No need to protest

Very appropriate picture illustrating the tone of the ridiculous manufactured economic numbers coming out of Washington. The only reliable message from them is, "Relax and eat your Cheetos. We're doing the thinking around here and everything is fine."

Below is another quote from a major economist talking about the same kind of meltdown I have predicted for the first half of this year.


“The conventional wisdom among the elite is still that the current slump “cannot be as bad as the Great Depression.” This view is wrong. What we face now could, in fact, be worse than the Great Depression—because the world is now so much more interconnected and because the banking sector is now so big. We face a synchronized downturn in almost all countries, a weakening of confidence among individuals and firms, and major problems for government finances. If our leadership wakes up to the potential consequences, we may yet see dramatic action on the banking system and a breaking of the old elite. Let us hope it is not then too late. “

Simon Johnson, a professor at MIT’s Sloan School of Management, was the chief economist at the International Monetary Fund during 2007 and 2008. He blogs about the financial crisis at baselinescenario.com, along with James Kwak, who also contributed to this essay. May 2009 The Atlantic “The Quiet Coup”.

I believe I already posted a link to John Williams, the major economist who publishes Shadow Stats, predicting for 2010 the same thing I have been predicting. If we get to say, "We told you so." it won't be much consolation.

Pascal's Wager

I was in church yesterday, and was thinking about how some people think a person has to be an idiot to be a Christian. I find that ironic.

First, let's talk about Pascal's Wager. Blaise Pascal said that deciding to be a Christian or not was like wagering. If you decide to be a Christian and are right that God is real and and you go to heaven, that's great. If you're wrong and believe "for no reason," what have you lost? If you choose not to believe and are right that there is no God, it may be a wash, but if you're wrong and you go to hell, OUCH. Therefore, it is logical to be a Christian because of the likely results of your belief.

Now we are in an age of Pascal's Wager on steroids. The last fifty years of research has shown us that Christians (for whatever reason) report being happier and less stressed, recover from surgery faster, have less depression, have fewer divorces, fewer suicides, live longer, and make more money (I'm sure I'm forgetting some).

That being the case, whether God can be proven to exist or not, how is it logical to choose much worse outcomes in this life, and potentially a much worse outcome after this life? Being a non-Christian is illogical.

Our biggest problem - get out your wallet

Pie chart is for background information about who holds our debt.

Very simply, here is a basic and irreducible problem. In 2010 the United States government will need to borrow $2,500,000,000,000. Note that this number doesn't even include the recent debt of $3 TRILLION that expires and needs to be re-sold this year, for a total of over $5 Trillion. There are three sources of money for that.

One is people and companies inside the United States. Last year they loaned the government $200 billion, or about 8% of what will be needed for the new debt this year.

The second source is people outside the U.S., who sold nearly as much as they bought in 2009, and in the second half of the year were net sellers: They were very unwilling to loan more, especially short-term debt, which is most of what will be needed in 2010. Several major lenders have publicly stated that they are not planning to lend more, and that the U.S. is being "reckless," "irresponsible," and "endangering the world economy." Hardly a way to get people to loan you money.

The third source is printing money, which is where a large part of the money came from in 2009. This is essentially a parlor trick of your left hand borrowing from your right hand. It is not a serious strategy one can do for long. It's like moving money from your wallet to your bank account and back again. Ridiculous.

So, if foreigners won't lend, and printing money heads us towards what they call the "death spiral" (and the Fed claims they won't do it much longer), that leaves people within the U.S. What do you think the chances are that people here will suddenly, starting January 1, start lending TWELVE TIMES as much to our government to make this come out ok? As they say, slim or none, and slim is out of town.

A failure to borrow enough money to run our government means either much higher interest rates paid and a plunge into depression, or bond auction failure, which means game over. Hmmm.