Saturday, December 19, 2009

There Is No Way Out Of This Box....



... that does not involve serious pain.
Go ahead folks - tell me how we can simply ignore this.

How we can pretend that the outstanding debt does not have to come back down to reasonable levels.

That these levels are "reasonable" - and that these rates of growth are "reasonable."

This is the "magic of compounding" writ large - and in a fashion that is going to inflict severe pain on our population - and the longer we wait to deal with it, the worse it will be.

Bernanke, who was at The Fed during Greenspan's time there, should have used his "education" - his claimed knowledge of economics - to make a lot of noise about this and demand that interest rates NOT be lowered to further encourage more debt-based consumption.

He did exactly the opposite.

As this decade wore on he should have sounded the alarm on our debt binge in all sectors, especially in the financial and consumer sectors where the growth in indebtedness has been the highest.

He did exactly the opposite.

Since this crisis began, in fact, every single government official who has spoken on the matter has emphasized even more lending, that is, cranking the amount of debt outstanding even higher, and The Federal Government has made good on their intent by, in the last year, spending more than $1.7 trillion dollars they did not have - that is, they borrowed even more.

Let's just take ONE example of this: Larry Summers, President Obama's "chief economic advisor", thought he could outrun the math at Harvard - where he gave approval to enter into complex derivative trades. They blew up in the school's face:

The swaps, which assumed that interest rates would rise, proved so toxic that the 373-year-old institution agreed to pay banks a total of almost $1 billion to terminate them. Most of the wrong-way bets were made in 2004, when Lawrence Summers, now President Barack Obama’s economic adviser, led the university. Cranes were recently removed from the construction site of a $1 billion science center that was to be the expansion’s centerpiece, a reminder of Summers’s ambition. The school suspended work on the building last week.
“For nonprofits, this is going to be written up as a case study of what not to do,” said Mark Williams, a finance professor at Boston University, who specializes in risk management and has studied Harvard’s finances. “Harvard throws itself out as a beacon of what to do in higher learning. Clearly, there have been major missteps.”
MISSTEPS? This is fifth-grade math! It is willful and intentional ignorance of fundamental and basic mathematics over the last 30 years that is the proximate cause of the mess we are in today - a mess that to this very day none of these jackasses will come out and talk about or have an honest debate over! FULL STORY

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