Some Thoughts on 2010

So we took off the last bit of 2009, and the first bit of 2010, and after coming back to it, we realise we still have nothing in particular to say. That, however, has never stopped us before, so we look forward to another year of fun and games on the world scene, as the 2007 Depression rolls on. Since 2010 is still figuring out which way is up, we thought we'd offer some ideas as to how the year is going to look.

Previously, we called 2009 the Year of the Whinger; boy, were we ever right (insert back-patting here). The banks whinged, and got money; the health insurance companies whinged, and will probably get money; the auto manufacturers whinged, and got money; the home-builders whinged, and got money. Come to think of it, the only people who whinged and were ignored was the Citizenry, of the various countries which forked over said money, who really didn't want all the aforementioned whingers to get all that money. Oh well, they don't know what's best for them, now do they? Don't they know that they need autos, and health insurance, and banks, and home-builders? Why, what would a modern economy look like without these centrepieces of industry? Perhaps they'll learn better.

At any rate, this year, 2010, is certainly shaping up to be quite the doozie, what with the U.S. Treasury removing - not raising, but eliminating - the cap on how much money can be poured into the haemorrhaging enterprises known as Fannie Mae and Freddie Mac. Additionally, justice has been thrust to the side, with a U.S. judge throwing out a murder case against Blackwater agents (i.e. U.S. mercenaries), because the Government prosecutors botched, perhaps purposefully, the case. And the U.S. Transportation Security Administration is hounding a pair of bloggers who published the details of supposedly super-secret security directives. Say that last part ten times as fast.

But what will 2010 be, you ask, dear Reader? Well, we're getting to that. 2009 saw corporate powers across the globe - but perhaps most spectacularly in the United States - with their collective hands out, begging to be kept from going under. At the same time, we see that being the point where those same corporate powers have cemented their control over the Governments which gave them the money, to the detriment of the Citizenry to which a Government is supposedly responsible. This year, we see the fallout of that move start to make itself evident.

Simply put, the moves, for instance, by Goldman Sachs in the U.S., are of such a patently, and odiously, self-serving nature, it doesn't take a genius to figure out the Citizenry has gotten screwed so that Lloyd Blankfein can keep his $43 million a year for doing God's work - oh, we wish we had thought of that one! At the same time, we have a sneaking suspicion that the world markets will take their next big nosedive toward their final destination, which is a 90% drop or so from the peak.

Do you hear what we hear? Yes, the gnashing of teeth: those who got bailouts will grumble they did not get enough bailout; those who will pay for all the bailouts will grumble about how there is already too much slop in the trough. Both sides will be gnashing, and foaming at the mouth; take a look at the latest bailout of GMAC, as an example of what we're talking about. There will be many, many more bailouts, and we would like to be on record as saying this is the year the FDIC will need a direct bailout to keep operating. Ted Butler, we hear, recently stated that 2010 is the year when JP Morgan Chase closes its heart-stoppingly humungous silver and gold short positions; we'd like to put ol' JP on that list of bailouts-waiting-to-happen, too.

Simply put, this will not be a pretty affair, and might indeed result in the civil unrest which James Kunstler and Gerald Celente have been ranting about for about a year already. It could certainly result in the loss of legitimacy of the most bailout-happy Governments, as their respective Citizenry will see continued, extremely unpopular, bailout-age as a sign those Governments are no longer responsible. History has shown that, when Governments no longer seem responsible, they tend to become quite despotic and oppressive, to keep an increasingly restive population under control.

So, we posit two trends: the teeth gnashing on the part of corporate interests, screaming for another series of big bailouts, to ensure their primacy in a depressionary economy; and the teeth gnashing on the part of Citizens, riling against both the previous bailouts, and new bailouts being forced down their throats. Governments will respond to these two, conflicting demands by funnelling vast amounts of money, either directly or indirectly, to their corporate masters; whist simultaneously increasing the bread and circuses for the masses to keep them placated and obedient.

There you have it, then, dear Reader: 2010 is the Year of the Teeth Gnashers. The two different poles of the gnashers - i.e. the Citizenry and the corporate elite - will attempt to pull on Governments to be aligned more strongly with one, against the other. Unfortunately for the Citizenry of the world, they have already lost this fight, probably a long time ago; the corporate interests have the field, as it were. If those interests are smart, which they might or might not be, they will recognise the need to maintain the illusion that Governments are still responsible to the Citizenry, and make token gestures of hollow sacrifice. This, coupled with a sharp uptick in bread and circuses, will likely be enough to keep the Citizenry of the world in check, and docile.

We would like to make it clear, though, that we don't quite see massive civil unrest, a la James Kunstler or Gerald Celente, happening this year. This is not to say the possibility isn't there, of course - the 18th Century French aristocracy assumed the rabble would simply take their lumps, as it were, but those same aristocrats all had their heads chopped off during the Revolution. However, we feel that Governments will be able to maintain the illusion of responsibility to their respective Citizenry through most, if not all, of this year. Next year, 2011, we think all bets are off; we could see that being the year when even major OECD Governments start to loose their aura of faux responsibility.

However, if civil unrest does occur this year, it will likely be in those countries where the Citizenry has a long and noble tradition of taking to the streets. France, Greece, and Italy, for example, are the most likely, in our mind, to see some form of uprising, along with Spain and Portugal. The United Kingdom is a lesser possibility, along with the rest of the core counties of Europa (i.e. Germany, et cetera); Canada, Australia, Russia, and Brasil are not likely to see revolts, as those populations are either relatively docile, or well-policed. The United States, as the most docile and beaten-down country on the planet, will almost certainly not see anything resembling unrest. China, though, is the wild-card, in our mind: it will either have no problems whatsoever, thanks to the famous heavy hand of Communism, or it will completely blow to pieces, taking any mirage of a recovery down with it.

We end with a little tune, sung to Old MacDonald Had a Farm:

Ol' Lloyd Blankfein had a trough,
E - I - E - I - N!
And in that trough he poured some slop,
E - I - E - I - N!
And some slop! slop! here, and an oink! oink! there,
Here some slop, there an oink,
Here some slop, there an oink!
Ol' Lloyd Blankfein had a trough,
E - I - E - I - N!

Ol' Lloyd Blankfein did God's work,
E - I - E - I - N!
...et cetera...

Forming America's Next Political Party

We've been giving the issue of former Alaska Governor Sarah Palin's resignation some thought, although we still wonder exactly what she has planned. Resigning before completing a term is not an unheard of manoeuvre, so such an act by Ms. Palin is not necessarily out of the ordinary. However, she seems to be a canny and clever person; we would be very surprised if she is simply leaving politics behind and returning to a quiet, private life.

On the contrary, this article from the Wall Street Journal gave us pause; "Governor's move highlights GOP divide," as the title says. The Republican Party has a rich and vibrant tradition of falling completely to pieces at various intervals, typically resulting in a name change (or at least a bifurcation of the Party). A collapse and reinvention of the GOP is not outside of the realm of possibility, in our minds.

Now, Ms. Palin's 'highlighting of divides' could just be another interior squabble of the Republican Party, which will resolve itself one way or the other. However, Mr. Gerald Celente, of the Trends Research Institute, has made it clear on numerous occasions that he expects to see a powerful third political party develop in the United States - partly in response to the Depression.

We regard Mr. Celente as a very smart man... he's paid lots of money to be very right, after all. We can think of no reason why a new party couldn't form, except perhaps the disinterest and passivity of the U.S. citizenry. If there were to be a new third party, we frankly don't expect it to bud off of the Democratic Party. A splintering of the Republican Party, on the other hand, is not unlikely, as the Party is under an incredible amount of political strain (e.g. sex scandals of former frontrunners for the 2012 Elections, losing their majority, and their perceived responsibility for the Nation's economic woes).

We ask the question, could Ms. Palin be one of the forces behind the creation of this new party? We wouldn't bet against that. Out of the present Republican Party, she is - in our mind - one of the few with any, shall we say, personality. She had a very striking rise to national attention, and has not really left the national scene entirely, even after the election. We wouldn't expect that her reasons for leaving her post as Governor include 'form new third party,' but we could definitely see her being part of any sort of movement in that direction.

We suggest watching Ms. Palin's actions closely for the next few months. Perhaps we are wrong, and she really does intend to leave politics behind. Whatever the case, though, we posit her moves will be most illuminating.

What is the Likelihood of Rebellion?

The recent 'tea parties' on April 15th bring to the foreground that which has been seething under the surface of discourse in the United States: the anger against the course which the Federal Government has taken in managing the 2007 Depression. One need to look no further than these 'tea parties' to realise that this anger is indeed present. The question is, how far will this anger go?

Measuring this public sentiment is quite difficult, as the anger could simply result in the next elections ending in favour of one political party or another. However, there are - as far as the Federal Government is concerned - more serious implications of this anger. This can bee seen in the comments of Governor Rick Perry of Texas (as well as the following discussion thereof):

"We've got a great union. There's absolutely no reason to dissolve it. But if Washington continues to thumb their nose at the American people, you know, who knows what might come out of that. But Texas is a very unique place, and we're a pretty independent lot to boot."

It is this 'independence' which started a little-remembered altercation known as the Mexican-American War. This also ties into the concept of State's Rights, which has been severely trampled upon by the Federal Government since the War Between the States. The Confederate States of America was founded upon the notion that States, having voluntarily entered into the Union, could also voluntarily leave it. This is the tradition which Governor Perry touched.

Secession from the Union of the United States need not necessarily be the end result of the justifiable anger felt by Citizens against the actions of both private and public figures. In fact, we would not be surprised if Gerald Celente's prediction of the rise of a third party came true: the dissatisfaction felt by the Citizenry with the present format of politics may indeed give rise to such a new power in the American political arena.

A new, powerful third party would be a relief, actually: it would help bleed off the pressure which the building anger is causing within the Citizenry. It would, at least on the surface, seem as if 'something' was actually being done. We only hope that this new party will be one which stands for actual, honest change, not warmed-over rhetoric from a teleprompter. The United States, if it is to survive as a viable political entity, needs to be overhauled in every way imaginable.

However, we are not willing to rule out rebellion entirely. Texas is just one of several States which have a historical propensity to 'bolt,' if you will. The Union has been left in tatters before, and we would frankly not be surprised if again it is shredded by the very People in whose name the Federal Government claims to act. Mr. Celente predicts tax riots and a revolution; we cannot argue with him on those points, as the foundations for those acts have already been built.

What we come down to, when thinking about the possibility of rebellion, is this: a vast number of Citizens would say "I did everything right. I played by the rules. I got screwed." They feel entitled to some sort of reward for what they perceive as their labours, and if they do not get said reward, they will feel greatly betrayed. They will look for new answers to the problem; answers which will probably be outside of the present de facto two-party political system. Hence, a new third party; we honestly see such a change as inevitable.

Take that same discontent, however, and add into it a long, horrific, destructive, hyperinflationary depression... say, like the 2007 Depression will probably be. In that case, the discontent will be vastly magnified: not only did the system not provide to those who feel entitled to a better life, but the system destroyed what life was had by these people. Imagine, if you will, the white-hot rage at that, especially if the destruction occurs over a relatively short amount of time. In that scenario, secession and violent rebellion would not be out of the picture by any means at all.

In our opinion, we don't think violent rebellion will be seen in the 2007 Depression. The American Citizenry is probably too pacified and unimaginative to resort to violent overthrow of the Federal Government. What wouldn't surprise us, however, would be systemic, nonviolent rebellion against the Federal Government by States. Those States which were fiscally responsible - for example, North Dakota - may come to resent continual bail-outs of profligate states - say, California - and indeed the Federal Government itself. Also, when the U.S. dollar blows out, the States may of necessity come up with their own monetary systems. At some point, the Federal Government could be so impotent that it will no longer have the power necessary to force the States to toe the line, as it were; at that point, the Union will be effectively dissolved.

How this building anger and discontent will be expressed is, in our opinion, still uncertain. Much of the future venting thereof will likely rest heavily upon the nature of whatever new political parties arise in the coming years. If those parties wish to rebuild the United States into a frugal, efficient, and thrifty nation, then there is hope for the Union to survive. If, on the other hand, those parties instead try to reinforce what was once the status quo at all costs... then we believe that all bets will be off.

Confidence and Legitimacy

Mr. Summers, the former U.S. Treasury Secretary and now advisor to the President, claims "what we need today is more optimism and more confidence." Unfortunately for this agenda, a crisis of legitimacy for the political and economic system is taking place, which dampens the citizenry's optimism and confidence.

The USA is looking more and more like a kleptocracy these days. The government sends trillions of the people's money directly into the hands of banks. Most Americans are neither major shareholders nor executives of banks, so this largesse is of little use to them. However, it is a great deal of use to said major shareholders and executives.

Meanwhile the masses whose money has been appropriated by the government are not doing so well financially. Banks are not helping the economy recover - in fact they are doing the opposite by raising interest rates on loans, cutting existing lines of credit, and making new loans harder to get.

The American household is under seige on many fronts, and the collusion of the governement and the banks seems a tad hostile. Perhaps the citizenry is docile and obedient, and will take the abuse without complaint. But in any case, they are not going to feel particularly 'optimistic or confident'.

The era of deluding the wage-slaves and debt-slaves into believing they have access to 'the American Dream' is over. The masses will either carry on like whipped dogs (our opinion) or rebel (Mr. Gerald Celente's opinion), but the optimism and confidence that ensnared them and ultimately enslaved them has flown forever and cannot be recovered by exhortations of the Administration.