At some time would you please post a blog fleshing out what debt repudiation will look like.

How do you select the beneficiaries and how do you prevent the debt teleporting elsewhere?

How do you do it without rewarding the imprudent at the expense of the prudent? If those rescued by debt repudiation are to be somehow stripped of material reward, then wouldn’t plain old bankruptcy do the same job?

Thanks,
Muzz (Joe Blow non-economist)

But now we are in this mess, so how do we get out of it in the quickest way with the minimum possible damage?

There is going to be damage, it is in our power to make that devestating or just merely bad. The US has decided to make it devestating for them, by trying to protect the old order.

Anyone who has worked through Steve’s work knows that the old order cannot, in fact should not, be saved.

So what is the new order? More local production? Less trade? Where is the capital coming from? What about skill levels? What sort of society do we want?

I am always reminded about Australia before the 2nd World Waar. Broke (Australia like Germany and the US suffered terribly during the Depression), we could not even make a gun.

By the end of WW2 we were making, here in Australia, guns, ships, radar, computers, Mustangs and Mosquitos (the F-22 and F-35 of their day). In just 6 short years.

So it ain’t over until it is over. And in the end, the big boys, US, EU, China, Japan, will make their own good/bad decisions. But what are our decisions? What is right for us? What can we do to get through this? And emerge with a strong economy and a good standard of living?

{Though saying ‘I told you’ so to some people is so irresistible that you would have to be inhuman to avoid that pleasure. Plus some of these people deserve Guantanamo, they have made Bin Ladin look like an amateur in terms of damage to our society.}

Take a peek at this document, retrieved from the fed’s comptroller office:

http://www.occ.gov/ftp/release/2007-137a.pdf

and take a look at the very *last* chart. Remember that’s millions they’re talking so just add 6 zeros to those numbers.

So… 1 trillion? 10 trillion? Not enough. Not nearly enough, even if it was real money and not the fantasyland cotton candy it is.

What’s going on in DC right now is like asking whether to give coffee or coffee AND aspirin to to the terminal cancer patient. It’s all about votes – a show for our benefit. A new American Idol for the voters with congress playing the part of Simon.

Given these numbers, the terminal outcome for the world economy as it now exists is certain.

Cheers!

Rather odd, and a bit disturbing…

Later on Govts can sell off those organisations and help pay off the taxpayer debts

Basically an extended form of the ‘Swedish model’ when they nearly went under in the 90′s (look it up). It worked for them, though now this solution has to be extended far further.

Either through controlled mechanisms (ie Govt) or uncontrolled by bankruptcy. The amounts are so great in many areas that they can NEVER be paid off.

So smart Govts can:
(1) let organisations go under, then nationalising the remains and recapitalising those who are critically important, which is a possible mechanism for some banks (10 banks go under, save only 1, thats all you need to provide services).

(2) Cancel debt by law. The classic example would be CDOs. It is doubtful many are legal anyway. This does require international cooperation.

Govts around the World announcement “At 12:00 Zulu time, all CDO contracts are now declared null and void and have no legal standing”. Poof 65 trillion goes away. The will bankrupt some organisations on the creditor side, but then you use method (1) for those who need to be saved, the others you let go.

On the debtor side, put in an emergency once off tax for a reasonable % of that money, to put something back into the general efforts to save the economy.

(3) Shut down every hedge fund. These are destabilising organisations. With an estimated, at one time, 600+ trillion dollars in positions, they also act as positive feedback mechanisms increasing instability (think currencies, etc).

They are getting in the way of stabilisation efforts. They are just the same as people who light bushfires right here in Victoria .. and should be shown exactly the same mercy.

Internationally coordinated again, at (say) 12:00 Zulu time the police break into every hedge fund operation in the World and shut them down, taking away computers, papers, etc.

All those trades, and the associated debt and destabilisation .. gone. Use method (1) to save those on the losing side who have to be saved, the rest, e.g wealthy individuals … go under.

Basic Triage. Save the essentials to keep society going, let go the unsaveable, invest in the ones who are actually ok. Keep people in their homes and make sure they have food.

Best I have been able to make of it (and boy is it torturous to look at this stuff, like going down the rabbit hole) this was built on a few foundations:

A deep hatred of unionism, to frankly insane and irrational levels.
A dislike of ‘step up’ socio-economic policies, such a free education, technical training, etc.
An incredible ‘kow towing’ to financial and some traditional (land linked) elites, manufacturing elites got shafted though.
A real dislike and suspicion of science, particularly research, especially in areas that conflicted with idiological postions.
A real belief that the resources of the world are infinite, just waiting got be tapped by some enterprising (middle/upper class of course) soul.

All in all, the only thing I can make of it was a conscious/inconscious desire to return to an imagined late 19th century, social and economic order. Their fiercer cousins, neo-conservatives, took that further, wanting to go back to an 18th/19th century World colonial order (trouble with that one was that the ‘fuzzie wuzzies’ now have the maxim gun).

Almost like a revenge by some, strangly mostly middle class, throwbacks from the 1890′s who got passed by modernity.

The fact that it was insane and illogical escaped them, TINA was the endless cry. Plus the fact that this imagined 1890′s Nirvana never existed, except in their fevered imagination (in reality it was a period of immense turmoil and change).

Plus the greatest pushers of this line of thought came mostly from middle class backgrounds, which barely existed then and if they were actually successful they would essentially be eliminating their own class.

Bizzaro stuff.

I extracted this link from the site, that may be better for many readers here than the vidio:

http://dandelionsalad.wordpress.com/2009/02/03/bailout-for-the-people-the-cook-plan-by-richard-c-cook-2/