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.