President Snow

Are “The Hunger Games” realistic? Yes and there are ample historic examples. The Soviet Union operated on that basic premise for decades.  Specifically various regions (Districts) operating a very monolithic economy with all planning and distribution through a central authority or city (Moscow).  Such a system inherently breaks down if not for the sheer inefficiency of such economic models causing the collapse from the center out.  Or from the  abuse of power of the central authority causing moral decay and eventual collapse of production.

The whole colonial model of England in New England, Holland with the Dutch East and West Indies Companies and the French in Africa and South East Asia are great examples.

What about Tributes, you say?  Slaves for one and Roman Games, “For those about to die, we salute you!”.  Parallels to Communist Party membership and hence privileges the normal folks of the district would not get, that parallel is strained.   But the Victors did get to share in the wealth abet with some guilt.  As President Snow said, “offer hope, but don’t deliver it”.   “I don’t like underdogs”, said  President Snow.

Capitol City practices “extractive economies”, the outlying districts use unskilled labor for one commodity only, the technology or equipment to add value to that commodity that are not located in the districts. Emigration to other districts in search of better opportunities are banned, as are exploitation of the apparently bountiful resources of the surrounding forest.  Keep the masses down and make them dependent on the Capitol City.   All this is very much in line with the Colonial Model Exploitative economies of the 1500′s, 1600′s and 1700′s.  As well as limiting educational opportunities.

Oh, and to those who say, you’ll be confused if you don’t read the book before seeing the movies.  Not so, especially if you know history.

I enjoyed the movie.  It tells a story.  Very little special effects, the story doesn’t need it.  Worth seeing.  3 Thumbs up from the Mainstreet movie critic.

I give you the US GDP to US Debt chart. In all it’s glory.

USA GDP to Debt

Not Good Company

In a word, No. Because the US has an economy, whereas as one Greek Poltico put it, “all we have is olives, sun and ruins”.

But we are in very bad company.  Ireland, Italy, Portugal and Spain are known as the PIIGS of Europe, economies so bad they are very likely candidates for European Central Bank bailouts.  Which is what has been happening to Greece.  Essentially the deal forced on the Greeks for getting bailed out, sentences the  Greeks to debt slavery for decades.  The Greek young recognizing the depth of the problem are leaving.  Mostly for Germany and German language lessons are on the rise in Germany.

Yes, the Greeks borrowed their way into this problem, but someone on their own free will lent the Greeks the money, knowning at some point the Greeks would start floating belly up under debt payments.

When your debt is 136% GDP to Debt, nothing good comes of it.  The USA is just at 100% and climbing fast.  So far we have gotten away with it because we are the USA, the largest economy in the world and the dollar is the reserve currency of the world.  As long as this continues we can live on borrowed time.

The largest debt holder of US debt is us, we the American people hold most of our debt, again thanks to being the reserve and large economy in the world.    Other holders are the British, Canadians, Japanese and Chinese.

The graph is by way of Senator Sessions.

Had to happen.

Attorney David Anziska tells Bloomberg Law’s Lee Pacchia that he plans to file class action suits against 20 more law schools in the coming months, and is looking for a global settlement of his allegations that schools misrepresented employment statistics of their graduates. The law schools deny the allegations.

Bloomberg Law’s Lee Pacchia interviews the former Commissioner of the SEC of the much maligned Dodd-Frank bill.

Roberta Karmel told Bloomberg Law on Tuesday that Dodd-Frank financial reform isn’t strong enough to stop another financial crisis.

“This is not a recipe for strong regulation,” said Karmel, who is now a professor at Brooklyn Law School. “We not only did nothing to change the balkanization of the regulatory system; we actually made it a little bit worse by creating FSOC [the Financial Stability Oversight Council].”

“We have to eliminate the problem that comes along with too-big-to-fail: that of socializing losses and privatizing profits,” Karmel told Barron’s. “Such a system is antithetical to any notion of the capitalist ideal.”

Some critics say that the Dodd-Frank Act, signed into law by President Obama in 2010, is unlikely to enact tangible change within the financial industry. Former Federal Reserve chairman Paul Volcker, the inspiration behind a rule to prevent banks from making risky bets with their own money, said in September that Dodd-Frank is “nowhere near what we need.”

The question of too-big-to-fail banks, he said, has “not yet been convincingly settled.”

http://www.bloomberg.com/quote/GGGB1YR:IND

2 year Greeks are at 207% down from over 400% earlier this month.

The trick is can you collect?  Will the bonds be around long enough for the first dividend?

Part of the Euro bailout includes a “haircut” of Greek Bonds, some say as high as a 70% haircut, hence the hugh risk premium bond traders are putting on the Greeks.

Prime Rate - You Get Much Lower

A lot of retirement planning are based on a 7% rate of return.   Especially pension plans that are not subject to change.  With the Federal Government keeping interest rates artificially low these pension plans are having a hard time delivering.

Additionally the amount of money that people not on pensions have to save prior to retiring is going way up as they count on dividends in the 1% range and not the 7% range, causing many to delay retirement or just put it off.

Consider this, the Government debt service is $169 Billion this year.  That is interest only, and that is at artifically low rates, rates the Government is keeping low as a means to stimulate the economy.  A side effect is if the interest doubles or triples or more, which eventually it will, the Government will be looking at upwards of $600 Billion in interest payments.  Or over 1/2 Trillion dollars a year, and that is just the interest payment, never mind principle payment.

The Government has every incentive to keep interest rates low, which hurts pension plans and retirees, which causes them to delay retirement or not to retire, which exacerbates the unemployment problem.

The Federal Government has a big footprint in the economy and right now it hurts.  Government debt and the Government’s attempts to deal with it and the recession are having horrible effects and it’s going to get worse.

This will cause people to take more risk at a time they should be dialing it back.

Athens is burning

AP: Riots are spreading across central Athens.

Police are shutting down public transportation to prevent protesters from pouring into Athens.

Why do I spend so much ink on Greece?  Because it is relevant.  It will affect us.  And I see parallels between Greece’s debt slavery and our possible future.

Second World War-resistance hero Manolis Glezos has made a statement from Syntagma.

“Is it possible to impose these measures by using tear gas … These measures don’t have the vote of the Greek people.”

Glezos was wearing a surgical mask and seemed to be suffering from tear-gas inhalation.

Gas Deliveries

Gas consumption is at record lows, the likes of which have not been seen in decades at least not since 1980.

From Zerohedge.com

What other plausible explanation is there for the decline from 42.4 MGD in July 2011 to 30.9 MGD in November 2011 other than a dramatic decline in discretionary driving? That 27% drop in a few months in unprecedented, except in times of war or sharp economic contraction, i.e. recession.

If we stipulate that vehicles and fuel consumption are essential proxies for the U.S. economy, then we can expect a steep decline in economic activity to register in other metrics within the next few months.

Such a sharp drop would of course be “unexpected” given the positive employment data of the past few months. But as the data above shows, employment isn’t tightly correlated to gasoline consumption: gasoline consumption reflects recession and growth.

In other words, look out below.

Greek Riots

We need to follow Greece because their default and withdrawal from the eurozone would set off major consequences to the European Monetary Union, and thus the EU, that are unforeseeable. A default would impact Greek banks who are major lenders to the government, as well as major German, French, and Belgian banks. These defaults would set off a crisis because these big banks are allowed to use sovereign bonds, such as Greek bonds, as Tier 1 capital. Everyone knows that those values are a fantasy and that these European banks are seriously undercapitalized. Even without a Greek default, these banks are required to come up with an additional $150billion of capital by July 1, 2012. A default would eventually result in major bank bailouts from their host countries and would probably require the European Central Bank to intervene by buying sovereign debt, thus monetizing the debt and flooding the EU with fiat (editor: fiat = paper printed money) money. Greece would just wipe out its debt, go back to the drachma, and stay in perpetual recession/depression. My guess is that there could be a military coup somewhere along the way.

Perhaps everything will be just fine, but my smell-o-meter tells me otherwise:

Today is the first day of massive protests in Athens, Thessalonika and other cities. Five ministers resigned from the coalition cabinet of Lukas Papademos.  Germany’s Finance Minister Wolfgang Schäuble cast a shadow of doubt over the proposed implementation of austerity measures since they haven’t followed through on the conditions from the first bailout. Several members of the “nationalst” Laos party resigned and refused to back the settlement. It’s getting ugly. This, from different sources:………read more at the Daily Capitalist

Biggest question I have, will our Government feel the need to “help out” and buy European Sovereign debt, with our fiat (printed paper) money? The Germans have said no repeatedly.