The Italian Job: How Borrowing And Printing Lead To An Economic Dead End

http://davidstockmanscontracorner.com/the-italian-job-how-borrowing-and-printing-lead-to-an-economic-dead-end/

Lawrence Summers: To fix the economy, fix the housing market

This is a re-post of why this country's economy and why the global banking system will collapse.  With leadership like this, who needs enemies? 

http://blogs.reuters.com/lawrencesummers/2011/10/24/to-fix-the-economy-fix-the-housing-market/

The central irony of financial crisis is that while it is caused by too much confidence, too much borrowing and lending and too much spending, it can only be resolved with more confidence, more borrowing and lending, and more spending.

Art Cashin: Fed is walking a tightrope

http://www.zerohedge.com/article/art-cashin-fed-walking-tightrope-hurricane-and-other-observations

While we are seeing the headline numbers are pretty bad, behind the headlines there are some equally disturbing numbers. The government, we are hearing, because of tight budgets, people are being asked to take 1, 2 or even 3 furloughs a week without pay. That's wage deflation, and that's gonna put a strain on things: consumers are going to hold back.

The layoff seem to be slowing because business was taking the other approach. If you want to stay working I am going to have to cut your salary and/or your benefits.

Small businesses account for 50% of our GDP, they account for 60% of new hiring. We are not seeing new hiring because small businesses are not buying into this. So the recovery has not hit main street yet. If you ask small businesses why aren't you borrowing, their answer is "send me a customer, don't send me credit."

We've had more and more signs of potential deflation and the Fed is terrified of that...They've got to come up with something inventive, something as they call it, 'new quantitative easing.' And yet that brings the concern if they do something that is dramatically different, will people say 'What do they know that we don't know? What is the big cause of this?' So the Fed is walking a tightrope in a hurricane and it's going to be tough."

Galbraith vs. Schiff

Dr. James Galbraith believes US debt levels are the subject of "fear-monguering", and "capital markets are not worried." Peter Schiff believes the debt levels will lead to "disaster."

Schiff correctly called the subprime mortgage crisis and housing bubble 5 years ago. Galbraith teaches business students. You be the judge.



http://www.youtube.com/watch?v=fZrWoZiB9HY

Servicing debt payments

According to Darryl Robert Schoon:

In the early stages of capitalist systems, interest and principal can be serviced out of the debtor’s cash flow. In the final stage of “mature capitalist systems”, they cannot.

Capitalism’s final stage is what Minsky calls “ponzi-financing”, when debt payments can only be made by additional borrowing. This is what the US, the UK and Japan are doing today, having to borrow against tomorrow in order to pay yesterday’s bills.