Economic Stockholm Syndrome

October 11, 2013

Without getting into a dissertation on Stockholm syndrome, it can be summed up as a psychological condition where hostages come to have feelings of empathy and/or sympathy towards their captors, sometimes to the point of defending them. This is also a common phenomenon in abuse situations as well. Why are we talking about this in an article about economics? Well, it is pretty obvious that America has a fulminant case of Stockholm syndrome when it comes to our own ‘captors’, many of whom we don’t even know. Their faces are hidden behind a mishmash of hyperbole, media glitz, and unadulterated effluvium.

Let me say first that the majority of the people who are reading this article probably don’t suffer from this condition. This isn’t a jab at those who do suffer, because most of them don’t even realize it. I’ve marveled along with many of you in email threads and phone calls over the past half dozen plus years about how America was transformed from a nation where hard work was rewarded, debt and sloth were stigmatized, and people honestly believed that if you worked hard and treated people right that you were going to be successful. And, for the most part, it was true. Of course, that was a long time ago. So how exactly did we get to this point? This article is going to hurt. I know it pains me to say the things you’re about to read, but I believe in my heart of hearts that every bit of it is true. It needs to be said. And more importantly it needs to be acted upon.

Political Dissonance and Sham Theater

On the eve of yet another race-to-the-finish debt ceiling blowout argument in Washington DC, it has become painfully evident that America in the aggregate has learned absolutely NOTHING from the past two years since we last danced this dance. I can remember back to the July/August 2011 time frame like it was yesterday. The markets were on pins and needles, and the entire world watched while our leaders behaved like a bunch of spoiled playground bullies on the world stage and resolved to solve nothing. They punted, created an idiotic ‘super’ congress and the idea of mandatory sequestration if a package of budget cuts couldn’t be identified.

Of course, after this, the debt ceiling situation pretty much dropped off the public’s radar and we went back to business as usual. Slowly but surely the markets regained their lost ground and the consumption binge resumed. Predictably (likely intentionally), the super congress was an abject failure and a joke and generated a raft of bylines in the media, and the sequester went into effect. And much like the current government shutdown situation, the contempt towards the American people was on full display. The cuts mandated by the sequester were aimed at hurting the American people rather than limiting the size of government.

I say this with tongue in cheek because, to be honest, any cuts that could be squeezed out of a government that has been on the biggest spending rampage in history were a minor victory.

So here we are, on the eve of yet another down to the wire fiasco. And what has changed? Some are calling for another super congress. Others are calling for more sequestration. Still others are calling for the shutdown to be permanent, which is hard to argue with at this point, given that the ‘solution’ will be nothing more than another farce.

We are at a point where the government has near zero credibility, not just in America, but also around the globe. We’ve just been slapped around by the Russians and the Chinese and kicked out of Syria before we even got our ‘kinetic military action’ off the ground. Remember that? Seems like forever ago, doesn’t it? China just told us to get our act together regarding our blossoming debt problem. Of course they know better; this is just part of the game. The point here is that America has gone from being perceived as the leader of the world, operating with morals and usually above reproach, to being little more than the proverbial redheaded stepchild or rented mule. The amazing thing is that two months ago, we had plenty of money for a war in Syria and now we can’t even keep the national parks open. Amazing how quickly things change. If that doesn’t tell you where your government’s priorities lie, then nothing will.

A Second Predatory Syndicate

Now, consider the predatory banking syndicate that has been allowed by governments like ours to run roughshod over the people of the world in unfettered fashion since 2008. Using stooges like Henry Paulson and Mario Draghi to do their bidding they’ve conned entire countries into ‘loan’ arrangements that can never be satisfied. Does anyone seriously think Greece will ever be able to pay back the IMF cabal with a youth unemployment rate of 55%? Does anyone even think America has any chance of paying even the $2 trillion in TBonds that the not-so-USFed holds just by themselves, let alone the rest of it? And yet there are still Stockholm sick individuals out there who insist on telling us that when governments borrow, the people of those nations become rich – by accounting definition.

Ask the Greeks how rich they are. Or ask the folks in Spain, Italy, Portugal, and Lithuania. We can now add Poland to that list. They just got a 50% ‘haircut’ (Newspeak for being ripped off) on their pension plans. Let me ask you a serious question, especially if you’re retired. What would you do if you woke up tomorrow morning and got a letter from your pension plan saying that from that day hence your benefits were cut in half? “Take it easy Andy, that can’t happen in America”. Oh really? It already has. We’ve taken a 97% scalping from the banking cabal as it approaches its one hundredth year in existence and other than one former Representative and one current Senator there hasn’t been nary a whimper about doing a thing to stop it.

Instead, after the thrashing in 2008, we found retrenching to be much too dreadful a pain to endure and ran right back to the fountain of never-ending credit. We throw stones at the government for failure to manage its finances when our own household balance sheets are so tilted the ink runs off the page before it can even dry. We’re upside down on our home loans, our car loans, our school loans, and our thinking. Our fiscal compass has been shattered under the weight of gross excess.

Many Americans have had their homes ripped out from under them, cars repossessed, and had to declare bankruptcy only to return, hat in hand, to the very same people who helped cajole us (along with our own irresponsibility) into committing financial suicide in the first place. Evidently once wasn’t enough.

Then in what has so far been the ultimate swipe in the history of the double-cross, our government passed what was called a ‘Financial Reform Bill’ that turned ownership of your bank account over to the bank to use at its discretion. You’re no longer a ‘depositor’, but an ‘unsecured creditor’. Unsecured. Think about that when you ponder the question about your pension payments that I posed earlier. Think hard. Think to the point of hurting yourself. This is not a jab either; I could not be more serious.

The Desensitization of America

Still, the American people, feverish with Stockholm syndrome on steroids, embrace these two syndicates, which are now both diametrically opposed to them and their best interests. One acts as an enforcement arm of the other. To make matters worse, there is not even an attempt to hide it anymore. It is right out there in the open for all to see. And what is even worse is that we’re becoming desensitized to it. We think this is the way it is supposed to be. We’re so numb with our own sense of entitlement that we are incapable of even conceptualizing the pain we’re inflicting on our own children and grandchildren because of our inaction and apathy. Like it or not, this is our legacy. How do those shackles feel, children of excess and plenty? It would be one thing if a foreign enemy came into this country and conquered us on the battlefield. That would be bad enough. However, that isn’t how it happened. It happened from within just as the Founders indicated it would if we became complacent. Those same Founders, by the way, are now referred to as ‘terrorists’ by both aforementioned syndicates. We’ve taken complacency to a new level and we’re now just beginning to reap what we’ve sown.

It is not even possible in the context of a single article, or even a month’s worth of articles, to condense into comprehensible form the manner and extent to which we have been sold out. As you can probably guess I am not just speaking in economic terms either, although that is the focus of this column. The issue of subjugation and the empathy and defense of the very establishments that have absconded with our national posterity spans almost every area of our existence.

The goal of all this is to frame these final days of the latest debt ceiling/fiscal cliff follies and charade in their proper context. The debates are not about responsibility, but about further predation. They’re not about building up, but about tearing down. They’re not about checks and balances, but rather are focused on the further concentration of wealth and power. Watch what goes on with this question in your mind: what will you tell your children and grandchildren when they ask you what you did to stop the train wreck that became their existence? If you can look them in the eye and tell them you did everything you could to stop that train wreck, then we tip our hats to you. If not, then depart from us in peace. We seek neither your counsel nor your arms. Crouch down and lick the hands which feed you. May your chains set lightly upon you and may posterity forget that you were our countrymen – paraphrased with compliments to Samuel Adams, a man who was clearly not under the influence of Stockholm syndrome.


Andrew W. Sutton, MBA Chief Market Strategist Sutton & Associates, LLC

Andy Sutton is the Chief Market Strategist for Sutton & Associates, LLC – a Registered Investment Adviser in Pennsylvania. His focuses are econometric modeling and risk management. The firm specializes in wealth preservation and growth and recognizes the validity of non-paper assets in achieving a balanced approach. The firm is also currently working with a growing clientele towards avoiding the risks outlined above.

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