The superrich have never accepted financial responsibility for the poor. Instead, this criminally insane class has always used politics to divert any money that could’ve been used to ameliorate, or even eliminate, a profoundly simple income distribution problem. In our recent past the superrich unleashed the likes of George W. Bush and Dick Cheney onto the world stage, war criminals who lavished taxpayer funds on ungodly military actions against parties posing no national threat, and, more importantly today, turned to the hideous practice of torture, insuring that potential enemies would rise against us forever, creating a permanent need for over-the-top defense spending. In the process, the supers have deliberately amassed this gigantic national debt to let them claim that there’s no money left for the impoverished. None at all. We have to pay off our bondholders instead.
Taking their lunacy one step further, these reprobates are buying off everybody in sight to convince you that their taxes shouldn’t be raised to pay for the nefarious scheme they hatched to avoid accepting their responsibilities to the poor, a class that they create, for goodness sakes.
The superrich have been so successful at all this the country can’t even afford to come up with
market interest rates on all those bonds. For one despicable reason,
transferring American jobs overseas and keeping them there, sovereign piles of
money, mostly in China, Japan, and the U.S., have kept gobbling up enough U.S.
Treasury bonds to rig interest rates to the point where we really don’t have to
pay bondholders anything if we don’t want to.
Drama queens now running the country
are using the Bush/Cheney legacy to focus attention on themselves. The
debt has to be paid off somehow sometime, and they schedule events around the
how and the when so that they can shine, mostly by giving the other guy dirty
looks in photo ops. One of these debacles, labeled the “financial cliff”,
comes up on December 31. The specifics here aren’t important. That
Bush and Cheney aren’t in jail, and that their curse continues to plague us,
is.
The superrich have convinced half
the nation that we have to stop spending money on our poor, and the other half
are too close to poverty to go along with that bovine scatology.
Underpinning the whole mess is one incontrovertible fact:
Continuing to dick investors is the
only way out. Inflation is the visible possibility. As long as the
rich are bent on buying politicians to destroy the lives of their fellow
citizens, you’d expect the cost of living in this wretched place to remain
under constant attack. Lately, it’s been held in check by the sovereigns,
and that will probably go on, but some day ………
The chickens will come home to
roost, and at ever-escalating prices.
Which brings us to the nuclear
option, the invisible possibility, refusing to honor some or all of the
nation’s debt obligations. In times like these, that is always on the
table. Asset destruction is a tantalizing quick fix for elected
officials opting to pin blame on a wealthy investor class. A fix that’s
been used time and time again throughout history in the kind of polarizing
political atmosphere coming out of Washington in December 2012.
Under the visible possibility, the
worst-case scenario is hyperinflation. At market realization of the threat that prices could go that far out of whack, if you’re sitting
with long term bonds bearing a low single digit coupon rate, YOU WILL LOSE SOMETHING LIKE
HALF YOUR CAPITAL ON THE FIRST STRIKE. After a brief dead cat bounce,
that loss will deepen - to TWO-THIRDS OF YOUR CAPITAL if encountering 1970’s
style inflation, or mathematically worse should hyperinflation actually rear its
horrific head.
And don’t think you’ll be able to
trade your way out of it either. Markets can close for days or weeks in
the midst of a financial holocaust - simply because nobody has any idea what
anything is worth anymore. Even if stock exchanges are open, buyers can vanish and bid-asked spreads widen to blatantly racketeering levels. God help the naive investor who thinks that markets function at his convenience.
As for the second possibility, your
loss, usually 100%, is determined as of the date the announcement comes
out. That's all she said about that.
So, whatever the media mumbles about the fiscal cliff in the days to come, remember this. As
catastrophic as the event may seem, it’s only a drop in the bucket given the
course this country is on and where we’re headed eventually.
Stay tuned for that, valued
subscribers, and please remember this, we join you in hoping we all outlive our money.
