some more stupid economics  

this foreclosure mess gives me some encouragement. because internal parts of the system are placed in conflict with one another.

as much as the media will try to paint this as freeloading defaulted mortgage holders vs the legal owners of those debts, or more simply portray the whole thing as some paperwork errors and shortcuts, the truth is otherwise.

this is bank vs judge. perjury vs members of the legal system who take their work seriously. mbs servicer vs mortgage originator. pension fund investor vs mbs packager.

the fraud and crimes are not just the big boys vs the people. it is fraud by some big boys perpetrated on other big boys. and if the lackey government favors one group over another, those unfavored will squawk and scream, and won't take it lying down.

not that it matters too much exactly how and when the house of cards comes down, this could be the trigger.

meanwhile, as the unavoidable process of debt deflation proceeds, the powers that be realize that everything they tried over the past two years to trigger inflation has miserably failed. so, rather than marshall resources to take care of the people, and to build a new, sustainable economic structure, what do they do?

more of the same. if it failed before, only because they did too little.

more monetary bullshit (dropping rates and devaluing the currency); more keynesian bullshit (government must spend more, more, more, be it from tax, print, borrow or all of the above).

yet, debt creation is not growing. debt destruction continues. wages fall, unemployment increases.

and weakening the currency, so the price of oil, wheat and rice rises, is mistaken for inflation. or, if you define deflation differently than do i, a weak dollar somehow counteracts the contraction of credit/debt.

our economic system is based on growing credit and debt. credit and debt is not increasing. the system ain't working no more.

destruction of the purchasing power of the dollar is not the same as counteracting debt deflation. and increasing government debt has very very limited positive effects on total credit expansion.

even if the folks in charge recognized this, they are intent on saving the banks and wall street first and foremost; the people take the hindmost.

while a few, trying to sound enlightened, speak of the evils of supersized government debt and deficit. and those clowns never even mention the wars, the waste of the military industrialist class. much less the promises of the most expenive health care on earth for everybody w/o limits (titanium hips and knees for every 80yo! half a million dollar cancer chemotherapy for two months of horrific quality of life!), and promises of lifelong government pensions and social security that cannot possibly all be kept.

deficits are dangerous. but don't talk about the only possible ways to cut them.

i stand in awe at how long things have held together. easy for me to say, i am not unemployed, or underemployed, working enough to not qualify for food and medical money from the government.

maybe they can hold it together another couple of years. i won't bet against it (well, i won't bet much), but i sure won't count on it.