-- Posted Thursday, 9 October 2003 | Digg This Article
"...The rumblings and grumblings of Economics World remind me of a quote from some witty woman I once saw on TV, and I forget who, but she was explaining how life in the homes of alcoholics is different; "Every day is a drama." And when you look around the economic world, every freaking day is a drama! G-7! OPEC! IMF! Middle-East! China! Dollar! Enron! Interest rates! Deficits! Job losses! Money supply! Debt! Recall elections! Each of these, and many more, as dramatic as they are, are all in almost daily upheaval! Drama of unbelievable dimensions!"
The Mogambo Guru
St Petersburg, Florida - The Fed jumped into the money-mobile, turned the ignition, put the Fed in gear and roared back into the market as Greenspan goosed total credit by $9.5 billion, and those are United States dollars we are talking about here, to a new record. Foreign central banks decided that they would be happy to soak up the debt of an almost-bankrupt nation of fat deadbeats, and took up another $10 billion, also to a new record. Commercial banks here in America, however, do not have the leeway to act like morons and lose money "in the name of the greater good," and so are still dumping government debt from their portfolios. Apparently the juxtaposition of rising inflation, thanks to the un-holy printing of monstrous amounts money all around the world, versus loaning money long-term at rates at 45-year lows, doesn't sit too well with them. Cowards. I'm surprised that none of the Fed governors is calling for these lily-livered weaklings to be rounded up and shot as traitors.
- Ashlea Ebeling wrote an interesting article on Forbes.com entitled "The Other Federal Budget." I know what popped into your head when you read that, because I am sure that it is the same thing that popped into MY head when I read it. Namely, "Huh? I am suddenly quizzical, and my curiosity is thus piqued!" With rising excitement we move along through the link and read "A widely cited study says that Americans actually spent $843 billion to comply with federal regulations in 2000 ("The Impact of Regulatory Costs on Small Firms," by W. Mark Crain and Thomas D. Hopkins, prepared for the Small Business Administration, October 2001)."
Now, I know that YOU, fabulously up-to-date on all this stuff, probably know this report by heart, and are probably sick and tired of hearing about it. But, I am sorry to say, this is the first time that I ever heard of the thing. I've probably been spending too much time attending to the music of the cosmos or something, because you know how we gurus are, all the time meditating and attaining transcendent enlightenment. Ommmmmm.
It's not that we peons out here did not already know that the costs of the regulatory burden were significant. Wayne Crews, who is the director of technology policy at the Cato Institute, wrote a report that he called "Ten Thousand Commandments: An Annual Snapshot of the Federal Regulatory State," which to me is one terrific title, even though I have not read it, for the reason that the Cato Institute did not send me one in the mail so that I could read it during the commercials of the Simpsons, or, if they did, it did not have enough color graphs and pretty pictures in it, and so I quickly got bored and stopped reading it. In it he is said to argue, and I am sure that he argues with unstoppable, iron logic, striding like a Colossus across the intellectual landscape because there is no way to argue the opposite, that "Regulation is like an off-budget, hidden tax," says the tuned-in Mr. Crews. "State and local governments, businesses and consumers have to pay - even though it doesn't appear in the federal budget." Well, I got some good news and some bad news for Mr. Crews. The good news is that is that neither the state, nor the local governments, nor businesses have to permanently pay the hidden tax. They get all that money back. The bad news is that the consumers always pay the full cost of everything, eventually, as the state government, and the local government, and the businesses always get their money back, and more, through taxes and higher prices. Always higher prices.
But I like that $843 billion figure. $843 billion is obviously too high, and $842 billion is obviously too low. Nonetheless, it is a lot of money. Better known as "a lot of money," or perhaps it should now be known as "a gigantically, unimaginably huge freaking wad of money."
Other people still have attempted to assess the price of regulatory compliance, and they sometimes get lower figures, like the OMB. But a figure derived from guesses and assumptions isn't something to take to the bank, but even so, they figure it could be several times worse than this because they admit that their estimates can be off by as much as a thousand percent! Or maybe even a ten thousand percent margin of error! Hahahaha! Those government guys are so witty! "We are professionals, although our estimates may be off by ten thousand percent or more, we don't know!" Hahahaha!
But the one constant throughout both of the estimates is that it is a lot. Of money. And, combined into one sentence, it is a lot of money. And again I provide the precise, dictionary definition of "lot" to help it sink into our brains, "a gigantically, unimaginably huge freaking wad of money."
The World Bank is also issuing a report that details how regulation by government is a killer of economies. So, in light of the massive evidence, it is amazing that government continues to pile on regulations to kill the economy. That said, perhaps this whole Gray Davis recall-thing will be just be a good start, only now we start applying it to Congress, who take an evil delight in piling on more and more regulations with each passing hour.
And you can tell by the way that the rest of the audience is moaning and groaning that they are less than overjoyed to see me raising my hand in the air, saying "Excuse me please! I'd like to be recognized to speak!" And then rising to my feet I refuse to acknowledge the fact that everyone on the dais and everyone in the audience are all yelling and pleading with me to shut up and sit down. Undaunted, my voice rises to a commanding pitch that causes even rabid dogs to cower in the corner, and delivered in that hypnotically sing-song way that top evangelists have, I remind everyone to heed the words of Mogambo. "Friends and neighbors, heed the words of Mogambo! Heed, heed, heed the words of the Mighty Mogambo! The Mogambo speaks, and says thus: The regulatory burden is ultimately income to some of our citizens, but like slugging back one shot of good liquor makes all women pretty, makes me witty and eases the horror of actually interacting with any of you morons in person, chugging down an entire bottle of liquor will kill you. Therefore, beyond an absolute minimum, regulatory burden is completely contrary to the Darwinian imperative that you do not go around inventing ways of harming yourself."
Of course, I think that this is as profound as all get-out, of course, and I search for a way to provide a boffo ending. You know, some theatrical flourish, a cloud of dust and a hearty, "Hi-yo, Silver! Away!" But the best I can come up with is that chestnut, my old boilerplate speech that I carry around on a 3X5 card, the old "Now you are going to die speech," which is as hoary as Martin Luther King's "I have a dream" speech. "And now you are all going to die! Hahahaha! You have economically killed yourselves, and now you are going to die! And you have economically killed your children, and you have economically killed your grandchildren! And grandchildren! Hahahaha! You have murdered all the seeds of your own loins! Your names shall forever be as the name of serpents, and you will be forever vilified, condemned as vile, a Biblical seven times over, for your sin of (insert economic sin here)." Of course, I inserted "increased regulatory burden" there at the end, since that is what we were talking about, and I wanted to kind of tie it all up.
But, I hasten to add, that this is just a specific sub-set of the more global "increase in size and cost of government itself," which is sort of a Macro Sin, and if you have been paying attention, then you are painfully aware that this is the thing, The Big Thing, TBT, that I have been screeching about all these years, to the point where my throat is raw and sore from all the hysterical screaming and my arms are sore where trained professionals tried to calm me down by injecting me with various serums that would stun a rampaging buffalo. And compounded by the fact that I moan in my sleep because I am having nightmares about what is surely going to happen to us, makes the throat problem even more dire, and which got me where I am today, which is nowhere. Except by being a little richer, thanks to buying gold.
And, parenthetically, if you want to be richer in the future, you had better be moving into gold, too, because the un-holy monetary and fiscal insanity that got us to where we are today is getting exponentially worse with every passing moment in time. And with each new passing of each moment in time, when very bad things are growing exponentially, this is where the smart guys got out of Pompeii when the volcano starting rumbling, and they got a good price for their house, too, unlike the guys who ignored the rumbling, and whose real estate holdings are, even to this day, centuries and centuries later, still worthless, as they are still encased in mountains of rock-like volcanic ash.
- Doug Noland, who seems to take a perverse delight in rooting around in the dark innards of the economic world, and then finding another stinking, diseased tumor, yanks it out and sticks it in your face, a disgusting, bloody, dripping, festering blob of gunk, as if to say, in a role that eerily reprises Linda Blair in the "Exorcist" trying to freak out the priest, "Well, how do you like your precious little economy NOW?!?"
For example, in his latest Credit Bubble Bulletin, he writes " Japan's Monetary Base (coins and banknotes and reserve balances) was up 20.9% in September from a year ago." So, in Japan, the thing that causes price inflation is inflating at a 20% rate. How charming.
Then he quotes Stan Rosenberg of Dow Jones, "Low interest rates and continued financial pressure on state and local government budgets are driving new long-term municipal bond issuance toward a new annual volume record. Issuance for the first nine months of 2003 already has surged 13.2% from the same period last year to $285.4 billion this year, according to Thomson Financial." So the government debt bubble continues growing exponentially. Even more charming.
Then he cites USAToday: "California businesses are screaming about the high cost of operating in a state of high taxes, pricey real estate, mandates from Sacramento and a mountain of state budget red ink that someone will have to cover." And then this morning I read that Davis, in the last few hours of his doomed governorship of California, signed legislation that requires that all businesses with 50 or more employees pay for health insurance for their employees, or pay into a special fund that will buy the required health insurance for them! In both instances, the business has to pay for it. And so now the businesses of California have something ELSE to complain about! And another do-or-die reason to raise prices, which makes the plight of the poor even more dire because they didn't have enough money to afford things at the OLD prices, and thus paves the way for more government regulation to try and reverse some of the horrors that they have unleashed, which will only make things worse and worse.
He sums up with saying, "This week had the 'feel' of a commencement of some type of systemic dislocation." To which I say, "Well, I felt something, alright, but I just thought it was my wife kicking me to stop snoring. Now I know better!"
- The rumblings and grumblings of Economics World remind me of a quote from some witty woman I once saw on TV, and I forget who, but she was explaining how life in the homes of alcoholics is different; "Every day is a drama." And when you look around the economic world, every freaking day is a drama! G-7! OPEC! IMF! Middle-East! China! Dollar! Enron! Interest rates! Deficits! Job losses! Money supply! Debt! Recall elections! Each of these, and many more, as dramatic as they are, are all in almost daily upheaval! Drama of unbelievable dimensions!
And, carrying the metaphor of "life in the homes of alcoholics" that extra, supremely superfluous step, you never hear anybody explaining to Oprah how, "Yes, I was very fortunate to grow up in a house of alcoholics, and it is probably the best thing that can happen to a kid."
- The sudden appearance of a few jobs is given as the reason behind the surprising rise in the stock market over the last few days. But the guys at the Daily Reckoning website are not so easily amused by appearances, and report that they "...found it a little troubling that the Department of Labor added 57,000 jobs in September, while subtracting 145,000 jobs from the prior 12 months. In other words, the Labor Department revised away 145,000 jobs that it had previously reported as existing, while adding 57,000 new jobs... which may or may not be revised away in
subsequent reports. Net-net, the economy has LOST 88,000 jobs in the last
year."
- The Bush Administration is still intent on making Iraq into something resembling the USA, and in their nasty little pea-brains I suppose that they dream of some future, sunny day when Iraqis are driving American-made SUV's, converting to Christianity in droves, and wearing "I Love America" T-shirts. I also assume that they believe that the Iraqis will be voting the straight Republican ticket.
The precedent for having Iraqis vote in American elections has been made by, of course, California and, of course, by Gray Davis who is, of course, a Democrat, who has, of course, signed legislation to allow illegal immigrants to legally drive in California and can, of course, by virtue of the Motor Voter law, vote. So extending California driver's licenses to Iraqis is not that much of a stretch, since to do otherwise would be to demonstrate favoritism to those who can travel to the borders of the USA ("unfairly transportation-advantaged") and sneak across, like rats scurrying around getting into a pantry at night, which naturally discriminates against Iraqis ("transportation-disadvantaged") who cannot. It is blatant "geographical racism" or something, we don't know what yet, but it is obviously a rallying cause that is tailor-made for the low-IQ "we love everybody and we don't care how much it costs to prove we love them" people who are attracted to the Democrat Party.
But, low-IQ weenies are not peculiar to the Democrats, and the Republican dim bulbs who think that Iraqis will suddenly embrace American values, value systems, political systems, or anything else, are very sadly mistaken. These people have lived the same daily humdrum non-democratic, obedience-to-autocrats lives for millennia, carried grudges for thousands of years, perpetuated ethnic identities that stretch back before written time, and suddenly they are going to foreswear all of that to embrace the values of a foreign government, which does not bow to Allah, that came in and bombed them into obedience by killing their children and neighbors? Hahahaha!
I will not continue this disturbing line of thought to those neighboring Islamic countries that are still ruled by royalty and autocrats, and who are probably not happy with the idea of being overthrown in some dorky election, so that the common people can democratically decide to confiscate their enormous wealth, and maybe democratically decide to execute the whole lot of them at a stroke.
But all of this talk about history and custom, and how this makes me think of how nobody is buying gold even though it is such a great buy and a terrific investment, leads naturally to an article by Alan M. Newman, Editor of Longboat Global Advisors Crosscurrents, who writes that something is new in America. My own little pea-brain remembers that it was Calvin Coolidge or somebody like that who famously said "The business of America is business." Well, that is no longer true. The business of America is now selling stocks to each other. Mr. Newman underscores my flip remark when he writes, "The one category in which the U.S. is still the undisputed leader and vaunted expert is the manufacture of financial products and the marketing and advertising of those products."
As evidence of that, he calculates that "Even at the very lowest point since the enormous 2000 peak in prices, Dollar Trading Volume never traded below $1.70 for each dollar generated in the purchase or sale of goods and services in the domestic economy. And the rally since March has now enabled DTV to surge to $1.92."
I will wait a minute so you can call, as in "Hey! Come down here and get a load of this!" to your husband or your wife, or your children, or your parents, if you are one of those precocious teenagers who has been given the tremendous advantage of learning about Austrian economics at so tender an age and you are trying, desperately, in a losing battle, to get your proletariat parents to get hip to this stuff, too, so that they can stop their spiral down to financial suicide with their doomed schemes to perpetually use equity, re-financing, exploiting credit cards by switching companies for desperation low-ball interest rate deals, and seemingly accepting every no-money-down deal that promises Nirvana at no cost.
Then we get to something that I used to puzzle over at various times, and then soon give up, as it makes my head swim. "Growth in Program Trading has been exploding. Thus far in 2003, programs account for about 546 million shares per day, about as much as total NYSE volume ran in 1997! Programs now comprise 41% of NYSE volume."
Now, I can understand how program trading exploits mis-pricings between stocks and their derivatives. So when stocks are more costly than the derivative products that include the stock, then you sell the stock and buy the derivative, locking in the profit, and vice versa when the derivative is more costly than the underlying stock. In short, there is money to be made in this arbitrage.
But, and look at the numbers, how can 41% of volume of the NYSE be in program trading? Where does the money come from that the program traders book as profit? It has to come from somebody ELSE'S pocket, right? So whose pocket? I will answer my own question with another question; "Who is the only guy that has a pocket to pick?"
- Carolyn Baum over at Bloomberg, writes that we doom-and-gloomers are missing the point, as usual, and it is only the bulls that can see clearly. She quotes a guy named Joe Carson at an outfit named Alliance Capital Management, who says, "What all these analysts miss in their doom-over-the-horizon forecast is the strength of real disposable income (DPI) even in the absence of any job creation." Disposable income is supposed to have risen 8.5 percent in the 20 months following the trough of the 2001 market dip or something.
Well, Dick Grasso and the CEO salary bonanza are, of course, increases in disposable income. The stock sales by corporate insiders created a hell of a lot of money, and those huge multi-million dollar sales have been at very high levels for quite a while so far, and they are also increases in disposable income. And the teachers are always offering the deal, "If you pay us more, then maybe we will stop doing such a horrifically bad job of educating your children." And government deficit-spending has pumped a lot of money into the economy, $600 billion at last count, which eventually works its way to its ultimate destination, which is into somebody's pocket, which is, by definition, an increase in disposable income. And I don't know what is happening over where you live, but around here the news is that some pretty big bucks are being made by government guys, too, and it is not unusual anymore for the most lackluster backslider on the public payroll to be dipping into the pockets of taxpayers to the tune of a quarter mill a year anymore, especially when you add in salary and a long, long list of benefits.
And I always think it is interesting to note that there are usually no public employees who make LESS than the average HOUSEHOLD income! As in Lake Wobegon, "Where all the children are above average," this means, by simple mathematics, that our neighborhoods are places "Where all government employees are paid more than the average citizens."
Of course, the best benefit of all for government employees, is the benefit of having the back-up guarantee that if the stocks and bonds in their retirement accounts all go to zero, like ours went to zero, then they can be made whole. And when I say "ours" I mean those of us who are NOT public employees and, in fact, the only time we actually deal with public employees at all is when they are yelling at me through a megaphone to come out peacefully with my hands over my head, and how these nice professional people are standing by to help me, like I am going to fall for THAT one again. So while our retirement accounts took a big drop, then they and their buddies in government will raise the taxes of the taxpayers to make up for their shortfall, and by the simple expedient of raising my taxes and thus increasing MY shortfall! A nice little benefit! Wow!
But I am NOT here to bring up that public-employee bonanza issue, even though it really steams my butt, and I would LOVE the opportunity to really get up a full head of steam and let go with a long string of charges, verbal abuses, profanities, and maybe a few veiled threats, charges and counter-charges, not to mention criminations and re-recriminations or butts and rebuttals.
No, we are talking about disposable income. Anyway, now that we are back to talking about disposable income, I can see how disposable income could have risen. Not mine, of course. And probably not yours. And when we are through paying for the increases in those disposable incomes of all those other people, then you can be SURE that you and I did not have an increase in disposable income. Quite the opposite, in fact.
- The August CPI is up 2.2% year from a year ago. This follows the rise of 2.1% in June and the 2.1% in July. The goal of Fed policy ought to be zero inflation. But now, looking nervously up at the gauge on the wall, I note with alarm that the needle has climbed, and is now quivering at 70% of red-line, which is 3% price inflation. Dark, moody music fills the soundtrack, and the camera comes in for a close up, where the twitching of my eyebrows and barely perceptible tics of my handsome leading-man face betray my rising nervousness, as evidenced by the little beads of sweat that suddenly glisten on my manly brow. So we are in the "yellow zone," which is entirely appropriate, because the color so perfectly matches that wide streak up my back, as concerns inflation. Price inflation, even after the intense and fraudulent massaging of the raw data to subtract quality improvement and the other hedonic devices, is running at two-thirds of red-line! Yow! And yet the Fed is still gunning the monetary motor and actually holding interest rates at historic lows! And people are letting them get away with it, by buying the damn debt at these ridiculously low rates! At the same time as the dollar is being prepared for a devaluation!
- Jim Willy, writing over at the 321.gold site, wrote a nice article entitled "Dragon at the back door," and if you have ever lived anywhere that had dragons that showed up at back doors, then you are probably aware that a dragon actually showing up at your back door is no laughing matter. For those of you who have NOT lived in such a place, then close your eyes and imagine your immediate future if a vicious, ravenous polar bear was knock knock knocking on your back door. And for those of you who have not ever lived where dragons OR polar bears showed up at back doors, then imagine all your ravenous in-laws showing up and demanding that you let them in, because they had all lost their jobs, and their houses, and their cars, and were flat broke, and that they had spent their last few dollars on a shotgun in case you were so inhospitable that you denied them carte blanche to consume anything they could get their hands on.
Anyway, he writes, "What is clear to all experienced hands is that Asians will no longer bear the brunt of responsibility (and enormous expense) of defending the US dollar. They will manage the dollar decline now, rather than prevent that decline."
And to that I add, hahahahaha! Good luck! Because to "manage a decline" in anything is to set yourself up to take a long series of losses, which is to transfer money into the pockets of the guys who sell every time you force prices back up.
- James Cook at Investment Rarities is one of those guys who has taken a look at things and is justifiably alarmed about, and here I reproduce his exact list, lack of savings, inflation, over-consumption, debt, deficits, the trade deficit, asset inflation and speculation. The difference between Mr. Cook and me is that I take a look at these things and see death and destruction descending on us, which I can only try and forestall by clutching my ratty blue flannel security blanket to my chest and screaming in hysterical fear for extended periods of time, while he remains curiously calm and still in possession of his faculties.
He writes, "We don't know the future or the precise timing of the things we warn about. But, at the very least, it seems certain that, in the near term, a malevolent form of stagflation is inevitable with much worse to follow." Now, for those of you who are not familiar with the term "stagflation," it is a word that combines stagnant, as in "a foul smell emanated from the fetid, feculent swamp of stinking, stagnant water," and inflation, which means that prices of things are rising, as in "a foul smell emanated from the swamp of prices that rose above your knees, and then above your hips, and then above your chest, and then above your neck, and then above your head, and you suddenly found yourself drowning in higher prices."
As for the first part, the stagnation part indicates that jobs are hard to get, hard to hold on to, and incomes are not rising, but hopefully not falling. The inflation part is pretty self-explanatory. The net result is manifested in your bank account, where even a steady income from your boring job, which you cannot leave because there are no better jobs to be had, is increasingly insufficient to buy the things you need because the prices keep getting higher and higher. And when aggregate incomes are falling at the same time that prices are rising it is a real bummer, and that is why you never see that exact policy prescription in any economics textbooks under the heading "How to fine-tune an economy."
This plays right into the current flap over the survivability of the Social Security system, which is again a topic of conversation, and of course there are all of the relevant statistics that easily show that the system is doomed. It is not, I hasten to add, and the answer to the question on your trembling lips, namely "Huh?" is the same as the answer to the question of the budget deficit, and the debt incurred to finance that deficit. The usual limiting variable to budget deficits and debt in general is something like, "Debt service capacity for a government is directly related to its capacity to tax the population."
But it is not. It used to be true, way back when the dollar was a proxy for actual money, meaning gold, of which there was a limited supply. So when money was in limited supply, the government DID have to tax people to get it, since so few of us voluntarily send large checks to the government, and even if we did, it would soon prove to be, again, insufficient.
But today we are on a fiat currency, and there is nothing to stop the government from merely printing up all the dollars it needs! Print them up and just hand them out! You say a hundred billion dollars is needed to finance the Social Security system this year? No problem! John Snow merely has to pick up the phone, dial the guy running the printing press in the basement and say, "Hey, dude! This is John! How are the wife and kids? Great! Hey, look, if you get a few minutes, how's about printing me up an extra hundred-billion dollars? Thanks!"
Hey! You say Iraq could use a nice $87 billion dollar infusion? No sweat! Again, John Snow gets on the horn and calls back down to the print shop in the basement, and says "Hey! It's me again! Yeah, sorry to bother you again like this, and I know you are on your way to lunch, but could you go ahead and make that a hundred and eighty-seven billion dollars instead of just a hundred billion dollars? You can? Great! Say hello to the wife and kids for me! Bye!"
Of course, all that extra money suddenly coursing through the veins of the economy are going to cause the general price level to rise to hyper-inflationary rates, but who the hell cares anymore? Certainly not John Snow. Certainly not the Fed. Certainly not the President. Certainly not the rest of the government. Certainly not the lackluster university-trained economists that like to demonstrate their profound ignorance of economics. Certainly not the blowhard stock touts on TV. So why should YOU care?
As a nice lesson in why you should care, the recent Zimbabwe experiment in this area has now so devalued their currency that toilet paper, per sheet, or per square, or whatever you call each little piece of toilet paper, is now more valuable than the money it takes to buy it! In practical terms, toilet paper costs over a thousand Zimbabwe dollars per roll, and so it is cheaper to wipe your funky behind with Zimbabwe ten-dollar bills than it is to use a thousand Zimbabwe dollars to buy actual toilet paper!
And now, for your optional essay question, how much is a Zimbabwe 401(k) retirement plan worth?
- At CNN, a guy named Justin Lahart, wrote an nice little essay entitled, "Spending our way to disaster." This Lahart guy may be is, I think, dryly funny. In an article that was about debts being everywhere, he weaves stuff together to produce the inescapable conclusion that Armageddon is here. But that isn't the point.
First, he sets the stage, never letting on what is coming next, when he has the innocuous-sounding Dave Rosenberg, a Merrill Lynch economist, saying "We have a Fed that wants a booming economy, but the only way the consumer can continue to fuel the economy is through continued debt accumulation." Now, of course, since we are all so hip to the economic imbalances that have existed for - how many years now? - years, we say, "Well, duh!" Nothing new there, right? He's just telling us what we already know. And we demonstrate our knowledge by being petrified out of our minds in overwhelming fear because we know what we know, and sometimes wish we didn't know, because then we would not be so scared and miserable because we didn't know.
Then, out of the blue, he has this Rosenberg fella hit you with, and I hope you are ready for this, "I don't know if there's an easy way out." Hahahaha! I'm laughing like a cartoon hyena here! Hahahaha! He doesn't know if there is an easy way out! Hahahaha! Ooooh! My stomach is hurting from all the laughing! Hahahaha!
Okay, finally, after what seems to be an eternity, the laughing begins to subside, and wiping the tears from our eyes, and still giggling periodically, we sink down in our chairs, smiling, but exhausted, and spent. But the point is that, of COURSE, there is nothing called The Easy Way Out!
So, watch my lips! Watch my lips, I say! Ready? There is no easy way out! Now, I will say it as if I were trying to say it in a game of charades. There (I point out away from me). Is (I pinch my thumb and forefinger to indicate "small word,"). No (I shake my head 'no'). Easy. (Hmm, this is tougher than I thought it was going to be, so let's forget it, and quit this stupid game. Hey! I'm not paying you to play games here, fella!). Way. Out.
Because if there WAS an easy way out, don't you think that at least one guy, in one country, in the whole damned history of guys and countries, all the way through history, would have thought of it by now? Huh? But not one male, female, animal, vegetable, mineral, natural phenomenon, or observational anecdote has ever, ever, found The Easy Way Out.
Okay, right around in here someplace is usually where polite discourse degenerates into the Mogambo Way, where I get increasing belligerent, and probably armed and dangerous, and where I would typically say, "Do you really, really think that now, after all these centuries, after all these millennia of unstoppable boom and bust, and after suffering wave after wave of human misery of nightmarish proportions, that now we finally have some glorious messiah that can lead us to a promised land of milk and honey because they have found 'The Easy Way Out'? Is THAT what you think, you stupid little twerp? Huh? Is it? Are you really, REALLY that stupid? Have you actually escaped from someplace where they send really stupid people?"
And, with voice rising higher and higher, this is where I work myself into a fit of hysteria, and would typically grab the jerk by the hair, drag them towards me, and putting my face closer and closer to them until I am literally nose-to-nose with them, I would start screaming in their faces, spittle flying to make the episode even more unpleasant for them, "Do you expect me to believe that your little diseased pea-brain really thinks that now, NOW, we are suddenly so smart that we have been able to achieve what nobody, has ever, and I underline EVER, done? Listen to me good, you worthless little creep, when I tell you that nobody has ever, and I again I repeat EVER as a way of indicating emphasis, found The Easy Way Out. And the reason is that there IS no dangity-blang Easy Way Out, you piece of putrid, mentally-ill garbage, you disgusting, stupid little jackass whose mother is so ugly that..." No wait a minute; this is no time for jokes. Gotta keep serious here.
Nah. Forget it.
- An article in the October 6 issue of U.S. News and World Report was entitled "Home Economics." The newest wrinkle is interest-only mortgages, where your monthly payment never includes any money for repayment of the principal. At the end of the loan, if you borrowed $100,000, you still owe $100,000. In the meantime, you have made monthly payments that are as little as half as big as a conventional mortgage loan, which always had that extra money per month that went toward the outstanding principal.
But half! A loan payment that is half as big! No wonder they are popular! It isn't every day that some dirtbag, half-witted lenders will take on such enormous risks, namely that house prices will always go up, and that every borrower will always be able to sell the house for more than they owe the lender! And for the lender to do this for such a small interest rate is certainly something very, very new!
Of course this doesn't even touch the new wheeze in which lenders are now offering mortgages that require no money down, or ones where the lender pays the cost of obtaining the mortgage and also kicks in the money for the down payment!
- Martin Weiss of the Safe Money Report writes that "According to the Center for Budget and Policy Priorities, two-thirds of the people who collect unemployment benefits do not find a new job by the time their benefits run out. That's at least 39 weeks without a job! Then, after a laid off workers' unemployment benefits run out, the government stops keeping track! So no one really knows just how long they are going without work. No wonder they're starting to grip their wallets more tightly! No wonder retail chain store sales have slipped for the third consecutive week!"
And when they do find a job, it is usually something akin to a minimum-wage job that pays a lot less than what these people need when compared to their debt loads, if a tsunami of anecdotal reports is any clue. Ugh.
---Mogambo Sez: Judd W. Patton, PhD, a professor of economics, enumerated the "Seven Economic Laws" and the fifth law is "Law of the Quantity of Money: there is no economic benefit from increasing the quantity of money. Prices and costs adjust to the available supply. More money means higher prices and less money means lower prices."
Today, and all the yesterdays for the last decade or so, the money supply of the USA and the world is boosted to levels only dreamt of in the nightmares of real economists. Now you don't have to wait in suspense to find out if you will really spend the rest of your life slowly starving for goods and services. You will.
The Mogambo Guru Lives!
Richard Daughty is general partner and C.O.O. for Smith Consultant Group, serving the financial and medical communities, and the writer/publisher of the Mogambo Guru economic newsletter, an avocational exercise the better to heap disrespect on those who desperately deserve it. The Mogambo Guru is quoted frequently in Barron's, The Daily Reckoning, and other fine publications.
-- Posted Thursday, 9 October 2003 | Digg This Article
