When the Riots Begin

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http://www.latimes.com/news/local/la-me ... 5161.story

We began last year with California and now we are back to California again. They seem to lead the nation in every way. What a sad chronicle this is. At least the America that I remember will be with me always.

Why do banks not want to modify mortgages? Why do people want to strategically default? Perhaps the two are intertwined? Morality is most definitely not the issue here. What I mourn is America’s rush to ruin and destruction. A country that will not accept pain as a necessary part of change can only expect to suffer even more as the world leaves you behind.

America is a dead man walking.

In the early 1970's America was the biggest manufacturing nation in the world. The biggest lending nation. The biggest oil producing and exporting nation.
Now all of those things have been reversed.

The Federal Government is printing trillions of dollars in funny money that can never be repaid and giving it to the bankers and to make overseas wars.

Meanwhile the states are broke, counties are broke and cities are broke

Very very soon they are going to have to stop paying all the welfare money to an increasing number of poor people..

When that happens all hell is going to break loose.

http://online.wsj.com/article/SB1000142 ... 22404.html

Death would be a release from the agony of paying back all that debt. Treasury Inflation-Protected Securities (TIPS) are more eternal. The real problem is that the world will not come to an end on 2012 and countries like America do not die, they just stay sick for a very long time. China was on the deathbed for 150 years before learning to change and adapt. In those 150 years, so much suffering was unleashed that there is still no way to describe it.

TIPS are treasuries that are bench-marked to an inflation index like the Consumer Price Index. If inflation were to rise in the future (it definitely will), interest payments on these TIPS would become more onerous. If hyperinflation results, then the entire tax revenue of the country could be consumed by interest payments alone. Of course the U.S. Treasury and the Federal Reserve believe that hyperinflation is at best a remote possibility. They still think that thanks to peek-a-boo innovations, America’s financial system is the best there is. But these guys also believed that Freddie Mac and Fannie Mae would never fail.

TIPS today, foreign currency denominated bonds tomorrow!

http://www.theglobeandmail.com/report-o ... le1427020/

Could not find the original AP article, but this will do. Tens of billions of dollars have been spent on Obama's stimulus plan and the outcome is a ZERO, or close to it. All that additional debt and little of no positive effect. Way to go.

A radio commentator gave some stuff to flesh this out.

Economic growth never happens because of government, it comes from small business. No businessperson will take risks when the economy is so uncertain. Obama wants to tax everything. He wants to dictate how business can be done. No sane businessperson will expand operations or hire lots of people when they can't know what will likely be the rule for the next couple of years.

Obama wants to tax those making over $500K a year (single) [$1 million a year (couple)]. Sounds good until you realize that about 90% of those are small business owners. Why should these people want to create jobs to put you to work when they are being threatened with about a dozen new taxes that may or may not happen in the next 10 months? The uber wealthy don't worry about paying taxes (and most don't). Of those that EARN lots of money, most of them earn it by hard work and initiative.

It called biting the hand that feeds you. Economic uncertainty kills new business growth.

This is a famous collection of images:

http://images.google.com/images?hl=en&q ... CBwQsAQwAA

With Google’s complaint that the Chinese penetrated their computer systems and threat to withdraw from China, the assault on China has begun in earnest. Does the Obama administration really believe that berating the Chinese will get America anywhere? America could go to war with the UK or Canada, but it cannot pick a fight with the Chinese for the simple reason that the entire US economy is critically dependent on Chinese imports. Cut the flow of Chinese goods and American society will implode even before the first shots are fired.

Yesterday the People’s Bank of China (China’s central bank) told Chinese banks that the banking reserve requirement will be raised. Asian markets interpreted this as a sign that the Chinese economy is overheating and sold off but it really should be viewed as the clearest signal yet that the Chinese ‘stimulus’ has worked and the Chinese government feel confident enough to cool things down a little. Why would it matter to this topic? You see, in early 2009, after failing repeatedly to get their message across to the new American administration, the Chinese government announced that they were going to shift the country’s economic strategy from export led growth to stoking domestic demand. This means that they are going to supplant exports to America with consumption by Chinese citizens. Instead of producing goods for the American market and earning pennies on the dollars for their hard work, the Chinese have decided that it makes more sense to serve their own needs. All those cheap made in China goods that Americans regard with disdain might very well become a thing of the past. The problem for America is, where else will all the stuff come from then?

Does America really intend to be hostile towards the people whose labor maintains Americans in the style they are accustomed to? Does America really believe that aggression towards their main creditor, whose goodwill they must have if there is to be hope for a turnaround, will really serve its national interests?

http://www.boston.com/news/politics/2010/senate_race/

Tuesday will be an important day for America. If Brown (Republican) prevails over Coakley (Democrat) for Ted Kennedy's Senate seat, then the probability of riots this summer rises exponentially. Without the supermajority needed for cloture, none of Obama's left wing policy initiatives - including the healthcare bill and any further extensions of unemployment benefits or expansion of other safety net programs like food stamps - will make it through the Senate.

http://www.nytimes.com/2010/01/19/busin ... f=business
http://www.nytimes.com/2010/01/18/opini ... n1.html?hp

First it was steel, then it was tires and now it is glass. The favors that Barrack Obama owes to organized labor are coming back to haunt him. Raising trade barriers against Chinese goods will only hurt America. Not only are the bulk of America’s imports from China irreplaceable, exports to China are often vital to sustaining industries on the margin. When the row over the tire tariffs erupted, there was talk of retaliation by restricting Chinese import of American poultry products. The leftover bits like the feet of the chicken are sold to China which uses them to produce uniquely Chinese delicacies. In the past these leftovers were simply discarded but today the sale of these unwanted parts actually help support the entire American poultry industry and account significantly for the profitability of business. If China chooses to retaliate – and if Barrack Obama continues down this reckless course China will most certainly strike back at some point – millions of American jobs will be put at immediate risk.

I like the editorial even better: the United States and China, two rich nations standing side by side, ready to provide help to the world’s profligate nations. Why did people not say these things when the Asian financial crisis hit or when Russian ruble hit the wall or when Argentina defaulted? Have these people never been to China? What shame it is to call the Chinese rich. It appears that the State Department still wants to play its G2 gambit (Obama went to China and basically told the Chinese that America would carve up the world with them only to be met with stony, choking silence). Why do they not see how insulting it is to the Chinese to be proposed thus by a superpower desperate for their financial backing?