Election machines proven to be hackable: graphic lesson in Kubler-Ross

This video is longer than it really needs to be to tell the story but I guess it had to be that way since too people have to have a sharp stick shoved into their eye before they can anticipate that blindness is even possible.  In short, the "unhackable" Diebold Tabs electronic voting machines can easily be hacked:

http://www.youtube.com/watch?feature=player_embedded&v=qwS4XMEr_qY

The hackability of these machines doesn’t surprise me.  In fact, it would not shock me at all to learn that the exploits were purposely added to the design for the express purpose of fixing the votes because it is exactly what I would do if I were a scumbag running the con.  But it is for exactly that reason that this post is not about the hackability of the machine but rather the reaction of one of the voting official ladies at seeing it hacked.

I'm talking about the lady who broke down into tears over it at the end of the video.  She had foolishly put so much trust and faith in "the system" that when she saw it so easily hacked it caused all those fears that she had been suppressing to come forward in a wave.  The words “technophobe” and “conspiracy theorist” were right on her tongue because she probably used them a hundred times herself.  Now she realizes what a patsy she has been for giving over all her trust so easily.  Now she realizes that she is the fool and those who she mocked were right the whole time.  This kind of rude awakening can leave very strong emotional scars.  She will not just be "better" tomorrow.  The tears will have dried up but she will be a changed person.  Once bitten twice shy.

This is the same type of collapse into the Kubler-Ross grief cycle that I expect we will see some day here in the US once people finally figure out that we have been running a multi-decade debt Ponzi.  Of course, that will only happen when people who have been lulled into being sleepy followers get some rude awakening like the voting lady got.  The main reactions will be denial and then anger.  People will figure out that there isn't even close to being enough wealth in the system to pay out all the whacky vote-buying promises made by all the presidents since Ike was in office. This is the same reason why Athens is burning today.  This is the kind of upset that gets con men hanged in the streets by angry mobs.

John Mauldin on the Cancer of Debts and Deficits

Mauldin's latest email is entitled, "The Cancer of Debts and Deficits".  He writes:

“We are coming to the point in the United States when even the US government will no longer be able to borrow at very low long-term rates. That point is a few years off, and we have time to change paths; but as I have shown in previous letters, the longer we wait to get the deficit under control, the fewer choices we have and the more painful they are.”

Mauldin is finally understanding the severity of the economic problems we face but he still has not come to full grips with reality.  The main two things I contest from his opening statements are:

1. that point is a few years off
2. we have time to change paths

The truth is that nobody knows how far off that date is but history shows that the collapse will seemingly come from the clear blue sky.  In other words, an exponential decay will transpire just like it did with GM and just like with AIG, both of which were microcosms of the global debt Ponzi.

But where John is really out of touch with reality is that he thinks there is time to change paths if we just start doing the “right thing” right now, whatever that right thing might be.  Unfortunately, a lot of people are similarly confused.  They mistake the fact that things have not collapsed here in the states like they currently are in several parts of Euroland with the hope that we can avoid a similar fate.  It shows a fundamental lack of mathematical and logical analysis.  It’s the kind of things that scared people say when they have not had time to think things through.  It is a herding reaction.

So let’s analyze why Athens is in flames and why several other Euro-countries are near collapse as well and why Germany and France are beginning to show cracks.  The fact is this: people are figuring out that they have been lied to.  They are figuring out that there is not enough real wealth in the system to fulfill all of the Ponzi Promises that have been made.  When people get screwed out of what they feel is rightfully theirs, they get angry and they strike back.  Period.

In truth, the main driver of unrest is the mass awakening to the fact that austerity of some form or fashion cannot be avoided.  As the saying goes, you really can't fool all of the people all of the time and during the end game you can't fool anyone ever.  If we “change paths”, it means self imposed austerity.  Austerity is all about doing less with less.  Of course, the big boys will fight to keep what they have and economic $hit will roll downhill.  This leads to many of the patsies getting screwed, often the young, the old and the otherwise weak.  Taking all emotion out of the equation, it is a weakness to be critically dependent on anyone but yourself for your basic living needs and thus anyone who is dependent on the corrupt and fraudulent system will feel the effects of austerity. 

As soon as someone “changes paths” (i.e. opts for austerity), the diminished free stuff stirs up violent protests from captured souls who foolishly allowed themselves to become dependent just like it is doing overseas to many people right now.  This is why we cannot just “change paths” so simply as some would like to suggest.  The very act of cutting back on deficit spending will bring on the carnage.  It is no different than getting someone addicted on hard drugs and then cutting off the cheap supply to them.  Some of the druggies will just die, other will lash out: lie, steal, kill, whatever.  Their immediate wants and needs become their only concern.

The only other alternative is to try to maintain the status quo via spending supported by the acquisition of debt and via money printing.  This also leads to chaos eventually because it is keeping the Ponzi running, keeping the con men in power long past the point where it should all have been restructured and social power redistributed to those who are productive economic contributors.  While this “can kicking” exercise is happening, young people are out of work and prices begin to rise for food and energy which hurts anyone living on fixed incomes.  Retirees cannot invest their savings in “safe” investments like government bonds because they pay no yield. Besides that, there is a growing question as to the actual safety of these debt notes.  At some point we will be unable to acquire more cheap debt and then money printing will go into high gear.  Not because the con men want to do that but rather because they see no other choice whereby they get to remain in charge instead of getting killed in the streets by angry mobs.

As for people who think that cutting back on government spending is a panacea, it is not.  Federal, state and local government DEFICIT spending is 18% of our economy.  If we were to balance the budget it would cause a greater depression.  The US economy is not superman.  It cannot withstand an 18% collapse without social and political repercussions.  Unemployment would have to skyrocket if government stopped deficit spending and our GDP would plummet.  If the world saw this happening it would recognize that the end is near for the United States of Money Scam and foreigners would stop lending us money at zero percent interest.  That would lead to skyrocketing interest rates, perhaps as bad or worse than what happened during the Volcker years: 13-17%!! 

The U.S. now has $15 trillion in national debt and it is heavily weighted toward short term maturity treasuries.  In other words, our creditors are all crowded around the door looking for the signal that they should get out.  Given that so much of our debt is in near term treasuries, we will some day face a rollover crisis just like Greece.  Debt that we are currently paying very little interest on will get rolled over into treasuries that bear very high interest.  Thus, even though we might have balanced the old budget, the NEW budget which is based on much higher interest expense will eventually overwhelm government’s ability to collect taxes.

So you see, there is no “right course” to avoid the eventual collapse and government knows it which is why any cuts by either democrats or republicans are for show only.  They cannot cut anything and in fact they have to keep increasing the amounts borrowed or the debt fueled Ponzi will collapse.  In fact, this analysis makes perfect sense.  The U.S is now at a debt to (puffed up) GDP of 100%.  This is just as if you personally racked up a year’s worth of debt on credit cards just to pay for your daily living expenses just because interest rates were low and you were careless about living beyond your true means.  If you got yourself into that pickle, how would you eventually get out of it?  What “right path” do you think would exist for you?  There is no right path for indebtedness to the point of bankruptcy – not for you and not for governments.  Anyone who doesn’t understand this is doing themselves a serious disservice by not paying attention.

The individual defense against the eventual and inevitable collapse of the global debt Ponzi is clear and simple: keep your long term savings in a universally recognized store of wealth that is outside of the corrupt debt Ponzi. There is only one intelligent candidate for this: gold (OK and silver too).  Keep your wealth away from fiat currency and fractional reserve banking and any form of paper asset.  When the unavoidable problems overwhelm the con men you will have many options available to you because in a time of crisis, he who has the gold can make his own rules.  Too bad if you don't like it or if you find yourself unprepared because it has always been thus.  The writing is on the wall in big letters.  If you have viable financial means when others have been wiped out then you can stay in the US, you can go elsewhere, you can do what you need to do in order to secure for yourself life, liberty and the pursuit of happiness.  But if you are totally invested in the con of paper based wealth and if it is fiat currency and government con men that you have placed all your faith in then good luck to you.

Bernanke knows the housing market is still plummeting.

At the start of the economic crisis, Greenspan famously noted that there was no bottom until housing prices stabilized.  Greenspan's best pupil, Bernanke, is now telling us loud and clear that he heard Greenspan clearly but that all of his emergency efforts to stop the fall of housing prices have failed.  Of course, Bernanke will never tell the truth about anything because that would be contrary to the code of the con men.  Bernanke must verbalize his thoughts in "Fed Speak" which Greenspan defined as "a language of purposeful obfuscation".  In other words, con-man speak.

Today, after years of keeping interest rates near zero percent with no positive effect on housing prices, Bernanke is telling us that we must do more to prop up housing prices.  Thinking people will have to ask, why?  After all, by now all the speculators and flippers are pretty much wiped out and the majority of people who own homes own them as shelter, not as an investment.  Who in their right mind wants their housing value to increase just so the corrupt state governments can tax them annually on some arbitrary paper valuation?  If your house is your savings plan then you are a blithering idiot because government is taxing you on that plan far more quickly than it is increasing in value.  And with the shape that banks are in, don't expect valuations to climb anytime soon.

And so we get to the heart of the matter.  Propping up your housing value, including recent pledges to keep interest rates at rock bottom through 2014, isn't about you at all.  To imply that it is about you is just part of the con.  In truth, it's all about the dying banks.  They own your house, not you.  They hold the deed, not you.  Their ability to lend is directly affected by the value of their assets which includes your house.  As your house falls in value, banks increasingly hunker down trying to weather the storm instead of expanding their lending.  Why lend more money on assets that keep falling in value?  It's a situation that has, in the past, led to death spirals for banks.  Greenspan knew this which is why he knew that economic problems would continue until housing stabilized.  Bernanke knows it too. 

What neither of them will tell you is that propped up housing prices is a con game perpetrated by the scammers of fiat currency and fractional reserve lending.  If people had to pay cash for homes then they would cost 50% or maybe even 30% of today's prices.  Why?  Because buyers set the prices in the market, not sellers.  In an an economy infected by fiat currency and fractional reserve banking, people cannot afford to buy houses without becoming multi-decade debt slaves.  All that loose money running around out there drives up the price of everything.  Alternatively, if credit was not so readily available, people would save for 5 or 10 years and then buy something smaller outright.  Then, having no house payment, they would save up more money and then trade up.  We would all still end up with nice houses within a reasonable time period but this honest way of doing things cuts banks and elitist moneymen out of the something-for-nothing alchemy profit loop.  These are the people Bernanke is really trying to protect.  Anything that happens either for or to the common man on the street is just a consequence of supporting the money elite.

This will never change as long as we have a corrupt system that allows fiat currency and fractional reserve banking.  We need to end the Fed, return to honest, commodity money, and get real change in US politics.  That is not going to happen as long as Obama, Romney, Gingrich, Santorum or any of the other choices of the money elite are in charge.  We already saw that campaign promises mean zilch from these a$$holes.  They are all corrupt in their own special ways.  Only Ron Paul stands out as a man to be trusted and as a man with a multi decade record of true statemanship and public service.  The rest of them just want to cash in on the pain of the people.

So much for fabled Chinese prosperity.

If you read Mish's latest post on the subject, it's pretty clear that the illusion of Chinese prosperity is in no small measure based on unpayable debt, just like here in the US.  It seems that everyone has learned from the U.S. that in a fraudulent money system, the biggest con man is the biggest winner.  Until it all collapses of course and then the con men running the show are dragged into the streets and hanged like in Libya, etc.  When Chinese money printing eventually causes rapid price increases for food and energy for the Chinese people, there will be riots and civil unrest of all kinds.  It’s something they can delay but can never escape.  Once everyone is in on the con, the crooks outnumber the patsies and there is nobody left to fleece.  That is how the con falls apart.

Don’t be surprised if gold continues to show strength when priced in every global currency because a significant number of people in every country now understand that fiat currency is a scam. Some of them already know the answer – just store your long term wealth outside of the corrupt money system.  Of course, gold is still reasonably priced (based on many factors including global debt) because in most cases people know there is a problem but they just don’t know what to do about it.  In many cases people don’t want to think about it.  They are afraid of the unknown.  This is herding behavior 101.  Instead of just doing a simple analysis they would rather just freeze and hope that the troubles pass them by.  As long as the threat doesn’t close in too quickly, they believe that they will have time to escape. 

What they don’t understand is that the smart ones in the herd are already slowly ambling their way toward the door, trying to look nonchalant.  This is why gold has gone up a good deal in terms of fraudulent fiat currency but it has not yet gone hyperbolic.  Why nonchalant?  Because they don’t want to fight for the exit with the masses.  They want to be well positioned to just step through the portal when the herd finally gets animated about the situation.  They want to buy their fill of gold over time on a cost averaged basis.  They want to scoop up as much as they can while the price is still too low.  The global gold market is quite small when compared to things like the sovereign debt market.  If all of the money that is currently stored in "safe" (HA HA!) sovereign debt was somehow moved at its current valuation into gold, the price of gold would skyrocket 10x from its current price.

Gold will someday get ridiculously overpriced.  That is a given.  In other words, the cost of goods will have fallen relative to the buying power of the money.  This happens all the time because of the boom and bust cycle of fractional reserve banking.  Ridiculous lending leads to ridiculous overproduction which leads to unsustainably low prices as the producers fight tooth and nail for very few customers.

At some point the prices of non-monetary assets fall so low that you have to be stupid not to scoop them up.  In this case, holding long term wealth in other assets besides money (by which I mean gold) will simply be a better strategy for wealth preservation.  For example, when rental property becomes dirt cheap or when the stocks of companies with strong balance sheets with price/book of 0.5 begin paying 5-7% dividends with 20% or less payout ratios then it will be time for those with wealth (the last men standing) to buy these assets up cheaply.  These will be the tycoons of tomorrow.

As I have indicated in prior posts, one huge trigger that will likely get the herd really interested in gold will be when corporations, fearing the government printing presses, begin to seek safety in physical gold which they will begin listing as assets on their corporate balance sheets.  Nobody but nobody in the financial media is talking about this today.  The only corporations which have even breathed a word of this strategy are mining companies and even among them there is still no real push in this direction.  But it will happen because it has to happen as the fraudulent fiat currency continues to die.  Those corporations which do not figure it out will die right along with the fraudulent currency.  

Bottom line: gold is still very cheap and gold cannot be a bubble until everyone and their dog, especially the corporate dogs, are heavily invested in it.  That is certainly not the case as of February 2012 and thus it continues to make perfect sense to pursue a long term strategy of dollar cost averaging into gold as a means of long term savings.

What would I do at this point if I were one of the con men running the show?

I'm looking around at the herd and nobody seems to be all that worried about what's going on in the economy or in politics.  Unless I knew better I would question if there was anything wrong at all.  But, like the termite inspector who knows that termites can eat the whole structure of the house while leaving only a thin veneer of paint, I know that the economic and moral structure of the US (and of the world by extension) is fatally flawed.  We have given in to con men and liars to run the show and things run by these kind of people never end well.   It might look OK for quite some time but at the end of the day, the Madoffian reveal will slap everyone in the face with the understanding that there is simply not enough real value in the system to pay out claims to everyone who has been promised value.  Unkeepable Ponzi Promises will default and the web of lies will collapse as a result.

I mean that in the broadest sense possible.  People expecting pensions will not receive what they were promised nor will those looking to cash in on Social Security or Medicare.  Annuity holders will eventually get stiffed by the insurance companies that sold them the dodgy paper.  Holders of GSE (Fannie and Freddie) as well as sovereign debt (bonds) as well as corporate bonds will take massive hair cuts and finally, holders of fiat currency will find that it loses massive amounts of buying power by the time they retire.

I do not think I am the only person who understands this and in fact the government is fully aware.  Their solution to all problems is to simply continue acquiring debt until that no longer works and then they will resort to the printing presses in a way that people are not mentally ready to understand.  In the mean time, government is removing our rights and giving the police state dictatorial powers that it will eventually need in order to put down riots and social unrest that must occur once the sleepy populace figures out that it has been conned.  Of course, government knows it is running a confidence game and that confidence is the only thing that keeps government in power.  Once the confidence runs out, you end up with Egypt or Syria or Libya, etc.  The con men are eventually hunted down and killed in the streets.  Because of this historical reality, the con men are Hell bent on keeping the con going as long as they possibly can.

In order to understand all of this, you have to put yourself in their shoes and wonder what you would do if you were a con man during times like these when the con was coming apart at the seams on a global basis.  The middle east is a shambles with constant talk of war, the Eurozone is ready to fly apart as the PIIGS and the ranchers (Germany and France) finally agree to be honest with each other, China is a massive real estate bubble and its economy is slowing rapidly and Japan is a bug in search of a windshield from both an economic and demographic point of view.

Since they are con men, the only thing they know is the con.  So if you were one of the con men, your only tool to keep the debt Ponzi running would be to continue to create false illusions of prosperity.  You would prop up the stock market (or likely have your banking minions do it with you quietly guaranteeing them another bail out if the gambit fails) and you would game any numbers that people are foolish enough to look to you for.  As for the stock market, the fact that it continues to show strength in light of the uncertainty (or rather the certainty of a negative European outcome IMO) leads me to wonder what is going on.  The stock market generally abhors uncertainty.  So where is this strength coming from?  At some point I believe it will be revealed that is was the government propping it up from behind the scenes.  Government knows that if the stock market tumbles then it is a very public indicator of ill health.  It leads people to get angry and it stirs up civil unrest.  And so, if I were a con man running the show I would seek to prop the stock market up by any means available, legal or not, moral or not.

In addition, I would control the flow of data and pay my academian PhDs to massage the message so that it doesn't look negative and, whenever possible, to spin it positively.  One key number that I would focus on would be the unemployment numbers.  If those are looking bad then even people with jobs will cut their spending in anticipation of not having a job.  But if everyone looks to be doing well then perhaps they will buy that house and that car or take that vacation.  Heck, maybe they will even assume more debt in order to do these things!  True to these expectations, government has been gaming the unemployment numbers.  As Mish explains, government simply excludes from the numbers anyone whose unemployment benefits have run out.  They simply don't count anymore and can thus be ignored by the official numbers put out by the spin doctors and the ministry of propaganda.  What a joke!  The real unemployment number is north of 11% and it would be a lot higher but government is pumping billions of debt-dollars into the economy via food stamps and other "safety nets" gone wild.

Still, you can't fool all the people all the time.  Have a look at the truly wondrous plunge in gasoline consumption!  Energy is a labor multiplier folks.   When energy consumption collapses like this it is not a good sign for the economy.  As output falls, revenues will follow leaving it more difficult for the government to borrow money in order to bail out the problem hot spots of the country that threaten to expose the scam.  By the way, the main way that a con is exposed is when promises made by the con men cannot be kept.  That's why government has been allowing banks to operate under "adjusted" accounting rules for several years now under an official policy of regulatory forbearance (i.e. ignoring the rules whenever it is convenient or required lest the system collapse). 

But the hits to the establishment just keep on coming and they will not stop until it becomes painfully obvious that government cannot plug all the leaks in the dam.  The latest one is the American Airlines bankruptcy.  American Air could not be profitable given that all their major competitors already went bankrupt, thus wiping out their debt, but remain in operation.  It used to be that if you could outlast the other guy that there would be a pile of money waiting for you in the form of increased prices once competition was gone.  But government does not allow the weak to die and so the strong cannot thrive.  Sooner or later the strong fall too and that was what happened with the recent AMR bankruptcy.  This is what happens when people accept the intervention of the government into the economy.

So why should you care about AMR's bankruptcy?  Well, there is this ridiculous thing called the Pension Benefit Guarantee Corporation which calls itself "A US Government Agency".  PBGC is supposed to be an insurance company for pensioners.  Don't ask me why or how this function ever got to be a government agency but it's is pretty clearly unconstitutional.  It should either be part of the private economy or not exist at all.  In any case, major corporations are supposed to pay premiums on this insurance plan (sort of like banks and the FDIC) and if the corporation goes BK then the PBGC is supposed to make sure the pensions get paid.  Unfortunately, like anything else in government, PBGC is nothing more than a scam - a front for the con game.  Just like the FDIC, it has never charged high enough premiums to cover all the coming claims and so it will eventually either:

1. Make rulings that change the rules which enable it to avoid payment (a form of default)
2. Default outright
3. Get a bail out from the taxpayer

None of these options are good.  If it goes route 1 then people will lose confidence in the promises.  Without the government backing of pensions, employees will demand that companies make larger contributions to the under-funded plans.  Once these real costs have to be paid, a lot of major companies might have to throw in the towel because they could only appear to be profitable by not meeting their pension obligations.  If it goes route 2 then people will wonder what real power and backing can be expected from any "government agency".  Such an event will damage the credibility of the con.  And item 3 is going to be difficult to explain why some people just get thrown out on the street when their job goes away while other "special" people get made whole in their retirement promises by the body of taxpayers.  Such things can lead to riots and even revolts because they are so grossly unfair.

The case of AMR pensions and the PBGC is significant to the con.  It has the power to expose more of the con as being a con.  It has the power to wake thousands and thousands of sleepy, unaware people to what is really going on.