Green Shoots? Where is Global Trade?

I know I keep hammering on 30% contractions in various metrics of shipping and traffic, asking "how can we have a 5% GDP contraction when 30% downstrokes are taking place literally almost everywhere I look in commercial activity?"

Do not tell these men and women about green shoots of recovery. As Briton Tim Huxley, one of Asia's leading ship brokers, says, if the world is really pulling itself out of recession, then all these idle ships should be back on the move.

'This is the time of year when everyone is doing all the Christmas stuff,' he points out.

'A couple of years ago those ships would have been steaming back and forth, going at full speed. But now you've got something like 12 per cent of the world's container ships doing nothing.'

Decreases from 850 pounds to 180 (pound sterling) to move a container from China to the UK?

Remember, this is the time when Christmas goods are on the way. You can't order something from China, have it produced, and then have it sent in a ship in a week. Uh uh. Those goods have been ordered now, they are in the pipeline for delivery now, or they're not coming.

Lies told in 2007, 2008 and now, in 2009. Claims of "green shoots" by the media, by politicians, by industry.

Lies intended to get you to sink yourself further into debt peonage and slavery.

Lies that reach back to the passage of the "Bankruptcy Abuse Prevention and Consumer Protection Act of 2005" - a law that, like so many others, was a lie in not only its text but in its title.

This law changed the presumptions in bankruptcy code, but only for consumers, not for corporations. If your income is above the median income of their state, you may not be able to file for bankruptcy and discharge debts.

The law establishes a presumption that you are abusing bankruptcy if you have as little as $166.67 in monthly income available after the allowed deductions. That's right - less than one week's grocery bill for an average family of four in income beyond their claimed "means test" with you making minimum debt payments (under which your debt would not be discharged for up to ten years!) results in a finding of presumptive abuse.

President Obama, when in the Senate, voted against this bill. But he has not, and I am willing to bet he will not, send up a bill to Congress demanding the repeal of this law.

A law intended to render you a slave to debt, even if your enslavement results from the unilateral change to terms made by your creditors, such as millions of Americans have encountered in the last year from their credit-card companies.

President Obama claimed to be opposed to this law in 2005. Where is your bill sent up to Congress, now that you have a majority in both houses, to repeal it, IF IN FACT YOU WERE REALLY OPPOSED? I charge that President Obama was a LIAR as a Senator standing opposed in 2005 to this legislation AND STILL IS IN FACT IN SUPPORT OF IT.

This cannot be sustained. It simply cannot. I don't care if people want it to be, I don't care if bankers want it to be, it does not matter.

At a ratio of 375% of debt to GDP with an interest rate of just five percent the nation expends $2.65 trillion in interest costs, or about 20% of GDP.

That's $2.65 trillion dollars that does not go to salaries of productive workers, it does not go toward inventing new machines and technologies, and it does not help advance the common weal of The United States.

That interest rate, by the way, is likely to be impossibly low. Remember that included in there is not just the manipulated short-term rate for credit to the Federal Government; indeed, most credit is not Federal. It is private in some form or fashion, whether charged to consumers for credit card use, to companies for inventory and expansion, or to investors and speculators who wish to deploy capital in the markets in a leveraged format.

The lies must stop and we must accept that the position we are in today is untenable. GDP cannot rise dramatically, as it must to contract the debt-to-GDP ratio if debt is not to be defaulted, under a regime where global trade "forces" labor overseas because a poor woman in Vietnam will sew jeans for 25 cents/day, while a laborer in America would require (under minimum wage laws) $8/hour to do the same job. We cannot have a "global trade paradigm" where China literally robs intellectual property wholesale without any retaliatory action by the United States, yet we will buy billions of dollars of their lead-painted toys in our nation without regard to their safety - or the labor conditions under which they were produced.

The bankers who shoved this debt upon the public knew when they did it that there was no way those obligations could be met. The simple mathematical principle of exponents guaranteed this fact, and each and every one of those "geniuses" with advanced degrees, including Chairman Bernanke, is well-aware of this foundational mathematical principle. Yet none of them told the truth to Congress or The American People - a people that are largely educated in government schools where the application of these foundational mathematical principles to the claims of economic growth and stability made by government are not taught, for if it were the government would be instantly exposed as having lied for the past thirty years - both Democrat and Republican administrations.

"No Child Left Behind" should be better entitled "No child left un-screwed", as our nation's leaders have intentionally fostered more than a generation of economic illiteracy, and our so-called "educators" have refused to fix it on their own initiative. Many of our so-called educators are in fact in debt up to the necks themselves and believe that there is some way out other than a massive repudiation - that is, default - of the existing debt in the system.

The claims of "recovery" made on the back of cooked economic data, ignoring the actual counts for things such as the household survey (we lost over 900,000 jobs last month, not 211,000), sales tax receipts (cratering), Federal tax receipts (ditto) and similar are not challenged by the mainstream media nor presented in our schools.

One critical way the Fed exerts control on academic economists is through its relationships with the field's gatekeepers. For instance, at the Journal of Monetary Economics, a must-publish venue for rising economists, more than half of the editorial board members are currently on the Fed payroll -- and the rest have been in the past.

How do you get a fair presentation and debate on economic facts when an institution that grows only through enabling more and more debt peonage controls ALL of the of the editorial board of the journal where you must publish in order to obtain credibility in the field?

It would be one thing if this sort of incestuous relationship only led to some people becoming poor and others rich.

But in this case the pervasive nature of the lying and outright fraud visited upon the public has fed on itself, because irrespective of how much you lie you cannot change the mathematical realities involved.

The law of exponential growth cannot be repealed, and it is impossible for an exponential growth process to continue forever in any venue where there is a hard, physical boundary on the maximum expansion possible.

We live in such a venue. It is called the Planet Earth and it has a finite size, surface area, and carrying capacity for people. While we can (and have) expanded that carrying capacity through the exploitation of technology it is nonetheless finite and eventually must and will succumb to the pressure placed on our economic system by the abusive nature of exponential growth mandates.

We appear to have hit that wall when it comes to debt, just as we did in the 1920s, resulting in The Great Depression.

The Depression was not caused, as Bernanke and others have (knowingly falsely) claimed, by a "failure" of The Fed to appropriately loosen monetary policy.

The Depression was caused by the more than decade-long expansion of credit in exponential fashion - a mathematical impossibility to sustain. That expansion in turn led to a demand for the consumption of ever-more of output in the form of interest payments. When those payments exceeded the ability of persons and corporations to pay the system collapsed, as defaults cascaded through the system causing unemployment, slack capacity and thus more defaults.

The premise of being able to "halt the damage" through the issuance of more credit is in fact a Ponzi Scheme. It is mathematically impossible to do anything more than delay the taking of damage and by doing so the ultimate loss is made worse. The very definition of a Ponzi Scheme - that is, the taking of money (credit) from new "investors" (citizens) to pay off the claims of the old, is exactly what was done in 2001 and is being done now.

Such frauds are supposed to be illegal under the general context of a fraudulent transaction: That is, the making of a promise that is mathematically impossible over an extended period of time.

Why is not Ben Bernanke, along with the remainder of the Fed Governors and every public official who has made such a statement under oath before Congress (including Tim Geithner) not now under indictment?

"We The People" may have been dumbed down in our public schools but we still have the right and ability to learn for ourselves, to apply mathematics to the issues before us, and to demand that our government act in lawful fashion in punishing those who perpetrate frauds upon the public.

Even if they do control the peer-review process in so-called "scholarly publications."

Bottom line: we've just kicked the can down the road.

For Christmas, my wife is knitting me a new scarf out of yarn that’s been hanging around for years. I am giving her a cutting board made of oak scraps which have been in my storage bin since the ‘90’s.

We’re nowhere close to broke but we’ve made a conscious decision to resign from the consumer economy for awhile.

We’ll get an on-sale turkey from Safeway and cheerfully have a 1930’s Christmas.

3 posted on 09/14/2009 7:09:25 AM PDT by NaughtiusMaximus (Hey, Mr. Obama, please don't gnaw the finger off my gramma!)

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