWYER).

"MAINTENANCE" IS USED EXPLICITLY IN THE THREE MOST IMPORTANT SCRUTINY CASES:

1. WEST COAST
2. UNITED STATES V. CAROLENE PRODUCTS
3. BERMAN V. PARKER

LOOK FOR THE SUPREME COURT TO VETO SOME LAW WHICH UNDERMINES SOME IMPORTANT FACT, STATING THAT THEY ALWAYS GROUNDED DISCRETION IN POLITICAL SYSTEM, ON MAINTENANCE OF IMPORTANT FACTS.

THAT WILL SHOW YOU THAT THE REGIME CHANGE HAS COME. AND IT HAS TO COME. IT IS THE ONLY CREDIBLE ALTERNATIVE. THE ECONOMY IS COLLAPSING BECAUSE THE SCRUTINY REGIME HAS LOST CREDIBILITY.

IF YOU KNEW ANYTHING WHATSOEVER ABOUT THE LAW, YOU WOULD KNOW THIS.

AND WHERE IS THIS CHANGE COMING FROM? WHY, FROM OUR SEMI-FASCIST SUBURBAN CLASS. THEY'RE SCARED SH-TLESS ABOUT IMPORTANT FACTS SUCH AS HOUSING AND MEDICAL CARE.


That being said, there is no political support for more stimulus. Deficits and a Congressional election preclude another stimulus package next year and the Fed and Uncle Sam have already said they are definitely pulling back, beginning November 1.

YOU'RE QUITE MISINFORMED. A SECOND STIMULUS BILL IS ALREADY IN THE WORKS. IT WILL PROBABLY BE INTRODUCED IN FEBRUARY 2010, AND WILL BE ABOUT $2 TRILLION. COMMERCIAL REAL ESTATE HAS TO BE BAILED OUT, OR 2000 COMMUNITY BANKS WILL FAIL.