The Debt Ceiling Debacle...

... is a sham battle, like "The Science" on climate, everlasting gov giveaways and so much more...

(Source: Getty Images)

Bill Bonner, reckoning today from Normandy, France...

A nation is born stoic. It dies epicurean.

~ Will Durant

Our friend wasn’t finished. She was “unloading,” as they say… with thoughts and gripes she’d been storing up for years.  

Finally, she had found someone who more-or-less agreed with her.

We were down in Poitou yesterday, visiting the house we’ve had there for more than a quarter of a century. It is still, hélas, a work in progress… functional, liveable… but far from comfortable.

While there, we paid a visit to a feisty, intelligent neighbor. A wiry, attractive woman of about our age (born in 1947) she had a lot to say.

“The Science”

“I can’t even talk to my family about this,” she began. “They either take offense… or they think I’m crazy. They’ve been taught by a generation of “soixante-huitards” [veterans of the leftist uprising of ‘68]. They believe all these things – that the planet is in danger… that we should all be forced to be vaccinated… that the government can spend as much money as it wants… that those of us who doubt these things… or have any sense of tradition, manners and customs… are just standing in the way of progress… and  that we should always follow ‘The Science,’ as the elite see it, of course… 

“I try to explain that science is a way of discovering truth. If you think you already have the truth – The Science – you don’t need science at all. I could go on and on…”

We were sure she could! And she did. But let us first check in with the markets.

Investors are still hesitating… wobbling… not sure which direction to take. Like passengers lost in the Paris metro, they turn left, they turn right… first paralyzed by choice… later befuddled and fatigued by wrong choices. 

We don’t know which direction markets will take either… but we suspect the smart money is betting on ‘down.’ If not now, soon enough.

There are just too many banana peels on the ground. One of them is bound to slip us up.   

On Friday, the federal government bumped up against its debt ceiling. Ms. Yellen, previously in charge of the Fed’s misguided monetary policy, and now messing things up on the fiscal policy front, says she can use ‘extraordinary measures’ to keep the heat on in the Capitol building. But those measures won’t last forever. In June, push will come to shove… and the ceiling will have to be raised.

A Sham Battle

Washington wags are saying that the ‘conservatives’ will insist on budget cuts before agreeing to increase the debt ceiling. But they say that every time the ceiling is raised. And in the end, the ceiling is raised without any real constraints on federal spending.  

The fight over the debt ceiling increase is a sham battle. Both sides fire blanks.  Both vow to fight to the last man to get what they want. And in the end, both agree that what they need is more money to spend.

Yes, the decline of the US empire happens with the advice and consent of both parties. Republicans and Democrats pretend to be fierce competitors. But the typical member of congress has much less in common with his own voters than with his fellows in the Capitol – even those in the opposite camp. They all live in the same area. They earn the same amount of money – enhanced by the same slimy contributions from the industries they regulate. And they all have the same interest in seeing the flow of money from the public to the elite deciders continue without interruption.

So, the debt ‘ceiling’ levitates and the banana peels proliferate.      

The Fed is raising rates and the money supply declines; at some point a major player will be unable to refinance his debts. Real wages have fallen for 21 months in a row; sooner or later households will have to stop spending money. Growth rates are pathetically low. Savings rates are near all-time lows. Productivity is falling at the fastest in 40 years. The feds are trying to pinch off supplies of fossil fuel energy – the very stuff that made us so prosperous. And the war industry – which has bought off both political parties, the press, and the universities – leads the country towards another huge disaster.  

We remind readers that progress, such as there is - in marriage, economics and politics - is cyclical. Up and down… round and round… One day, we enjoy warm kisses; the next we are reminded to take out the trash. One day comes a great boom… then, comes a bust. Optimism prevails… until the facts are out in the open; then pessimism takes over.  

And inevitably, there are slip-ups. 

Our friend was on the case:

“You saw those demonstrations on TV….”

A System Rigged

We did not; we don’t have a TV. But we knew she was talking about last week’s large demonstrations against raising the retirement age.

“Many of the demonstrators were just spoiled children. Many have never actually had a job. They’ve been on government handouts all their lives… and they just want to be sure the money keeps coming. And even my relatives think that is perfectly normal.

“Were it not for the moslem immigrants, who have a lot of children, the population of France would be shrinking. Already, there are only 1.7 workers for every person who is retired. How can you support a system like that?

“But the whole idea was that they would give you more in your retirement than you paid in. Otherwise, you wouldn’t want to do it. But how was that ever going to work?”

By this time, we had no doubt. The petite woman in front of us had begun a jeremiad against modern political philosophy in its entirety. 

“Democracy is a fraud. Everybody votes but it is meaningless. We give up half our incomes… and get programs that only serve the elite. Behind the scenes, the elite – and we never know exactly who it is – rig the system.   

“Macron, for example, the little twerp who married his mother [his wife is 25 years older than he]… where did he come from? They eliminated DSK [Dominique Strauss-Kahn, who was ruined after a New York cleaning lady…curiously, a French speaker from the Caribbean… accused him of exposing himself. The charges were dismissed, but not before DSK’s political career was over.] And just as well, in my opinion. He was awful.

“But somebody wanted to get rid of him. And now we have the puppet Macron. Who is he working for? We don’t know… probably those appalling people at Davos. He’s a graduate of their ‘Global Leaders’ program, you know.’

As always, more to come…

Regards,

Bill Bonner