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The art of deception: Hank Paulson speaks

Tuesday, November 18, 2008, 1:22 PM

The key problems that we face are all expressions of the fact that our monetary system is based on debt, and this enforces an exceptionally short-term investing and planning horizon, along with the need for continuous exponential expansion.

Thus our primary ailment today is a failure of our money system. Practically everything else that we read about today – bank failures, foreclosures, rapidly depleting resources, etc – are merely symptoms of this failure.

We are facing a money crisis, not a banking crisis. We are not experiencing a failure of our credit markets, but a failure of our money system. The apparent inability of our policy makers to understand this crucial distinction all but assures that their attempts to “fix things” will do more harm than good.

This OpEd piece by Hank Paulson, published today by the NYT, is a monument to wasteful, off-target thinking.

“Fighting the Financial Crisis, One Challenge at a Time”
By Secretary Henry M. Paulson, Jr.
The New York Times November 18, 2008

We are going through a financial crisis more severe and unpredictable than any in our lifetimes. We have seen the failures, or the equivalent of failures, of Bear Stearns, IndyMac, Lehman Brothers, Washington Mutual, Wachovia, Fannie Mae, Freddie Mac and the American International Group. Each of these failures would be tremendously consequential in its own right. But we faced them in succession, as our financial system seized up and severely damaged the economy.

My Comment:  So far so good, but all he’s done here is describe a few symptoms. No recognition of the causes of the problems yet (let alone assigning culpability). But this is just his opening paragraph; perhaps he’ll get to the causes later.

By September, the government faced a systemwide crisis. After months of making the most of the authority we already had, we asked Congress for a comprehensive rescue package so we could stabilize our financial system and minimize further damage to our economy.

My Comment:  Actually, the crisis was fully recognized by many observers several years back, but was obvious to everyone in the industry a full year earlier than September 2008, and Hank knows it. The August 17th, 2007 event (a credit dislocation and stock market swoon) was a full-blown systemic crisis that kicked off everything we are seeing today.  Astute observers of financial markets know that every warning bell in the engine room went off on that day.

Hank is avoiding raising that uncomfortable fact because it puts the lie to the “emergency” bailout bill, which was rammed through Congress and which has subsequently enriched many of his closest personal associates. So he is trying to reshape history by implying that the crisis erupted in September of 2008. It did not. It had been in the offing long enough that I remain confident that Ben Bernanke was handpicked in 2002 based on his recipes for fighting this exact sort of a battle. If this isn’t true, then I have to believe that one guy in Western MA with an Internet connection was able to diagnose and predict a set of ailments that eluded professionals with access to far better information. It’s possible, but not very likely.

There is no playbook for responding to turmoil we have never faced. We adjusted our strategy to reflect the facts of a severe market crisis, always keeping focused on our goal: to stabilize a financial system that is integral to the everyday lives of all Americans.

My Comment:  The goal here, while laudable, is very much directed at the symptoms and offers us no insights as to whether the cause has been identified. After all, is it worth “stabilizing” a system that is inherently unstable? Do we know why it was unstable? Will providing massive funds help, or hurt? How can we know unless we know that the cause of the instability has been identified? What if the cause was “too much debt?” How will going deeper into debt help? These are all valid questions and they are left unasked and unanswered, probably because confidence in our economic system would be eroded by any such introspection.

As we assessed how best to use the remaining money for the Troubled Asset Relief Program, we carefully considered the uncertainties around the deteriorating economic situation in the United States and globally. The latest economic reports underscore the challenges we are facing. The gross domestic product for the third quarter (which ended Sept. 30, three days before the bill passed) shrank by 0.3 percent. The unemployment rate rose in October to a level not seen since the mid-1990s. Home prices in 10 major cities have fallen 18 percent over the previous year. Auto sales numbers plummeted in October and were more than a third lower than one year ago.

My Comment:  Here Hank is connecting the bailout money to fixing the economy. He explicitly draws that connection and maintains it throughout the editorial. The application of TARP money, he implies, is the same as aiding the economy. But what this mechanism might be is never stated, and I’ve not yet seen any mention of it anywhere. For the millions out of work, new capital in a big bank is not helpful in the least. For an ailing company addicted to selling to overly indebted consumers, the TARP money provides no relief.

I have always said that the decline in the housing market is at the root of the economic downturn and our financial market stress. And the economy, as it slows further, threatens to prolong this decline, as well as the stress on our financial institutions and financial markets.

My Comment:  Um, no, Hank, sorry, this is not true. Here are some recent quotes from you:

April 20, 2007 — “I don’t see (subprime mortgage market troubles) imposing a serious problem. I think it’s going to be largely contained.”

July 26, 2007 — “I don't think it [the subprime mess] poses any threat to the overall economy.”

Perhaps “always” and “root” mean different things to Hank than to me, but when I say “I have always maintained,” I generally mean for a much longer period of time than, say, since last year.

The current $250 billion capital purchase program is strong medicine for our financial institutions. More capital enables banks to take losses as they write down or sell troubled assets. And stronger capitalization is essential to increasing lending, which is vital to economic recovery.

My Comment:  This is technically true, but in a very, very slippery way. What Hank is leaving unsaid is that the banks are not really taking losses to anywhere near their true extent, because the Federal Reserve is buying their assets at prices far above fair market value. So you’ve got Hank shoveling taxpayer money into the capital/equity side of banks (at very unfavorable terms to the taxpayers, especially compared to European efforts), while on the other side of the balance sheet you’ve got the Fed lifting damaged assets off their books at above-market rates so that the banks can avoid an honest appraisal of their true condition. So the slippery part was for Hank to mysteriously leave out the Fed's efforts in describing the scope of the bailout help.

Worse, this paragraph displays the pro debt-growth bias that will lead to our eventual ruin as a nation. Hank is parroting a thoroughly unquestioned premise on Wall Street, which is that “stronger capitalization is essential to increasing lending, which is vital to economic recovery,” but you and I might reasonably question whether this is true. Increased lending has brought us to the highest levels of debt ever and is the precise cause of the current mess. So, clearly there is a type of lending that is not good and should be avoided at all costs. Instead we need to actively begin paying down our debts, not increasing them. But as a creature of the banking system, Hank only knows one thing: more debt.

Recently I've been asked two questions. First, Congress gave you the authority you requested, and the economy has only become worse. What went wrong? Second, if housing and mortgages are at the root of our economic difficulties, why aren't you addressing those problems?

My Comment:  These straw-man questions are ducking the main issues. The continued espousing of the myth that mortgages are “at the root of” our problems either displays an appalling lack of awareness or a deliberate attempt to deceive. The root of our problems is primarily composed of excess leverage and a reckless disregard for risk by big financial institutions. It was Hank himself who oversaw the dangerous accumulation of leverage during his tenure as the captain at the helm of the flagship Wall Street firm Goldman Sachs. Reckless lending was the cause, mortgage foreclosures are the symptom. This utter failure to distinguish between cause and effect is what worries me most about our chances of pulling through all this with minimal pain.

The answer to the second question is that more access to lower-cost mortgage lending is the No. 1 thing we can do to slow the decline in the housing market and reduce the number of foreclosures. Together with our bank capital program, the moves we have made to stabilize and strengthen Fannie Mae and Freddie Mac, and through them to increase the flow of mortgage credit, will promote mortgage lending.

My Comment:  Given that Hank cannot spot the cause of the disease, it is unsurprising that he’s decided to treat the symptom. Here he advocates “access to lower-cost mortgage lending” as the solution to the housing crisis, delightfully unaware that he is prescribing more of the very toxin that caused the sickness in the first place. No, we do not need more low-cost lending. Yes, we do need to wring out the excesses of the past and have house prices fall back into a lower equilibrium with incomes. With this one statement, Hank Paulson is effectively saying, “We’ve decided to treat the alcoholic with a fifth of scotch.” Perhaps it’s time to get a new doctor?

The rest of the article closes with three paragraphs of gratuitous self-congratulation for operating boldly in an uncertain market environment. There’s nothing to gain from parsing that out, so I’ll stop here.

In summary, these are the things that are not helped, but rather hurt, by the actions of the US government going deeper into debt to repair failed banks:

  1. Insolvent entitlement programs. Our government is already fully insolvent with regard to the entitlement programs. Going deeper into debt at this time only exacerbates that problem, which is no longer far off into the future, but only a decade away from being a full-blown crisis of its own. Instead, a program of saving and cutting government spending needs to be implemented immediately.
  2. Lack of readiness for a new energy future. We need to make trillions of dollars in investments into preparing for a very different energy future. A smart grid, electric high speed railroads, reforming our ‘exurb’ living/work arrangement, and the complete replacement of our auto fleet are all essential components of arriving at the future gracefully.  To use this recent weakness in oil prices to encourage people to borrow more to buy SUVs is about the most cynical and shortsighted policy I can imagine.
  3. A deficit and crumbling infrastructure. To be a first-world nation, you need an elegant and modern infrastructure. Drive from JFK to NYC with this in mind, and you will know the meaning of ‘embarrassing.’ Have you heard about any major bridges falling into rivers in any major country besides the US recently? We have vast investment needs just in rebuilding and maintaining our current infrastructure. Going into debt to bail out Wall Street does nothing to help in this regard, and very likely sabotages our future ability to borrow, should we ever decide that investing in ourselves is a priority. 
  4. A national failure to save. Ending our raw-consumptive spending and rebuilding savings (the only way to support true capital formation) is an absolute must if we want a future of prosperity. By showing zero willingness to do anything other than spend whatever it takes to return to a zero-saving society, the federal government is setting a bad example. Instead we should be exploring ways to cut spending where possible and redirect funds to places where some investment could yield a decent return. Green energy comes to mind.
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31 Comments

bsm20's picture
bsm20
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Re: The art of deception; Hank Paulson speaks

Hank is parroting a thoroughly unquestioned premise on Wall Street
which is that “stronger capitalization is essential to increasing
lending, which is vital to economic recovery” but you and I might
reasonably question whether this is true.

Neither Hank or any other conventional economist can accept that this is not true.  Even questioning the validity of this sentiment opens the door to the kinds of nightmare scenarios for which they have no response because the questions relate to their fundamental economic model assumptions:

  1. Growth can continue forever (i.e., there is such a thing as "sustainable growth")
  2. Energy, and all other inputs, are unlimited and will be provided to meet demand.

#2 is obviously and patently absurd on a finite planet so, according to the gospel of modern economics, it shall be a given and ye shall talk no more of it.  Since they cannot talk about #2 without insulting the intelligence of anything brighter than mold, they must keep the focus on #1.

As you point out, in our economic system growth requires lending/debt.  If lending/debt is actually a problem, rather than a positive necessary methodology for achieving #1, then, as they say in Ghostbusters, that "would be bad".  Without lending-driven growth, the model collapses and a replacement model would need to be found (and will be, one way or another).  There seems to be little or no possibility that the people currently in charge of the economy (or modern economics in general) can provide such an option because it is outside the scope of their reality. For these economists, growth is an article of faith. It cannot be questioned. It is simply to be believed. Everything else flows from there.

It is as if you told somebody that the founding principle of their religion was not true.  Without that principle, their religion would have no meaning, and they could not have the faith they have.  They could not accept this new information and would surely try to frame it in the context of what they believe.  If they could not easily to that, they might well be lost.  Similarly, if you cannot increase lending/debt forever in order to generate growth forever, then there is no sustainable growth econonomic model and they cannot be what they claim they are (and have always been).  Their whole existance becomes meaningless, perhaps worse, they might actually have to accept being part of the problem.

Asking these people to adopt another economic model, or even to admit that the base assumptions of the current model are, shall we say, "iffy", is akin to asking people to abandon their religion.  It is probably simply too great an obstacle for their economic faith.

Short version:  if the only tool you have is a hammer, everything looks like a nail (and will be treated accordingly ;-).   Growth is always the answer, and therefore, debt (somewhere) is pretty much always the tool.  Hank et al are simply doing the only thing they can do with the tools their "faith" provides.  We need some people with different tools.

Brian

bearing01's picture
bearing01
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Re: The art of deception; Hank Paulson speaks

Dr. Ron Paul asked Bernanke yesterday what his thoughts were on the failed dollar and if there were any talks regarding using the treasuries gold reserves toward a gold backed currency.

http://blog.mises.org/archives/008975.asp

Bernanke said that the dollar is strong and see's no problem with it.  The only talks of the treasuries gold  reserves is when talking about selling it off.

If Bernanke is telling the truth, this is why I believe we are headed down the road to complete destruction.  I believe it was Einstsein that said that you can't have the same guys solve the problem that they unknowingly created.  You need someone else that understands the root cause of the problem in order to fix it. 

 

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andrevanbrussel
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Re: The art of deception; Hank Paulson speaks

 

Damnthematrix's picture
Damnthematrix
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If the world is bankrupt, shouldn't the debts be canceled?

Excellent piece Chris, the standard never varies.......  It never ceases to amaze me how the people running the world seem so appalingly incompetent..

Anyone who has been reading my numerous posts on debt cancelation will know how strongly I feel about this. If a business or individual reaches the stage of being completely unable to service their debts, they usually file for bankruptcy.  After selling off any worthwhile assets to compensate creditors to the fullest possible, the debts are then canceled or forgiven.  After all, what else can you do?  You can't get blood out of a stone.

So, if the entire system is now bankrupt and unable to service the debts, I believe we should call for a jubilee, and cancel all debts.  And I mean ALL debts....

This notion of mine has been met with some derision in these forums, but frankly I see no other solutions.  You can say that it's unfair to those of us who have paid off all their debts (as we have) but as far as I'm concerned it has nothing to do with fairness to this generation and all to do with fairness for my children's generation.  At current prices they could never afford to purchase a house, without getting a sub-prime loan...Wink

Canceling the debts also means we could start again with a blank slate and tackle the huge problems of future sustainability.  Continuing with this idiotic money system is simply not possible.  We woud need (as Chris says above) to increase growth to such an unsustainable level (as if it wasn't already!) just to meet the current level of interest repayment that we would kill off the entire planet within 20 years.....  I know the next 20 years will be nothing like the last 20, but killing off the planet is NOT on MY agenda, thank you very much.

Going back to Albert Bartlett's test tube of bacteria, I feel the test tube is already (at least) 3/4 full, and we must stop the nonsense.

I haven't seen Chris comment on any of my posts on debt cancelation.  Are you there mate?  What do you think?  Do you have a better idea?

Mike in Australia.  Fuming! 

castlewp's picture
castlewp
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The assassination of Eliot Spitzer

The more you look into this whole economic meltdown the scarier it gets.

http://www.youtube.com/watch?v=GMo7T9t0Gzk 

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johndaniels
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'Gold for Oil' international standard

'Gold for Oil' international standard, and the Fed constructing a caste based "neo-aristocracy" (http://www.ured.com)

11/18/2008: I have a remotely possible theory about what the Fed is doing with the financial system. Their methods behind the current system are exploited, corrupted, and transparently failing. Creating digital money from nothing and credit-debt economies are becoming extinct, as these are American inventions. America will be forced to resort to outward fascism, or become a 3rd world country; and the people will not tolerate 'war for economy'. Government conspiracies like 911 won't succeed anymore, because of the growing awareness that the government conducts these operations to establish PR support for wars based on economics... under the guise of 'terror attacks'.

To survive, the elites will simply establish a "neo-aristocracy"; just like what has always been done historically. The new middle class will support the upper classes, based on gold possession and self interest. The artificially low prices in monetary metals are designed by the financial elites to establish this new middle class, and to increase gold circulation to their benefit. 

Case in Point: For everything that the public has expected to happen regarding the dollar and the fed, the OPPOSITE has occurred. We have gotten deflation and dollar strength, when most intelligent economists called for dollar collapse via hyperinflation. Therefore, I submit that the Fed banks will stealthily acquire more gold, even as they suppress the price. It may come where commodities need to be traded for other commodities and rare items. Gold won't be the traded currency, but it will be the standard of wealth because it will be necessary to acquire key commodities, like oil. 

The word is out on the potential 'gold for oil standard', dictated by the middle east, and backed by the international community! Recent major gold acquisitions by Saudi Arabia and Iran suggest a lack of confidence in currencies by these major oil producers. This means the possibility of a 'gold for oil' standard at some time in the future; especially if there is any type of war or further financial based upheaval. An invasion or attack on Iran, for example. Clearly, preparations have been made by other countries for the new standard: 11/15/2008 Iran switches reserves to gold, 11/14/2008 China set to increase gold reserves, 11/13/2008 Saudi buys 3.5 billion gold.

Why will this preposterous notion come to pass?

1. Bernake testimony before Ron Paul 11/18/08: denying gold standard and implying central bank gold sales. Leading us to think the system is intact while they plot its controlled collapse. They know only gold will have the legitimacy to continue public support after this fiasco (11/18/2008 Congress/Fed). Additionally, The Investment banker aspects of the economy are set to fail if not bailed out. Bank of America acquisitions of Countrywide and Merrill Lynch will seal their fate (Bank of America = the Titanic: http://www.riverside.info/warning.htm); the stock traded today at 15 bucks per share, down about 68% on the year.

2. The elites have 15% of all the gold ever mined! After this digital system crashes, its back to a commodity based trade system; and they will once again be the financial elites.

Ray Hewitt's picture
Ray Hewitt
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Re: The art of deception; Hank Paulson speaks

It never ceases to amaze me how the people running the world seem so appalingly incompetent..

They reflect the incompetence of the voters who put them in office.

johndaniels's picture
johndaniels
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Re: The art of deception; Hank Paulson speaks

their incompetence is matched only by their arrogance

rlee's picture
rlee
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Re: The art of deception: Hank Paulson speaks


 

In summary, these are the things that are not helped, but rather hurt, by the actions of the US government going deeper into debt to repair failed banks:

  1. Insolvent entitlement programs. Our government is already fully insolvent with regard to the entitlement programs. Going deeper into debt at this time only exacerbates that problem, which is no longer far off into the future, but only a decade away from being a full-blown crisis of its own. Instead, a program of saving and cutting government spending needs to be implemented immediately.
  2. Lack of readiness for a new energy future. We need to make trillions of dollars in investments into preparing for a very different energy future. A smart grid, electric high speed railroads, reforming our ‘exurb’ living/work arrangement, and the complete replacement of our auto fleet are all essential components of arriving at the future gracefully.  To use this recent weakness in oil prices to encourage people to borrow more to buy SUVs is about the most cynical and shortsighted policy I can imagine.
  3. A deficit and crumbling infrastructure. To be a first-world nation, you need an elegant and modern infrastructure. Drive from JFK to NYC with this in mind, and you will know the meaning of ‘embarrassing.’ Have you heard about any major bridges falling into rivers in any major country besides the US recently? We have vast investment needs just in rebuilding and maintaining our current infrastructure. Going into debt to bail out Wall Street does nothing to help in this regard, and very likely sabotages our future ability to borrow, should we ever decide that investing in ourselves is a priority. 
  4. A national failure to save. Ending our raw-consumptive spending and rebuilding savings (the only way to support true capital formation) is an absolute must if we want a future of prosperity. By showing zero willingness to do anything other than spend whatever it takes to return to a zero-saving society, the federal government is setting a bad example. Instead we should be exploring ways to cut spending where possible and redirect funds to places where some investment could yield a decent return. Green energy comes to mind.
Entitlement Programs:  This may be exactly the result desired Chris.  Think back to the earlier years of 'W'.  What was the answer then to keeping these programs in check?  That's right, privatization!  The first PR campaign didn't take hold, so the best way to sell a program that nobody wants is to create a crisis that the sell will make go away.  If they form an environment that yields a program's collapse, then the sale to the private sector will sail through without so much as a wink.
 
Energy Future:  Unless the future of energy involves the exact same people who are running it now (the big oil guys) you can count on NOTHING going forward.  Again, with crisis comes unbridled funding.  If the energy questions were to be answered in any way by moving forward with development, then government and the oil guys would in effect be acknowledging the petroleum dilemma.  Not gonna happen any time soon.
 
Infrastructure:  This is considered the last place to invest.  The real trouble here is this - if you think the Wall Street gang sucks at running a business, spend some time with a Department of Transportation ANYWHERE in this country at ANY level!  WOW, there's a lesson on how not to do anything!!!
 
SAVE?:  Are you kidding?  If I'm saving I can't have all the newest, coolest, most up-to-date stuff that nobody else has yet!  This is the land of entitlement Chris, get with the program.
 
Just my opinion - Hey I got to go - I got a WII tennis match to play! 

 

Damnthematrix's picture
Damnthematrix
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Re: The art of deception; Hank Paulson speaks
hewittr wrote:

It never ceases to amaze me how the people running the world seem so appalingly incompetent..

They reflect the incompetence of the voters who put them in office.

They are not all elected.  The likes of Bernanke Paulson and Greenspan were appointed..... 

r101958's picture
r101958
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Re: The art of deception; Hank Paulson speaks

In reality, there are only two ways we can judge the activities of Paulson and Bernanke. One, they are ignorant of the real causes of the problems we face or they are incompetent or both.  Two, they are very aware of what is going on and have been part and parcel to a clandestine plan to create another financial paradigm.

I think most people choose the former alternative because it is much easier to rationalize and will not end up getting you labeled a conspiracy theorist. However, I believe that there are some that choose the latter.

If they (Paulson and Bernanke) are of the former ilk then I can only wonder how they arrived at their lofty positions carrying the heavy baggage of such ignorance.

If they are of the latter group then I believe they would rather be considered part of the former group as it is much less dangerous for them to be thought of as ignorant than it would be for them to be thought of as very intelligent, conniving middle men in a larger scheme. 

Taking it a step further, it would be to their benefit to be thought of as blundering, well meaning, disconnected and clueless public servants. After all, who would we be angrier with, a fool or a grifter? Against which, theft or loss, would the public more quickly raise its voice?

Have any of you ever known a really good chess player? How many moves ahead do they plan? This also means they anticipate the moves of their adversary. I personally have never known a good chess player that thought any less than three moves ahead.

How ignorant and stupid are we prepared to think these men are? Are they really just pawns? If we can discern the reasons for our economic predicament then are we really willing to think that these men can not?

I really can not answer. However, I think these are some questions we might need to ponder.

 

castlewp's picture
castlewp
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Re: The art of deception; Hank Paulson speaks

WOW! 

http://nz.youtube.com/wat...

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ajparrillo
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Re: The art of deception; Hank Paulson speaks
hewittr wrote:

It never ceases to amaze me how the people running the world seem so appalingly incompetent..

They reflect the incompetence of the voters who put them in office.

A public incompetence cultivated by a well designed attack by economic elite on society at large.

ajparrillo's picture
ajparrillo
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Re: The art of deception: Hank Paulson speaks
rlee wrote:

Entitlement Programs:  This may be exactly the result desired Chris.  Think back to the earlier years of 'W'.  What was the answer then to keeping these programs in check?  That's right, privatization!

YES!  Economically forced privatization....this has already been achieved throught the Neoliberal agenda all around the world.

Bookrat's picture
Bookrat
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Bridge collapses happen everywhere.

 

Quote:

Have you heard about any major bridges falling into rivers in any major country besides the US recently?

Yes, actually.

Vietnamese bridge collapse (Apr/07) that killed 54: http://www.chinapost.com.tw/asia/vietnam/2008/07/04/164005/Vietnam-bridge.htm

Bridge under construction in Kashmir collapses (Nov/08) killing 23: http://www.upiasia.com/Top_News/2008/11/16/23_feared_dead_in_Kashmir_bridge_collapse/UPI-82471226837081/

Bridge collapses in Karachi (Jan/08) 10 days after being opened: http://www.dawn.com/2008/01/09/local16.htm

Bridge cables snap on Clyde Arc bridge in Glasgow (2008) just 2 years after it opened: http://news.bbc.co.uk/1/hi/scotland/glasgow_and_west/7188584.stm

Bridge collapse in China (August/07) kills 22: http://chinadigitaltimes.net/2007/08/chinese-bridge-collapse-kills-22-bbc-news-updated/

(And that's just the ones I knew about and/or could google for in under 5 minutes.)

Just because the USAian media isn't reporting it doesn't mean that it isn't happening. You of all people, Chris, should know better than that. :-)

 

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Re: Bridge collapses happen everywhere.

Bookrat-  you cite 5 incidents of bridge collapse, but 2 were new bridges and 3 were still under construction.  These are indications of engineering and construction failures.  American bridges are failing because the structures have surpassed their respective design lives and the country has not invested in replacement and rehabilitation, which I believe is Dr. Martenson's point.  ASCE completed a detailed study documenting the severity of the problem.

 Now, if we did start fixing all those bridges, we'd still have a bunch of collapses just like those you listed because we America doesn't produce enough good engineers and we don't know how to build anything anymore.

 

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Re: The art of deception: Hank Paulson speaks

I found an interesting article by Robert L. Kocher where he compares America today with the movie "The Matrix". A bit off topic but good nonetheless, excerpt...

The Fascist-Socialist Psychological Analog

In our present real world, the incipient Matrix equivalent is liberalism/socialism or industrial fascism. There is no real fully developed Matrix as yet, although the American psychological environment is becoming increasingly dominated by a distorted atmosphere that would have been considered science fiction 45 or 50 years ago. Americans to a great extent no longer interact with each other directly, but instead interact with each other indirectly through TV and other media—through which they develop a filtered artificial mutual experience, wherein each person separately reacts with a third party or presentation instead of directly and exclusively with the person next to him.

http://members.mountain.net/theanalyticpapers/matrix8.htm

Bookrat's picture
Bookrat
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Re: Bridge collapses happen everywhere.
Quote:

American bridges are failing because the structures have surpassed their respective design lives and the country has not invested in replacement and rehabilitation, which I believe is Dr. Martenson's point.

Well, I can't read his mind any more than I can read yours; I just went looking for 'bridge collapses' in a quick search because the implication was that they weren't happening anywhere else. If you're asking about infrastructure-related bridge failures... how about this one, from Quebec? http://www.cbc.ca/canada/story/2006/10/02/laval-montreal.html (And again, that's just from memory: I'm not seeking to make a project out of this.)

Quote:

Now, if we did start fixing all those bridges, we'd still have a bunch of collapses just like those you listed because we America doesn't produce enough good engineers and we don't know how to build anything anymore.

Geeze... hyperbole much?

Remember, just because a person is past his prime doesn't mean he has no skills whatsoever; a 50 year-old NHL player will still skate circles around you. The same applies to countries (and oilfields, and many other things.)

 

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Re: Bridge collapses happen everywhere.
Quote:

Well, I can't read his mind any more than I can read yours; I just went looking for 'bridge collapses' in a quick search because the implication was that they weren't happening anywhere else. 

Uh...really?  You could not tell from the context that the comment was directed at the problem of infrastructure deterioration?  Also, Chris askes about "major" contries.  While we could have a debate on the definition of "major," in this context he clearly means other most developed countries with comparable levels of development to the US. 

Quote:

Remember, just because a person is past his prime doesn't mean he has no skills whatsoever; a 50 year-old NHL player will still skate circles around you. The same applies to countries (and oilfields, and many other things.)

The above clarification makes your final comment irrelavent to the discussion of the high level of infrastructure deterioration experienced in the supposedly most powerful economy in the world.  However, with this aside, you analogy is overly simplistic.  That 50 yr old NHL player can skate circles around me (I don't play hockey and have only iceskated on rare occassions), but would you not agree the he could no longer perform up to par in the specific arena that counts...the NHL?  Maybe he could still perform and make a living in lower level leagues or even some foreign leagues, but he has lost his competitive advantage in the arena of highest competitions.  So, as you see, as we extend your original overly simplistic analogy, it actually begins to make sense and indicates that the US infrastructure deterioration hinders its performance in many areas and makes it less competitive overall.

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How about some constructive suggestions on what Hank should do

I appreciate the analysis and agree that people in power may not understand the real problem or that they know what it is, and just don't want to face it but how about some constructive suggestions on what they should do? We apply a lot of good brain power here griping and complaining but if just a portion of that was used to try and come up with solutions, maybe we have a shot at lessening the burden on future generations. If I see some good suggestions, I'd be more than happy to pass it on to as many people as possible hoping that it reaches the ears of those that can change policy.

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Re: The art of deception: Hank Paulson speaks

gregroberts don't tell damthematrix of he will probably get quite excited. Thats at least three references to the Matrix now and they are only the ones I've seen.

I describe the phenomonen in your link as faxsimarlies (spelling ?) of reality. Like what I am doing now "speaking to you". We are continually accepting less and less quality faxs as maps or versions of reality. Almost all adds now use computer generated graphics and the plethora of cartoon programmes both demonstrate this phenomena.

In my opinion we can only arrest this trend by reclaiming our attention and bringing it to bear on our own immediate environment and that seems very unlikely to happen unless forced by such attention grabbing circumstances as electronic money stopping, carbon extraction stopping, weather bombs, lack of shelter (cold) or hunger.

Don 

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How about some constructive suggestions on what Hank should do

faxsimarlies is actually spelled facsimiles. It is in fact where the word fax came from.

Not having a go at anyone in particular, because it is in fact widespread, but I find the standard of spelling on American sites considerably lower than that on Australian ones, and I find this most puzzling as I always thought American education standards were among the highest in the world......... maybe you don't edit before sending, I don't know.

I have noticed the many references to the Matrix on this site. It is possibly because the Matrix is such an excellent analogy for 'the system'. I will never forget the excitement I felt when, at the cinema, the movie's heroes pass through the wobbly air screen special effects creators are so good at, into the streets of Sydney (where the Matrix was shot)..... it became so obvious to me then, all the people walking around, seemingly aimlessly, carrying laptop cases, shopping bags, going about their every day chores in oblivion of what was going on around them... It hit me like a lightining bolt! We ARE in the Matrix.

Re " how about some constructive suggestions on what they should do?"

The problems are so HUGE (like the $648 T derivatives) that I don't think anyone has any idea of what to do next.

The only solution, to stop EVERYTHING we are doing, is so left field, so against everything TPTB believe in, that they cannot even think about it. To them it would be even worse than finding out there was no God.....

Oh and Hank? He should be sent to jail.... with Bernanke, Paulson, and Greenspan. Oh and Bush, our ex Prime-Miniscule little Johnny Howard, Rumsfeld, Cheney....... gosh the list is sooooo long!

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Re: The art of deception; Hank Paulson speaks

Castlewp,

 Thanks for that link: I no longer feel bad about throwing vegetables at my television whenever Paulson comes on...

 Have you seen the latest bumper sticker?

"Save America, Kill a Lobbyist!"

 

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Re: How about some constructive suggestions on what Hank ...

ummm ok so if the problems are so HUGE that no one has any idea of what to do next then how can we criticize those who are trying to solve the problems.  Wrong or right... they are trying.  For those fancy pants out there who think they're so smart, come up with solutions and suggest it to the powers that be.  If your only solution is to stop everything then think of your neighbour, your kids, your neighbour's kids and tell them, to their eyes that they might as well shoot themselves because they have no future.  It's not a solution.

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Re: If the world is bankrupt, shouldn't the debts be ...

mike

i dont think china would be a big supporter of a jubilee. they would see no jubilation in us saying "ah so sorry  we start new game now."

i for one since i live here where  "their" assets are to be liquidated would be even less happy.

as chris points out the other option to default is inflate and payoff with seriously devalued currency. china would not be happy with that but might make do with concessions

the scenario i see in this marble game is china will be behind the scenes as usual calling the shots. we will be providing them with more of our technology probably more of our food. we will not compete with them for oil or other strategic minerals.

we will eventually be told by them when and where to deploy our military. we will probably be their blackwater. this will all be done very discretely. there will be a quiet transfer of taiwan. then the rest of asia (excluding india for now)then south to the land of oz. i think you do have a nice highway running from north to south to speed the china express.  seato will by this time be dismantled.

in return they will give us our allowance of marbles so we can continue to play.

but hey i am no gerald celente

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Re: How about some constructive suggestions on what Hank ...

Hi Mike

I'm actually across the ditch from you (Kiwi not American) but was schooled in Aus. I believe in meaning is use. So if you understand me thats all thats needed for me. I know my spelling in atroshus. 

I guess you have read http://members.mountain.net/theanalyticpapers/matrix8.htm posted by Greg Roberts.

I read it for the first time today and although I dissagree with his heavy use of imprecise terms (with which I have trouble) a lot of it makes sense. If you accept his argument then getting any leader to do something different is not going to make one bit of difference. 

The only constructive suggestion I can make is that we form small groups with our neighbours (where we can) and work only with concensus - but I don't think most people are ready for that yet; we need a more tangible crisis before that can happen. Most seem too bound to the leader paradigm. If the only fix is a big fix then theres no fix.

Don 

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Re: The art of deception; Hank Paulson speaks
bsm20 wrote:

Short version:  if the only tool you have is a hammer, everything looks like a nail (and will be treated accordingly ;-).   Growth is always the answer, and therefore, debt (somewhere) is pretty much always the tool.  Hank et al are simply doing the only thing they can do with the tools their "faith" provides.  We need some people with different tools.

Good point Brian,

The different tools that I've identified so far are things like: small diversified sustainable farming, biodiesel projects, complementary currencies, renewable energy, retrofitting existing houses for energy efficiency...  All of these things can be achieved at the grassroots level but they do take time, research, and experience.  It would be great if the people that are so good at making money could divert their skills into these areas and take society in the direction it needs to go for our long-term health and happiness but also the direction that is vitally needed now through the transition. 

All the best,

James

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Re: The art of deception; Hank Paulson speaks


JUST THE TRUTH

by Rusty

[email protected]

I have had it!! Done!! Finished!! Over!!

What does it take for a species, such as ours, with all our newest technological advances in science, medicine, astronomy and humanity, to finally come full circle and realize we are never going to progress any further than we are right now, unless we come to grips with the one and only “standard” that holds its’ own thru every single civilization that has ever lived on this planet?

Why is it so hard for this wonderful species of ours to just take a deep breath and say, “Enough is Enough”, and succumb to the “one and only axiom” that has held sway from the very beginning?

How can we continue to watch, in horror, lives snuffed out in front of our eyes for unknown transgressions and how is it even possible that we can look, unconscionably, upon the daily killing of 1000's of lives that crossed an “imaginary” boundary that was laid down in the sand by unknowing, unfeeling, unintelligent beings that have only ONE agenda in mind?

Where are all those “tuff patriots”, that so endlessly spit out their meaningless diatribe on endless forums, telling us all how, “I think.....” and “I would do.....”, and acting as if they actually KNOW something about fighting for their freedom from an aspect other than their keyboard or game controller?

When do the ‘REAL AMERICANS’ stand up and say, “This is NOT what I put my life on the line for and THIS is NOT what I worked so hard for all my life, dammit! I will NOT let a bunch of impromptu politicians walk in and take away my very existence. Regardless of what everyone thinks, this is NOT a DEMOCRACY and I will not stand by and let the democratic majority take away my rights! I will do my “CONSTITUTIONAL DUTY” and my DUTY, not JOB, but DUTY, and I will stand up and OVERTHROW this government that has gotten out of control and is only in office for the single purpose of self preservation and personal profit”!

How can a man of widely unknown origins circumvent the system and end up running for President of the U.S., without having to answer to ANY of the many requests for his live birth records, college records, etc., while at the same time, I will go to jail, for 8 hours in my county, if I cannot provide proof of a drivers license “on my person”?. How is it this man is so well versed when on a teleprompter and can’t hold a tune with answering unrehearsed questions? Exactly, when did the United States let people “just running for office” go over to other countries (Israel) and dictate foreign policy? Since when, did a man that has not even made it through the Electoral College process, start dictating Executive Orders and picking his cabinet members?

I keep hearing the words “Unprecedented Times” over and over as people talk about today’s lifestyle and the “changes” this new President is going to bring. Well, I have news for all you folks that have not done your homework or have not read any news other than Yahoo and MSNBC.

YOU are about to experience the biggest change you have ever seen in your life.

I don’t care if you lived thru Katrina AND a tsunami AND a tornado. You are going to be so overwhelmed in 1 year you won’t even know what hit you. You don’t chop down a huge tree with one big chop. You cut it down with a bunch of little cuts. Most people cannot see the “little cuts” that have been occurring over the last 10-15 years. They were all so gradual that we never felt their effects until now. They are now culminating at such an exponential pace that it’s almost frightening. We are literally going to go to bed on a Friday night feeling a little trepidation and wake up on Monday morn saying, “WTF just happened”? It will be THAT quick.

It is wild to think that only a mere 15 years ago, the stock market started rising at such an incredible pace that you were a fool NOT to get into it. Every Monday morning, someone else was introduced that would tell us how “this market is different”. They would be an “expert” by that Friday, because the market went up just like they said. To make it look and sound good, they would throw in numbers and P/E ratios and a pretty chart of the projections that their “supersoftware” had made for them. Ahhhh, the days of trading AMZN and YHOO options everyday. Sometimes making 30k before 10:30 and celebrating at the golf course with martinis by 11:30. If a stock DIDN’T split every couple of months, something was wrong. It was considered a laggard!! Imagine telling someone back then that we would be seeing the banks getting bailed out and they would have had you committed! Everyone was a lush with their $20.00 cigars and their pearl inlaid cigar cutters and their $200.00 bottles of Pinot Noir at dinner.

Cars couldn’t get big enough to haul all our “stuff” around in. But then came a threat that was laughed at by some and dreaded by others. The threat of Y2K. What a wonderful time to be alive. The speculation that went on for that New Years’ was just shy of “Unprecedented”. Most of us remember where we were on that New Years’ cause we thought it might be our last.

We had just gotten over the hangover of that event, when all of a sudden...BAAAMMMM!..We have the WTC’s fiasco. I call this a fiasco because we have come to realize that it “most likely” wasn’t perpetrated by a guy on dialysis in a cave in Afghanistan. I think it is safe to say that 911 was easily the “beginning of the end”.

Now here we are on the cusp of the most volatile time in our countrys’ history and we can’t, or won’t, face the inevitable facts before us. Somehow though, this we must do. We have no other choice. We can bury our heads in the sand and pretend that there is nothing wrong, or we can stand up as one nation and say, “I want to hear the truth. I want to LIVE the TRUTH”!!!!

Why is it so hard for us to just present the truth? Mr. Obama...excuse me..Barrack, or Barry or whatever name you go by, We the people have the right for you to answer our questions “truthfully” and in full. For you to hide behind injunctions and delay tactics is probably a very noble thing to do in the corporate/legal/political world that YOU live in, but, guess what, THAT is NOT the world that the majority of people in the U.S.A. live in. Most of us don’t make it a common occurrence to lie and cover up everything we do. Some decent Americans are still of the belief that it is WRONG to lie about taxes and marriages and affairs and even their upbringing. We all know the values that you talked about on the campaign trail and we have already seen that those are NOT, in fact, what you are doing as of yet.

I approached a friend of mine and said, “We need to do something to help set this country back on the straight and narrow. Something that will get not only Washington’s attention, but something that will make every politician in the land remember that THEY work for US”.

We batted the idea around for awhile and came up with this. We call it “One Shot”. The name has a lot of different connotations involved but we will get to that later. On a particular date, at a particular time, an unknown number of law abiding citizens (500k plus) are going to show up in Washington, D.C. with our “legal” weapons, legal handguns, BB guns, Pellet Rifles and slingshots with metal pellets, and we are going to all get hotel/motel rooms within a 1 mile radius of the Whitehouse. At the predesignated time, we are all gonna take our weapons and aim them in the general vicinity of the Whitehouse and when the clock strikes, you are going to hear “The shot heard round the world”. Now I’m not sure where all that lead is going to come down, but I’m sure Dick Cheney could fill you in on that one since you don’t seem to like, or know much about weapons. Oopps!!! I almost forgot. Dick’s not too good with a weapon either.

Did you ever see those propaganda videos,that your cronies in Washington put out,showing Saddam Hussein shooting a pistol or machine gun into the air? How many people do you think he may have hurt because of his stupidity? Think about it.

After a couple of beers, my buddy said that my plan would never work. I asked him why he felt that way and he said the way America is these days, the idiots would close the whole city down for 2 weeks if they thought we were on the way! I have to wonder though, about the resolve of the REAL American in this scenario. I think they would actually show up in bigger numbers with bigger bullets. I heard Joe Biden adamantly saying there was going to be an “EVENT” on Jan. 20 or 21 that was going to test the resolve of Mr. Obamamama. I wonder if it involves slingshots?

Because of you and the forces that have manipulated the road that you came in on, it is not too hard to imagine that your name is going to go down in the history books in one way or another.

I, for one, think that it may not be the legacy that you would have preferred though. You are definitely going to be remembered and it will not be anything racial or hateful, but....

I am of the feeling, no, feeling is not a strong enough word...”premonition”...that sounds good...that the Holiday season of the end of 2008 will forever go down in history as.....

“BLACK CHRISTMAS”. In 50 years they will still talk about it just like the “CRASH of 29" and all the other historical events. And YOU will be able to take all the credit for it.

Make us proud Barry!

 

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Damnthematrix
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Re: The art of deception: Hank Paulson speaks
International Forecaster November 2008 (#6) - Gold, Silver, Economy + More

By: Bob Chapman, The International Forecaster


20 November 2008  Source: GoldSeek.com

The following are some snippets from the most recent issue of the International Forecaster.  For the full 32 page issue, please see subscription information below.

 

US MARKETS

 

          What
you are now witnessing is the slow motion destruction of the CRIMEX,
formerly known as the COMEX, a commodities futures market which is
supposed to provide a means for producers to hedge their products, but
which has morphed into a rigged casino where commodities that don't
exist are traded as if they did for prices that exist only in the
fairytales woven by the Illuminati, who control the exchange.  This
destruction is what happens when the credibility and integrity of the
market owners and managers of the CRIMEX, together with the credibility
and integrity of the market regulators, the CFTC, move from near zero
to negative infinity. 

<MORE> 

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Re: How about some constructive suggestions on what Hank ...
Xflies wrote:

ummm ok so if the problems are so HUGE that no one has any idea of what to do next then how can we criticize those who are trying to solve the problems. Wrong or right... they are trying. For those fancy pants out there who think they're so smart, come up with solutions and suggest it to the powers that be. If your only solution is to stop everything then think of your neighbour, your kids, your neighbour's kids and tell them, to their eyes that they might as well shoot themselves because they have no future. It's not a solution.

Stopping everything does NOT mean having no future.....

We all have a future, it's WHAT we do with it that matters.  Sure lots of people will suicide, that is a given, but they are not the people we want left over to crawl out of the other side of this mess.  I'm sure not ready to shoot myself...  I want to see how this all pans out if nothing else!  Don't they say curiosity killed the cat...? Cool

I've given this a lot of thought.  The Matrix is STUFFED.  Agree?  So why try to fix it?

The problem is DEBT.  Agree?  So let's get rid of debt.

Pick a date, and stop all payments on your debts.  Get all your friends to do it too, and their friends and...  In no time, the Matrix would be on its knees.  WHY should we put up with this shit?  TPTB caused it to happen, they can pay the price....  my heart bleeds for them

Then we can take over.  I reckon there are enough smaty people on this site who'd be able to take control.  Chris for President!!

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Damnthematrix
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Re: How about some constructive suggestions on what Hank ...
pir8don wrote:

I guess you have read http://members.mountain.net/theanalyticpapers/matrix8.htm posted by Greg Roberts.

Don

No.....  but thanks, that was excellent!

 "The plot of the movie is a very complex story of the future.
Somewhere during the 21st Century the human mentality was merged with
a giant computer/machine complex for service to mankind. People were
to live in the real world commanding the abilities of the
computer/machine complex. But the resultant system took on human
characteristics, and came to think like humans, with eventual
independent thought and exclusive concern for its own growth and
survival. It took over the human race instead of serving it."

And there you have it, in a nutshell..... the economy has taken over society.  We no longer live in a society, we exist in an economy.  Well f$%^ the economy I say....

It's time to bring the Matrix to its knees. 

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