“Given that the economy appears to be entering “crash mode,” and given that the money supply is now almost 5x higher than it was in 2009, and given that Treasury debt outstanding is now $7 trillion dollars – or 64% – higher now than in 2009, and given that interest rates can only go negative, I would suggest that the Fed is out of tricks and what is coming at us in the system is going to be much WORSE than what occurred in 2008.” Dave from Denver

http://www.gata.org/node/15266

“Weaker-than-expected headline data in the next week should push consensus expectations meaningfully towards an outright quarter-to-quarter contraction for the April 29th initial estimate of first-quarter 2015 GDP growth. Once all revisions are in place, that first-quarter GDP contraction should be the deepest since the economic collapse from 2007 into 2009, and it would raise serious market concerns for a subsequent, second-quarter GDP downturn (release on July 30th) and formal recognition of a “new” recession. – John Williams, Shadowstats.com, April 10, 2015

http://theeconomiccollapseblog.com/archives/the-six-too-big-to-fail-banks-in-the-u-s-have-278-trillion-dollars-of-exposure-to-derivatives

See more at: http://www.thedailybell.com/news-analysis/36230/Were-All-Welfare-Queens-Now/?uuid=6F800609-5056-9627-3C5071902B060BF2#sthash.wt0eRTmd.dpuf

Thank you for joining this site, and adding your comments.

Roosevelt did introduce laws that cut down on the level of “casino-banking” that was occurring in Wall Street. However, other anti-deflationary policies were nuts – especially with respect to the destruction of food.

Roosevelt was lucky in the end. Call it the “survivor” theory. In 1945 there were few industrial powers intact. The United States, Switzerland, and Sweden were at an enormous advantage. Their corporations had few competitors, and carried little or no debt. Their workforces were ready to work overtime, and the machinery was in perfect condition. Their credit systems were intact. Their populations were well nourished, and not infected by distrust or enmity of each other.

Truman stood down the military economy. And production of the real economy took off. Houses, cars, clothes, appliances, all took off. And America was capitalized and ready to produce.

What America has done to itself since the LBJ years, by hollowing itself out is disgraceful. And I don’t see anybody talking about it.

I can identify two problems with Dave’s idea and I would like to propose some solution to the second problem.

First problem with that is that if we look at how all of this worked in the US we will notice that the US economy needed 17 years and World War II to get out of the recession. The unemployment rate before the Great Depression was about 3% and by 1939 it was still 19%. Hardly a success. Personal Consumption was still about 10% lower in 1940 than it was in the Great Depression year of 1930. The Great Depression has only really ended when the Federal Budget was cut from $95bn in 1945 to $35bn in 1947. The Keynesian economists were horrified but the economy took off, and this is without considering that most of President Roosevelt’s solutions required delegating much of legislative power to the executive power which in turn required first emulating some corporate solutions of a fascist state (whereby all business in a corporate state is in obedience of mission to the paternal wisdom of government) and secondly breaking the law, which Roosevelt commented on by writing to the Chairman of the House Committee that ‘little thing like the Constitution ought not stand in the way of a good intention for the public welfare’. By the way, when we talk about the New Deal I am not quite sure how happy the Irish would be some means which President Roosevelt thought would justify his goals such as confiscating part of people’s savings.

In Poland the government implemented a New Deal program of public works and price regulations on an ever larger scale than in the US – by confiscating 2/3 of people’s savings on 28 October 1950 at the cost of around 400,000 people imprisoned in years 1944-1956 and 100,000 killed between 1944-1956. Both President Roosevelt and Vice-President Wallace were enchanted by the Soviet Union. Are you sure David we should put President Roosevelt on a pedestal, a man who having been acquainted with details of the atrocities being committed by the Nazis shared Anthony Eden’s fear that Hitler might actually accept an offer from the Allies to move Jews out of areas under German control (we can read all of that in the Memorandum of Conversation by Mr. Harry L. Hopkins, Special Assistant to President Roosevelt regarding a meeting with Anthony Eden March 27, 1943)?

Anyway, my first point is that we cannot wait for 17 years for the economy to take off and mortgages starting to perform profitably. ECB (and FED) also does not want to wait for 17 years and therefore they embark on the QE program which results in hidden hyperinflation in property market and stock exchange. Maybe David’s solution would work in short term when it comes to relieving debt burden of young couples in Ireland inasmuch in hyper inflated markets the debt for equity swap solves the problem of too much debt, but in the long run liquidity is not a substitution for insolvency. Hemingway characters often start with big plans and ruffle everyone’s feathers on their way but sometimes they end up committing suicide. QE program is a suicide in long term which will end up with sovereign bond market collapse.

Having said that, we can boil down the outcome of David’s solution to federalization of toxic Irish property bubble and in that I support his cunning plan of paying countries like France and Germany in kind for burdening the Irish taxpayer with bad debts of their banks. Let’s do it!

As to his idea that the write-downs might be administered on a sliding scale (with those who bought at the peak getting the biggest break) I find it very fair. Pity that David is only jesting for no political party will give preference to outsiders over insiders except for the radical left, in which case Ireland will be bereft of any foreign investment and it will suffer Polish levels of taxation to finance the radical left programs (in Poland if you are earning 350 euro a week gross you will receive perhaps a 100 euro after taxation – half of your wages will be deducted for a Social Insurance Institution which will soon go bankrupt and with that income you will be paying 32% income tax – ever wondered why so many Poles emigrated?; all of this to finance bureaucrats – 3 times more of them than in 1989 and a lot of new ones after Poland’s accession to the EU – and to repay growing foreign debt because unlike Greece, Poland takes its debt repayments seriously and debt repayments account for a much bigger part of Polish budget than Greece’s; it has also, in an unfathomable act of stupidity, voluntarily chipped in to rescue the euro which is rather like Irish taxpayers bailing out Germany; i in 2013 Poland has also paid €200m for the British rebate, but only few people know that Germany have their own EU rebate too – €2.5bn, as does Holland – €1bn).

Second problem is that, as I pointed out in the Irish Independent a few years ago, by agreeing on everything what Germany and France proposed Ireland deprived itself of any bargaining power with the EU and the EU controlled ECB.

Is there any solution to this problem? Maybe there is. It is to threaten the ECB/IMF that should they not accept the debt for equity swap Ireland will, along the UK, join the China led Asian Infrastructure Bank and it will get the swap deal there – Prime Minister’s Cameron move which pissed off the US so much that they issued a statement saying that they are ‘wary about a trend of constant accommodation toward China’. By the way, this reorientation of the UK toward China at the cost of the US should make David to rethink his proposed strategy of choosing the UK-USA alliance over the continental Europe alliance because more and more countries are now drifting away from the soon-to-be overthrown dollar hegemony.

The UK’s U-turn has already resulted in China investing ?14bn in Hinkley Point C nuclear power station which should make the UK a little bit less dependent on President Vladimir Putin’s mood (Ireland is more dependent on energy imports than the UK but that never worried any Irish politician except for those who firmly believe that even though it turned out that Germany cannot afford the wind energy, is féidir linn), ?42.8bn in UK’s High Speed 2 airline, ?800m in Manchester City Airport and ?1bn in the Asian Business Park.

If Ireland replicated the UK’s change in geopolitical strategy it could in the best case scenario force the ECB – or maybe even the US, using its Irish lobby over there? – to get the debt-for-equity deal at the cost of not joining the Asian Infrastructure Bank for the time being.

In the worst case scenario Ireland will get the much needed Chinese investment and perhaps the Germans will stop reading Ireland’s budgets in Bundestag before they are red in the Dáil. David often mentions the opportunity presented by the Irish diaspora in the weakening US, but he never mentioned the opportunity presented Chinese diaspora here in this country – some of them Chinese immigrants might actually be very wealthy and well connected people…

Maybe this can be done without Ireland changing its name to Chireland? It would be a Mark Twain entrepreneurial story rather than Hemingway’s. As far as I remember, no Mark Twain character ever committed suicide…