Thanks as usual to “zero hedge,” a fascinating long-term perspective on government bonds, the best security for hard times. But the author observes:

The worst historical stress-test I could find shows that in extreme deflation, cash (read: $) can beat even the best credit. It doesn’t matter if cash is silver or goldfish or pancakes. Nanosecond maturity on the yield curve is king when the system is in complete meltdown.

Zhu Zhu pet hamsters are the “must have” toy for eager young consumers this season. CNBC is providing breathless coverage of Best Buy shopping. The failure to understand what makes an economy grow – in the sense of providing jobs, rather than just debt-fueled consumption – is unforgivable. I don’t blame CNBC much, after all they are just disseminating the official propaganda line, but I do blame the economists and legislators who are blinded by their dogmatic beliefs and self-interest.

Do they really think that people buying a toy hamster, brand named Zhu Zhu, is benefiting the U.S. economy? Does the elimination of any investment returns on savings, forcing savers to either consume or speculate, really lead to economic growth?  Of course not. It leads to disaster.

Over the Thanksgiving holiday, Dubai, the would-be playground of the rich and famous, announced that it was defaulting on its sovereign debts. Markets around the world fell in response to the perceived increase in risk, until of course the U.S. robot traders were turned loose to put Humpty Dumpty back together again. How many times will they be able to pull this off in the face of continued declines in the economy and increased distress in the banking system? There are over $55 trillion of outstanding debts in the U.S., an unsustainable load. The U.S. government has taken over the role of Ponzi borrower, taking on more and more debt to meet its obligations. How long until the U.S. emulates Dubai?

It is a Thanksgiving week, with a build-up all week leading to breathless shopping commentary on Friday, as if the future of the economy rested on the willingness of people to load up on stuff. The eager commentators don’t seem to have figured that the stuff is all made in China. Or that buying stuff is not the way to economic growth.

I came across a short piece today which is a teaser for a book; Plunder! How Public Employee Unions Are Raiding Treasuries, Controlling Our Lives And Bankrupting The Nation. This is something that irritates me every day as I walk past the local fire station, where the firefighters are loafing around.

When I recently appeared on Glenn Beck’s TV show to discuss California’s dreadful fiscal situation, I mentioned that in Orange County, where I had been a columnist for the Orange County Register, the average pay and benefits package for firefighters was $175,000 per year. After the show, I heard from viewers who couldn’t believe the figure, but it’s true. Firefighters, like all public-safety officials in California, also receive a gold-plated retirement plan: a defined-benefit annual pension that offers 90 percent or more of the worker’s final year’s pay, guaranteed for the rest of his life (and the life of his spouse).

I read some time ago that the L.A. fire department had openings for six firefighters, and had to rent a football stadium to accommodate the thousands of applicants. No wonder. Although the jobs mostly go to those with guanxi. The author blames the unions, who are certainly not free of responsibility for the looting. But we should not forget the role of the politicians who have benefited from the union largesse.

Hat tip naked capitalism.

Anyone who watches the markets can see the bizarre effects of the High Frequency Trading systems every day. The SEC has acknowledged the problem, but chosen not to do anything other than study it. Sen. Kaufman writes a letter to encourage it to do more (Thanks to zero hedge). Fat chance. The one thing that I find interesting is the comment that the “dark pools” have been set up, at least in part, in order to shelter trading the HFT boyz, who are excluded from these private exchanges.

Would be nice to go back to the old level playing field model, without the cheaters. I strongly support the idea of an 0.25% transaction tax which would kill off these parasites. We’re paying the tax anyway, I’d rather pay it to the general fund than to the crooks.