Courtesy of The Automatic Earth
"Arkansas farmer now picking fruit in Berrien County, Michigan" Wearing Tuf-Nut overalls
Ilargi: I get acutely nauseous when I see things like new Italian PM Mario Monti, king of cuts and lackey of bankers, calling the draconian austerity measures about to be unleashed on his own people "reforms".
That’s the vocabulary that comes straight from the IMF and World Bank playbook on Chile, Argentina, Russia. It’s the sort of "reform" that opens up economies to be raped and pillaged, as their 99% see their national assets privatized, their wages cut and their jobs lost due to legislative changes that relax "too stringent" job protection laws.
Spain is next in line: selling their 10-year bond at 6.975% today signals an imminent change in government in Madrid as well. And not through democratic means either: technocrats to the rescue, to infinity and beyond.
EC chief Herman Van Rompuy said it all in a few words this week in Florence:"We need reforms, not elections" (No, I kid you not). Democratic elections have been judged too risky and bothersome; economists must take over, as long as they adhere to the right school of economics.
What Spain also indicates is that Europe has turned the corner, or rather: has been stretched around it. You may see it as the little boy running out of fingers to put in the dike, or as a chess game in which you are outmaneuvered so badly the only thing left to do is surrender your king.
On Tuesday, every country but Germany saw their bond rates rise vs the Bund. A warning shot across the bow in case anyone still needed one. Last week Italy, this week Spain, and soon France. And Europe has no defense left. Or attack, for that matter.
The ECB, perhaps alongside the IMF, may still bring out alleged big guns at the eleventh hour, but we should hope not; it makes no difference, other than it will make the crisis on the ground that much worse. And that crisis will be plenty hard to begin with.
Sovereign debt has ruled the airwaves over the past little while. It may soon have to make way and move over for more bank bailouts. In the upcoming days and weeks, we will see an increasing number of stories about banks having funding trouble.
Even though they can largely make up their own rules, and even though they have an amazingly powerful arsenal of accounting tricks, they’re still falling ever deeper into their self-dug holes.
The banks need another bubble to inflate, or they will be exposed as the giant bubble they themselves are. Well, they already have been, of course, it’s just that your trillions -which you never knew you had- have been used to prop them up like so many Norwegian Blues.
On that same ground level where the crisis is deteriorating, Occupy Wall Street -and many of its sisters- are trying to regroup and recommit. It won’t be easy.
The reason why, while obvious again today through arrests on Wall Street and tear gas in Athens, is also presented very well in the piece below, which I decided to run in its entirety in today’s intro, because it captures in a few words a lot of things that I personally care about.
I don’t know Simon Black, he may be just another wealthy international investor. Still, he does capture the zeitgeist for me, without perhaps even trying to do so. The picture he paints makes me think of the song "Baby, it’s cold outside". I’ll leave you to contemplate it.
Longtime readers know that I don’t spend much time in the United States; I usually swing by for a month or so each year to visit friends and family, and the period in-between visits can often stretch 6-months or more. This is sufficiently long enough that I notice a lot of changes… some so drastic that they hit me in the head like a baseball bat.
For example, just last week when I was at Los Angeles International Airport, the police set up a checkpoint outside the main entrance as if we were in downtown Baghdad driving into the Green Zone.
And I couldn’t believe my eyes when, driving down Santa Monica Boulevard last Wednesday, I saw a police urban assault vehicle modeled after a US Army mechanized infantry fighting vehicle. It’s designed for one thing: maximum destruction.
It’s truly appalling how police forces across the country have become militarized. The concept of ‘peace officer’ no longer exists.Police are now paramilitary forces who only protect and serve the political class. Because I’ve been out of the country for so long, I notice these changes more acutely; it’s like diving in head first into ice-cold water as opposed to wading in slowly. And this rise of the police state is accelerating.
Here’s the thing– when you look around the world, you can see a lot of chaos and turmoil. Hardly a day goes by when there’s not multiple riots and protests in the western world being met with overwhelming force from the government. The government is sending a clear message: "We are in charge."
It’s no wonder that, according to a recent Gallup poll, a record-high 81% of Americans are dissatisfied with the way the country is being run. On a proportional basis, this is 25% higher than during the Watergate scandal.
What’s even more stark is that, according to the same poll, roughlyHALF of Americans believe the federal government has become so large and powerful that it POSES AN IMMEDIATE THREAT to the rights and freedoms of ordinary citizens. This certainly explains why the government is increasing its offensive capabilities.
Now, clearly there are a lot of disgruntled Americans. There’s a lot of anger… even class tensions. The OWS movement is emblematic of this sentiment for sure, but in terms of taking action, most people still believe in the political process.
All of their angst and negativity will be taken out in the voting booth. Until then, it’s the calm before the storm. But the unfortunate reality is that no matter which way the 2012 election turns out, chaos will ensue.
If President Obama wins a second term, many conservative Americans will have reached their breaking points. If a republican candidate should win, a huge portion of Americans will feel they have lost their champion.
No matter what, though, people will quickly realize that absolutely nothing has changed. They’ll recognize that the insolvency of the United States government is a simple arithmetic problem; that social security is bankrupt; that the Treasury Department is a giant Ponzi scheme; and that there is. no. recovery.
For now, Americans are still investing in the political process. Come next year, though, all the hope that’s building up will turn quickly into disappointment… and then anger. Then they’ll take that anger to the streets.
This is what happens when governments go bust. It’s happened numerous times throughout history, and it’s playing out right now from Greece to Argentina. Social unrest becomes commonplace.
Governments engage in financial repression, giving rise to asset seizures, inflation, and capital controls. Militarized police states categorize ordinary citizens into combatants and non-combatants. Collateral damage becomes an acceptable risk. Society turns on itself, and crime rates soar.
Watching the farce of America’s political theater play out, it’s clear that this ticking time bomb will go off after Election Day 2012. As polarized as voters are, and as dismal the federal balance sheet is, there’s little chance of society keeping it together afterwards.
What’s happening right now is merely an overture… and you can mark a date on your calendar for when the real fun begins.
