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U.S. Faces Much Worse ‘Japanization’

Articles & Blogs - US Commentary

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As the collapse of the U.S. economy quickly evolved into the Crash of ‘08; politicians, “experts”, and mainstream media shills were unanimous: the U.S. economy would/could “never experience the Lost Decade” experienced by Japan’s economy after several, huge asset bubbles simultaneously burst.

At that same time I was equally adamant in my own writing: the U.S. would be extraordinarily lucky if its economic collapse was no worse than that of Japan. In fact my expectation was that the collapse of the U.S. economy would be many times worse than what has become a “Lost Generation” for the economy of Japan, resulting in my dubbing the collapse of the U.S. economy to be its Greater Depression”.

As we near the end of 2011, we now see something which would have been unthinkable just three years earlier: a U.S. business icon (gently) warning the U.S. business and political communities of the many reasons to expect the U.S.’s economic collapse to exceed the severity of Japan’s own depression.

Today, Reuters published an opinion piece from Pimco’s #2 man, Mohamed El-Erian in which El-Erian now reluctantly concludes the U.S. will be lucky to escape its own Depression with no more economic damage than what has been experienced by Japan – and could easily suffer a worse fate. Several observations flow from El-Erian’s mild “mea culpa”.

To begin with, every single “weakness” in the U.S. economy to which El-Erian now refers was completely visible four years ago. However, virtually no one in the U.S. political community, business community, academic community, or media propaganda-machine was willing to take off their “rose-coloured glasses” and look at the real world.

Indeed, the propaganda-machine got great amusement from bringing in well-known contrarian Peter Schiff as a guest on their “economic panels”, and then having everyone present gang-up and ridicule Schiff for telling the truth about the U.S. economy. To this day, these dishonest shills will admit to no more than “surprise” over the collapse of the U.S. economy – despite the obvious economic parameters which made this collapse inevitable (not to mention Schiff’s warnings).

Despite the supposed “candor” from El-Erian, very little has changed. Evidence of this can be found (for starters) with the gigantic myth to which El-Erian and the rest of the mainstream community continues to cling: that the U.S. is a “post-bubble economy”.

U.S. interest rates are lower than during the supposed “bubble”. The number of “underwater mortgages” is much higher. Trillions in leveraged-losses for the Wall Street fraud-factories have not been purged from balance sheets – only hidden, and with much of that financial feces sitting on the balance sheet of the Federal Reserve itself.

The systemic fraud which saturates the U.S. mortgage market (and prevents any “bottom” from ever forming in this market) has not been eliminated. Rather, U.S. politicians and banksters are close to a deal to permanently sweep all this fraud “under the carpet”, where it will fester (and drive down home prices) for decades to come.

It is utterly absurd to refer to the U.S. as a “post-bubble economy” when U.S. politicians have spent all of their time and efforts doing anything and everything they can to re-inflate this bubble. No less than a dozen government band-aids have been hatched just to attempt to pump-up the housing-bubble alone.

The ultimate evidence that neither the U.S. nor the Euro-zone economies could possibly be described as “post-bubble” is the constant rhetoric emanating from the economic charlatans in charge of their central banks. Regardless of which side of the Atlantic we hear these talking-heads speak, the message is the same: the ultimate enemy is “deflation”.

You don’t have to be an economist, or even be good at arithmetic to see the absolute absurdity/hypocrisy which is inherent in this attitude (and policy) of these central bankers. All you need is a moderately competent understanding of the English language.

What happens when a bubble bursts? It deflates. Yet week after week, month after month, year after year; we listen to self-deluded “experts” like El-Erian spout drivel about “post-bubble economies” when it is the official, absolute economic policy of our central banks (and the servile politicians) to prevent deflation at literally any “cost”.

Across the Atlantic (and following 18 months of relentless economic terrorism from Wall Street), European hypocrisy in this regard is also fully on display. After many months of stalling and denying the inevitable, we see Greece’s bond-parasites having 50% haircuts imposed on them – an obvious default, and on its surface a partial “deflation” of Greece’s debt-bubble. However, simultaneously we see these idiot-leaders (at the urging of the bankers), printing hundreds of billions more euros to pump-up the debt bubbles of Europe’s Bank Oligarchs, as well as attempting to keep the other sovereign debt bubbles inflated.

When you see a boy with a bicycle pump attached to his bike tire, pumping furiously while telling you he is “deflating” his tire, you don’t need to perform a polygraph test to realize that the boy is lying.

Everything to this point has merely demonstrated why the U.S. (and most of the Western world) is guaranteed to repeat the failed economic policies of Japan, and for the same reasons – because their bankers and political leaders continued to do the exact opposite of what they claimed to be doing. In fact, there are a nearly endless list of reasons why the U.S.’s refusal to “deflate” its bubbles (i.e. the refusal of its Oligarchs to allow deflation) will result in a much worse economic catastrophe than what has been experienced in Japan.

The U.S. has a $trillion per year war machine bleeding its economy dry, Japan does not. The U.S. has had more than three decades of trade deficits, which are getting steadily larger. Japan has a trade surplus. The average American is so heavily indebted that an ever-growing percentage are literally unable to borrow a single dollar more. The Japanese people had an enormous pool of savings at the time their depression began.

The primary “drag” on the Japanese economy has been the massive losses which have been hidden rather than purged from the balance sheets of Japans banking Oligarchs. Not only are the Wall Street fraud-factories much more insolvent than the Japanese banks (in proportional terms), but the U.S. financial sector is more than twice as large as Japan’s financial sector in relation to the overall size of their respective economies.

This has resulted in the blood-sucking done by Wall Street being many times more extreme than what has taken place in Japan. We can see this reflected in the astronomical amounts of “bail-out” dollars being funneled into those vampire banks. Of the more than $15 trillion in direct hand-outs and “guarantees” printed into existence by the Federal Reserve and the U.S. government, well over 90% has been funneled directly into Wall Street.

An amount of liquidity equivalent to roughly ¼ of the entire global economy has been pumped into Wall Street to prevent the banksters’ fraud-saturated bubbles from deflating. To refer to this as a “post-bubble economy” is like referring to the nation of Japan as being “post-Fukushima” the day after the first meltdown. Obviously that event merely marked the beginning of Japan’s nightmare (and the suffering of its people).

What makes the choice by U.S. leaders to duplicate every mistake made by Japan (except to a much greater degree) even more reprehensible is that it is now apparent that there is “no escape” for Japan. Year after year of massive deficits to prevent the economic pain (and economic healing) which comes from a deflationary purge, has left Japan with a mountain of debt – and its biggest “bubble” yet. Debt-default for Japan is now merely a question of “when” rather than “if”.

What this means is that current U.S. economic policy is not the “reasoned gamble” it is portrayed to be by politicians, bankers, academics, and media parrots alike. Rather it is the deliberate, conscious election of economic suicideto merely delay the inevitable “deflation” (and insolvency) which awaits its Banker Oligarchs, and now its entire economy.

Comments (4)Add Comment
Jeff Nielson
written by Jeff Nielson, November 04, 2011
Thanks Apberusdisvet!

It's a sign or our times, I'm afraid, that if you possess (and utilize) a moderate amount of common sense in your thinking that you tend to 'tower' over many of your peers. smilies/cheesy.gif
written by apberusdisvet, November 04, 2011
Jeff: I would pay serious PPV money to watch a debate with you and Peter on one side and 2 of the worst Administration shills. Zandi and LIESman on the other. You two would make mincemeat of these idiots who just had to be cloned from a Goebbels' DNA sample.
Jeff Nielson
written by Jeff Nielson, November 01, 2011
Yes Dalkrin, trying to re-inflate burst bubbles ranks right up there with "trying to put Humpty-Dumpty together again". smilies/wink.gif

However, when allowing these fraud-saturated bubbles to deflate would imply the END of the Wall Street crime syndicate, we instead see U.S. politicians recklessly attempting to do the impossible.
written by Dalkrin, November 01, 2011
I may be affected by the Halloween aura, but this article does carry a spooky foreboding for the immediate future. Or it could also be the recent news plastered even in the mainstream media: MF entering a messy bankruptcy, Greece making noises over its coup of an agreement.

I like your analogy with the boy and the bicycle pump. Looks like he ran over a scattering of tacks, and no amount of pumping will get those tires back to a proper firmness. Only now to achieve "growth" he must simultaneously ride his bike around a minefield, while pumping all the while.

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