FedUpUSA

Archive for April 29th, 2010

Threats Of Civil War

Posted by Karl Denninger

Just reported: Greece will not cut public salaries or there wll be civil war.

There’s the gauntlet folks.  It means that no “assistance” can actually succeed, because it is not possible to get the fiscal situation under control without significant cuts in public spending.

This, incidentally, is the same problem we have in the US, and why attempts to deal with our fiscal situation at both state and federal levels is going to end up in the same place eventually.  The majority of our budget is comprised of handouts of one form or another, whether they be Social Security, Medicare, or public-sector salaries.

The “unified opposition” by public-sector employee unions (just look at what Florida teachers ran when their pension handouts and tenure were threatened) says everything you need to know.

Greece has to be cut loose.  The best way to do it is for Germany to walk away from the Euro and return to the Mark for its currency, leaving the rest of Europe to twist in the wind.

I see no other solution.  Threats of civil war, which are effectively what the public sector unions here in the US have also threatened repeatedly since 2008 (and to which we have responded by refusing to cut their salaries and benefits) mean that we have the irresistible force meeting the immovable object.

All such governments who refuse to take on these bullies and meet that threat with immediate charges of inciting overthrow of the government by force (in the US this charge is known as seditious conspiracy) will fail.

We have refused to make clear that such threats will result in charges of this sort - and so have other nations such as Greece.  Yet unless this is made crystal clear and this sort of approach by these unions is put down immediately all nations beset by this sort of action will fail both politically and economically.

Simply put the artificial support proffered to the financial sector should have never been put forward, but having done so, the public must now bear the cost, here, today, and immediately.

Those are the only choices folks.  Greece, and indeed the entire European Union, will ultimately disintegrate (as will America) if this is not done.

The Wheels On The Bus Go Flying Down The Street

Posted by Karl Denninger

We’re told, of course, that the economy is improving.

The “strongest indicator” that is incessantly pointed to (and which is a part of the “leading economic indicators”) is, of course, stock prices.

But who’s buying stocks and driving their prices higher?

The outperformance of risk assets over the past year suggests investors appear to believe that all credit problems have been solved – but nothing could be further from the truth, says Leigh Skene at Lombard Street Research.

…

Surprisingly, says Mr Skene, surveys show that the usual investors in major rallies – pension funds, hedge funds and retail investors – have not been net buyers of equities. And he says the most likely explanation for this anomaly in the biggest stock market rally since the 1930s is that major investment banks are the anxious buyers.

That’s a problem folks.

In fact, it’s a serious problem.

There are only two possible explanations for this in terms of “theme” – first, that they believe that the authorities will be able to spur people to “lever up” again (exactly how we get into this mess in the first place, and which will inevitably create a bigger bust) or that they are “too big to fail’ and thus can continue to borrow at zero from The Fed and pass these shares back and forth between one another until they can goad those traditional investors to come back in and buy from them at ever higher prices – at which point, of course, the average American is again the bagholder.

Mr. Skene posits (and I agree) that one of these possibilities ultimately means prices “revert to the mean” (ex-leverage), which is very bad, the second, if they succeed, will destroy the average American and their pension and insurance funds.

The actual result of the policies that we’ve seen by nations has not been to “fix” anything.  Indeed, all we’ve done is shift the problem from private parties (who deserve to fail when they screw up) to governments – where failures are far more serious, even catastrophic.  PIMCO’s El-Erian has suggested that:

The Greek debt crisis is now morphing into something much broader. …… The heads of the European Central Bank and IMF have made the trip to Germany that is reminiscent of the Ben Bernanke-Hank Paulson trip to Congress in the midst of the US financial crisis.

Markets are now catching up to the reality of over-burdened public finances in the aftermath of the global financial crisis.

Yeah, like ours (America’s) – shall we once again post this chart?

Again, the reality is this: We have shifted the burden of economic expansion – and maintenance of final demand – from private actors to government.  This is exactly the mistake made in Greece, Portugal, Spain, Ireland and elsewhere. 

The problem with trying to paper over a solvency crisis is that you can’t accomplish it.  Illiquidity and insolvency are two different things; one can be fixed with temporary sources of funds and time, the other has to be absorbed somewhere. 

By shifting these liabilities to governments, the absorption is forced onto the taxpayer.  This means that the taxpayer – and recipient of government services must absorb much higher taxation, much lower service provision (including government salaries, pensions, handouts such as welfare, social programs and similar) or both.

If that adjustment is not immediately made then you get a graph that looks like the above.  Effectively, the nation shifts to attempting to pay for today’s expenses with its credit card, instead of with its tax receipts.

This can go on for some period of time but it cannot go on forever. 

But all of the western governments who got involved in “bailout world” failed to immediately transmit the costs of these bailouts to taxpayers through higher taxes and lower service provision, most likely because they (correctly) deduced that the people would not sit for it, and if they tried to do so there was a very material risk that the people would rise and lynch someone – and it would require luck for those lynchings to be confined to the banksters who had compelled governments to bail them out through their acts of extortion.

Trichet is caught in a nasty box:

Bonds and stocks plunged across Europe in the past week as Chancellor Angela Merkel delayed approving a rescue plan for Greece and Standard & Poor’s downgraded Greece, Portugal and Spain. European policy makers may need to stump up as much as 600 billion euros ($794 billion) in aid or buy government bonds if they are to stamp out the region’s spreading fiscal crisis, according to economists at JPMorgan Chase & Co. and Royal Bank of Scotland Group Plc.

“Loans are not transfers and loans come at a cost” Trichet said today. Strict conditionality “needs to be given to assure lenders, not only that they will be repaid but also that the borrower will be able to stand on its own feet over a multi- year horizon,” he said.

Remember, Greece was supposed to be a €30 billion problem! 

Suddenly it has transmuted into €600 billion, or twenty times as large?

See what happens when you lie to people folks?  When you try to conceal what’s really going on?

What’s worse is that just as in the US the problem over in Europe is too much debt – and the so-called “solution” is even more loans – that is, more debt!

As I have said for more than three years now you cannot fix a drinking problem with a case of whiskey, nor can you fix a debt problem with more credit – that is, more debt.

To put this all in perspective – despite the claims of Treasury and others in our government – in the 29 days thus far this month Treasury has added $113 billion to the Federal Debt.

Annualized (assuming no additions for the next two days) this is $1.36 trillion “run rate”, or approximately 10% of GDP – still.

Where’s the “private economy” pick-up for final demand we keep being told about?  We’ve had two full years now where approximately 10% of final demand has been filled by government deficit spending, and there is zero evidence that this has fallen off.  For April to post a $113 billion debt addition is outrageous – remember, April is income tax month and is a month that frequently shows surplus for this reason!

In 2008 April ran a $60 billion surplus; in 2007, $9 billion, in 2006 $6 billion, in 2005 $12 billion.  In 2004 there was a $2 billion deficit; 2003 recorded a $395 million surplus; 2002 $21 billion and 2001 $112 billion. 

Point made?  I think so.

Oh, in 2009?  $111 billion of net deficit was recorded in April.

These numbers, unlike the so-called “budget” numbers, are not subject to being gamed.  The Treasury’s actual “debt to the penny” is reported to the public every day.

But for today, it’s “risk on”, at least for the “too big to fails” who can (and have) sucked off the Federal Reserve’s ZIRP and used it to drive “confidence” by pumping stock prices – even if it hasn’t created a single job and government has utterly failed to put the economy in a position where it can support the level of GDP being produced on its own.

Guest Post: The Perils of Credit Money Systems Managed by Private Corporations

In this instance the ‘paper money’ system would be analagous to money created by private banks by means of expanding credit. The Second Bank of the United States is the predecessor to the Federal Reserve Bank System which was established in 1913.

“The paper system being founded on public confidence and having of itself no intrinsic value, is liable to great and sudden fluctuations, thereby rendering property insecure and the wages of labor unsteady and uncertain.

The corporations which create the paper money cannot be relied upon to keep the circulating medium uniform in amount. In times of prosperity, when confidence is high, they are tempted by the prospect of gain or by the influence of those who hope to profit by it to extend their issues of paper beyond the bounds of discretion and the reasonable demands of business.

And when these issues have been pushed on from day to day until the public confidence is at length shaken, then a reaction takes place, and they immediately withdraw the credits they have given; suddenly curtail their issues; and produce an unexpected and ruinous contraction of the circulating medium which is felt by the whole community.

The banks, by this means, save themselves, and the mischievous consequences of their imprudence or cupidity are visited upon the public. Nor does the evil stop here. These ebbs and flows in the currency and these indiscreet extensions of credit naturally engender a spirit of speculation injurious to the habits and character of the people. We have already seen its effects in the wild spirit of speculation in the public lands and various kinds of stock which, within the last year or two, seized upon such a multitude of our citizens and threatened to pervade all classes of society and to withdraw their attention from the sober pursuits of honest industry. It is not by encouraging this spirit that we shall best preserve public virtue and promote the true interests of our country.

But if your currency continues as exclusively paper as it now is, it will foster this eager desire to amass wealth without labor; it will multiply the number of dependents on bank accommodations and bank favors; the temptation to obtain money at any sacrifice will become stronger and stronger, and inevitably lead to corruption which will find its way into your public councils and destroy, at no distant day, the purity of your government. Some of the evils which arise from this system of paper press, with peculiar hardship, upon the class of society least able to bear it…

Recent events have proved that the paper money system of this country may be used as an engine to undermine your free institutions; and that those who desire to engross all power in the hands of the few and to govern by corruption or force are aware of its power and prepared to employ it. Your banks now furnish your only circulating medium, and money is plenty or scarce according to the quantity of notes issued by them. While they have capitals not greatly disproportioned to each other, they are competitors in business, and no one of them can exercise dominion over the rest. And although, in the present state of the currency, these banks may and do operate injuriously upon the habits of business, the pecuniary concerns, and the moral tone of society, yet, from their number and dispersed situation, they cannot combine for the purpose of political influence; and whatever may be the dispositions of some of them their power of mischief must necessarily be confined to a narrow space and felt only in their immediate neighborhoods.

But when the charter of the Bank of the United States was obtained from Congress, it perfected the schemes of the paper system and gave its advocates the position they have struggled to obtain from the commencement of the federal government down to the present hour. The immense capital and peculiar privileges bestowed upon it enabled it to exercise despotic sway over the other banks in every part of the country. From its superior strength it could seriously injure, if not destroy, the business of any one of them which might incur its resentment; and it openly claimed for itself the power of regulating the currency throughout the United States. In other words, it asserted (and it undoubtedly possessed) the power to make money plenty or scarce, at its pleasure, at any time, and in any quarter of the Union, by controlling the issues of other banks and permitting an expansion or compelling a general contraction of the circulating medium according to its own will.

The other banking institutions were sensible of its strength, and they soon generally became its obedient instruments, ready at all times to execute its mandates; and with the banks necessarily went, also, that numerous class of persons in our commercial cities who depend altogether on bank credits for their solvency and means of business; and who are, therefore, obliged for their own safety to propitiate the favor of the money power by distinguished zeal and devotion in its service.

The result of the ill-advised legislation which established this great monopoly was to concentrate the whole money power of the Union, with its boundless means of corruption and its numerous dependents, under the direction and command of one acknowledged head; thus organizing this particular interest as one body and securing to it unity and concert of action throughout the United States and enabling it to bring forward, upon any occasion, its entire and undivided strength to support or defeat any measure of the government. In the hands of this formidable power, thus perfectly organized, was also placed unlimited dominion over the amount of the circulating medium, giving it the power to regulate the value of property and the fruits of labor in every quarter of the Union and to bestow prosperity or bring ruin upon any city or section of the country as might best comport with its own interest or policy.

We are not left to conjecture how the moneyed power, thus organized and with such a weapon in its hands, would be likely to use it. The distress and alarm which pervaded and agitated the whole country when the Bank of the United States waged war upon the people in order to compel them to submit to its demands cannot yet be forgotten. The ruthless and unsparing temper with which whole cities and communities were oppressed, individuals impoverished and ruined, and a scene of cheerful prosperity suddenly changed into one of gloom and despondency ought to be indelibly impressed on the memory of the people of the United States.

If such was its power in a time of peace, what would it not have been in a season of war with an enemy at your doors? No nation but the freemen of the United States could have come out victorious from such a contest; yet, if you had not conquered, the government would have passed from the hands of the many to the hands of the few; and this organized money power, from its secret conclave, would have directed the choice of your highest officers and compelled you to make peace or war as best suited their own wishes. The forms of your government might, for a time, have remained; but its living spirit would have departed from it.

The distress and sufferings inflicted on the people by the Bank are some of the fruits of that system of policy which is continually striving to enlarge the authority of the federal government beyond the limits fixed by the Constitution. The powers enumerated in that instrument do not confer on Congress the right to establish such a corporation as the Bank of the United States; and the evil consequences which followed may warn us of the danger of departing from the true rule of construction and of permitting temporary circumstances or the hope of better promoting the public welfare to influence, in any degree, our decisions upon the extent of the authority of the general government. Let us abide by the Constitution as it is written or amend it in the constitutional mode if it is found defective.

The severe lessons of experience will, I doubt not, be sufficient to prevent Congress from again chartering such a monopoly, even if the Constitution did not present an insuperable objection to it. But you must remember, my fellow citizens, that eternal vigilance by the people is the price of liberty; and that you must pay the price if you wish to secure the blessing. It behooves you, therefore, to be watchful in your states as well as in the federal government.

The power which the moneyed interest can exercise, when concentrated under a single head, and with our present system of currency, was sufficiently demonstrated in the struggle made by the Bank of the United States. Defeated in the general government, the same class of intriguers and politicians will now resort to the states and endeavor to obtain there the same organization which they failed to perpetuate in the Union; and with specious and deceitful plans of public advantages and state interests and state pride they will endeavor to establish, in the different states, one moneyed institution with overgrown capital and exclusive privileges sufficient to enable it to control the operations of the other banks.

Such an institution will be pregnant with the same evils produced by the Bank of the United States, although its sphere of action is more confined; and in the state in which it is chartered the money power will be able to embody its whole strength and to move together with undivided force to accomplish any object it may wish to attain. You have already had abundant evidence of its power to inflict injury upon the agricultural, mechanical, and laboring classes of society, and over whose engagements in trade or speculation render them dependent on bank facilities, the dominion of the state monopoly will be absolute, and their obedience unlimited. With such a bank and a paper currency, the money power would, in a few years, govern the state and control its measures; and if a sufficient number of states can be induced to create such establishments, the time will soon come when it will again take the field against the United States and succeed in perfecting and perpetuating its organization by a charter from Congress.

It is one of the serious evils of our present system of banking that it enables one class of society, and that by no means a numerous one, by its control over the currency to act injuriously upon the interests of all the others and to exercise more than its just proportion of influence in political affairs. The agricultural, the mechanical, and the laboring classes have little or no share in the direction of the great moneyed corporations; and from their habits and the nature of their pursuits, they are incapable of forming extensive combinations to act together with united force. Such concert of action may sometimes be produced in a single city or in a small district of country by means of personal communications with each other; but they have no regular or active correspondence with those who are engaged in similar pursuits in distant places. They have but little patronage to give the press and exercise but a small share of influence over it; they have no crowd of dependents about them who hope to grow rich without labor by their countenance and favor and who are, therefore, always ready to exercise their wishes.

The planter, the farmer, the mechanic, and the laborer all know that their success depends upon their own industry and economy and that they must not expect to become suddenly rich by the fruits of their toil. Yet these classes of society form the great body of the people of the United States; they are the bone and sinew of the country; men who love liberty and desire nothing but equal rights and equal laws and who, moreover, hold the great mass of our national wealth, although it is distributed in moderate amounts among the millions of freemen who possess it. But, with overwhelming numbers and wealth on their side, they are in constant danger of losing their fair influence in the government, and with difficulty maintain their just rights against the incessant efforts daily made to encroach upon them.

The mischief springs from the power which the moneyed interest derives from a paper currency which they are able to control; from the multitude of corporations with exclusive privileges which they have succeeded in obtaining in the different states and which are employed altogether for their benefit; and unless you become more watchful in your states and check this spirit of monopoly and thirst for exclusive privileges, you will, in the end, find that the most important powers of government have been given or bartered away, and the control over your dearest interests has passed into the hands of these corporations.

The paper money system and its natural associates, monopoly and exclusive privileges, have already struck their roots deep in the soil; and it will require all your efforts to check its further growth and to eradicate the evil. The men who profit by the abuses and desire to perpetuate them will continue to besiege the halls of legislation in the general government as well as in the states and will seek, by every artifice, to mislead and deceive the public servants. It is to yourselves that you must look for safety and the means of guarding and perpetuating your free institutions. In your hands is rightfully placed the sovereignty of the country and to you everyone placed in authority is ultimately responsible. It is always in your power to see that the wishes of the people are carried into faithful execution, and their will, when once made known, must sooner or later be obeyed. And while the people remain, as I trust they ever will, uncorrupted and incorruptible and continue watchful and jealous of their rights, the government is safe, and the cause of freedom will continue to triumph over all its enemies.

But it will require steady and persevering exertions on your part to rid yourselves of the iniquities and mischiefs of the paper system and to check the spirit of monopoly and other abuses which have sprung up with it and of which it is the main support. So many interests are united to resist all reform on this subject that you must not hope the conflict will be a short one nor success easy. My humble efforts have not been spared during my administration of the government to restore the constitutional currency of gold and silver; and something, I trust, has been done toward the accomplishment of this most desirable object. But enough yet remains to require all your energy and perseverance. The power, however, is in your hands, and the remedy must and will be applied if you determine upon it.”

A Meditation on the Tea Party Movement

By Charles Hugh Smith

The Tea Party movement is neither fully formed nor monolithic. Perhaps there is more going on here than is generally credited.

I have yet to read an account of the Tea Party movement which makes any sort of comprehensive sense. What passes for “commentary” on the subject is mostly ideologically-driven spin from the “left” or “right,” both of which see the movement as a handy rhetorical device they can mock or co-opt to make their same old tired “talking points.”

My own sense is that a coherent account of the Tea Party movement must be far more nuanced and historically informed. The standard-issue pundit/commentator’s ignorance of American history is so abysmal that it is little wonder that commentary on the movement is so threadbare.

To the frustration of those MSM pundits and Party ideologues seeking a sound-bite summary, the Tea Party movement is neither fully formed nor monolithic. There are Democratic Tea Party types, quasi-Libertarians–an entire spectrum of causes and emotional drivers loosely bound up under the one banner.

The comically self-serving frenzy of the Democrats and the blatant desperation to co-opt the movement by the Republicans are less reflective of the Tea Party than they are of the parties’ own fears and failures.

The “progressives” either ignore the Tea Party’s influence and gatherings, hoping not to encourage it with exposure, or they mock and discredit it by focusing on the inevitable self-aggrandizing grand-standers who appear like locusts whenever a new political movement is self-assembling.

What is striking to me is how the MSM coverage reflects–but does not comment on in a self-aware fashion–the stark terror aroused in the status quo by the Tea Party movement.

The Tea Party is creating fear and loathing in the status quo (Demopublicans and Savior State/Financial Plutocracy partnership) because it is the only potential political threat to the Savior State’s protected fiefdoms and the financial/corporate Elites.

The Savior State is unprepared to deal with anyone who can’t be bought off with a few crumbs of entitlement/bread and circuses. As I discuss in Survival+, the Savior State is partnered with the nation’s Financial and corporate/cartel Power Elites.

To keep the lower-income masses politicially subservient, compliant and thus complicit in the rule by Elites and Savior State fiefdoms (public unions, sickcare and defense cartels, etc.), the Savior State distributes food stamps, extended unemployment, tax credits and other forms of “free money” to the underclass to keep them distracted, fed and politically neutered.

The status quo’s private-sector propaganda division, the Mainstream Media (dominated by a handful of global corporations), provides plentiful “entertainment” to the masses while the Government Ministries of Propaganda distribute endless reams of phony data and manipulated statistics to support the “confidence building” view that the status quo is firmly in charge and thus resistance is both needless (because everything’s going great) and futile (because you’re so powerless and we’re so powerful).

The ideal state of affairs for the Savior State status quo is complacency, complicity and a pervasive fatalism that the status quo is permanent and godlike and there is no point in resisting it.

The incentives are all to join in the fun and game the system as rapaciously as you can via liar loans, credit card debt you never intend to pay off, speculation in stocks and housing as a replacement for actually producing value in the real world, trumped-up resumes, bogus balance sheets, cheating on entrance exams, etc.

Into this comfortable world of protected State fiefdoms, Financial Overlords and fatalistic complicity in an economy based on lies, debt and speculative bubbles comes the Tea Party. The Tea Party participants are fueled by a deep and abiding awareness that the country is going down the wrong path, not just in a political or financial context but in a moral, values-based sense. (The three are interconnected, after all.)

The standard-issue sneering “progressive” pundit openly mocks the working-class roots of the movement, and spares no smear in attempting to discredit it: it’s racist, led by show-boaters and nutters, etc.

This terrible need to trash the movement reflects a deep-seated fear that it might threaten the cozy dominance of “progressives” in the Savior State. Of course those same “progressives” have been delighted to enable the pillaging of the nation by various fiefdoms and cartels; as long as their power base and fiefdoms remain in place, nothing else matters. Even more revealing, the “progressives” refuse to grant any moral core to the Tea Party movement. The “progressives’ and the MSM are studiously devoid of moral foundations; that sort of “opiate of the masses” stuff is for the poor, who are supposed to buck up via private prayer and do-good church functions like bake sales.

The “conservatives” are hypocrites of the first order, claiming the mantle of “free enterprise” while brown-nosing the “too big to fail” banks and Wall Street at every opportunity; the chains of their corruption clank loudly with every step.

Most importantly for both Zombie Parties, the “poor” and “middle class” alike are supposed to not vote and not resist their oppressors; and if they do vote, they’re supposed to vote for the Democratic or Republican machines.

What is also striking is how quickly the Republican half of the status quo is moving to co-opt and defang the Tea Party movement. Their “me-too’s” are truly pathetic. “You don’t like higher taxes? Me, too!” Meanwhile, the Republicans oversaw the greatest expansion of government borrowing and spending in U.S. history, all the while giving endless corporate welfare to their Power Elite cartel pals and partners, even as they endlessly proclaimed “deficits don’t matter.”

The Tea Party is self-organizing, and that also terrifies the status quo. Like the Chinese Communist dictators who were stunned and horrified to find the Falun Gong had self-organized under their noses, the status quo is absolutely terrified by the self-organizing structure of the Tea Party movement, for it is outside the Elites’ control.

Like the ChiCom dictatorship, the U.S. status quo must disrupt, discredit, undermine, infiltrate and co-opt the Tea Party movement because it poses a large-scale threat to the absolute political control of the “one-party state” which controls the U.S. for its own benefit: the Demopublican-Savior State/fiefdoms/Power Elite cartels status quo.

Like the Chinese Communist Party, their over-reaction is a measure of their panic at discovering a political movement in their midst which they do not control.

From this point of view, the desire to mock/discredit/co-opt the Tea Party is evidence of just how threatening it is to both corrupt, venal parties.

At this early stage, the Tea Party is not a “party” in the sense of being dominated by a national structure of command and control. Nor does it have a coherent set of principles which every “member” agrees upon. It is bound by a powerful awareness that something is deeply wrong with the nation and its financial/political leadership, something which neither the Democrats or Republicans have any interest in fixing as they are part of the problem.

Implicit in the Tea Party movement’s anger is an awareness that 80% of the nation’s households own virtually no assets. Yes, there is $1 trillion left in home equity spread among 50 million households ( Housing and the Collapse of Upward Mobility April 16, 2010), but it can no longer be tapped. There are a few trillion in IRAs and 401K retirement funds, but the vast majority of these funds hold less than $10,000. Those with larger accounts lost 40% of their value in the 2008-09 timeframe and have not recovered their previous value, despite the tremendous rally in stocks.

Also implicit in the anger is a dismay that the nation’s economy, government and media are all based entirely on webs of lies and fraud. People may not understand derivatives but they do grasp the moral rot that this reflects: How We Get Ahead Now: Gaming the System April 20, 2010)

Fixing the nation requires bypassing the existing parties and wresting control of the levers of governance from the State’s protected fiefdoms (public unions, et al.) and the Power Elites’ cartels (finance, banking, sickcare, defense/global Empire, et al.)

Pundits from the entire political spectrum–from “progressive” to tight-jawed Survivalists–cannot see that the Tea Party movement has much in common with the spiritual revivals in U.S. history which led to Revolution or Civil War.

While it is trendy to espouse cheap “follow the money” “explanations” for the American Revolution and the American Civil War, these mono-explanations miss not just the nuance of what actually happened but the core of what powered the participants.

Great political upheavals are not caused by people examining their pocketbooks and rationally concluding that the risks of revolution are worth some sort of future financial payoff. By that measure, fomenting Revolution against the world’s greatest Empire (The British Empire) was a completely stupid “pocketbook” calculation: if you lost, then not only would you forfeit your possessions but very likely your life.

Remaining in the Empire offered numerous financial benefits and guarantees. It was the “obviously sound” pocketbook calculation, and that’s why some 40% of the Colonies’ residents were Royalists who supported the Crown and who resisted the Independence movement.

New political movements are powered by an emotional understanding that the status quo is untenable in some profound way. At some key juncture, the alternatives crystallize in a politically coherent fashion. In Colonial America, dissatisfaction with British policy and politics did not necessarily require a war of Independence; that “solution” only crystallized when moral revulsion at perceived British corruption and greed sparked by the Great Awakening (circa 1740s and 1750s) reached a powerful coherence with Enlightenment ideas of self-governance and liberty and a fear of indebtedness and loss of autonomy.

While it is fashionable to dismiss the Civil War as some sort of financial battle for dominance by the Northern Elites, that is not what the participants felt or what motivated their actions.

The status quo political powers are mystified by the Tea Party; we’re giving them unemployment, tax credits and healthcare/sickcare coverage; we’re buying them off with the same entitlements we offer our other constituencies; why aren’t they silent and complicit like everyone else? Why don’t they just take the swag and shut up like everyone else?

Lost in their moral rot, the status quo “leadership” cannot understand the Tea Party’s anger. The Elites do not understand why the Tea Party rebels don’t have the self-serving sense to just take the swag and go back to watching TV. What fires their enthusiasm for rebellion?

The British Parliament was equally confounded in 1773. The Colonists are well-off, and protected by the Empire; what is their problem?

The Tea Party is as yet an unformed movement. It might fade, gutted by co-option or intense factionalism, or it might transform one or both of the zombie parties, or it might eventually coalesce into a true political party. No one can say, but what powers the Tea Party–a sense that the nation has lost its moral bearings and its Elites have over-reached–will not fade. Those truths cannot be mocked, discredited, or co-opted out of existence; regardless of whether the status quo manages to quash the Tea Party or not, those truths will only gather force as the status quo’s “nascent recovery,” its deeply corrupted governance and its over-reach fail, and the status quo’s foundation is revealed as a sandy sinkhole of fraud and lies.