Sounds like these CEO’s are out of gas. Here’s an idea: innovate! Oh that’s right you can’t, you’re too used to coasting along on an economy built on fraud for too long

These guys are drinking too much koolaide as well. “The lack of financial regulation is what caused this financial crisis”? Shame on them for saying such nonsense! The lack of accountability is what caused the crisis, not lack of regulation!

I’m not advocating religion but he does manage to get a very good point across: “The Romans, the Arabs, the Jews all had an edict against debt. If we had religion with a tacit prohibition of debt, we would probably not have had this problem. But science, or scientism, thinks it knows better.” – Nassim Taleb

Taleb: Government Deficits Could Be the Next ‘Black Swan’
http://www.businessweek.com/investor/content/jul2010/pi2010078_530571_page_2.htm

There is a happy mix of good debt levels, but I think we passed it

@Ken, you say: “Debt is not a problem as long as you turn a profit on it. We always have turned a profit on it. If all those societies that had edicts against debt were so great then why did they all collapse?…”

And there lies the bait. Just like in TF we have little control over profits and how things end.

And yes an overdone military is a number too. How much is too much?

Michael, yes America is in trouble, but all is not lost. Why? Despite the beat-down of the individual, who has been challenged by accusations that their personal freedoms were threats against the common good, common defense, or the common “good”, he and/or she persists because of the bills to pay, the kids to feed, and all the countless childhood dreams or moments of inspiration that give us strength. There is still room for difference of opinion and approach, despite the “powers that be” who regardless of political affiliation seem hell-bent on subjugating the will of others to specific or cynical ends.

America is only truly lost if we didn’t have people like you around, who march at a cadence only you hear and feel, without regard to outside opinion. I’m not about to say it’s on you to solve the country’s problems. It’s the approach you follow, and of others who do likewise in their own fashion. It’s the approach of all individuals, who, in the words of the Buddha, “strive on”. True change doesn’t come from the flourish of oratory born in Illinois, neither does the true “Maverick” spirit hail from just Arizona, or Alaska, or anywhere else specifically.

Liberation and salvation never came from the top down, it comes from each and everyone of us scratching away on the ground, doing our own thing while recognizing the right of others to do this too. You are right we are lost, but so many of us are busy finding our way back, each on our own, because we have no choice, because it is better to live than to die, and because we have loved ones we care about more than life itself and they feel the same way about us. The deepest wealth in every sense of the word came from following through on our faith in ourselves, our hopes and our dreams.

Yes, the America many knew will be lost, and thank goodness for that. We’ll be rediscovering an idea of a country that acts instead of reacts, that builds instead of takes, and that makes more than it needs to borrow. Why? Because we have no choice. Perhaps the name America fades one day, but the ideals will live on. That is the true “America” so many of us are wistful for, feeling the dull ache of recognizing lost youth and the panic at recognizing the passage of time and age.

Michael, you followed through on your moment of inspiration about fifteen years ago and kept going. You are not alone in that respect. That was a catalyst for me and many others, and so I strive on. Other real mavericks like you have done likewise for others in different fields and callings, inspiring true “change”. It’s in the middle of these tiny places and moments that America is rediscovered and saved. Please never forget that.

Several months ago I attended a talk by Mark Faber. His bottom line was “We are not getting out of this one”. Yes, it’s a Ponzi Scheme but we don’t have a Madoff to send to jail and there is no way to “claw back” our losses. I don’t predict the future, so I guess all I can hope for is that we will pull out of “this one”.

I understand your skepticism. Often, in my experience the right answer is initially counter-intuitive and even uncomfortable. Without getting into too much detail here is the gist of it:

1) All models are false, some are useful and some are dangerous.

2) We can exactly measure the net change of the level of savings or debt but we cannot exactly measure the instantaneous rate of change of deficits (or surplus). We can only estimate it by measuring the rate of change of the level of debt(or savings) over a time interval. This is SD 101 which is often used as a generic example to illustrate a SD analytical frame work.

3) To be more accurate I said deficits/surpluses are highly unpredictable and uncertain. How the government defines deficits/surpluses is crucial since it effects everything from trade policy to the national budget to various government policies that impact our social and economic life.

4) Trying to control deficits/surpluses through taxes, borrowing money and manipulating the budget, and so forth usually leads to a familiar problem such as follows and the many problems that still plague us today:

PRESIDENT CLINTON: THE LARGEST BUDGET SURPLUS AND DEBT PAY-DOWN IN HISTORY
“Today’s good news is a result of hard-won economic choices that put our people first. That strategy has created the most prosperous economy in generations.”
- President Bill Clinton, *Thursday, October 28, 1999* http://clinton3.nara.gov/WH/Work/102899.html

So what happened to the supposed budget surplus of $236 billion that President Bill Clinton is talking about? There was never a real surplus!! The alleged surplus has been accepted by the media and repeated by every economist that everybody thinks it really existed. Remember, the national debt will continue to rise even when the deficit is falling. Falling deficit does not equate to a surplus! The only way we as a country can show a surplus is if the national debt falls. Since the total national debt went up every year since 1980, there wasn’t a real surplus. Yes, the deficit was almost eliminated in 2000 (ending in September 2000 with a deficit of “only” $17.9 billion), but it never reached zero, let alone a positive surplus number.

A deficit by definition is negative surplus. The government just borrowed money from trust funds(i.e. social security, FSMITF, FHITF and so on) instead of from the public, called the borrowed money income, plus general taxes and claimed the combined figure as a surplus. The Clinton administration is not the only one that has used this form of accounting. All modern presidents have. So much for realistic budgets!

The core point is that the government can have a surplus even if it has trillions in debt, but it cannot have a surplus if that debt rises every year. In the case of the 80’s and 90’s the debt just didn’t rise, it grew exponentially year after year! In 2000 the combined total of taxes and trust fund surpluses exceeded the amount of money the government needed that year, and some of the extra amount was used to pay down the debt. Is that a surplus? No it is not! In a given year if you earn $100,000 and you borrow $10,000 from a friend and you spend 105,000 is the remaining amount a surplus? I guess you can answer that for yourself.

So your solution is to increase taxes on Chinese imports and decrease taxes on American businesses and start a trade war, and blame the Chinese? Prediction never pays. The best solution, in my opinion, is admit we screwed up and get smaller, unwind debt, convert debt to equity(where possible), create incentives to save, and support the manufacturing base to come back to life. Then wait until a good trend in the economy starts to develop. If we can do that faster than the Chinese then we don’t have to worry about the Chinese.

“I never give them hell. I just tell the truth and they think it’s hell.’ – Harry S. Truman

“PRESIDENT CLINTON: THE LARGEST BUDGET SURPLUS AND DEBT PAY-DOWN IN HISTORY”

Say for argumentative purpose:
Part of the credit went to the republican congress who restricted his spending. Part of it was due to massive conversion of traditional IRS to Roth IRS. The credit due to Clinton; at least he moved from left to central, without which he wouldn’t have such credible “surplus” report which the left keeps on quoting.

@ Trader Jim, how come you often have a nasty disposition? Yes, you’re right, I do express myself too liberally on this blog. That ends today. Thanks for bringing that to my attention.

The solution is not in what we do, it’s in what we STOP doing.

Maybe if you manage to stop making a ‘thing’ out of a ‘process’, even for a moment, you might “see” that nobody really does anything.

@Mike C., so, yes, the point is ponzi schemes and bubbles do not produce any real tax receipt or surplus which is only apparent in hindsight. Todays problems continue as part of the mismanagement that occurred in that era.

The US is turning into the biggest loser…just like the TV show. It’s fat, its blaming everyone else, and it thinks that all its problems can be solved with another donut.

China is NOT the problem…China is the solution. Keeping Chinese imports out of the country is like locking all the fit people out of the gym…it might make you feel better, but when it’s all said and done, you’re still a pig!

By rising to meet the new challenges imposed by a new economic balance, the country becomes leaner and meaner for its long-term health. If it regresses into a protective shell of comfort food, it’s toast (pun intended).

Ken, for me at least, if stocks really decide to tank, and all that piggy bank money is not gonna be there (read: Nikkei) for a generation … then the debts sure could be a big problem sooner than later.

That said, and I think about it a lot, what innovation is coming in the face of the internet arbitraging away so much at an alarming pace?

In all seriousness extending life and time travel are the only innovations that I can imagine that are truly revolutionary.

From Mauldin tonight:

To judge by the headlines, you might think we Americans have lost the ability to create wealth. The stock market is floundering, even after flatlining for a decade. The overall economy is in the doldrums. Domestic heavy industry has all but disappeared. Real estate has crashed. The airlines, the automakers, the banks, all have gone to Washington, begging bowl in hand, demanding handouts from a government that, like the average citizen, is drowning in debt. Bad news abounds, no doubt. Yet, amid all the doom and gloom, it’s easy to overlook the fact that the real engine of growth in the modern world is chugging right along. Easy because many investors have turned their attention intently in the direction of interest rates and housing starts and the pontifications of Ben Bernanke, failing to notice that one of the markets they left behind is now leaving them behind. Over the past decade, while the overall market was weakly limping along, these companies have been steadily growing revenues, adding jobs, and spewing profits. At the same time as brash startups were reinventing news, entertainment, communication, medicine, and virtually every other aspect of our work and home lives, promising to deliver still more growth even in this weak economy. We’re talking about technology, of course. Technological development is impersonal and implacable. It cares not who controls Congress or chairs the Fed. It has been the stuff of American life for a century – from the assembly line to the smartphone. Most importantly, it’s done what a successful segment of the economy is supposed to do, bring about prosperity by adding to the tangible wealth of the country. And it did so the old-fashioned way, by creating things useful to society. It made money for the innovators who were able to parlay their intellectual property into products that people wanted to buy. It made money for the people who worked for the innovators. It made money for companies, and their employees, that increased efficiency by integrating technological advances into their businesses. And it made money for investors who backed the leading lights in the field. Tech, in short, has not only raised everyone’s standard of living, it has created wealth. Lots of wealth. And it continues to do so today, right through all of our economic turmoil. One incredibly simple measure of the prosperity created is market capitalization, the sum total of the wealth held by investors. Thirty years ago, in 1980, the entire stock market boasted only three mega-companies, i.e., those with market caps in excess of $40 billion (the equivalent of $100 billion today, in inflation-adjusted dollars): Exxon, IBM, AT&T. Those three are still with us, and all still boast $100B+ caps. But they are joined by no fewer than 21 other U.S. companies. Taken together, the 24 have a collective market cap of $3.8 trillion. Technology allowed this to happen. Consider that in 1980, five of the top 24 – Apple (#2), Microsoft (3), Cisco (15), Google (19), and Oracle (23), tech companies all – either hadn’t gone public or didn’t even exist. Intel (21) was around, but almost no one had noticed. IBM (7) was an industry leader then, but only as the primary maker of clunky mainframes. Hewlett-Packard (24) had yet to introduce either inkjet or laser printers. Walmart (4) was still dreaming of the ultra-efficient, automated distribution system that would transform its business.

What if all this tech was a one time revolution spread over decades? What if it was all plumbing so to speak. Think about airplanes. Airplanes have only been marginally improving for decades. What is the tech advance from here? We made Star Trek come true with the communicator, but now what? I don’t think any of those tech advances are revolutionary in hindsight. The original phone was an advance, but everything else since? Great stuff no doubt, but where from here?

The Dot-com bubble is dead. There are few winners supplying us all with more and more communicators, but once we are all connected into one massive iChat — then what?

There needs to be a there there.

If we stop innovating then I agree, we are toast.

But I don’t think that will happen. People always want more, bigger, better, faster. No matter how much they have, it eventually feels “normal” and then they want more. Where will it all end? It won’t end, people will never be eternally satisfied, imho.

Awww poor crybabies!!! I feel so sowie for them !!!!
Do they need another 37 trillion dollar backstop so they can call themselves captalists (welfare)? I am sorry but even he does not want to live in the polluted smog filled garbage-piling, evnironmental nightmare shithole like China!
S