Our Suez Crisis

The Suez Crisis was the end of Britain’s pretentions to be an independent power.

Our Suez Crisis is slower, and entirely self-inflicted.

paul_bernake_geithner

Don’t celebrate Dow 10,000. It is really only Dow 3,333.

The number 10,000, of course, refers to 10,000 U.S. Dollars, a currency whose entire value depends on the credibility of Treasury Secretaries. In the last few years are Treasury Secretaries have been men like Henry Paulson (who made millions from his friends on Wall Street) on Tim Geithner (whose unaccountable aides, or “czars,” made millions on Wall Street).

Another way of thinking about the past ten years, not as a recovery but as a collapse, is to count in terms of ounces of gold, instead of U.S. dollars. Unlike U.S. Dollars. the value of an ounce can be silently inflated by men like Paulson and Geithner, who are more concerned with Wall Street profits than American power.

In 1999, Dow $10,000 = Dow 30 ounces of gold.
In 2009, Dow $10,000 = Dow 10 ounces of gold.

In other words, in constant points, our “Dow 10,000” is just “Dow 3,333.”

No foreign country did this to us.

Only men like Henry Paulson, and Tim Geithner.

And their friends on Wall Street.

Update: Thanks to Robert Patterson for the link!

9 thoughts on “Our Suez Crisis”

  1. Dan,
    That is a good way of looking at. Although I would point out that gold was being heavily sold in the ’98-’01 time frame. There seemed to be a concerted effort on the part of Western central banks to dump their reserves (which lead to many conspiracy theories); so the price of gold reflected excess inventories in ’99. That being said, your back of the envelope assessment is fairly accurate. SP500, for instance, is roughly 50% lower than it was in 2000 and at no point the previous 9 years did it surpass the 2000 highs once inflation is factored in (this is despite the nominal highs of 2007.)

    Regards,
    TDL

    P.S. Below is a nice link showing a chart on this from dshort.com

    http://dshort.com/articles/2009/mega-bear-2000.html

  2. Three rogues before the docket.

    The last time we saw this kind of photo was when Sadam and his brethren were in court. Their expressions reveal a thousand words as to their culpability.

  3. Dan
    I hope you’re wrong about this being a Suez style crisis but I fear you may be right. The real test will come when, in the Suez fashion, China explicitly threatens to dumps its bond holdings if the U.S. doesn’t do something.

    Of course, there are two terrifying difference between the situation the U.S. finds itself in and the situation Britain and France found themselves in:

    1. France, Britain and the U.S. were already aligned against the Soviets within the NATO alliance, so America’s check on their power didn’t have to be viewed as a direct threat to the U.K. and France.

    2. As a corollary to point 1, France and the U.K. didn’t have the ability to send the U.S. navy to the bottom of the ocean. The U.S. has that power vis a vis China. My greatest fear of a latter day Suez crisis is that the U.S. will decline relative to China, but that our nation may be inclined to throw a fit on the way down.

  4. It’s absolutely fair to say this is a national disaster.

    It’s also fair to say that the Obama administration is capitalizing on the grave of the Bush administration. The emergence of State Capitlalism in the United States has seen the federal government reward companies who are openly supportive of administration policies, such as GE, while slashing the pay of those who are not, all while having a Socialized news outlet (NBC/MSNBC) to describe the wisdom of the State Capitalists. [1]

    Eddie,

    The deterioration of our financial system — Goldman Sachs and others even larger, no meaningful reforms, etc. is very distressing.

    TDL,

    I’ve seen that ‘Mega-Bear’ chart, but we should be seeing it daily. We are living through an long, national economic nightmare.

    historyguy99,

    One would think that Paulson’s predecessor at Goldman Sachs would not be so supported by our President… [2] that is, if the capture of our government’s vision by the State Capitalists had not been so complete. Besides foreign policy and rump areas not worth taking over (Veterans Affairs, Education, etc.), the oligarchs appear to be in complete control.

    Brent,

    Outside of a 1942 Japan-style repudiation (where only debt held by specific nations is defaulted on), we would be sunk if that happened. Given the relative performance of our and China’s economies these days, we can’t count on a financial ‘mutually assured destruction’ to protect us, either.

    [1] http://www.tdaxp.com/archive/2009/10/24/journalist-ethics.html
    [2] http://www.nydailynews.com/news/politics/2009/10/21/2009-10-21_president_obama_calls_gov_corzine_an_honorable_man_during_new_jersey_trip.html

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