Oh Canada

Today being Boxing day, it seemed fitting to start off this post with an example of the coinage being offered to our friends north of the border. That is a Canadian quarter my wife is holding with her magnetic bracelet. And yes, that spanking new Canadian quarter is magnetic. It contains iron. This recalls the debasement of the denarius in the latter days of the Roman empire where each successive emperor seemed to remove more and more silver from the coin of the realm from about 92% silver with Nero(60AD) to 43- 58% with Septimius Severus (200 AD). The same thing has of course happened in the declining empire south of Canada, which itself has a multitude of almost exact parallels with the decline and fall of the Western Roman empire. Like Rome, the military is the single largest item in the budget. Joseph Tainter writes: "At all times the single largest expense was the military, although the Roman dole was not inconsequential.". Sound familiar? Of course the difference in the US is that we put TBTF banks on the dole instead of citizens. The official pentagon budget is said to be in the $700 billion range but Mish of Globaleconomicanalysis.com reports that it is certainly twice that with the hidden costs, secret off budget costs associated with a bloated military with over 1000 bases and outposts scattered throughout the galaxy. And like the Roman Emperors, our emperors court the military even going so far as to dress up in military flight jackets and strut around aircraft flight decks schmoozing with the troops thanking them for their service defending the nation when they are offensive military actions defending the corporate military state back home with expenditures bankrupting the country as a whole. here is our putative budget which is fraudulently reported as I have stated:

The true red line would extend to the edge of the page. You will observe that our offense budget is larger than the rest of the world combined. When you combine military expenditures with the massive unfunded pension and health care costs of the states from bloated public sector pensions and health care costs combined with underfunded SS and health costs of the rest of us, the country is indeed without a doubt BROKE. And the politicians who goose step ahead of the corporate ruling military class just keep adding shamelessly to the nations debt with QE from the banking cartel to stimulus plans from Iraq Obama and his congressional and senate pals. But not to worry. The selfsame corporate mainstream media including  Fox and NPR(National Pentagon Radio) dispense reassuring propaganda of the return to growth and mindless consumption as our economy turns the corner back to prosperity, conveniently omitting that in America, we make nothing and consume everything. The longer this flawed model is drawn out the bigger and more sudden the crash. The crash is likely to be triggered by events almost anywhere as the world Bond market finally loses patience with political morons everywhere and demand risk premiums commensurate with the sovereign default risk profiles of the bankrupt countries whose debt they hold.

Time for a Haircut

Tis the season to be jolly but the recent cascade of  not so jolly events suggests that financial delamination not to mention social delamination is starting to take hold. The past 4 months have seen most the action in Europe with multiple attempts by the ECB and IMF to plug holes in the dike by saddling the PIGS with more debt than can ever be paid back. These bailouts are more of the same manure being shoveled out of Europe's money barn purportedly to bail out nations but as anyone with an IQ over 81 knows are bailouts of imprudent and insolvent bankers.  It is the system that is imploding as it tries to save itself and all the big players. The world bond markets are starting to get a wee bit restive. The financial markets are awash with rumors and statements from a variety of corners. Angela Merkel says that it may be time in a year or two for senior bondholders taking on a little more risk and that is angrily denounced by ECB finance ministers and  outcry from the other usual suspects denouncing such heresy. The fact of the matter from my unsophisticated perspective is that forcing insolvent countries to borrow their way out of debt is foolish and pointless and does nothing to start to solve the European and worldwide financial crisis. The situation is bankers trying to save bankers and banks by forcing debt onto citizens.  Citizens can and should push back against the austerity measures imposed by legislators owned lock stock and barrel by their financial cartels.  What needs to be done is for citizens to either vote to denounce and remove these governments or find other ways to bring down the governments. There is no way to begin to solve  these debt issues without rescheduling or repudiating the debt and that means telling senior bondholders they will not be getting 100 cents on the dollar which is what AIG and Goldman Sachs and a multitude of other European banks received from the US taxpayer not so long ago.  These bondholders do not intend to see this happen but unless and until they are taken down and given marine corps haircuts, there will be no way to even begin to rebuild the world economy. Some countries like Greece are skating perilously close to the edge and the riots are ratcheting up in severity with Molotov cocktails being thrown. The next riot may involve real bloodshed which will either result in bringing down the government or the government imposing a police state.
     The situation is Ireland is hardly less dire as Mr Lenihan keeps insisting that the Irish have an agreement to pay back bank debt and those bondholders and that anyone who thinks that not paying the bondholders 100 cents on the dollar "is living in a fantasy world." The elections coming up in Dublin in the next few months may determine who is living in a fantasy world.As I have written repeatedly, the Irish citizenry should throw out the bums and tell the European banking establishment that they will not pay.  It worked in Iceland. If they do, there will be a lot of unhappy banks. Look at the different country exposure to PIGS debt which I pulled from Mish's website:

Exposure to Spain
Germany - $216.6 billion
France - $201.3 billion
Great Britain - $136.5 billion
US - $172.8 billion

Exposure to Ireland
Germany - $186.4 billion
France - $77.3 billion
Great Britain - $187.5 billion
US - $108.3 billion
Spain - $17.7 billion

Exposure to Portugal
Germany - $44.3 billion
France - $48.5 billion
US - $35.6 billion
Spain - $98.3 billion

Exposure to Greece
Germany - $65.4 billion
France - $83.1 billion
US - $36.2 billion

Germany's exposure is over half a trillion and what I found surprising was that US bank exposure was around $350 billion. IF Ireland defaults, a lot of rich people will be less rich  and the Euro will be endangered and almost certainly lose value. I have a feeling that the impact of these events will hit the US pretty hard as well.
Bumbling Ben is under assault from all sides for continuing the tradition established by his predecessor of clueless incompetence. Bernanke  has no idea what is going on or what to do but his imprudent actions are destroying the currency and world wide confidence in the US dollar. My best trade in the markets has been shorting  treasuries. My double short has been twice as good. The yield on the 10 year treasury is up 1% in the last month or so. Muni bonds are in free fall and the traitor Iraq Obama has joined the Republican Party .
    If you look at economic historical events and the time frame within which significant events occur, what you see time after time is how long things lurch and limp along until WHAM-O!!. The manure hits the fan and chaos ensues. Bond market, step right up. It's time for your haircut.

Ireland: Just say NO. Time for a December Rising.

     While Americans were stuffing their Type 2 faces with turkey flavored tryptophan-laced fixins’, the hard drinking tag team of Cowen and Lenihan were meeting behind (very) closed doors with the bond thug representatives of the IMF and the Eurozone to traitorously sell out an entire nation of 4.5 million people. I am talking about Ireland.
This sellout which would burden the Irish state with somewhere between $89 and $113 Billion depending on which news source you believe. If I am doing my math right, that is saddling every single Irish soul with a debt(plus interest!) of over $25,000. I would remind the Irish people
how the people of Iceland reacted  when   a similar absurd sellout  into debt slavery was proposed early this year that would have saddled every Icelandic citizen with over $17,000 in debt. This so called oxymoronically labeled Icesave legislation was  resoundingly defeated  by over 90%. of Icelanders.  Iceland is a remarkable place, a little island of democracy where the people stood up to Dutch and UK bondholders who were demanding that Icelandic citizens make good on the gambling activities of their unregulated banking system. The situation in Ireland is eerily similar to Iceland and for that matter to the US where the bondholders of AIG were bailed out by a corrupt American political system owned lock, stock and barrel by the bond market. As you may recall, that bailout went not just to the Blood Squid Goldman Sachs in New York but to European and Asian bondholders, all of it paid with borrowed money from our  American children’s futures.
     But wait, there is more. The dipsomaniac Cowen agreed to a raid of the Irish pension system to the tune of $17.5 Billion. This has been done and tried in other nations, Argentina among them, to try to bail out the nations banks at the expense of the citizens of Ireland who had no direct role in the collapse of banks in Ireland, most notably the Anglo-Irish bank. Do you notice the name? The Irish serfs, which is what they will soon become, are being forced to bail out not just Irish banks but US,UK, German, French,  and other European bondholders.  The worldwide bond market has been getting away with jamming it’s blood funnel into the citizens of the world to cover its bad bets.  Is it possible that the Irish people do not see that they are being asked to bail out international banks ? This loan is to save not the the Irish state, or Irish banks. This loan is to try to save bondholders in the globalized banking system at the expense of the Irish citizens. It is simply outrageous.  When the Iceland Parliament was debating whether to sellout the Icelandic citizens this spring, Icelanders showed up in a vast mob banging on pans and demanding justice. And it worked. It can also work in Ireland but the Irish people are going to have to get serious. They had a march a few days ago which was supposed to be a “family friendly” rally of about 100,000 well behaved people. Well, family friendly didn’t cut it and when it is so painfully apparent that the bond market owns the Irish politicians, the next rally will need serious teeth and I am not suggesting that Cowen and Lenihan and Peter Sutherland, the former AG of Ireland now in the pay of Goldman Sachs should be dragged out of their comfy offices and placed in stocks in the town square. Violence  also doesn’t cut it. A French Revolution style protest would be internecine . I would suggest a lot of pots and pans and true to Irish tradition, perhaps armed with thousands of PVC or ABS potato guns, open fire on Cowen’s bunker and demand the immediate resignation of the whole pusillanimous pack of cowards. The Irish people need to demand that default is the only option.
     Would default endanger economic stability in the Eurozone? Of course. Would an Irish default endanger the Euro? Perhaps. Would default stick it to the bondholders? Obviously. The banks and bondholders hold vast amounts of not only Irish but Greek, Portuguese, Spanish, and Italian debt. But should the citizens of these countries bail out these banks? Obviously not. The misnamed “bailout” of Ireland is just more can kicking and the first  and only rule of thumb when you have dug yourself into a hole is to what? STOP DIGGING! If it is debt that caused the failure, then how will taking on more debt fix it?!  Even Paul Krugman of the NY Times is having second thoughts about borrowing and throwing money at the Irish problem.  If Ireland defaults, what who will be next? Portugal, Spain? Italy, Greece? California? Probably. Will the EEU fail? Perhaps. But these solutions by the bond market gangsters solve nothing. The mountain of debt is not being restructured or reduced because the bond market just hates losing money. Eventually this mountain of debt will hit it’s angle of criticality and implode in a disorganized fashion. A scheduled, organized, orderly default is the only solution. I would suggest that the Irish Parliament book  a flight on  Aer Lingus to Stockholm and ask the Swedes for their recipe of bank restructuring which they employed in the 1990’s to take care of their bank default. There simply is no other option.

Wake up Call on China

The Air Show in Zhuhai started yesterday and that is a model of  the Comac C919 which may be in your future.The powerplant is a LEAP X1C, a joint venture with COMAC, a French company and no surprise here:GE. And guess who placed an order for their aircraft leasing arm:  GE. The CEO says that China has plans to develop their own propulsion engines. I'll just bet the C919 is giving  the execs at Boeing and Airbus heartburn. And it should. All those deals by Boeing to subcontract out bits and pieces of Boeing airliners to Chinese suppliers to avoid paying Boeing machinists will within the next few years be  more nails in the coffin for good paying  American  Jobs. The C919 is just the latest egregious example of a huge multinational profiting(for a while) selling out to the Communist Chinese for the greater good of the Boeing Corporation at the expense of American Workers. It was just a few years back that our media and our government referred to China as Communist China because communism was the enemy and the masses had to be reminded of the dangers of all the socialist pinko countries out there trying to bring America to its knees. But the Corporate Military state soon woke up and let bygones be bygones. The chance to make even more lolly employing hard working Chinese at slave labor rates was too good a money making deal to pass up.  China is still a centrally controlled communist state and if you don't think the Chinese military poses a strategic military threat to the world, perhaps it is time you strike up a conversation with your neighborhood Korean Army or Marine veteran who was there when the Chinese troops swooped down on them  near the Yalu River inflicting terrible casualties and ending the American advance. For the American Military who was used to winning wars, this was the first wake up call. It was our first military defeat. Of course in the US we called it a "stalemate." Think Viet Nam, Afghanistan, Iraq.    I brought up this  1950 era example as a metaphor for the next takeover of America which is well along. The ironic tragedy of this takeover is that it has been facilitated by our corporate globalized capital machine who just couldn't resist the chance to make a few  trillion . I was called a "conspiracy theorist" recently and nothing could be further from the truth. I don't believe that Boeing or GE or Wall mart are traitors intent on undermining American Military and economic superiority. I don't believe that the Chinese economic and military leaders have a developed mission plan to militarily defeat the United States, yet. I do believe that the Chinese are a proud and determined extremely hardworking people who are intent on bettering their station and making as much lolly as possible, not unlike the immigrants who settled this nation.
My point is that the Chinese by dint of hard work and strategic cooperation would have risen in the world economy but someone over there in the secret councils in Beijing decided that the old state run model of centralized production wasn't paying the bills and needed a kick start. And what a kick start it was and has been. And the model was this: Open up China to  the wonders of comparative advantage, let the yellowhairs come and build their factories with tax advantages galore and a starving population from the country willing to work at slave labor wages, sell salad shooters to Americans and take the enormous profit generated to buy treasuries. But here is where the Chinese were crucially foxy and the US government was criminally insane. The Chinese said we will build your salad shooters but we want you to send over the machinery and the technology to build those shooters. Of course it didn't stop with salad shooters. It soon began to include machine tools, building materials, computers,textiles,solar and wind technology and now  aircraft manufacturing. They made transfer of the technology and the machines a precondition of the deals and our government was stupid and greedy enough to permit and encourage the destruction of the American economy. The Chinese didn't destroy and take over our economy, we actively encouraged it.
      Now again, this is no conspiracy. If you recall at the time in the 1980's when the Chinese ascent began, we had an imbecile running the Federal Reserve and a demented retired actor running the country who told us we were a nation of ideas, and would not miss these dirty manufacturing jobs. This was the dawn of the computer age and consumerism, cheap gasoline, the toppling of the Berlin Wall and the Soviet Union dissolving before our eyes. And so began globalization, shutting down American Plants who paid living wage jobs to uneducated folks who could afford to buy  American cars, shoes, clothes and tools and appliances and live in their slab boxes in the suburbs. I guess you could call it  some early post industrial version of the American Dream. What we have here then is analogous to a war and it is hard to argue that America has won any battles and if we don't start winning a few pretty soon, it will be all over.
        The Chinese are sitting on  cash, a pile of treasuries,and agency debt. They have not come by this cash hoard by sheer hard work. They have ignored patents, intellectual property laws and have stolen machinery outright as well as engaging in cyber theft and espionage. They are just doing what a lot of countries have done but on a huge scale,  What I find most ominous is that the Chinese have been making big energy deals with any country willing to sign an exclusive contract with them and of late they are using those treasuries to buy up mines and mining companies all over the world supplying only China. They are willing now to retaliate against anyone who crosses them. When a Chinese trawler strayed into disputed waters last month near Japan and banged into a Japanese Coast Guard vessel, the skipper and ship were impounded  and the Chinese immediately cut off deliveries of crucial metals and rare earths to Japan. For a country like Japan which relies on these metals for export, that was big deal. Whatever. Maybe it was payback for the Rape of  Nanking but it got the world's attention. The Chinese play for keeps. They are spending money like a drunken sailor buying up every crucial asset in sight. But remember this: It was money that we gave to them and if we keep giving it to them, in time, they will own us. What we can do about winning a skirmish or two in this war will be the subject of an upcoming blog. Now a disclaimer:A few years back our family hosted a choir from the University of Nanjing  and it was an eye opening experience to meet such fine and warm people. I became an instant fan of the Chinese people and their rich and varied culture and history. I think we have more to learn from them that they from us.

IEA 2010 Report:Peak Oil Exists After All(sorry folks).

I follow the periodic reports from the International Energy Agency(IEA) and our own domestic equivalent the EIA. World supply and demand figures form a big part of the reports out of the Paris based IEA and this recent report seemed benign and banal enough until I had some time to study the graphs and contrast them with the text. For many years, the IEA has been predicting  world oil demand and expected production with figures that seemed chimerical to me and increasing every year. Their production forecasts always kept up with world demand out many decades to come and were in line with our domestic think tanks like like Daniel Yergin at Cambridge Energy Research Associates(CERA).   CERA and  the IEA debunked Peak Oil as an immediate or even near term issue. IEA years back predicted world production into the distant future of up to 120 MBD but in the past few years that number has been ratcheted back to 105 MBD,  then to the mid 90’s. Here is the graph I saw yesterday oil global oil production and you tell me what you see:

                                                                                                                                                                                     Click to this link if you want a enlarged look also at this graph and others :http://www.worldenergyoutlook.org/docs/weo2010/key_graphs.pdf. This link will also get you to the 2010 Annual Report which is 63 pages and well worth a critical read.A whole lot of very percipient authors starting with M King Hubbert in 1956  have predicted an imminent peak to first domestic then world oil production. They have included many distinguished petroleum geologists like Ken Defeyes, Colin Campbell as well as CEO’s of various energy and energy financing companies like Matt Simmons and a whole raft of authors such as Richard Heinberg, Jim Kunstler, James Michael Greer and others. The fact and the reality of Peak Oil as it was then called was certainly known in high political circles but was systematically concealed from the public. The super secret energy conferences at the beginning of the Bush administration almost certainly discussed this reality as the invasion of Iraq and Afghanistan and the isolation of Iran virtually prove. The invasion of these middle east countries were no more about democracy than cow pies are about pie. Dick Cheney and his oil goons knew the US was 30 years past our peak and those wars were about access to oil and nothing else. Of course, if a few of our mercenary forces could nail a few jihadists, so much the better. It made good press and concealed the real purpose of the mission which was to secure oil access corridors. There are 28 members of the IEA and most are also OECD countries. Chile, Iceland, Mexico and Slovenia are OECD Member countries but currently not IEA Member countries. You will note some rather curious countries in the mix many of whom have no significant petroleum resources. In fact none of them have significant petroleum resources except the US, Canada and perhaps England. These countries are  a curious collection of countries that just need petroleum even though a few like Iceland, Greece and Ireland are virtually bankrupt. What is also obvious is that none of the petro powers are members. Curioser and curioser. This motley membership list is just one of the odd things about the IEA. What is also apparent if you are used to reading the much vaunted IEA reports is that the IEA is  primarily a political organization putting out often unverifiable energy data for the consumption of its members. Now to get back to the graph, if you look at the navy blue portion, you see that peak oil is staring you in the face. For the time being look only at the blue portion of the graph. That is conventional oil. Forget the unconventionals, biofuels, tarsands, ethanol, propane and so forth. Most of the non oils are subsidized or of lower btu content. To repeat, look at just crude oil. That is the real story, the only important story. The other "fuels" are fog and mirrors, fluff, fog, and mud thrown into your face hoping you don't notice the blue portion of the graph. In fact we hit it in 2005 and have been clattering along on the summit ridge for 5 years or so but until this years report which made Peak Oil  impossible to ignore.  Another oddity:The IEA with this graph has announced in effect , all is well. Just look at our graph. It slopes up(Yea!) and only minimally in the report is there a mention of  EROEI, the net energy required to produce this petroleum to the right of the vertical line marking 2009. The really REALLY important thing to take away from this graph is that it takes vast and increasing amounts of energy, usually oil, to be able to produce the new oil. The old oil was cheap to produce. The new oil will be expensive.Once you reach the point where it takes one gallon of oil to produce one gallon of oil, you are out of business. In fact by the time you get to say 3 gallons  to get one,according to some experts, you are toast. Lets look at some of those other colors which are supposed to save us..Unconventionals are things like oil sands and shales, biofuels, coal to liquids(CTLs). They are almost entirely subsidized fuels. In the case of the Canadian oil sands, the extraction is subsidized by tax policy,governments and mostly by the rock bottom cost of natural gas which is far below the cost of oil on a btu basis. Remove the subsidies and the sands are dead or nearly dead as their EROEI ration is approaching 3:1. The subsidiers will argue that it is much higher of course because they are on the receiving end of that tit. Forget oil shales and CTLs most especially. Germany lost the war because it’s distillates for its war machine relied upon CTLs with low net energy. Once they failed to hold oil fields and refineries, they were toast. Biofuels have very low net energy unless they use non petroleum energy or are used on site. They are kept alive by subsidies, currently $.45/gallon for ethanol in the US.  Remove the subsidies and they are toast. Natural gas liquids are compounds like propane, butane,ethane, , natural gasoline and a few others that come out of oil wells as well as the gas wells. The predominant component of gas wells is CH4, methane, but it is mixed in with these other gasses along with nitrogen, SO2 and water vapor. It’s production stays constant out to 2035 . The obvious implication is that NGL’s will be coming in vast quantities from gas wells, not oil wells. NGl’s have a market value currently of about 35% of what oil goes for, about $30/barrel. Methane doesn’t go for much these days so my gut tells me that just going after NGL’s will not be cost effective as net energy costs rise. The next color, the light blue just has to be  total guesswork. It implies there is a lot of new oil to be found, a dubious assumption. Certainly there is likely that amount of oil to be found but it will be expensive hard to produce oil in dangerous and distant places. It will likely have a high EROEI, or net energy.  The gray is perhaps a bit more reliable with fields to be developed. Some will be very expensive oil, most offshore and most in politically unstable areas like Iraq. Will peace break out and the Shiites shake hands with the Kurds and Sunnis? I would say unless that happens or Iraq is partitioned into 3 countries, that graph could get pretty slender.  Now there is one other graph of vital interest which is Pg 5 on the IEA report which is rarely mentioned.  Oil demand in the future will be driven not by OECD countries who don’t have much oil, but by countries like the Persian Gulf, Russia, and Brazil who do. Curiously, the graph shows declining consumption of fossil energy in the richer nations and increasing consumption in the poorer nations. So if I am reading this correctly, the more scarce and expensive these fuels become, only the poor nations will be able to afford them. This is patent nonsense. The poorer nations will soon be priced out of the market, outbid by the richer nations.The poorer nations have been late to the industrial party and just as they are beginning to taste the dubious fruits of industrialization,  the rising cost and scarcity of energy will cut them off at the knees. The richer Western nations got to the cheap energy first and partied like there was no tomorrow at the expense of the third world nations.. The Persian Gulf exporters will party on for a while longer surrounded by highly militarized nations running  on fumes. It doesn't take an Einstein to figure out the next step. Many of the  Gulf nations are incapable of making anything. The Saudi terrorists who caused 911 had to use imported box cutters to break into the cockpits. Many of the desert exporters grow very little of their own food from their harsh desert landscape and  are buying up rich farmland in distant poor lands to feed their people. Imagine the thoughts going through the mind of a starving native watching convoys of food passing through his impoverished village on the way to Riyadh. These long complicated food supply chains carry obvious seeds of their own destruction.But I digress.                                                                                              There is a so called Land Export Model which states that as oil consumption in he exporting lands increase, oil will go to the producers first and the rest of us get what’s left. Mexico, for example is fast approaching this point when they will have only enough oil for Mexicans. So not only does net energy shrink the IEA graph(imagine it made of wool and then put it through a hot wash and a hot drier), but the availability of that oil reduces what’s left for the largely white, post colonial members of the IEA.                                               Hey you say, What about China? That will be the subject of an upcoming post.

Burn the Bondholders

 The picture depicted above is of a cement truck crashing the Irish Parliament protesting the bailout of the Insolvent Anglo Irish bank and the government's attempts to shovel the debt onto innocent Irish Citizens. Ireland is of course one of the PIGS(Portugal, Ireland,Greece and Spain) facing big debt problems. It is currently running a budget deficit of 14.4% of GDP, just behind Greece, the current champ at 15.4%. Greece is utterly hopeless as the Germans have figured out with huge public sector union and pension costs, a tradition of entitlement for doing no productive work, flagrant tax corruption,no significant resources  and astonishing growth in their debt. Austerity has been imposed by the government after some visits from the heavies at the IMF and the EEU Central Bank but a cursory glance suggests that the center wont hold and the Greek Citizens, always treading near anarchy will not tolerate these measures for much longer. Meanwhile over in Ireland, our old Celtic Tiger, the situation is similar. The Irish Citizens have groused and grumbled but so far haven't really rioted in the streets but the government has been plodding along grinding their hardworking freckled faces into the cobblestones with behind the scenes machinations by among others, Bond Thugs from Goldman Sachs but things are starting to heat up. There  are indications that the heretofore well behaved citizens may have had it with their pusillanimous politicians. The existing government of hard drinking Brian Cowen's coalition Fiana Fail party could fall by the end of the year. The cost of insuring Irish debt has soared along with bond yields of Irish Bonds. The proximal impetus seems to have been from some courageous remarks by Angela Merkel who suggested that it may be high time for the bondholders of the world to share in the pain instead of just the citizens. That's an original thought from a politician but of course she is German, not American and not Irish. Angela has been lambasted by the bond market heavies who thought they owned the world and are now starting to get a wee bit nervioso. My solution is for Ireland to abrogate the bailout, and adopt Sweden's measures of the 1990's by nationalizing the banks, firing the executives, letting the bond and equity holders drown in the Irish Sea and this deleveraging along with the native industry and educational level of the Irish citizens could restore Ireland to Celtic Tiger status within 10 years. At this point Celtic Kitten status would be welcome.

Spartacus 2.0

I have incorporated the concept of cognitive dissonance in several past blogs because living under our current civilization is an exercise in CD. The last election cycle was just more of the same. Voters in many states were given choices of a  conflict of  interest corrupt incumbent or a whackjob nutcase who either was or was not a witch. I'm not sure why being a witch should disqualify anyone for public office in the first place. Given the current political system it would seem to be a fruitless exercise to vote  on a  national  or federal level. The political system is owned by the ruling class composed of  globalized banks, corporations, and the myriad capital movers and shakers in the bond market who provide the lobbyists to educate and coddle the political class with  the judicial system protecting both classes allowing secret donations and no scrutiny, no accountability. Now why is it again that you want to vote? It is like living in the antebellum south where every few years you allow the slaves to vote on whether to retain the massah.  The slaves vote and nothing happens. At best they vote out one Simon Legree and substitute another.
The reason the system doesn't work is obvious. You are voting on the posturing puppets in the political class and not the ruling and ownership class. If you want fairness and change you have to be able to vote on whether to keep the Federal Reserve banking cartel, hedge funds banks, a million secret LLC's and transnational banks and corporations and  all the other bond market participants who really call the shots. But they are beyond reach and unaccountable. So again, why is it you think you should vote? We are beyond the point where voting has efficacy. The capital controlling ruling class holds all the cards. They made some stupid greedy bets which could have cost them their beloved capital and in an act of self preservation shifted the losses to the slobs down the hill in the slave quarters. This process is by no means confined to the United States.  An example of  their current scam mediated by the IMF, World Bank, the ECB and the other banking cartels is to impose austerity on the slaves. Mr Blankfein,  over at your local  Irish branch of Goldman Sachs is now doing doing his covert best   to make those hapless potato pickers pay  Mr Legree's bondholders in  the Anglo Irish Bank taken over by the Irish Government. What is interesting and not surprising is that the Head  of Goldman Sachs in Europe is Peter Sutherland who has been meeting behind closed doors with Brian Lenahan, the current finance minister of Ireland. Peter Sutherland  of GS was(surprise surprise) the former recent Attorney General of Ireland.!! What these Legrees are doing exactly mirrors what happened in the US under the inspired leadership of  Hank Paulson and the whole rogues gallery who preceded and followed him.  Their goal was and is  to force the responsibility of their bad bets onto the backs of the laboring slaves. Ditto in Greece, Portugal and who knows how many other countries at Europe's periphery. The slaveholders made the mistakes and the slaves must pay. What the Simon Legrees have not counted on is a good old fashioned slave rebellion and my bet is that it could easily happen in Greece or Ireland. While the capital holding class is the defacto ruling class, in fact they have no authority over the slaves. The US dominated IMF has no authority over slaves in Iceland, Ireland, or Greece and if the slaves figure that out, we could have a real game changer. The capital owning giant squid  are sitting on vast bags of debt they have foisted on the world assuming that the hapless slaves will just keep picking cotton ad infinitum paying off bad debts.
      The Industrial West is staring into the abyss of perhaps the greatest depression it  has ever seen and the debt has not been repudiated and until the debt is shifted to the shoulders of the bondholders, and the wealthy capital owning class who by any standard of fairness should be shouldering the burden, there will be no end to the looming  deflationary depression. So far this battle has been waged  in secret councils and banking , corporate and legislative conference rooms far from the prying eyes and ears  of the slaves.  The world now awaits the arrival of a modern day Spartacus.