Primed and ready to blow (Headlines from the Meltdown)

General comment from Cardin: Primed and ready to blow

Beware the coming week. If you’ve kept even one eye and ear on any news outlet, you’ve seen a swelling flurry of events and stories indicating that the excrement is starting to sail toward the propeller at high speed in multiple clumps. Several clumps have of course already hit and have served as the source of the ongoing financial and economic scare since last summer. But now the mother load of dung is sailing toward those whirling blades.

I’ve thought all along that March-April was the most likely window for when some really interesting events would start to go down. The barrage of heady headlines over the past week would seem to indicate that I (and also the much smarter people who have shared the same judgment with me) have been correct. The Fed just made over $200 billion more available to the banks in what looks distinctly like a panicky move. A small bank south of Kansas City, MO failed last week and was taken over by the FDIC. (And guess what? It was the second bank of the year to fail; the first was in Kansas City itself. Weird, no?) The Dow and all other American — and also world! — stock indices were sharply down for the second week running. The Fed is waffling about the possibility of another dramatic rate cut at their next meeting. The report last week on the loss of 63,000 U.S. jobs blew everybody’s minds. Amidst it all, Ambrose Evans-Pritchard, the widely respected business and financial reporter at the International Herald Tribune, wrote a piece last week, linked to below, about how the U.S. Fed’s rescue mission has failed. He has of course been covering this unfolding drama right from the start. Now he ends this latest piece with a confession worthy of extended rumination: “For the first time since this Greek tragedy began, I am now really frightened.”

Stay tuned.

* * * * *

Economist John Williams predicts ‘worst business cycle since the Great Depression’

CNN, March 1

[Cardin comments: You can either click the link above to watch the video at the YouTube site or watch it below. The appearance of this type of piece with its explicit warning of imminent economic havoc represents the breaking of a metaphorical dam. Before cutting to the interview with John Williams, the economist who runs, the CNN correspondent Greg Hunter begins with this intro, which is right on the money in its recounting of recent false predictions by Bernanke, Paulson, and Bush:

“A year ago, Ben Bernanke, the head of the Fed, Hank Paulson, the head of the Treasury, even the president said the subprime crisis was going to be contained. There are 9 million houses under water now. Experts say that number could easily double, 15 to 20 million houses could be under water in a year or two. That’s not contained.

“So, when you hear Ben Bernanke this week talk about how we are not in a recession. We don’t see a recession. The president, same song. Not in a recession. Not going to be in a recession. It makes you wonder. Are these guys going to be wrong in the future? Here is what John Williams of says about what’s coming down the road. “

What is “coming down the road,” according to Williams in the brief interview that follows, is “a severe recession” representing “the worst business cycle I have seen since the Great Depression.” When the video returns to Hunter in the studio, he may be overstating things when he claims that Williams is therefore predicting an inflationary depression. But this type of coverage on CNN is still significant, as is the fact of Williams’ outlook, given that he is very widely respected in the financial world for his accurate moves and predictions.]

* * * * *

Markets may be indicating ‘absolute disaster’ for U.S.

John Authers, The Financial Times, March 6

[Cardin comments: This is a short video segment featuring John Authers, investment editor at the Financial Times, explaining why current market movements suggest the possibility of all-out disaster for the U.S. economy. Click the link to watch the two-minute video. I’ve transcribed his opening and closing comments below.]

Welcome from New York, where a lot of people are very scared. We’ve had another day of quite dramatic extremes on the markets. The Euro is at a new all-time high against the dollar. Sterling is back above two dollars here in the states. Stocks have been falling, and financial stocks are at a new low for the year. All of that sounds bad enough but what I’d like to take you through is the very scary implications when we put the judgments of different markets together.

[Authers shows and explains a few charts tracking S & P performance, loss of international confidence in the U.S. dollar, rising gold prices, and gold prices compared to U.S. home values. All of the numbers are awful for the U.S.]

….On face value, what the markets are telling us that the U.S. is heading for absolute disaster. The alternative explanation is that people have gotten very scared and the markets are overdone. Let’s hope that the latter is correct.

* * * * *

International experts foresee collapse of U.S. economy

Bert Hielema, Belleville Intelligencer (Ontario), Feb. 29

Now the bad news pops up everywhere.

Harry Koza in the Globe and Mail quotes Bernard Connelly, the global strategist at Banque AIG in London, who claims that the likelihood of a Great Depression is growing by the day.

Martin Wolf, celebrated columnist of the U.K.-based Financial Times, cites Dr. Nouriel Roubini of the New York University’s Stern School of Business, who, in 12 steps, outlines how the losses of the American financial system will grow to more than $1 trillion — that’s one million times $1 million. That amount is equal to all the assets of all American banks.

….The most frightening forecast so far comes from the Global Europe Anticipation Bulletin (GEAB), available for 200 euros — about $300 — for 16 issues annually. Its prediction is quite specific.

….”The end of the third quarter of 2008 (thus late September, a mere seven months from now) will be marked by a new tipping point in the unfolding of the global systemic crisis.

“At that time indeed, the cumulated impact of the various sequences of the crisis will reach its maximum strength and affect decisively the very heart of the systems concerned, on the front line of which (is) the United States, epicentre of the current crisis.

In the United States, this new tipping point will translate into — get this — a collapse of the real economy, (the) final socio-economic stage of the serial bursting of the housing and financial bubbles and of the pursuance of the U.S. dollar fall. The collapse of U.S. real economy means the virtual freeze of the American economic machinery: private and public bankruptcies in large numbers, companies and public services closing down.”

The report goes on to say that we are entering a period for which there is no historic precedent. Any comparisons with previous situations in our modern economy are invalid.

We are not experiencing a “remake” of the 1929 crisis nor a repetition of the 1970s oil crises or 1987 stock market crisis.

What we will have, instead, is truly a global momentous threat — a true turning point affecting the entire planet and questioning the very foundations of the international system upon which the world was organized in the last decades.

The report emphasizes that it is, first and foremost, in the United States where this historic happening is taking an unprecedented shape (the authors call it “Very Great U.S. Depression”).

….Concerning stock markets, the GEAB anticipates that international stocks would plummet by 40 to 80 per cent depending where in the world they are located, all affected in the course of the year 2008 by the collapse of the real economy in the U.S. by the end of summer.

The European authors of this report — it appears simultaneously in French, German and English — state that they simply and without prejudice try to describe in advance the consequences of the ominous trends at play in this 21st-century world, and to share these with their readers, so that they can take the proper means to protect themselves from the most negative effects.

* * * * *

A recession of Shakespearean tragic-epic dimensions

Paul B. Farrell, MarketWatch, March 3

[Cardin comments: Click through for yet another relisting of Nouriel Roubini’s 12-step scenario for global financial disaster. Kudos to Mr. Farrell for his frankness, but I still wonder: Since he’s buying wholeheartedly into Roubini’s dire 12-step scenario for economic disaster, why is he still calling this unfolding mess a “recession”? Why not just go ahead and drop the “d” bomb on us? But then again, Roubini himself is only calling it a recession. Methinks there’s something rotten in the State of Denial.]

Roubini’s 12-act drama is chilling, apocalyptic, coming at us in 12 relentless waves, tearing down the world’s economic and financial system, triggering a severe recession in America that spreads globally, impacting every corner of every economy across the globe and creating havoc in world financial markets, leaving nothing intact.

….Can anyone stop this classic Shakespearean tragedy before the dramatic climax? Probably not, says Roubini. Add your comments: Tell us, are things too far out of control for anyone to fix? What can be done? For America? To protect your family?

* * * * *

Why this economic crisis is so much worse than you think

Richard Gibbons, The Motley Fool, March 3

I think this crisis has just begun. For months, we’ve been experiencing a liquidity crisis that has locked up credit markets. It’s now apparent that the debt market was a disaster waiting to happen . . . and that the collapsing housing market was all that was needed to end the wait.

The problem is, if you look at the catalyst for this crash, you’ll see that the correction may have just begun. As of November, housing was 8.4% off its peak. That’s right, a mere 8.4% decline has caused financials to melt down, homebuilders to go bankrupt, and the panicked Federal Reserve to ignore its inflation-fighting mandate and push through interest-rate cuts — despite the highest inflation rates since 1990.

But how bad could it get? Well, Goldman Sachs — noteworthy for being the one big investment bank that was smart enough to not get burned by securitized mortgages — has predicted that if there’s no recession, the housing market will probably fall by 15%. If there is a recession, Goldman thinks prices could fall by 30%. That’s a heck of a lot more than the current 8.4% decline.

And if housing continues to fall, the problems will only get worse. For instance, you may have heard of people with negative equity in their homes walking away from their houses and their mortgages . . . . But this is happening with only with an 8.4% fall in the housing market. What happens with a 15% or 30% fall?

….[U]sing Goldman’s 15% estimated decline, 21% of homeowners will owe more money than their house is actually worth. If a recession develops — which, frankly, seems likely to me — and the market falls 30%, then nearly two of every five mortgages will be under water.

In light of those numbers, it’s not so surprising that the Fed is panicking. Default could make sense financially for a huge number of people . . . .

And again, this crisis may have only just begun. The average foreclosure in a good market takes a little more than 10 months, according to a research paper from the Federal Reserve Bank of St. Louis. So, we’ve only begun ironing out the foreclosures resulting from the credit crunch that started over the summer. The impact on the economy won’t just be the direct effect of the loss of lending, real estate, and construction jobs. As consumers’ equity in their homes falls, it means that they can no longer borrow against that equity to buy consumer goods.

This may sound like a small problem, but this borrowing has been helping our economy grow. In recent years, it’s been estimated to be equal to 6% to 8% of consumers’ disposable income. If the economy has slowed this much when consumers continue to have some spending power, how bad will it get if they have to stop spending completely?

* * * * *

Twin crises impacting global economy: resource shortages and financial shocks

The Financial Times, March 6

[Cardin comments: If the events of this article don’t sound like something right of the hypothetical “peak oil playbook” that I’ve referred to here in the past, then I don’t know what does. Or at the very least they’re not far removed from it. This, despite the fact that the Financial Times has explicitly and repeatedly adopted an editorial position denying most of the basic tenets of the peak oil outlook. Go figure.]

The global economy is facing twin shocks. Natural resource markets are delivering a supply shock of 1970s dimensions, while the financial system is delivering a shock comparable to the bank and thrift crises of the 1988-1993 period. The magnitude of each shock is very different.

….The energy sector is just one example of the more generalised supply problems afflicting the natural resources markets. Scarcity is endemic across most commodity markets, as existing capacity has struggled to meet a demand shock from the rapidly developing middle income economies.

….The broad story is of depletion. Most of the easily obtainable resource deposits have already been exploited and most usable agricultural land is already in production. Natural resource discoveries, where they continue to occur, tend to be of a lower quality and are more costly to extract. Meanwhile, the dwindling supply of unutilised land faces competing demands from biodiversity, biofuels and food production.

* * * * *

Of nails and coffin lids: The Federal Reserve’s rescue has failed

Ambrose Evans-Pritchard, The London Telegraph, March 3

The verdict is in. The Fed’s emergency rate cuts in January have failed to halt the downward spiral towards a full-blown debt deflation. Much more drastic action will be needed.

Yields on two-year US Treasuries plummeted to 1.63pc on Friday in a flight to safety, foretelling financial winter.

The debt markets are freezing ever deeper, a full eight months into the crunch. Contagion is spreading into the safest pockets of the US credit universe.

….”I never thought I would see anything like this in my life,” said James Steele, an HSBC economist in New York.

….Contagion is moving up the ladder to prime mortgages, commercial property, home equity loans, car loans, credit cards and student loans. We have not even begun Wave Two: the British, Club Med, East European, and Antipodean house busts.

As the once unthinkable unfolds, the leaders of global finance dither. The Europeans are frozen in the headlights: trembling before a false inflation; cowed by an atavistic Bundesbank; waiting passively for the Atlantic storm to hit.

….Ultimately the big guns have the means to stop descent into an economic Ice Age. But will they act in time?

“We are becoming increasingly concerned that the authorities in the world do not get it,” said Bernard Connolly, global strategist at Banque AIG.

“The extent of de-leveraging involves a wholesale destruction of credit. The risk is that the ‘shadow banking system’ completely collapses,” he said.

For the first time since this Greek tragedy began, I am now really frightened.

* * * * *

The writing’s on the wall as the FDIC decides to increase staff

MarketWatch, March 2

The Federal Deposit Insurance Corp. is planning to beef up its division of resolutions and receiverships, which handles failed banks, by 40% this year. The division currently has 233 employees. Considering that only three banks failed last year, why do they need more examiners?

For now, the FDIC is looking to bring back 25 retired employees with experience in the bank closures of the 1980s and 1990s. No, it’s not just a reunion of hard-nosed accountants who closed banks and savings and loans in notorious Friday night raids and liquidated their assets. This is a real search for tough, experienced “lone rangers,” who set upon a bank or thrift institution on a Friday to take over as much of the assets as possible and open the following Monday with full assurances for insured depositors and firm answers for uninsured depositors. The latter group will get 100% on their insured deposits, probably 50% on the uninsured portion and “well, we can talk about it, and we’ll send you some more later.”

This week Fed Chairman Ben Bernanke put it bluntly: “There probably will be some bank failures.” Regulators have some real work ahead of them. The FDIC had 76 banks on its problem bank list at Dec. 31, down from 136 problem banks in 2002 and 213 banks in 1990. This past year’s three failures were the first since 2004. Apparently the FDIC expects to have a busy year.

The FDIC’s challenge means you should confine your bank accounts to insured deposits exclusively. Other safe harbors are Treasury-only money-market funds, money funds owned by large institutions (even banks) and maybe short-term Treasury bills.

….First, David Walker, the Comptroller General of the Government Accountability Office, resigns with five years still left on his term. Now the FDIC is staffing up. It’s time to rethink your investments.

* * * * *

Federal Reserve Bank of Atlanta releases disaster preparation DVD for banks

Website for the Federal Reserve Bank of Atlanta

[Cardin comments: Yes, it may represent an invocation of the farthest fringes of conspiracy-crank thinking to speculate that the timing of this DVD’s release may be significant, coming as it does amid the current avalanche of dire economic news. But it’s fun — if you’re a fan of gallows humor — to speculate about it anyway. The chunk of text below is from the DVD’s ordering page, where you’ll also find a link to a free complete transcript.]

DVD TITLE — Crisis Preparedness: Reconnecting the Financial Lifeline

In the aftermath of a disaster, banks, like first responders, play a vital role. By distributing cash to their customers and ensuring that customers are able to meet the financial needs of their families and businesses, banks help to weather a crisis. Drawing on the experience of bankers who have lived through crisis situations, the Federal Reserve Bank of Atlanta developed this DVD to assist bankers with their emergency preparedness efforts.

Is your bank prepared for a crisis?

This DVD covers crisis preparedness issues of interest to bankers and to first responders who deal with bankers in the community. Each of the DVD’s topics, such as caring for employees or creating and testing an emergency plan, is introduced and accompanied by supplemental interviews.

* * * * *

The $34 trillion problem: Medicare poised to pulverize the U.S. economy

Fortune, March 4

[Cardin comments: Is it just me, or is Washington’s “dirty little secret,” the one that former comptroller general David Walker struggled, through channels both official and unofficial, to bring to everybody’s attention before abruptly resigning his job a few weeks ago — is this secret not such a secret anymore? It seems as if we’re all beginning to wake up to the reality of our financial and economic excess, overreach, and voluntary, greed-driven myopia at the same time.]

Sometime in the next President’s first term, Medicare Part A (hospital insurance) will go cash-flow-negative, and it’s all downhill from there. Medicare provides a wide range of services and subsidies to more than 40 million old and disabled Americans. As the country ages, Medicare and Medicaid (for those of any age with low incomes) will devour growing chunks of U.S. economic output. So will Social Security, but its cut of GDP should stop increasing around 2030. The federal budget has averaged about 18% of GDP over the past several decades. If that average holds and if the rules of our social insurance programs don’t change, then by 2070, when today’s kids are retiring, Medicare, Medicaid, and Social Security will consume the entire federal budget, with Medicare taking by far the largest share. No Army, no Navy, no Education Department — just those three programs.

But wait — the situation is actually much worse. Those estimates, reported in the latest Financial Report of the U.S. Government, assume that Medicare payments to doctors will be slashed drastically, by some 41% over the next nine years, as required by current law. It won’t happen. Every year for the past five years, Congress has overridden the mandatory cuts. As for future cuts, the Financial Report says drily, “Reductions of this magnitude are not feasible and are very unlikely to occur fully in practice.” So in reality, Medicare will go into the hole even faster than official projections reflect. And they show that if Medicare had to be accounted for like a company pension fund, it would be underfunded by $34 trillion.

Obviously those long-term scenarios won’t happen, because they can’t happen — we won’t be shutting down the Army, Navy, and so on. But it’s easy to see why the candidates don’t want to discuss it. As you listen to them, keep three points in mind:

Pain-free remedies won’t do the job . . . . Any mention of trust funds is bogus . . . . Tax and spending plans must Include Medicare.

If this is the greatest threat to the U.S. economy and the candidates haven’t told us what they’d do about it, they haven’t told us a thing.

* * * * *

U.S. Mortgage Foreclosures Rise as Owners ‘Give Up’

Bloomberg, March 6

U.S. mortgage foreclosures rose to an all-time high at the end of 2007 as borrowers with adjustable-rate loans walked away from properties before their payments increased, the Mortgage Bankers Association said today.

* * * * *

Don’t count on government to meet your basic needs in the near future

Dave Ramsden, PrudentBear guest commentary, March 7, 2008

Led by cheap energy and technological advances, a long period of economic integration is now under stress. I see a potential process of dis-integration ahead. Lots of “paper promises” by large institutions are breaking down. There’ve been recent recent bank runs and halts on fund redemptions. The underlying economic model shows signs of breaking down (or breaking up).

Big institutions are under pressure to prevent a global meltdown. Personally, I see the unfolding crisis as beyond anyone’s understanding or control. That’s certainly what the timeseries data says to my eye. How bad the crisis will get, what form it will take, or how long to unfold are anybody’s guesses, but I wouldn’t count on government to supply your basic needs in ten years or so.

So, be prepared for a return of the 70’s catch phrase “small is beautiful”, only in this case, it might be more akin to “small is all we got”. Who knows how local economies will need to get to reach sustainable equilibria.

And, if things get really bad, prepare yourself to participate in a very local economy, so have resources close to hand. Your financial institution may not answer the phone one day, so have some of your assets in real, physical form.

The adjustment to a new economic world will take a while. Problem solvers, like investors, are going to have to come to their senses one at a time. Big economies are ultimately built out of small, resilient ones, and a lot of competitive smaller players would really help the process.

Maybe by then there’ll be a new macro paradigm to replace the discredited ones, with even some Minsky baked into official economic models. Ones that won’t blow up real good.

About Matt Cardin


Posted on March 9, 2008, in Economy and tagged . Bookmark the permalink. 3 Comments.

  1. Don’t believe one optimistic word from any public figure about the economy or humanity in general. They are all part of the problem. Its like a game of Monopoly. In America, the richest 1% now hold 1/2 OF ALL UNITED STATES WEALTH. Unlike ‘lesser’ estimates, this includes all stocks, bonds, cash, and material assets held by America’s richest 1%. Even that filthy pig Oprah acknowledged that it was at about 50% in 2006. Naturally, she put her own ‘humanitarian’ spin on it. Calling attention to her own ‘good will’. WHAT A DISGUSTING HYPOCRITE SLOB. THE RICHEST 1% HAVE LITERALLY MADE WORLD PROSPERITY ABSOLUTELY IMPOSSIBLE. Don’t fall for any of their ‘humanitarian’ CRAP. ITS A SHAM. THESE PEOPLE ARE CAUSING THE SAME PROBLEMS THEY PRETEND TO CARE ABOUT. Ask any professor of economics. Money does not grow on trees. The government can’t just print up more on a whim. At any given time, there is a relative limit to the wealth within ANY economy of ANY size. So when too much wealth accumulates at the top, the middle class slip further into debt and the lower class further into poverty. A similar rule applies worldwide. The world’s richest 1% now own over 40% of ALL WORLD WEALTH. This is EVEN AFTER you account for all of this ‘good will’ ‘humanitarian’ BS from celebrities and executives. ITS A SHAM. As they get richer and richer, less wealth is left circulating beneath them. This is the single greatest underlying cause for the current US recession. The middle class can no longer afford to sustain their share of the economy….. Their wealth has been gradually transfered to the richest 1%. One way or another, we suffer because of their incredible greed. We are talking about TRILLIONS of dollars. Transfered FROM US TO THEM. Over a period of about 27 years. Thats Reaganomics for you. The wealth does not ‘trickle down’ as we were told it would. It just accumulates at the top. Shrinking the middle class and expanding the lower class. Causing a domino effect of socio-economic problems. But the rich will never stop. They will never settle for a reasonable share of ANYTHING. They will do whatever it takes to get even richer. Leaving even less of the pie for the other 99% of us to share. At the same time, they throw back a few tax deductible crumbs and call themselves ‘humanitarians’. Cashing in on the PR and getting even richer the following year. IT CAN’T WORK THIS WAY. Their bogus efforts to make the world a better place can not possibly succeed. Any ‘humanitarian’ progress made in one area will be lost in another. EVERY SINGLE TIME. IT ABSOLUTELY CAN NOT WORK THIS WAY. This is going to end just like a game of Monopoly. The current US recession will drag on for years and lead into the worst US depression of all time. The richest 1% will live like royalty while the rest of us fight over jobs, food, and gasoline. Crime, poverty, and suicide will skyrocket. So don’t fall for all of this PR CRAP from Hollywood, Pro Sports, and Wall Street PIGS. ITS A SHAM. Remember: They are filthy rich EVEN AFTER their tax deductible contributions. Greedy pigs. Now, we are headed for the worst economic and cultural crisis of all time. SEND A “THANK YOU” NOTE TO YOUR FAVORITE MILLIONAIRE. ITS THEIR FAULT. I’m not discounting other factors like China, sub-prime, or gas prices. But all of those factors combined still pale in comparison to that HUGE transfer of wealth to the rich. Anyway, those other factors are all related and further aggrivated because of GREED. If it weren’t for the OBSCENE distribution of wealth within our country, there never would have been such a market for sub-prime to begin with. Which by the way, was another trick whipped up by greedy bankers and executives. IT MAKES THEM RICHER. The credit industry has been ENDORSED by people like Oprah, Ellen, Dr Phil, and many other celebrities. IT MAKES THEM RICHER. Now, there are commercial ties between nearly every industry and every public figure. IT MAKES THEM RICHER. So don’t fall for their ‘good will’ BS. ITS A LIE. If you fall for it, then you’re a fool.. If you see any real difference between the moral character of a celebrity, politician, attorney, or executive, then you’re a fool. WAKE UP PEOPLE. THEIR GOAL IS TO WIN THE GAME. The 1% club will always say or do whatever it takes to get as rich as possible. Without the slightest regard for anything or anyone but themselves. Reaganomics. Their idea. Loans from China.. Their idea. NAFTA. Their idea. Outsourcing. Their idea. Sub-prime. Their idea. The commercial lobbyist. Their idea. The multi-million dollar lawsuit.. Their idea. $200 cell phone bills. Their idea. $200 basketball shoes. Their idea. $30 late fees. Their idea. $30 NSF fees. Their idea. $20 DVDs. Their idea. Subliminal advertising. Their idea. Brainwash plots on TV. Their idea… Prozac, Zanex, Vioxx, and Celebrex. Their idea. The MASSIVE campaign to turn every American into a brainwashed, credit card, pharmaceutical, love-sick, couch potatoe, celebrity junkie. Their idea. All of the above shrink the middle class, concentrate the world’s wealth and resources, and wreak havok on society. All of which have been CREATED AND ENDORSED by celebrities, athletes, executives, entrepreneurs, attorneys, and politicians. IT MAKES THEM RICHER. So don’t fall for any of their ‘good will’ ‘humanitarian’ BS. ITS A SHAM. NOTHING BUT TAX DEDUCTIBLE PR CRAP.. In many cases, the ‘charitable’ contribution is almost entirely offset.. Not to mention the opportunity to plug their name, image, product, and ‘good will’ all at once. IT MAKES THEM RICHER. These filthy pigs even have the nerve to throw a fit and spin up a misleading defense with regard to ‘tax revenue’. ITS A SHAM. THEY SCREWED UP THE EQUATION TO BEGIN WITH. ITS THEIR OWN DAMN FAULT. If the middle and lower classes had a greater share of the pie, they could easily cover a greater share of the federal tax revenue. They are held down in many ways because of greed. Wages remain stagnant for millions because the executives, celebrities, athletes, attorneys, and entrepreneurs, are paid millions. They over-sell, over-charge, under-pay, outsource, cut jobs, and benefits to increase their bottom line. As their profits rise, so do the stock values. Which are owned primarily by the richest 5%. As more United States wealth rises to the top, the middle and lower classes inevitably suffer. This reduces the potential tax reveue drawn from those brackets. At the same time, it wreaks havok on middle and lower class communities and increases the need for financial aid.. Not to mention the spike in crime because of it. There is a dominoe effect to consider. So when people forgive the rich for all of the above and then praise them for paying a greater share of the FEDERAL income taxes, its like nails on a chalk board. If these filthy pigs want to be over-paid, then they should be over-taxed as well. Remember: The richest 1% STILL own 1/2 of all United States wealth EVEN AFTER taxes, charity, and PR CRAP. A similar rule applies worldwide. There is nothing anyone can say to justify that. Anyway, there is usually a higher state and local burden on the middle class. They get little or nothing without a local tax increase. Otherwise, the red inks flows like a waterfall. Service cuts and lay-offs follow. Again, because of the OBSCENE distribution of bottom line wealth in this country. I can not accept any theory that our economy would suffer in any way with a more reasonable distribution of wealth. Afterall, it was more reasonable 30 years ago. Before Reaganomics came along. Before GREED became such an epidemic. Before we had an army of over-paid executives, celebrities, athletes, attorneys, investors, entrepreneurs, developers, and sold-out politicians to kiss their asses. As a nation, we were in much better shape. Lower crime rate, more widespread prosperity, stable job market, free and clear assets, lower deficit, ect. Our economy as a whole was much more stable and prosperous for the majority. WITHOUT LOANS FROM CHINA. Now, we have a more obscene distribution of bottom line wealth than ever before. We have a sold-out government, crumbling infrastructure, energy crisis, home forclosure epidemic, 13 figure national deficit, and 12 figure annual shortfall. ALL BECAUSE OF GREED. I really don’t blame the 2nd -5th percentiles. No economy could ever function without some reasonable scale of personal wealth and income. But it can’t be allowed to run wild like a mad dog. GREED KILLS. Bottom line: The richest 1% will soon tank the largest economy in the world. It will be like nothing we’ve ever seen before. and thats just the beginning. Greed will eventually tank every major economy in the world. Causing millions to suffer and die. Oprah, Angelina, Brad, Bono, Drew, and Bill are not part of the solution.. They are part of the problem. THERE IS NO SUCH THING AS A MULTI-MILLIONAIRE HUMANITARIAN. EXTREME WEALTH HAS MADE WORLD PROSPERITY ABSOLUTELY IMPOSSIBLE. WITHOUT WORLD PROSPERITY, THERE WILL NEVER BE WORLD PEACE OR ANYTHING EVEN CLOSE. GREED KILLS. IT WILL BE OUR DOWNFALL. Of course, the rich will throw a fit and call me a madman. Of course, their ignorant fans will do the same. You have to expect that. But I speak the truth. If you don’t believe me, then copy this entry and run it by any professor of economics or socio-economics. Then tell a friend. Call the local radio station. Re-post this entry or put it in your own words. Be one of the first to predict the worst economic and cultural crisis of all time and explain its cause. WE ARE IN BIG TROUBLE.

  2. Good analysis. Check out my March 11th commentary, and website-

  3. Thanks for weighing in, gentlemen.

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