Bread and Circuses Bread and Circuses: Panem et Circenses
by Justice Litle
The Daily Reckoning
London, England
Thursday, December 1, 2005 Justice Litle discusses the mob scenes prevalent on Black Friday and how this is reminiscent of the "Bread and Circuses" days of the Roman Empire. --------------------- GDP numbers show the U.S. economy advancing at a surprisingly strong pace: 4.3%. Can you believe it?
A Senator responds to our new book: Empire of Debt!
The president’s “Total Victory” plan…the correction of gold…and more!
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--------------------- The Dow seems to be backing off. The dollar, too. And gold. None has moved down much. But all are looking a little peaked. GDP numbers show the U.S. economy advancing at a surprisingly strong pace: 4.3%. Can you believe it, dear reader? We can’t. We don’t doubt that there is a lot of economic activity taking place. We just doubt that it’s “growth.” Remember, consumers’ incomes have been going down for the last two years. In an economy that is 76% based on consumer spending, how can “growth” occur without an increase in the thing that has to do the most growing? Imagine a man who inherits a mansion - left to him by his father, who made his fortune in auto parts. The man’s own income is stagnant. Still, he finds his house is going up in price. So, he borrows against it in order to increase his standard of living. He goes out to restaurants. He puts in new drapes and how could he resist, new granite countertops! All around him, people feel the effects. Money is flowing. Everyone feels richer...the GDP goes up! But is it “growth?” It’s the sort of expansion that is likely to give “growth” a bad name. But who are we to argue with it? People think they are richer. They spend more. They borrow. Their houses go up, and they think they are richer still. As long as the economy is growing, people think they can grow along with it - until they go broke. Gold is at $498, which is about where it was when Alan Greenspan first planted himself in the cushiest chair at the Fed. There has been much growth of all sorts since then. Houses are worth at least twice as much - or more (Our house in Maryland has gone up four-fold.). Home mortgages outstanding have quadrupled. Consumer debt has tripled. Corporate debt has more than doubled. State and local debt has more than doubled. U.S. debt in foreign hands is up about 700%. Credit market derivatives barely existed in ’87. Now, there are trillions worth of them. Gold is correcting. Having hit $500, it is backing off to catch its breath. We don’t know how far it will eventually go. But today we move our target buying price up to meet it - to $475. We hope it falls below that level where we will buy more. Gold would have to go to about $1,000, we figure, just to catch up to all the “growth” that has happened since Alan Greenspan took over at the Fed. If all this “growth” is as stunting as we think it is, gold will go up even more. More news from our currency counselor...
------------- Chris Gaffney, reporting from the EverBank trading desk in St. Louis: “The ECB has made their announcement of a 0.25% increase, so now we will wait to see what Trichet has to say about future increases. Should be a volatile and busy day in the currency markets.”
Learn more in today's
Daily Pfennig ------------- Bill Bonner, back in London with more views… *** Is the president of the United States of America a great leader? Or a conniving fool? The question came to mind as we read accounts of the man’s speech last night in our hometown - Annapolis, Maryland. We don’t know the answer. But we have a hunch. “Stay the course,” said our main man. The sentiment may be broadly transferred from the war in Iraq to the whole tableau of America’s 21st century empire. Should we continue to run huge trade deficits – over $700 billion annually? Doesn’t this put the economy in jeopardy? Doesn’t it mean that real wealth is moving from the United States into foreign hands at a rate (calculated by Warren Buffett) of about 1% of our total net worth per year? Nah. Don’t worry about it. Stay the course! And does it really make sense to run federal budget deficits greater than $300 billion per year...as far as the eye can see? Or to commit ourselves to financial obligations that drive up the deficit, year after year, so that it will pass $1 trillion a year within a dozen years? Isn’t this courting trouble? Isn’t it unfair to the young who will have to pay these bills? Don’t worry about it. Stay the course! Should an individual family continue to spend more than it earns...counting on an increase in housing prices to give it something to borrow against? Shouldn’t it have some savings, just in case? Stop worrying. We’ve got the most flexible and dynamic economy on earth. Stay the course! Mr. Bush says he will settle for nothing less than “total victory.” Ah...there’s the weasel in that woodpile. What is victory? He has already defeated the enemy’s army. He has already installed a government more to his liking. Isn’t that victory enough? Saddam has been ousted, and is now the star of a show trial. The people of Iraq have voted; even the president himself said they are capable of misgoverning themselves. Surely this “victory” alone is worth 2,000 American soldiers’ lives and $200 billion - not to mention the thousands of Iraqis who have given up the ghost or the billions in property damage caused by U.S. military forces. Besides, the president says we are building a, “free, federal, democratic, pluralist and unified state.” Isn’t that worth the cost? Here at The Daily Reckoning headquarters, we are not smart enough to know. We’re forced to stoop to the essentials. We might kill a man for love or money or a parking place, but we wouldn’t risk being damned to Hell for a claptrap theory about how a foreign country should be governed.
*** Addison reports some success in getting Congress to acknowledge America’s empire of debt: “We’ve received several more holiday cards,” writes Addison. “Which is…umn…cheery. But we may have struck a little gold, thanks to reader Jon Rice. He writes: “Hello Members of Daily Reckoning.com.
“I thought you might be interested in the letter I received in response to my
asking Senator Nelson of Fl to be sure he read more than just the
introduction of the book you sent him, Empire of Debt. Below is that
response.
“Respectfully, Jon Rice” Senator Nelson’s Response: “Dear Mr. Rice, “Thank you for sharing your views on our nation's spending priorities. As a member of the Senate Budget Committee, I take seriously my role in the Federal budget process. “Our nation is at a critical junction. Recent gas price increases and the devastation caused by Hurricanes Katrina, Rita, and Wilma have left many people struggling just to get by. Meanwhile, the budget passed by the Congress shortchanges hardworking Americans, gives the biggest breaks to only the wealthiest among us, and puts our nation in deeper debt. “To set spending priorities, I firmly believe we must implement a pay-as-you-go system that requires Congress to implement sound fiscal policies that will help reduce the $8 trillion debt. Reducing the debt will help prevent inflation and cuts in critical government programs that many Americans rely upon, like Social Security and Medicare. “I appreciate your opinions about our nation's budget and our economic well being, and will take them into account as the budget is debated in committee and on the Senate floor.” Perhaps Senator Nelson means what he says. But it does sound like a page right out of the “Democratic Response to Waning Poll Numbers for Republicans Play Book” (Or, as the great Mogambo would say, the DRWPNR Play Book). *** The book seems to be catching on in New York, too. It hit the New York Times Hardcover Nonfiction list last week. This week it moved up four spots and is now sitting at #22. Not too bad considering we’ve been grappling with Oprah, an insipid array of diet cookbooks and holiday pop-ups for children. Empire of Debt: Still a hefty 34% discount, and great for kids! *** Also, from Addison: The Charter Membership launch of the Reserve was such a success that we are offering a new membership option: Agora Financial Reserve Platinum. Over the holidays, the Agora Financial Reserve will be available at a substantial discount. The platinum membership option will be open from today, December 1, 2005, to midnight January 1, 2006 - get in while you can. The Agora Financial Reserve - Great Savings On Our Best Services! --- Advertisement --- "How a Cold-Blooded KGB Shakedown Could Hand You 458% by January 31, 2006." If you don't mind profiting from the ruthless political shakedown of a
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