The "correction" will come soon

Michael Panzner reminds us that he predicted hyperinflation to follow after deflation, and quoting Edward Chancellor's recent article, thinks the phase change may be on its way. Chancellor answers the argument about global oversupply by reference to run-down inventories, widespread bankruptcies etc - there is now less productive capacity than there was, and what's left is not running smoothly.

A sleep-deprived Jim Kunstler experiences some of this disruption in a Colorado over-dependent on the vagaries of aviation, and rehearses his central theme that US living standards must (in his view) drop 20 to 50 per cent, whether through deflationary depression or savings-destroying inflation. He thinks the page will turn soon, too - maybe in June.

I said to my brother this weekend, that I think America can cope with being poorer, though the adjustment will be nasty; I didn't think it could survive being so rich. Look at what all that easy, phoney, fraudulent wealth did: that gallery of fat rogues in Wall Street and elsewhere, while the poor were exploited with credit cards and doomed home loans.

Kunstler's healing vision is bucolic, like Alexander Pope's:

Another age shall see the golden ear

Imbrown the slope, and nod on the parterre,

Deep harvests bury all his pride has planned,

And laughing Ceres reassume the land.

Horrifying budget

Fraser Nelson in the Spectator:

To comprehend the scale of the sickening task awaiting George Osborne if he becomes chancellor, consider the following. If he were to raise VAT to 25 per cent, double corporation tax, close the Foreign Office, cancel all international aid, disband the army and the police, release all prisoners, close every school and abolish unemployment benefit he would still be unable to close the gulf between what the UK government spends and what it raises in taxes.

Where does all the money go? How can we get out of this in one piece?

Scene of the crime: US debt acceleration

(Data source)

Back to the Constitution - and its underlying principles

A fine rhetorical performance by Bob Basso (htp: Karl Denninger), reminding Americans that the issue isn't money, but liberty and national integrity (as in holding the pieces together).

I agree with everything before the tea-bag (never as good as leaves, old chap) and the call to buy guns; some might go further.

Götterdämmerung

The British Prime Minister has become a desperate man. Whether it be the countless borrowed billions dashed at an economy he has personally supervised in its progress towards ruin; the chainsaw systemic attacks on personal liberty; the arrest of an MP in the House of Commons for the offence of performing his constitutional duty; the tour of foreign countries to "gild o'er" his failures at home; and now the attempt to meddle with the royal succession in order to divert some of his deserved unpopularity onto an institution that gives us continuity with a past he has assiduously sought to obliterate; all combines to show a man floundering, willing to sacrifice all others to maintain his wretched office for a few more miserable years. The Birnam Wood of financial collapse is, however improbably, marching towards Dunsinane; how apt that he should have chosen to domicile his family in Fife.

Divided consciousness

It's a strange feeling. I go about my daily work as though everything is normal - meetings, calls, teaching, memos, make a cuppa for others - and then I remember the financial volcano beneath our feet. One or the other must be a fantasy, yet I neither run away nor stop following the crisis on the Net. I hate the fuzzy-headedness you get from doublethink.

The Federal Reserve is out of control

Here is a very worrisome point:

None other than disgraced senator Ted Stevens was the poor sap who made the unpleasant discovery that if Congress didn't like the Fed handing trillions of dollars to banks without any oversight, Congress could apparently go f*ck itself — or so said the law. When Stevens asked the GAO about what authority Congress has to monitor the Fed, he got back a letter citing an obscure statute that nobody had ever heard of before: the Accounting and Auditing Act of 1950. The relevant section, 31 USC 714(b), dictated that congressional audits of the Federal Reserve may not include "deliberations, decisions and actions on monetary policy matters." The exemption, as Foss notes, "basically includes everything." According to the law, in other words, the Fed simply cannot be audited by Congress. Or by anyone else, for that matter.

For the full horror of the runaway financial train, see the Rolling Stone article here.