Denial Confronts Illiteracy: 69 Mass Delusions

[Tachyon Flare]

Denial Confronts Illiteracy: 69 Mass Delusions By
Jim Willie CB

http://www.321gold.com/editorials/wi...lie032003.html

[edjerider@]

A good read, this is delusion No. 23


23. federal deficits don't matter, since we can grow out of them

When our economy grew in the 1990 decade, our federal deficits grew from $4.5 trillion to $6 trillion. The Keynesian model dictates that during the prosperous years, government surpluses be drawn upon to pay down the debt. Instead, we increased it, vastly expanding our socialist system. When our economy falls into retreat during more challenging times such as recessions, our federal deficits usually escalate in dramatic fashion, as we are seeing now. Magnify those deficits when security and wartime concerns dominate. We have shown no discipline. Our deficits rise in good times, and rise faster in bad times. And worse, they threaten our Treasury debt, our longterm interest rates, and the viability of our dollar currency. Worse still, our Treasury debt is 45% owned by foreigners. Eventually our creditors will doubt our ability to repay at all. We advertise to young television viewers that their drug purchases support murder and other violent crimes against South American children. Let's project the same phenomenon to a national level. Our federal debts owned by foreign nations are now supporting Islamic Fundamentalist movements, which finance world terrorism like seen at the World Trade Center. No, we never have nor never will grow out of federal deficits, which contribute to the spread of world conflict.

[Caligula]

Fun to read now.
Love it......

7. democracy can be imposed in the Arab world
The Iraq region has not seen democracy in five thousand years. The Arab world has had a few episodes of democratic leadership, but the assassinations of Nasser and Sadat ended those examples in Egypt. Is Mubarak the leader of a democratic land, or is he held ransom by a strong and vocal Islamic community? Our plan to impose democracy steeps with arrogance, hegemony, and naïveté. The Arab culture is inconsistent with such a structure of government. A tribal culture that does not value education or advancement of women's rights offers no foundation for the active requirements of democratic representation and leadership. Most Arab democracies have resulted in brutal dictatorships. No, any attempt to promote a democratic leader would be quickly seen as installation of an American puppet for conducting our business and furthering our interests, inviting a quick broad backlash.

Ugh.....

61. Real Estate is a tangible asset that will never lose you money
Since the stock bust of 2000, real estate has seen a massive influx of investment. Following the Fed's numerous interest rate cuts, a mortgage finance bubble has developed. Fanny Mae and Freddy Mac, Government Sponsored Entities which support the mortgage finance industry, might be in trouble. However, a valid argument can be made that real estate property is not a hard asset, but rather a "hard asset impostor" whose value is primarily based upon available mortgage finance funding. The commercial niche has seen substantial value reductions amidst historically high vacancy. For now, housing has served well as a safe haven for capital. But cracks are showing, as coastal cities (plus Denver) have seen large losses in the high end. More importantly, across almost every single major city, supply of residential property is sitting on the market unsold. What is the value of an unsold home? We will find out. Mortgage debt has been abused with dictated appraisals, lax income verification, low down payment (high leverage), and widely reported abuse of cashback at contract closing. And a final blow might come from local govts, where fiscal distress has led to increases in property tax. I know of a few people who have already or plan to sell their homes in order to end their tax burden. The gap between rising housing prices and gradual increases in rental costs indicates a correction is near. At some point, job losses trigger such a correction. No, real estate is ripe for giving off gas for several years, since financing will soon become more difficult, job losses will escalate further, and the tax burden will only worsen.

69. Americans are entitled to perpetual wealth and good times
The "Ugly American" syndrome is making a comeback. We have produced many spoiled brats, accustomed to the good life, strong purchasing power, ample access to credit, good paying jobs. We seem incapable of calling into question the method and means for this wealth and party atmosphere. The wellspring toward our illusory wealth has been the abusive extension of debt and the simultaneous coercion of foreign economies to bestow upon us their savings, as we accumulate endless debts. We encourage Asian nations to serve as our manufacturing base, benefit from outsized trade surpluses, but recycle the capital back into our debt system. The game is finite and cannot last forever. We do have considerable innovation, but our financial violations of economic laws vetoes the benefits of innovation. What we boast of "financial engineering" has been laid bare as financial corruption, crazed leveraging, monetary exploitation, and extortion of foreign economies. We might be nearing the end of the Keynesian Monetarist bankruptcy game. No, Kondratiev Winter has arrived, and its deep destructive force has only begun to work on the greatest debt irresponsibility in the history of mankind, the United States economy, its citizens, corporations, states, and federal govt.

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[AndreaGail]

thanks for the bump to this Caligula

27. depression could never happen again, since the system has designed counter-measures
After the Great Depression in the 1930's, we installed safeguards and created institutions which were designed to prevent calamity from occurring again. But did we avoid the gratuitous granting of credit and usage of debt? Did we avoid speculative mania in stock prices? Did we avoid vast over-expansion in productive capacity? Did our govt leaders encourage the excesses? Did our corporate leaders corrupt the system with their own fraud, largesse, and embezzlement? In the 1930 decade, our Congress passed legislation that erected a firewall among the banking, brokerage, and insurance business. In 1997, Clinton's Congress repealed the law, just in time for the bust, which is far from over. Depressions occur to purge a system from widespread and crippling excesses in debt, often coupled with irresponsible expansion of the money supply. Since 2000, debts have actually accelerated while the monetary base has expanded at an alarming rate. No, a depression is far more likely than it was even two years ago, since safeguards are removed and debts continue unabated. By treating the systemic ills with more of what caused the sickness, we put the nation at greater risk now of depression.