naked capitalism

kevinearick says:

Volcker can only handle the banking error. He cannot build a new education system. Last time around, he had the Internet to work with, to assume the validity of NPV calculations. He cannot fix the leak:

5%GDP, American corporations blowing up the Asian bubble, to support the American bubble, effectively “printing” money, with no bump in tax receipts, like no one is paying attention. Don’t fix the leak; just keep pumping money down that rat hole. Nice

So, there I am, watching the suck truck pull sand out to place an elevator jack, but the elevation isn’t going down any, and the university bosses don’t want to stop, because of the alternative cost. The company owner went on vacation to Florida, and the other elevator mechanic is sweating bullets, wishing like heck he were 500 miles away from this infinite hole in the ground. The sand is coming out from under the floating foundation of a 19th century building, with no pilings, sitting above a natural spring. Gotta love public education.

Here comes the bullwhip, where capital tries to jump start an economy with no final demand, by force, then throws a temper tantrum when it fails, and cuts its own lifeline (that family board meeting before the mid-term elections should be interesting).

A real economy requires a real education system. The old propaganda system failed when several billion people, from 100s of cultures, started crosschecking the data, choking the old system on the margin.

What external observers saw was capital liquidating the middle class, traveling back and forth at the same station, dissipating wealth, while going no where. Internally, capital was running about looking busy on tv(s) that replaced economic windows, simulating an economy, so none of the participants would want to get off the ride, until it was too late.

Capital liquidates the middle class from the back of the train, forward, throwing the drained carcasses off the caboose with each cycle, which is why it does not, under any circumstances, want anyone to look too closely at the spoil pile, output from the legal system, and why it directs all attention to the social promise of advancement through the certifiably rigged lottery economy, where capital and its hacks enjoy caviar and champagne in the front car, until the current load is fully dissipated. Then it pulls in the next sector of the middle class capacitor, to rinse and repeat, producing the internal combustion economy. It didn’t take a great leap for global observers to see that capital cartels were applying the same technique globally.

The basic algorithm hasn’t changed; the relative frequency of economic turnover, speed to disclosure, has simply accelerated to the point where capital’s family law / breeding control mechanism has become transparent, and individuals are turning off the propaganda machine at an accelerating pace.

This is the last round of the old system. If the pension funds are already bankrupt on a real cash flow basis, why not juice them with infinite leverage to drive the market? So goes the thinking … again, like the doctor zapping the corpse for 20 minutes to impress the new nurses.

With structurally shrinking tax receipts, increasing demographic demand, and infinite, virtual monetary expansion to issue the checks, the white-tops are only as secure as the kids paying for their pensions, as it should be. Once everyone realizes that, the monetary system will take care of itself.

The white-tops may want to take a good look at Florida on their next trip, and re-assess their attitude about prices and wages before the mid-term elections. Shorting their kid’s wages, to drive up their own equity, created the economic desert, and the only way to support the required wage/price ratio, to right the economy and bring Lazarus back from the dead, is to install a real education system. The old one is a sunk cost.

The children need real education to re-establish confidence in future cash flows, and, in order to get it, the artificial induction system of crony job certification has to be replaced, with effective final demand from an open and transparent job certification system. Short of that, the $500T is headed into the rocks, along with all the white-tops and cronies attached to it.

Because the too-big-to-fail strategy fully discharged the economy, it has to be re-tooled from the bottom up, which is only a problem for those clutching non-performing assets, and they will go over the cliff regardless, if they do not let go. The current congressional system, as a captive of capital, is a sunk cost as well. Correct the problem or don’t correct the problem; the problem will be corrected.

Big Capital and small labor reside on opposite ends of the economic fulcrum. An imbalance does not tell you who has the upper hand; it tells you that there is a bimodal distribution, the gate contacts are opening, and that the catapult will release the forward distribution and recycle the lagging distribution, if the problem is not corrected.

Because Big Capital’s goal is to protect itself from exposure to evolution, it knows only what small labor learned, and communicated to it, in the last round, and small labor never ties off to Big Capital with anything other than a slip knot. It’s in the nature of capital to drown itself.

Never put a drowning victim in a position to pull you under, and keep a sharp knife handy, to cut the line just in case.

In Florida, everything is for sale, at a deep discount, but you need cash, and the store clerks are checking $1 bills for counterfeit script. The Chinese are not stupefied, and the Chinese kids are wearing their pants down to their ankles.

Watch out.