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Tuesday, February 23, 2010

Denninger: How Long Before You Wake Up, Politicos?

Karl Denninger takes both American politicians and "the Only Ones" to the woodshed:

I'm going to write today about a very somber subject. It will be, as it usually is here in one form or another, about math.

First, some background. If you believe that we have "escaped" from the mess that gripped this nation in 2008 and 2009, or that said mess "suddenly appeared" and "nobody saw it coming", stop reading now and have your Thorazine dosage checked. It's way off.

Assuming you accept the truth - that this mess was 20 year or more in the making, that it involved creating credit (that is, debt) which the debtor could never pay, and that it still exists because our government policy has been to extend, pretend and allow lies that should be considered accounting fraud and result in prison sentences, then you're on the right page to understand the rest of this missive. Again, if not, go check your Thorazine dosage.

Yes, I know all about the stock market rally from last March. I know all about the claimed GDP "improvement." But I also know that we got both by adding more than $2 trillion in debt to the United States - or roughly 14% of GDP - over the space of the last 18 months. That's about 10% of GDP annualized, and incidentally, a 10% GDP contraction is the common economist's definition of an Economic Depression.

So let's cut the crap - we are in a Depression right now. We are pretending we are not, just like you can pretend you didn't really lose your job so long as your credit card does not reach its limit. We have been in that depression for about 18 months and there is no evidence that we will exit it, as we have yet to find a way to pull back the deficit spending without an instantaneous collapse in the economy.

Yet at some point we must and will stop. We will either do so of our own volition, or we will do so when the cost of borrowing skyrockets, as others get tired of funding our profligacy. If we attempt to "print" our way out of it the cost of petroleum products will shoot the moon and destroy our economy anyway.

You haven't seen the half of what happened though - not yet. It appears that AIG - the company we have bailed out (thus far) to the tune of some $100 billion plus, in fact isn't done. It appears they may have written credit protection on Greece. If this allegation by the German equivalent to The New York Times is true Americans are going to be asked to pay billions of dollars - or more likely, hundreds of billions (since Greece is almost certainly not the only place - try Spain, Portugal, Ireland, etc) to bail out a bunch of FOREIGN NATIONS.

Do you both think Americans can and will pay that bill? A bill that has been forced on us, and yet benefits not The United States economy, but foreigners?

Wars - big wars - start over much less, my friends.

Oh, and let's not forget - some 30% of Greece's workers went out on strike to protest their "austerity measures." That's right - one in three.

The Fed and our fabulous Treasury Secretary already gave tens of billions of our hard-earned money to foreign banks to prop them up via AIG. That was just a down payment; now we all get to - quite literally - buy all their houses over in Europe. They get to keep living in them.

If you do not believe it is going to get much worse than it is now, economically and otherwise, you once again need to go have that Thorazine dosage adjusted.

A recent Rasmussen poll disclosed that only 21% of the voters in this country believe that the government enjoys the consent of the governed. Put another way, only 21% of the voters in this nation consent to what Washington is doing.

More ominously, 61% say the government does NOT have consent. The remainder (18%) are not sure.

May I remind you that in 1776 less than that 21% of the population (19%, actually) were loyal to Britain?

If you do not believe this nation is wound tighter than a clock spring, you need to have that Thorazine dosage checked again.

You are in denial.

After denial comes anger, then bargaining, and finally acceptance.

Let's not do anger on a mass scale in this country, ok?

Neither I or my daughter will appreciate it if it happens; shall we skip that and go right to "acceptance"?

Let's assume your answer is "yes."

Now let's talk numbers.

There are approximately 150,000 federally-attached law enforcement personnel. Another 750,000, roughly, state and local cops are employed by our various government arms. Of those various officers well more than half sit behind a desk and haven't left one gram of shoe leather on a street or in a cruiser in the last year. The majority of you fire your weapons for periodic qualification and they have never been warm or dirty besides. You've never faced death, you've never had a weapon pointed at you in anger, and you've never drawn your service weapon in the line of duty. Those are facts.

Now consider the "bad side" of America. The Justice Department estimates there are at least one million gang members - active gang members - in America. These people, mostly young males, have nearly all drawn or fired weapons in anger. They are responsible for more than three quarters of all crime in this country, and some eight out of ten violent crimes. Those gang members have families - younger males who are "coming up", "friends" (if you can call a murderous thug a friend) and others. Between all of those "loosely attached" folks and the hard-core inner circle itself we probably have somewhere between 5 and 10 million people in this nation who, given the wrong sort of provocation, might decide that "Zombieland" wasn't just a movie.

Our politicians created most of these monsters so the "finest" would have something to do. A nearly-100-year obsession with what consenting adults put in their bodies is largely responsible for this, and an intentional policy of allowing an effective invasion of illegal aliens over our southern border provides some the most-violent core of this group. The illegal drug trade has fueled international wars, international gangs, and virtually all of the organized violent crime in this nation going back to Prohibition. Essentially every automatic weapon in the hands of criminals (and there are plenty of them) comes into the US through this same intentionally-left-open border as do the gangbangers, lies of this (and previous) administrations notwithstanding. Those of you in the Law Enforcement business may not want to accept these facts, but if you reflect on it you cannot escape reality: weapons, ammunition and other means of street thuggery all cost money, and without these drugs being illegal there would be no profit in it, and thus a huge part of the criminal gangland element would not exist. You've cheered on the War on Drugs as it has meant more cops being hired and more, better, fancier toys for you to play with, along with $200,000+ pensions (in some areas.) You've been fools and even self-destructive assholes for having done so. But that, today, is water over the dam - the bad guys are here, they're not leaving, and there's no evidence that the political class is going to suddenly legalize these substances tomorrow, cutting the source of funds for the thugs off at the knees - after all, you won't rise up and demand it happen. So we must deal with reality on the ground as it is (and as you have cheered on the creation of), whether we like it or not.

As I'm sure you're aware all of America sees some of our "finest", not to mention our politicians, in various forms of misbehavior virtually on a daily basis. A girl beaten on a train platform while uniformed rail security stands and watches. A young man who appears to have been executed by a different rail security officer, even after he was subdued, face-down, without a weapon and easily able to be cuffed. The infamous Rodney King incident. The false accusations against the Duke Lacrosse team that threatened young men with many years behind bars for something that never happened. Our current Treasury Secretary who cheated on his taxes, not to mention the chair of the House Ways and Means Committee who did as well (that's the committee that writes tax law, if you're not up on your American Government.) And now, in the latest bit of ignobility we're expected to swallow, we have accusations that a school district has been taking pictures of kids in their bedrooms using state-issued laptops that said kids were required to accept in order to pass their high school classes.

Here's the problem: We the people increasingly don't trust you, the law enforcement community, and we definitely don't trust Washington. It's not just beating a black man within an inch of his life, or shooting a prone, subdued suspect in the back.

Oh that's bad enough, don't get me wrong, but it gets worse.

Much worse.

See, our economy wasn't ruined by accident. These crimes of economic activity were every bit as destructive, if not more so, than the bank robber, rapist or even murderer is. These economic offenses have literally dispossessed millions of Americans of everything they once owned. They have destroyed the hopes, dreams, and lifestyles of entire cities, sent tens of millions of jobs overseas into slave labor camps and stripped off the wealth of our nation through the issuance of securities that were worth nothing, just to add insult (and yet more profit for these banksters) to injury. Take a drive through Detroit if you doubt me, if you dare, and are appropriately armed to defend yourself (you'll need the latter, especially if you're white.)

As I noted above the bad news is nowhere near being over. We're denying as a nation, as corporations, as politicians and as people. You've drank your coffee and eaten your donuts, but what you haven't done is taken the initiative and marched down onto Wall Street and K Street (in DC), along with the myriad bankers, mortgage brokers and yes, even borrowers who were lying and cheating at the same time. You should have broke out the handcuffs by the crate-load and frog-marched these people into the dock en-masse over the last two decades, but you didn't. You should do it today, but you won't.

I know, you don't make the laws and you just follow orders from above.

But you're who we see. You're "The Badge" or "The Squad." And what we, the people don't see is perp walks of those people who richly deserve it - who have in fact broken the law and destroyed our nation's economic vitality for their own personal profit.

Remember, ladies and gentlemen, no matter what branch of law enforcement you hail from, your primary oath was not to a person. It is not to your commander, your captain or your squad.

Your oath is to The Constitution. You swore to defend that Constitution against all enemies, foreign and domestic. You swore to God and countryman alike, and your oath does not have a "use by" date at which point it expires.

Now consider this: the unspoken "social contract" says that the good guys go about their business without harming other people, and the occasional miscreant commits some offense, gets arrested and put in the dock by you. There they face their twelve, and in many cases subsequently do their time.

But what really inhibits the miscreant from his deed? Is it that you will show up and take a report after the stereo is stolen, the car burgled or the bank robbed, and attempt post-hoc to have them face the music?

No.

It is the possibility that he will break into or attempt to rob a home or business that has an armed citizen in it who is prepared and willing to defend him or herself. Armed not only with the ability to fight back but the weapon of familiarity of surrounding, said homeowner or shopkeeper might well splatter the brain of said felonious thug all over the far wall - in righteous and perfectly-legal defense of one's person (except in places like Chicago, of course.) The truth of this is clear on its face - those places where citizens are "restricted" (illegally, I might add, under the clear language of our Constitution) from mounting their own defense to rape, robbery or murder the bad guys pretty much take turns "at will", as opposed to places like Kennesaw Georgia which mandate instead that every homeowner have a firearm and ammunition.

One last thing to consider, and I will leave you be, as I have others to address this fine day.

If it gets bad, and I believe both history and the math says it will, who's going to help you? Do you really think the entirety of the 150,000 Federal Officers will come to your aid? Or will they sit in Washington DC and in their big black Suburbans (armored, of course) issuing orders for you to go into the streets in your (unarmored) Crown Vics and die in their place? Remember that the "bad guys" in such a circumstance outnumber you 10 or even 20:1 and not only are they probably armed as well as you are, they've actually shot - offensively - at other human beings. Unless you're one of the "bad cops" you've never done that, and few of you have had to fire in self-defense. Your only realistic advantage in such a situation is that most of the gangbangers are pretty poor marksman.

What's the outcome of such an event likely to be? Remember, we may distrust you, but the bad guys hate you to the core and would BBQ and eat you for dinner if they thought they could get away with it. If things get bad they might deduce - en-masse - that they can get away with it.

Let's face facts: while today we all count on being able to pick up the phone and call "911" if we need an officer to take a report on our stolen stereo, if the bad times come you will need us, not the other way around. We the people will, under such a circumstance, have the luxury of determining whether your oath of office has been faithfully discharged, or whether the only difference at that instant between you and the gangbanger is that you've got a fancy hat and a nicer car.

Most of us, should we determine that you're just the thug with the fancy hat will hide under the desk. We won't shoot at you - that's not our way. We're law-abiding citizens, for the most part, and while we will shoot back, we won't shoot first. But what we won't do is help you, because your time - your opportunity to help us prevent this catastrophe - will have expired. We will protect our neighbors, our friends, our fellow citizens.

But that's all.

You will get to deal with Zombieland, and in the back of your mind as you're literally consumed will ring that old saw you laid on us for the last two decades: "I just follow orders; I don't make the rules."

Be honest with yourselves: Is this where you want to be, or would changing things now be worthwhile? Would regaining the trust of the people be a good thing? Would replacing the large percentage of law-abiding citizens who now would spit on your shoes with those who will stand shoulder-to-shoulder with you, weapons facing the oncoming zombie hoard, be a good thing?

If so you have some work to do and there's still time left to accomplish it.

To the politicians who are reading this, your Thorazine dosage needs adjustment as well. The math is irrefutable. If, in point of fact, AIG has entangled itself with the European Continent there is no escape from what is to come. There is only destruction, and our only two choices are to cause as much of it as we can to occur there, by pulling the plug on these clowns now, or risk a literal World War. We may get one anyway, but if we bring the bulk of the damage here we'll be dealing with a civil collapse at the same time, and have no chance of being able to deal with the geopolitical implications. We must not allow that to happen. You must not allow that to happen.

We understand you give the orders to the people I've been talking to (mostly) up above. But you have less excuse than they, when it comes to oaths. You all took an oath to uphold The Constitution as well. You've used it as toilet paper, and that's on a good day. The rest of the time we see you gleefully burning it in the Wells of the House and Senate, dancing around the smoke and fire like some odd pagan ritual.

It's time to stop. Not because you want to, not because you fear us (even though you should - after all, we're your employers and can fire you) but because if you don't there won't be a nation worth governing left. You know who the crooks are - including those among you.

Let's talk taking this nation back.

It starts with declaring all CDS written against sovereign debt, directly or indirectly, void as contrary to public policy. Yes, that cuts Europe off from any prospect of a US bailout. So be it.

Next, all the banksters who were involved in these bogus securitizations need to be hauled into the dock. Now. William Black and his merry men sent over 1,000 people to the slammer in the S&L crisis. There are ten times that many who need to go this time.

Third, force all credit-default swaps onto a public exchange with published bids, offers, last trades, open interest and nightly margining. In public, where we all can see it. Either that or ban these obscenities outright. Choose one, and only one of those two options, and do it now. Yes, I know the banksters will howl. Too damn bad, and while you're at it, make it unlawful for any institution that does business in this country to transact in any way in any instrument that does not comply with that rule. This monster, as I've been writing about for almost three years now, must be caged.

Fourth, reinstate Glass-Steagall. Yeah, I know, the Senate doesn't want to do it. The Senate wants a nation that's worth governing though, right? We won't have one if this crap isn't stopped. Mssrs. Glass and Steagall had it right in the 1930s. Put it back.

Fifth, stop lying to the people - and this includes lies told through deficit spending. We don't have the money and can't keep borrowing it. If you don't stop we will find the "knee point" the hard way, at which point once again, you won't have a nation worth governing. Remember the four steps above - neither I or my daughter, nor most of the 330 million Americans in this country, want to see the "anger" phase. Our country is like a powder keg and every time you lie you're playing with matches in the room. Stop it before you blow us all up.

Sixth, we're in a Depression, like it or not, and we're not going to get out of it until the bad debt is defaulted and cleared from the system. Your job is to make that happen and get it over with. That's deflationary. Sorry; this is math, not politics. The housing bubble was a hyperinflationary event - one hidden from the people by bogus government statistics and outright lies. Deflation always follows hyperinflationary credit booms - it's either that, or the destruction of the government, political system and currency. You choose, but if you do not decide, destruction it will be.

Seventh, close the damn border and declare all the illegal immigrants as what they are - invaders. Tell them to either leave or will expel them - and mean it. Declare "LaRaza" a terrorist organization and lock 'em all up. Americans need the jobs and we cannot afford to have five or ten million thugs just waiting for opportunity in the smallest loss of civil order to swoop in and take advantage of us all. At the same time, drop your insane "War on Drugs" and replace it with a taxation, regulation and legalization structure. Yes, I said legalize - federally. While we still have time we must cut off the chief funding source for the murderous thugs who otherwise, given the opportunity, will feast on you after they BBQ the local and state law enforcement crowd in our major cities. Don't BS me or anyone else with your claims that such isn't a real risk - I don't see you strolling around in your fancy suits through the bad parts of Washington DC sans security details. Gee, I wonder why not......

Finally, to President Obama. You can't serve both the banksters and The American People. You took the oath of office too. Now you have to choose. Not only will you lose in 2012 (badly) if you don't start locking up the jackasses that got us into this mess but if you don't ram the above seven points down the throats of these banksters and others in the next couple of months your party will be decimated in the November elections. Some of your oldest allies in the Democratic Party are resigning; Senator Bayh, for example. Illinois' State financial health is akin to someone with terminal pancreatic cancer, and that's where you're going home to in 2012 if you don't quit being nice-nice with people who have played rape-rape to the American people and economy for the last two decades. You didn't make the mess (you weren't around long enough to do it) but you had damn well better clean it up, or what will be left of this nation is unlikely to be worth governing by the time your term expires.

Health care may be important but not until the above is taken care of. Fixing the financial system is the issue you must confront and fix in its entirety. Not half-way, not by compromise - you simply must fix it. The seven points above are not options, they're not discussion points - they're mandatory. All of them. Don't believe me if you don't want to - believe Charlie Munger, one of the wisest investment professionals ever to live, and, in my opinion, the smarter half of Berkshire Hathaway (with no disrespect intended to Warren.)

The choice is yours Mr. President, but the consequences will belong to all of us.

Choose wisely.

Amen, brother.

17 Comments:

Blogger chris horton said...

It seems obvious to me they have ALREADY made their choices,from top to bottom.

We'll find out soon....

CIII

February 23, 2010 at 9:25 PM  
Anonymous Anonymous said...

I like Denninger. I think we need more folks like him sounding the alarm of truth.

Having said that, what are the odds that the criminal element in government is going to heed his advice? They are a pack of scoundrels. They dont know how to act right and do the appropriate measures.

WE ARE SO FUCKED! IT IS NOT EVEN FUNNY.
Gold, Guns and Groceries. That is what we will need and a set of neighbors who understand the perils awaiting us and are of like mind to stand their ground.

....."so the kids they dance and shake their bones. while the politicians are throwing stones. singing ashes, ashes all fall down."
GRATEFUL DEAD

February 23, 2010 at 10:56 PM  
Anonymous Anonymous said...

Great minds...

I was just forwarding a link to Denninger's piece to a large number of people in my address book.

He's right on the money.
May God help us.
Eric
III

February 23, 2010 at 11:39 PM  
Blogger sofa said...

Karl laid out what needs to be done to fix things.

But to date, the plan seems to be to do the most damage possible. So none of Karl's recommendations will be considered, let alone implemented. We should probably expect several new and novel destructive devices to be unleashed as well.

February 24, 2010 at 1:33 AM  
Anonymous Anonymous said...

This is a good follow up post to Mike's post at Sipsey Street on 2/17. Unfortunately, the politicos and their stooges will, generally, pay little attention to this excellent advice.

February 24, 2010 at 1:39 AM  
Anonymous Patrick Sperry said...

Excellent! I don't comment here a lot but I do read WRSA often. H/T to Anthony at Second Amendment News.

For nearly two years I have been saying that we are in a depression, not recession. It's nice to know that other people did, in fact pass Macroeconomics!

February 24, 2010 at 1:41 AM  
Blogger johnnyreb said...

Solid gold. Should be required reading.

In my never-to-be-humble opinion, if there really is a collapse, in most cities the LEOs with their fancy new equipment will be over-run by the gangs in short order. And their Fed buddies will be too busy in meetings and setting up hearings to analize what went wrong to be of any help.

These are Dead-enders, hard-core Cop-haters with little to lose anyway. And I think a 20 - 1 ratio is being generous.


Hey, JBT's. Are you listening yet?

February 24, 2010 at 3:45 AM  
Blogger tjbbpgobIII said...

I haven't read anything near as true in many years. I sent it to all my contacts and am about to send it to my congress people.

February 24, 2010 at 4:32 AM  
Anonymous Publius said...

Hear, hear!

February 24, 2010 at 4:48 AM  
Anonymous jselvy said...

I like the essay but I think his time is a little off. It is far too late to save the LEOJBTs from the consequences of their abuses of power. I, personally, will make the sauce fopr the BBQ. They have proven that they deserve no more consideration than a redcoat in 1778.
I'm sorry if I seem extremist, but the litany of the crimes of the "Only Ones" is long and horrific. The "I was only following orders" excuse will buy them the same penalty that it bought the Waffen SS in the Nuremberg trials.

February 24, 2010 at 6:27 AM  
Anonymous Anonymous said...

"The average man's love of liberty is nine-tenths imaginary. It takes a special sort of man to understand and enjoy liberty - and he is usually an outlaw in democratic societies." - H. L. Mencken

February 24, 2010 at 3:14 PM  
Blogger Concerned American said...

Deleted in error during moderation, from Michael at Staying Alive:

In reading this great post by KD and looking over the comments, I find myself wondering what I can add. How about "Got rope?" It is time for a little payback and I hope God lets me watch it.


Michael

February 24, 2010 at 9:59 PM  
Anonymous Anonymous said...

This didn't just begin 20 years ago. This started with the farm crisis in the 1970's. We lost family farms to the banks after farmers took the bait of easy money for expansion. When they couldn't repay their loans because of low prices and they couldn't afford the higher interest rate loans for seeds for future crops, they lost their farms. This issued in the era of factory farms and corporate giants like Monsanto and ADM now control our food supply.

February 24, 2010 at 10:00 PM  
Blogger JoeFromSidney said...

"Got Rope?" Hey, I like that. How about that on a bumper sticker, with a picture of a noose?

February 25, 2010 at 1:35 AM  
Anonymous Anonymous said...

I unfortunately have to agree w/ Chris Horton & jselvy in that it's WAY past time for the good folks @ the upper levels of politics, academia, finance, & LE to have dealt w/ the ravagers & those who can barely wait to become the American version of the STASI or Cheka. The die's pretty much cast & now it's become a question of how the U.S. will collapse: Slowly, which will give lots of people who haven't already done so time to make up their minds about what (if anything) they're going to do before, during, & after the SHTF, or, thru a confluence of circumstances it all goes POOF @ once & things get REAL bad REAL fast & everybody has to deal w/ the resulting chaos as best they can for as long as they can. As far as Mr. Denninger's request (hope?) that the buildup of anger not erupt on a mass scale is concerned, IMO a point is rapidly approaching that will force the American people to choose what kind of country they want to have & if history's any guide, the prospects for a return to even a semblance of what the Founders had in mind aren't even close to 50-50 as the rot that's been eating away @ the population's moral & ethical foundation (aided & abetted largely by "the greatest generation" & to an overwhelming extent by the "boomers") is, again IMO, SO widespread & runs SO deep that it's quite unlikely that what once gave @ least the appearence of being "the good ol' USA" will be able to be resurrected from the ashes of its demise. I know how that assessment sounds & believe me when I tell you that I don't like writing it in the least, but if you want to verify for yourself whether & to what extent I'm right, review the conversation between Redford & Robertson in the last part of "3 Days of the Condor". It's an eye opener, & also a kind of simultaneous test of how realistic & idealistic you are. Give it a look & take the "test", then see how things look to you. Tip: Have either Pepto, Alka Seltzer, or some good hooch handy for use afterward.


Cassandra (of Troy)

February 25, 2010 at 7:22 AM  
Anonymous Anonymous said...

Hey Joe from Sydney:
Be very careful. While i might tend to concur with the sentiment, that kind of bumper sticker would be sure to have labeled a domestic terrorist and targeted by local LEO's for total harassment. In many jurisdictions, it is currently a violation of law to even be in possession of a noose.

Better to fly under the radar and keep your car bumper sticker free.

just saying

February 25, 2010 at 12:58 PM  
Anonymous Anonymous said...

Find a copy of 'The Money Masters' it's long, but tells a very interesting story. Failing that, find 'Money as Debt' and 'Money as Debt 2' which are shorter but give a pretty decent picture of the corruption in the world's banking system.

The Bankster rip off goes back centuries, not decades.

February 25, 2010 at 11:24 PM  

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