I wonder how George Soros feels about the financial débâcle that is unfolding in an unpredictable manner. In his book, "The Age of Fallibility," Soros himself stated that that 2007 would see the slowdown of the economy in the aftermath of the burstng of the so-called "real estate bubble." He saw fiscal responsibility on the horizon. Consumers would curb spending and personal debt in order to return to the virtue of saving. Fat chance! We are pumping up yet another debt bubble to continue the legacy of Alan "Bubbles" Greenspan.
Last night, I perused the book, "Empire of Debt," written by Bill Bonner and Addison Wiggin, again. I may have to purchase the book. In fact, read Bonner's commentary on The Daily Reckoning site. An excerpt:
Yes, we're all believers in the Theology of Capitalism now. That is, we don't think we have to look too deeply into the Holy Mysteries that surround modern markets. The place is full of miracles; that is all we have to know.The delusion, of course, is that debt can go on forever. It can continue to increase to infinity. Yes, we are going to ride the debt train right off the cliff because the Fed just increased the throttle. Perhaps the Fed will only make one 0.5 percent cut in interest rates, fools may wonder. Come on back down to reality. The pigs at the the trough have an insatiable hunger. The first rate cut is only an appetizer. The eight-course meal follows with a lavish dessert at the end.
But when it comes to real, free-market capitalism, we are all agnostic. People think that central banks can collude to manipulate the markets…and thereby avoid a much-needed correction forever. Our guess is that investors will pay dearly for the delusion.
Alas, we have a negative savings rate in this nation. In 2004, about 37 percent of the nation's populace had no retirement savings at all. Nada. Zilch. Of those who did have retirement savings in some form, the average was about $44,000, but the telltale median figure of $27,000 reveals all. And, only 11 percent of the population have retirement accounts valued at $250,000 and above. Thus, mostly everyone's net worth is tied to their homes, if they own one. Yet, the home is a tricky piece of accounting as its value is not realized until it is sold. Hence, antsy satanic gargoyles, who were seething with greed, opted to extract equity using those 125-percent equity line mortgages. Thus, their homes may be worth nothing.
The sickness of consumerism (i.e., the epidemic of the "seven sins") is something that I can no longer tolerate. Why should it bother me? Well, if it isn't obvious by now, the herd mentality is going to bring us all down whether we are deeply infected by greed or are ascetics. It does not matter. The vortex generated by the "system" is too strong.
Clearly, from the outdated figures that I cited, most "Americans" (i.e., 89 percent) are at or near bankruptcy. If we assume that many of them are carrying mortgages, then their net worth is negative. The aggregate household debt is over $10.8 trillion and growing. That's consumer debt alone, by the way. We are looking at hedonistic, irresponsible, and infantile behavior that is the rule, not the exception.
Even with all the money injected into the "system" by the Fed, the stock market fell today. Must the Fed inject more and more money daily to keep this pathetic charade going? Well, that's what it amounts to, doesn't it? The "serial bubble" economy will bring us all down in the end. The peons will be hit the hardest.