happy new year 2011  

cause 2010 sucked balls for me. would've been horrible, except my team won the friggin world series. and that is the only thing i will remember from this year. well, that and the hard lessons learned.

the hardest to accept lessons are those regarding the sorry state of our country. and worse than the hard truths are the constant lies, and the refusal of most americans to admit to even a few of the hard truths that define our america today. simple, obvious truths that if you speak them in polite company, folks excuse themselves from the conversation, and they don't invite you next time.

simple unambiguous gems such as:

--the wars in afghanistan, iraq, pakistan, yemen, and soon to come to somalia, are bankrupting our treasury, are immoral, are pointless, are making us less safe, and are absolutely unwinnable. the people who become 'terrorists' hate us because we are over there making war and killing people.

--the economy is completely wrecked, being looted as it dies by wall street and the bankers, being artifically supported by trillions of printed and borrowed dollars that cannot be sustained for very much longer. as soon as they stop printing, the whole thing falls.

--98% of congress are bought and paid for by big money interests, and serve 100% of big money interests, and 0% of the public good. this is also true of 100% of presidents, immediate past, present and immediate future.

--the war on drugs has been a spectacular failure. legalization/decriminalization could not possibly increase drug use and drug addiction from the current all-time high levels. the proof is in the history of alcohol prohibition, and in the experience in various european countries that have legalized. crime would plummet, the war in afghanistan would come to a quick halt (no more money for the taliban), only one-tenth of the savings could fund rehab and treatment on demand for every single addict in america. but too many folks in the usa (prisons and cops) make too much money from drug crimes.

--the status quo is completely unsustainable, and when the efforts to maintain it fail and/or are withdrawn, things are gonna go from bad (true unemployment of roughly 1 in 5; 1 in 7 americans on food stamps; residential real estate values are going down again and nothing can stop this;) to much much worse.

i have great difficulty not thinking about these truths. the wars and the complete corruption of our leadership make me supremely sad. the continued economic enrichment of a small number of american elites at the direct expense of the masses makes me feel like a broke sucker for not jumping on the greed train and getting mine before the whole thing crashes. the looming full on collapse of the barely functioning economy makes me feel like going to work, and taking risks to build/innovate my little business is a complete waste of effort.

i doubt it is possible for me to ignore the truths, or for me to not react to the lies, denial, deception and willful ignorance. but i must find a different way to react to the political/social/economic milieu. probably a lot of focus and discipline. regarding what i eat; my activity, particularly exercise; and my thinking, particularly reading more books and less internet blogs about how bad the economy is.

i'll work out the details of what and how i want to change. but a part will be venting and purging a bunch of frustrating thoughts. on the internet. right here.

and here come a big batch of rant.

the folks running the economy, the ben bernanck and crew, have really fucked themselves. too bad they fucked all of us at the same time. their only concern has been to preserve the current banks and wall street firms, and preserve the current system of guaranteed money for the elite class that runs and works at the top of the current system. they care not even a little bit for the masses of american people. they may realize the truth, or they may delude themselves otherwise, but they work to enrich the elite at the direct cost of the rest of us. via outsourcing manufacturing and now service jobs overseas. via inflation of the currency. via taxpayer guarantees of fannie freddie and a shitload of bad paper the fed has purchased. via tax evasion by the multinational corporations and banks.

but in the midst of the hollowing out of the manufacturing capacity of the usa, the destruction of the middle class by destroying jobs and blowing serial financial bubbles, they blew it. the ben bernanck has painted himself into a corner. he and his fiscal counterparts, larry summers and the rest, have thrown trillions of dollars at the failed system. printing, borrowing, keeping interest rates artificially low. these machinations have staved off complete collapse. but they were intended as temporary measures, until the economy got back on track.

it hasn't. because the prosperity of the prior decade was fake, built on prior fed machinations (low interest rates) and fraud. the economy has just puttered along, growing only as much as those in control printed and borrowed. not real growth; just borrowed growth.

and, if they withdraw the temporary support, the whole thing falls. and the temporary support cannot possibly become permanent.

first, the borrowing. at some point, the borrowing (and the deficit government spending) has to stop. the chinese, the oil countries, and japan are getting a bit concerned that they may not get paid back. their desire to lend is lessening. their capacity to lend is shrinking as well, as we buy less stuff from them. and at some point, the interest rate the us must pay to borrow will increase (the fed is not omnipotent in the setting of interest rates; they have a lot of influence but not unlimited influence.) and once the size of the debt times the interest rate reaches a certain level, payment becomes impossible. and starts to reinforce itself, with higher rates. see iceland, greece, and ireland for the proof of this arithmetic.

when this happens, that is hard to say. i thought it would've happened by now. i was dead wrong. i underestimated the power of being the reserve currency of the entire world. the power of having most of the millions of barrels of oil sold daily denominated in us dollars. i had discounted the twenty years that japan stretched things out before hitting their wall.

but it will happen. it has to happen. i just have to get used to waiting. (and i was told the waiting is the hardest part.)

second, the printing. if/when you print too much, the value of the currency being printed falls, approaching zero. also, the interest rate for borrowing that currency will tend to rise. which feeds into the above. again, being the reserve currency of the world allows you to print a lot more w/o consequences than if you are printing argentine reals or icelandic whatevers. but it is limited. personally, i do not believe the wealthy elite will allow the printing press to run long enough to cut into their accumulated wealth, to the point of hyperinflation and currency collapse. but i could be wrong, and ben could print until those chickens come home to roost, and a loaf of bread costs $100.

so, if the ben bernanck and the tim geithner continue to print and borrow, the lenders stop lending or charge so much to lend that borrowing stops. or the currency falls toward zero, and the lenders charge so much to lend that borrowing stops. the printing/borrowing has to end.

otoh, when the printing/borrowing stops, the stock market crashes, the little bit of GDP growth being paid for by government spending/borrowing ends, and the last veils of fake economic growth are removed.

keep printing/borrowing, and the system crashes. stop printing/borrowing, and the system crashes. there is no third thing.

how close are we? well, unemployment is high and getting worse, regardless of which set of government numbers you accept, the fake ones, or the really fake ones. no one i have heard can reasonably postulate where job growth is supposed to come from; how all the construction, real estate and consumer finance related jobs that went away are going to be replaced.

the residential real estate market is bad and getting worse. there was a brief reprieve when the government was giving away $8,000 if you bought a house. but when that program ended, home sales went back down again. there are millions of empty houses on the market. millions more being held back from the market. and hundreds of thousands occupied by people who stopped paying their mortgages, or will soon.

several large states are broke. not just suffering from short-term difficulties; broke. and they cannot print money. same for hundreds of municipalities, large and small. the cost of their borrowing is increasing. they will have to cut jobs, and cut welfare payments. this will make the economy as a whole shrink. maybe the central government will provide some printed/borrowed bailout money. but that will not help, just delay.

oil costs $90/barrel. may be headed up to $100. this will hurt the economy.

the banking system has a huge problem with all the fraud at every level of the mortgage business. because of all those derivatives. all those mortgage backed securities (the trillions of dollars worth that were not dumped onto the fed) legally may not be backed by mortgages that were fraudulently conveyed. if this were a battle of banks vs mortgage holders staying in their houses w/o paying, the government would just slap down the people and let the banks win. but this is bank vs bank; wall street firm vs hedge fund. this huge problem is unlikely to go away quietly.

and that is just domestically. then there is continuing debt problems for every euro country, the inevitable breakup of the EU and the failure of the euro currency; the bursting of china's housing bubble; japan's day of reckoning ever closer; and likelihood of war in korea, pakistan or israel.

none of those issues will help american gdp, although some could temporarily boost the dollar and lower us interest rates. only temporarily.

shit. no wonder i'm depressed. but that is just the numbers side, and not even the worst of our troubles.