On Negotiating And "Compromise"

One of the classic gambits in game theory was played out over the weekend as Republicans ignored BO's 36-hour deadline.  I don't know if that was calling his own bluff or not, but it reminded me of the wisdom of Sophocles: "Do not command that which you cannot enforce."  It is wise of the Republicans to do this - Barry seems to think that he's the Emperor and can dictate terms.  This should serve as a wake-up call to the White House which is only negotiating in the hopes of scoring political points.

Meanwhile the cacophony grows from the Scylla of the mainstream press and the Charybdis of "mainstream" Republicans and "reasonable" Democrats for the Republican negotiators to fall prostrate at the altar of "compromise."  I touched on this last week, but let's offer up some analogies for why "compromise" should not be on the table:

• If you were dying of cancer, would you want your doctor to "compromise" and only cure part of the cancer?
  
• If a thief broke into your house and was robbing you of all that you owned - should you "compromise" with him and let him take everything in the living room as long as you got to keep the den and the bedrooms?
  
• If termites were eating away the timbers under your first floor, should you "compromise" and let them eat half of it?
  
• If you were in a plane that was going to crash into the mountain unless you pulled the stick up sharply - should you "compromise" and agree to just smash into the top part of the mountain?
  

I think you get the point.  Put succinctly by Admiral Stockdale in a speech given at my graduation from Surface Warfare School many years ago: "Where matters of principal are concerned, there can be no compromise."

We are in a death struggle to save our nation.  The historical track record beautifully spelled out in "This Time It's Different: Eight Centuries of Financial Folly," is brutally clear.  As of June, 2011, the percent of debt of the GDP is 98.6% - and as the following chart shows, we are slated to go over 100% soon: 

The sobering conclusion of "This Time It's Different?"  Go over 90% and really bad things start to happen.  The domestic economy can no longer grow as interest carry on the debt swallows current payments, services are curtailed, gimme's get gone - result?  Chaos, riots, groups protesting in the streets...err, like the bunch in Chicago over the weekend threatening not to work for BHO if he cuts ANYTHING. A little bit of scratching on that bunch: "Boldprogressive.org" - leads you to find out that they are in cahoots with Soros and "Democracy for America" and other essentially anti-American groups. 

The choice is clear.  A fundamental realignment of spending priorities and a return to the resilient society of self reliance or...Athens:

And before you choose "Athens," consider that in 2002 in Argentina when the economy collapsed in on itself in a debt drunk implosion - there wasn't money to pay the police like they still can in Athens.

Compromise anyone?

Rumble on!

 

China 2030 AD

Here's one cheery outcome of our current problems:



Hat tip MGH.

Mortgaging our Grandchildren

About says it all...

Canary in the Mineshaft

Nouriel Roubini in an article over at Bloomberg is stating the obvious: Rising Sovereign Debt Leads to Default.  I greatly respect Roubini and agreed with him when he forecast the crash back in August of 2006, and he is right again here.  We can't keep spending and adding obligations to our balance sheet...period.  There are several exhibits of what happens when you do this:

1. Weimar Germany in the 1933.
2. Argentina in 1999.
3. Greece in 2010.
4. Spain in 2010.
5. Portugal in 2010.
6. Ireland in 2011.
7. Japan in 2012.
8. USA in ??

Newsflash: White House Says Debt is Big!

Whoa! Hold the presses, White House Budget Advisor, Peter Orszag says that huge deficits could cause the market to lose confidence in the creditworthiness of the Federal Government AND that we might "mortgage our future to foreign creditors."

In a move that some dubbed as "curious," Orszag repeated his warning in Greek (whose bonds got rated as "junk" today), Portuguese (whose bonds are slightly more valuable than bacalau a cozida [steamed codfish, the native dish]) and Spanish (whose bonds are now sold out of small tented stands in Morocco) .

Orszag acknowledged that it was "unusual" to be issuing such a warning FROM the White House and that it was analogous to "a cocaine addict snorting two more lines while telling everyone else that they really needed to quit."

Maybe Orszag sneaked a peak at this little pic:

Financial Armageddon

Read this article in Financial Times and watch the embedded video.  It is an interview with retiring Senator Judd Gregg.  This is a sober, frightening perspective on our debt and the pending problems we face.

Debt Clock

Want to get mad? I mean REALLY flipping mad? Click on the U.S. Debt Clock and take a look.

Pledging to the Debt II

From the mouths of babes!

Hat tip DN.

Pledging to the Debt

Powerful ad, I saw last night:

Here's the reality we are facing:

As Investor's Business Daily is reporting, there are two separate GAO reports stating that this level of debt is "unsustainable." By 2016, Social Security (remember Al Gore's "lock box) goes to a negative cash position - all those funds that have been propping up other government giveaways go away. In other words, if you are under 60 today, you have a better chance of flying in one of these:

Than ever receiving one of these:

And that's BEFORE they socialize medicine! Check out the website for Defeat the Debt. They have some suggestions we can act upon before its too late.

Keynesian Clunkers

Zero Hedge has an excellent analysis of the economics of the "Cash for Clunkers" program that just got another $3 Billion of OUR money. Basically, the program is encouraging more personal debt and lathering on another heaping Cinnabon of debt onto the Federal err, taxpayers, books.

The Cinnabon of Debt!

From the article:

The $28,000 average price per car translates into a total sale value of $21 billion. Of that amount $3b will be borrowed by Treasury, the balance of $18b will be financed by the new owners.

A month from now the new payments will hit both households and Treasury. For Treasury the cost is $90 million a year. Just $7.5mm per month. Think of it as $7.5mm a month forever. For the households who are driving nice new cars the numbers are much worse.

If buyers finance their purchase with 8% money and a five-year payback the monthly nut for these cars is $375 million. Nearly $5b a year. The owners will have a fully paid asset at the end of the five years, but they have to pay for it in full. It comes to $500 per person each month on a fully loaded basis.

What? You mean it's not good to have another coupon book you have to pull and pay every month?

Over indebted consumers nearly killed us last year. CC’s, crazy mortgages, store cards, car loans you name it. We are not out of trouble yet from our debt binge. For the government to be crafting ‘solutions’ that just put another $18 billion of debt onto consumers is bad policy.

Simply put, this represents more flawed (panicked?) thinking on the part of our Democratic Masters, uh I mean, leaders, to jump-start the economy. Damned the cost! Full speed ahead. I have never been a big fan of Keynesian Theory - when I studied economics in the late 1970's, the theory was in the process of being completely discredited. But if you are going to do it, can't you at least do it right?

Yes, there may never have been such a "marriage of beauty and brains as that of Lopokova and John Maynard Keynes," but what we have right now is the marriage of socialism and power consolidation and it ain't pretty. But what the heck - we can all still afford a Cinnabon can't we? I sure hope so:

You Go WaPo!

Something (common sense?) seems to have gotten into the liberal bastion Washington Post. They and the Wall Street Journal have been the only print media that aren't slobbering over the Big O. Take a look at this sweet graphic depicting Obaspending: