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grandcountyuncensored.com Opinion and commentary by Karl Denninger, author of his new book: Leverage How Cheap Money Will Destroy the World

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August 2011, Volume 1, Number 6 || Free

Our Ship of State Is Leaderless... What's Next?

One has to wonder after Tuesday's Fed statement and the screaming harpy nonsense out of the Democratic party. First, let's talk a bit more about that Fed Statement. The Federal Reserve stated that their base case is now for zero to negative economic growth for the next two years. This is the only justification for zero interest rates ergo, you just heard their forecast through their actions. Next, you're seeing the impact of fiscal consolidation in Greece. We had better learn from this because it's coming here. Their 'fiscal consolidation' is leading (temporarily) to lower revenue (taxes), exactly as one would expect. Why? Because when you make the necessary reforms you crimp profits. This hits taxes, since taxes are assessed on earnings (either personal or corporate). Therefore when you make the necessary changes to a bloated government that's deficit spending, tax receipts always decline in the short term. Greece's deficit widened as a consequence, and will for some time. So will ours, if and when we take our necessary fiscal medicine. Third, we better learn from Great Britain. Rioting has gone on now for four nights. Why? Price increases on necessary commodities coupled with the loss of legitimacy of government. The latter is extremely dangerous and it's very realincluding here. A new Rasmussen poll says that just 17 percent of likely US voters believe the federal government has the consent of the governed. This is down from 24 percent in Maythe lowest level measured yet. I don't know what you can possibly say that's positive about that. Further, only eight percent of Americans believe that their Congressman (or woman) listens to the voters as opposed to 'party leaders.' And only six percent rate Congress' job performance as 'good' or 'excellent.' These are numbers associated with monarchies or governments about to be beset by actual revolutionnot functional representative republics. Folks the fact is that we, collectively, blew it. Our representatives and other members of government listened to the 'Captains of Wall Street' instead of their constituents and mathematics. Instead of forcing those who did imprudent thingsboth borrowers and lendersto eat their own cooking and blow up, we bailed them out. We then went even further in that we did not force them to change their bad behavior. In fact, we not only ratified that bad behavior we enhanced it by formally permitting 'mark to fantasy' as a business practice on bank balance sheets. This is a convenient fantasy but that's all it is: A fantasy. Eventually the cash flow always wins, because you can't spend anything other than cash. This presents a huge problem because the lack of real cash flow forces people to start kiting checks and otherwise scrounging in the couch cushions for pennies, along with pledging worthless assets for yet more lent money. Since the private economy has no real borrowing capacity left, this ultimately winds up back on the sovereign balance sheet which would be ok if there was tax revenue to support it. But of course there's not because, as unemployment goes up, tax receipts go down.

The markets are back to insane volatility, this time downwards. Since the close Tuesday, we've seen a 30 point range in the S&P 500a nearly 3% move. On Wednesday morning, the Dow futures were down 200 after being up about 60 early the previous evening. Why? The BS over in Europe hasn't been fixed and can't be without recognizing the frauds and resolving them. Unicredit and SocGen are again frontandcenter. Despite The Fed's proclamation, no government in the western worldnot ours, not in Europehas forced their banks to come clean and clear out their trash. I hope you enjoy the markets over the coming weeks and months. You've already had your 401k and IRA trashed in the last two weeks and now we're at it again. If you bought back into the huge ramp in the last hour of Tuesday, much of those gains are now gone, and we're headed for the toilet, again, this morning. Rumors will dominate and huge moves are now commonplace. This is unlikely to be overnot today not next week not next monthuntil the government stupidity ends. Who knows where this ends, or if it ends before the people force it to end through either general strikes and destroying the government's ability to collect taxes or even through destructive acts. All I do know is that there are times when one should step back and be prepared to fend for themselves rather than 'believe,' and this is one of those times. We need leadership in Washington, D.C. who will look at the fundamental mathematics and force those facts front and center into the debate refusing to bend. They should demand that all who come with any sort of solution or policy recommendation square them against the fundamental mathematical fact that debt cannot grow faster than productive output on a sustained basis. More than 30 years of hard mathematical fact show us that all economic policies of those last 30 years, irrespective of party, have in fact devolved into

an utter mathematical impossibility when one considers the longerrun future. This organized fraud upon the public by both political parties and their minions must end right now. We are in the end stages of this Ponzi scheme and are teetering on the edge of fullon collapse. If immediate action is not taken to stop the accumulation of yet more debt and piling up of more leverage upon that which cannot be paid, we will go down the toilet. It may be too late even now, but this much is clear: The path we are on leads to CERTAIN disaster.

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THE EFFECTS OF A DOWNGRADE

During Tuesday's meeting of the Board of County Commissioners, the subject of the ratings downgrade of U.S. government debt came up. Grand County routinely purchases treasuries and other securities with surplus funds in order to earn a return on those monies. After consulting with a number of people, it was determined that at least two of three ratings agencies must rate debt as AAA for them to be legally purchased by the county. Any existing securities held by the county are not at risk, regardless of rating. You'd think this would be the end of it, but of course, it's not. After the S&P downgrade of sovereign U.S. debt on Friday of last week, it began downgrading other types of debt tied to federal funds on Monday morning. Thousands of municipalities, school districts, public housing and transportation projects are affected. The effect of these downgrades is that, over time, interest rates and therefore debt service payments, will begin to climb for already cashstrapped public entities. With many already on the verge of bankrupcty, this downgrade could easily push them into the brink. When the other ratings agencies finally follow suit, and rating downgrades begin to cascade, public entities nationwide will be at even greater risk of default. As it stands now, the stock market seems to be the biggest victim of the downgrade, but here's something to ponder over the coming months: with thousands of counties and other entities holding trillions of dollars worth of U.S. treasuries, what happens when they go to the market to purchase AAArated bonds and they don't purchase U.S. debt?
Opinion and Commentary by reggie.paulk@gmail.com

In the United States, the fact there's even a debate over whether or not people should or shouldn't be allowed to carry guns is hilarious. The Supreme Court has held the primacy of the First Amendment on an almost religious basis yet the Second Amendment seems to be open to debate. Even the idea of a permit to carry a concealed firearm, when put in context of the Second Amendment, is a major infringement of the RIGHT to bear arms, no matter the blather you hear from our courts, representatives or law enforcement to the contrary. People who don't want to own or carry firearms are more than welcome to exercise that choice. People who are afraid of firearms are more than welcome to be fearful. The line is drawn on people who, for whatever reasonhowever seemingly justifiablewant to limit our right to bear arms. There's no provision given in the Constitution to infringe on that rightin fact it's expressly forbidden! Gun control advocates try to use studies and data to prove guns are dangerous. The fact is these people, ragardless of their studies, should be outcasts in a society founded on the principle of bearing arms as a right. The First Amendment protects their right to share their drivel, and I would be a hypocrite if I wanted to silence them by limiting that right. On the contrary, I speak out against them using the same birthright. Granby's Town Council unanimously passed an ordinance in direct violation of the Constitution. What, if any, benefit have they derived in doing so? For that, they've proven their ignorance and lack of respect for the law. What makes them any different from a citizen who chooses to ignore the law for their own personal gain?

SECOND AMENDMENT TO THE CONSTITUTION OF THE UNITED STATES: A well regulated Militia being necessary to the security of a free State, the right of the people to keep and bear Arms shall not be infringed. infringe/Verb Act so as to limit or undermine (something) encroach on (From Google Dictionary)
I was so bummed I missed the Granby Town Council meeting on Tuesday evening, because the subject was about limiting the possession of firearms in public buildings and places. I put a call into town manager Wally Baird to ask how the meeting progressed. He stated that many board members were not comfortable with placing any limits on gun possession. But, in the end, they unanimously voted to restrict opencarry guns (ie: holstered) at the town hall. Why only opencarry? Colorado is a shall issue state. This means, after passing an extensive background check, a person must be issued a concealed carry permit by their county sheriff. Colorado law allows a permit holder to carry their weapon on their person just about anywhere except for public schools, facilities with electronic screening devices and facilities with security personnel who screen with handheld devices. (Source: rmgo.org) The gentleman who dropped his firearm on the floor may have alarmed the members sitting on the town council, but at no time was their safety at risk. The Granby Town Council vote demonstrates their naivety and complete ignorance of the Constitution. Laws meant to restrict behavior only work on lawabiding citizens. The act of drawing a gun or holding a knife, in a threatening manner, is a crime. Discharging a firearm with the intent to do harm is a crime. Discharging a firearm in a manner that is unsafe is a crime. Restricting the simple act of carrying a firearm is plain stupid when there are myriad felonies that may be committed through any number of acts using a weapon. >continued

GRANBY TRIES, FAILS GUN BAN

Definition: Twitter is an online social networking and microblogging service that enables its users to send and read textbased posts of up to 140 characters, informally known as "tweets." (Wikipedia) Many people don't know the news value of twitter. I personally follow over 80 sources so I can keep uptodate on literally the latest breaking news. If it's happening anywhere in the world, it's happening on twitter first. Whenever I make a new post to the Grand County Uncensored blog, it automatically generates a tweet. follow our us on twitter: @gcuncensored Here are a few 'tweets' you may have missed:
RT @Drudge_Report: BANK STOCKS PLUNGE... http://drudge.tw/pbZk6q_tweeted 8 hours ago RT @weaselzippers: Shocker: Joe Wilson Was Right When He Said "You Lie" HHS Says ObamacareFunded H http://weaselzippers.us/?p=87672_tweeted 9 hours ago RT @businessinsider: Market Chaos Could Cause Serious Problems For States And Cities by @grace_lightning http://read.bi/q22Fvv_tweeted 13 hours ago

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Contact the editor: reggie.paulk@gmail.com (303)5527963