The End of Freedom

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Created on Wednesday, 24 October 2012 19:51

Published on Wednesday, 24 October 2012 19:51

Written by Bill Bonner, Founder and President, Agora Inc.

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In the end more than they wanted freedom, they wanted security. When the Athenians finally wanted not to give to society but for society to give to them, when the freedom they wished for was freedom from responsibility, then Athens ceased to be free.

-- British historian Edward Gibbon

From President Obama's point of view, what's the worst thing that could happen now? A big drop in the stock market. It would make voters feel insecure... They'd think something was wrong. And they'd be right.

It was partly to keep propping up stock prices that Ben Bernanke launched his all-you-can-eat QE program last month. But wantin' ain't always gettin'.

Yesterday, the Dow fell 243 points -- the biggest drop in four months. Gold dropped $16 per ounce. From Reuters:

Stocks fell on Tuesday, driving the Dow industrials to the biggest drop since June 21, as weak results from index members DuPont and United Technologies showed profit growth is slowing.

This earnings season has so far produced a string of disappointments from companies falling short of Wall Street's expectations. With results in from 29% of S&P 500 companies, 37% have exceeded revenue forecasts, far short of the 62% average, and just 57.2% of the S&P 500 names reporting so far have beaten earnings forecasts, according to Thomson Reuters data.

That would be the worst percentage of companies beating earnings estimates since the fourth quarter of 2001 -- should it stay at the current level, the data showed.

Dear Readers should be completely out of U.S. stocks. Stocks may go up -- or down -- in price. But there's not enough real growth in the economy to justify the risk of owning them now.

U.S. stocks are not cheap. Not even close. Some day they will be cheap. We'll wait. Being out of the stock market will make watching the news a lot more agreeable in the months to come.

Right now, a rising stock market favors Obama. Falling stock prices favor his opponent. When prices are going up, people figure all is well. When they are going down, they get sour and vote for a change.

The Romney vs. Obama Zombie Smackdown

But is that all there is? Is that all there is to the Obama vs. Romney contest? Is that all there is to democracy?

Glad you asked. Because we have an idea. This U.S. election can best be understood in terms of a Zombie Smackdown!

One candidate supports one group of zombies. The other supports another group of zombies.

But many zombies -- retirees, bankers and the military -- have it made. Both candidates back them. No matter who loses, they win.

For example, Romney sounds like he might go hard on the little zombies -- those who get a few bucks for doing nothing.

But Obama sounds like he might go hard on the big zombies -- those who get big bucks for doing nothing worth doing.

Neither candidate can win this election without zombie support. So they both favor more money for retirees, the Pentagon and the banks.

Which zombies will lose? Which will get smacked down? The unemployed? The farmers? The education industry? From InsideARM.com:

Last summer, it was announced that student debt achieved the distinction of being greater than that of credit card holders and even the victims of subprime mortgages...

Shares of the University of Phoenix parent Apollo Group, the largest for-profit college chain by enrollment ($4.9 billion -- yes, that's billion), soared when G.W. Bush's administration eased regulation to get things in motion a few years back.

A much smaller group, Capella, with an enrollment of 38,000, got 78% of its $335 million in revenue from government loans and grants in 2009.

Why are for-profit schools important for us? These colleges received $26.5 billion in U.S. loans and grants in 2009. Even though they educate less than 10% of all college students, they get 25% of all Pell grants and make up 44% of federal student loan defaults.

Stephen Burd, the editor of the New America Foundation's Higher Ed Watch blog, has written (that) Sallie Mae has often allied itself with for-profit colleges -- not all of them reputable -- thereby helping fund private student loans "with interest rates and fees totaling more than 20% per year, to financially needy students who normally wouldn't qualify for them because of their subprime credit scores..."

As reported by Mother Jones, the new Consumer Protection Bureau -- created to crack down on shady real estate loans and predatory lenders -- was not given that same authority to deal with student loans described as by (the then) New York Attorney General Aaron Cuomo as the "Wild West" of lending.

When the Money Runs Out...

Which candidate will keep the student loan hustle going? Probably both.

President Obama? Almost certainly. President Romney? Yes again!

Yes, dear reader, most zombies have nothing to worry about. Both candidates are on their side. And that probably won't change soon.

But sooner or later, the money will run out, and then the student loan scammers will have to fight with the ethanol scammers... and the War on Terror scammers... and the Food and Drug scammers... and the SEC scammers... and the food-stamp scammers...

And all the scammers from A to Z in the federal directory.

Editor's Note: When Zombie Money Dies, this Old Money Thrives... Eventually, all zombie fiat currencies will become worthless. History's full of these stories...and the American dollar has been on a historic slide.

But what will replace the Zombie Dollar when it finally perishes? Maybe this old kind of money, a natural money that thrives when Zombie Money dies.

And the thing is -- this other type of money has been manipulated by some big Zombie banks. And when this manipulation comes to its end, this other money promises to have a meteoric rally.

Here's the whole story on the other money and the Zombie banks...