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Monday, July 06, 2009

Bill Bonner echoes Charles Dickens

[T]hank God for Arnold Schwarzenegger. What an entertainer! He had it all. Money. A good wife from a bad family. A nice hairdo. And what did he do? He gave up a promising career in the motion picture business to launch himself into the slimy world of politics.

And now the poor man is groveling. Begging. Imploring the banks to take his state’s IOUs. He says they are “rock solid.” California is the world’s 6th largest economy. But it was a world-beater when it came to debt-based bubble illusions. And now its economy is falling apart. Economists can lie about the inflation rate. They can fudge the GDP. They can torture the unemployment numbers. But when the revenues come in, all they can do is count them up. And revenues are falling. Especially tax revenues.

The feds and the states are losing income. When businesses lose revenue they cut back expenses. But governments – at least those that are modern popular democracies – find that they need to increase spending. They have more people asking for help. And they have programs that become automatically more expensive – such as unemployment benefits – when the economy softens.

Let’s see. Expenses down, income up = happiness.

Expenses up, income down = misery.

See how simple it is?
-- from "When Zombies Attack" by Bill Bonner

Annual income twenty pounds, annual expenditure nineteen nineteen and six, result happiness. Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery.
-- Charles Dickens' character Mr. Micawber in "David Copperfield"

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