End of Vikings, End of Capitalism?

The Old Gods required greater fortitude in their practice. Die with a sword in your hand, or no promised land. The simple salvation of Christianity was more desirable for the sheeple masses. Likewise, American Capitalism is meeting its demise. Neither Capitalism's warrior elite nor its sheeple consumers are willing to abide by the downside risk inherent in the practice.

Will State Capitalism bring salvation?

More on the Liquidity Trap (PIMCO's Take)

Paul McCulley opined on pre-collapse work done by Krugman and Bernanke (hat tip to ZeroHedge). One thing that continues to irk me on the subject of the liquidity trap is the the failure to understand that money can exit a market and never return. Inflation is a closed system, bound by internal, national parameters. Same with interest rates on government bonds. But, equity ownership and real business investment is global.

Simply put, the central bank's effort to reflate a battered economy through monetary policy will fail -- no matter what! -- if there is no confidence in the business environment. The sideline cash can go to China, India, or South Korea. Peru or Botswana. It can fund Swedish bailouts of the Baltic banks. It can buy farmland in SE Asia. It can dump itself in oil futures. It can wait for US companies to relocate to Switzerland, then invest in their equity.

In the US, this means one thing only. Jobs. If the jobs do not return soon, the taxation war will scare off investors. If jobs do not return soon, the liquidity trap will morph into full scale deflation. If jobs do not return soon, the American way of life will take a permanent step back. We will work harder, make less, and have less to show for it socially.

I really think there is only one solution to this mess. Extreme tax cuts. We're already running a deficit, why not let the people earning money stow a little away, or spend some, or pay down their debt? Let the next President raise taxes back up. Confidence returns immediately because businesses will have instant increased demand. Increased demand will mean business expansion, which means jobs.

'Nother Jobz Rant

This time on the WSJ, complete with some detailed criticisms of the unemployment stats. People are watching. This summer better show some signs of improvement, or there will be revolt against the President's policies. Stagnation won't be good enough.

Stop It Already!

I agree with this guy. I wish the Gov't would just say "enough" and let Americans find our way through this mess. The financial industry is stable-ish. Good enough. Now everyone get back to work!

Instead, investors and job hunters and entrepreneurs are all wondering what the Gov't is going to do, how the rules are going to change, and which industries are going to get puffed up with taxpayer money. People are standing around watching Citi, AIG, BoA, GM, and California flounder, uncertain whether these entities will default on their promises. Meanwhile, the federal deficit grows and grows. My son better get used to working three jobs because that's what it will take to pay off the Baby Boomers' debt.

The first stimulus package was not a stimulus package. It was a vote-getting fund for Congress. It was a profile in achieving graft, waste, and corruption. Why would round two be any better?

On a side note: why is it expected that liberals are also Keynesian?

Uh oh?

It has to be said. If Obama can't cap the job losses, his presidency will be a colossal failure. And if you think it's getting bad now, imagine what the next buffoon will do . . .

Message to the President: forget tomorrow's problems. Today's are worse.

Here is how the summer is about to unfold.

1. Unemployment will be revised upward any day now to about 9.7%.
2. The political masses will call for a second stimulus. (Biden is already greasing the wheels)
3. Borrowing rates to support the stimulus will reach critical levels as investors demand a greater risk premium than the USG is prepared to offer.
4. Fed loses credibility as it suddenly buys up Treasury debt to make up for weak demand.
5. Inflation chicken littles (myself included) and bond vigilantes (Gross, et al.) will issue even more dire warnings about fiscal projections.
6. Stock market volatility (as measured by the VIX) will be back to 2008 levels.
7. Oil producing nations, Russia in particular (especially as it faces the threat of bond default again), will slash production. The resultant price of crude will keep recovery forecasts for the US economy pessimistic.
8. Even CNBC will talk about the liquidity trap. Simply, the threat of inflation is not enough to get sideline money back in the game because there is still too much fear.


Deja vu all over again?

Jobs plz.

What do I keep saying about jobs?

http://online.wsj.com/article/SB124645016745579363.html#mod=testMod