By Bob Marcin
If we continue to borrow and print, deny and procrastinate in an attempt to maintain unsustainable economic activity and artificially inflated asset prices, we will completely destroy the global economy as we know it. If we attempt to prevent recession “at all cost” as one moron politician stated on CNBC this morning, we will face economic Armageddon when the structural imbalances overwhelm temporary stimuli.
If we attempt, with Keynesian lunacy, to recreate demand levels back to that only experienced in a period of debt/credit/housing market insanity, then we are as clueless as we are cowardly. If we are so loathe to permit bondholder losses from poor economic choices, then the entire system is bankrupt from backstopping everything.
Since 2008 we spent trillions trying to sustain the unsustainable. We cheated, fibbed, cajoled, bullied, argued, begged, bribed, and threatened bankers, businessmen, and citizens in a futile attempt to restart economic growth. That process failed.
Now it’s time to try another path. Now is the time to acknowledge the Mother Of All Debt Bubbles and the necessity of the Great Unwind. Now is the time to broach the only true, long term solution: massive and comprehensive restructuring of all on/off balance sheet liabilities from all sources.
I call it the Boot Camp Compromise. Everyone gets a haircut, including bond holders, pensioners, asset owners, workers, managers, and governments. Everyone takes lower marks. Everyone admits to the new economic reality.
I won’t be pretty. It won’t be painless. But it can happen with some sense of attempted control, or under complete economic and social chaos. Either way, a major restructuring, a significant reset is coming. I vote for the former. It’s time for our financial system leadership to change course.
Well, I think what you are saying is going to happen and no one will be able to stop it. They have tried everything and come up with goose egg. The credit contraction will have to play out in the economy and in time the government will be forced to make cuts because of it.
The debt is too big to pay off, no matter how big the cuts.
Plus, most of it shouldn't be paid.
It should be repudiated. Over-leveraged derivatives (credit default swaps, and so forth) that were passed on to the backs of taxpayers at face value via TARP and the bailouts, GM debt, AIG debt, banker debt etc. is all odious.
I remember when TARP and the bailouts were shoved down the taxpayer's throats because of 'too big to fail', the public was 90% opposed. Yet the politicians still shoved it through.
At any rate, I think the point is not to solve the debt crisis, but rather to worsen it. The banks pull similar scams in third world countries. The IMF provides loans at usurious interest. Then it bribes the politicians NOT to pay those loans off. Ultimately, the nation defaults under massive debt, and the IMF comes in to strip out all of the real assets. The people end up enslaved and impoverished through austerity measures, with almost everything going to the banks.
Yes, I understand all of that, and I don't disagree one ounce.
You're speaking of the eventual, once the world finally wakes to the mechanisms of wealth confiscation.
It can be argued, that fractional reserve system does create opportunity though, that wouldn't be available without the ability to take on debt.
Or, simply an opportunity for bank_sters to confiscate wealth.
Anyway, there's good debt and bad debt, in my perspective, the difference between night and day.
I see that bank_sters aren't able to differentiate the two when it comes to their greed, which is where the system breaks down and ceases to function. That's just as well, except for the painful process involved, perhaps we're entering that phase now.
So yes, in the end, by default, we arrive to the place you describe.
In my lifetime? I have no idea, but that would be fine by me.
Meanwhile, it is what it is.
bond holders, pensioners, asset owners, workers, managers, and government
bond holders should take the full risk
meaning if gov cant pay you get NOTHING. sorry NOTHING.
you should have bought credit default swaps and pray your counter-party does not also default...
oh maybe buy them cds from the fed :).
oh wait that cds = just inflation. nvm your cds is right there dont worry
and the payer = everyone else. bond holders get a small profit hair cut but dun worry they took some loss as well as everyone else...
"I call it the Boot Camp Compromise. Everyone gets a haircut, including bond holders, pensioners, asset owners, workers, managers, and governments. Everyone takes lower marks. Everyone admits to the new economic reality."
So even those who acted responsibly by not loading up with unsustainable levels of debt, get a haircut as well?
Nowhere to hide?
Be specific, otherwise it's just more airheaded BS!