Astounding And Dangerous Crap…. (Egypt)


.. from one Thaddeus McCotter.

“The Egyptian demonstrations are not the equivalent of Iran’s 2009 Green Revolution.  The Egyptian demonstrations are the reprise of Iran’s 1979 radical revolution.

That’s correct.

“Thus, America must stand with her ally Egypt to preserve an imperfect government capable of reform; and prevent a tyrannical government capable of harm. 

This, not so much.

It’s always amazing to watch our government play patty-cake with tin-pot dictators when it suits us, even though they have a habit of torturing and otherwise abusing their citizens.  They hold fraudulent elections or no elections at all, they refuse to bend to the will of the people, and they claim a right to perpetual rule.

Mubarak has a brutal and long history.  Coming to power after Anwar Sadat was assassinated in 1981, he has been an effective dictator since ascending, since the nation has been under an Emergency Law since 1967.  This state of emergency has provided the government with the excuse to take virtually all rights and bin them, including freedom of the press, assembly, and others.  Unlimited imprisonment without charge or trial is permitted and reports of torture of prisoners are common.

Thaddeus may be well-intentioned but ex-post-facto analysis usually is.  The United States has a history of supporting this thug that goes well beyond the last few weeks and days. 

In addition since 2005 the Egyptian Pound has been pegged to the United States dollar, and the nation has undergone a cumulative 45% inflation rate in the last three years imposed on it by our Central Bank and profligate Federal spending, which Bernanke has been all too eager to monetize.

With a per-capita GDP of about $2,700 it’s people are 1/17th as capable of producing income as those of The United States on average and well-below other nations such as China ($4,300) and Belize ($4,500) that are commonly regarded as quite poor. 

The nation’s people are clearly incapable of absorbing a 45% increase in their cost of living and this has largely played into the causes of the current uprising.

It is true that there is grave risk of the populism in Egypt turning into something we will like even less than Mubarak, but that’s not really the point.  Neither Thaddeus or anyone else really stand for Representative Government when it comes to the Middle East; if we did we would not have tolerated decades of “Emergency” legislation out of Egypt and their refusal to honor basic human and political rights.

Yet we have not only done so, we have funded Egypt with both weapons and money, some of which they are using against their own people today.

The facts are this: We’re largely responsible for what’s happening over there.  We have, through our abuse of our status as the world’s reserve currency and the pegs maintained by other nations, forced inflation into other countries instead of taking the hit ourselves.  Our Central Bank and Treasury continue to claim that there’s “no inflationary pressure” but that’s a lie.  There has been enormous inflation but we have shifted it onto the backs of other people and literally forced them to eat it, both in China and through other nations with currency pegs, such as Egypt.

America “loves” these pegs, especially in the oil-producing nations in the Middle East.  Through them we get to enjoy oil that doesn’t cost $300/bbl as a consequence of our money printing. We get to force others to swallow the ever-increasing loads of monetary inflation that our government and Federal Reserve emit upon the world.  This is our definition of “stability”: We print, you starve, we enjoy it.

Thaddeus, like the rest of Congress, has refused to hold Ben Bernanke to account for his under-oath statement that he would not monetize the debt, even after he admitted to….. monetizing the debt.  Congress refuses to admit that you cannot treat an alcoholic with a case of whiskey, probably because half or more of Congress is alcoholic, just as you cannot solve a debt problem by piling on more and more debt.

The simple fact of the matter is that the monetary and fiscal imbalances that were bad in 2007 and should have resulted in the failure and resolution of every major financial institution have neither been resolved or gone away.  They have instead continued to build with the Federal Government adding $4.5 trillion in debt to the tab and forcing inflationary impacts onto those in other nations where they cannot afford to absorb them.

There is no long-term solution to this problem other than to default the debt that cannot be paid and reduce systemic leverage on the whole by about 50%, along with cutting the Federal Budget literally in half.  This will result in a huge contraction in GDP on a temporary basis but that cannot be avoided.  Were we to finally grow some wisdom we would take over and resolve every large financial institution tomorrow morning, force all the bad debt into the open and default it, throw Fannie and Freddie to the wolves and let them default and void every Treasury instrument and MBS that The Fed holds, bankrupting it.  Then we would add to The Federal Reserve Act a 20-year prison term for allowing inflation since price stability, which is actually in the law, mandates just that: Stable prices.

We need a payment clearing system but it is clear that the actions of those in power at present either believe they can blow a new bubble to get out of the trap they laid for themselves or simply believe there are enough Gulfstream IVs and a sufficient number of safe places that when, not if, this entire mess blows sky-high they will be able to abdicate and leave the rest of America to twist on ropes under the trees.

I assure you, there is no such collection of places, as Egypt has demonstrated over the last few days, and the rest of the world, when we blow up, will get it worse than we will.

This is a serious time and we need serious people in leadership roles in our nation.  It is time to stop pretending that we fixed anything by allowing banks to lie through getting rid of mark-to-market.  It is time to stop pretending that you can lose $7 trillion in housing value but only $500 billion in mortgage-related debt, and the other $6.5 trillion isn’t being hidden in whole or part by financial institutions who are lying about the value of their assets.

America is a great nation that has become rife with fraud and corruption through all levels of government.  We have made political promises that we cannot fund and allowed the robber barons of “high finance” to threaten their way to bailouts and handouts while the population goes wanting for a fair shake.  Over a million Americans lost their homes last year and some number of those foreclosures were prosecuted with perjured documents.  Major financial institutions collapsed and we have on-the-record testimony, under oath, that they knew for two years before the collapse that they were writing and selling defective loans, yet nobody is under indictment or in prison for having ripped off investors, homeowners or both.

Our attempt to cover up this fraud is failing.  It is producing outrageous suffering among people around the world and now is sparking civil and political unrest. 

The remaining options are to do the right thing now and accept the damage that accrues to our economy, deflating the credit system and the price of assets, or continue to try to paper over the fraud with ever-larger deficits and more debt until someone shuts off our credit card or the unrest reaches a nation that we rely on for a critical product like Saudi Arabia.

Time is running out to do the right thing.

The Market-Ticker