Tony D -- Operation Phoenix

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Subject: Tony D

Author:
Allen Currie

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Date Posted: 08:36:13 04/10/12 Tue

Tony. Thanks for visiting, reading and especially the comment. I need all the feedback I can get. I will take your points in order but I am tempted to jump to the last.

There are several ways a bond auction could fail. I noticed a thing on MoneyNews.com that said that the Fed was now buying 61% of the treasury auction. Lets say that China, who has been dumping dollars as fast as possible, and in fact in the last two years has reduced its percentage reserve holdings of USD from 65% to 54% PLUS those two years of trade surplus which last year ran in the neighborhood of $280 Billion, decided that since the Fed was buying, that they would use this information to “stuff” a few of its own bonds back to the US. Now either through error or malice aforethought they over did it. (And they are definitely in the position that if they do so they will be hurt but less than pretty well anyone else. They can afford a few dollars casualty in this war)

At the exact time of the auction they dump an equal amount on the market, suddenly the Fed would be faced with buying 161% of the auction. Now that is pretty fanciful and I can’t see it happening, but it does demonstrate the possibility and how vulnerable the US is. The Fed can’t continue this buying indefinitely. In the final analysis any country has to either come up with either the goods to balance the trade deficit, or the foreign exchange to balance the trade deficit, or suffer its currency to be wildly devalued. Just as I, if you want credit for something you are buying from me, can demand to be paid in Canadian dollars or I won’t sell to you, China can demand to be paid in goods or Yuan/Renmimbi. Yeah, I won’t make the sale, but I also understand that the bond holdings of China have deteriorated since they were purchased by half a TRILLION dollars in purchasing power. Which loss do I want to take?

“you laced the book with sign of the gradual degradation” Actually if you look at the time frame of the book, only 30 days pass in its entirety. Moreover I only put in one type of degradation per illustration. I left out a few, notably roving bands of bandits and how heavily armed US citizens are. Once started, each type will continue on along side every new type. I expect MUCH more violence. (and corruption) Glad you liked the presidents speech. I was proud of that.

Thank you for the critique on the last part. I will have to think on that very carefully. I am sort of stuck because it is now published, but it is an easy thing to do when you are so close to something. As to the movie, I am struggling with that now. There is too much going on. Still you can show a dead body lying there in the background with everyone ignoring it as normal and that will say a lot about the deterioration.

Restoring order and return to “normalcy”. I think the government will turn out to be unbelievably heavy handed. They haven’t passed these laws into being without the intention of using them. These laws are so draconian that Hitler would have had wet dreams.

“Normalcy”. Worldwide I expect billions (Yes with a B) of deaths. Lets take a small thing, not mentioned in the novel. Take any largish city, say New York. Aside from the violence and starvation our Just In Time world will produce, you will have 10 million people trying to get out into a fairly crowded countryside whose people are also being forced to get out. What water will they drink? The polluted Hudson River? Will disease, typhoid, etc spread? They need water more than food.

Secondly, I was telling someone recently that I was accumulating nails and other fastening devices. “Why?”

Think about a steel mill. It is always large and needs a certain large volume to break even. In these conditions how many people will be buying nails? That mill is going to shut down. Lets say that demand comes back in 2 years. (I doubt it because of population decline, but lets say.)

The operators/owners of the mill come back with the view to reopening. The vandalism will be massive. Okay lets assume no vandalism. Do they have the infrastructure to get iron or scrap metal to melt? Is the power operating, or like in many parts of the world, have thieves shorted out the lines so they can steal the copper? And is the firebrick manufacturer up and running so they can get their furnaces going because two years of sitting and those bricks will be toast. Then how about the nickel mines or whatever so they can get the additives they need for the steel. If we don’t have steel, we don’t have a whole lot of other downstream things like cars and razor blades.

The whole society is built like that. One small malfunction and the whole plant waits, and produces nothing, until it is fixed. Meanwhile their customers wait as well. And THEIR customers.

Then there is the fact that we have shipped most of our manufacturing equipment to low cost countries. We don't HAVE the equipment to be self sufficient even if we wanted to.

Be well and good luck
Allen

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