KARL DENNINGER Commentary ~ Sarah Palin, Economy and the Republicans

[peaceandlove]

Sarah Palin And The Republicans

Sunday, July 5. 2009
Posted by Karl Denninger

Since its Sunday (and the 5th of July) I think I'll take a foray into somewhere that I know will generate much controversy.

First, let's start with Sarah Palin, who as everyone knows announced her resignation with 18 months left to go in her term as Alaska's Governor http://www.msnbc.msn.com/id/31745445...shington_post/ , sparking every possible theory imaginable as to why (including rumors that she was about to be indicted - rumors that led her attorney to make what I believe was a monstrous gaffe, and one that The Daily Kos http://www.dailykos.com/storyonly/20...uits-UPDATE-X3 immediately - and in my opinion correctly - jumped all over.)

Let's dispense with the realities here right up front: If Sarah's departure is followed by the eruption of any scandal, no matter what it is, she is finished on the national political stage. Period. If she doesn't understand this she has an IQ smaller than her shoe size; the only way you can win as a political figure in such a circumstance is to stand and fight, winning the battle - you come out scarred, but in one piece. If you run, especially if you run in front of the eruption, you're done.

So let's assume for the sake of argument that she's intelligent enough to know this and there is nothing about to hit the spotlight of a particularly-embarrassing nature (and by the way, I consider anything related to her children to be absolutely out of bounds, even though the media won't - during the campaign such snipes were good for instantaneous and permanent bans on my forum and will remain so.)

The other view, held by many, is that Sarah is setting up for some sort of political assault in 2012, possibly on the White House.

I will simply repeat what I said to John McCain's campaign through the summer and into the fall of 2008:

There is no possible path to victory for the Republicans until and unless the fraud and bad debt are both excised from the economic and political system.

It is a mathematical impossibility for the economy to recover on a sustainable basis until the bad debt has been either paid down or defaulted. Taking on more debt and shuffling around where the debt resides does not remove a single dollar of it from the economy; such policy decisions as taken by both Bush and Obama cannot and have not resulted in a positive outcome.

Increasing The Bezzle http://market-ticker.denninger.net/a...-and-CNBS.html in the system in an insane attempt to further paper over the losses will not solve the underlying problem - that is, the fact that the debt service ratios are too high. There are only two ways to reduce that debt service requirement - default debt or pay down debt. The latter requires years, not weeks or months, and when it comes to mortgages (both commercial and residential) we're talking a decade or more.

The last time we took this path we had The Great Depression. The last time Japan took this path they suffered more than a decade's worth of economic malaise, and still haven't recovered.

There has never been a nation in history that has managed to get out of a credit-led recession through taking on more debt.

Continues: http://market-ticker.denninger.net/a...publicans.html