Some Useful Definitions to Understand Our Modern Progressive World

Failed Policies of the Past

Definition: Limited government, free markets, personal responsibility, liberty.

We Are All In This Together

Definition: For the love of God who do we tax back to the stone-age to get out of this!?

Social Darwinism

Definition: Essentially a darling concept of the progressive left of the first half of the 20th century (along with eugenics its even more vile cousin). It now is defined as “any attempt by conservatives and libertarians to rein in the unsustainable spending of out of control government.”

Fairness

Definition: A word used to motivate making sure outcomes do not match abilities or effort. Note, pre-1970 it meant roughly the opposite.

Social Justice

Definition: Redistribution based on group affiliation, regardless of anything the actual individuals in question did, or even their specific ancestors did, but instead based on the actions of other individuals in the past who just kind of looked vaguely like those in the relevant groups being discussed now, both victim and oppressor. Also applies to redistribution of any kind, whether based on actual unfairness, or on simply outcomes liberals do not like.

Alternative definition: Unspecific. Just a meaningless phrase that screams “I am liberal and this phrase sounds liberal and nice with just a hint of revolutionary sexiness.”

Antonym: Justice (which, even if it must be applied broadly to address real group-wide wrongs, is always and everywhere an individual notion)

The Phrase “Deny Access to…”

Used in a sentence: “It is unfair to deny access to healthcare to 26 year olds living off their parents.”

Definition: When a person isn’t given something they want for free, and they have not found a way to steal it yet, they have been “denied access” to it. In general it is the “1%” that “denies access.” See “1%” below.

Entitlement

Definition: Something provided by other men and women’s labor that some claim as their right, sometimes claiming to have paid for it during their lifetime, when all forms of modern mathematics and accounting reject that notion.

Rights

Used in a sentence: “I have a right to healthcare.”

Definition: A more extreme form of “entitlement” defined above. Note that modern usage throws out the long tradition of natural rights only of a negative nature, that is, the right not to have something done to you, for rights of a positive nature, that is, the right to certain goods and services, like health care, Apple products, and soy milk. Since, no matter how important these items are, these modern positive rights must still be produced and taken from others, essentially the word “rights” now often stands for a system of slavery and theft.

Main Street

Definition: A place liberals used to ridicule as Mayberry but now pretend to love.

Regular Americans

Definition: People who support me.

Special Interests

Definition: People who support you.

Fat Cat

Definition: Something a politicians calls someone with 3x more money than the median voter who supported the politician in question.

Alternative Definition: Someone the same exact politician hits up for cash.

The 1%

Definition: Those who pay more than 1/3 the total federal income tax and are never thanked for it. More generally, they are responsible for all evil in the world today (unless they work in Hollywood or hi-tech in which case they are “honorary 99%-ers” regardless of income, tax rate, and lifestyle).

Middle-Class

Definition: A focus-group tested better word than “the poor” for progressives to use to advance their statist schemes. Some speeches by progressives now consist of just saying it over and over again in different hypnotic musical tones.

Income Inequality

Definition: What occurs when a free and productive economy includes people with different abilities, work habits, and, of course, luck. Also, one of the main reasons anyone actually works at anything.

A Fair Tax System

Definition: One in which the “rich” (i.e., those making more than the speaker of these words, or those voting for the speaker) pay 50% more than they currently pay, and the speaker and his constituents get to pay 50% less than they currently pay. These figures remain unchanged despite any starting tax rates. If this change pushes the “rich” to over 100% or the non-rich to below 0% more the fairer.

Julia

Definition: The person living the ideal progressive life where no responsibility is taken, no risk is taken, the government perks are endless, you never see who pays for it, and the tyrannical hand of big-brother never makes it into the cartoon narrative.

Synonym: Sheep Antonym: Men

Citizens United

Definition: The ultimate evil Supreme Court decision (narrowly defeating Dred Scott) which expanded free speech, thus allowing those with money to, uh, speak freely.

SCOTUS

Definition: A delicious breakfast treat that goes well with English Breakfast tea and clotted crème. Conservatives prefer theirs in the traditional 9 pack, liberals enjoy up to 15.

Elizabeth Warren

Definition: An “Elizabeth Warren” is any brilliant scholar who both thinks we can fix the U.S. financial system simply by adding another giant bureaucracy with near unlimited power, and who can, by dancing vigorously in a circle, make it rain. Both equally as likely.

The IMF and/or the World Bank

Definition: Nobody knows. See SMERSH and CHAOS for similar definitions.

The European Financial Crisis

Definition: A complex multi-year dance whose sole purpose is to see how much money can be shaken out of the German middle-class.

Universal Health Care

Definition: The system formerly known as single payer.

Single payer Health Care

Definition: The system formerly known as socialized medicine.

Socialized Medicine

Definition: Something Democrats claim they don’t want, as they simply want Universal Health Care.

Nobel Peace Prize

Definition: A prize awarded to the left’s favorite person that year.

Antonym: Any prize having anything to do with actual Peace, or frankly accomplishment of any kind.

Stimulus

Definition: Taking money from current and future Americans to undertake projects that didn’t make sense before, don’t make sense now, will net cost jobs as the stimulus must be paid for privately, but since the job losses will be hidden, and the direct hires put on the evening news, might let those in charge keep their cushy jobs a bit longer.

World War II

Definition: Mainly important as proof that Keynesian stimulus works (side note: also led to defeat of Nazis and Imperial Japan). Since it is the only such “proof” ever, and we all have nuclear weapons now, different options are being considered for future stimuli. Actually, since World War II ending did not crash the economy as Keynesians predicted at the time, frankly we’re rethinking the whole thing.

Cash for Clunkers

Definition: What we came up to replace World War II as stimulus. Many perfectly good cars destroyed, no Nazis defeated.

Quantitative Easing

Definition: The act of printing pieces of paper to purchase other pieces of paper and thinking it matters at all for anything. See “dogs chasing cars” for related examples.

Austerity

Definition: Spending much more than ever before but slightly less than you had once thought you might spend which itself was a completely insane amount to spend.

Synonym: Profligacy

Paul Ryan

Definition: A “Paul Ryan” is a Hollywood monster which kills and devours old people simply by showing them a preliminary reasonable plan to grow spending slower than we currently are, while keeping any obligations already made to the elderly.

Grand Bargain

Definition: An agreement to raise taxes now while tacitly agreeing to waive the corresponding spending cuts later. Usually done in at least a 10:1 ratio as waiving 10x the future cuts is a particularly effective amount of waiving.

Reform

Definition: To make something (e.g., government) bigger, more intrusive, less efficient, and more dictatorial.

Bipartisan

Definition: We found one old sap from the other party dying for one last shot at relevance who will add his name to our highly partisan effort.

Dodd-Frank

Definition: A verb, to “Dodd-Frank” something is to use the perpetrators of a major crime to fix things for next time. Like taking ex-computer hackers and putting them in charge of your security (this example is not perfect as this might actually work). Used in a sentence: “We really Dodd-Franked that financial reform.”

See also “Searching for the real killers.”

Right Wing Extremist

Definition: Someone objecting in any way to left wing extremism.

Conservative

Definition: Moron

Liberal

Definition: A word that when applied to yourself conveys an instant halo of goodness that does not have to be justified with actions, logic, or even the slightest examination of what the policies you support have wrought. Works particularly well for rich hypocrites (Wall Street) and rich morons (Hollywood).

Progressive

Definition: A rebranding of “liberal” post-Dukakis, going back to an older word, that means essentially the same thing, but contains the very positive word “progress” within it, and the always welcome “ive” ending.

Libertarian

Definition: A philosophy held by annoying bastards who happen to be right about nearly everything. Fortunately, due to the frustration that comes with being right about nearly everything, in a world wrong about those same things, there are only 19 of them, and we’re going to find the bastards soon.

The Party of No

Definition: Legislators who are rightly demonized by the press and progressives for being elected to bring down the size of government and then actually trying to do so. Sons of bitches.

Synonyms: Obstructionists, Do-nothing Congress

The Buck Stops There

Definition: Something Barack Obama says about George W. Bush.

Foreign Policy

Definition: A process where the USA makes amends to the rest of the world for being more successful than them, footing many of their bills, and shedding our blood to keep them safer and freer.

Due Process

Definition: Something progressives get misty over when Henry Fonda is being denied it on the silver screen and when in power they deliver at the end of an explosive drone after Judge David Axelrod pronounces the target guilty.

Climate

Definition: A non-linear chaotic system that is a near-perfect example of something that is very very difficult, even using modern methods, to explain or forecast. This in no way takes away from the possible reasonableness of man-made climate change described below. Though, one might note, we get frustrated by weathermen as they can’t forecast the climate today.

Global Warming

Definition: What we now call “climate change”. Global warming was phased out as it also leads to things being too cold, and sometimes being just right. Mama Bear has been replaced with a highly volatile mix of all three bears.

Climate Change

Definition: The fact that over time the climate, uh, changes.

Man-Made Climate Change

Definition: The entirely reasonable idea that seven billion industrialized humans may be affecting the climate.

Krypton Seven Seconds Before Kal-El Was Launched Into Space

Definition: The stage liberals are certain the Earth is at.

Jor-El

Definition: Both a character once played by Marlon Brando and coincidentally the fictional character Al Gore pictures himself as. Nobody listened to Jor-El and look what happened! A fascinating additional coincidence is that when Brando was alive, Marlon and Al alone actually omitted ¼ of the USA’s greenhouse gases.

Infinity

Definition: The amount progressives will spend to combat man-made climate change without any assessment of the costs and benefits of these actions.

The Green Agenda

Definition: The additional use of man-made climate change, even if it’s fully true and it makes economic sense to sacrifice to fight it, to have government and its anointed priests take over much more of our lives. Any questioning of it is absolute proof of evil. Children must be indoctrinated in it in grade school before reading or writing or arithmetic. They must then be sent to spy on and lecture their parents.

Resistance is futile.

Ronald Reagan Definition: Right wing extremist President who kicked people off welfare which progressives said would be a holocaust, radically broadened free trade which progressives say has since killed American manufacturing, and whose administration perpetuated the horrible banking deregulation progressives say brought on the financial crisis.

Bill Clinton

Definition: The guy who actually did those things right above (though Reagan did some other cool
things). Oddly today’s Democrats insist that it’s Republicans who’ve changed and gotten “way more extreme” since the 1990s.

Trickle Down Economics

Definition: A brilliant marketing phrase for denigrating the truth: that a freer economy helps everyone. Not to be confused with “trickle up poverty” a perfect definition of socialism.

Democracy

Definition: An excellent form of government where if you can cobble together 51% of the people, by promising them other people’s stuff, or scaring them that you’ll take away their stuff, you can rule as a dictator. It is decidedly not the form of government originally chosen by the United States of America, which is a constitutional republic with limited government. Thankfully we’ve mostly done away with that nonsense.

Socialism

Definition: A word that is a hate crime if used about an American politician who wants us to be more like Europe. Or, alternatively, a word used by many European politicians to define themselves.

SOURCE: ZeroHedge.com

Those running the big investment banks and trading floors today bear an uncanny resemblance to the generals on both sides of the conflict in WWI. There is an old military saying about the folly of fighting the “next” war by the methods of the last war. In modern times, the best illustration of the truth of that adage is what happened on the Western Front between 1914 and 1918.

When 1914 dawned, Europe had not seen a continental war for a century. Most of the generals and the vast majority of their political masters on both sides had not noticed that the years since the Battle of Waterloo in 1815 had seen what was and remains the greatest technological revolution in the history of the world. Both sides had seen the US Civil War of 1861-65, a war which proved beyond all shadow of a doubt that a frontal assault on an established defensive position was almost guaranteed to fail. Both sides completely ignored the lesson. The literal “cannon fodder” on both sides paid a gruesome price.

The result of this stubborn ignorance, as the history books so voluminously recount, was the antithesis of “bliss”. It was mass carnage. When an attack by 50,000 men proved impotent to the task, the numbers were raised to 100,000 and then 250,000. When an hour of preliminary shelling of the target proved insufficient, it was raised to an entire morning and then to a day and then to the best part of a week. The “big” battalions got bigger and Bigger and BIGGER. The trenches proliferated. The barbed wire proliferated. The casualties proliferated. The destruction proliferated.

The men on the firing line on both sides quickly realised the futility of what those who commanded them were attempting to do. But there was no escape for them. They died in their millions while the generals and the politicians clung tenaciously to the goal of trying to make the unworkable “work”. Any suggestion of a deviation from the frontal assault was fiercely resisted. On the few occasions when it was actually tried, such as the Cambrai offensive with its use of tanks and no preliminary bombardment, it was done over protest and the means supplied were intentionally insufficient to the task. The end came as it was always going to come, with exhaustion.

Four Years Of False Dawns

WWI lasted 51 months, from August 1914 until November 1918. If we go back 51 months from the present, we reach late March 2008 – six months before the Lehman crisis hit. From that day to this, has there been ANY more deviation from the “approved” method of extracting the world from its financial morass than was shown by the WWI commanders in extracting themselves from their military morass?

The answer is crystal clear. There has been NO such deviation. There has simply been more of the same. When half a $US TRILLION in annual deficits proved insufficient to the task, the number was raised to $US 1 TRILLION and then the best part of $US 2 TRILLION. When central bank interest rates equalling the lowest in history didn’t work, interest rates were eradicated altogether. When existing methods of bailing out insolvent banks proved insufficient to the task, new methods were invented in an ever increasing stream. When the results of the inevitable financial carnage became too big to ignore, the figures which reported it were adulterated or simply suppressed completely.

With every new year that has dawned since 2008, the powers that be everywhere have announced that THIS TIME, the recovery is “real”. In March 2012, French President Sarkozy was announcing that: “Today, the problem is solved!” Christine Lagarde over at the IMF proclaimed that: “Economic spring is in the air.” Not to be outdone, President Obama was telling his fellow Americans that: “The recovery is accelerating, America is coming back!” The same songbook was followed in 2009, 2010 and 2011.

It was followed in WWI too, long after the contrast with the REAL situation had gone far beyond the grotesque. Today, there is only ONE place left in the world which still clings to its long-fostered stubborn ignorance. That place is the financial markets. They STILL believe in the BIGGER batallions.

The One “Good” Thing About A Big War:

A “big” war becomes the almost exclusive centre of attention to all those engaged in it, whether on the front or keeping the “home fires burning”. It is impossible to pretend that it is not happening and equally impossible to cover up the devastation in lives and property which it causes. Many people don’t come home from BIG wars, leaving those left behind with agonising and very REAL losses. War causes destruction which is immediate and visible. It is not something that can be swept under the carpet.

Today, we are in the midst of a financial debacle which is more truly global than any world war. There are no lines of trenches, no shattered towns and cities, no casualty lists in the papers and no “we regret to inform you” telegrams being delivered. The carnage is real but it is invisible. No lives have been lost. All that has happened is that the living of life has become more difficult and the ability to rely on the fruits of past efforts for future comfort and “security” has been all but extinguished. The vast majority of the people are cannon fodder in this financial debacle. Like the real thing in the trenches of the Western Front, they have long since realised the futility of the efforts of their “generals”. They know that the “recession” is not over. They are starting to realise that it will never be over as long as the same methods which produced it are being used to get out from under it. But most see no escape, having become used to looking to those same “generals” to tell them what to do.

To an extent which goes far beyond even the politicians and the bankers, the “market makers” want to fight this new financial war with the methods of the old ones. In WWI, the generals held to the end that if your shelling made a big enough noise, the danger of an attack would go away. The “market makers” figure that if they stuff enough new freshly-printed money in their ears, they won’t have to hear the sound of the economy falling away from underneath them. “Less Talk – More Stimulus?” That is a message that the generals of WWI would have understood very well. It didn’t work then. It won’t work now.

http://www.zerohedge.com/news/bill-buckler-keynesian-religion-world-war-and-one-good-thing-about-it

­Earlier this week police conducted a dawn raid on the house and office of Ettore Gotti Tedeschi. Investigators say they were looking for evidence in a graft case against defense and aerospace firm Finmeccanica, which was formerly run by a close friend of Gotti Tedeschi.

Instead, as it turns out, police stumbled upon an entirely different find.

They discovered 47 binders containing private communication exposing the opaque inner workings of the secretive Holy See.  They included financial documents, details of money transfers and confidential internal reports – all prepared by Gotti Tedeschi to build a convincing expose of corruption in the Vatican.

A renowned economics professor and head of the Italian branch of the giant Bank of Santander Gotti Tedeschi took what turned out to be a poisoned chalice of a job in 2009, when he became the President of the Institute for Works of Religion, the formal name for the Bank of Vatican. His brief was formidable – to introduce transparency to a lucrative enterprise that had become a byword for money-laundering and corruption.

After a tumultuous three years marked by in-fighting and public scandals, Gotti Tedeschi was unanimously dismissed from his post by a board of Vatican officials in May.

“I have paid for my transparency” the indignant banker said to the media, as he stormed off even before his dismissal hearing was over.

The confidential minutes of the stormy meeting obtained by Reuters showed the banker accused of “progressively erratic personal behavior” and “exhibiting lack of prudence and accuracy in comments regarding the Institute”.

But there may have been other reasons.

Aware that his crusade against corruption was failing, Gotti Tedeschi probably began to leak important documents to the media.

The drip-drip of damaging revelations (alongside more personal ones presumably passed onto the media by the Pope’s own butler) has been dubbed ‘Vatileaks’, and has captivated Italy in recent months.

At the hearing, the board that dismissed the banker also indirectly accused Gotti Tedeschi of being behind some of the leaks, pointing to his “Failure to provide any formal explanation for the dissemination of documents last known to be in the president’s possession.”

While the leaks were a weapon with which to attack his enemies, Gotti Tedeschi was also preparing a last resort option if the battle was lost – a ‘suicide belt’ that would blow the lid off Vatican.

Several months ago, he reportedly told his friends that he began collecting an exhaustive dossier “in case something happened to him.”

It is this dossier that the police have now apparently discovered.

The Vatican is barely concealing its panic – and wants the folders handed back unopened.

“We have faith that the prosecutors and Italian judicial system will respect our sovereignty—recognized internationally—with regard to these documents,” said an official statement.

But there is little chance the Papacy will get its way this time.

Italian prosecutors have frequently been at loggerheads with the Vatican and have accused it of using its sovereignty as a shield against proper regulation.

If the documents do spark a legal firestorm, Ettore Gotti Tedeschi is sure to be a key witness in any trial. A former employee against his employers, and a conservative Catholic pitched against the Vatican itself.

Allegedly, Gotti Tedeschi keeps a list of personal enemies in the Vatican – people who he had felt would stop at nothing to prevent him from reforming the Institute for Works of Religion. His friends have told the media he is shaken and scared.

Police are now considering putting the whistle-blowing banker under armed protection.

SOURCE: RT.com

Even now, in the third year of the recovery without a recovery, there is still a good deal of mystery as to why and how US investors should be wary of Europe.  The intentional opacity of the global banking/financial system contributes to this effect, but all that is taking place in Spain and Italy will directly impact US asset prices at some point.  The biggest lesson of the Great Depression was supposed to be limiting the spread of “contagion” through bond market prices, yet the modern interbank wholesale money system of securitization and financialization has gone far beyond what they ever dreamed possible in the 1930’s.  The connections between Spanish insolvency and the fallacy of the US dollar safe haven have never been greater, and given the propensity of sovereign euro debt to act as a global catalyst, it pays to at least review why US stock investors should be extremely mindful of monetary flows in seemingly unrelated global pockets.

On one side of the Atlantic, there is the “bull” case for US stocks as a safe haven from the European turmoil, particularly since stocks are supposedly cheap compared to corporate earnings (more on this below).  On the European side, there remains faith in policymakers to finally coalesce around a workable and serious solution.  But that faith misses what might be the unmovable object in this financial equation, just as the irresistible force of contagion is unleashed, again.

The real worry about the Spanish banks, as it has always been, is not even solvency, per se, it is that 1930’s-style contagion of pricing.  With Greek debt, Eurozone banks were afforded the margin to at least unload or even sit tight and take their mark-to-market losses; it was never going to rise to a fatal amount.  But Spanish and Italian sovereign and bank debt remains embedded within Euro banks, particularly those in France.  These are bonds that are, from what I have seen and given how this unraveled with Greece, currently embedded within “bank books” – not “trading books” – which means free from mark-to-market losses.  OECD sovereign debt itself is still considered risk free, and thus not applicable in a mark-to-market structure.  That is, until a market “event” which forces banks to recognize and legitimize any impairments.  That is the fear of Spain, as a restructuring event akin to Greece would probably destroy several large institutions (how close were we on December 8, 2011?) under the weight of previously “undisclosed” losses that are currently tucked away in “bank books” everywhere.  It has been amazing over the past four years just how assets go from perfectly fine, valued at or near par, to serious other-than-temporary-impairments overnight.

The more likely it appears that Spain needs to restructure, the more likely the Eurozone banking system ends up taking these large embedded, but still unmarked, losses.  As far as Spanish banks, we know that they are overexposed to the sovereign, including being over-represented in the LTRO’s, so we need only go back in time to see what prices they were likely buying at.  We also have some idea as to the extent to which the Spanish banks are still holding local RMBS (and especially CMBS of land developers) unmarked in their bank books through institutions that have already been “outed” in failure.  Bankia’s EUR5bn capital shortfall quickly turned into EUR9bn and then EUR15bn on the way to EUR19bn.  Those bailout losses are unmarked assets that are getting “reviewed” by the national “receiver” – thus the company’s small posted profit for 2011 is completely reversed into a multi-billion euro loss on a mark-to-market, ex post facto basis.  Bankia is/was a conglomeration of 7 previous regional cajas, so it is not likely unique and therefore gives us some insight into the intentionally opaque world of Eurozone banking in 2012.  What we need to know now is the proximate cause of Bankia’s fall – a loss of retail deposits or no access to repo funding (because there was no unencumbered/quality collateral left to be pledged at acceptable terms).

What is driving fear here is not whether Europe can solve its debt problems, but how to do so without bankrupting large swaths of its own banking system.  Even if Spain had the leeway to restructure its debt, it would still not be enough since losses at Spanish (and other) banks would be catastrophic, and would be spread throughout the global system.  Thus the game has been played out at the ECB of trying to get sovereign bonds to float at “reasonable” levels (the SMP purchases, LTRO’s), while bailing out each country to avoid a restructure that triggers mark-to-market. That process has always been finite, and was even intended to be due to the overconfidence of policymakers in the efficacy of their own policies and interventions.  The question for them was how much growth they could “engineer” and how much bank capital breathing room would follow before that shelf-life expired.  As that over-confidence has faded into the reality of the structural economic overhang and very real re-recession (even in the core; see Holland), market gullibility has fallen in proportion.  Just in these past two weekends we have seen a Spanish bank “bailout” and the “right” Greek election result, but no massive relief rallies in both credit and equities.  If anything, credit markets are marginally worse, at best no better (see Swiss bond yields).

This is a complete change, ominously, from the 2011 pattern.  The market is very fickle right now with how it is reacting to the same old playbook.  What worked well in stoking investor gullibility last year, providing breathing room then, does not seem to possess the same type of market magic.  There have been no two-standard deviation up days in concurrence with each “positive” event.

As all this unfolds in Europe, the calls of US decoupling and the safe haven of US stocks grow louder.  Yet, it would be a huge mistake to forget that the “safe haven” of the US stock market has experienced at least an 18% decline in each of the past four years, largely as a result of the dollar overhang/dollar shortage.  Euro-based banks’ modus operandi has been “hub and spoke” for more than two decades, meaning that they have gathered local deposits in their domestic areas, swapped them for dollars (creating the dollar shortage/crowded trade) and investing those phantom eurodollars in US dollar-denominated assets (they were a major source of housing bubble credit, and the shortage of dollars due to the hub and spoke was why the Fed was forced into the dollar swap business in 2008, and again in 2011/12).  The dollar overhang has been problematic in the breakdown of the interbank wholesale money markets as institutions find themselves periodically unable to easily rollover that dollar shortage.  As that inability to find dollar financing rises systemically, banks are pushed into a forced short covering of the dollar swaps/shorts (the dollar rises not in a flight to safety, but a short covering rally), including the wholesale selling of dollar denominated assets.

In the Spring of 2012, however, the dollar rollover problem may be intersecting with local deposit funding means.  If retail deposits are fleeing from afflicted institutions, that “spoke” issue will put even greater pressure on the “hub”.  No one knows just how big the dollar shortage is, but even the IMF has estimated that it is likely greater than $2 trillion (with upper bound estimates of $6.5 trillion).  In a crowded trade, that is a hell of a lot of marginal selling pressure into what conventional wisdom says is a “safe haven”.

The optimistic, bull case always falls back on company earnings, but market earnings, in and of themselves, do not drive markets.  Earnings do drive individual stock prices, but I do think there is a fallacy of composition here (and I hate the fallacy of composition usage in economics).  Market prices are driven by the supply of money related to psychology.  For example, at the last bear market nadir, in April 1980, the PE on the S&P 500 was 6.79.  As late as 1973, the market PE was 18+.  Over the intervening seven years, earnings on the S&P 500 grew 135%.  Nominal prices over the same period fell 12% (including that pretty severe correction in 1974).  The rise in corporate earnings was no protection against conspiring economic forces; in this case inflation.  You can actually extend this analysis backward to 1971, the PE-apex for the decade, and even to 1961 and the cycle PE peak (22.5x).  Despite a very good economic run in the 1960′s, including corporate earnings, at best the market PE fell slightly throughout the decade (or at a more exaggerated pace, dependent on your start date and end date).

Close to the bottom of the 1937-38 re-depression, the market’s PE had risen to 20x.  Over the next four years of turmoil, largely unrelated to the global economy as it somewhat recovered (including the Keynesian uber dream of government spending for large scale war), the market PE fell to 7.69 in 1942, despite the fact that earnings rose 62%.

Earnings are secondary considerations to investors’ collective perceptions of getting paid for the risk of holding equities, and that risk perception is, historically speaking, largely unrelated to earnings fundamentals themselves (the converse is true for rising market PE’s where earnings largely do not keep pace – the dot-com bubble, for example, had little to do with corporate earnings growth).

Currently, despite the overall move of the market higher since 2009, markets are more concerned with factors independent of earnings, namely gaming monetary intervention episodes.  That non-fundamental driving factor is balanced by the potential psychological parameters that “council” avoiding US stocks, especially the four straight years of large systemic declines (this massive volatility is very much on par with inflation of the late 1970′s in terms of the psychology of investor avoidance of stocks).  Add in the demographic shift to usage of retirement assets (particularly as that shift is being forced by the lack of wage income) and we really do not need double-digit inflation to see a single-digit PE in US stocks, perhaps even a sustained low multiple.

The evolution of investor perceptions of financial risk is really just the continuation of the secular bear market process that began twelve years ago.  Everything that has happened in the financial sphere during this run is but a reminder that long-term risk prospects are not on the side of simply holding equities.

So the intersection of that long-term trend with the analysis of this bear market rally is the point at which all this monetary intervention reaches that inevitable shelf-life.  The near-term bear market rally succumbs to the longer-term bear market gravity at some point, and I think there are any number of candidates in this discussion alone to demonstrate such an inflection (especially, again, the seeming change of asset markets to accept these policy interventions at face value – that is the essence of what this bear market rally has been and it seems to be reversing before our eyes).  For the market to keep moving higher, to get to 1600 on the S&P 500, for example, will require, in my opinion, full removal of all economic (statistical estimates of unemployment below 7.5% on a sustainable trajectory lower) and financial uncertainty (stable funding regimes).  Or hyperinflation.

We “enjoyed” the past three decades of eurozone dollar creation (the London hub of the eurodollar market), now we (US dollar assets) are stuck with the millstone of euro problems.  Earnings growth or strength in US companies simply will not mitigate against this potential wholly unrelated selling pressure, particularly since strength of earnings has been little comfort in each of the past two years.  Add to that the fact that the very investors that would be buyers of stock fundamentals are exactly the ones that are exiting due to demographics and a plain lack of funds.

Outside of the financial sphere, the real economy is less and less a source of comfort, though mainstream economists will remain optimistic all the way to the end.  Just as they were convinced the recovery was finally at hand in early 2012 (for the third time in as many years), they will remain stalwart optimists adhering to the textbook principles of monetary “science”.  One of these days low interest rates will work since that is Chapter 1, Page 1 of the monetary handbook.  As the Beveridge Curve and Okun’s Law undergo significant revisions (http://www.zerohedge.com/news/guest-post-its-far-deeper-broken-okun), perhaps the monetary handbook will get a rewrite in the face of the epic failure of Extend and Pretend.  In the real world, however, the uncomfortable payroll report for May has been matched by an almost universal downward trend in the real economy from the US to Europe to China.  The latest JOLTS survey merely confirms the unexpected deterioration in growth prospects; right on schedule.

If we put all of this together, we are seeing a warning signal, a confluence of trends that portends an abnormal summer.  In the context of the post-crisis, volatile markets of the non-existent recovery, that is saying something.  In the context of financial risk, optimists are simply betting on reflation through monetary intervention overcoming the financial gravity of a continuously contagion-prone system that cannot seem to find sufficient quality collateral despite the trillions in fresh government borrowing globally.  The financial risks to asset prices in so many markets are tied directly to the utter chaos and mess of the intractable problem of euro bank symbiosis to their local governments because financial markets still largely operate under textbook economic and financial assumptions.  This is also true, to a large extent, of investor expectations of asset prices and financial risks.

The revaluation that is underway now is beyond the simple scope of corporate earnings valuations, going to the very core of the system itself.  Just like the equity pricing regime (and investor expectations for equity assets) needs to adjust to the twelve-year-old bear market reality, pricing within the global banking system as a whole needs to adjust to the reality that the artificial growth of the economic textbook is not replicable.  The economic truth of 2012 is that much of the science of economics, and the foundation that gives to finance and financial pricing, was a temporal anomaly befitting only those specific conditions of that bygone era.  In other words, the entire financial world needs to reset itself outside the paradigm of pre-2008.  The secular bear market in US equities is one strand of this changing landscape, perhaps the first stirring of the collapse of the activist central bank experiment.

In the end, the potential selling pressure of the dollar shortage is irresistible, no matter how “cheap” stock prices are to earnings, but none of it may matter in the grander scheme of a dramatic reset to the global system.  The inability of that global system to escape this critical state, to simply move beyond crisis and function “normally” again, demonstrates conclusively, in my opinion, the foundational transformation that is still taking place well beyond the stock bear.  Everything is a locked feedback loop of negative pressures in this age, no matter how much we want to see “value” where and how it used to exist.  Paradigm shifts are rarely orderly, but there are warning signs.

SOURCE: http://www.acmwealthadvisors.com/

Persuading those in power to limit their power via “consensus” doesn’t work. Both the legal system and the horse-trading politics of “consensus” have failed.

How do you get “consensus” in politics? You horse-trade. You give everybody something they want. You cut everyone into the deal. That passes for “consensus” in politics: divide the swag.

If you want to understand President Obama’s failure as a leader, ask (as my friend G.F.B. did) where did he learn politics? In Chicago. Big-city politics boils down to getting the ward bosses, ethnic-neighborhood leaders, Chamber of Commerce and public unions together and making them all happy with concessions, give-aways or some other slice of swag so they all agree to to support some minor policy tweak of the Status Quo.

Any constituency left out of the swag distribution squeals like a stuck pig and kills the “consensus.”

This “making sausage” consensus is passed off as “the only way to get anything passed,” but the truth is that it’s the politics of failure: nothing meaningful can possibly get done in the politics of “consensus” because 95% of any useful reform must be traded away to get everyone willingly on board.

What you end up with after all the horse-trading “consensus” is 2,319-page monstrosities of self-defeating complexity like the “Dodd-Frank Wall Street Reform and Consumer Protection Act” or the 2,074-page healthcare bill. I have addressed these simulacra “reforms” many times:
What If We’re Beyond Mere Policy Tweaks? (February 6, 2012)
America Is Just Going Through the Motions (November 19, 2010)

The theory is that tiny baby-steps of hopelessly complex (and thus hopelessly corrupt) “reform” that everyone has been bought off to accept will eventually restore equilibrium to a political and financial system heading for a cliff.

In this view, President Obama had to trade away this to Big Pharma and that to Big Banking and so on, in order “to get the bill passed.” This bribery-based “consensus building” is the politics of failure. Those engorging themselves at the trough of Federal swag and power are the very forces that need corraling, yet they are the same forces that must be persuaded with give-aways and concessions to agree to limit their own power and revenue stream.

Dodd-Frank and Obamacare are two examples of what you get with this sort of politics of failure: the underlying problems have not been addressed or solved, they’ve been made more intractable.

Those feeding at the trough of swag and power will never willingly agree to limit their share of the tax revenues and power. Big-city horse-trading works when a mayor needs to get everyone in power to agree to a new subway line; there are billions of dollars in “free” construction money to give away, so there’s plenty of swag to distribute to buy agreement.

Limiting power and shrinking budgets cannot be accomplished with big-city type “consensus.” Nobody “agrees” to their power and budget being slashed or their power base and revenue stream demolished. That sort of structural reform can only be accomplished by those in power losing to the will of the people: either fix what’s broken or we’ll vote the whole lot of you out next election.

This kind of national revulsion at the “consensus reforms” of the Status Quo does occur from time to time, and the political Status Quo is thrown out en masse.

American jurisprudence may also have a hand in the politics of failure. 25 out of the 43 presidents (Grover Cleveland served twice) have been lawyers, and so having a law degree (or self-educated, in the case of Andrew Jackson) does not in itself qualify or disqualify a candidate for the presidency.

But as “it depends on your definition of it” Bill Clinton proved, a law background colors one’s understanding of ethics and power. What is just and right has lost all meaning in a system based on “getting the best deal possible for your client” regardless of guilt or justice. “Justice” has devolved to persuading a jury or judge that your client is blameless or justified, and “guilt” is now a PR pantomime of rationalizations slicked down with a blatantly insincere and hurried apology to the injured parties.

Indeed, we can understand President Obama’s signing of the National Defense Authorization Act (NDAA) as the perfection of the current legalist mindset: claim authority over a wide range of action and limit any legal constraints on that range of action.
Indefinite Detention, Endless Worldwide War and the 2012 National Defense Authorization Act (www.aclu.org)
Welcome to the United States of Orwell, Part 1: Our One Last Chance to Preserve the Bill of Rights (March 26, 2012)

Obama’s legalist power-grab mindset is also clearly revealed in his Orwellian Executive Order National Defense Resources Preparedness.

Welcome to the United States of Orwell, Part 3: We had to Destroy Democracy in Order to Save It (March 28, 2012).

Once again we see the President’s clear legal intent: claim unconstrained authority over the entire infrastructure and populace of the U.S. so his future “freedom of action” is unlimited by legal constraints. Read the Executive Order yourself if you doubt this: National Defense Resources Preparedness.(www.whitehouse.gov)

The politics of horse-trading power-player “consensus” fits perfectly with a legalist mindset that places a premium on “getting the best deal possible” and claiming wide authority via Executive Order. Has the legal mindset poisoned politics, or has power politics poisoned our understanding of the law, ethics and justice?

Perhaps both law and politics have drunk from the poisoned chalice, and President Obama’s abysmal failure as a leader and his vast power-grabs via Executive Order are the result of gulping the poison twice: once as a lawyer, and again as a politician.

SOURCE: Of Two Minds

Police in these countries – as well as in Cyprus and Lebanon – were flooded with phonecalls by panicked residents, as the white, gleaming light danced high up in the atmosphere.

Theories abounded over what this could be – a failing missile test, a satellite breaking up in our atmosphere, or a visit from an alien spacecraft.

Scroll down for video:

Spirals in space: The strange sighting looked like a Catherine Wheel as it span over Jordan, Isreal and other countries last night

The grainy footage shows the beam spinning and spiraling – perhaps a missile breaking up in space

However, the mysterious light does appear to be earth-based technology, with the the spiral of light looking very similar to a Russian missile test which similarly scared people in Norway in 2009 with a light-show which seemed more Doctor Who than anything else.

The event began at around 8:45pm in the evening, and after a few hours of panic, the Defense Ministry in Moscow said a test rocket had been launched just six minutes before that time.

They called it a successful launch, although a leaked and then supressed video apparrently shows the missile beginning to fail.

If this is the case, then the spirals of light in the sky is fuel spewing out from the missile as it burns in a fierce cartwheel through the sky, creating the startling geocentric shapes.

The missile is thought to be 120 to 180 miles in the sky which, at the top end of the scale, is roughly half as high as the International Space Station, at 345miles.

This amazing, mysterious beam was spotted over Norway in December 2009: This was later confirmed as a Russian missile breaking up, with the light display made by the missile spinning as it flew into the atmosphere

After days of speculation, it was revealed the sight was a Russian Bulava missile spinning out of control

If it was a missile exploding at that height, it explains why the spectacle could be seen from such a wide swathe of countries.

Israeli Astronomical Association Chairman Dr. Yigal Pat-El said it was most likely a missile: ‘It most likely spun out of control and its remnants and the fuel was what people saw.

‘It reached a height of 200-300 kilometers and that’s why it was seen from so many locations.’

A witness said: ‘We saw a large trail of light traveling from a distant spot in the sky.

‘We could not see the source of the light. The trail was massive. It was an unusual sight. Moments later we saw swirling movement where the light was coming from.’

The Russian Defense Ministry statement said the country had successfully test-fired a Topol strategic intercontinental ballistic missile from Russia’s Astrakhan region, to a testing area in Kazakhstan – approximately 2,000 miles from Israel’s northern border.

In 2009, Norway’s northern town of Tromso were given a similar display. The Russian Defense Ministry admitted later this was a failed test of a Bulava intercontinental missile.

Antonio Lombatti said the false shrouds circulated in the Middle Ages, but most of them were later destroyed.

He said the Turin Shroud itself – showing an image of a bearded man and venerated for centuries as Christ’s burial cloth – appears to have originated in Turkey some 1,300 years after the Crucifixion.

The Turin Shroud was believed to have covered Jesus, but a leading Church historian says it is one of many produced over a thousand years after his death

Lombatti, of the Università Popolare in Parma, Italy, cited work by a 19th century French historian who had studied surviving medieval documents. ‘The Turin Shroud is only one of the many burial cloths which were circulating in the Christian world during the Middle Ages. There were at least 40,’ said Lombatti.

‘Most of them were destroyed during the French Revolution. Some had images, others had blood-like stains, and others were completely white.’

The Turin Shroud is a linen cloth, about 14ft by 4ft, bearing a front and back view of the image of a bearded, naked man who appears to have been stabbed or tortured. Ever since the detail on the cloth was revealed by negative photography in the late 19th century it has attracted thousands of pilgrims to the Cathedral of St John the Baptist in Turin.

In a research paper to be published this month in the scholarly journal Studi Medievali, Lombatti says the shroud was most likely given to French knight Geoffroy de Charny as a memento from a crusade to Smyrna, Turkey, in 1346. The de Charny family are the first recorded owners of the shroud.

The image has bewitched believers and sceptics alike since the negative image, right, was revealed in the late 19th century

Lombatti found that Geoffroy was unable to join a pilgrimage to Jerusalem after liberating Smyrna, so he was given the shroud as a symbol of his participation in the crusade to Turkey.

The Catholic Church has never officially commented on the shroud’s authenticity, but has made samples available to scientists for testing.

In 2009 a Vatican researcher said she had found the words ‘Jesus Nazarene’ on the cloth, while two years later Italian government researchers claimed the image of a man had been caused by a supernatural ‘flash of light’.

But carbon tests carried out in Oxford in 1988 firmly dated the material to 1260-1390.
Read more: http://www.dailymail.co.uk/news/article-2157217/The-Turin-Shroud-fake-Eminent-historian-claims-40-similar-cloths-originated-1-300-years-AFTER-crucifixion.html#ixzz1xWihqDPX

So the root problem is the system, human nature, blah blah blah. There are no “solutions” that can fix those defaults. Thus the “solution” is collapse.

Policies create incentives and disincentives. Some are intended, some fall into the category of unintended consequences. Regardless of their intention, policies that create windfalls (“easy money”) or open spigots of “free money” (or what is perceived as free money by the recipient) quickly gather the allegiance of everyone reaping the windfall or collecting the free money.

This allegiance is soon tempered into political steel by self-justification: humans excel at rationalizing their self-interest. Thus my share of the swag is soon “absolutely essential.”

Humans don’t need much incentive to pursue windfalls or free money–seeking windfalls in the here and now is our default setting. Taking the pulpit to denounce humanity’s innate greed, avarice and selfishness doesn’t change this, as seeking short-term windfalls has offered enormous selective advantages for hundreds of thousands of years.

That which is painful to those collecting free money will be avoided, and that which is easy will be pursued until it’s painful. Borrowing $1.5 trillion a year from toddlers and the unborn taxpayers of the future is easy and painless, as toddlers have no political power. So we will borrow from the powerless to fund our free money spigots until it becomes painful.

It won’t become painful to borrow from our grandkids for quite some time, and it will probably not become progressively painful, either, because we will suppress the pain with superlow interest rates and other trickery. The pain will more likely be of the sudden, unexpected, “this can’t be happening to me” heart-attack sort: the free-money machine will unexpectedly grind to a halt in some sort of easily predictable but always-in-the-future crisis.

“Solutions” that turn off the free money spigots are non-starters, not just from self-interest but from ideology. Any attempt to tighten the spigots steps on ideological toes, as each spigot is ideologically sacred to one political camp or another.

Liberals don’t want to hear about scamming of their sacred “we must help everyone in need” welfare programs, and conservatives don’t want to hear about cartel looting of their sacred “free enterprise” system.

And so we have gridlock, what I call profound political disunity. Everybody at each trough of free money fights tooth and nail to keep their spigot wide open, and so the “solution” is to borrow 10% of the nation’s output in “free money” every year until the free-money machine breaks down.

Each ideology worships their own version of cargo-cult economics: if we wave the dead chicken over the enchanted rocks while dancing the humba-humba, prosperity and abundance will magically return and we can “grow our way out of debt.”

We’re like a sprawling family bickering over the inheritance: we’ll keep arguing over who deserves what until the inheritance is gone. That will trigger one final outburst of finger-pointing, resentment and betrayal, and then we’ll go do something else to get by.

The “solution” is thus collapse. This model has been very effectively explored in The Upside of Down: Catastrophe, Creativity, and the Renewal of Civilization by Thomas Homer-Dixon. The basic idea is that when the carrying costs of the society exceed its output, the whole contraption collapses.

The political adjunct to this systemic implosion is that the productive people just stop supporting the Status Quo because it’s become too burdensome. The calculus of self-interest shifts from supporting the bloated, marginal-return Status Quo to abandoning it.

So the root problem is the system, human nature, blah blah blah. There are no “solutions” that can fix those defaults. The “solution” is collapse, as only collapse will force everyone to go do something more sustainable to get by.

Until then, arguing about “solutions” is a sport to be enjoyed sparingly.

SOURCE: Of Two Minds

This attitude of collectivism (and elitism at the highest levels) and the treatment of the food producing subsection of the populace as slaves to the machine predictably generated the desire for civil unrest and even rebellion. By the time the Red Army had entered Khitrovo, the region was already a tinderbox.  After they had taken everything of value and began to beat elderly men in public view as an example to the rest of the town, a war had ignited.

At the height of what was later called “The Tambov Rebellion”, over 50,000 – 70,000 Russian citizens had taken up arms against their oppressive government, including Red Army soldiers who left their posts to join the cause. Vastly outnumbered, and technologically outclassed in every way, the guerilla fighters managed to infiltrate multiple levels of Bolshevik society and government, and had struck debilitating hits against Russian infrastructure.  So great was the threat, that Lenin along with Red Army leadership ordered chemical warfare to be used in the forests where guerrillas were thought to be dug in, as well as summary executions of civilians, many of whom were simply in the wrong place at the wrong time.  Concentration camps were built, mostly to house women, children, and elderly people thought to be related to insurgents and to be used as bargaining chips.  Eventually, the rebellion diminished, but not before Lenin was forced to end the policy of Prodrazvyorstka along with many other directives that had angered the Russian public.

The Soviets later attempted to erase all memory of the event, destroying records and removing public figures who might recount what had happened.  However, the fight against collectivist control and state power continued through numerous movements until the break-up of the empire decades after.

Now, many historians and cynics of today would label the Tambov Rebellion an overall failure.  They did not succeed in removing Lenin and the Bolsheviks.  They did not defeat the Red Army.  They did not directly put an end to Prodrazvyorstka, though they did trigger a chain of dominos which forced Lenin’s hand.  There was no glowing victory as there was during the American Revolution centuries before.  The freedom fighters were mostly forgotten until the fall of the Berlin Wall and the release of documentation that had survived the purge.  However, what these men and women did accomplish was to set an example; to remind us of the ongoing and inevitable battle between oppressive establishments and the people they seek to dominate.

Even in the nightmare world of communist Russia, from the conquests of Lenin, to the terrors of Stalin, even in the face of organized and energized tyranny, people decided to fight rather than quietly live in servitude.  The lesson we are taught by the Tambov Rebels is that there is no such thing as unassailable empire, that free thinking people will ALWAYS exist, that the drive for independence is inborn and inherent, and that no oligarchy will stand unopposed for very long.

Another lesson we learn, is that defiance is a virtue unto itself.  It is its own means, and its own end.  Wherever people seek truth, and honor, no consequence is foreboding enough to stop them.  Defiance takes no notice of the threat of death.

Some may question the example of the rebellion described above and its relevance to our times.  “Surely”, they will say, “the days of concentration camps, martial law, food confiscation, and general war against the people by most governments are long gone.” We are living in more “civilized times”, where technology and reason prevail.  The gullibility of this world view is hard to ignore…

In fact, Americans today may very well bear witness to similar or far worse tragedies in the coming years if current presidential directives and congressional legislation are any indication. It has become obvious that the Patriot Acts which many in the public rolled over for (under some protest) were a mere warm up to policies like the following:

FISA: An overarching domestic surveillance bill which joins the cooperative efforts of corporations and government agencies.

 

http://www.wired.com/threatlevel/2008/07/senate-approv-1/

 

The John Warner National Defense Authorization Act: A Bush supported action which allows the president to unilaterally declare a “public or national emergency” for any reason he wishes without congressional consent and institute martial law policies aimed at suppression of the populace (the president is requires by the act to “inform” congress of his intentions after 14 days, but does not give congress the power of oversight).  Also solidifies the erasure of Posse Comitatus.

 

http://www.bordc.org/threats/hr5122.php

 

Presidential Directive 51: Signed in private by George W. Bush.  Allocates further power to the president to declare a national emergency for any reason he sees fit and to institute Continuity of Government Policies (martial law, among other things).  This directive was only partially released to the public, but the entire document remains classified, even to members of congress!

 

http://www.scribd.com/doc/7566901/PDD51

 

National Defense Authorization Act (NDAA 2012): Incorporates policies outlined in John McCain and Joseph Lieberman’s thoroughly rejected “Enemy Beligerents Act”.  Allows the president along with the Department of Homeland Security to label anyone, even an American citizen, and “enemy combatant” under the laws of war.  Opens the door to the complete dismantling of Habeas Corpus, giving military authorities the ability to arrest U.S. citizens without warrant, without due process, without trial by civilian jury, to be held indefinitely.  In other words, rendition and black-bagging of U.S. citizens regardless of civil liberties or the Constitution.

 

http://www.latimes.com/news/local/environment/la-me-gs-national-defense-authorization-ruling-20120518,0,2046039.story

 

Assassination Programs: Obama has not only claimed the right to assassinate American citizens, he has executed such orders.  This policy works as an extension of the NDAA, meaning, anyone can be labeled an enemy combatant without trial, and, that person can be detained, or killed, as such.  These actions have been opposed by civil liberties unions and politicians alike, but because they have so far only been used against U.S. citizens working with “Al Qaeda”, the general public remains on the fence or oblivious to the dangerous precedent.  The Constitution specifically outlines what is to be done with Americans who aid the enemy in times of war in the Treason Clause.  The Treason Clause allows NO assassination or detainment without trial.  In fact, it REQUIRES a trial by jury along with two witnesses testifying to the overt criminal act.  The Treason Clause has been utterly ignored by the Obama Administration thus far.

 

http://www.peoplesworld.org/kucinich-bill-aims-to-stop-assassinations-of-u-s-citizens/

 

National Defense Resources Preparedness Executive Order: Obama recently signed this executive order which allows the president and the DHS to commandeer or confiscate public and private resources (any resources) in the name of national security, and, even allows for what essentially amounts to forced labor of U.S. citizens in the name of the “national good”.  An almost exact replication of the powers claimed by Lenin and the Bolsheviks that triggered the Tambov uprising.

 

ttp://www.whitehouse.gov/the-press-office/2012/03/16/executive-order-national-defense-resources-preparedness

 

http://reason.com/archives/2012/04/07/is-serfdom-an-executive-order-away

 

Internment And Resettlement Operations: A secret Department of Defense document recently leaked to the public outlines extensive planning on the part of the government to use DHS and FEMA to “relocate” U.S. citizens and detainees to internment camps for processing.  Triggers for such a policy could include natural disasters, man-made disasters, and terrorist attacks, among many others.  The document specifically requires “special exceptions” to Posse Comitatus, allowing for military operation of the camps in question.

 

http://info.publicintelligence.net/USArmy-InternmentResettlement.pdf

The response to many of the disturbing provisions listed above has so far remained in the legal and political realm.  A considerable portion of those aware of the dangerous path our government has taken over the past decade alone is to approach the problem from the top down.  Unfortunately, they don’t seem to realize or understand the greater crisis at work.

As matters stand, there is very little recourse politically outside of full state nullification under the 10th Amendment.  At the pace these executive orders and draconian bills are being churned out and slapped with a stamp of approval, the American people would have to unseat the president, not to mention almost every sitting Senator, and every Congressman, replacing them with true Constitutional statesmen and revamping Washington D.C. in the span of a few years in order to prevent the inevitable totalitarian abuse of the legal powers that now exist.  This is not going to happen.  Given that almost every president and presidential candidate for the last few decades has supported identical policies as far as expanding government power, voting in one party or the other (at least at the national level) does not appear to make much difference anymore.

Legally, every avenue is being explored, but with little progress.  The recent block on the NDAA by 4th District Court Judge Katherine Forrest was a moment of hope amongst anti-NDAA proponents, but the end result was obvious to some of us in the Liberty Movement who know the history of legal action against such legislation.  So far, the Obama Administration has stated that her ruling is basically of no consequence to them, and that they will continue to implement the NDAA as they see fit.  Apparently, the Judicial Branch now only has a say in matters of government when it agrees with the position of the president or DHS.  This shows conclusively that the government intends to ignore court based decisions that are contrary to desired policy, and that while the legal fight should be pursued, we should not expect much in the results department.

So, where does this leave us? If we cannot redress our grievances through elections, or through the courts, what is there for a freedom loving American to do?  Though the thought causes some to shudder, it is not only logical but imperative that we look at the existing alternatives seriously.  Invariably, if a government was to widely enforce any or all of the policies listed above, the result would be citizen dissent, peaceful and militant.

When a social system becomes so corrupted that its only prerogative is its own survival and self perpetuation, even at the cost of the life and liberty of the people it was originally tasked to defend, the populace has no choice but to question whether that system should continue to exist any longer.  Conflict, is unavoidable.

As clear as this fact is to anyone with any sense, though, I find that many seem to treat the idea of physical action as astonishing, or shocking.  Some even laugh as if the concept is outdated and absurd.  Yet, they never seem to have an answer to the primary underlying question:  What else is there?  If working within the system only results in wasted effort and wasted time, what do the naysayers plan to do?  Curl up in a ball and die?  Or perhaps join the venomous establishment they could not subdue?

As discussed earlier, the Tambov Rebellion and examples like it impress upon the narrow-minded visions of failure.  To them, defiance, real defiance, leads only to death and disaster.  The key to their extraordinary mistake is that they assume that defiance is about the “assurance” of victory.  There are never any assurances.  There were no assurances of victory for the Founding Fathers, there were no assurances for the Tambov Rebels, and there are no assurances for us if we one day have to draw a line in the sand against the very system we were born into.

At bottom, the debate over solutions within the system versus solutions from without is irrelevant.  On our current course, there is no other choice for the average American but to say no, regardless of the law, or the threat of its violent enforcement.  Rebellion, in all its forms, is as natural as the cycles of the Earth. It reoccurs time and again, sometimes suppressed, but not for long.  The horrors of governments gone rogue are no secret.  We have so many examples in history to draw from it is hard to imagine any crime despots have NOT visited upon innocents.  Frankly, if control thirsty elites can refine tyranny down to a science by examining the mistakes of the past, there is nothing stopping us from refining defiance down to an art form as well.  Again, what other choice do we have, but to take heart in the knowledge that though there is no assurance of victory, there is also no assurance of defeat.

SOURCE: ZeroHedge.com

To Summarize: courtesy of Einhorn’s cycle of perpetual doom…

Goldman Sachs Daily Focus: Key dates for the Euro area in the coming weeks – expect to be disappointed

Continued stress in European markets. Turmoil persists in European financial markets. Spanish and Italian bond yields remain at elevated levels, the euro has weakened significantly against the dollar over recent weeks, and equity prices have fallen back to levels last seen at the end of last year. The macroeconomic background offers no respite: with the latest conjunctural indicators (notably the PMI surveys) pointing to a contraction in 2012 Q2, last week we revised down our forecasts for economic activity in the Euro area.

Policy action is needed. Yesterday, in line with our expectations, the ECB Governing Council chose to leave its policy rates on hold. While we see the ECB as ready to act as circumstances demand (with a particular focus on the ability of the Spanish government to raise funds), no further non-standard policy measures were announced. In line with previous pronouncements, ECB President Draghi emphasised that it was up to governments to act: the fiscal authorities need to address what are fundamentally fiscal problems.

The central bank lacks the instruments necessary to confront Europe’s substantial structural and fiscal challenges: we can expect little immediate respite from monetary sources in the shorter term, and any such help would, at best, manage the symptoms of the current crisis rather than treat the cause.

Attention therefore needs to focus on the governments, who hold the relevant policy responsibilities. In the past, governments have proved reluctant to take decisive action ahead of market pressure. We see little reason to expect this to change. That said, there are a number of key events in the coming weeks that are worthy of close attention as potential catalysts for government action.

• 13 June – German inter-party discussions. In order to ratify the fiscal compact, a super-majority is needed in the Bundestag. The opposition Social Democrats (SPD) is insisting on a parallel set of growth-oriented measures in order to provide their necessary support. These measures will take the form of the much discussed financing of infrastructure projects, as well as the standard prescriptions of structural reform. The details are to be fleshed out at a meeting between the SPD and the government parties on 13 June. This occasion will also offer an opportunity for discussion of broader mechanisms to address the Euro crisis, notably the German Council of Economics Advisers’ proposal for a debt redemption fund. This proposal has been embraced by the SPD in the past – even while Ms. Merkel expressed some scepticism. (For our take, see this note by Francesco Garzarelli and Sylvia Ardagna). Were we to see wider enthusiasm for such an approach from across the German political spectrum, this would be a significant move in the direction of explicit German recognition of some willingness to share the burden of the Euro area’s significant debt overhang, thereby making its ongoing financing less costly and problematic as liquidity and rollover risk are reduced.
• 17 June – Greek and French elections. With the 6 May elections having failed to produce a government, Greeks will go to the polls again on 17 June. As we have argued elsewhere (see Greek eclection scenarios here), it is likely that the new elections will also fail to produce a definitive result. We expect a further period of political uncertainty, as no party is likely to achieve a working parliamentary majority. Something more concrete may emerge from the French National Assembly elections that are held on the same day. The two-round electoral system creates uncertainty about the final result. It appears likely that the left will win an overall majority in the Assembly, but this may depend on a coalition potentially including the harder-left. In such circumstances, President Hollande may be under pressure to deliver on some of his more radical proposals that surfaced in the election. Were the Socialist Party to score well enough to reduce or eliminate such dependence on the harder-left, then he would be better placed to outline his own programme for addressing the Euro crisis, noting that the ongoing politicking ahead of the Assembly elections may have constrained his scope to show greater pragmatism thus far.
• June 28-29 – EU summit in Brussels. Notwithstanding the dates mentioned above, we can expect attention to focus on the next EU summit, due to be held in Brussels at the end of the month. The main item of business is the announcement of the proposals for a growth compact: we can expect a restatement of the structural reform agenda and concrete proposals for infrastructure projects and their financing. But with the markets in their current state, expectations are likely to be raised for more dramatic action. The ECB, Commission and many governments are pushing for a ‘banking union’, embodying recapitalisations financed directly by the EFSF and the creation of a pan-Euro area bank deposit guarantee. Greater fiscal integration and Eurobonds may also be discussed, even if less extensive forms of debt mutualisation (such as the redemption fund mentioned above) are likely to be in greater focus. But we doubt that the summit can deliver concretely on such proposals: the current Treaty framework is not flexible enough to permit such significant innovations to be introduced in a legally and institutional sound way at such short notice. We can hope for a clearer statement of where the Europe is headed, laying out the 10-year vision for the Euro area’s future that ECB President Draghi has demanded. But articulation of this vision is unlikely to satisfy market pressures in the short term. One can envisage a repeat of the experience throughout last year: a summit promises to deliver a new and credible set of measures and markets rally in anticipation, only to be disappointed after the fact.

Reasons for scepticism. A bold step forward to fiscal and financial integration is needed to contain the Euro crisis. But taking such bold steps is difficult. Aside from the practical difficulties of effecting change within the current Treaty framework, the underlying problem rests with the different perspectives of the key national governments.

Italy and Spain are facing mounting macroeconomic challenges and require help from the rest of the Euro area. Recapitalising the Spanish banking sector is the most immediate need. The resources to offer this support exist. But Germany – the ultimate paymaster – is unwilling to underwrite this support without obtaining some credible guarantee of future discipline and probity from the governments in trouble. And, even if Italy and Spain are now willing to offer such guarantees in the fiscal and banking domains (as, for example, the Spanish willingness to move in the direction of banking union implies), in the multilateral context of the Euro area, Germany would be ill-advised to agree to expand conditional support without obtaining equivalent guarantees from their biggest partner, France. Thus far, notwithstanding signing the fiscal compact, French political willingness to accept the loss of fiscal and political sovereignty associated with ensuring fiscal and financial discipline on the German model has been largely absent.

Suspended animation. Short of Germany simply caving in to pressure to provide unconditional financing for the Euro area periphery and/or France accepting the loss of sovereignty to German-inspired European fiscal institutions – neither likely scenarios in our view – we will have to await market pressure to force a new German-French agreement to underpin the Euro area. And while the French sovereign market is buoyed by liquidity injected via the ECB’s 3-year LTRO operations earlier in the year, such market pressure is contained (as recent developments in OAT yields demonstrate).

Therefore, we may have to wait some time for resolution of the Euro crisis. Meanwhile, Spain and Italy could enter a state of ‘suspended animation’, as they become increasingly reliant to direct and indirect official support. Spain is already embarking along this route. The ECB will again be drawn in to offer support. Such an outcome is not a solution for the periphery. On the contrary, it hinders the necessary strengthening of bank and sovereign balance sheets that is a precondition for recovery. And growth and employment will continue to suffer.

SOURCE: ZeroHedge.com