Ares
19th September 2010, 06:51 PM
The United States is facing both a structural and demand problem - it is not the cyclical recessionary business cycle or the fallout of a credit supply crisis which the Washington spin would have you believe.
It is my opinion that the Washington political machine is being forced to take this position, because it simply does not know what to do about the real dilemma associated with the implications of the massive structural debt and deficits facing the US. This is a politically dangerous predicament because the reality is we are on the cusp of an imminent and significant collapse in the standard of living for most Americans.
The politicos’ proven tool of stimulus spending, which has been the silver bullet solution for decades to everything that has even hinted of being a problem, is clearly no longer working. Monetary and Fiscal policy are presently no match for the collapse of the Shadow Banking System. A $2.1 Trillion YTD drop in Shadow Banking Liabilities has become an insurmountable problem for the Federal Reserve without a further and dramatic increase in Quantitative Easing. The fallout from this action will be an intractable problem which we will face for the next five to eight years, resulting in the 'Jaws of Death' for the American public.
<img src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/shirakawa/09-18-10-Shadow_Components-2_0.jpg"/>
The ‘Jaws of Death’ is the crushing squeeze of a shrinking gap between incomes and a rising burden of the real cost of debt burdens. Many may say there is nothing new in this, but I would respectfully disagree. There is a widespread misperception of what is actually evolving that stops voters from forcing politicians to address America’s substantial underlying dilemma. It also stops investors from positioning themselves correctly.
<img src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/shirakawa/Jaws%20of%20Death_0.jpg"/>
Any solutions of real substance are presently considered political suicide. It is wiser to wait for a crisis event to unfold. As White House Chief of Staff and a primary Obama political strategist, Rahm Emanuel has said on numerous occasions: “You never want a serious crisis to go to wasteâ€. It doesn’t take much intelligence to understand this also implies looking for a crisis as a political shield, for example from an almost insurmountable political problem such as a generational reduction in the US standard of living.
Before I delve into misperceptions of the ‘Jaws of Death’ and a reduced US standard of living, we need to briefly consider for a moment whether this is a planned outcome or just happenstance? President Franklin Roosevelt said:
“Nothing in politics happens by chanceâ€.
Being in business I have always been very watchful of a slightly different variation of the same theme:
“Strategy is something that happens to you while you are looking the other wayâ€.
Maybe Mark Twain said it better than both of us:
“It ain’t what you don’t know that gets you into trouble. It’s what you know for sure and just ain’t so!â€
My point is that there is a strong possibility that the ‘Jaws of Death’ is an orchestrated plan to reposition America’s standard of living. A plan not for the good of Americans but for the good of the banks and those that control the $630 Trillion unregulated, off shore, off balance sheet, OTC derivative market. It is no secret that America’s standard of living is no longer viable, as evidenced by a continuous and chronic deterioration in the US Balance of Payments, Trade Deficit and Current Account funding. It must be addressed and this may already be happening in a stealth fashion.
What the above suggests is that we need to address what is perceived as ‘truisms’ but in fact are not; what is perceived as reality versus what is perception. These subtleties are the veils that hide the real dangers from us.
<img src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/shirakawa/2-%20Diminishing%20Productivity%20of%20DEBT%20%283%2 9_0.gif"/>
Link to Source (http://www.zerohedge.com/article/guest-post-preserve-and-protect-jaws-death) Much more to be read at the link.
VERY VERY informative.
It is my opinion that the Washington political machine is being forced to take this position, because it simply does not know what to do about the real dilemma associated with the implications of the massive structural debt and deficits facing the US. This is a politically dangerous predicament because the reality is we are on the cusp of an imminent and significant collapse in the standard of living for most Americans.
The politicos’ proven tool of stimulus spending, which has been the silver bullet solution for decades to everything that has even hinted of being a problem, is clearly no longer working. Monetary and Fiscal policy are presently no match for the collapse of the Shadow Banking System. A $2.1 Trillion YTD drop in Shadow Banking Liabilities has become an insurmountable problem for the Federal Reserve without a further and dramatic increase in Quantitative Easing. The fallout from this action will be an intractable problem which we will face for the next five to eight years, resulting in the 'Jaws of Death' for the American public.
<img src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/shirakawa/09-18-10-Shadow_Components-2_0.jpg"/>
The ‘Jaws of Death’ is the crushing squeeze of a shrinking gap between incomes and a rising burden of the real cost of debt burdens. Many may say there is nothing new in this, but I would respectfully disagree. There is a widespread misperception of what is actually evolving that stops voters from forcing politicians to address America’s substantial underlying dilemma. It also stops investors from positioning themselves correctly.
<img src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/shirakawa/Jaws%20of%20Death_0.jpg"/>
Any solutions of real substance are presently considered political suicide. It is wiser to wait for a crisis event to unfold. As White House Chief of Staff and a primary Obama political strategist, Rahm Emanuel has said on numerous occasions: “You never want a serious crisis to go to wasteâ€. It doesn’t take much intelligence to understand this also implies looking for a crisis as a political shield, for example from an almost insurmountable political problem such as a generational reduction in the US standard of living.
Before I delve into misperceptions of the ‘Jaws of Death’ and a reduced US standard of living, we need to briefly consider for a moment whether this is a planned outcome or just happenstance? President Franklin Roosevelt said:
“Nothing in politics happens by chanceâ€.
Being in business I have always been very watchful of a slightly different variation of the same theme:
“Strategy is something that happens to you while you are looking the other wayâ€.
Maybe Mark Twain said it better than both of us:
“It ain’t what you don’t know that gets you into trouble. It’s what you know for sure and just ain’t so!â€
My point is that there is a strong possibility that the ‘Jaws of Death’ is an orchestrated plan to reposition America’s standard of living. A plan not for the good of Americans but for the good of the banks and those that control the $630 Trillion unregulated, off shore, off balance sheet, OTC derivative market. It is no secret that America’s standard of living is no longer viable, as evidenced by a continuous and chronic deterioration in the US Balance of Payments, Trade Deficit and Current Account funding. It must be addressed and this may already be happening in a stealth fashion.
What the above suggests is that we need to address what is perceived as ‘truisms’ but in fact are not; what is perceived as reality versus what is perception. These subtleties are the veils that hide the real dangers from us.
<img src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/shirakawa/2-%20Diminishing%20Productivity%20of%20DEBT%20%283%2 9_0.gif"/>
Link to Source (http://www.zerohedge.com/article/guest-post-preserve-and-protect-jaws-death) Much more to be read at the link.
VERY VERY informative.