A long time ago, somebody figured out that people were afraid of nature. With this realization, our subject set out to carve a statue of a woman with a horned head dress, and declared the idol to be Ninhursag, the goddess of the earth. Our carver then set about convincing people that if they brought their best wheat, their best grapes, and their best lambs and calves to sacrifice to the goddess then they will be blessed with plenty and the grace of the divine goddess will rain down upon them, but if they refused they would be cursed with pestilence.
And thus the people, rending their garments and lamenting of their fear of the weather and their invented devil gods, brought their best produce to their idols, making themselves poorer and their lives more difficult all out of superstition and fear of their world.
It grew into dogma â€“ everybody knew that sacrifices to the idols was a necessary step to ensure survival of the community and the individual alike.
Of course, modern humanity has advanced light-years beyond these petty superstitions. We donâ€™t fear natural phenomena; we fear a chemical element â€“ carbon.
Enter the global climate change movement, who has informed us that driving cars, using electricity and having children (or as Prince Philip called them, Carbon Bombs,) are all causing massive expulsions of carbon dioxide into our atmosphere, and that if it continued, the seas would rise, hurricanes and other storms would run rampant, crops would wilt and famine would choke all the lands everywhere.
It has turned into a dogma â€“ everybody knows that carbon dioxide from human activity will destroy all the world with global warming and floods, droughts, heat, cold, etcâ€¦
Therefore we the peasants must be constrained in our â€œcarbon footprints,â€ with higher taxes on gasoline, electricity, natural gas, food, clothing, babies and every other trapping of ordinary life.
So, instead of sacrificing your standard of living to a god, you can sacrifice your standard of living to government.
Of course, if you feel uniquely guilty about your existence, you can sacrifice a larger portion of your income through the purchase of carbon offsets; plenary indulgences guaranteeing your place in green heaven regardless of what you do in your everyday life, and the carvers of the environmentalist gods are standing ready to accept your offering.
They also have no more power over the climate as the carved idols of primitive cultures, but they will take your hard-earned wealth if they can convince you that your sacrifices are for the greater good by means of gratifying the new climate goddess.
The environmentalist cult has even threatened â€œclimate change deniers,â€ going so far as calling for systematic punishment of those who publicly disagree with the climate change agenda. One Australian commentator even called for forcible tattooing of climate change skeptics. Our self-appointed betters arenâ€™t above sending heretics to the dungeons as it turns out.
Under the climate change regime, progress is renamed destruction, poverty assumes the name â€œsustainable development,â€ and naturally there are huge profits to be made by the prophets of the new nature worship; and a horde of people line up to sacrifice wealth and liberty out of fear and without receiving anything in return.
So, go surrender your freedom, your mobility, your red meat and your air conditioning to the new Ninhursag if you wish. Iâ€™ll burn a pile of tires in honor of Kali the Destroyer, and weâ€™ll see what happens.
Much attention has been focused on the size of the national debt as a whole; roughly $14.4 trillion. That number is astonishing, but the sheer size of the debt actually hides the true horror which is in store for the economy and future generations.
The debt has many component categories, the largest of which is called Marketable Debt. That means the portion of the debt that was issued in treasury securities that can be sold in the secondary bond market, and it is around $9.2 trillion. The rest is Non-marketable, and held mainly by the Social Security Administration through bonds that cannot be sold.
The Marketable Debt also has its own sub-components, based on the type of security that was sold to incur the debt in the first place. Treasury Bills mature in 1 year or less and accrue interest; Treasury Notes mature in 2, 3, 5, 7 or 10 years, and Bonds mature in 30 years – and the Notes and Bonds pay coupon interest every six months. Each bond is sold at the prevailing interest rate at the time of the sale.
Here is the part that is frightening: Starting under President Clinton, expanding under Bush, and exploding under Obama, the federal government has shifted its borrowing from traditional 30-year Bonds to the shorter term securities.
According to the US Department of the Treasuryâ€™s Monthly Statement of Public Debt dated May 31, 2011, of the $9.2 trillion dollars of Marketable Debt, only about $965 billion are 30-year Bonds. More than $6 trillion are on Notes, with maturities ranging from 2 to 10 years, and a whopping $1.5 trillion are on 1-year Bills.
We are running record deficits, so we arenâ€™t paying any of these off when they mature – we just roll them over onto new securities. Weâ€™re also adding another $1.6 trillion on to the pile.
Right now the Federal Reserve is fixing interest rates at levels so low that they cannot be maintained forever. When the Fed raised interest rates to more than 20% back in the 1979-82 recession, the Treasury actually sold some bonds at interest rates of 20% or higher. Imagine if interest rates went up to just 10% today, and stayed there for a couple of years. All of those Bills and Notes that mature and are rolled over will roll over to higher interest rates.
The interest payments alone will easily top $700 billion dollars a year, and since the debt is likely to grow further as interest rates go up, the country is likely to pay well over $1 trillion per year in coupon interest alone -which will be financed by the issuance of new Treasury Notes.
Imagine a world where the Army is disbanded, Medicare covers only critical care needs, the Social Security age is retroactively raised to 75, and the all retired government officials lose their pensions because the United States needs to dedicate so much of its budget to paying the interest on the debt. These are politically impossible measures.
The only other way to avoid direct default is to print money – destroying the nationâ€™s economy with hyperinflation but technically making the interest payments, albeit with dollars devalued to near worthlessness. Thatâ€™s how the Federal Reserve managed to keep interest rates so low up to this point – by buying Treasuries at artificially low interest rates with printed money. That is why Bill Gross of PIMCO dumped every piece of US Treasury paper his hedge fund owned – the returns on these bonds would have been eaten up by inflation.
There it is – either we ruin the dollar or we default. Default is by far the better option; we can restructure our debts to something more manageable. This will ruin our credit rating forever, so future politicians will not be able to run deficits for vote-buying projects and illegal â€œKinetic Military Actions,â€ whatever those are. There are silver linings everywhere.
Around the corner from my former apartment in Newton was a house that was taken in foreclosure. The â€œFor Saleâ€ sign had been there for a very long time, the lawn wasnâ€™t mowed regularly and the shrubs had died in the winter but hadnâ€™t been removed.
Walk around your own neighborhood and see how many houses are for sale. Sometimes the sign openly states that it is bank-owned, other times you might have to search on the county assessors website. There are plenty of bank-owned houses in Iowa; there are many, many more in California, Nevada, Michigan and Illinois.
The point is this: With such a large supply of bank-owned houses, of course houses will continue to fall in price. When a store has excess inventory, they need to have a discount sale to get rid of it, the same is true for houses, and banks are taking more houses every day.
Banks live and die by their balance sheets. If a bank has the cash to keep these houses in their possession, hoping that the prices will stabilize and that they can sell at prices that allow the banks to recover the unpaid mortgage, then they will keep on trying to sell houses in the usual retail market. As soon as a bank runs short of cash, or can no longer carry the costs of the property taxes and the maintenance for all these houses, they will sell their houses at fire-sale prices, probably even at auction. No reserve bids, the highest price gets the house free and clear.
This should have happened back in 2009-2010. Banks, short on cash and overloaded on houses and notes for houses, would have had to dump them for whatever they could get. This would have caused a sharp decline in housing prices, but as the houses were sold and put back to work – the job of a house is to shelter people – the supply would have been worked through and housing prices would have recovered and stabilized in relatively short order.
And then came the TARP bailout. The federal government gave billions of dollars in checks to the banks, giving them a â€œcapital injectionâ€ – putting cash on their balance sheets – hoping that the banks would lend it out. They didnâ€™t. They kept it in cash, and were able to carry thousands of foreclosed homes on their books through the crunch of 2009-2010.
Instead of a flash drop followed by a recovery, the American homeowner was â€œsparedâ€ a deep but short fall in home prices and instead have been subjected to this long, slow death march of declining home equity. The decline we got may have been slower, but it will be longer, guaranteeing that more private home owners will be forced – by a bad economy, relocation, or retirement – to try and sell their most expensive asset in a market that is still actively falling. As for potential buyers, the odds are that the longer they hold off making a purchase, the better deal they will get.
If we had skipped TARP, then this glut of houses would have been worked through by now, sold at auction either by the banks or by the bankruptcy trustees of the banks that didnâ€™t get the message of the markets.
Politicians that supported TARP are still finding ways to rationalize it. â€œWe needed to preserve the financial system.â€ â€œWe needed to prevent chaos,â€ and on, and on, and on. All they achieved was to prevent real bargains and guarantee continued oversupply. They need to be held accountable for their support of that pathetic misstep passed under the cover of hysterics.