Wednesday, December 28, 2011

Power does not come from competing in the market place of ideas, it comes from utter corruption....


Power does not come from competing in the market place of ideas, it comes from utter corruption....

“The entire world is now broke”....

by Don Surber

When it comes to bankrupting a nation, Barack CIA Obomba should bow to his counterparts in China and Japan. Obama and his economic advisers just are not up to the majestic stupidity of their counterparts on the other side of the Pacific. The United States going broke makes sense. We stopped making things. Everyone has a B.A. on communications, journalism, English or something just as useless. But for China to go belly up takes some real genius. China has trade surpluses. You really have to go out of your way to spend that much money.


http://news.yahoo.com/obama-nominate-powell-stein-fed-governors-180141381.html

China is turning Japanese. And that is where our story begins. Our intellectual and moral superiors considered the Japanese economy a rival primed to take over the American juggernaut 20 years ago. Japan had surpluses and it began buying property in the United States (at terribly inflated prices — we ain’t that dumb), which spawned fear-mongering stories about racism in the New York Times (“Huge Japanese Realty Deals Breeding Jokes and Anger,” December 18, 1989 and “Japanese in the New York Region Begin to Feel the Sting of Prejudice,” July 22, 1990 — America is always one sheet away from a klan rally in the eyes of the staff and management of the New York Times).....http://sjlendman.blogspot.com/2011/12/russian-v-us-elections.html

But the reality is, Japan’s economy stalled and its government got hooked on stimulus and stimulants, and well…

From Zero Hedge: “Japan Will Raise More Cash From Debt Issuance Than Taxes For Fourth Year In A Row.”

That’s remarkable. Such a deal. For every dollar in taxes, your government spends two dollars — or more.

And what is amazing is that Japan with a population one-third of America’s has a national debt that is larger than ours and it is living well beyond its means — and it is getting away with it.

From Zero Hedge:

While the world is watching Europe and the US for signs of imminent decoupling, and now has added China to its insolvency focus list, things in Japan, which is “fine” courtesy of a self-destruct autopilot, are just getting plain ridiculous. As we reported earlier this year, Japan’s marketable public debt, already the largest in the world at $11.2 trillion compared to America’s $10 trillion (of course this assumes the whole SSN sleight of hand is funded, which it isn’t), is due to surpass ¥1 quadrillion any month now (aka the exponential phase). And that’s just the beginning.

As Bloomberg reports, “Bond sales to the market will climb to a record 149.7 trillion yen ($1.9 trillion), while the national budget’s reliance on debt for funding will rise to an unprecedented 49 percent in the year starting April 1, Japan’s government said Dec. 24. The government said it plans to sell 44.2 trillion yen of new bonds to fund 90.3 trillion yen of spending in next fiscal year’s budget. It estimates that tax revenue will total 42.3 trillion yen in fiscal 2012, meaning that new bond sales will exceed tax revenue for a fourth year.”

In other words, in a world increasingly disconnected form any sort of reality, very soon no taxes at all will be needed: after all each and every government (or uber-union in the EU’s case, once the imploding Eurozone turns to the final Deus Ex – a fiscal protectorate issuing joining Eurobonds) will simply fund all its cash needs by printing its own money. Naturally, anyone daring to suggest that this is beyond idiotic will be given an MMT 101 manual and/or incarcerated for grand treason. And any last voices of sanity will be promptly muted: “I think the reliance on bonds to compile budgets is reaching its limit,” Japanese Finance Minister Jun Azumi said Dec. 24, after the announcement of the budget plan.

Japan has a Wile E. Coyote Economy. Just as the laws of gravity are suspended until that moment when Wile E. Coyote looks down, the rules of finance are suspended until someone notices that there is nothing supporting the Japanese economy.

Oops.

Now here is the real sad thing. China looked down. And guess what, our Overlords are broke too.

From Zero Hedge:

Well, now we learn that as the global insolvency wave finally moves to China, a bankruptcy is now called something even less scary: “deferred loan payments” (and also explains why suddenly Japan is going to have to bail China out and buy its bonds, because somehow when China fails, it is the turn of the country that started the whole deflationary collapse to step to the plate). After all, who in their right mind would want to scare the public that the entire world is now broke. Certainly not SWIFT. And certainly not that paragon of 8%+ annual growth, where no matter how many layers of lipstick are applied, the piggyness of it all is shining through ever more acutely. Because here are the facts, from China Daily, and they speaks for themselves: “China’s biggest provincial borrowers are deferring payment on their loans just two months after the country’s regulator said some local government companies would be allowed to do so….Hunan Provincial Expressway Construction Group is delaying payment on 3.11 billion yuan in interest, documents governing the securities show this month. Guangdong Provincial Communications Group Co, the second-largest debtor, is following suit. So are two others among the biggest 11 debtors, for a total of 30.16 billion yuan, according to bond prospectuses from 55 local authorities that have raised money in capital markets since the beginning of November.” So not even two months in and companies are already becoming serial defaulters, pardon, “loan payment deferrers?” And China is supposed to bail out the world? Ironically, in a world in which can kicking is now an art form, China will show everyone just how it is done, by effectively upturning the capital structure and saying that paying interest is, well, optional. In the immortal words of the comrade from Georgia, “no coupon, no problem.”

Maybe the Saudis will bail us out. Maybe Dubai. Otherwise, I have seen the future and it is North Korea:

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