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Reply #52: The Tragedy of Busted Myths (Willie) [View All]

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54anickel Donating Member (1000+ posts) Send PM | Profile | Ignore Tue Sep-05-06 12:43 PM
Response to Reply #47
52. The Tragedy of Busted Myths (Willie)

Mythology is powerful. Just a few thousand years ago, men would go to war over strange beliefs about gods and goddesses, or make decisions of state, or act upon the fate of cities and hamlets, or enter into big trade agreements, or embark on grand voyages, or agree to marriage, all after consulting the oracles. They were the gurus of their day, replaced today by economists from many corners. Budget advisors, brokerage analysts, government spokesmen, and academic charlatans are the modern soothsayers, hardly ever correct, always revered, never understood. It seems whenever things are about to go badly, we face more economic myths in the process of being shattered, and are soon subjected to new ones. In their failed wake, we install more controlling (corrupting) mechanisms like the Plunge Protection Team after crises like the 1987 Black Monday and the 2000 Tech Telecom bust.

Once again the motive in promoting silly myths is the same, or at least the nucleus motive is the same. Domestically, that is to deceive the hapless ignorant hopeful public to continue to trust the leadership out of Washington DC and New York City, to continue to remain invested in the Wall Street game, to continue to participate in the consumption game, to avoid a panic and head for exits before the losses mount. On the foreign front, the motive is to encourage other nations to continue to send their hard earned savings into the Great Black Hole that is the USEconomy, to continue to supply and satisfy its desperate credit needs, to continue to pay for the entry fee for selling in its vast marketplace. The unspoken motive is to enable the aristocrats to continue to churn their machinery, to ply their trade of exploiting the great paper game, to further the squeeze on the middle class. In fact, the middle class is the greatest loser from inflations impact and heavy cost.


Inflation has its hidden costs. Writers, analysts, and pundits catch the easy victims, like savers who are robbed of the stored value from the drip drip drip of erosion. Like small-time participants who shun the opportunity to grow big. Rising wages, which at first seem like an advantage from a steadily inflating economic system, have turned on the masters of the inflationary machinery. Job outsourcing to Asia has ripped the manufacturing foundation of the USEconomy clean off its mooring and capstone, deprived it of legitimate wealth generation. Consequently, the participants of our mfg-less society have been deceived into believing that consumption within retail chains can stand in its place. It offers the benefit of cleaner air, less sweat, and more fun. Whats not to like? Lets go shopping, the great medication for the depressed. Instead of factories belching out smoke, noxious fumes, and rendering its workers musclebound but with damaged bodies from chemical intake, we have clean tidy shopping malls, nifty prevalent consumer retail chains, really cool electronic stores, and nice smelling furniture marts. Complimenting the networks of consumer havens are our homes, the veritable piggy banks. Who needs to save anymore, so pass? We have mutual funds and trading accounts. So we have suffered a deadly transition from making products in an industrial setting, wherein added value is gained from human labor with the aid of sophisticated machines. We now stand with one foot in the financial credit spin cycle replete with mortgages and car loans and vendor financed sales, not to mention the world of stocks and bonds, and the other foot in the service collage known to keep our devices and grounds in working order and looking spiffy.

Is this progress? No way! It is a tragedy in the making, fully denied. We crossed the Rubicon ten years ago, maybe as long ago as the 1971 date. At that time, we both abrogated the Bretton Woods gold standard for the USDollar, and embraced the USGovt social & military contract. The dual pact often called Guns & Butter committed to provide a vast social safety net (despite claims we are not socialist) and to wage war wherever we can. The Medicare plan is the latest socialist plan passed under the current Administration is certain to worsen the national bankruptcy condition, fully fingered by the St Louis Fed this summer. So since 2001 we have a grand scheme identified by Nationalism & Socialism, the former brandished proudly, the latter quietly engrained more deeply, all against a backdrop of growing fear, withering civil liberties, and wider war. My concept is that military actions represent the ultimate in fixed business investment, although with as much cleared paths for trade benefits on the positive side as global backlash on the destructive side. Whereas the multiplier effect reaps benefits in six to seven steps from trickle down in commerce, military and defense spending reaps benefits mainly to the contractors in an abrupt one to two steps as some degree of destruction results. On rare occasion, military contract engineering has civilian benefits, however far more being evident in NASA space research.

The most reckless and irresponsible phase change has been the overdue dependence within the USEconomy on the inflated equity of the entire housing sector. Indeed it sustains the system to a great degree. Americans have not saved actively since the mid-1990 decade, when Greenspan endorsed irrational exuberance by warning about it, but continuing to feed the destructive damaging condition. Several years later, Greenspan actively shocked the world by claiming that gains in home equity suddenly realized should be regarded as legitimate wealth. This is unprecedented in the modern era for a central banker. Worse still, in 2005 Greenspan added insult to injury by stating that People who took on too much debt were desirous of financial harm. He urged the housing bubble stampede, then stepped out of its path on political fallout. The central question should be Will the Greenspan legacy be directly linked to the upcoming crisis in housing and the USEconomy, which is of his own making? Given the utterly imbecilic nave confounded lack of comprehension of economic matters, blame is likely to go to the current USFed Chairman Bernanke by the present public and current leaders alike.

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  -STOCK MARKET WATCH, Tuesday 5 September ozymandius  Sep-05-06 05:23 AM   #0 
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  - We're saved , we're saved...  AnneD   Sep-05-06 03:02 PM   #64 
  - Indonesia may take over Exxon Mobil gas field in Jan  Ghost Dog   Sep-05-06 09:59 AM   #32 
     - Bit more....sounds like another great movie plot  54anickel   Sep-05-06 10:20 AM   #36 
  - Cairn leads fallers on London's FTSE  ozymandius   Sep-05-06 05:39 AM   #6 
  - FTSE ends below 3-1/2 month highs, retailers fall  Ghost Dog   Sep-05-06 12:31 PM   #51 
  - European bourses fall as profits booked  ozymandius   Sep-05-06 05:40 AM   #7 
  - HK shares shed 0.43 pct, China properties gain  Ghost Dog   Sep-05-06 09:57 AM   #31 
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  - Ford needs new business model: memo  ozymandius   Sep-05-06 05:45 AM   #9 
  - Good morning!  ozymandius   Sep-05-06 05:50 AM   #10 
  - Hiya, Ozy!  UpInArms   Sep-05-06 07:27 AM   #16 
  - Morning Marketeers...  AnneD   Sep-05-06 10:05 AM   #34 
     - Hiya AnneD.  Ghost Dog   Sep-05-06 10:25 AM   #37 
     - A well run home..  AnneD   Sep-05-06 10:46 AM   #41 
     - hi AnneD..yes I am a lurker but I enjoy this forum even with  DemInDistress   Sep-05-06 12:48 PM   #53 
        - Hello Lurker  AnneD   Sep-05-06 02:44 PM   #62 
           - thanks AnneD... you made my day. I wish I had the expertise  DemInDistress   Sep-05-06 03:47 PM   #66 
  - daily dollar watch  UpInArms   Sep-05-06 07:09 AM   #11 
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     - New law may not salvage pensions.........  AnneD   Sep-05-06 10:35 AM   #39 
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     - Talk about....  AnneD   Sep-05-06 02:49 PM   #63 
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     - Fed may have to hike, ECB should do so -OECD  54anickel   Sep-05-06 01:32 PM   #56 
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           - Euro Fetched 11-day High Against British Pound Tuesday  Ghost Dog   Sep-05-06 01:52 PM   #60 
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     - Toronto stocks climb on rising gold, Inco drops  Ghost Dog   Sep-05-06 09:45 AM   #29 
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  - Taking aim at big 'retention bonuses' for managers of bankrupt firms  54anickel   Sep-05-06 10:11 AM   #35 
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  - Peter Schiff vs. Art Laffer  54anickel   Sep-05-06 12:10 PM   #47 
  - The Tragedy of Busted Myths (Willie)  54anickel   Sep-05-06 12:43 PM   #52 
  - 1:09 numbers and yada  54anickel   Sep-05-06 12:12 PM   #48 
  - 2:10 - the magical hour  54anickel   Sep-05-06 01:13 PM   #55 
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