National Bankruptcy

Denninger sends once more.

This time, with feeling.

Too much leverage is the problem and bankruptcy is the only solution as it clears both sides of the balance sheet.  Pretending everything is ok does nothing except make the problem worse.

Good times ahead folks.


I actually buy a lot of this…

Tax loopholes as a business model and true believer culture on the future skids.


Yes, I know that Apple has 10% of its enterprise value in cash.  I know the firm has no debt.  But I also know that the company spends like crazy on R&D and sell-through is everything to a firm that is playing in this space.  The problem with these sorts of firms is that when you’re running on afterburners it’s nearly impossible to pull back without losing control and crashing, simply because you’ve built a culture and corporate environment that is filled with “true believers” operating at a corporate level where everything has gone right — and thus you all believe it will continue to.


Amazon’s primary “lever” is the ability to play around the edge of the sales tax system.  This gives it an instant 6% (on average) price advantage over everyone else, more than enough to offset the shipping costs (which you pay in any event; whether shipped directly to you or to a retail store, you still pay for it in the product price somehow.)

But that sales tax loophole is going to close.  Over the next few years states will find a way, as the revenue shaft is getting out of hand for them.

Like Karl said, not a “crash coming tomorrow” kind of thing, but a future speculation. Tax loopholes such as the one that powers Amazon close. Unless there is some kind of majick lobby by Bezos, this is bound to happen as tax revenues further contract at the state level. The Apple thing is also simple. Markets dry up for stuff like this, though I do see the consumer public in many cases giving up on other necessities before their techno-baubles.

Total Collapse: Worth Your Time

Thanks Zerohedge…

See this post.

“This economic crisis is like a cancer, if you just wait and wait hoping it is going to go away, just like a cancer it is going to grow and it will be too late!”

Denninger also sends.

Keep your wits about you. Keep your vision clear and focused. Prepare yourself and your tribe when & where ever possible.

One More Hit Off the Crack Pipe

Just. One. More.

Denninger seems to write the same blog post about every three days. I commend him on this. It’s hard to write about the same topic over and over and remain relevant and interesting. Yet, despite that difficulty, he pulls it off.

See his latest here.

When debt grows faster than output on a compound basis the two curves inevitably run away from one another and must always result in a collapse.

This is not a political issue, it is not a left or right issue, it is a function of simple mathematics.  Those who were IPOing these businesses in the 1990s and who were building and selling houses into the ramp in the 2000s were simply believing that they would unload the bag on you before the leverage pyramid in that particular part of the economy fell over.

That’s all the last thirty years was folks, and now we’re desperately scrambling on a global basis to find just one more sucker.  To obtain just one more hit off the crack pipe.  To stave off death just one more day and draw one more breath.

The days of the indebted nation state as the central power are coming to a close. Simple as that. How do you adjust, adapt, and overcome to not only survive, but thrive in the new societal construct?

On Leviathans and Jobs

Denninger, as usual, makes a succinct point.

If you want people like me to create jobs you have to stop threatening to steal my capital.  I have several ideas for new enterprises, but today I wouldn’t even consider committing that capital to these ventures.  Not because I might be wrong and fail – that’s always a risk, and one that entrepreneurs accept as inherent in the game – but because government wishes to reserve the right to steal my capital any time they wish with their unconstitutional and outrageous mandates and demands.

Let’s be very clear about this: I have every right to dissipate my capital doing nothing more or less than enjoying it, and I will do exactly that before I allow the government to steal it and give it to someone who has done nothing to deserve it.

I feel exactly the same way.

So, what are the odds Leviathan is listening and paying attention? Hint: I have stock in a bridge to sell you…