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California is doomed for two simple but profound reasons: the cost structure is too high for most businesses to survive, and a boom-dependent economy. The dysfunctions crippling California would easily fill a volume: a dysfunctional Legislature that has been gerrymandered to protect virtually every seat; a dysfunctional proposition system which enables special interests to craft Protected Fiefdoms [...]

The Keynesians, though well-meaning, suffer from a psychotic disconnect between their “project” of reinflating private borrowing and consumption and financial reality. This week’s theme will be familiar to anyone who has seen the original Star Wars films in which Luke, Leia or Hans Solo utter the ominous words “I’ve got a bad feeling about this…” just before a [...]

The euro as presently configured is doomed due to structural imbalances between mercantilist and consumer nations. A “euro1 and euro2″ system would allow a face-saving demise to euroland’s single currency. This week’s theme will be familiar to anyone who has seen the original Star Wars films in which Luke, Leia or Hans Solo utter the ominous words “I’ve [...]

Any of several critical factors could trigger the next phase shift decline in housing prices. One of the central ironies of the current “housing recovery” is that it is 100% “socialist,” that is, funded entirely by the Federal Reserve and the Federal Government. The Fed has purchased quite literally 99% of all the mortgage-backed securities issued in [...]

Student loans are a classic simulacrum of “helping the citizenry:” the real purpose is to support bloated bureaucracies and create highly profitable debt instruments. The time has come to end the student loan charade/scam/rip-off. Cloaked in the language of “helping the citizenry get a higher education,” the entire student loan system is instead a classic simulacrum: behind [...]

Charles Hugh Smith wrote a new blog post: Losing the Red Queen’s Race

The Red Queen’s Race is an apt analogy for the meltdown in assets and debt now swamping the global economy.
The Red Queen’s race refers to running very fast to stay in the [...]

  3 weeks, 3 days ago · View

Charles Hugh Smith wrote a new blog post: Why We Keep Getting Poorer: High-Cost Housing

The reason why we’re poorer: more of our income goes to housing than it did 35 years ago. Simply put: housing costs have far outpaced household incomes over the past 35 years, making the high cost of housing the primary driver of declining discretionary [...]

  1 month, 1 week ago · View

Charles Hugh Smith wrote a new blog post: Is Buying a House in 2010 a Good Idea?

Readers regularly ask me to weigh in on the question “should I buy a house now or not?” Here are a few key considerations. Has the housing market bottomed? Is now a good time to buy a house if you’ve been waiting patiently for [...]

  1 month, 2 weeks ago · View

Charles Hugh Smith wrote a new blog post: Low Interest Rates and Easy Credit Are Catastrophes for Any Economy

The Federal Reserve insists that super-low interest rates and loose lending are the keys to renewed growth. Their analysis is fatally flawed; those are catastrophically destructive policies in any economy. One of the key analytic tools in the Survival+ critique is very simple [...]

  1 month, 3 weeks ago · View

Charles Hugh Smith wrote a new blog post: China and the U.S.: Dysfunctional Real Estate Bubble Twins

China and the U.S. share two central traits: a financial-command-economy and an addiction to cheap, easy money to prop up bubbles that serve the status quo.Despite the many obvious differences between the Chinese and American systems of governance and “capitalism,” there are [...]

  1 month, 3 weeks ago · View

Charles Hugh Smith wrote a new blog post: Keynesian Disease

The “solution” to our Great Recession, we are told endlessly, is Keynesian stimulus. It’s not working, as we have the “Keynesian Disease.” In an imperfect yet weirdly powerful analogy, I suddenly realized the Keynesian “cure”–constantly flooding the economy with stimulus–is exactly like blood sugar and [...]

  2 months ago · View