"Starve the Beast"

The Market Ticker ^ | Jun 30 2009 | Karl Denningger

[jacquej]

Perhaps its time.

There have been a number of people on the forum talking about this, with one of the most recent converts being "iflyjetzzz".

Look, we can rant and rave about market manipulation and government-sponsored games. We can petition the SEC, the FBI and Congress. We can demand that they stop it all we want.

But they haven't and likely won't until and unless America gets pissed off enough to force them to act.

So how do we make that happen, yet remain within the law?

Its not that hard, and in the intermediate and longer-term it would be incredibly positive for our economy and nation.

We go on a consumption strike until and unless our demands are met.

What are our demands? Here's the list:

All the financial fraudsters are investigated, indicted, and prosecuted. This includes the con artists in CONgress who got "special deals" from Mozilo and his "Friends of Angelo" program (and who are blocking a subpoena to BofA as it would implicate them), it includes those past and current members of Government Sachs, and it includes all those other financial "professionals" who deceived Americans and others with their sale of toxic exploding mortgage products along with the securities supposedly backed by them.

Glass-Steagall is restored, in full, and all the firms that can't exist under it are broken up. Period.

The insider-trading that has become blatant and outrageous is prosecuted where illegal and where not, is made illegal and then prosecuted, with the focus being on the size of the scam. This includes obvious circumstances such as August 2007 (Bernanke's phone logs were FOIA'd) where trading patterns made clear that "certain someones" had foreknowledge of the discount rate cut along with Congresspeople who were briefed on the TARP and within hours or days made significant stock trades.

Today if you're Martha Stewart you're prosecuted where if you make millions in an hour by exploiting government information "leaks" the SEC and FBI look the other way.

The Government withdraws all of its backstopping of financial firms who created this mess. All of it. If you're a bank or other firm and did something imprudent, you fail. Period. This is true whether you're a small regional bank (as is happening now; 5 in the last week) or a big behemoth like Citibank or Bank Of America.

No "special deals", no "special guarantees", nothing of the kind. If the government wishes to avoid "systemic risk" then the government regulators can do their damn job.

The Fed disgorges all of its improperly-acquired MBS and other related securities. If it doesn't have a full-faith-and-credit guarantee and was bought, it is disgorged - period.

The Fed agrees to full annual audits without exception.

Those people inside government who conspired with certain bankers to cook the books, along with those in the banks who did so, go to jail.

Our own Office of The Inspector General in the government has confirmed that there was an active conspiracy to break the law within the OTS, but not one indictment has been issued.

Those who committed fraud in the creation of this economic mess, whether they be mortgage lenders, those who packaged up securities while intentionally omitting credit information, those in the real estate industry to pressed for appraisal fraud and others are investigated, prosecuted and if convicted jailed. All of them.

Losses are born by those who made bad decisions, not the taxpayer generally. Those who made good decisions get to reap the benefits, while those who made bad decisions eat the losses. No exceptions.

Government cuts the annual budget deficit to zero. If government wants to blow the money it has to have the money. If they can't raise the money they don't spend it. It is time to live within our means and hold government to account for its profligate spending along with promises of "benefits" they know they cannot actually deliver down the road such as Medicare Part D.

Until then the position of those who wish to join is simple: No non-essential purchases of anything are made. Period.

What's an essential purchase? Here's the list:

Enough food to eat at home. No more eating out. Rent and utilities. Essential medical services. Enough fuel to get to and from work. In addition any "excess withholding" is stopped; if you are getting a big fat refund from the IRS every year you are loaning the government your money at zero interest until April. Stop that; its stupid. Change your W4 so you get exactly nothing back or owe a tiny amount; if you pay estimates pay only that which you must and not one dime more.

Note that it is unlawful to use your W4 to intentionally under-withhold, but you are in fact not obligated to pay one more dime in tax than you actually owe. There is nothing wrong with adjusting withholding to match (as close as you reasonably can) your actual tax obligation.

Put the money you save (it will be a lot!) into a non-TARP Credit Union if you have one available to you, or a non-TARP local bank if you do not. Spend none of it.

If we pledge to do this and not resume normal spending habits on wants as opposed to needs until and unless the budget is balanced, the bailouts are rolled back and those who committed fraud go to prison the government will be forced to act as they will simply run out of money.

They cannot force you to buy that new iPOD or flatscreen TV, or to take an expensive vacation.

Consumer spending is 70% of the economy.

This is a consumer weapon that is more powerful than any other means of peaceful protest. Strangling the government and private business' ability to steal from us all by cutting off their revenue will force reform, and has the additional benefit of being exactly what this nation needs to provide a strong capital formation base when that reform is complete.

If businesses want my money they can join in the chorus of voices demanding that government stop the looting and start prosecuting.

Will any of us be perfect in this endeavor? No. There will be the occasional indulgence I'm sure no matter who we are. But I'm willing to bet we can shrink consumption - each and every one of us - by at least 10% without any real personal pain at all, and if we do so it will send an indelible message to those in government and business: cut that crap out!

July 4th is Independence Day.

Let's make it a day of freedom from the banksters and government financial marauders.

Who's with me?

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[jacquej]

I say we get help Karl Denninger get the ball rolling, and help stop all this nonsense!

[Graybeard58]

There is nothing wrong with adjusting withholding to match (as close as you reasonably can) your actual tax obligation.

Been doing that for many years. No point in "loaning" any of my money, interest free, to the government.

[Spktyr]

I’m already doing most of this....

... so I can buy more firearms, accessories, and ammo.

[mallardx]

If we band together and refuse to spend money on anything but necessities we could have this Administration on the ropes. Of course it would hit many businesses. But maybe Socialism needs to FAIL in epic proportions so we can get our Republic back. If we could wait on purchases until Congress and the White house changes parties, we would be “voting with our feet.” Seems more forceful than our Republicans in office can be. Not to trample on them while they’re down, but I think they are starting to listen to Grassroots Conservative ANGER.

[penelopesire]

We started going ‘Galt’ last November.

It’s not so bad, although I need a new car soon. It will not be an Obama or union car though.

[FromLori]

Related

http://market-ticker.org/archives/1173-And-Here-It-Is-On-CNBC-Manipulation.html

[majormaturity]

Most businesses are Mom & Pop size or 50 employees or less; if we stop spending, these people suffer; and even many of us are these people. Instead, why not boycott the purchase of products and services of those companies who support this administration AND those products that produce federal revenue. For companies, Jeffrey Imelt and GE come to mind - how about trying really hard to boycott GE? Don’t buy anything made by GE or its subsidiaries; refuse to fly on a jet powered by a GE engine (imagine the airlines when people start refusing flights on planes with GE engines?); refuse an MRI at a hospital that uses GE MRI machines or x-ray machines; stop buying GE light bulbs; stop financing through GE’s finance unit; etc. As to products, the gov’t charges an excise tax on new car tires - how about waiting as long as you safely can to buy tires, then buy used ones from the classifieds or Craig’s List (no excise tax on buying used tires). Reduce gas consumption as much as possible - less fuel tax to the feds. I think we need someone to get a website going to spread the word - we can boycott until you listen and change - if you haven’t heard us by the next election, you go home.

[jacquej]

If you go over to Karl’s forum, and read the comments, many of them are suggesting that we continue to support our local Mom and Pop businesses.

We are having a large family gathering this weekend, and will going to a locally owned restaurant to give them the support. We now shop at our local hardware store, instead of the box chains.

Most important, I think is to stop using the withholding tax as a “savings” account. Only have as much taken out of your pay as you will actually owe. Those of us who pay quarterly might ask our accountants how best to pay the minimum quarterly without running afoul of IRS rules.

I also like the idea of printing out sheets of paper, and encouraging all those we know to join in the “starvation program”.

[SuziQ]

“Don’t feed the monster” PING!

[OB1kNOb]

“Starve the Beast”.......I like it. It has a nice sound to it.

[SkyPilot]

It won't work.

A "Consumption" protest is ridiculous in an economy this size and a forum base this small.

If anyone launches something that would really work, like a National Tax Protest (which of course I don't advocate) their IP address could be demanded by the Secret Service from FR owner and they would be investigated and prosecuted.

[familyop]

Finally...realization. There are those who are trying to bleed every last dollar that they can get out of consumers for entertainment and the like. They feel that their worlds will end, if they must rely on doing real work for living. We can do it, and they’ll survive.

We are already doing it. A few more people with us will bring the needed defaults and only workable solution. Governments and government-dependent businesses are heading for defaults anyway. The longer it takes, the longer that we’ll have to put up with their despotism. Stop buying everything that you don’t really need for a few years. It will be difficult, but we need to shut their sources of revenue down.

Grow gardens. Store food. Learn to make useful things. Refuse to engage in phony, fixed politics. We’ll make it.

[Costumed Vigilante]

I've been in, am in, and will continue to remain in.

Additionally, I am burdening the Federal infrastructure and attempting to stress out as many Federal employees as possible. This is very personal.

Tyranny is implemented by individuals, and it is these individuals I make suffer, and will continue to do so. I want them to hate their jobs, and question their value as human beings. I want them to run screaming from their government job desks into the night, knowing that whatever horrors await them can't be as bad as those they left sitting in their "In" box.

Evil must have a cost, and I intend to extract it.

A verbis ad verbera

[sjmjax]

I’ve been in “Galt Mode” since November.

Funny timing. Just this afternoon I was wondering how a nationwide movement to “starve the beast” could be encouraged.

My thought was an email to your congressman and both senators stating what you expect them to do or undo. Until then you will make no unnecessary purchases - No new cars, furniture, kitchen appliances, home remodeling/purchase, landscaping, clothing, toys, computers, music, movies, recreational activities that require significant expense and so on. Whatever non-essential purchases that you control.

Business owners likewise could promise no new employees, equipment purchases or business construction.

I don’t think it would take a larger percentage of Americans participating to have a noticeable affect.

Yeah, as mentioned it’s going to hurt some people. But we’re going to get hurt much more so by the actions of Congress. Might as well take the medicine now while it might be effective.

[perchprism]

I like your approach. To the extent possible, we should tax the federal government.

[Publius6961]

Enough food to eat at home. No more eating out. Rent and utilities. Essential medical services. Enough fuel to get to and from work. In addition any "excess withholding" is stopped; if you are getting a big fat refund from the IRS every year you are loaning the government your money at zero interest until April. Stop that; its stupid. Change your W4 so you get exactly nothing back or owe a tiny amount; if you pay estimates pay only that which you must and not one dime more.

Talk about being way ahead of the curve...
After September of 2008, when my 401(k) principal lost 45% of its value overnight, those "recommendations" became not an option, but a necessity. What I need now is survivalist suggestions to go beyond that. My current major discretionary spending is books. Any other suggestions besides buying used, which I am already doing?

[muir_redwoods]

Another thing we could do would be to coordinate the mass cashing in of US Savings Bonds. It a small part of the debt but if we all acted on the same day, say, 9/11, it might send a message.

[FastCoyote]

[It’s not so bad, although I need a new car soon. It will not be an Obama or union car though.]

I have a 67 Camaro and a 57 Bel Air for that reason. They go up in value with time, the repairs aren’t that much worse than new cars if you do preventive maintenance, and you starve the Unions.

[MSSC6644]

Any other suggestions besides buying used, which I am already doing?

The library? You're already paying for it; might as well use it as much as possible.

[Oatka]

My thought was an email to your congressman and both senators stating what you expect them to do or undo. Until then you will make no unnecessary purchases

Direct your snail mail to the companies as to why you're not buying their product. The pols won't listen to you but perhaps, if the companies get enough of these letters, and get them is a steady stream every week/month, the pols might listen to them, since they are the big campaign contributors.