The Accident

No one in his or her right mind wants to cause an accident.  Here we are talking about the risk of setting off a economic accident, a depression.   The current face-off between the Republicans and Democrats is a high stakes fight by the Republicans to stay relevant and continue to exist.  They have to win one of the two current battles if they are going to remain players. 

As you know from our past comments, the combination of Rove-Bush-Iraq-Greenspan-Bernanke set the stage for a decline of the Republican party as their combined actions appalled the public sense.  It increased our national debt numbers and with the FED created various bubbles to try and make everything work out. 

The crash of 2008 was  the first consequence, the election of President Obama was the second consequence.  In the short run the carryover of Bernanke sustained the illusion that the economic consequence was turned around(Bernanke reached into the trick bag and pulled out his old dissertation “Helicopter Money”, added the  trickle down theory from the Reagan administration, and implemented an asset inflation bubble program that grew and grew as it became obvious that the real goal of creating jobs was not working.

So here we are: 2013 and the Repblicans are still looking for a way to get back into the game.  The approach we are watching, sequestor, government shutdown, and no increase of debt limits is there response to what they started in 2002.  They feel they have seen the light and this is there last chance, create a smaller government.

This is where the accident comes into play.  The only thing that has held the Republican game together is Bernanke’s bubble machine, but guess what?  The Republicans do not get that basic fact.  Bernanke actually admitted such with his refusal to start the taper because of the coming Republican assault on the economy.  So while Democrats sit and watch the Republicans implode we are likely going to see the accident trigger, the implosion of the Bernanke asset bubble.  Ironically we will not need the FED to keep interest rates low, investors will do that automatically by rejecting assets.