IMO there is crystal clarity when this person writes.
Some extracts from his latest article -
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....... The Senate, that conclave of corrupt clowns, passed a bill to allow companies to put less money into their pension plans. This is accomplished by using higher interest rates of corporate bonds, instead of the rate paid of Treasury bonds, to calculate future returns to the fund. This wonderful expedient that brings to mind a "Dilbert" cartoon, where the our hapless hero is explaining, "We doubled our projected income by modifying our assumptions." The Wall Street Journal perfectly characterized this as a "bailout." Thomas G. Donlan, in his essay in this week's Barron's entitled "The Old Switcheroo," opines that "Congress says it's strengthening private pensions by taking money away from them."
This new contribution method will, according to the Associated Press, "result in smaller payments to pension funds over the short run," and that it "gives some financial breathing space to companies that might otherwise go bankrupt, lay off workers, freeze their pension plans or renege on the promised benefits." So let me see if I have this straight: By screwing the workers out of some of their retirement benefits, the companies will not go bankrupt, because they get to keep the money. Which would, admittedly, screw the employees out of retirement benefits. So here we have, again, another identified cohort of people who are targeted to be screwed out of something to make up for the jackass Congress and the jackass Federal Reserve making a mess of things. How special.
Like General Motors, I assume, which has 25 retirees for every ten workers, as if there is any way in the world that one worker, up to his ears in mortgage payments, credit card debt, taxes and disobedient children who think I am made out of money or something, can provide a retirement to 2.5 other people. It is obvious that the one worker cannot even provide for his own living expenses anymore, much less his own retirement, and much, much less the retirement of 2.5 other people who don't even say "thank you."
And of course there is a long, long list of sorry companies who are borderline insolvent, and a longer, longer list of people whose golden years are riding on this wheeze working out. Hahahaha!
This is the Greenspan method in all its glory. In the strict Greenspan method, screwing people who have savings accounts, by lowering their interest income to the point of ridiculousness, will enable stressed borrowers and other deadbeats to not default on their debts, if they can borrow more money cheaply, and this is somehow going to benefit the small saver in the long run, although nobody actually says how this is possible. This retirement plan is the same thing: Screwing people out of their retirements so that the companies can keep the money, to keep them from defaulting on their pension obligations, which would screw the people out of their retirements. And the retirees will benefit, although, again, nobody actually says how this is possible.
There is no doubt that more and more retirement plans are going to be dumped into the laps of the government bailout fund, known as the Pension Benefit Guaranty Corporation, because the whole thing is ludicrously insane to start with......
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...... And isn't the popular definition of inflation, and I am asking you instead of actually looking it up in the dictionary, something about how prices go, umm, up? And so how come this blistering inflation in prices was not enough to get the Fed to increase interest rates? How come the year-after-year double-digit increases in house prices, or stock prices, or the prices of oil, or commodities, or the rapidly rising prices of anything, is not enough to get the Fed to try and cool down the white-hot asset sector? The answer is obvious, once you remember that this Fed is the most inept, corrupt, ridiculously pompous and smugly arrogant bunch of clueless weenies in US history. They are worried about deflation, which is now defined as when something, even things that are already so grossly overpriced, goes down in price. Like stocks. And bonds. And houses. You know: Everything that that is currently waaayyyyy overpriced.
And why do they want to prevent this deflation in preposterously overpriced things? Wouldn't the US consumer, namely you and me, be better off if things were cheaper? Wouldn't it be a big benefit to us pathetic bozos out here in the real world when our paltry incomes buy a bigger basket of things on payday? Without waiting for your answer, I answer my own question and say, "Yes, it certainly would be a benefit!" But Greenspan does not WANT us to be better off. Why? Because the whole US economy is now totally dependent on things NOT going down in price. In fact, the whole US economy is now dependent on overpriced things being more and more and MORE overpriced! Namely, stocks, bonds and real estate. Weird, huh? ........
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....... In a roughly similar vein, Richard Russell, and if you do not know who Richard Russell is then you have no business reading this stuff, says, and as a warning I urge you to buckle your safety belt to keep from catapulting out of your chair, "Going over past history, say going back a hundred years, total US debt averaged around 130% of GDP. But today US debt is around 300% of GDP - its highest level in history. No country has ever carried debt amounting to 300% of its GDP before. Furthermore, the amazing fact is that our debt burden is actually growing faster than our GDP. In an effort to handle this debt burden, credit creation has been accelerating. Credit creation recently has been growing at an annualized rate of around $3.3 trillion." ......
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..... Dan Ferris at the Daily Reckoning site has also taken a hard look at the entire menu of stocks for sale, and he writes, "My little screening exercise suggests that there's almost nothing left to buy in the U.S. markets. Or any other markets, for that matter." This is because things are all so overpriced, and this should not come as a surprise to you if you had been paying the least bit of attention to me, and don't feel bad if you have not, since nobody else does, either. And when things are overpriced, there is usually not a good chance that they will get MORE overpriced, which is where your profit should come in.
But how and why did they all increase in price? Because the Fed increased the amount of dollars in the system, and the Congress borrowed and spent those dollars. And so the system was flooded with more dollars, but the amount of goods and services did not increase. Ergo - and don't you just love it when I use the word "ergo?" - the value of each dollar went down.
And don't worry if you do not understand this concept right away. The Federal Reserve has never understood it either, and they think they are smarter than all of us put together. They are not. In fact they are much more stupid than we are, QED. They just think that they are smarter. And, continuing our little story, Goldilocks said, "Why Grandmother, what big teeth you have!" and the big, bad wolf said...oops. Sorry. Wrong story.
Anyway, that flood of dollars sped hither and yon through the economy, and ended up in somebody's pockets, who spent the dollars on imports, which flooded foreign economies with dollars. But those foreign exporters did not want dollars, but instead they want their own currency, because their wives want to spend money, and the places where they shop do not want to go through the hassle of converting US dollars into their own currencies. So the exporters were prone to dumping those dollars to get their own currencies with which to fill up the pocketbooks of their wives, and then the banks ended up with all those damn dollars. But the banks do not want the dollars either. So then the foreign central banks printed up some big wads of their own currencies, and bought up the US dollars from the banks, who do not want, as we have seen, dollars. And then the boss of the central bank comes to work one day and wants to know who in the hell has been piling up all these damn dollars in the lobby and making such a big mess, and issues an order to get them out of here and get this damn placed cleaned up! So all those dollars, those lovely mountains of dollars that in the aggregate add up to more than a half a trillion dollars a year, were used to buy US debt.
Which the US government spent, continuing the cycle. And they went into people buying things, like stocks, and bonds, and houses, and imports. And prices went up. And then, the next year, they went up some more. And then, the next year, they went up some more. And then the next year, they, but this is getting real boring, so to save time, we will hop into Professor Peabody's Time Machine and fast forward a decade or so, and when we step out of that time transporter we notice that I am still intoning, "And then the next year, they went up some more." Then we are all happy that we are back in the present, and have finally stopped that "and then next year..." crap.
And sure enough, there is Steve Sjuggerud saying "Today we have substantially the worst prospects for long-term global investment returns of my 35-year career when all asset classes are considered, particularly for U.S.-centric investors," which gives me an eerie feeling of deja-vu, but is quickly explained by the fact that I just cut-and-pasted his original quote, but that doesn't change the facts. ......
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There's a lot more in the full article, which can be found at http://www.dailyreckoning.com/home.cfm .
