Karl Denninger: Endgame Approaching

02-22-2011 • Market-ticker.org

We had the opportunity to force those who did these things to eat their losses and, when there were frauds involved, to imprison them. That was the right thing to do. It was the right thing to do in 2007, in 2008, 2009, 2010, and now. But instead the government at all levels has chosen through bribery and extortion to allow these games to continue and the perpetrators to walk free, keeping the loot in the bargain. It doesn't matter, in the end, because this is not sustainable. It cannot continue. We hit the wall in 2007 not because of a few subprime mortgages, but because debt carrying costs exceeded the ability to pay. We have not materially decreased those costs. Total systemic debt in the United States has gone from $52.7 trillion to $52.4 trillion, a less than one percent decrease. There's no way out of this box without correcting that distortion. It's that simple, in the end, and what you're seeing now is exactly what I expected to happen if we took this path. It is why I counseled against this decision back in 2007, wrote letters to Congress, ran petitions and spoke vociferously against TARP, the mark-to-market fantasy games and other bailouts. It is not simply because we have a right to the Rule of Law in this country, although we do, and that ought to be sufficient justification standing alone. It is because the mathematics of what was being attempted could not succeed. I hope you're ready, because the consequences are coming and they are emergent. Right here, right now, today.