"I saw my problems and I'll see the light
"We got a lovin' thing, we gotta feed it right
"There ain't no danger we can go too far
"We start believin' now that we can be who we are.
"Grease is the word..."
That's the opening verse of the Bee Gees' title track from the movie "Grease."
They go on to sing "Grease is the way we are feeling." Well, if you change the spelling of the word to "Greece," that's how I'm feeling about America's debt.
Both Greece and the U.S. are on a slippery slope, greased by too much debt.
And, like the song says, we are both in danger of thinking that because we see the problems, we see the light. We are both feeding it right - our debt, that is.
We're similarly deluded in believin' there ain't no danger we can go too far.
But that's wrong. The danger is incredible.
You see, something just happened in Greece - something that is going to happen here and, in fact, is already happening, but doesn't have to. We can still stop it.
In fact, what's brilliant is that Greece is an easy lesson for us.
"We got a lovin' thing, we gotta feed it right
"There ain't no danger we can go too far
"We start believin' now that we can be who we are.
"Grease is the word..."
That's the opening verse of the Bee Gees' title track from the movie "Grease."
They go on to sing "Grease is the way we are feeling." Well, if you change the spelling of the word to "Greece," that's how I'm feeling about America's debt.
Both Greece and the U.S. are on a slippery slope, greased by too much debt.
And, like the song says, we are both in danger of thinking that because we see the problems, we see the light. We are both feeding it right - our debt, that is.
We're similarly deluded in believin' there ain't no danger we can go too far.
But that's wrong. The danger is incredible.
You see, something just happened in Greece - something that is going to happen here and, in fact, is already happening, but doesn't have to. We can still stop it.
In fact, what's brilliant is that Greece is an easy lesson for us.
We now know how to solve the riddle about how to fix the debt mess we're in and what exactly to do about the dreaded fiscal cliff.
Let me haircut this for you right here: We aren't going to fix our debt and spending problems in the next couple of weeks, or in January, or by the first quarter of 2013, or next year. We aren't going to fix them by the next mid-term elections.
So let's all hold hands and jump off the fiscal cliff.
Don't be afraid. Yes, it's a long way down, and we may never hit bottom. In fact, there is no bottom. We won't get there.
We will feel our stomachs rise in our throats on the way down, and we may even vomit a bit. But once that passes, something remarkable will happen. Something thousands of Wall Street Insights & Indictments readers tell me they want more than almost anything.
I'll get to that.
But first: Here's the reality about Greece. They're "you-know-what" (rhymes with "screwed," kind of). They can't get past the debt they've accumulated. They keep adding to it, in fact.
The ECB, the Eurozone euro currency group, the IMF, and Europe's banks are all playing the "extend and pretend" game with Greece. As if the country is going to pay back its debt. Newsflash: It can't - EVER.
Greece's debt-to-GDP ratio is now more than 170% (the U.S. ratio is around 102%). By now it was supposed to be down to about 140%. Who are they kidding?
What happened is that politics intervened. Politics and another thing called reality - which is kind of like politics, only not as surreal.
After several rounds of bailouts, and restructurings of those bailouts, and the buying back of new debt that Greece issued by Greece itself at a discount (which means the buyers of that debt got screwed), so they had less debt outstanding (for a second), so they could issue a ton more debt (at lower interest rates, of course), so their debt burden and debt-to-GDP ratios would fall... all because they had to fall to meet IMF and ECB and lender criteria to be able to borrow more in the future (because by then, of course, they would be a better bet to pay back what they were then going to borrow), after all that jockeying of debts and bailout loans, and even after two general elections and a lot of political backstabbing...
Guess what.
Greece hasn't done anything to meet the criteria that its lenders demanded for them to get any more loans.
So, what happened? Consequences? The end of the road?
No. Greece just got approved for another bailout tranche. It starts now and runs through March.
There's no need to get into the specifics. It's always the same.
The banks that borrow the money from central banks (who print it or say they have promises of member governments to pony up the money if the central banks get into their own trouble with all their lending) buy the debts that Greece and the other sick Eurozone countries vomit up to keep the extend and pretend game going so they don't all end up insolvent, which technically most of them are.
How so?... Because they don't have anything near to the amount of money they've lent out and never will. That's not how they work. They work on the belief system.
You know, if you believe they have it, they are safe and solvent. Yep, it's kind of like: "We start believin' now that we can be who we are, grease is the word..."
So here's what we have to learn from Greece.
The extend and pretend game sucks the life out of everyone. Except the bankers, of course, they get a permanent reprieve, kind of like a perma-stay of execution for their criminal lending policies.
Greece has been in a recession for seven years. That's what's ahead for us (or worse).
The U.S. had a more diversified economy, to be sure. But so does Japan, and look what happened there. They're well into their second "lost decade."
The funny thing that isn't funny is that Japan ended up where it is because of what happened there. What's not funny is that what happened to Japan is exactly what is happening to us.
First, an uncontrollable housing and property boom made people feel rich. So they borrowed against their property to invest in the stock market, which, of course, rose with all that money chasing rising share prices. Then the bubble popped and the markets collapsed, both of them, the stock market and the property market.
The same thing happened here in the U.S. The only difference here is that the Fed pumped so much money into the banks - which has gone into the stock market - that the stock market recovered. And now the property market looks like it's starting to recover. So far, so good.
But then there's all this debt. We're looking like Greece, playing a never-ending game of extend and pretend.
But it does need to end.
So I say let it end here. Let's jump off the fiscal cliff.
Our politicians make Greek politicians look like Greek Gods. There's no way our federal fools are going to get us out of this without getting themselves into a position to be elected or re-elected. It's about them, not us.
So let's all be the brave Americans we are and jump together.
If we do, again, we won't ever hit bottom. We will find a cloud somewhere on the way down that will break our fall and we will start floating. Why? Because here's the amazing silver lining...
Once we stop stupid spending, once we raise enough revenues, our debt problems will diminish. They won't go away completely. But if we go over the cliff, do you really think we're not all going to look at our politicians, all of them, and take them all to the woodshed?
This could be our chance to change the way we are governed.
This could lead to the revolution we need to throw all the bums out, to shut down the Federal Reserve (so it doesn't keep printing money for the banks to get into more and more trouble that we end up having to bail them out again by, guess what, having the Fed stuff them with more money), and to revisit what kind of America we want for the future of all our children and their children, and the world.
There, I said it. Let's all go jump off a cliff.
Who's with me?
Related Articles and News:
Jump off of it...
That's right. Man up, get behind it, and stop "believin' now that we can be who we are." We already are who we are - hopelessly in debt.Let me haircut this for you right here: We aren't going to fix our debt and spending problems in the next couple of weeks, or in January, or by the first quarter of 2013, or next year. We aren't going to fix them by the next mid-term elections.
So let's all hold hands and jump off the fiscal cliff.
Don't be afraid. Yes, it's a long way down, and we may never hit bottom. In fact, there is no bottom. We won't get there.
We will feel our stomachs rise in our throats on the way down, and we may even vomit a bit. But once that passes, something remarkable will happen. Something thousands of Wall Street Insights & Indictments readers tell me they want more than almost anything.
I'll get to that.
But first: Here's the reality about Greece. They're "you-know-what" (rhymes with "screwed," kind of). They can't get past the debt they've accumulated. They keep adding to it, in fact.
The ECB, the Eurozone euro currency group, the IMF, and Europe's banks are all playing the "extend and pretend" game with Greece. As if the country is going to pay back its debt. Newsflash: It can't - EVER.
Greece's debt-to-GDP ratio is now more than 170% (the U.S. ratio is around 102%). By now it was supposed to be down to about 140%. Who are they kidding?
What happened is that politics intervened. Politics and another thing called reality - which is kind of like politics, only not as surreal.
After several rounds of bailouts, and restructurings of those bailouts, and the buying back of new debt that Greece issued by Greece itself at a discount (which means the buyers of that debt got screwed), so they had less debt outstanding (for a second), so they could issue a ton more debt (at lower interest rates, of course), so their debt burden and debt-to-GDP ratios would fall... all because they had to fall to meet IMF and ECB and lender criteria to be able to borrow more in the future (because by then, of course, they would be a better bet to pay back what they were then going to borrow), after all that jockeying of debts and bailout loans, and even after two general elections and a lot of political backstabbing...
Guess what.
Greece hasn't done anything to meet the criteria that its lenders demanded for them to get any more loans.
So, what happened? Consequences? The end of the road?
No. Greece just got approved for another bailout tranche. It starts now and runs through March.
There's no need to get into the specifics. It's always the same.
The banks that borrow the money from central banks (who print it or say they have promises of member governments to pony up the money if the central banks get into their own trouble with all their lending) buy the debts that Greece and the other sick Eurozone countries vomit up to keep the extend and pretend game going so they don't all end up insolvent, which technically most of them are.
How so?... Because they don't have anything near to the amount of money they've lent out and never will. That's not how they work. They work on the belief system.
You know, if you believe they have it, they are safe and solvent. Yep, it's kind of like: "We start believin' now that we can be who we are, grease is the word..."
So here's what we have to learn from Greece.
The extend and pretend game sucks the life out of everyone. Except the bankers, of course, they get a permanent reprieve, kind of like a perma-stay of execution for their criminal lending policies.
Greece has been in a recession for seven years. That's what's ahead for us (or worse).
The U.S. had a more diversified economy, to be sure. But so does Japan, and look what happened there. They're well into their second "lost decade."
The funny thing that isn't funny is that Japan ended up where it is because of what happened there. What's not funny is that what happened to Japan is exactly what is happening to us.
First, an uncontrollable housing and property boom made people feel rich. So they borrowed against their property to invest in the stock market, which, of course, rose with all that money chasing rising share prices. Then the bubble popped and the markets collapsed, both of them, the stock market and the property market.
The same thing happened here in the U.S. The only difference here is that the Fed pumped so much money into the banks - which has gone into the stock market - that the stock market recovered. And now the property market looks like it's starting to recover. So far, so good.
But then there's all this debt. We're looking like Greece, playing a never-ending game of extend and pretend.
But it does need to end.
So I say let it end here. Let's jump off the fiscal cliff.
Our politicians make Greek politicians look like Greek Gods. There's no way our federal fools are going to get us out of this without getting themselves into a position to be elected or re-elected. It's about them, not us.
So let's all be the brave Americans we are and jump together.
If we do, again, we won't ever hit bottom. We will find a cloud somewhere on the way down that will break our fall and we will start floating. Why? Because here's the amazing silver lining...
Once we stop stupid spending, once we raise enough revenues, our debt problems will diminish. They won't go away completely. But if we go over the cliff, do you really think we're not all going to look at our politicians, all of them, and take them all to the woodshed?
This could be our chance to change the way we are governed.
This could lead to the revolution we need to throw all the bums out, to shut down the Federal Reserve (so it doesn't keep printing money for the banks to get into more and more trouble that we end up having to bail them out again by, guess what, having the Fed stuff them with more money), and to revisit what kind of America we want for the future of all our children and their children, and the world.
There, I said it. Let's all go jump off a cliff.
Who's with me?
Related Articles and News:
-
Money Morning:
With the Fed Out of "Bullets," A Stock Market Crash Will Really Hurt -
Money Morning:
Thanks to the Fed, It's All Proceeding According to "The Plan" -
Money Morning:
The Stage Has Been Set For Another Credit Crisis -
Money Morning:
It Looks Like the Market Is Saying "OMG"
I'm with you! Sounds good to me! Let's get rid of all the bums and start over!
I'm with you
I agree – I think that back in 2008, the bailouts should never have started and the troubled banks should have been left to let the market sort them out. There would have been a lot of pain felt undoubtedly, but by now we'd have all crawled out from under the likely depression it would have caused and been humbled into realizing we can't all spend stupidly forever.
It sort of like slamming your hand in the car door – just don't do it slowly!!
Our parents crawled out from the last depression with a far greater respect for frugality than our generations have ever had. Yes they endured a lot of pain, but they came out of it as smarter people.
The end!
"There are two ways to conquer and enslave a nation. One is by the sword and the other is by debt." John Adams 1826
I wish there were another way, but there doesn't appear to be. What has become clear (now that the election/campaigning is over) is that the President has NO intentions to reign in spending and put our fiscal condition on a sustainable path – and a large chunk of our fellow citizens are not tuned-in enough to understand (they simply believe (at face value) what the slick-talking politicians are saying to them).
Our so-called millionaires/billionaires do not have enough money to come close to solving our problem (even at a 100% tax rate).
A sad situation we are in – going over the cliff appears to be the "only" way to have a chance of saving us from total ruin.
We must be willing to jump "if" we are going to have a chance.
I like what I'm reading here, Shah. I'm ready to jump with you, but I have no clue as to what that jumping entails. How exactly does an obscure individual 'do their part'!? BTW, I am a new subscriber and am just absolutely loving your articles!!
HOW?, I'll do it.
Greece has no incentive to do anything about there debt crisis, they know that there debt crisis does affect the rest of the world. So they know that the rest of the world will keep bailing them out. But by Greece knowing this, when they recieve bailout money, they will spend it on whatever they feel like, because the rest of the world, who doesnt want to have greece spiral down, will just give them more to bail out and the cycle of this bailout-free spending- bailout- free spending will continue ad infinitum….. IMHO
JUMP!!
I was thinking exactly the same thing! I wonder how long it would take. Probably not in my lifetime.
Well said, Shah! Fantastic article and a refreshing US viewpoint to an oversees interested (and affected!) observer. The future for us all looks like whatever the opposite of rosy is, and the only rational course is to bite the bullet, stop borrowing and start paying back what has been "spent". I feel some sympathy for the Greek public, devastated by spending cuts and unemployment, but they turned a blind eye for too long and we are all guilty of that same crime. It's time to stand up to goverment everywhere and say, "enough!". Thank you.
I am a union boilermaker.25yrs. And have watched my pension get "adjusted", annuity plan incurr "administration fees"galore, and our raises get "redirected",all due to our governing bodie..we are all locals governed by an international brotherhood..international is like our go ernment, they give themselves raises while the working hands take cuts…its really hard to watch..I would love to see all the corrupt government officials and governing bodies have to answer for their corruption..but how does that happen? Revolution? As all the revolutions before..it would cost lives..crazy,but IM IN!!
This article makes sense, even though a lot of essentially researched detail is missing to support the warrant of the claim. However, what is practically understood from the apparently underlying statements in the theory presented is that America can no longer continue borrowing money in order to play the role of America in the world or to Americans; and America should stop borrowing money in order to uphold the belief that America can pay back all that is borrowed. Americans do not have to hold hands and jump into the bottomless pit of debt and impending doom, that is true; but, Americans must be willing to work together to prevent disaster, instead of working together to demand all things be freely given to them, which seems to be a great fault the grassroots population of Greece. Therein is the danger of failure in America, because the government is simply taking what the government can get for itself, while tying to appease the grassroots Americans. When one truly thinks about it, there is no practical logic in this theory. So, everyone will be forced to sit and watch what the results will be?
Dr. Bill Avaritt
The nation just had an election that proves there currently is no solution for solving either the socialist direction of this country, the destruction of the elitist and decision makers, the scaling back on the banking system and the elimination of the Federal Reserve or the IRS, for that matter, or the restoration of a constitutional government. The graffiti is on the wall and the US welfare ship of state has the approval of approximately half of the slothful population.
Greed, avarice and taxation without representation are the "rule of the day" and I don't believe that divine intervention is anywhere close at hand. There are few leaders who are not drowned out by the liberal news media or the rats, pigs, indigents, government bureaucrats or those on the government payroll, and all the free-loaders that gather at the government's never ending "food trough." Those wanting to "spread the wealth" are the ones unwilling to work for it.
It looks like the historical rise and fall of Rome all over again, except on a much more accelerated scale. The government and the courts are pushing God out of our country and his context to our founding principles and cultural way of life. I can only hope that God is merciful, because the un-United States is going to need His consideration in the matter.
And Obama buys a 40 million Estate in Hawaii
http://weeklyworldnews.com/politics/51125/obama-buys-40-million-estate-in-hawaii/
I am with you, but will the politicians really let it happen?
The only solution is revolution….
Shah,
I'm with you. But how does an individual go about jumping?
Larry
I am with you for sure!! You and your group bring rays of hope to me in this dysfunctional state our country is in.
Thank you and keep up the good fight!
Greece should drop out of the Euro and quickly before it drags the rest of the "PIIGs" with it.
As for the US we had better wake up fast or the dollar will be worth zip in a couple of years.
You are absolutely right, we should jump off the cliff and take our lumps now. Perhaps we may
then seek some fiscal sanity. It's going to be painful but it's gotta happen or we will pushing the
pile of dung for years until the whole mess explodes.
I AM WITH YOU….should have done it 5 years ago!
Actually, the "Grease" title song was sung for the movie by Frankie Valli, though it was written by Barry Gibb and performed by the Bee Gees in their concert tours.
Let's face the music and dancre.
I am !
I think a more appropriate verse is from the song tempest Mothers and their daughters descending down stairs jumped into the icy waters love and pity sent their prayers.
I believe you're right- that the sooner this happens the better. People will still remember how to fend for themselves and revert to capitalism for their sustenance, once the dust clears. The longer that people live in socialism the harder it is to get them off those dependent, "what can you do for me" ways. Look at Russia. Those people had their chance to be free and blew it because they didn't remember HOW to be free!!
Shah
OMG. Okay so I'm gonna go buy more Gold and get that Mossberg 930 semi auto 12 Ga I been promising myself. I might as well pile up some more ammo too, before Hillary and Obozo ban ammo as well as guns.
Honestly, I am getting that Mossberg, but I am sticking with my quality stocks that pay decent and increasing dividends. I'm still liking commodities, water companies, food companies and oil, gold and silver stocks.
Let's not tell the Chinese we will never pay them back.
You paint a dark and dreary picture and the worse part is, I agree with you.
Paul
I agree with you.
In theory I agree with you. Some how we need to stop the spending, Our government take's our money by force then just pisses it away faster than anybody could ever beleive. I do not want to fund the IMF, or the United Nations, I don't want to give forgein aid to Egypt or Packistan or anyone else. I do not want to pay the pensions of our congressmen, I do not want to pay to have our kids sent to Afganistan. I do not want to pay for 50,000 troops to be stationed in Germany, or PBS for that matter. If a hurricane destroys Hatie I would like to decide for myself if I want to donate money. However if we go off the cliff, I think we will double dip back into depression. Maybe that would put an eye on the spending side. Thelma and Louise, The wronged just say screw it it's not worth the pain any more, And go off the cliff. I remember when they drove off the cliff but I don't remember if the car exploded when it hit the bottom, I'll have to watch it again or if anyone else remembers just save me the two hours.
We are going over the cliff anyway, whether we agree to jump together or not. I have been telling the House that they can do a lot to help: refuse to raise the debt limit, refuse to fund everything in Washington that is not absolutely required to have a stable government, get rid of 4 or 5 of the Departments in the Executive Branch which are unconstitutional, refuse to fund Obamacare and cut all salaries of government employees, including the Pres., Congress and Senate, Judges and so on.
It probably wouldn't keep us from going over the cliff but it might reduce the distance of the fall.
But NO ONE UP THERE IN THE HOUSE HAS THE BACKBONE to do the job required.
So good bye America, welcome to another Zimbabwe with a Muslim Dictator – which means we become another Iran.
NOW AIN'T THAT SWEET?
Like your thoughts
at least if you jump, then all will share the burden and not just the productive ones, ie income earners
you could get rid of all the zombies & freeloaders, you could bring the empire borders back to the states and if you clean up your own house first, you might even get a chance to lead the rest of the globe back from oblivion (and economic war).
In fact the cliff might even make you self sufficient
Why not Van Halen's "Jump"? It doesn't have the tie-in to "Grease" but it would make a nice theme song to inspire the masses, wouldn't it?
Interesting essay, but it should have been just one or two paragraphs on what we should do, if we could, and the remainder on "but here is what is actually going to happen."
Politician are motivated principally by what is good for them. Typical human behavior. We, the great unwashed, cannot do anything short of a revolution that will change their behavior. When we have an election it is like a rapist asking you if you want it in the front or in the rear.
Governments in the USA, at all levels national and local, have been perverted beyond all recognition, and I think it should be obvious that the people in power in this country are never going to change their behavior.
I would welcome with open arms and mind anyone who can bring forward a way that the everyday citizens of the USA can use together to end this calamity. And please, please, don't suggest that we vote the bums out, saying such a naive thing just shows your lack of understanding of political reality.
DC
Ummm… Greece doesn't have its own currency, but the US does. The US will never "default" – at worst, its currency would devalue, which would actually be a decent outcome for the exporting half of the economy. Greece can't devalue because it doesn't have a separate currency. It has to come up with hard Euros, and other countries (like Germany) are keeping the Euro high. Yeah, Greece is screwed, but the US isn't.
Seven-year depression….coming up. Then 30 years of Fabulous, fueled by cheap energy and a revitalized credit market. Gulp
Unfortunately, we are now suddenly worried about debt with a fragile economy and a future of high unemployment for some time to come. I can't help but wonder where all of you were when we made drastic tax cuts, started two expensive wars of unprecidented length, managed to add 5 trillion in debt, and failed to regulate the banking industry. Even our decision to set dates to exit the wars was met with angry GOP people that thought it was a terrible idea. The same people that dug this hole are suddenly worried about the budget and take no blame. We will eventually gain back the middle class, gain jobs, and it will make sense to eliminate all tax cuts at that time. Doing it at this time will slow our recovery and do more harm than good.
I'm with you.
Let the blame fall where it is deserved.
I'm with you, Sir. There's NO effin' WAY the debt will be paid.
How about repudiating it? That would really make the soup hotter, perhaps?
I'm all ready to go! All my affairs are in order, 50% of my monies have been converted into gold coins while the rest have been deposited into offshore accounts.
Believe me folks it's not to late convert to gold before we go off the cliff.
Good luck to everyone and God Bless America.
Sounds like a plan. I'll wear my lite fall suit.
I'm with you all the way. I live in the UK and we are screwed too. The UK,US and Euro cloud cuckoo Land need to press the reset button NOW.
I agree. Short term pain, as intense as it might be is preferable (in my opinion — and as Marcus
Aerilius said "all is opinion") to long term oblivion. The Federal Reserve has managed to deflate the value of the dollar since its inception by about 97% — the flip side is inflation, and now the policy is to print money like mad. This seems to be the policy to offset unsustainable pensions
etc. — but in the end everyone suffers from the ensuing inflation. Inflation can be viewed as a
tax, plain and simple. Morever, its a regressive tax and hurts everyone, especially the poor. This
policy also creates bubbles, as in the housing market etc. The policy is therefore "I'm forever
blowing bubbles" they look nice until they pop — and the markets are especially vulnerable now. History shows that politicians like to cap inflation — but this has never worked. These kinds of policies have to do with humans greedy natures and repeatedly bring down civilizations. In the
end we are responsible because we keep voting for the clowns of our choice.
Let's do it …. Look out belowwwwww !
News flash most of us went off the cliff years ago and could give a s*
Funny the only candidate who promised a smaller gov't and wanted to abolish the Fed Reserve
was quickly deleted from the ballots…. Sorry Ron Paul not in this country against a stacked deck..
I am with you.
I am ready to junp if we don't get enough spending cuts!!!!!!
I,m with you, lets jump. We have to stop the gross printing of our us dollars….
What exactly is the method to go over the Fiscal Cliff?
What are the mechanics to achieve it?
(PS, What happened to the identical previous letter and responses?)
Qvestions, alvays ze qvestions !
i'll jump !
I've just gotten tidbits of the "plan" to avoid the cliff, that Komrad and Kommisar Obama proposed last Thursday.
In the long run – i.e. beyond the middle of 2014 (or maybe earlier), my guess is that the Cliff would be less damaging to the economy than his plan
I'm all for it. I had to do this very thing with our company and houehold finances. We run a concrete construction company which hit the skid hard duing the past 2-3 years. I started using (and kept using) our line-of-credit (like printing money) to stay afloat and to "maintain our lifestyle". We ended up with about $100K of debt. I, too, was in the "extend and pretend" mode: I kept using it and hoped it would somehow 'just blow away…" but it never did until I maxed out, went over the cliff and got to work cutting costs and living frugally, and working very hard. By the grace of God, we're almost there – I can see the end – and it's a great relief. I needed to hit the wall and hit it hard – it has been tough (and it should have been!) and to be truthful, it "hurt" because I couldn't be so comfortable (which is what I think most of us are really wining about when we think of having to stop being indulgent and start being disciplined and responsible and stop looking for someone to bail us out of the trouble or to blame for a self-created problem). So let's agree together and do this and stop treating it as if it's a bad thing – we need to do it now, not tomorrow or the next term. Imagine how things will be if we're forced to do it like Greece is/will when things are much further down the road. We need to show the politicians that WE GET IT and will invite them to go find other work if they don't.