"You can fool some of the people all of the time, and all of the people some of the time, but you can not fool all of the people all of the time."
- Abraham Lincoln

Wall Street has a problem.

You see Wall Street functions much like Las Vegas. Their immense wealth depends on the continuing myth that their games aren't rigged, and the willful denial of reality by the suckers.
Just like Vegas, no one wants to talk about the money they lost playing the stock market. Instead, all you here about is how everyone is getting rich at the blackjack table. If you aren't getting obscenely wealthy betting on interest rate spreads then there must be something wrong with you.

In reality, the reason why you lost money is because the game is rigged. The House always wins in the end. The suckers are the ones who think there are rules. Like Wall Street, Vegas exists to separate you from your money.

Wall Street may seem all powerful, but like Vegas it has an Achilles Heel - if the people don't feed the beast it will starve.
If the greed of The House gets to extreme, and the rigging of the games becomes too obvious to ignore, people will stop gambling at the casinos and in the stock market. The House goes broke.

That tipping point, where the willful denial of Main Street starts to break down because the game rigging is so blatant, may have finally been reached.

It's that time of the year again.
No, not Christmas. It's the time of the year when the state of California starts paying its bills in IOU's.

California lawmakers passed a bill to let recipients use state IOUs to pay fees and taxes owed to the government in Sacramento, if the warrants are issued.
The bill, from Assemblyman Joel Anderson, a San Diego Republican, passed the Senate unanimously. It requires all state agencies to accept registered warrants issued to pay for goods and services. The Assembly unanimously approved the measure in September.

The state could start handing out these IOU's as soon as two weeks from today.

One thing you can count on is that blame and suggestions on how to fix the budget mess will start flying fast and furious. Some ideas will be crazy. Some reasonable, but long on image and short on impact. Many good ideas will never be considered.
What is also sure to happen is you will see a blizzard of numbers. Some will be created out of thin air. Most will be half-truths. Almost none of them will give you an honest perspective on what the actual problems are.

That's why I am presenting this essay, so that you can make a rational judgment for yourself.

A relatively obscure case in Norway shows just how different the United States is from the rest of the industrialized world.
The Oslo Stock Exchange was halted by unusual trade action. It seems two Norwegians were trying to manipulate stock prices.

We believe the two are behind a number of cases of price manipulation. They have set purchase and sales orders that have not been real, because they have had another motive, namely to move prices, "said Stenberg.

In other words, they did exactly what every single bank on Wall Street does every single day. In New York it is called High Frequency Trading. In Oslo it is called getting six years of jail time for breaking the law.

So who is right? Is Norway some Socialist Hell for not allowing the free market to work, allowing faster traders to skim profits from slower traders? Or are laws in the United States too lax, allowing people to take money from the system without adding any value, thus destabilizing the economy?

To answer that we need to look at a couple more examples.

Perhaps the worst insult you can hurl at a politician these days is to give him the middle name of "Hoover".
Such as George Hoover Bush and Barack Hoover Obama. 80 years later Herbert Hoover is still the standard for the "do-nothing" president in the face of economic collapse.

Like most easy comparisons, these examples lack details. That's because the names are there for the purpose of accusation, rather than enlightenment.
However, if you dig down into the individual economic policies of Hoover, Bush, and Obama, the story gets much more interesting.

As Mark Twain once said, "History doesn't repeat itself, but it does rhyme." I'm not going to try and find direct connections in this essay, just broad picture comparisons. If the reader confuses the two, then that will only mean I was justified in writing this.

Three years ago this past Saturday the economic crisis struck.

That's why the comments by Alan Greenspan on the very same day on Meet the Press are worth noting.

"There is no doubt that the federal funds rate can be fixed at what the Fed wants it to be but which the government has no control over is long-term interest rates and long-term interest rates are what make the economy move. And if this budget problem eventually merges to the point where it begins to become very toxic, it will be reflected in rising long-term interest rates, rising mortgage rates, lower housing. At the moment there is no sign of that because the financial system is broke and you can not have inflation if the financial system is not working."

There has been a lot of talk about a double-dip recession recently by people like Paul Krugman and Nouriel Roubini, how to define it, and what it means. What is missing from these discussions is the most obvious question of all: why won't the economy recover?
Capitalism is supposed to be self-correcting - or so we've been told - and a recession like the one we've had is supposed to be that reset button. So why aren't businesses hiring?
I'm going to try to answer that question in the simplest way possible.

There are two primary reasons why the economy isn't recovering, one reason is cyclical, the other is secular.

The most heated debate in Washington these days involves deficits and unemployment. There are lots of heated rhetoric, finger-pointing, and hyperbole.
What there isn't is a surplus of actual facts.

For instance, this headline reads "U.S. should cut deficit to spur recovery, IMF says". It implies that cutting the deficit would automatically increase economic growth.
That sounds good to me. The problem is that the IMF never actually says that. In fact, the article spends most of its time warning about a drop in economic growth.

The headline was misleading, as is just about everything said in this debate.

The whispers on Wall Street lately have been the feared "double-dip".
There is a much louder chorus of people proclaiming that we are only looking at a "slow-down". Of course they were the same people who were telling us as recently as April that we were in a "V-shaped" recovery.

Generally speaking, Liz Ann Sonders agrees.
"I'm amazed people still say it's not a 'V'-shaped recovery, which to means they're simply not looking at the charts," says Charles Schwab's chief investment strategist...

Ah, yes. The charts. I have several issues with people who say things like this.