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2017-12-17 12:53 by Karl Denninger
in Editorial , 199 references
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There's a modern version of a "conspiracy theory" going around in regard to the so-called "Deep State."  The chestnut commonly told is that there are a bunch of embedded actors in the country (and internationally) that pull the puppet strings, prevent investigation of criminal acts by certain people in the government and otherwise "direct" how the "visible" government operates.

The truth is that this is all a convenient, self-serving and cowardly lie.

All activity by humans requires energy input.  That is, the world without same tends toward disorder; it is only through the input of energy that order comes from chaos and remains that way.  You can look around you and see it everywhere; the piece of metal left outside rusts, the car turns to dust, the house falls down, the food left out rots, etc.

Everything in the universe operates on the laws of thermodynamics.

Thus the so-called "Deep State" in fact has no resources of its own at all.  It must obtain them like everyone else.  Where it obtains them is from you.

It does so by your voluntary actions.

Let's be clear: Every single individual and group in that so-called "Deep State" can be killed -- either politically or physically.  Of course initiating physical violence is both difficult and expensive, in that 1, 10, 100 or 1,000 (or more) people might need to spend their lives for each one of them but when it comes to causing their political death nobody has to do a single illegal thing.

The so-called "Deep State" exists because we as a people are unwilling to get our noses out of Netflix and Facebook, in short.

Consider the 50 year old heroin addict living with his retired Mom.  Mom gets Social Security.  She has a modest house, paid off.  She lets him live there and cooks, so he has the basic needs of life at zero effort or cost and he in turn gets stoned all day on her money.  Maybe he's on disability, but if so that's hardly enough to live on your own in any reasonable amount of comfort (it's about $1,000 a month), never mind paying for the drugs.

As long as Mom either gives him money for drugs (or lets him steal it without tossing his sorry ass in prison) this can continue indefinitely until the addict overdoses and dies or he begs, "borrows" and steals enough that Mom loses her house.  Then they're both screwed.

Just like you will be if you fund the "Deep State" for long enough.

But let's not kid ourselves; the active complicity of Mom is necessary for the addiction to continue.  It didn't start that way but it sure is that way now.

The day she says "No" and refuses to give in to the whining the addict is forced to either quit using heroin or turn to visible, external crime such as robbery, mugging and burglary.  The latter self-corrects relatively quickly in that he will either be caught and tossed in prison (at which point he'll have trouble getting his fix) or someone will shoot him while he's in the act of robbing them.

No matter what happens the moment Mom says "No" and refuses to cave it is a certainty he will cease using and cease being an addict -- either voluntarily or involuntarily.

The addict is at "fault" for choosing to continue to use drugs but Mom is responsible because she is voluntarily funding it.

The "Deep State" may be at fault for a whole host of sins, some of them really ugly, but don't kid yourself -- it's only because you provide the government with "full faith and credit" that said "Deep State" exists.

You're responsible because you voluntarily fund it.

If any material percentage of the people of a nation decide that's not going to happen any more then said "full faith and credit" goes poof like a fart in a Church and very quickly said "Deep State" has no money to operate. 

Not one single illegal act has to be committed by one single citizen for this to occur.

The people just need to grow a set of balls.

The US Federal, State and Local governments are all highly-dependent on daily cash flows.  Anything that disrupts them is an instant disaster -- for them.  Yes, it's also tough on you, but then again that's the point, right?  It'll be intolerable for them long before it is for you for one simple reason: You can trade effort for a chicken or a loaf of bread.  The Deep State can't trade anything for their acts of coercion, extortion and blackmail because you're collectively the source of what they operate on and they have no other means to acquire the amount of money necessary.  There are simply too few of them in comparison to the amount of cash necessary and as such they can't generate it themselves, nor can they force you to work for their benefit.

Mom doesn't cut off the heroin addict because Mom feels sorry for him and wants him to stay in the house and keep her company.

As a result she tolerates the fact that he robs her blind and unless someone intervenes she'll ultimately let him rob her out of her house!

Well folks?

You're all Mom.

The "Deep State" narrative is a fraud; it's simply a heroin addict that you refuse to cut off and expel.

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2017-12-16 07:21 by Karl Denninger
in Editorial , 878 references
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This is the sort of horse**** that really pisses me off.

Like everyone in my generation, I am finding it increasingly difficult not to be scared about the future and angry about the past.

I am 35 years old—the oldest millennial, the first millennial—and for a decade now, I’ve been waiting for adulthood to kick in. My rent consumes nearly half my income, I haven’t had a steady job since Pluto was a planet and my savings are dwindling faster than the ice caps the baby boomers melted.

So let me see if I get this right.  You're 35, which means you were of voting age when Obamacare was passed.  You went to college after the scam of ramping college prices, driven by student loanswent into place.  In other words you got to vote for the majority of that **** too.

But generalizations about millennials, like those about any other arbitrarily defined group of 75 million people, fall apart under the slightest scrutiny. Contrary to the cliché, the vast majority of millennials did not go to college, do not work as baristas and cannot lean on their parents for help. Every stereotype of our generation applies only to the tiniest, richest, whitest sliver of young people.

Well that last sentence is true.

But what's not true is that your cohort as a group made this bed and then you sat back and stuffed your head in TV sets and then cellphones while it was going on -- when you weren't actively cheering for and advocating it.

What is different about us as individuals compared to previous generations is minor. What is different about the world around us is profound. Salaries have stagnated and entire sectors have cratered. At the same time, the cost of every prerequisite of a secure existence—education, housing and health care—has inflated into the stratosphere. From job security to the social safety net, all the structures that insulate us from ruin are eroding. And the opportunities leading to a middle-class life—the ones that boomers lucked into—are being lifted out of our reach. Add it all up and it’s no surprise that we’re the first generation in modern history to end up poorer than our parents.

Yes.  But basically all of that happened after you turned 18.  Rather than pick up a pitchfork, torch or worse and demand that it stop you sat back and got stoned or even cheered on what amounts to rampant theft and socialism!

You have Netflix subscriptions, virtually to an individual.  You supported Hastings (their CEO, in case you don't know) conning you into the belief that you could have "all you can eat" movies for $8/month while the company has been cash-flow negative for the last many years and projects the same forward into the indefinite future.  This, of course, means he's writing rubber checks and counting on you to raise a policy stink to bail him out by forcing someone else to pay your bill.

You did this in 2014 and 2015.  Why didn't you hang him instead when he ran that pack of lies and why do you continue to fund that stupidity today?

You have Amazon Prime, virtually to an individual.  You love Jeff Bezos and his company.  Never mind that in selling you all those great products he makes less than a grocery store does in margins and in aggregate often sells at a net loss when fulfillment and other costs are considered, yet has a stock price with a valuation 10x or more that of a grocery store.  He got that by putting you and your friends out of work when the non-college jobs you had were eliminated.  What he "created" instead was for that lily-white 1% or so minority in terms of "good jobs" while the rest of you can't survive (warehouse work) unless you're in marathon-runner condition -- and even then it might kill you.

You could have hung him and his company that has robbed your generation but instead you keep buying his ****!  What the **** is wrong with you?

You love "free" contraceptives and similar mandates in the government scam of Obamacare.  Those of us a bit older had no problem paying cash for our rubbers and it wasn't that long ago that if you screwed up you either paid for the abortion (in cash) or, 20 or so years prior to that there were no abortions at all -- you got to raise the kid.  Instead of facing the fact that there is no such thing as "free" you have cheered on the medical scam that has added anywhere from 10 to 30 administrators for every doctor or nurse along with monopolist practices that have taken what should be a $2,000 appendectomy (and is in virtually every other nation) and turned it into a $30,000+ disaster.

At the same time you eat yourself to death -- literally in many cases, and then expect everyone else to pay for the bad news when it comes.

You are directly responsible for most of this -- "health insurance" forced on your parents until you're 26, for example, despite being able to give Dad and Mom the finger at 18 -- for openers.

Rather than look at other nations (like Japan, for instance) where if you need an MRI you can pay $125 cash for it you bitch and moan about the cost of medical care because that same scan is $3,000 here.  Why is it $3,000?  Monopolies and price-fixing that have been illegal for 100+ years and instead of demanding it stop you actually demanded more of the same crap via Obamacare.

You in this generation also demanded all those student loans you bitch about today instead of demanding that colleges price tuition and fees at a level that can be covered by flipping burgers on the weekends and at night.  That's what the generation behind you had, and we managed it because we could.  Again, instead of finding your pitchfork, rope and torch and hanging some college administrators and politicians you cheered on and even demanded your own destruction -- and now you're pissed that you got it but even so you won't change your ****ing tune and start calling for heads on plates within the schools. At the same time a concrete-block dorm room won't do -- no, you need a luxury apartment complete with all-you-can-eat Sushi bar downstairs, damn what that does to the price.

It not only wouldn't be impossible to demand that college costs be coverable by the average unskilled part-time job it was damn near universal all the way up until the mid 1980s! I know this to be true because I was there and did it and I assure you calculus, biology, mechanical engineering and chemistry have not changed much if at all in the last 30 years while the cost of computers has gone from millions for a mainframe, special room and cooling all the way down to a literal $35 for a Raspberry Pi that will fit in your pocket.  You can fix this right now by demanding accountability both within the government and on college campuses along with an immediate cessation of all the price-driving bull**** "loan" programs but instead you riot, commit assault and burn things when a Republican wants to come on campus and give a political speech during a Presidential campaign.

Decision by decision, the economy has turned into a young people-screwing machine. 

Your generation begged for and in fact demanded nearly every bit of that screwing.

You in fact started doing exactly that when you refused to pay attention to exponents in middle school and you're still doing it -- right here, right now, today.

The fact of the matter is that every such exponential growth ramp-job ends the same way.  Always.  It does so because of basic mathematical fact and you were taught exponents in either middle school or your first year of high school.

You bought and in fact have advanced and supported a knowing lie.

A lie you knew better than to buy, but you bought it anyway.  You bought into the "belly" of that blue line (cost, debt, etc) where it appears you're getting a free lunch because the distance between blue and red originally gets wider.

It's always a lie because the inevitable result -- cost crosses benefit at an ever-accelerating rate -- is mathematical fact.

And unless something changes, our calamity is going to become America’s.

Oh really?  And what do you think will happen when it does?  Do you think this will turn out well for you?  Uh, no -- it will end very poorly, and you'll get the brunt of it.

So let's assume you don't like where this is going and would like a better way forward.

First, cut the crap and accept responsibility for what you advocated for in all of the above cases, along with how you have voted both in the ballot box and with your wallet.  Change your mind, what you demand be done and back that with how you do (or don't) spend your money.

Specifically with regard to health care, demand that everyone post a price before services and goods are provided and that everyone pays the same price.  That ends all of the medical crap right here and now.  No more "insurance" games and no more "mandates." Prices will collapse by 80% or more in an afternoon.  Oh, we'll also have a nasty recession because nearly all of those administrators will lose their jobs, but heh, life's rough sometimes when you're running a scam.

With regard to education, ditto.  No more loans and everyone pays the same price.  No more of this crap where you pay 50% of the kid next to you's tuition and fees -- by force, because your Daddy makes more money than his and you had to disclose that to get in on a FAFSA so they can discriminate against you.  He doesn't get more or less value than you do so why should the price be different?  Yes, a lot of universities will go under in an afternoon.  So what?  They'll be back in another week with 90% of their administrators fired and their football stadium turned into a homeless shelter, but that's good, not bad.  You'll still learn Calculus and it'll cost 1/5th of what it does now.

I just took care of two of your biggest complaints and we haven't gone after the state and local spending scams yet.

Second, find your ******n pitchfork and torch.  Revolution is a game for the young, especially when you largely caused the problem in the first place.  And no, it doesn't have to be violent and illegal but it sure as hell does have to be forceful, backed up with your wallet and "in your face" protest, including pickets and boycotts.

Third, if you think us old geezers are going to fight to fix what you broke while you bitch and whine then you need to **** off and play in front of a fast-moving freight train.  We might be persuaded to fight next to or with you if you change both your mind and behavior but we're sure as hell not going to fight in place of you nor will we fight at all until you stop advocating for and supporting what caused the problems in the first place.

Oh, by the way -- Arianna Huffington (founder of HuffPo) is one of the very people who needs to be held responsible.

She has stoked all this bull**** you bought into and HuffPo is still pushing it -- as is evidenced in that article.

Cut the crap, admit you screwed the pooch, change what you do and demand that the monopolists be punished under 100+ year old law that is still on the books and applies to all of these situations.

In short find your damn pitchfork and get out in front with it if you expect help from people like me.

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2017-12-15 12:44 by Karl Denninger
in Editorial , 202 references
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Corporate balance sheets have never been in the condition they are now, but most of this is a fraud.

Virtually all of the so-called "growth" has been in buybacks and (to a lesser extent) dividends.  The problem with buybacks is that into ramping prices they are a terrible long-term deal.  They make some sense in the depths of a crash, but of course nobody has the cash to do it during a crash.

When debt financed it's even worse because history says that corporate debt is never paid off, only rolled over.  In point of fact non-financial companies did not decrease their total debt levels (as measured by the Fed Z1) even during the depth of the financial crisis of 2007-2009.  This of course means that debt:equity levels go vertical as soon as the ramp in equity price stops.

I remind you that while buybacks increase earnings during good years (by reducing the divisor) they also increase losses during bad ones.  People forget this because, well, there haven't been any bad ones recently.  That will end and when it does it will provide a gross amount of acceleration for the decline in equity prices.  In fact, it's not going to be gasoline poured on that fire, it's going to a mixture of diesel fuel and ammonium nitrate.... See Galveston for what will come of that.

But on top of this we now have the real screw job in the tax bill.

Hedge fund managers will get a roughly $20-25 billion a year (that's about $250 billion over the budget period) in additional tax breaks through the so-called "Carried Interest" loophole.

This is raw theft.  This "loophole" is really no such thing.  The capital gains rate exists for those who put their own capital on the line and risk it.  If you manage someone else's money then it's their money at risk and you are performing a service.  This is clearly a W2 employee or 1099-contractor act and thus is wage income.

But, no, it's not in the tax code due to gamesmanship and the so-called tax reform does not stop this.  It would have been very simple to add the following to the tax code on capital gains: In order to take a capital gains tax rate your own personal capital must be at risk in the transaction.

Americans, except for the 0.01%, have every reason to find their pitchfork and use it over this.  That particular provision, may I remind you, would almost close the gap in funding that the bill creates by repealing the "individual mandate."

The "individual mandate" is and always has been a fraud.  But getting rid of one fraud only to enhance a second is not a net positive -- at best it's neutral and in this case it will cost-shift over $20 billion a year from working-class people to the ultra-rich with 8-digit+ annual incomes.

What's worse is that the money-printing (by Treasury, which I remind you is where it all traces back to -- always -- not The Fed) will further destroy ordinary Americans when it comes to their so-called "zero inflation" lives.  Asset price, medical and educational cost inflation will continue to advance and you cannot outrun the second and third with the first unless you are already in the 0.1%.  While I remind you that the medical cost-ramp problem is one that I've analyzed now since the 1990s and my latest projection is just around the time of the 2020 elections this may in fact move the day forward by another year or so.

$10 says not one American gets off their ass and finds their pitchfork over this act of raw theft.

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2017-12-15 07:00 by Karl Denninger
in Editorial , 366 references
[Comments enabled]  

This letter is something everyone in the US ought to read, understand and act upon.

Some of these texts appear to go beyond merely expressing a private political opinion, and appear to cross the line into taking some official action to create an “insurance policy” against a Trump presidency.

Get this through your head, America.  You have people within the FBI who, it appears, had some sort of "insurance" arrangement they were actively working on to change a political outcome.

The document goes on to talk about the fact that there apparently was an active conspiracy to keep the contents of the conversations between these people private as well despite the fact that they were acting within their official capacities at the time.  In other words they perverted their public employment for the purpose of expressing and acting upon personal political animus.

We're all entitled to our political opinions and First Amendment protections are very broad.  However there is also the matter of long-standing federal law (The Hatch Act, principally) and policy, which bars partisan political activity by a wide swath of executive branch employees.

The FBI, as a law enforcement agency, is part of the Executive Branch.

Further, and much more seriously, an active attempt to subvert the electoral process by clandestinely using the resources of the Executive to damage one political party or candidate and favor another is an act that I believe constitutes election tampering and is a rank violation of the US Constitution (never mind violating 18 USC 242 and possible obstruction of justice charges if part of the activity was shielding Hillary from being indicted for mishandling classified information.)  The fact that the people involved appear to have engaged in this conduct using a "burner phone" (one that they believe could not be traced and was explicitly used in an attempt to prevent discovery of the content of communication) is stand-alone evidence of corrupt intent on their part.

If this is in fact what it appears to be then there are a whole host of people including top level FBI leadership both former and current that badly need to be staring down criminal indictments -- now.

As with all the other outrages standing today, however, I have no faith whatsoever that anyone will care and rise to demand that justice prevail.

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