# Global markets slide on Greek crisis



## readytogo (Apr 6, 2013)

https://finance.yahoo.com/news/global-markets-slide-greek-crisis-073252310.html#

http://www.cnbc.com/id/102794835?__...adline|headline|story&par=yahoo&doc=102794835

http://www.cnbc.com/id/102794424?__...adline|headline|story&par=yahoo&doc=102794424

http://www.cnbc.com/id/102794788?__...adline|headline|story&par=yahoo&doc=102794788

All this was on the books 10 years ago, the Greeks fail to play by the rules, this is the second time that they blame their stupidity on the rest of the World.


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## bkt (Oct 10, 2008)

Um, the Greeks aren't the stupid ones. This problem has been brewing for a long time and we could see it clearly long before today. Mario Draghi and his ilk - THOSE are the stupid ones.


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## LastOutlaw (Jun 1, 2013)

readytogo said:


> All this was on the books 10 year...e books to look good enough to join the Euro.


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## hiwall (Jun 15, 2012)

Greece will drag the markets down all week (I guess). Puerto Rico just announced they can not pay their debts and that will add a little more turmoil in the mix. Over night all markets went down 2% to 3% (and that is just the beginning).


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## Marcus (May 13, 2012)

hiwall said:


> Greece will drag the markets down all week (I guess). Puerto Rico just announced they can not pay their debts and that will add a little more turmoil in the mix. Over night all markets went down 2% to 3% (and that is just the beginning).


And maybe some spillover in to next week too until folks look around and figure out they don't buy or sell anything to Greece. But if you like your Feta cheese, better stock up now. :eyebulge:


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## LastOutlaw (Jun 1, 2013)

I think you are wrong about Greece Marcus, I think Greece is going to be like the hole in the dike that gets bigger and bigger until the dike fails.
(Euro fails). If in fact the Euro does fail it will cause a short lived boost to the dollar as Euro investors look elsewhere to invest. This will however be a short lived boost as the reality of monies being tied together sets in. All can be effected by any "can kicks" the IMF, ECB and FED may attempt to put together to try to continue to hold things up as long as possible.


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## bkt (Oct 10, 2008)

The Euro problem is pretty simple, really. Either the ECB props up Greece indefinitely which it obviously can't afford to do, or it lets Greece exit the Euro which sets a precedent for Portugal, Spain, Italy and Ireland doing likewise. That equates to the demise of the EU and the PTB in Europe are desperately trying to prevent Greece from becoming the first of many dominoes.

If the ECB prop up Greece, the euro suffers. If Greece exits the EU, the euro suffers. We're going to have some bumps for some time 'til the euro settles down.


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## oldasrocks (Jun 30, 2012)

But look on the bright side. They are having killer sales on Greek mail order brides!


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## Marcus (May 13, 2012)

LastOutlaw said:


> I think you are wrong about Greece Marcus, I think Greece is going to be like the hole in the dike that gets bigger and bigger until the dike fails.
> (Euro fails). If in fact the Euro does fail it will cause a short lived boost to the dollar as Euro investors look elsewhere to invest. This will however be a short lived boost as the reality of monies being tied together sets in. All can be effected by any "can kicks" the IMF, ECB and FED may attempt to put together to try to continue to hold things up as long as possible.


It's just not that much money. To me and you, yeah it is. But to a central bank, it's not. Greece's economy is just too small.

To compare it's GDP to US states, it would fall between Connecticut and Louisiana. These states have populations 33% and 43% respectively, of Greece's population. One of the major problems with Greece is their economy is just not efficient and they have too many people living off of government benefits. Sound familiar?

We're at this point because a leftist government in a little podunk country is trying to game the system in order that they can continue to live the good life at the expense of others.

As the famous Margaret Thatcher quote goes, "The problem with socialism is you eventually run out of other people's money."

The posturing by the leftist government is an attempt to blackmail the ECB and others with threats to destabilize markets unless the goodies continue to flow. The Greek government is wanting a bigger write-down on their current debt in an effort to keep from having to make hard choices about their own spending.

Because of the way this has played out, the central bankers are unwilling to let a spoiled brat get away with not fulfilling the obligations to which they have already agreed. After all as bkt points out, Greece is not the only problem child who has overspent on luxuries. At some point, reality has to set in. For Greece, that time is now.

The vote this weekend in Greece is merely political cover. However the vote goes, the leftists will claim to have a mandate from the people to do whatever is decided. In other words, they're trying to hold on to power even though their own intransigence is the reason they're at this juncture.

What's the endgame?

I look for the IMF to declare a one week (or more) moratorium of the scheduled payment tomorrow. Who's going to complain? And even if they don't, it won't be the first time a country has defaulted to the IMF.

You may not know this, but the head of the IMF is Christine Lagarde. Though French, she has ties to Obama's cronies and worked at a large Chicago law firm for many years. She replaced Dominique Strauss-Kahn after he was setup on false rape allegations in NYC in 2011.

As far as the markets go, please understand that they tend to over-react to events. The reason this happens is because the movements generate opportunities to make boatloads of money. It doesn't matter if the movement is up or down. Unsettled markets give traders and speculators the opportunity to pillage less sophisticated investors.

Yes, the VIX spiked today. It's up to 18.85 which is still considered low risk. And the spike is still only the 5th highest spike *within the last year.*

As for Greece itself, they will be in a world of hurt if they leave the euro. The government has to know that which is why I don't see it happening. Any possible new currency will be immediately devalued which will cause even more pain since their debt is denominated in euros. That's why the smart people started taking their money out of the Greek banks early last week before the capital controls began.

*Edit:* The world's markets erased $1.5 trillion in the equities markets on Monday. This is roughly 3X the total indebtedness of Greece and demonstrates the over-reaction I was referencing.. Asian markets are up with the exception of China. Dow & S&P 500 futures are up .25% & .17% respectively.


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## LincTex (Apr 1, 2011)

A sad time for Greece....


.


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## LastOutlaw (Jun 1, 2013)

LincTex said:


> A sad time for Greece....
> 
> .


Thanks for that post Linc...always good to hear from someone living through it.
I'm glad to hear someone there speak of the failed system that caused this problem. Especially since TPTB seem hellbent to put the US under the same failed system.
The only reason to do such a thing is control.


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## LastOutlaw (Jun 1, 2013)

readytogo said:


> https://finance.yahoo.com/news/global-markets-slide-greek-crisis-073252310.html#
> 
> http://www.cnbc.com/id/102794835?__...adline|headline|story&par=yahoo&doc=102794835
> 
> ...


NBC and YAHOO the most liberal lying news sites one could pull info from.


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## Marcus (May 13, 2012)

BTW the VIX is 16.09 today, down 2.14 (11.74%)


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## hiwall (Jun 15, 2012)

> Greek Banks Considering 30% Haircut On Deposits Over €8,000: FT
> 
> Last week in "For Greeks, The Nightmare Is Just Beginning: Here Come The Depositor Haircuts," we warned that a Cyprus-style bail-in of Greek depositors may be imminent given the acute cash crunch that has brought the Greek banking sector to its knees and forced the Greek government to implement capital controls in a futile attempt to stem the flow.
> 
> ...


http://www.zerohedge.com/news/2015-...ing-30-haircut-deposits-over-€8000-ft-reports


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## BillS (May 30, 2011)

I expect Greece's default and the estimated 4 trillion in Greek debt derivatives to cause a collapse of the world's financial system. Greece will go down first. Next will be the rest of the PIIGS. Then the rest of Europe. Then the USA. I don't expect it all to happen within days. It could take years but I think it will be within months.

The banks holding the government debt and the derivatives will be crushed. The problem will grow exponentially as it affects more and more countries. I think the time it will take to affect the next country will be less and less as it spreads.


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## LastOutlaw (Jun 1, 2013)

hiwall said:


> http://www.zerohedge.com/news/2015-...ing-30-haircut-deposits-over-€8000-ft-reports


So if they vote yes they pay a bail-in and everyone with more than 8000 in the bank loses 30% of their money?

8000 is a much lower starting point for the robbery of funds from the people than the last bail in of Cypress.

I'll bet the trend continues with the other countries that are in line next like Portugal and Spain.
By the time they get to the US could they be taking 75% of anyone over $1000?


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## hiwall (Jun 15, 2012)

LastOutlaw said:


> So if they vote yes they pay a bail-in and everyone with more than 8000 in the bank loses 30% of their money?
> 
> 8000 is a much lower starting point for the robbery of funds from the people than the last bail in of Cypress.
> 
> ...


This is far from being written in stone. No one knows what will happen no matter what the vote. I don't care how the vote goes - Greece just does not have the money to pay back any loans. I doubt whether the Greek government has enough money to buy a used car let alone pay off billions in loans. And Puerto Rico is in the same boat.


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## Marcus (May 13, 2012)

From the article:
*"With few deposits over €100,000 left in the banks after six months of capital flight, "it makes sense for the banks to consider imposing a haircut on small depositors as part of a recapitalisation. . . It could even be flagged as a one-off tax," said one analyst."*

The smart money is long gone. That's part of their problem. BTW, €8000 is just under $9000.

*"after six months of capital flight"* I can't emphasis that enough. There has been plenty of warning.

The net financial wealth per adult in Greece in 2011 was $14,004. Note that this was before their economy contracted. So the bail in would cost 30% of ~$5000 or $1500 per adult *max.* But if it was a smart adult in Greece who moved half his money to another Greek bank so he had 2 accounts of $7000 each, he would not lose anything. Or if in the 6 month run up to this, the smart Greek decided to take a vacation to Germany and move all his money to a bank there, he would also be unaffected.

Here is a link to a pdf that shows who owns the Greek debt. http://www.bloombergbriefs.com/content/uploads/sites/2/2015/01/MS_Greece_WhoHurts.pdf
Note that only 17% (as on January) was in private hands. It is highly likely that that number has declined.

Here is a link to a series of financial articles (mostly about Greece.) http://www.bloomberg.com/news/artic...n-credit-swaps-by-greece-s-failure-to-pay-imf
"There were a total of 609 credit-default swap contracts covering a net $584 million of Greek debt outstanding as of June 26, Depository Trust & Clearing Corp. data show."

From another article in that link:
"Goldman Sachs Group Inc. said in a July 2 report that equity volatility caused by a rejection of the bailout terms will be short-lived as the ECB intervenes, allowing investors to refocus on Europe's economic fundamentals.
A "no," which Syriza's leader has been campaigning for, could trigger a decline in the Euro Stoxx 50 to 3,150, or 8.5 percent below where it closed Friday, strategists at the New York-based bank wrote. That's a scenario that should spur investors to buy Italian, Spanish and German equities, they said. Acceptance could send the gauge back up to 3,830, near where it traded at the April peak, according to the note."


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## Marcus (May 13, 2012)

Now if you really want to know what *I* think is much scarier than Greece......

http://finance.yahoo.com/news/chinese-officials-investors-hope-support-110047668.html

Down 22% in 9 days! That equals a $1.3 trillion loss in market capitalization in the Shanghai Exchange.
I don't know the Chinese word for hot air, but I reckon they done cooked the books until they were way overdone.
Since this is the world's second largest economy as opposed to a zit on the ass end of Europe, it is a big deal.

Recall in one of my earlier posts that I said how things go down is important. This is anything but a slow settling. This is the same percentage loss as the Black Monday loss in 1987 and almost equals the combined Black Monday & Black Tuesday losses in 1929. Except instead of happening in 1 or 2 days, it's taken 9.

From the article:
"Earlier, in a series of initial announcements on Saturday, China's top brokerages pledged to collectively buy at least 120 billion yuan ($19.3 billion) of shares to help steady the market.....
The combined effect of the policies is to signal to China's army of retail investors, who conduct around 85 percent of share transactions, that the government is now standing behind the stock market. But it is unclear whether even this will be enough to put a floor under prices or revive the rally.
Li Feng, a trader at Fortune Securities, said the amount of money that brokerages and fund managers vowed to put into the stock market was tiny compared with the size of leveraged positions still waiting to be unwound.
Some analysts suggest total margin lending, both formal and informal, could add up to around *4 trillion yuan.*" Bold is mine. 4 trillion yuan = ~$650 billion

Remember when I mentioned trading on margin was a very bad idea? This is why. As the market goes down, margin calls for more money are made to keep accounts from being liquidated. If those margin calls aren't met, stock holdings are sold until such time as the margin percentage meets minimum requirements or until the account has nothing left to sell. This increases the downward pressure on stocks and will lead to more losses and even more margin calls. It becomes a vicious cycle that can literally clean out an account in a day.

Brokerages are going to throw $20 billion at a $650 billion problem. It's like trying to put a forest fire with a garden hose. It also means we could see another 11% drop from the late June levels. So, the Shanghai Exchange could lose a *third* of its value within a month or just under $2 trillion. That's 8-9 times the total indebtedness of Greece. Or in other words, the Chinese issue is nearly an order of magnitude larger than the Greek problem that everyone is so worried about.

Also from the article:
"A surprise interest-rate cut by the central bank last week, relaxations in margin trading and other "stability measures" did little to calm investors..."
How do you say QE in Chinese?

Due to domestic political considerations surrounding a collapsing export economy, we may see more aggressive military posturing by China in disputed areas as the Chinese government attempts to deflect attention from its growing economic problems.


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## hiwall (Jun 15, 2012)

China should be of some concern for everyone. The Shanghai Composite Index while it has dropped quickly in a short time is still up about 78% for the last 12 months. 
Yes I do think China is having the same problems as every other country. It seems everyone is racing for the edge of the cliff and it should be 'interesting' to see who gets there first.
It is possible that China may have more ammunition left to slow the run down yet compared to many others countries that have already shot the bulk of their economic/financial ammo.
Anyone who thinks there is no need to prepare is crazy!


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## Marcus (May 13, 2012)

http://finance.yahoo.com/news/china-stocks-nosedive-despite-fresh-022752194.html

" China's tumbling stock market showed signs of seizing up on Wednesday, as companies scrambled to escape the rout by having their shares suspended and indexes plunged after the securities regulator warned of "panic sentiment" gripping investors.

Beijing, which has struggled for more than a week to bend the market to its will, unveiled yet another battery of measures to arrest the sell-off, and the People's Bank of China said it would step up support to brokerages enlisted to prop up shares.

The CSI300 index of the largest listed companies in Shanghai and Shenzhen closed down 6.8 percent, while the Shanghai Composite Index dropped 5.9 percent.

With nearly half the market on a trading halt and another round of margin calls forcing leveraged investors to dump whatever shares could find a buyer, blue chips that had been supported by stabilization funds earlier in the week bore the brunt.

"I've never seen this kind of slump before. I don't think anyone has. Liquidity is totally depleted," said Du Changchun, an analyst at Northeast Securities.

"Originally, many wanted to hold blue chips. But since so many small caps are suspended from trading, the only way to reduce risk exposure is to sell blue chips."

More than 30 percent has been knocked off the value of Chinese shares since mid-June, and for some global investors the fear that China's market turmoil will destabilize the real economy is now a bigger risk than the crisis in Greece.

"Also, the ripple effect from the market correction has yet to show up," wrote Bank of America Merrill Lynch analysts in a note. "We expect slower growth, poorer corporate earnings, and a higher risk of a financial crisis."

Commodities markets reflected growing concerns about the broader health of the world's second largest economy, with copper prices falling to a six-year low, Shanghai nickel futures sliding by their 5 percent daily limit, and oil falling toward $56 a barrel, near a three month-low.

More than 500 China-listed firms announced trading halts on the Shanghai and Shenzhen exchanges on Wednesday, taking total suspensions to about 1,300 - 45 percent of the market or roughly $2.4 trillion worth of stock - as companies scuttled to sit out the carnage.

With so many small-cap companies sheltering on the sidelines, the ChiNext growth board, which has seen some of the biggest swings in valuations, fell a modest 0.8 percent.

The plunge in China's previously booming stock markets, which had more than doubled in the year to mid-June, is a major headache for President Xi Jinping and China's top leaders, who are already grappling with slowing growth.

Beijing's interventionist response has also raised questions about its ability to enact the market liberalization steps that are a centerpiece of its economic reform agenda.

China has orchestrated brokerages and fund managers to promise to buy billions of dollars' worth of stocks, helped by a state-backed margin finance company which the central bank pledged on Wednesday to provide sufficient liquidity.

The securities regulator said the Securities Finance Corp had provided 260 billion yuan ($41.8 billion) to 21 brokerages."

I wish I wasn't right about this.
Since the Shanghai Index is now down 30% in less than a month, we're liable to see a much larger drop than I originally thought. How much now? 50% wouldn't surprise me at all at this point.
Notice they have doubled their support to the brokerages ($41.8 billion up from $20 billion.) That's still not near enough. $100 billion tomorrow _might be enough_ to at least get a pause so that the markets can stabilize. Right now, they're still pissing in the wind. That means the carnage will continue.

*So how does this all tie together?*

As hiwall pointed out, the Shanghai index was up 100% since June of last year. That's why I wouldn't be surprised to see a 50% drop. It would erase the gains in the last year.
The fact that their markets are freezing up is important too. It means that almost everyone was gambling (and that is the proper word) that the markets would continue to go up, up, and away (old music reference to what's coming.) In healthy markets, a certain amount of skepticism is needed to keep things well grounded. That forces reality to the forefront and keeps things from getting out of hand.
What we going to see now is a vicious cycle of margin calls causing even more drops and market freezes until the time when there will be no investors left in China trading on margin. They'll either voluntarily or be forced to go to straight cash accounts to prevent further bleeding. *At that point,* the market will start to stabilize. It will also likely overshoot to the downside by 5-10%.
The best analogy I can give is this: When something goes off a cliff, it will sometimes hit the side of the cliff several times on the way down. Sometimes it will even hang up on a ledge or tree and stop. But the steeper the cliff, the less likely there will be anything to stop the fall before it hits bottom. As the momentum builds, stopping the falling object gets harder and harder.

This correction/crash will probably do tremendous damage to the wealth of the growing Chinese middle class. That may cause some political effects.

In another thread, folks were wondering why silver was falling and how low can it go. I point to China as the probable cause of the sell off as margin calls are forcing people to raise cash quickly. I think silver will keep falling until the Chinese markets stabilize.


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## hiwall (Jun 15, 2012)

I am excited everyday to see what new crisis is happening! 
Speaking as a simple grown up farm boy it sure looks like things will fall apart. I find that rather exciting to think I can live to see the big house of cards fall down. It is not surprising to hear opinions ranging from 'everything is rosy' to 'we are all doomed' and everything in between. This world situation is different from anything that has happened in history so none of us can look back and say 'this is what happened last time'. Everyone is guessing and that is one of the reasons that the markets are so volatile (IMHO). I find it all interesting. On particularly bad days I order more PM's or LTS food. On good days I sort out and rearrange what I have in stock.


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## db2469 (Jun 11, 2012)

hiwall said:


> I am excited everyday to see what new crisis is happening!
> Speaking as a simple grown up farm boy it sure looks like things will fall apart. I find that rather exciting to think I can live to see the big house of cards fall down. It is not surprising to hear opinions ranging from 'everything is rosy' to 'we are all doomed' and everything in between. This world situation is different from anything that has happened in history so none of us can look back and say 'this is what happened last time'. Everyone is guessing and that is one of the reasons that the markets are so volatile (IMHO). I find it all interesting. On particularly bad days I order more PM's or LTS food. On good days I sort out and rearrange what I have in stock.


With me, it's not excitement in a positive sense. It's more like nervousness that motivates me to keep informed to be at least prepared for short term (6 months) survival. I don't want to see it all fall apart and chaos reign, although there are so many changes needed that a total reset might have to happen...


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## hiwall (Jun 15, 2012)

So now we get to see what the people of Greece are made out of. First they voted for this leader who said he would stand up to the EU and would accept no more austerity measures. Then they just had another nationwide vote where the people of Greece overwhelmingly re-affirmed that is what they wanted. Now the leader they voted for has made a deal much worse than anything in the past and the total opposite of what he said when running for the office. 
So what are the people of Greece going to do? Are they going to cower down and grovel in the streets and accept this new deal that is the opposite of what they wanted? Or are they going to rise up against their government who is doing the exact opposite of what the people want?
No matter what you think is ‘right’ or ‘wrong’ or no matter what you think of the policies that led to this really makes no difference. The people of Greece will suffer no matter what deal or no deal was made. The only difference is whether the Greeks decide to suffer standing tall like men or cowered down like dogs. 
I find this interesting because I think it will tell us what to expect from the people here in the USA. Will we accept whatever our government does even when it is the exact opposite of what the people want or will we revolt? Will we cower like a whipped dog or will we rise up?


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## bkt (Oct 10, 2008)

It wouldn't surprise me if we saw a new government in Greece by Friday. That's an exaggeration, but it should be pretty soon. I can't see the Greeks tolerating this b.s.

For the record, many of us in Colorado, Maryland, New York, Connecticut and Washington state are presently engaging in (armed) civil disobedience. Cowering like a dog ain't my thing.

By the way, the crisis in Greece has caused a surge in various cryptocurrency values. Litecoin value shot past $7.00/coin a few days ago and I jumped at the opportunity and placed an order for a half-ounce gold Eagle from Provident Metals. It should be here in a day or two.


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## hiwall (Jun 15, 2012)

I see the Greek unions are organizing a massive strike on Wednesday when the Greek Parliament votes on this 'bailout'. This bailout could yet all fall apart. Even if it goes through it will only last for 3 to 6 months. What is the point?


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## LastOutlaw (Jun 1, 2013)

hiwall said:


> I find this interesting because I think it will tell us what to expect from the people here in the USA. Will we accept whatever our government does even when it is the exact opposite of what the people want or will we revolt? Will we cower like a whipped dog or will we rise up?


Didn't this already happen right after the last election?
The people clearly said "Stop Obama". Our officials who were re-elected to carry out this message did nothing. If anything they have been complicit. The American people did nothing about the elected's lack of action.


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## LastOutlaw (Jun 1, 2013)

bkt said:


> For the record, many of us in Colorado, Maryland, New York, Connecticut and Washington state are presently engaging in (armed) civil disobedience. Cowering like a dog ain't my thing..


What is this 'armed civil disobedience?


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## bkt (Oct 10, 2008)

LastOutlaw said:


> Didn't this already happen right after the last election?
> The people clearly said "Stop Obama". Our officials who were re-elected to carry out this message did nothing. If anything they have been complicit. The American people did nothing about the elected's lack of action.


The American people don't yet completely understand or believe that their votes don't matter; that what they want their representatives to do doesn't matter. We don't run the show.


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## bkt (Oct 10, 2008)

LastOutlaw said:


> What is this 'armed civil disobedience?


http://townhall.com/columnists/rach...s-i594--in-front-of-police-n1931759/page/full

http://news.yahoo.com/groups-warn-oregon-mine-militia-dispute-threatens-democracy-040721303.html

http://gazette.com/last-of-gun-bills-fizzle-out/article/1549665

http://blog.timesunion.com/capitol/archives/237510/state-doesnt-appeal-foil-case-gun-stats-released/

There are more examples. Bottom line is simple: on the issue of citizen disarmament, we refuse to be disarmed. That leaves a lot of doors open on resolving issues of government overstepping its bounds in other ways and those in government know it. That's good because it prevents, not encourages, bloodshed.

Good thoughts to consider:
http://www.familysecuritymatters.or...s-civil-disobedience-or-collapse?f=must_reads


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## LastOutlaw (Jun 1, 2013)

I knew of the mine protection but not of the others.
The Burn barrel is in use I see.


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