Punchinello's Chronicles

April 27, 2011

eBay, the Fed, and Shill Bidding

Let’s you and me start a small business, okay? We’ll pretend we’re in the same family, maybe. Or, you can imagine it’s you and your spouse, significant other, kids or someone otherwise sharing money and expenses. The key here is that the two of us have weekly expenses, and we make some money. The problem is, we’re not making enough money these days, to cover our expenses. So we figure we’ll start a business.

The first thing we do is come up with a product. We’ll call it The Widget, since that’s what lots of companies you hear about in books are making. It’s a really popular product, apparently, since I read about it all the time. It’s like that Parking family who has a monopoly on all those signs you see everywhere.

The next step is that we’ll sell Widgets on eBay. Everyone likes doing that, and it doesn’t take a lot of know-how to get started. We’re buying our Widgets wholesale from China, probably, for around $4 each. So we’d “like to” sell them for around $10 apiece. On the other hand, we’ve heard that if you put something up for auction, you might even make more than your basic asking price. Cool beans, that’s the way to go!

Alright, we’re ready to go. We’ve listed a Widget and set the starting bid at $5 (to cover the listing fees and stuff). Nobody can actually see that starting bid, we just put in a reserve. We also have a “Buy it Now” price of $10 so people don’t have to be bothered with auction bidding. If they don’t want to.

Just one problem. Nobody’s ever heard of us! We’re a totally new company, no word-of-mouth, no online presence, and we’re selling a variation of the same Widget other people are selling.

Here’s what we can do, as long as we ignore all ethical standards, cancel any moral principles, blindfold our conscience, and generally act like Wall Street financiers or government officials. We create two different screen-names and eBay accounts. They’re different from our actual business name and account, under which we’re listing our product.

To get some action going, I’ll make a bid. Then you make a bid. Then I’ll make a bid really fast. You make another bid, and BAMMO!…suddenly we’ve got A Hot Item! Obviously it’s a hot item, otherwise “people” wouldn’t be bidding on it so rapidly, right? And man-oh-man is that price goin’ up! Woah…we’re already at $9.50! Just a few more bids and we’ll be selling it for more than our ten bucks!

Neat-O!

We’re Hot! We’re A Rising Star! Product activity is sky-rocketing! People are taking notice, what with all that activity goin’ on about Widgets! “Have you heard? Widgets are the hot new item! A gotta-have thing, dude, and people are bidding like crazy! Just go to eBay and you’ll see!”

Finally, only seconds before the auction closes, I make a bid for $10.75 and win! Hoo Hah! (Fist in the air, air-guitar, Injun war dance across the living room!) I won! I got it! It’s…MINE!! ALL MINE!!!

I send you the $10.75 via PayPal, who takes out their small percentage for the transaction. You get around ten bucks, and we decide to go out and celebrate! After all, we Sold Our First Item! We’re gonna be RICH! We suddenly have money!

Right?

Obviously, we don’t have SQUAT! I take the money out of our household checking expenses to pay YOU the money for the item WE sold! The result is a net zero! And actually, that’s not true either. The true result is that we took a loss. We had to pay a listing fee, a PayPal transaction fee, and a Final Value fee.

This is pretty much exactly how the Federal Reserve and the United States Treasury work with the bonds and other so-called securities.

Right now, each month the US Treasury lists somewhere around $75-billion in bonds and securities on the open auction markets, which might as well be eBay for all they’re worth.

“Bidders” then start placing their bids. US Treasuries and bonds are a good deal, see, because they’re safe. You can buy them with paper money and when you sell them again, you get the same amount of paper money back again. It used to be that you’d get some additional paper money, historically known as something called “interest.”

Nobody uses “interest” anymore. Probably because nobody’s interested.

The Treasury calls up folks in the family and let’s them know there’s a hot new Widget for auction. They’re calling it the 10-year bond, or maybe the 2-year bond. It’s hot! It’s cool! It’s massive! It’s The Cat’s Meow! (Does anyone say that, really?) “Ya gotta buy this new product, dude! It’s awesome! There’s all KINDS of activity goin’ on right now, with EVERYone wanting in on the action!”

The Federal Reserve puts in their bids, Bank of America puts in a bid, Citigroup, Wells Fargo, JP Morgan, HSB; they ALL put in bids! The Fed sees that the bid is going hot an heavy, and by gosh they sure don’t want to lose so they put in a higher bid!

At the last moment, just before the auction closes, the Fed sweeps in with a hyooooOOGE bid and wins! Fists in the air, happy feet, air guitar, and a whole lotta whoopin’ and hollerin’ over there at the office. They WON!

Thank God “we” sold all those securities and bonds! If we hadn’t, we wouldn’t have any money! And if we didn’t have any money, we couldn’t afford to pay the monthly interest on our credit cards and loans! China would get really mad! So would Japan, England, Brazil, India, Russia and so forth. The Financial Markets would get mad! Everyone would get really really mad!

But not to worry: We sold out of all our Widgets — those whatchamacallits…the bond thingie! So now we’ve got Moh’ Money! At least enough to play around for a month, until we can list some more stuff!

Good deal, dude! We’re gonna get totally rich! All’s we gotta do is keep sellin’ those Widgets and bonds! There’s obviously a huge amount of excitement about them, ’cause, like, dude!…whenever we list them for auction they get, like, totally sold OUT!

Right?

Okay, so somewhere along the line here, you probably figured out that this is ridiculous! Nobody would be fooled by something as idiotic as this kind of scheme (or is it a scam?), right?

WRONG!

There’s an entire whole Group of people who are Totally Fooled! That group is called The United States Congress! Yup, the best government money can buy! They’re, like, totally fooled, dude!

Each month, Our Esteemed Members of the August Body of American Leadership (except for a few new members here and there) go out and party it up! They’re totally excited, because The Treasury just sold out of all it’s debt issues! Obviously, America is still The Home of the Great, Land of the Rich!

Otherwise, why would everyone be so excited about buying our bonds and securities? Heck, all’s ya gotta do is look at the stock market, for cryin’ out loud. It’s going up pretty much all the time! Sure, there are a few times when it goes down, but not for long!

There’s no question we can afford a higher debt ceiling. There’s no question we can afford to keep ALL the fabulous programs and benefits! There’s no question we can continue building up more debt. After all, according to Leading Economists and pretty much everyone in California, “Debt equals Wealth!” Right? Right!

Let’s just keep voting in those Esteemed Members of our August Leadership. They sure know what’s what! They understand business! They know how to make stuff! In fact, let’s just give them control over all the business activity in the country, maybe even the world! They’re experienced, right? They’ve got the background, the know-how, and they surely know a lot more than anyone else.

Right?

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February 3, 2011

What are Market Fundamentals?

Filed under: Word of the Day — Punchinello @ 3:01 am
Tags: , , , , ,

Whenever you ad an “-al” to a word, you’re hoping to make the word mean “in the nature of” or “characteristic of.” So we know what music means, right? It’s all that stuff you hear coming out of the radio. When we make it music-al, we hope to mean that something is “a whole lot like” music. It’s “in the nature of being like music.” See?

Alright, so what does fundament mean? It’s the bottom (literally, your butt) and the base. When something is fundament-al, it’s in the nature of being at the very bottom of something. Since we’re talking about concepts, logic and argument when we discuss economics, “fundamental” refers to the most basic premises, along with the very bottom of the cause-and-effect chain. What are the most basic components of a market?

Markets depend on business. That’s why we call it a market. Long ago, a market was a place where people went to sell things and others went to buy things. Many times the market was located within the walls of a city or a castle keep. The kings and lords who owned the towns or castles learned that they could charge a fee to walk through the gate. Sellers had to pay to have a stall or sell their stuff, and buyers had to pay a fee to get into the market.

We still have markets like that, just about everywhere. We also have online markets like eBay, Bonanzle, Craig’s List and so forth. And people often still have to pay a fee of some sort. But “The Market” we talk about in the economic news is a little more abstract. It’s the overall combination of all the ways in which people buy and sell anything in the world. We have oil markets, commodity markets, the job market and the housing market. But we also have the equities market, loans and mortgage markets, interest markets, and financial markets.

So what’s all this about fundamentals? How come they matter? What are they, and why do we even care?

The reason we should all care is because we’re being told that The Recession is Over! We’re being told that “the markets” all are looking up. We’re being told that manufacturing is picking up, jobs are being created, prices are holding steady, and people are buying houses. We’re being told that because The Dow is now over 12,000 for the first time in two years, Happy Days are Here Again! Just like in the 1920s.

How do you know if this is all true? Can you tell what’s what when everyone in the news business is telling you that things are getting better? Why do some people say we’re Recovering (from the Recession), and others say that we’re in the starting phase of the Great World Depression?

It comes down to these fundamentals.

One of the key fundamentals is that some THING has to be made, grown, created or otherwise put together in order for some ONE to buy that thing. Another key fundamental is that someone needs WORK to be completed in order for those things to be put on the market and sold.

A slightly more complicated fundamental is that some ONE knows something you don’t know, and YOU have to pay money in order to find out about it. For example, a doctor knows a lot about your body. You can’t see out of one eye, so you go to the doctor to find out why you can’t see, and whether anyone can do something to make it better. That’s a service, and is part of the service “industry” (market).

What do we make nowadays? What do YOU make? What do YOU know that people pay you money to learn?

Moving right along with that making and knowing stuff, there’s the idea that no single person can make everything or know everything. Well, except for me: I know everything and I’m, indeed, a legend in my own mind. But setting that aside for the moment (or until I’m crowned Emperor of the World), we often need some help. We have work to do, and we need help to get all that work accomplished.

A job is fundamentally work. You have something you need accomplished but you can’t do it yourself. So you pay money or trade something with someone else and they do the task. Maybe it’s something you don’t like, like mowing a lawn. Maybe it’s something you don’t know how to do, like fixing a broken pipe. Maybe you just need help because you don’t have the time to finish all the tasks, like when you need help making 10 dozen cookies in time for the bake sale.

One way or another, real things have to be made, real work has to be done, real tasks have to be accomplished, and real services have to be rendered. That’s the way things work in the real world.

But we don’t live in the real world, these days! No, we live in the statistical world of the Bureau of Labor Statistics, lovingly known as the BLS. These are the people in The Government who tell us what’s going on by looking at lots of numbers. Do those people do actual work?

Yes, they do. Most of us don’t know that much about statistics and numbers. We don’t have the time, energy, knowledge or resources to gather all the numbers involving work, jobs, manufacturing and so on. Actually; neither does the BLS. So they gather a “sample” of all those numbers, then take a guess at what the rest of the world is doing.

“The DOW is up on news that Egypt is exploding into revolution.” That’s the kind of idiotic headline you’ll read, then say to yourself, “Well, I guess the economy must be getting better. The DOW is up! That’s a good thing! My father told me so, and I believe whatever my father tells me to believe.”

Did you know that right now, the single biggest investors in the DOW are the Federal Reserve (Central Bank of America), and massive investment companies like Goldman Sachs? What about all those moms and dads, grandmas and grandpas? What about those little European retired soldiers, whose entire pensions are invested?

No, they don’t exist. Not any more. Well, they actually exist as people, but no, their money isn’t involved.

And what about all those taxes you’re paying (if you’re working)? Aren’t all those tax dollars going to fund the stimulus, bail-outs, and entitlements? Uh…no, they’re not. The United States takes in around $2.16 trillion dollars in tax money. We have an on-the-books deficit of $14 trillion dollars. We spend around $45-billion a month just to cover the minimum monthly payment on all our debts.

When you factor in the military, basic government services and basic public functions, that $2.16 trillion dollars pretty much disappears by the end of January. YOUR tax money is gone before it arrives in Washington. YOU aren’t funding a damn thing, when it comes to all this other spending (like Social Security, Medicare, Pensions, Medicaid, and so on).

But…you heard on the radio that YOU, The Taxpayer will be paying all this money for GM, the public unions, and so forth, right? Nah…don’t worry about it. None of that money actually exists.

Fundamentally, in order to have real money we have to have real products, real services, and real work. In order to have real work, we fundamentally have to have real people with too little time or too little knowledge. Do we have that? How much real stuff are we actually making?

Another fundamental is the concept of value. Let’s say that I have a 15-inch tire for a 1995 Ford van. I come to you and ask if you’d like to buy it. I tell you it’s a terrific deal, and I’ll sell it to you for $50.

Your first question might be, “Why the hell would I want an old tire? I drive a Toyota compact car!” Another question might be, “Why should I pay you $50 for a stupid tire?”

In other words, my tire has no value to you whatsoever. Ah, but what about intrinsic value? Isn’t there something about the very nature of the tire that makes it valuable? Well sure, the rubber. IF you want to melt it down, IF you have a way to recycle that melted rubber, and IF you produce something out of that rubber. Otherwise, it has no value.

Something is valuable ONLY if someone else wants to buy or possess that something. A “thing” is only worth what someone will pay for that thing. Are you willing to pay $250,000 for a house tomorrow afternoon? How about $800,000?

We hear all sorts of statistics about houses and how much they’re worth — how valuable they are. It seems not that many people think a house is all that valuable, right at the moment. Particularly those people who don’t have any money! If nobody is paying to buy houses, then they become less and less valuable.

What about malls and strip malls? How about downtown office buildings? What about all that commercial real estate property? Isn’t that still valuable? How many stores have closed in your neighborhood? Is anyone running to fill those empty stores with real stuff?

Talking with someone who believes that the overall economy is bad and getting worse, we say they’re a “bear.” Someone who believes the economy is getting better and will be back to normal soon, we say they’re a “bull.” Are you bullish or bearish? On what basis? On what foundation? What fundamentally do you see about the economy to support your feeling?

For thousands of years, people have used gold and silver as real money. We can look at the price of a piece of gold or silver in terms of paper money and determine the fundamental value of paper money. The more paper money it costs to buy a piece of gold or silver, the less that paper money is worth. The higher the price of gold or silver, the less value paper money holds in The Markets.

Did you know that people are removing their money from mutual funds and stock portfolios by billions of dollars? They’ve been removing that money, pulling it out of the financial equity markets for more than 30 weeks. Week after week, people are taking their money and going home. And yet, The DOW closed at over 12,000 points today. Is that good?

How can this average of Very Important Company Stocks be going up, when so much of the fundamental economy is going down or holding steady at very low levels? One way would be to remove from this average any company that isn’t doing very well. Another way would be for someone with an infinite supply of money to buy as much of those stocks as possible every day, regardless of whether or not they make a profit.

What about the Consumer Price Index (CPI)? This is an average of what a “basket of goods” costs on the open market. How can that CPI remain steady, indicating according to statistical analysis that prices aren’t getting higher? One way might be to remove things like oil, gasoline, energy and food. Another might be to change what’s in that “basket of goods” from steak to hamburger, and eventually to cat food.

And how about those manufacturing numbers? General Motors (GM) failed last year, and had to be purchased by the government. They say that The Taxpayers came up with that money, but in fact it was just more paper money created by the Federal Reserve. WE, the Taxpayers don’t HAVE any money!

GM supposedly is doing Just Great! They “sold” more cars than last year, and Happy Days are Here Again! We’ll just ignore the fundamentals. Indeed, GM “sold” half a million cars to their dealers, who put them into their inventory. By golly, Manufacturing Inventory numbers are up too! Therefore, says the BLS, the economy is improving!

Ultimately, it’s up to you, me, and each of us as individuals, whether or not we care to learn about the underlying fundamental facts of today’s markets and economy. Half the population seems to believe that “facts” are whatever someone says they are. The other half holds that facts are statements in a language, which match an observation in reality. That second half also holds that reality is real, regardless of whether or not human beings exist to perceive reality.

Half the population holds that reality is a figment of our imagination. Many of those people work in the Bureau of Labor Statistics. Many more of them work for the important news services around us. To them, since reality is whatever anyone wants to say it is (or feels that it is), then facts are simply interpretations of feelings. If it feels true, then it is true, according to modern deconstructionists.

So what do YOU think? Is reality just something to ponder when you’re having a beer after dinner? Or is reality the fundamental platform in and on which we all exist? Do you feel that the economy gets better or worse all on its own? Do you think the economy is only a result of underlying fundamental events?

Sadly enough, it soon won’t matter which way you think or feel. Reality always has a way of being real, and no amount of pretending can change that. I feel this is really, really true, y’know? I mean, like, I read it on the Internet, so, like, it sorta has to be true, right? Or…whut-EVERRR!

November 6, 2010

All Players Take Your Positions

Well, we’ve concluded the US midterm elections of 2010 and the large urban centers have remained Democrat. The middle of the country has moved to the Republican party, but the “message” was that voters want a more conservative ideology in Washington. California and New York elected strongly liberal governors, Illinois almost went Republican, but Pat Quinn (removed Rob Blagojevich’s lieutenant governor) squeaked through with 19,000 votes ahead of Bill Brady.

At the same time, the world is moving into the middle of the Fourth Turning for the 1940-2025 period. In a nutshell, this is a statistical theory based on a “seculum,” which is a “long lifetime” of about 80 years. The theory examines 400+ years of history, showing that every generation of about 20 years falls into a cyclical type. Every fourth generation there is a “winter” of endings in preparation for a “spring” of rebirth.

In the middle of each fourth turning there’s a major war in just about every case, with the an exception for the Civil War. The cycles and repetitions are so similar, they’re astonishing. World War II came during the previous fourth turning, with the “boom” of the post-war period coming from the start of the current seculum. Curiously, the American Revolution also took place during a fourth turning.

We’ve now had many chances, time and again to choose between two fundamental philosophies (or ideologies, as some people like to call them). In today’s world, we know them as liberalism (progressive) versus conservatism. The so-called Tea Party movement reflects modern conservative thinking. The current Democrat Party leadership reflects today’s liberalism. Nobody knows what the Republican Party represents; it’s a mystery.

This election was a referendum on the Constitution of the United States. Do we keep the existing document or do we get rid of it and start some different country? Liberalism proposes that the Constitution is a “living, breathing” document. That generally means the rules and charter for the United States can change according to some inexplicable set of ideas, mostly set forth by unelected judges and courts.

Conservatives would like there to be a strict reading of the Constitution. It isn’t a living breathing anything! It’s a document outlining the explicit rules for how this country and its government shall work. In the past two years, we’ve seen so many breaches of that Constitution that even the average American is now a bit concerned. And so, a referendum.

Starting back around 1977, with the election of Jimmy Carter, the United States entered into the Third Turning cycle. This was the time when much of the growth and development of “spring and summer” began to be “harvested.” America began to experience the consequences of many social ideas, and we entered into the “autumn” of the cycle. That proceeded through 1995-2005.

Each and every one of us has been given the opportunity to vote for a position. We also saw that the split between liberal and conservative was getting more and more polarized. Now in 2010, that split has completed. There no longer is any possibility of compromise between the two thoroughly opposing ideologies.

Many people and politicians like to say they’re fiscal conservatives “but” social moderates. There’s no such thing! Someone either is conservative or they’re not. The entire ideology of conservatism is based on an objective reality in which actions have consequences. Words have specific, defined meanings. The artificial split tries to have it both ways. Fiscal conservatives would like to spend money “wisely,” trying to keep budget deficits at a minimum.

A social moderate would like to have government act as a safety net, offering subsidies and aid to “someone.” Who is that someone? Nobody knows, it’s a mystery. It “feels” like it should be The Poor, The Elderly, The Sick, The Halt, and The Lame. Indeed, nobody really knows, they just feel like some people don’t have enough of something, so the government ought to do something about it.

Be that as it may, we also are entering into a new astrological age. It doesn’t matter if you believe in astrology or not, it’s simply convenient to note historical eons and milleniums. This is the Age of Aquarius, and represents the start of a new 2,000 year cycle. The Age of Pisces can be summarized as the age of organized religions. The overall concept refers to human morality being formulated by a metaphysical Supreme Being of some or another kind.

With the evolution of monotheism (one God), humanity has been split between two basic sources of morality. The one is this God, the other is the State (the government). For 2,000 years we’ve seen the rise and fall of empires, nations, businesses and other societies, each time based on how humanity will, could or should be led, and who shall be those leaders.

We’re now in the endgame both for this particular turning point, and for a 2,000 year cycle. It doesn’t matter if you voted or not, nor does it matter for whom you voted. Each of us has had ample opportunity to solidify our thinking, choose our perception and definition of reality, and adjust our lives accordingly. This election was only a “marker” in the game. It’s the final running around, getting into place, getting ready, set and prepared to start.

A lot of people think this election was an end of something. Many others believe it’s just another cycle, not particularly different from any other election. Many people claim that older people “always” grumble about younger people, “always” see things going from bad to worse. Understanding the theory of seculums, we find that no, older people aren’t “always” the same.

In the Third Turning period, people DO always say about the same things. Problems mount, seeming to be unsolvable. Morality collapses, civilization becomes more anarchistic, and the focus moves toward helping “the children.” There are lots of reasons for this, but you can read the book. I won’t get into them all in this post.

“Everything” seems to get worse during the Third Turning, and finally begins to become unsustainable as we enter into the Fourth Turning. At that point, tensions within the society are so high that the social fabric begins to unravel. The social contract fails, and nations begin to collapse. Political leaders fumble around, increasingly more frantic as they try to put everything back together again.

In our own personal lives, we find ourselves struggling more and more just to survive. Pressures mount economically, socially, idealistically, philosophically and everywhere else. We become more and more frustrated, angry, nervous, anxious and afraid. It all eventually explodes in a major war. The oldest of the generation, remembering the “glory days” of the previous major war, enlist the youngest to “go solve everything.”

The youngest generation, far removed from warfare, now identifies with the adventure and glory of those wars. They’re encouraged by the grand-parents, and so off it goes again. The great war is so destructive that everyone wakes up, everyone stops, and nobody wants to continue the destruction. At that point, those warriors returning from the battle fields want only two things: peace and quiet.

What about the generation that follows the warriors? These are the artists, builders, creators and members of what’s often called The Lost Generation. They’re the leaders of today’s Hollywood and entertainment industry. They also produced some of the great business leaders, and helped initialize America’s economic and military move into super-power status following WWII. So too, the 7-15 yearolds of today will build the next First Turning.

We saw this in the 1950s, and those returning warriors gave birth to the “idealistic” generation, what we know as the Baby Boomers. That generation grows up without any real trouble or pain, free to put into place all the ideals and wishful dreams for a Utopia. In the Fourth Turning, that idealistic generation has become the society’s leadership and moves to legislate all those ideal dreams.

While all that’s happening, each and every one of us has to make choices. We choose what to believe, we choose how to live, and we choose our political leaders. We either vote or we don’t, win or lose, elect or fail to elect. But one way or another, we become polarized. Just as we are in America today.

The things we see around us economically are almost an exact copy of what was taking place in 1893. The only (and major) difference is that for the first time, the majority of the population now has access to unsecured credit. Back in the late 19th century, if you wanted a loan you had to have collateral. Today, you can get thousands of dollars in simple credit.

With this election, everyone is now in place. Everyone who was a principal cause of the current economic depression has once again been voted into office. Harry Reid, Nancy Pelosi and Barak Obama are the central figures. Barney Frank and Chris Dodd, engineered the subprime mortgage crisis. Andrew Cuomo enforced the subprime loan problems, forcing banks to take bad loans as the head of HUD (Dept. of Housing and Urban Development). Mr. Cuomo now has been elected as governor of the bankrupt state of New York.

In California, the people have elected Jerry Brown to be their governor for the second time around. Mr. Brown was the man in charge during the Enron fiasco, setting in place most of the economic forces that have California at the point of total financial default. In Washington State, Patty Murray cast an important vote in the Senate for the Obama health-care reform act, the financial reform act, and the various bailouts.

Wisconsin chose to walk away from liberalism, moving toward conservatism. Michigan, the most bankrupt of the states so far, went toward conservative Republicans on a state level, but chose to remain liberal at the federal level. So too, throughout the country, each state has made its final choice. Each voter has done the same.

And so we now let the game begin. Reality will either produce the consequences that have been “kicked down the road” for so long, or conservatives are wrong. In that case, there never will be any consequences for anything, based on how liberals see things.

We’re about to see the state of California become the first state in the union to declare bankruptcy. Do you believe it? Do you agree? Or do you believe that California now finally has a “good” government that will really empathize with The People?

Not long ago, several of the brightest, smartest, brilliantest, bestest people were brought together for an economic experiment. In that experiment, a virtual state called New Jefferson declared bankruptcy. No, it didn’t have the slightest resemblance to California, New York, Illinois or Michigan. Not at all! These Most Brilliant economic planners went through an exercise to examine what The Government likely would do.

In the experiment, the state asked for emergency help from The Federal Reserve. It was given, but only for 30 days. In exchange for that help, New Jefferson promised, cross-your-heart-hope-to-die that they would change their accounting method, act like adults, cut spending, and whatever whatever, yadda-yadda.

I would expect that in 2011, no later than 2012, California will go bankrupt. As the 8th largest economy in the world, it’ll be a Come To Jesus moment for Pat Quinn, who’s been ignoring completely anything having to do with Illinois budgets. At the same time, starting November 3, 2010, Ben Bernanke, Chairman of the Federal Reserve has announced he will buy up the rest of the United States.

“Qualitative Easing,” the second time around, otherwise known as QE2 means that the privately held Federal Reserve will authorize the US Treasury to print whatever amount of money it takes to buy all United States securities. That means Treasury bills, bonds, and so forth, along with bad loans on the books for the Too Big To Fail (TBTF) banks. Bernanke claims he’ll limit to only….$600 billion. More likely it’ll be $4 trillion.

The players are all in position. Jerry Brown will have to smoke a lot of (still illegal) marijuana to come up with a way to pay everyone in California. Pat Quinn will have to figure out what to do about a $13-billion shortfall in the Illinois operating budget, and $175-billion unfunded liability in state pension funds. So what? Who cares?

The main thing is The Children won’t eat fat foods anymore because Happy Meals have been outlawed in San Francisco! New Yorkers may not be able to put salt on their food anymore, in order to “save costs” in the New & Improved National Health Care System. Right?

Sadly, there aren’t any more “chances.” We’ll see what’s what for the 2012 elections, but my prediction is that between now and then, the world as we know it will change into something very, very different from what we all see around us today. The good news is that whatever happens, it’ll be done by around 2020-2025. The key time to watch will be 2015.

It’s all a mystery. An interesting one, but a mystery nonetheless.

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