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Stimulus Bill Causes Hope to Fade

Saturday, January 31, 2009, 2:45 PM

The subtitle to this article is Bringing a Hose to a Flood

I’ll be honest, I was equal parts hopeful and doubtful that anything new would come out of Washington because, well, I’ve been watching the situation for a long time and nothing really “new” comes out of there very often.

For now, I must content myself to sit back and watch, and wait, knowing that sooner or later reality will force itself back onto the radar screens of our leaders. For now, they remain hopelessly out of touch. For example, check out this well-meaning statement:

“This is a continuing disaster for America’s working families,” Obama said at the White House yesterday. “They need us to pass the American Recovery and Investment Plan,” designed to save more than 3 million jobs, he said. House lawmakers passed the stimulus Jan. 28, moving action to the Senate next week.

I agree with the ‘disaster’ part, but I am less than certain of the ’save more than 3 million jobs’ part.

Here’s why:

An $800 billion-plus package, it turns out, gives lawmakers plenty of opportunities to rid themselves of nagging headaches left over from the days when running up the government's $10 trillion-plus debt was a bigger concern.

There's $345 million for Agriculture Department computers, $650 million for TV converter boxes, $15 billion for college scholarships — worthy, perhaps, but not likely to put many Americans back to work quickly.

There's $1 billion to deal with Census problems and $88 million to help move the Public Health Service into a new building next year. The Senate would devote $2.1 billion to pay off a looming shortfall in public housing accounts, $870 million to combat the flu and $400 million to slow the spread HIV and other sexually transmitted diseases such as chlamydia.

But nothing is in the legislation by accident. By including in the Senate stimulus bill such far-ranging ideas as $40 million to convert the way health statistics are collected — from paper to an electronic system — lawmakers are able to thin out their in-boxes, even if they aren't doing much to create jobs.

There's also $380 million in the Senate bill for a rainy day fund for the Women, Infants and Children program that delivers healthful food to the poor. WIC got a $1 billion infusion last fall.

But some Democrats, like Sen. Ben Nelson of Nebraska, think the $3.5 billion in the stimulus package devoted to health research, or the $14 billion-$15 billion for boosting Pell Grant college scholarships by $400 to $500 would be better spent on additional brick and mortar infrastructure projects.

Instead of directing money where it is most needed, Congress could not resist using this massive appropriation as free money for pet projects. In other words, there’s no sense that we need to be smart or careful with our money. Instead, an $850 billion package is the ideal time to do all the nifty things that couldn’t be funded during normal budget discussions.

It's exactly how we might expect a lottery winner to behave during their first few weeks in the millionaire bracket.

How is it possible that DC Congressmen can see things this way? This embarrassing quote sums it up:

"If the house is burning, you're not going to worry about which hose you grab, so long as you get water on the fire," said Rep. David Obey, D-Wis., one of the chief authors of the House package as chairman of its appropriations committee.

Well, Mr. Obey, it might matter if you’ve misdiagnosed the problem and it turns out the economic house is not on fire but rather caught in a flood of debt. Then your additional “spray and pray” deficit spending could be more harmful than helpful over the long haul. Having a basic understanding of the problem is essential to picking effective solutions.

It is attitudes like Mr Obey’s that cause me to lose hope that adults are in charge in DC and have some idea what they are doing.  The vast amount of spending waste has convinced me that the actual seriousness of the predicament has not yet penetrated the thicker layers of the more obtuse lawmakers.

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83 Comments

Davos's picture
Davos
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Re: Stimulus bill causes hope to fade

CM Wrote:

 

"Well, Mr. Obey, it might matter if you’ve misdiagnosed the problem and it turns out the economic house is noton fire but rather caught in a flood of debt.

 

Hello Chris:

I could not agree more with that statement. I truly believe that the U.S. is insolvent. We are in the last days, it took Enron 16 years to "create" 65 billion of "wealth" and 24 days to go bankrupt.

We are in the 24 day period, how long it will take to play out, who the heck knows.

One thing for certain, our books would make the late Kennie Boy green with envy. 

In aviation when the bad stuff hits the fan and you miss diagnose the problem your solution only exacerbates the problem. Ditto when debugging computer programs. 

Seems clear as day that when all your solutions put you on track to obliterating 6 million jobs this year then you are making things worse not better and you need to re-diagnose the problem.

Truly, and let me rant, the issue is the idiots doing the diagnosing. My hunch is that England or one of the EU nations will fall first and it will cascade around the world, by then they will figure out that 2+2=4 not 3.

In any event, I'm pretty certain that a re-denomination will obliterate our 70 trillion dollar black hole. The only cruddy part will be the road there and of course, if they don't know what hit them we will all get hit again.

Take care 

Nichoman's picture
Nichoman
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Re: Stimulus bill causes hope to fade
cmartenson wrote:

Well, Mr. Obey, it might matter if you’ve misdiagnosed the problem and it turns out the economic house is not on fire but rather caught in a flood of debt. Then your additional “spray and pray” deficit spending could be more harmful than helpful over the long haul. Having a basic understanding of the problem is essential to picking effective solutions.

It is attitudes like Mr Obey’s that cause me to lose hope that adults are in charge in DC and have some idea what they are doing.  The vast amount of spending waste has convinced me that the actual seriousness of the predicament has not yet penetrated the thicker layers of the more obtuse lawmakers.

edit: Underline for emphasis.

Agree. Question becomes timing of currency and government collapse(s) and subsequent (hyper)inflation.   Any comparisons based on past historical countries when cash flow w/r/t debt...GDP we reach this?

So...patients are in charge of insane asylum.  Another question is how long before crash in confidence in leaders and social, political unrest? 

To borrow from Chris, my intuition suggests within 6-9 months to both questions.

Nichoman 

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Re: Stimulus bill causes hope to fade

NichoMan:

Should be something. Greece (below) didn't take all too long, somewhere I have their GDP. Gallery Photo

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Re: Stimulus bill causes hope to fade

@Davos...

Unfortunately, I'm inclined to think sooner as well.  Maybe much sooner.   Frown

 

Nichoman

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Re: Stimulus bill causes hope to fade

Chris, you hit it right on the head...it's like bringing a bucket of water to douse a California wildfire. I got into so many heated arguments this past week with people when I was trying to tell them that stimulae do not work. And listening to their arguments, I could tell that these same people are being brain washed by the media and the economists and the congressman they trot out there telling us we need to do something, anything! Mr. Obey, as you point out above is one example. Paul Krugman is one I hear about a lot. We're all out there trying to save people from themselves, yet they want to stay on the Titanic that's about to sink.

castlewp's picture
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Re: Stimulus bill causes hope to fade

Chris, you are on the money.  The only question I have is that this action taken by Washington seems so obtuse, that it smells of a controlled demolition.  

The fact that it is happening so quickly actually gives me hope.  Maybe there will be enough infrastructure left to re-build.  A slow collapse, I'm afraid, would be longer and harder for America to make a come back.  

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cedar
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Re: Stimulus bill causes hope to fade

I am very new to gold and I keep asking myself "will it go up and why?"

The answer I keep coming back to is that gold is worth whatever people are willing to pay. In a currency crisis people will view gold as a safe haven and the resulting demand will push up the price.

So why does the current gold price not reflect the risk of a future crisis?

Because the majority of the public, including our leaders as demonstrated by Chris's observations above, have no idea what is going on, nor how serious the situation is.

castlewp's picture
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Re: Stimulus bill causes hope to fade

Cedar, I disagree.  First gold prices are and have been manipulated for a very long time.  Second, I truly believe that our leaders know exactly what's going on.  

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Re: Stimulus bill causes hope to fade
castlewp wrote:

Cedar, I disagree.  First gold prices are and have been manipulated for a very long time.  Second, I truly believe that our leaders know exactly what's going on.  

Thanks. I am not saying you are wrong because I am seeking the truth. I am interested in your thoughts.

I agree gold is manipulated. More specifically, US government is selling gold so that the dollar appears stronger than it is.

My logic is that the market is much bigger than the government. At some point when public consciousness shifts, the government's actions will be overwhelmed. This will result in an economic crash with a resulting spike in gold, regardless of what the government does. 

I overstated and/or mis-stated what I was trying to say about our leaders. I agree they understand that piling on debt will cause serious problems. I think they have decided that the political risk of inflation is better than deflation. Where we might disagree is that I do not think our leaders understand the profound implications of declining cheap energy that underlies this crisis. It's for this reason that I believe "this time it really is different". And therefore history provides little guidance unless you look at, for example, ancient Egypt or Easter Island.

 

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castlewp
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Re: Stimulus bill causes hope to fade

I agree, Cedar.  Good points.  You are right that the governments actions will be overwhelmed and that right now there may have been a gold breakout.

But I do strongly believe that our leaders do understand the profound implications of declining cheap energy.  In my opinion it's is all connected.  The current global meltdown is and always has been about energy.  

Read this article from 2004 by Michael Ruppert.  He has connected the dots as well as anyone.  Besides Chris of course.  TPTB have been preparing for a long time.  Also, if you look at a map to see where our military is set up around the world, you would see an eerie corrilation to where the oil is.

http://www.fromthewilderness.com/free/ww3/062104_berlin_peak.html

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Re: Stimulus bill causes hope to fade

I question whether the powers that be really do understand what is happening. They are conditioned to believe in economic growth. They do not understand that all the operations of civilization entail using up limited natural capital. They do not know of the Dependence on Nature Law. Cheap oil is only one of the components of the natural capital that is being used up. This natural capital is becoming scarce. Consequently, economic contraction is becoming the new paradigm, regardless of the attempts to foster business as usual. There will be chaos in the transition. We are seeing the tip of the iceberg now.

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Damnthematrix
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Re: Stimulus bill causes hope to fade

A come back?  Whatever it is you're smoking, I want some too......

Mike 

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Damnthematrix
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Re: Stimulus bill causes hope to fade

It was worked out thus:  158,000 tonnes of gold (from memory) @ $1000/oz.

Now just think about what all the 'stuff' we have built/made/accumulated over the last 100 years is worth.   one thousand trillion?  Ten?  One thousand?  I'd hate to hazard a guess really....

158,000 tonnes is ~ 5 billion ounces.

If the wealth of civilisation was, for argument's sake 1000 Trillion ($,1000,000,000,000,000), then gold would have to be valued at $200,000/oz

If I had to guess, I'd say Civilisation's wealth would have to be one
or two orders of magnitude higher....  which would make gold then be
also worth one or two orders more...  like $2 to 20 million/oz. 

Whatever the truth......  hang onto that gold Dude!

Mike 

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Re: Stimulus bill causes hope to fade

If banks and businesses get money directly why do they have to bother with us pesky middle people?

Don

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Re: Stimulus bill causes hope to fade

castlewp, thanks for excellent article.

I agree our leaders understand some of the problems associated with declining cheap energy. But its one thing to understand that an important commodity is becoming expensive. And its another thing altogether to understand that the physics of energy underlies everything in our way of life, not the least of which food and water. After many discussions with people I have concluded that without a sound education in physics or engineering, most people do not grasp the significance of energy. And it stands to reason. Culture is what we learn. And the culture of this generation has never known anything other than abundant energy.

Yes it is enlightening to look at a map. Many think of Iraq and Afghanistan as being in quite distinct locations. When in fact they encircle the last decent reserve of cheap oil on the planet.

 denisaf,

You are right that oil is only one of many resources in decline. But I still think of energy as being very different. For example, with abundant energy you can desalinate sea water and irrigate a desert. Or you can profitably strip mine very low grade mineral ores. Without energy, all you can do is grow food to feed yourself.

 

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Re: Stimulus bill causes hope to fade
Damnthematrix wrote:

A come back?  Whatever it is you're smoking, I want some too......

Mike 

I know, but my girlfriend is accusing me of a gloom and doomer and says that if I have no hope, then what's the use?  

Believe me, this is a 100% catastrophe IMO, but you have to have a little hope.

Davos's picture
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Re: Stimulus bill causes hope to fade

On gold: Unless Bernanke finds a way to become some alchemist who can make gold out of lead, I wouldn't worry all too much about price suppression of gold.

I'm certain they jack with the paper price now, but I myself think there are a few currencies set to topple.

Looking ahead I can safely assume that people will exit that currency when it srarts to tank. To digress: While, as absurd as it seems, when they exit from the falling currency they likely will put it in what they consider to be a safer currency. I say absurd becuase I can only imagine what the masses of that country might consider a safe currency to be --- the U.S. dollar if the U.S. dollar isn't the first to go?

That said I'm sure a lot of folks will make a rush for gold, physical gold. Even if it is 5% or 10% of them, my hunch, and it is just a hunch, is that this will put the cabosh on future jacking around of the paper gold price and we will see a much larger disparity between the paper and the physical price of gold. God forbid enough people take delivery of the metal by delivery....

Talk about a rush for the door. 

 

castlewp's picture
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Re: Stimulus bill causes hope to fade

Like Captain Hook said in Financial Sense "Gold is like a beach ball being held underwater"

I think we see the behemoth holding the beach ball down losing its grasp, but the behemoth knows that the beach ball will pop out.

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mainecooncat
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Re: Stimulus bill causes hope to fade

Castle said: "I know, but my girlfriend is accusing me of a gloom and doomer and says that if I have no hope, then what's the use?"

Ha! I feel for you. I'm in the same boat. Most of the time now I can't even talk about this stuff anymore. She'll ask me what I'm up to and my response will be, "You know..." And she'll say, "Okay. I'm gonna stay downstairs then." 

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capesurvivor
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Re: Stimulus bill causes hope to fade

What is it that all of the GFs and female spouses don't get it!

My wife keeps telling me to leave and start a pig farm if I want.

 

SG

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mainecooncat
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Re: Stimulus bill causes hope to fade

Cedar and Castle,

Apropos of some of the things you were addressing, it seems like there's been a lot of noise in the mainstream recently deriding the notion of investing heavily in gold (or at all for that matter) or that gold's a no brainer.

I unfortunately happened to catch that snake oil saleswoman Suze Orman on CNN for a bit and she was literally laughing aloud and making sarcastic faces when a person who had e-mailed the show with a question suggested putting a lot of money into gold. She followed that up with a full-throated endorsement of 401(k)s and stocks, practically begging the person to max out their contributions.

I think many in the mainstream see almost the mere thought of buying gold -- not even to mention taking physical possession of it -- as some kind of conspiracy theory in and of itself. I know some JP Morgan guys in Boston I went to school with and while they don't deride the thought they look at me somewhat perplexed when I plug PMs in general. It seems like there's a prevalent attitude out there that says hotshots make their money on exotic instruments not archaic gold and silver.

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mainecooncat
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Re: Stimulus bill causes hope to fade
capesurvivor wrote:

My wife keeps telling me to leave and start a pig farm if I want.

And your response?

castlewp's picture
castlewp
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Re: Stimulus bill causes hope to fade

capesurvivor, that is priceless.  My GF wants me to start a garden, but not for food if you get my drift.  I will only answer questions from her for now on and still she ends up mad at ME???  Like I am doing all of this.  Glad I'm not the only one in this situation. 

I think for now on I will only talk about rainbows and gumdrops with her.  Oh and Jessica Simpsons wieght (seems to be a hot topic these days) LOL

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cannotaffordit
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RE: Our leaders DO, or DON't get it?

Who the heck are you guys referring to, when you say "Our Leaders?"

Surely not that bunch of idiots in D.C.  or at the helm of those "corporatrosities."

The folks who really "get it" are the ones who set it all up in the first place, and continue,

some way or the other, to benefit from our stupid "followship."  Nothings gonna change

'till all that changes, and I can't see for the life of me how that's ever gonna change. 

Can you? 

 

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Re: Stimulus bill causes hope to fade
capesurvivor wrote:

What is it that all of the GFs and female spouses don't get it!

My wife keeps telling me to leave and start a pig farm if I want.

 

SG

SG... Now you know you opened a can of worms with that statement....Smile  I know you don't speak of ALL females.... Ask Dogs_In_A_Pile  who got it long before he did.

Cat

 

castlewp's picture
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RE: Our leaders DO, or DON't get it?

dbajba

You are absolutely correct about that!!

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capesurvivor
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Re: Stimulus bill causes hope to fade

Oink.

 

SG

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Re: Stimulus bill causes hope to fade

I've got to second Cat's statement... can'o worms, guys!

I get the same treatment you discuss from my husband.  Well, he hasn't asked me to start a pig farm yet.... 

But he sure doesn't want to hear about any of this, either.  He's happy living in the moment, and doesn't really want to know something that may bring his world down.  I can almost appreciate that view, except I believe too strongly in personal responsibility! 

So yeah, we women on the site get all the eye rolls and "you're wearing a tin-hat" looks that you do!

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capesurvivor
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Re: Stimulus bill causes hope to fade

I couldn't resist.

No sexist comment meant. The truth is, this has become a red-letter issue after decades of marriage. I started getting interested in resources back in the 70's, read "The Long Emergency ", Orlov, Simmons, etc., etc., the last few years and now I start to get distressed with various energy misuse around the house. Planning for triple E nastiness...very difficult.

I don't want to start a diatribe post against my wife here but, my guess is, if your significant other thinks you're nuts and a doomer, you have a very difficult time.It goes beyond denial, it is living in a different reality.

 

SG

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Re: Stimulus bill causes hope to fade

SG,

You do bring up an excellent point.  I trade the stock market, it is a lot of hard work.  Dogs is my support team, we have been married almost 25 years.  He did finally get on board with CC concepts, I think we all go through a bit of a denial phase, I know I did.  Dogs has been to seven years of continual stock classes with me.  While I do the trading, he understands all of it.  Since the stock market is a man's world and most of the others in class are men... Dogs jokingly shares me with 15 other men who I call, "my husbands."   I literally have them numbered 1-15... As I said as a joke, but it is nice to have "spousal' support.

And though we aren't living  with you, you will always have a support team on this site!

Cat

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capesurvivor
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Re: Stimulus bill causes hope to fade

Thanks, Cat.

I am attending the Rowe conference where my wife said that I'm welcome to meet a female doomer and leave to start a farm in the boonies somewhere.

She is half-kidding.

SG

 

 

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Re: Stimulus bill causes hope to fade
mainecooncat wrote:

It seems like there's a prevalent attitude out there that says hotshots make their money on exotic instruments not archaic gold and silver.

I tend to think that is a LARGE part of the problem. All of the current movers, shakers and leaders (used loosely) that are at the helm now have never seen hard times that require investing in gold, silver, seeds etc. The worst thing any of them have seen is maybe the 70's recession, the dot com meltdown or their Blackberry going down. A depression is only something they vaguely remember reading about in school.

When I first learned about this site and watched the CC I can honestly say that very little about it suprised me. There were plenty of facts I was not specifically aware of but I keep my ear to the ground so I did not need to be convinced by the wisdom of CM.

After watching the CC I came to the conclusion that this economic "crisis" will, in the long run, be a good thing for our country. It might be a long and nasty road getting there and I don't feel that I'm adequately prepared for it but I've done the best I can. My wife and I are both employed in areas that continue to show increased demand and growth, we've reduced our 401k contributions to minimum matching levels, started buying gold & silver, hold only enough cash to pay off "fixed debts" and are selling off anything we can't use to improve our lives and trade or make money with. Luckily we don't equate wealth with quality of life. 

This situation is damn shame. It ought to be interesting watching it unfold.

Bill

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Re: Stimulus bill causes hope to fade

I'll post this on the Feb 1 Daily Digest, but there is a ton of info in here, a lot about gold, TIPs and us being in a depression.

http://www.netcastdaily.com/broadcast/fsn2009-0131-2.asx

Take care 

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Re: Stimulus bill causes hope to fade

SG,

I feel your pain.  I think my spousal unit is more in denial...maybe.  I tend to have an obsessive nature and she attributes this to another obsession. She asks questions like, "How much food do you think we need?"  with a tone that really means, "Are you buying MORE food?"

Fortunately, I am the bread winner and her needs are taken care of.  Therefore, I am able to prepare as I see appropriate.  However, it would be nice to be in this "together".

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Re: Stimulus bill causes hope to fade

A bit more on topic here . . .

As far as I can tell from the press noise, the stimulus package only stimulates what got us into this mess in the first place.  I'll name just a few.

Much of the blame here can be placed at the feet of the bankers.  Congress gives them pretty much what they want.  What they wanted was to get everyone hopelessly in debt.  They also wanted immunity from any sort of regulation or criminal statute.  What we have to show for it is another flood of public debt to cover their potential capital losses.  Someone will have to redeem that debt plus the interest.  Guess who?

In a related story, Obama places himself and us at the mercy of the Fed.  "I will not second guess the Fed".  The Fed, as it's shown time and again has no mercy.  No mercy for us, that is the class of people who depend on a place to sell our labor.  It's basically the same story for the investment houses that made all the bad decisions.  They get a bailout, we get the discipline of the market.  This isn't socialism for the rich.  It's fascism for the rest of us.

Another problem is the massive investments in infrastructure that has a very limited useful life in light of the pending world decline in hydrocarbon production.  It's time to plan for the post oil environment and what are large portions of the stimulus directed toward?  Roads, highway bridges, more cars, more consumption, more building of things that conform to the Happy Motoring paradigm.

Then there's the pittance thrown toward renewable energy, purported to free us from our dependence on foreign oil.  This is ridiculous on its face.  If we're to free ourselves from foreign oil, why are we investing in infrastructure that is critically dependent on hydrocarbon energy?  Are the so-called alternatives supposed to make up the difference?  Not likely.  If fossil hydrocarbon based infrastructure is to expand, how will the alternatives ever catch up?

When you're digging yourself into a hole, the first step to getting out of the mess is to put down the shovel.  I don't see that happening.  After putting down the shovel, the next step is to evaluate where you are and where you want to be.  That would be something like, 'I'm in this hole and I want to be out of this hole.'  There's a lot of empty talk about getting out of the hole, but I don't see anyone in charge who's putting down their shovels.  The next step would be to get a ladder and climb out of the hole.  There's been no mention of procuring ladders that I'm aware of.

The vast majority of the verbiage in the mainstream has been about bailing out the shovel makers, shovel sellers, shovel operators, shovel insurers, etc.  No mention of where we might find some ladders.  The federal government has once again shown that it serves mainly as a manager for the capitalist class.  It's interested in solutions that will serve the most powerful property owning entities.  These are entrenched interests that will stand to benefit from throwing trillions of tax dollars toward protecting their properties.  For all of Obama's promise and promises, I have to admit that he's just more of the same.  The capitalist class gives a little to keep a lot.  Put Obama in charge to make it look like the government pursues some program of economic equality.  That's the change from GeeDub.

The real crime here is that Obama can at best put a happy face on the fact that the note has come due and we have nothing to pay it with.  Our landscape is massively overbuilt with an infrastructure that has no future and yet we're expected to cough up still more claims against our future prosperity to pay for expanding it.  Not long ago Mike Ruppert reported on a conference held in the Netherlands where one speaker remarked that there may be no profit in trying to mitigate Peak Oil.  Think about it.  That means that from the perspective of capital, there is no point in investing heavily in turning the experiment of civilization around toward a sustainable path.  Moral imperative be damned.  Why bother if you can't make a buck off it?  Has governent or capital done anything of substance in the last 30 years that would convince you that they believe it's time to try something else?  They've known about the pending collapse in hydrocarbon energy since the 1970's and yet they've done next to nothing to improve the situation.  Arguably, they've done a great deal to make it exponentially worse!  This stimulus bill is no exception.

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Re: Stimulus bill causes hope to fade

I find it very comforting to know that some of you are finding it hard to find people to talk to about these issues.

My friends and family know that I have studied these issues in great depth, and they know that I am reasonably intelligent, and they know that I care about their future. Yet no one really wants to discuss the issue, let alone face it.

Its quite fascinating and probably indicative of society at large. When TSHTF there are going to be lot of surprised and angry people.

As for me, I feel trapped. I know I need to sell my house and buy some agricultural land in a small community. And my wife agrees but she wants to wait 3 years for my son to finish high school. I don't think we have 3 years. And I think my son would benefit more from helping us set up a small farm than the pain of switching schools. Still can't get my wife to watch the CC... groan

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scrib
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Re: Stimulus bill causes hope to fade

DAvos, Is "re-denomination" your euphemism for inflation?

Regards,

Scrib

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Re: Stimulus bill causes hope to fade

DurangoKId,

Maybe the powers that be are a little like our spouses and friends that are not receptive to our thoughts on the future.  They are so comfortable with the present and the profits and power afforded them that they refuse to steer the ship in another direction.

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cat233
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Re: Stimulus bill causes hope to fade
DurangoKid wrote:

When you're digging yourself into a hole, the first step to getting out of the mess is to put down the shovel.  I don't see that happening.  After putting down the shovel, the next step is to evaluate where you are and where you want to be.  That would be something like, 'I'm in this hole and I want to be out of this hole.'  There's a lot of empty talk about getting out of the hole, but I don't see anyone in charge who's putting down their shovels.  The next step would be to get a ladder and climb out of the hole.  There's been no mention of procuring ladders that I'm aware of.

DurangoKid,

How do we get the ladder that we need?

Cat 

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djhester1940
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Re: Stimulus bill causes hope to fade

We are preparing to elect a new mayor and city council in May here in San Antonio. All three of the major candidates for mayor are expressing their intentions to emphasize growth as a way to keep the San Antonio economy afloat. They are all supported by various developers and big businessmen, touting these supporters as reasons for our voting for them. It's absolutely nauseating.

Where is the option to vote NO for mayor. That's what I'm going to be looking for.

Don

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KathyP
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Re: Stimulus bill causes hope to fade

I am a newcomer, so my comments may seem naive to many of you, but I'd like to share some thoughts.

 First, relative to getting "significant others" on board, the availablility of the Crash Course DVD helped immensely.  My spouse and I are watching it together, and I'm sensing that he's finally beginning to share the concern that I have had for the past several years.  I'm hoping that from the concern, we may begin to engage in a new level of cooperative planning for the future.

 I share Chris's growing sense of pessimism about the "stimulus" bill.  I wish that Obama had provided some triage-like structure to Congress' thinking - something to the effect of first, strengthening and even expanding the safety nets for people in economic distress; second, repairing essential infrastructure; and third, projects that would lead to a sustainable future for the US.  I don't see any structure at all except for random bits and pieces of "pork" in the current version of the bill.

My third observation is that I think I'm beginning to understand Washington's obsession with creating more spending (and, of course, debt) by consumers.  If the US consumer doesn't keep China's economic engine going, China may decide to get rid of all the the US debt it carries, causing a terminal cliff diving drop of the value of the US dollar.

Thanks for letting me chime in.

 

Kathy

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Davos
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Re: Stimulus bill causes hope to fade

Hello Scrib:

Spelling is NOT my strong point, my apologies, you'd think as much as I read, I'd be a good speller. The spell checker changed it to a hyphenated word, turns out it isn't.

To answer your question: Yes, I was being euphemistic, substituting hyperinflation, not just inflation, with redemomination.

I was referring to where countries have had to redenominate or basically destroy the old and print the new. Of course they do this with every Fiat currency after the currency devalues and results in hyperinflation - usually the result of idiots like Greenspan and Bernanke printing money with insanely low interest rates.

Mexico it was done in 1930+/- and 1982, Argentina 2001, I might be off on the years, going from memory, a lot of this stuff I didn't keep notes on when I read about it before. But, yes I was referring to where they say: Okay, we owe 70 trillion, old dollars. Now every 1,000 old dollars buys one new dollar, so now our total U.S. debt is 70 billion dollars.

Of course our wages go down, but they divide out any existing debt and everyone undergoes somewhat of a Jubilee.

Sorry for being vague, my wife lives in the past and I always look to the horizon.

Take care. 

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Re: Stimulus bill causes hope to fade

Last night my wife and I read this thread.

I told her I was glad that we are on the same page now and I remember the hell we went through when we weren't on the same page.

I got one of those "subtle" sounding two word corrections, "Pretty much," that after 18 years of marriage I know same book, different chapters, page 10 vs. page 449.

The page evoked a lot of laughs.

She used to get on me, as CastleLp said, like I was responsible for creating this economic mess all by myeself.

The garden and pig farm comments evoked laughs, laughs like, "Yeah those were better ideas then what I came up with to get him the hell out of here or off the doom and gloom topics."

If it is of any consequence, had I have stuck to the why's of what she was seeing on the news and in the market instead of the (very blunt, I'm from N.Y.) what will happen when (i.e. tear gas and food shortages) I would have been better off. Of course, back then this wasn't even officially a recession. Now Nightly News with Brian Williams (the only TV we watch or get) makes me look like Mr. Happy.

Hang in there, I think we will all be on the same page soon, then she can tell me that this was her idea to get all prepared and that I should have gotten more TP and rice.Foot in mouth 

 

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Re: Stimulus bill causes hope to fade

Pertaining to redenomination...

Davos wrote:

Okay, we owe 70 trillion, old dollars. Now every 1,000 old dollars
buys one new dollar, so now our total U.S. debt is 70 billion dollars.

Of course our wages go down, but they divide out any existing debt and everyone undergoes somewhat of a Jubilee.

Hi Davos, I am now a bit confused, if the cost of our present and future obligations were all re-scaled (redenominated) by a factor of 1000, are we not  still at the same place?  For example - say I owe $100,000 (old dollars) and I save  would take me 20 years of work to pay this debt off at 5% interest and ~$650 per month. 

Now: One month after I take on this debt everything is redenominated, I will still owe ~$100 (new dollars) and it should still take me 20 years of work paying at $0.65/month.  My 'work load' stays the same (only the numerical value changes) but it doesn't 'feel' any different (i.e. no jubilee for me).

If, however, inflation jumps to ~10% year - and my salary roughly keeps up - then after 7 years my earnings are ~twice what they were when I took on the debt so it is easier to pay the same $650 per month than it was at the beginning.  If I chose, I could increase my monthly payment and pay off the debt earlier.  In this scenario -  inflation erodes the original debt and the creditor is unhappy since they lost the bet on what the future inflation rate would be.  Relative to a redenomination solution, I (the debtor) am better off under this scenario.

The 'jubilee' solution would, however, seem to be the 'best' for me - but then it is really unclear what is meant by a jubilee (and if that word means the same to everyone).

The Daily Kos article on "Odious debt, Jubilee, and the cost of ignoring history"  had a very good take on this subject - but still lacked any substantive examples of how it would be applied in modern times.   More importantly (for this discussion) is that it failed to address 'who' is the agent that can invoke/impose a Jubilee.  With respect to the debt owed First world nations by Third world nations - it makes sense the First World nations are the agents that can 'forgive' the debt (if the debtor nation simply default on the debt (stop paying) it hardly seems like it would qualify as a  'jubilee' since it will likely be followed by some sort of punishing actions (blockade, financial shunning, military action, take your pick..)   

Perhaps no substantive example can be provided (and everyone's understanding of a Jubilee will vary significantly) because it has not been applied in modern times.   I believe that the closest example to the concept of Jubilee in modern times would be application of the Bankruptcy Laws (but the debtor must initiate this action, not the creditor, and it still entails a form of punishment by virtue of a period of restrictions on the level of participation in the economy that will be permitted over a period of 7 years).

(This comment was going to be short and sweet but it got a little out of hand...)

 

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capesurvivor
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Re: Stimulus bill causes hope to fade

Hi Davos,

 

Long time no write to you! Hope you are well.Enjoy your posts.

I know folks think this is OT but if you are married/LT relationship and at 24/7 disagreement with triple E, things are not pretty. I'm not going to start a thread on "how to deal with a clueless spouse" but I hope just bringing this up here has been helpful.

For the record, my spouse is very competent at what she does, says it is "refreshing" when we go into 20 degree weather, and is absolutely unconcerned about local or national issues beyond voting liberal Democrat (if that is appropriate concern, LOL.) Also, due to her constitution and sheer will, she would be the last man standing  in a disaster situation. If the time comes and the oil truck doesn't pull up and the big van doesn't restock the Stop and Shop shelves, she will patiently freeze to death or slowly starve waiting for them, long after I have croaked, screaming, "I knew this was coming."

Tomorrow I am surreptitiously, never a good thing, buying my first gold Eagle at the local coin store. I have had a hard time doing this but will force myself to liquidate some things to buy one periodically, though the buy/sell spread convinces one that TSHTF really has to happen to make it worthwhile. I will also acquire and sneak other stufff in to the basement, though a bunch of freeze-dried food will be hard to hide and spark considerable difficulty. At least my gen X son, who asked my mother if I should be committed last month when I told him I was thinking of getting freeze dried food, listened to me yesterday when I showed him the article about hedge fund managers stocking up on gold, guns, and food (New york Magazine article you can google).

 

My last and somewhat whimsical comment is that we need to set up a website, tripleespouseswap.com, to help couples re-pair up with doomers or clueless.

 

GLTA.

 

SG

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Re: Stimulus bill causes hope to fade

Davos, you made me laugh!  My husband doens't want to hear any of this doom and gloom stuff, and I get the occassional "you're out there" looks and responses.  But when big economic new makes the MSM that we all have known was coming for months, and which I had  mentioned to him, I hear the "WE've known about this for months!":)  

Ok, I'll see if I can get him to watch the CC to get him more on the same page.  He actually said he would a week or so ago.  It's translating that casual promise into reality that's my challenge now!

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CB
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Re: Stimulus bill causes hope to fade

 An uninformed opinion: 

I am not sure why it would be assumed that any political solution (i.e. the stimulus package, TARP, etc.) to the crisis would be designed to result in fundamental change of the type advocated here. A revolutionary change can be dictated by events, but will not be legislated - it is beyond the power of politicians and the political class to concieve and implement such a change. It took Andrew Jackson 8 years and dogged determination to "break the bank" under rather different circumstances than exist today. Today the financial system is international in scope and consequence, and implementation of a radical change in the US system would require consensus and cooperation between Europe, America, and Asia in order to deal with reserve currency and debt issues.

 Radical change could occur if a crisis (real or manufactured for the purpose) provided the opportunity for either a dictated/imposed solution or precipitated an uncontrolled collapse of the current arrangement.

 TPTB will try with all tools available to maintain control of the course of events and determine an outcome that maintains their position and power. Military power is one of these tools...

I see the Obama stimulus as an attempt to buy some time for attempts at an international solution to jell - to slow the slide toward a domestic depression that might lead to uncontrolled collapse.

I am not sure it can succeed - even with such a modest objective - as the cycle of layoffs > foreclosures and defaults > reduced consumption and imports > reduced tax receipts and bank failures > more layoffs seems set to continue, perhaps accelerate in the near term. Additionally, the weaked economies abroad will likely continue to throw spanners into the works making planning difficult or immpossible as unforseen consequences and crisis multiply and interact. Eastern Europe is in dire straits, not to mention "rich" countries like the UK.

 Radical changes, shifts in dominant powers etc., in the past have tended to be accompnaied by wars...

Interesting times.

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dickey45
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Re: Stimulus bill causes hope to fade

Same here - my husband (been married 1 year but my second marriage) isn't really into the doom and gloom.  He just doesn't want to think about it.  Fortunately he could make due is a very bad depression - me - not so much.  He was raised in a large family on a farm with cows, sheep, tractors, etc.  He can fix anything put in front of him, much like the rest of his family.  We live in the middle of a small city (town?).  Somehow, our next door neighbor is a doom and gloomer.  What are the odds?  We were talking about drilling a small well by hand in a  way that is legal - for our "garden" and in no way connected to the sewer or any other water line.  I was also eyeing his side lot.  If we took out our fence between the houses we could have a pretty good sized garden plot.  It would be workable with a self drilled well.

Unfortunately it seems we are all waiting to make big ideas into a reality.  I'm afraid we are all waiting until it is too late - too late to get equipment, materials, seeds, etc.

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Gadfly
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Re: Stimulus bill causes hope to fade

Here is some food for thought:

  Here in Canada, we had what was known as the "Sponsorship Scandal".  Where the Liberal Govt of the day was getting kick backs to money that was sent to Quebec for a program there.  My issue is that I believe that it is impossible to keep track of all the spending of this $850 billion porkfest and a certain amount of it will be siphoned by unintended receipients.   You folks are getting ripped off from all directions, my condolences.

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Damnthematrix
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Re: Stimulus bill causes hope to fade

I have to say I feel so blessed to have a wife who is 100% on side, understands the whole dilemma, and goes out to work to fund, not the pig farm, but the goat farm.....  though pigs are not out of the question at this stage!

Glenda attended a whole weekend Transition Town workshop which was presented by the instigators of the idea in Totnes, England.  She said it was good, but as she altready knew most of what was said, she didn't actually get that much out of it.....  that's how up to speed she is!

Interestingly, she thought they were all really depressed about the appalling state of the British economy...  and who could blame them I suppose?

Mike 

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