Like there’s a good side, right?
From Market-Ticker: What’s Dead (Short Answer: All Of It)
Just so you have a short list of what’s at stake if Washington DC doesn’t change policy here and now (which means before the collapse in equities comes, which could start as soon as today, if the indicators I watch have any validity at all. For what its worth, those indicators are painting a picture of the Apocalypse that I simply can’t believe, and they’re showing it as an imminent event – like perhaps today imminent.)
- All pension funds, private and public, are done. If you are receiving one, you won’t be. If you think you will in the future, you won’t be. PBGC will fail as well. Pension funds will be forced to start eating their “seed corn” within the next 12 months and once that begins there is no way to recover.
- All annuities will be defaulted to the state insurance protection (if any) on them. The state insurance funds will be bankrupted and unable to be replenished. Essentially, all annuities are toast. Expect zero, be ecstatic if you do better. All insurance companies with material exposure to these obligations will go bankrupt, without exception. Some of these firms are dangerously close to this happening right here and now; the rest will die within the next 6-12 months. If you have other insured interests with these firms, be prepared to pay a LOT more with a new company that can’t earn anything off investments, and if you have a claim in process at the time it happens, it won’t get paid. The probability of you getting “boned” on any transaction with an insurance company is extremely high – I rate this risk in excess of 90%.
- The FDIC will be unable to cover bank failure obligations. They will attempt to do more of what they’re doing now (raising insurance rates and doing special assessments) but will fail; the current path has no chance of success. Congress will backstop them (because they must lest shotguns come out) with disastrous results. In short, FDIC backstops will take precedence even over Social Security and Medicare.
And that’s just the first half of the list.
The President is thinking about ways to save money:
I am not a health care wonk but some of my good friends are, so I’ll refrain from pretending I can construct a health care argument whereby this makes sense (or doesn’t, for that matter). Instead, as a moral matter, veterans deserve free, government-provided health care. As a political matter, why the Obama administration would want to squander its good will in the military community is completely beyond me. Murray calls the plan DOA, as she should. But why should it be considered seriously in the first place?
Has lying become the underlying theme? More from Market Ticker:
Here are some examples of “The Bezzle”:
- Liar loans: The borrower can’t possibly pay off the loan on the original agreed terms and the institution that makes the loan “passes it” to an investor fully aware that the borrower almost certainly lied about credit capacity.
- Overly-rosy projections about growth in property values: The speaker is either incompetent (doesn’t understand exponents – a fundamental mathematical concept) or is intentionally deceiving people.
- Overly-rosy projections about the stock market: “The market always comes back” and “over long periods of time it outperforms other investments.” Both true, but both misleading; if you’re 18 you might be able to wait for it to come back, but the market has remained flat to down from a given level for more than 20 years before. How long did you say it was before you intended to retire?
- “The Internet is doubling every three months!”: It was – for about six months. But that got embedded into the business plans of thousands of businesses, long after the growth rate had started to slow down to something more sustainable. Oh by the way, the fundamental lie of that claim is that in 7 years the Internet would have gone from its original two people to covering more than the entire population of the planet, including the rice farmer in China and the starving child in Bangladesh.
In short The Bezzle is “the lie” that is always present in business.
The truth is always some degree of lying in business transactions – always has been, always will be. And so long as The Bezzle doesn’t become the underlying theme in business, it simply bankrupts the people who try to run it when they get discovered.
But when The Bezzle becomes the underlying premise and basis for business transactions that entire segment of the market is doomed.
All this and more will be discussed tonight on Conflucians Say: The Dark Side of the economic meltdown
Please join me (Katiebird), BostonBoomer, and Dakinikat at Conflucians Say:
Time: 10pm Eastern
Call-in Number: (347) 539-5420