Raoul Paul-The End

[DRumsfeld2000]

Enjoy the presentation:-

http://www.zerohedge.com/news/big-re...sentation-ever

[thriftyandboringinohio]

Re: Raoul Paul-The End

I spotted that last night and read it.
I'm tempted to call it truly great doomer porn, except it seems too credible for that label.

[jiimbergin]

Re: Raoul Paul-The End

I spotted that last night and read it.
I'm tempted to call it truly great doomer porn, except it seems too credible for that label.

I also saw that last night on Zerohedge and am sad to say it is one possible senario.

[EJ]

Re: Raoul Paul-The End

I spotted that last night and read it.
I'm tempted to call it truly great doomer porn, except it seems too credible for that label.

He's on the right track. He's inching toward a Ka-Poom Theory. He's thinking about what happens when we have another recession before the 7% of GDP output gap is closed that was opened by the last recession, the first time that has happened since 1938, as we've discussed here for several years. He's gotten his head around events that will produce a convulsive global panic into cash dollars and out of illiquid, non-dollar assets that cannot be readily converted to cash dollars. He has yet to get his head around what happens after that.

There is a large contingent of current and former Wall Street pros who think the way Raoul Paul does but do not share their views with the public. They see their special knowledge as an arbitrage opportunity. Sharing it does not help them and may in fact reduce their opportunities to use the information to their benefit. Paul's thinking on the subject has developed to about the same point as a little known fund manager was at when I met with in NYC in 2006. He retired that year, wealthy after 19 years on Wall Street. He did so then because he didn't want to be working on Wall Street when the SHTF. He thought Wall Street was to be widely vilified after the event. He wanted physical and reputational distance. His goals were to build what he referred to as his "fortress" with his wife, study history, and raise his young son. At the time, six years ago, this manager believed that the kind of great collapse that Paul describes was imminent. Like most of the 100 plus Wall Street pros I've talked with over the past 13 plus years that I've been running iTulip, he had his Wall Street window into events but didn't understand enough about central banking, the IMS, and finance-based macroeconomics to be able to think through all of the steps and permutations to establish a viable timeline, and he like Paul missed major phases of the process completely. He didn't understand that the American Financial Crisis that arrived two years later in 2008 was a small part of a longer, larger process.

Over the years I've come to the conclusion that the dire forecasts from these Wall Street doomers are tinged with more than a pinch of guilt over how much money they made for the work they did. They are expecting to be chased down by the torch and pitchfork crowd after the Big One that turns out to be understood as largely the result of too much credit product being sold to too many individuals, firms, and countries over the past 30 years as the FIRE Economy grew. Those who go public with their warnings are hoping for absolution, or at least to be distinguished from the rank and file Wall Street titans when, presumably, they are hunted down by the hungry, angry hoard -- or so they imagine. That's not how it works, of course. Just as all real estate is local, so is persecution. When everyone is poor, the wealthy who are showy and insensitive take the brunt of it.

After working this project for more than 16 years, including the years I spent on it before starting iTulip in 1998, I believe that a major catastrophe on the scale that Raoul Paul is describing is in the offing, but later than he thinks. They have not yet begun to reflate. A second coordinated global stimulus is in the wings, like the Q4 2008 to Q1 2009 stimulus executed by 40 plus nations that coordinated four trillion dollars in government spending. I believe that this will also fail in time to get the economy growing fast enough to exit the output gap trap. I also believe that recovery from a convulsive crash that wipes out the debt that is the source of the problem will be far more rapid than anyone expects if -- and this is the big if -- the political leadership of the major players in the global economy do not turn on each other. With the right leadership we'll be back in business in three to five years. I can give example after example of national economies that went from a virtual dead stop to booming in five years or less. The goal of Ka-Poom Theory is to know how to ride out those three to five years. It is also to think about what happens if we are not so lucky as we were last time to have FDR and Winston Churchill. In that case all bets are off. Anything could happen.

[don]

Re: Raoul Paul-The End

Thanks for the perspective, EJ.

[jiimbergin]

Re: Raoul Paul-The End

Thanks for the perspective, EJ.

yes, thanks again EJ

[LazyBoy]

Re: Raoul Paul-The End

Thanks for the perspective, EJ.

Yes, thanks especially for the time frame. The possibility of recovery in only 3-5 years is really encouraging!

But since it's global, how many FDRs and Churchills do we need?

[shiny!]

Re: Raoul Paul-The End

I also believe that recovery from a convulsive crash that wipes out the debt that is the source of the problem will be far more rapid than anyone expects if -- and this is the big if -- the political leadership of the major players in the global economy do not turn on each other. With the right leadership we'll be back in business in three to five years

Where are these leaders? Do they even exist? How do you suddenly get leaders of wisdom and courage and get people to willingly follow them when the system itself and its gatekeepers are so determined to support and perpetuate FIRE?

I can give example after example of national economies that went from a virtual dead stop to booming in five years or less. The goal of Ka-Poom Theory is to know how to ride out those three to five years. It is also to think about what happens if we are not so lucky as we were last time to have FDR and Winston Churchill. In that case all bets are off. Anything could happen.

I'm already thinking we won't be so lucky. Would you be willing to share with us some of the possibilities you envision for "anything"? Because I'm having trouble envisioning things I've never experienced. It's hard to get out of normalcy bias.

[c1ue]

Re: Raoul Paul-The End

I also believe that recovery from a convulsive crash that wipes out the debt that is the source of the problem will be far more rapid than anyone expects if -- and this is the big if -- the political leadership of the major players in the global economy do not turn on each other.

It seems there are two different assertions in this statement:

1) That debts will be allowed to be wiped out

2) That political leadership can then embark on a path of recovery

Both seem to be more than a little contingent on the present political leadership giving up their literally lifelong subservience to FIRE.

Whether it is the present political leadership changing their tune or new leadership coming to the fore despite massive FIRE intervention, this seems ... difficult.

Equally so I'd think that massive wealth destruction via debt destruction - whether via jubilee or inflation - carries its own dangers. Or perhaps you are indirectly saying that the economic chaos resulting from debt devaluation via inflation/mass wealth destruction will itself cause a political change for the better?

[shiny!]

Re: Raoul Paul-The End

It seems there are two different assertions in this statement:

1) That debts will be allowed to be wiped out

2) That political leadership can then embark on a path of recovery

Both seem to be more than a little contingent on the present political leadership giving up their literally lifelong subservience to FIRE.

Whether it is the present political leadership changing their tune or new leadership coming to the fore despite massive FIRE intervention, this seems ... difficult.

Equally so I'd think that massive wealth destruction via debt destruction - whether via jubilee or inflation - carries its own dangers. Or perhaps you are indirectly saying that the economic chaos resulting from debt devaluation via inflation/mass wealth destruction will itself cause a political change for the better?

That's what I was trying to say. You said it better.

[thriftyandboringinohio]

Re: Raoul Paul-The End

... A second coordinated global stimulus is in the wings, like the Q4 2008 to Q1 2009 stimulus executed by 40 plus nations that coordinated four trillion dollars in government spending. ....

A bad jobs report this morning, and gold spiked. Looks like others agree that QE 3 / stimulus 2 / twist 2 is now a foregone conclusion.

[Woodsman]

Re: Raoul Paul-The End

Thank you, EJ.

[Dave Stratman]

Re: Raoul Paul-The End

Enjoy the presentation:-

http://www.zerohedge.com/news/big-re...sentation-ever

There is a great deal about all this that I don't understand, but I guess the key question for me is the relationship between the "banking crisis" and the collapse in GDP and other cataclysmic events predicted here.

Roual Pal states that the 10 largest economies in the world have a total sovereign debt equal to 300% of world GDP. A substantial portion of that sovereign debt was incurred in the last few years through bank bailouts. My understanding from reading John Hussman is that these bailouts were quite unnecessary. The usual--and legal--way of dealing with insolvent banks is that FDIC replaces the management, uses shareholder and bondholder value to wipe out the bad debts, and sells the good debt to a solvent bank; not a penny of depositors' funds is lost in this procedure. Hussman claims that there was more than enough shareholder and bondholder value in the TBTF banks that this established procedure could have been followed; no depositors' funds would have been lost and taxpayers would not have spent a dime on it. The problem, as Hussman puts it, is simply that Congress has chosen to defend bank bondholders rather than American taxpayers. The same rape of the public on behalf of bankers is an international phenomenon. Hussman's latest column describes the current bailout of Bankia in Spain to the tune of nearly $24 billion.

If I am understanding all this correctly, the huge level of sovereign debt and the wave of sovereign defaults which Pal predicts are based on fraud, or at least corruption, on a nearly unimaginable scale. As Hussman points out, the phrase "bank failure" is used as a scare tactic. All it really means is that the bondholders of a bank are going to take a haircut--lose some money on their investment. Boo Hoo. These problems could have been dealt with in a way that would have left the public--and, presumably, the economies of various nations--unscathed. Instead The Powers That Be have chosen--and have persisted in choosing--to deal with problems that could have been easily contained in a manner that has blown them up to gigantic levels. According to TPTB, the only way to deal with these (artificial) problems is to dismantle social democracy in Europe, privatize vast amounts of public wealth, and impose austerity on ordinary people--to pay for the bankers' misdeeds.

Then there is the other part of the equation, the decline in GDP and the failure to make up the 7% output gap from the last recession. Is this also an artifact of social policy; that is, is it a function of the massive redistribution of wealth upwards that we have experienced over the past 40 years or so, so that there are too few people with the means to buy the products of the economy?
.
My question, I suppose, is, How much of this crisis is real, and what part of it? Am I missing something here, or are we being manipulated into accepting a scary future that is somewhat akin to enslavement?

[lektrode]

Re: Raoul Paul-The End

There is a great deal about all this that I don't understand, but I guess the key question for me is the relationship between the "banking crisis" and the collapse in GDP and other cataclysmic events predicted here.

....
from reading John Hussman is that these bailouts were quite unnecessary. The usual--and legal--way of dealing with insolvent banks is that FDIC replaces the management, uses shareholder and bondholder value to wipe out the bad debts, and sells the good debt to a solvent bank; not a penny of depositors' funds is lost in this procedure. Hussman claims that there was more than enough shareholder and bondholder value in the TBTF banks that this established procedure could have been followed; no depositors' funds would have been lost and taxpayers would not have spent a dime on it. The problem, as Hussman puts it, is simply that Congress has chosen to defend bank bondholders rather than American taxpayers....

(and it was which congress - 2008-09 - controlled/voted-on by whom that allowed ALL of this to occur?)

Am I missing something here, or are we being manipulated into accepting a scary future that is somewhat akin to enslavement?

with ALL due Respect Mr Stratman, i'm not sure what the question is?

http://articles.latimes.com/2008/sep.../fi-polmoney23

The securities, banking and mortgage industries are among the biggest campaign contributors to both parties.Since 2002, the sector has contributed more than $1.1 billion to congressional candidates, with Republicans getting an edge during that period, according to federal lobbying records. The figure does not include millions more donated to the favored charities of prominent politicians and the hundreds of millions spent on lobbying. The sector is among the biggest donors overall; by comparison, another major category, lawyers and lobbyists, gave $646 million during the same period.

In the 2008 election cycle, the list of the top recipients of donations from the financial services, insurance and real estate sectors (all likely to be affected in varying degrees by the legislation) included the leading presidential candidates.

Democratic nominee Sen. Barack Obama took in $22.5 million, followed by New York Sen. Hillary Rodham Clinton with $21.5 million. Arizona Sen. John McCain, the Republican nominee, was close behind with $19.6 million.

Money rained down also on the top members of Congress who are steering the legislation. Senate Banking Committee Chairman Christopher J. Dodd (D-Conn.), a candidate for president during the primaries, received $6 million. His counterpart in the House, Rep. Barney Frank (D-Mass.), received $720,000 this year.

The No. 2-ranking Democrat on Frank's House Financial Services Committee, Rep. Paul E. Kanjorski of Pennsylvania, collected $755,000, and ranking Republican Spencer Bachus of Alabama took in $704,000.

"If you trace the movement of Wall Street money through Washington, it pretty well tells the story behind this and any other piece of legislation," said Lynn Turner, former chief accountant for the Securities and Exchange Commission. "The way Washington works, it is the lobbyists and the executives who hire them that get what they want. And it is the taxpayer who usually ends up getting fleeced."

Turner, who cites long experience in Washington and as an industry consultant, has become well known as a critic of U.S. financial regulation. But his position was echoed by research that is to be unveiled this week by the Center for Responsive Politics.

The nonpartisan research organization studied votes in 1999 on a piece of legislation, the Financial Services Modernization Act, that deregulated the banking sector, allowing commercial banks to compete with brokerage firms in buying and selling stocks.



Those who supported lifting restrictions on how commercial banks, investment banks and insurance companies could go about their business received more than twice as much money in campaign contributions from those interests as did those who opposed the measure, the study found.

The 195 Democrats who supported the legislation received an average of $179,920 in the nearly three years leading up to its passage, the study found. The 59 Democrats who opposed it received an average of just $83,475.

In addition to campaign contributions, the industries also invested heavily in lobbying. During 2008 alone, securities and investment firms spent $46,477,562 trying to influence members of Congress.

The fact that the bailout legislation is being rushed through -- spearheaded by a small group of congressional leaders --

and i would have to just guess here that those 'leaders' were from what state? and what party?

where's dc?
he'll no doubt want to 'keep me honest' here (which i appreciate, greatly)

while i'm not attempting to apologize for the idiots on the other side of the aisle, i cant ignore just who was running the show while it all happened.

[doom&gloom]

Re: Raoul Paul-The End

Okay, who seriously believes their "party" isn't a suck up to Wall Street?

Raise your hands kids so I beat you into submission accordingly.