USA's War against the Dollar

Making the World Strafe for Democracy.

2011-09-12T12:49:00.000-07:00

The Tarot's "Exploding Tower".

While riding in a ferris wheel, Harry Lime tells Rolo Martins about how lucrative and creatively stimulating War is in Orson Welles' "The Third Man", thus perfectly summarizing the future trajectory of the US War Machine.

While the nation wrapped itself in a mourning shroud and oozed self-pity, that extreme unction, it prefers to ignore the fact that the snail-like War Machine has been used to slime its way into involving the Nation in perpetual Nobel Peace Prize Wars.

Published today in the Guardian, in an interview on 9/11/2011, Jimmy Carter stated : 'We never dropped a bomb. We never fired a bullet. We never went to war'. How Rolo, and soooo not for the US. Instead, we put Harry Lime into office in the person of Ronald MacDonald Reagan, to declare "It's morning in America" and commence with fulfilling his Imperial ambition of making the world a secure place for the US Air Force to Strafe for Democracy..

And so began the build-up of unsustainable and unpayable Federal debt, the beginning of the undermining of Social Security and handing over the keys to the Nation's treasures to a handful of plutocrats, the end of any resemblance of truth by replacing it with an Orwellian Newspeak that would cynically alter any press release, political platform or Federal program into doing the opposite of what it was purportedly created to do.

This was a well-tested formula we learned by heart from those we declared to be our enemies: the Nazis and the USSR. As stated in the final novel, "The Return of Lanny Budd", of Upton Sinclair's towering achievement, his "World's End" series, Lanny Budd observes "the curious Soviet practice of telling the most bare-faced and obvious lies and maintaining them in spite of any facts offered in rebuttal. Was it an assertion of their ego, that truth was whatever they chose to make it? Was it a consequence of their denial of the existence of any moral law? Or was it just an expression of their contempt for their opponents? They would tell you a lie and then laugh in your face - not because they thought you believed it, but because you were foolish enough not to understand that they were superior to both the truth and you. Because you were foolish enough to believe that there was actually any such thing as truth in the world! Because you were inferiors, doomed to early extinction , and it didn't matter in the least what you believed about anything! That was really the way they felt, and lying to you was part of the process of your extermination. They, the new Master Class, the future possessors and rulers of the world, yielded to nothing - not even the truth!" (p383)

That this is the entire Karl Rove, GW, Cheney, Rice, Rumsfeld, Palin/Bachman/Perry Republican party strategy cum attitude has become increasingly, blatantly, unabashedly demonstrated again and again, yet the oh-so complicit Democrats remain silent time after time.

That's how we ended up with an administration that declared a War on Terror after we were bombed during the Iraq War. A Bush War that was transpiring all during the Clinton Years, and, although it was barely reported on in the US press, was still in full swing during the first year of the Bush fils regime. Because instating and maintaining a no-fly zone over Iraq for more than a decade is an act of War. A fact admitted to, not only by our closest allies, but by our own State Department, as they made evident while debating whether or not to institute a no-fly zone over Libya. This fact is also maintained by Secretary of Defense Robert M. Gates (Bush's Pentagon Chief!) who calls the imposition of a no-fly zone an “act of war”.

Why language means something, and why the above facts are important, it needs to be recalled that the reason for the second land invasion in the Iraq War was not only to search for WMD we knew not to be there, but because the Bush/Cheney Axis claimed that Saddam had a hand in the attack perpetrated on the US mainland on 9/11/2001.

Whether we believed such propaganda is not what's important here. The administration professed to believe it. And the Master Class feels so safely ensconced in the cocoon of their lies, so sure that they are superior to both the truth and you, that Cheney restates this not only in his book, but in interviews given since its publication. That means that the Bush administration's stated belief is that the attack perpetrated on the US mainland on 9/11 was an act of War by a sovereign entity with which we were already at War, and not a terrorist attack. But, as demonstrated by the ridiculous success of the media circus over the weekend, they preferred that the US citizenry saw it as an unprovoked assault, leading it into an indulgence of its puerile fantasy that said attack came unprovoked, unwarranted, and unexpected. It was none of these.

But "... lying to you is part of the process of your extermination". And believing those lies, so as to indulge a maudlin self-pity that enshrines our own magnificence, makes us a participant in those lies, and the voluntary participants in our own extermination, which, with the planned eventual elimination of Social Security and Medicare, and therefore you, proceeds apace.

http://www.guardian.co.uk/world/2011/sep/11/president-jimmy-carter-interview
http://blogcritics.org/politics/article/gates-libyan-no-fly-zone-would1/page-2/

Unmentionables.

2010-08-17T10:03:00.000-07:00

The Great Recession ....how is that different from a mild depression?

Double-dip recession.... how is that possible when we've not come out of the first dip?

Oil prices: the more the price of oil increases, the faster anthropogenic climate change accelerates. Burning oil, even hi-sulfur oil from Citgo, is, in the Northeast, being replaced by burning wood in fireplaces as the price of oil has doubled, with barely a comment, in the past year. The ensuing particulate pollution from an ancient fuel source being used by a modern-sized population is having catastrophic consequences as the soot covers snow in the Arctic drastically reducing its albedo factor. Meanwhile, coal, the next dirtiest fuel, is burned in prodigious quantities in both China and the US to generate electricity.

Peak Oil Production: if peak oil production is, as many, in fact, most economists, from Ben Bernanke and his doppelganger, Ben (Franken) Stein, to Paul Krugman, to Nouriel Roubini, it is simply not taken into any account by any economist, were not a factor in the above problems, why is it that the largest burners of fossil fuels don't burn oil in preference to coal? And not by happpenstance, but by policy preference, even as they argue about Cap and Trade?

Unemployment = 9.5%, no it = 22.5%, no it = 9.5% ... which do you believe? Which do you feel is real?

Banks made their outrageous profits only by deceiving their clients and customers and issuing "products" they then sold to suckers. This is called hucksterism, in a folksy milieu, fraud in a legal framework. This is all our banks have left to make profits from. This is all the government has left to collect taxes from. Do you feel recovered yet?

Recovered is also a term used in upholstery. In the present context it is that meaning that is more descriptive of our current economic recovery. Throw a TARP over it and hope that that recovery will fool people into thinking that something has essentially changed when nothing has, even though the economy is in dire need, by its own definitions that were promulgated and forced upon lesser, developing economies for decades, of restructuring, ie a SAP (Structural Adjustment Program) for the saps who believed in ever escalating property values, even as wages atrophied and the industries under-girding the economy that was supposedly supporting those valuations, was dismantled and systematically moved overseas in a matter of decades.

An economy recovered via a TARP being thrown over it has no hope of recovering in the medical sense of systemic health being restored.

I remember that when I was a wee child our family had a sand bank in the back yard. This is the concept most people have, left over from the days of the gold standard, of a bank: a Place of stored value, full and protected. The more people realize that it is neither full nor protected, and the more they realize that there is, in fact, risk involved in putting their dollars in said depositories, risk for which they are completely uncompensated for, the less they will be inclined to keep said dollars in the hands of banksters determined to take the value of their money and transfer it to that of their shareholders. Something they are, as Corporations operating under the auspices of the United States of America, required to do.

Remember, in ruling for the Ratings agencies of Moody's and STandard Poor's and Filth's, oh, I mean Filch, no, Fitch's, whatever, the third one, the Supreme Court called their rating service protected by the 1'st Amendment's free-speech clause (even though you had to pay to hear it), which means the banks can sell you any product, the insurance companies write any policy (see MBIA's claim that the insurance against Vallejo's default wasn't really insurance, or AIG's Insurance for CDO's with no capital allocated to cover losses, again entire business models completely based on Fraud, backed by the full faith and credit of the US Treasury ... YOU), so if they rated a security AAA, and you bought it, and it turned out to be junk, toxic waste, valueless, the ratings agency can not be held libel for you believing that they provided the service you paid them to.

If that's true of a mere ratings agency, a Bank, whose losses are covered by the FDIC, their gambling debts back-stopped by the Central Bank, which has access to the full vaults of the Treasury and the pockets of the Taxpayer, whereas their bondholders and investors are made whole by duplicity and chicanery, is held even less accountable. Literally, as the Accounting firms that audit them merely change the rules under whcih Bank holdings of collateral are valued. All under the auspices of those very same banks.

This will be money kept quite literally "on the sidelines", as it is pulled out of the banking sector completely and be stored in a safer place under the mattress, a rock in the backyard, in knickknacks bought specifically because they have a nook in which cash can be sequestered where it is deemed safer.

It may not in fact BE safer in any of those places. However, the one thing the banking industry has succeeded in doing is convincing the public of banking's untrustworthy nature. The one thing the free market now understands is that the banksters, by dint of the very free-market dictum they promulgate, are, the public is finally coming round to, under no rubric to return money to its depositors. That is unless there happens to be some remaining when they're through with it. Once deposited in their virtual vault, it ceases to be yours, but is from thereafter, theirs.

The cynical trickle of trickle-down economics, is beginning, but not in the way it was envisioned. It is already showing signs of turning into a torrent as billions are being pulled out of, not only mutual funds, but simultaneously from money market funds and savings accounts. It is not just paying down debt and deleveraging that we are witnessing. There is a loss of trust in our financial institutions more profound than anything I've ever witnessed, not by the underclass, who never really trusted them to begin with, but by the complacent, somnambulant middle classes who have been roughly shaken from their American dream of security to the stark reality that they are to be skewered on the altar of Free Market Economics. They are slowly waking up to the fact that they are the Isaacs to the Free Market's Abraham. Trusting children held in Bernanke's hand that has stayed their execution for the moment, but it is still poised, glistening blade in hand, ready to deliver the deathblow, as the same forces that brought Free Markets reforms to Russia, decimating that population and trimming it by the millions, delivers the same fate to the middle class of the good ole USA.

That is why, Mr. Bernanke, the head of a Corporation, a private Corporation, can by mere fiat, declare the value of your money worthless, the risk of your losing it negligible and pay you zero, da nada, zilch, while paying his wholly-owned subsidiaries, the Federal Reserve Banks (again, private institutions beholden to no one but their shareholders), a premium by giving them dollars for nothing which they can then use to buy Treasuries, effectively taking money from the public to shovel it by the boatload into the vaults of banks to pay for the bad loans they reaped enormous bonuses to make, but for which they'll never be paid back.

Those loans, even after the dog-and-pony-show of the Obama stress tests, are worth far less than what the institutions claim they are worth. To such an extent that the whole process is called extend and pretend. Again, we come up to that word that encompasses so much of the westerner's mindset. Fraud. That is all extend and pretend is a catchy phrase for: Bank Fraud. On a global, international scale. And not just fraud in the parlor sense of the word, FRAUD in all caps, not only running throughout the system but, more accurately, running the system. The fumes of fraud, by the pronouncement of bankrupt Central Bankers and insolvent Governments worldwide, including the IMF and The World Bank, is all that 's keeping the globalized financial system from undergoing a shuddering cataclysmic collapse.

"Consumer protection", whether presided over by Ms Warren, or Ralph Nader, is something forced down the throats of Corporations, not because they're big bad she-devils, but because that's what their charter demands of them. If a product, such as tobacco, kills your customers, kills those in the vicinity of your customers, including their children, degrades the soil in which it's grown, costs the State billions upon billions in healthcare costs, and costs other industries, oftentimes right across the street, an additional billions of dollars in lost productivity and health-related costs, that, legally, is not your problem. Your shareholders are richer. And that's a plus, because in the taxes collected, the government is richer (or used to be), so the only entity capable of stopping your killing spree is profiting from it along with you.

Shumpeter trumpeted that the soul of Capitalism is Creative destruction. "Creative" is an adjective, a modifier. The essential sense is therefore that Capitalism = destruction. First of nature, then of societies, as in its latter phases it cannibalizes what has been previously wrought.

But, as any scientist knows, each conversion loses energy in the conversion to heat. Capitalism depends on a store of wealth that it can vulturize. Upon the "discovery" of the Americas, it had an entire two continents to feed upon and suck the value out of. The product, in terms of energy, most amenable to extraction and utilization to energize the business environment was, of course, gold, and then silver. Once that was sucked dry, the next target was, naturally, soil, which went hand-in-hand with slavery, and then it was is oil.

The rate of extraction of oil was so great, however, that, as predicted by M. King Hubbert, it reached its peak barely 100 years after it's discovery, necessitating a revamping of the entire economy to accommodate such a seismic shift. That was the entire nature of the so-called Reagan Revolution. To rejigger the economy to enable it to extract the value built into it over a generation, that had been meant to serve a larger portion of the economic pie to a larger swath of the population, and instead slowly suck that investment away from the public whose toil paid for it into the hands of a few oligarchs, the upper class, who , since they were the Owners, could be better entrusted with it.

Part and parcel of this plan was ultimate destruction of the Soviet Union. The access to its enormous oil reserves, with the arrival of Peak Oil in the US, could no longer be foregone. Detente was for the sissified Left. In a race against time during which the huge sucking sound was not just the jobs being moved to third world economies that Ross Perot warned about, but the sucking of the insatiable thirst for oil in the US that must be satisfied. And the place to get those reserves was in Central Asia. And the behemoth that stood astride that particular piece of geography was the USSR.

That Russia is now the Number One oil producer in the world, replacing the US, which was the Number One oil producer in the world when Nixon started detente with the USSR, is not an accident.

Obama, like his predecessor, insists that we must wage constant War to maintain the peace. What he's really saying, is that since unrestrained Capitalism = Destruction, and the most efficient engine of destruction = War. Capitalism = Constant War.

To further prove this thesis, merely go back to the definition of entropy, the basic law under which the entire universe must bend. It claims that all matter and energy tend from a state of higher concentration to one of chaos. So an economic system that dictates that all people should tend to their own selfish needs and ignore others, pushes that tendency to chaos towards its ultimate solution: the chaos of War.

That is what the reality of America translates into. The American Dream, in its real atavistic dreams and puerile fantasies embraces and ultimately worships the nihilistic testosterone-drenched trappings of an overly-militarized Capitalist War Machine. It's baked into the cake.

That is the final unmentionable. Like the economic collapse before it, it will supposedly arrive unbidden to our shores. Who could have foreseen that turning every country inward toward jingoistic exultations of their own Superiority and contempt for International Law could result in Nation against Nation? But when citizen is turned against citizen the only thing that unites them is a common hatred of "the other". And united we will stand.Because the haves and the have-mores know all they have to do is present a common enemy and the have and know nothings will rally to their side and gladly give up everything, their life, their liberty and their pursuit of happiness, just so long as they can know they're depriving some alien of it.

The Spoils.

2010-08-10T10:23:00.000-07:00

At a time when workers' pay and benefits have stagnated, federal employees' average compensation has grown to more than double what private sector workers earn, a USA TODAY analysis finds. What the data show:

•Benefits. Federal workers received average benefits worth $41,791 in 2009. Most of this was the government's contribution to pensions. Employees contributed an additional $10,569.

•Pay. The average federal salary has grown 33% faster than inflation since 2000. USA TODAY reported in March that the federal government pays an average of 20% more than private firms for comparable occupations. The analysis did not consider differences in experience and education.

•Total compensation. Federal compensation has grown 36.9% since 2000 after adjusting for inflation, compared with 8.8% for private workers.

"The data are not useful for a direct public-private pay comparison," says self-serving Colleen Kelley, president of the National Treasury Employees Union, "the compensation gap reflects the increasingly high level of skill and education required for most federal jobs".

Speculation went through a bad period for a moment, but the rapidity of transformation, the frenzy for enjoyment, the blindness to expense that is crushing the economy is shaking out the cautious in Washington. Just like Municipalities that find themselves face to face with crushing deficits will not hear of prudence, of economy, of a calm and respectable existence, the Federal Government prefers to keep up the useless luxury and real penury of the new financial innovations whence can be derived colossal fortunes, coming into being each morning to be swallowed up at night.

Passing from adventure to adventure, the Capitol now possesses only the gilded facade of dried up capital: promissory notes consisting of a broken promise and insincere "sorry". In this period of meagerness and madness, Enron, Donald trump, Bear Stearn's, and Lehman's did not risk their future with greater rashness, nor march straighter towards every folly and every trick of finance than now does the Capitol, yet Colleen Kelley can say with a straight face that "the compensation gap reflects the increasingly high level of skill and education required for most federal jobs".

The fortunes being made that are the offspring of those federal jobs, in this "free mark-it-up" economy seem to be at their zenith. They blaze in the midst of ever-swelling homeless populations like a colossal bonfire. The appetites let loose by the Bush tax-cuts for the rich can be satisfied with the shamelessness of triumph amid the sounds of crumbling cities as fortunes are built up in six months. Washington has become a sheer orgy of gold and trophy women. Vice, coming from on high, flows through the gutters, spreads out over ornamental waters, shoots up in the fountains of the public gardens to fall down again upon the roofs in a fine, penetrating rain.

And at night, when you commute to your suburb, it seems as though the Potomac drew along with it, through the sleeping city, the refuse of the town: crumbs fallen from the tables, bows of lace left on couches, false hair forgotten in cabs, dollars that have slipped out of brassieres and jockstraps. All that brutality of desire and the immediate satisfaction of an instinct flung into the street bruised and sullied. Then, amid the feverish sleep of the apparently unskilled, uneducated workers of the private sector, and even better than during its breathless quest in broad daylight, you can feel the unsettling of the brain, the golden and voluptuous nightmare of a city madly enamored of cash and flesh.

There, the Treasury, embedded in its center, yawns like a Neo-Classical alcove, large enough to accommodate the amorous exploits with trillions of dollars. Here is fortune bloomed and insolently displayed. It spends money madly on pure folly; handfuls of bills flung out the window, the reserve emptied each evening to its last nickel, filling again every night, no one knows how, and never supplying such large sums as when Hank Paulson pretended to have lost the keys.

Only with such a backdrop can the conditions exist for a government that for more than a generation has claimed that it needs to get out of the way to let the private sector do its work, then claim that that same feckless, know-nothing institution that is sloughing off all its most sacred trusts and important responsibilities onto the private sector, justify its dazzling salaries by stating that that same private sector is poorly educated and is sorely lacking in skills.

If consistency is indeed the hobgoblins of little minds, Colleen Kelley must need a crane to carry hers.

Wordplay

2010-07-30T08:52:00.000-07:00

S.E.C. Charges Wyly Brothers With $550 Million Fraud ... Wyly brothers....would you invest with them? Plus they're from Texas, the largest criminal enterprise in the country. Like expecting to get balanced views from someone who calls themselves Fox News.

Would you entrust Madoff with your money?

If, as Einstein said, "Compound interest is the most powerful force in the universe", where do you suppose the twerp that imposes ZIRP on the economy is trying to lead us? Zero interest rate policy = zero compound interest = zero growth.

Military-Industrial complex. Since we've systematically taken out the industrial, what it leaves us with is not complex; it's simple, it's The Military.

Market bull while a China shops: Let the arrogant behemoth snort and thrash itself to exhaustion. Since the 9/11 attacks, the US government has done more to destroy US democracy and the US military more to undermine US security than anything any ragtag bunch of virgin-ravager-hopefuls could have dreamed of.

Climate change: The most efficient way to slow down CO2 growth is to slow down its largest perpetrator: Cap that Trade. The elimination of the mere 5% of the global population that consumes in excess of 20% of the fossil-burning, CO2-spewing fuel heating the planet, leaves plenty for the rest of us. Most of the US's citizens haven't made that calculation. Most of the rest of the world has.

Go Ogle Google: The clamor over internet privacy and google spying on everybody is truly mind-numbing when the marching orders of the firm to its employees is right there in its name: Go Ogle.

Homeland Security: People thrown out of their homes and off their land in ever-increasing numbers have no security.

Land of the free: By far the largest prison population on the planet. By both sheer magnitude and percentage of its population.

Home of the brave: Where we conduct war in the Stealth of night against civilian targets and use Predatory, unmanned aircraft to carry out war by assassination.

Build America's Bonds: a borrower is slave to the lender. BAB'll on.

The Krugman's "Nospeak"

2010-07-27T12:44:00.001-07:00

IN this week's The Institutional Risk Analyst's article on government malfeasance, they started with a quote from "Words", an article by Anthony Judt published in the July 15, 2010 issue of The New York Review of Books. In it he states that "Rather than suffering from the onset of "newspeak," we risk the rise of "nospeak..."

In his championing of this new genre of obfuscating journalism, The Krugman has been proving himself the master ever since the onset of the financial crisis, but with this week's piece entitled, "Who Cooked the Planet?", he outdoes himself.

Here we have the loudest proponent of Central Government stimulus, all but standing on this desk and yelling More, More, More!, accusing his Washington counterparts of greed and cowardice. The reason? They, (and he singles out John McCain here for special chastising, as he's "a man willing to sacrifice his principles, and humanity’s future, for the sake of a few years added to his political career") are not taking enough action on climate change legislation.

But Krugman's just doing the same thing as the Senator he disparages. Every job created in the US economy creates an energy hog. It enables another American to trundle up to the energy trough and burn more energy, support an energy-voracious, out-of-control military machine and stoke oil companies to more hazardous areas of discovery and extraction. It is completely hypocritical to yell coward at the Congress (not that he's not right) while simultaneously yelling more stimulus.

The danger that the world will continue down its insane path to humanity's self-inflicted demise comes not from climate-change-denying fools like McCain and his idiotic presidential running mate. They're politicians. Their self-interest, corruption, hypocrisy and use of "nospeak" to assure they never get caught in a lie, by simply never actually saying anything, are all in their job description.

The Krugman, however is supposedly an economist and a journalist (although, with that clownish buffoon Ben Stein writing for the same paper and claiming the same credentials, it's hard to hold anybody to account anymore) , and the job of both those titles is to elucidate the issues for the public, not becloud them by spouting nonsense.

The answer to The Krug's question, "Who cooked the Planet?", is an undeniable, "We did". Call it "The Washington Consensus", "The End of History", "Globalization", "The American Dream", whatever you like, but you can't foist your energy-intensive, carbon-spewing, winner-take-all-and-the-rest-be-damned, capitalist model of resource extraction and capital accumulation-cum-creative destruction onto our entire earthly sphere, bringing our freedoms to them at the point of a gun, and then demurely ask "Who cooked the Planet?" It's like asking "Who Cooked Fallujah?" Gee, I wonder? Who do you think that could've been? Must've been those guys Greed and Cowardice. It sure as hell wasn't me.

Instead, by pretending to be incensed at the Congress while simultaneously demanding that the same Body stimulate the very economic model that's brought the globe to this hazardous state, and pretending that there's no connection between the two, The Krug shows himself to be just another man willing to sacrifice his principles, and humanity’s future, for the sake of a few years added to his "journalistic" career.

TGIF: Timothy Geithner is Fatuous

2010-07-23T08:03:00.000-07:00

While watching Charlie Rose interview Timothy Geithner the other night, I felt my cheek smart as Geithner gave me a resounding slap.

"The government doesn't create jobs", he told Mr. Rose.

There sits the Secretary of the Treasury, one of the plum positions in the federal bureaucracy, some would say it is the highest post in the President's cabinet, yet the holder of it doesn't consider it his job. That explains so much of what goes on in government. Like any slap in the face, it smarted, but it also left an afterglow, a tingling sensation reminiscent of pleasure as I remembered my post of 8/23/2008, entitled:

GM Drives itself off a Cliff.

In that post I reminded us of the fact that,

"On May 28, 1987, Mathias Rust took off from Helsinki, and, flying at low altitude to avoid radar detection, landed a small, single-engine plane in Moscow's Red Square.

This caused considerable embarrassment to the Politburo, and within a year the entire top echelon of the Soviet military was replaced.

On September 11, 2001, airline jets slammed into NYC's largest towering skyscrapers and into the Pentagon itself, killing thousands and wreaking havoc in not only those cities but to the airline industry and the economy as a whole. Not one government person lost their job."

But, now I see. No one lost their job because, as TG states, the government doesn't create jobs, so quite logically, no one in the federal employ is expected to perform a job function. Their positions are mere sinecures. How else to explain the Secretary's remark? His entire career has consisted of government positions, which, he can sit there and declare on national television were not jobs, which must be the truth, since, instead of falling out of his chair, the journalist Charlie Rose didn't even blink an eye.

Now doesn't that explain everything? Now there's logic to how Reagan can fire the entire staff of striking FAA employees for demanding more money, but after 9/11, GW fired nary a one for not noticing jet planes completely changing course and flying for 45 minutes, heading straight for the twin towers and the pentagon. Well, to lose one Twin Tower is unfortunate, but to lose two sounds like carelessness. For such carelessness, anyone in the private sector would be sacked and never find a job again. But now I see. As long as their keeping the chair warm, and dutifully taking their paychecks, Government sinecure-holders are safe from worry of dismissal, because, unlike a job, they have no actual responsibilities.

That's how Timothy Geithner can sit there, never having held down a job in the private sector, and even as government is the largest employer in the country, and regurgitate his Wall St. buddies' mantra that government doesn't create jobs, with one statement, making all federal, state and city employees, into little more than thieves, leaving the US in a worse state than the USSR was in. There, "We pretend to work, and they pretend to pay us" was the paradigm-du- jour. Here, they don't even have to pretend to work and they get not only better pay and access to union membership they get health care services, pension plans and no worries about peremptory dismissal, all by taking part of the earnings of the poor slobs who do have jobs, but who get none of those benefits. Instead they have to work at least five months of the year in order to provide those benefits to all those who don't.

No wonder everyone wants to get a federal sinecure.

No wonder China has been threatening for many months to replace the dollar as the world's reserve currency.

No wonder our largest creditor thinks American debt should be downgraded to junk.

Thanks for setting us straight Timmy. We can't wait to see how you "fix" the GSE's. But I'm sure it'll be to make sure those hard working stiffs pay even more for the housing of those who rake in more money than they can ever dream of making. Because don't forget, all those poor working stiffs, not only have to pay for all those sinecured positions, they also have to pay to guarantee their homeowner loans, and to pay for their mortgage interest deductions that they make on their over-valued homes, kept at that overpriced value by the illegal machinations of your partner at the Fed.

Just think. Between the two of you (yes just 2 of those federal sinecures, and not the highest paying, either), that's half a million bucks. And over you, Mr. Geithner, must be kept careful watch, because you're a well known tax cheat (http://thecaucus.blogs.nytimes.com/2009/01/13/geithner-choice-for-treasury-questioned-on-his-tax-returns/).

Match Point, An American Tragedy: As the Gulf Burns

2010-04-28T11:21:00.000-07:00

Jonathan Rhys Meyer's character in Woody Allen's "Match Point" starkly illustrates one of the writer/director's own quips: "...His lack of education is more than compensated for by his keenly developed moral bankruptcy". A phrase that, not coincidentally as it turns out, is also a spot-on description of Clyde Griffiths, the sad, rather pathetic protagonist in Theodore Dreiser's novel of murky emotions and desperate greed, "An American Tragedy".

Although Wikipedia says the movie "borrows heavily" from Dreiser's novel, the more accurate phrase would be, "unabashedly lifts" the entire plot and, via some adept manipulations, modernizes it and makes it adaptable to Mr. Allen's medium of choice.

In Dreiser's novel, Clyde Griffiths is not only related to someone in the higher echelons of society, he even closely resembles his cousin, making his initial employment as a drudge unacceptable to his uncle who encouraged him in his move from Chicago to upper state New York, and employs him, as well as his own son, in his Company. That leads to Clyde's promotion to floor manager, overseeing a workforce composed almost exclusively of women, the rule being, one must not fraternize with the lovely ladies over whom you preside.

Naturally one of the delectables proves irresistible to Griffith's lonely romantic yearnings. And Rhys-Meyers is a perfect Clyde Griffiths, only Allen puts the forbidden fruit out of reach by casting her as the fiancee of his future brother-in-law. From there it's by now almost stock:

The seduction, the pregnancy, the insistence on the part of the woman to have his illegitimate baby, the phone calls, the threatened exposure, the murder, which, as commented on by the police, appeared so haphazardly planned as to make it seem like he wanted to get caught, the police's discovery of a diary kept by the murder victim of which the murderer was ignorant, the confrontation with the authorities, the investigator's confidence that our erstwhile hero is in fact our killer.

But this is not to criticize or harangue Mr. Allen for his uncredited lifting of Dreiser's character and plot, but more to marvel at his directorial handling of Jonathan. For we are confronted here not with the same person who appears in "The Children of Huang Shi", but instead with the word made flesh, as Dreiser's Clyde Griffiths appears, as if produced by alchemy, in the cool, bland exterior of Rhys-Meyers, hiding an amoral, materialist, impassioned pretender to wealth who sees nothing in the upper class personality that makes them any more deserving than himself of all the riches and luxuries they take for granted, but which will always, unless he connives to make it so, remain out of his purview.

No. For me, what caught my eye and made for a strange (stretched?) analogy, was the similarity between Mr. Allen's reaching back into the past for a vehicle on which to ride into the future. The reason I say stretched, is because it made me wonder if there wasn't an analogy there of the current Fed. By placing an "expert", in the form of Bernanke, at its head who was a student of the Great Depression, and who fancied himself capable of steering the economy as though it were a car, it was fancied he could orchestrate an economic crash, (blandly referred to as "demand destruction", in economists' parlance), in order to slow global growth (and therefore escalating oil consumption), but one from which we could emerge badly shaken, but not severely injured.

But why would he want to do that?

For that we must not only believe the DOE and United States military's Joint Forces Command's projections of future oil production, and its inability to meet projected oil demand, but also realize the utter dependency of the globalized industrial economy, not only on cheap energy, but on that cheap energy coming, in large part, from petroleum and its byproducts.

This was an alarm that was sounded by none other than Dick Cheney in the late 90's, yet not mentioned once during his 8-year tenure in the Bush White House. Because then, before it came to light that the reserves expected in the Caspian basin simply were not there in anywhere near the quantities that had been rosily predicted, Cheney believed peak oil production was something that was in a faraway future.

But by the turn of the century all that had changed. To those, such as Cheney, who had an insider's knowledge that Peak Production was rapidly approaching, it was/is tantamount that the public know nothing about it. Because if peak oil production's imminence were known to the public, it would have the same profound effect on their knowledge of the crimes of the Bush Administration, the Financial industry, and the rest of the Superclass, as the Police's discovery of the murdered woman's Diary in both "The American Tragedy" and Allen's "Match Point".

Namely it would lay bare the fact that, just as in the financial industry, where risk has been surreptitiously collectivized, and profits privatized, the risks associated with the onset of peak oil have been SUV'd onto a hoodwinked public that believes the black gold 'll flow forever, encouraging them to take on more and more debt, believing in a glorious future that will pay for it, and keeping the bank accounts of the Superclass expanding, when all along, that smug band of Oligarchs is fully aware that the party's nearing its climax and the oil-filled punch bowl's about to be taken away, leaving the hoi polloi holding a bag of empty promises and unpayable debt.

So unlike Dreiser's American Tragedy, which concludes with the long trial and execution of the murderer, Woody Allen's ending has him getting off scot-free, with someone else taking the blame for his crime. That is how the denouement of our own American Tragedy will end, with those believing that the oil would flow forever, being blamed, like those who took out subprime loans, for their own credulity, and those who blatantly lied to their face not only flaunting their riches, but, just as Wall St is doing now, patronizingly sneering at the rest of us for being stupid enough to let them. Match point and SET.

The Financier: Goldman Sacks and Pillages.

2010-04-21T09:15:00.000-07:00

In an article entitled, "A Backlash in Europe Has Politicians Calling for a Goldman Ban", the WSJ writes that Goldman Sacks and Pillages "is in danger of losing business with a key group of clients as a result of the fraud allegations it faces: governments in Europe and the U.S."

Reading that reminded me of something:

In Theodore Dreiser's epic tome "The Financier", he tells the story of Frank Cowperwood, a not-quite-rags to riches tale of a banker's son who deciphers the financial subtleties of Philadelphia's city Treasury in such a way as to work its mechanism to provide him, and those in government who aid and abet him, with a substantial fortune, lifting them out of a humdrum, and for some marginal, existence, into undreamed of luxury (well, not quite undreamed of).

Dreiser explains how the city of Philadelphia allowed the Treasurer to lend quite freely from the treasury to certain brokers and dealers that sold the City's debt, and how our hero, Cowperwood, by manipulating the market on 'change, was able to get the City's debt to sell at par, whereas before his manipulation, it could be brokered for 80% at most. This legerdemain left the treasurer breathless and quite agog at the Wunderkind he'd unearthed. And because the Treasurer was allowed to make loans at no interest, since, for some reason, the city allowed the banks which it used as depositories to return any amounts allocated without paying interest on it, the more Frank Cowerwood could leverage the amounts loaned to him, the more money he could make, and instead of paying the City the interest, he could pay the Treasurer, say 2%, and everybody's happy with no one the wiser.

So for years Cowperwood ransacked the Treasury's funds, buying up streetcar lines, setting up dummy corporations and using wealth to create more wealth, not of course, for the Commonwealth, even though it was in fact the source of his success, but always as it ever is, to pad his own pocket and those he knew in government who were allowing his defalcations to occur.

He became more and more extended, using larger and larger loans to buy up more and more of the public's property for his own use, using the very same public's funds, until one day in 1871 the City of Chicago caught on fire, and the entire financial district was transformed overnight into a smoldering pile of ash.

Now up to this point Cowperwood's ascendancy did not go unnoticed amongst the city's denizens, but because "all of the papers were so closely identified with the political and financial powers of the city they did not dare to come out openly and say what they thought. It would not be good for Philadelphia, for local business, etc, if they were to make a row. The fair name of the City would be smirched. It was the same old story."

Because the devastation in Chicago was so complete, it resulted in a concatenating failure of insurance companies reaching as far as Philadelphia and exposing the huge risks sloughed onto the public by the profit-hungry banks and brokers ... it was a time "when all the little rats and mice were scurrying for cover because of the presence of the great, fiery-eyed public cat somewhere in the dark, and only the older and wiser rats were able to act."

However, while the Treasurer's face "was grayish-white, his lips blue", Cowperwood never lost his head; that "thing called conscience, which obsesses and rides some people to destruction did not trouble him at all. Good and Evil? Those were toys of clerics, by which they made money... Something - he could not say what - it was the only metaphysics he bothered about - was doing something for him" (as he went about doing God's work?).

Yes, in the parallel that's evident here, the citizen is now, thanks to our illustrious Supreme Court that bestows on an amoral fictitious entity the same rights but none of the responsibilities of a person, Goldman. The Goldman's that is indeed culpable of all the same crimes as Cowperwood, but will pay none of the penalties - you cannot send a Corporation to jail, which is where Frank Cowperwood ends up, as does the Treasurer, both of whom are thrown under the bus by the true reigning financial powers of the City, who walk away unscathed.

Before he passes sentence on our feckless duo, the judge addresses the Treasurer thus:

"The misapplication of public moneys has become the great crime of the age. If not promptly and firmly checked, it will ultimately destroy our institutions. When a republic becomes honeycombed with corruption its vitality is gone. It must crumble upon the first pressure.

"In my opinion, the public is much to blame for your offense and others of a similar character. Heretofore, official fraud has been regarded with too much indifference. What we need is a state of public opinion which would make the improper use of public money a thing to be execrated. It was the lack of this which made your offense possible.

"The people had confided in you the care of their money... a high and sacred trust. You should have guarded the door of the treasury against everyone who approached it improperly. Your position as the representative of a great community warranted that."

Hopefully you've noticed that those words, although in much need of today, are not being, and will not be, uttered. Instead, the head of the Central Bank is running the Fed's balance sheet the same way that Citi and other TBTF institutions ran their books: like a SIV, and doing so aided and abetted by the very Treasury that's disregarded its "high and sacred trust", and has, instead of "guarding the door against everyone who approached it improperly", has flung it open to be ransacked by fraudsters and embezzlers.

And, now that the WSJ, which was one "of the papers that were so closely identified with the political and financial powers of the Citi that they did not dare (care) to come out openly and say what they thought (knew), for years after the malfeasance that they trumpeted as American Exceptionalism so loudly during the boom, comes out to throw Cowperwood, oops, I mean Goldman's, under the train to hide their own and government's and OUR involvement in this confederacy of dunces' dance that even the Citi's Prince couldn't sit down from until the FED stopped playing the music.

Yes the FED. Because, without the backing of gold, it is only the full faith and credit of the Sovereign state of the US Government that backs our dollar. Banks are no longer the independent financial institutions that we all like to keep on pretending that they are: they are mere vassals of the Fed, completely lacking in resources until the Fed waves its magic wand and creates them. This while they crow about "free markets" and "entrepreneurship", as they work to undermine both.

City officials then, government officials on all levels now, were completely enmeshed in the financial legerdemain taking place. "The Financier" should be required reading in every high school in America. Instead we have them reading "The Great Gatsby" and "Grapes of Wrath", illustrating the perpetrators and the victims, leaving our students without a clue of the methods used by the Gatsbys of the world against the Judds. These methods are brilliantly and clearly set out in Dreiser's book, which, if read, would prevent the Superclass from using the same old tricks with no one the wiser, except the Chairman of the Fed who instead can stand in front of the citizens and claim he never saw it coming and still get re-appointed.

While everyone's playing "Monopoly", Benron Bernankie knows that the real action is the game of "Risk", namely, how to hide it so you can dupe others into taking it on unbeknown to themselves: it used to be called fraud, now it's called "financial innovation".

And by perpetrating it the agents of the federal government, agents we pay generous salaries to keep temptation at bay, have squandered the trust of the world (but not ours: Bernanke, Summers, Geithner, Rubin ... all still in power) and you will reap the whirlwind because of their treachery, while they, with the Goldman case, will use sleight of hand to slough the blame onto their agent, that, as in Greece, merely did their bidding, making them the richer and us the poorer.

Atlas Mugged: Playn'd Brand of EconTerrorism.

2010-04-20T08:28:00.000-07:00

In an article posted on Yves Smith's (author of "Econned") blog, "Naked Capitlism", written by Marshall Auerback, entitled: "Troubles in the Eurozone - Will the contagion affect the US?", he states that, "The President should be using his position of influence, and his considerable powers of oratory, to change public perceptions and explain why these deficits are not only necessary, but highly desirable in terms of sustaining a full employment economy."

Oh please. There is no such thing as a "full employment economy", and if there were, the Fed (and consequently Central Banks all over the globe, specifically, the ECB) has been actively promoting a monetary policy completely at odds with full employment, a policy it cogently refers to as anti-inflationary.

So what Mr. Auerback is suggesting is that the President should jettison any scruples he has and simply come out full-bore with complete lies.

What the financial crisis and its relatively benign effects on the Asian economies should be teaching the West is that industrial mass-production is now completely at odds with industrial mass employment and engenders suppressed wages via cross-border wage-arbitrage. Both India and China have huge reservoirs, (as measured in hundreds of millions) of forced-labor, poverty-stricken, homeless waifs working 12-hour days and mired in interminable hopeless poverty and life-crushing endless toil, that serve as human energy reserves. This is the New Economy the Neo-Liberal regime has fostered and - behind closed doors, as they face the specter of peak-oil production - embraces.

Public and private debt sustainability has exploded as a serious issue in advanced economies, most notably in the eurozone’s countries of Portugal, Italy, Ireland, Greece and Spain—but also in many larger OECD economies, including the U.S. and Japan. These issues stem primarily from a loss of competitiveness, high wage growth and labor costs which outstrip productivity, a nefarious Banker cabal, and undisciplined (to put it kindly) fiscal policies. All of which grew to staggering, unsustainable excesses during the very years the US was attacking sovereign nations in order to bring them our Friedmans (Milton, Thomas and George).

As we celebrate the 40'th anniversary of Earth Day, we should look at the sobering consequences of forcing a Capitalist society to pay for the externalities of their industries' behavior: it drives those industries off-shore where they can influence central governments better. It is no coincident that it was Nixon that "opened the door to China" the same year he instituted the first Earth Day. A dictatorship beholden to the Capitalists for its economic growth, and therefore preferring to shoot its citizens down in full view of the world to letting them think they have the least iota of voice in what "their" government does is much more in keeping with Freidman-ite economic planning than any so-called Democracy does.

So by using workers' pension savings to relocate industrial production to economies that use the power of their totalitarian regimes to suppress wages, ignore environmental degradation and their attendant costs, and consider health burdens to a coughing, asthmatic population to be the burden of the workers, we've shown that a blighted life-expectancy is more desirable than years of no-growth agricultural hard toil and poverty. The way we've seen the Atlas Mugged by Globalization is in no way accidental.

So it should be abundantly clear, from the actions of the Fed and by the Health Industry debates, that the radical Capitalism advocated by the Friedman School of economics that has driven the West for the last generation has no room in it for housing, Health-care coverage, nor education for a middle-class society. All the dynamics of the so-called innovative Neo-liberal regime are toward ensconcing a self-appointed elite class over the rest of society whilst draining the output of Labor into their own off-shore, tax-sheltered bank accounts. So that contagion he speaks of, it should be quite clear, has already occurred; but it went the other way around.

This is what Mr Auerback believes the President should indenture our children to preserving by "using his position of influence, and his considerable powers of oratory". With such claptrap is the road to war paved.

Obama Hitches a ride on Volcker's Vagon.

2010-02-03T08:36:00.000-08:00

Since I couldn't put it better myself, I thought I'd use Clive Crook's logic (yes, a financial reporter who's name's Crook ... who says there's no irony left?):

"Suppose Goldman Sachs were to comply with the Volcker rule by relinquishing its bank status (which it adopted after the crisis was upon us, with the authorities' blessing, to avail itself of the full range of assistance). When the next crisis comes round, would the Treasury be able to let Goldman fail? The Lehman experience answers the question. Lehman was not a commercial bank. If Goldman, having reverted to non-"bank" status, could not be allowed to fail, what would the Volcker rule have achieved?"

Precisely. Even as President Obama mouthed the terms of the so-called "Volcker Rule", the obvious uselessness of it, to anyone who followed the shenanigans at Treasury and the Fed during the denouement of Le Debacle could clearly see, it was nothing, did nothing, changed .... absolutely ... Nothing. As stated in the preceding paragraph, Goldman Sacks America was already a non-bank, they changed its status specifically so that they could inject taxpayer funds and put the American taxpayer and the US's Sovereign credit-rating at risk and then to underwrite the outsize bonuses and salaries that the executives at Goldman's had, yes, literally Sacked, leaving the Company without the necessary capital base to adequately cover their insatiable greed-driven speculative bets.

And now with a nod and a wink, the President stands in front of the country and purports to indemnify the system against a recurrence of the crisis by doing no more than putting us back to the situation where these sharks can again run free to maul and savage the financial system for their own aggrandizement while simultaneously debauching the very system on which their feeding frenzy depends. This is the height of cynicism, as it depends, not only on the government simply pretending it's doing something, but on the reliance on an utterly stupid electorate.

It does for the financial "industry" what stumblebum Benron Bernanke's doing over at the Fed for the housing industry: propping up a failed Ponzi scheme to re-energize profits so as to enhance federal revenues (all those bonuses are most assuredly NOT tax-deductible).

In Charles Dickens' "Martin Chuzzlewit", when called upon to paint the American Eagle and asked how he would do so, responds, "I should draw it like a bat for its short-sightedness, like a bantam for its bragging, like a magpie for its honesty, like a peacock for its vanity, like an ostrich for its putting its head in the mud and thinking nobody sees it....

....and like a phoenix for its power of springing from the ashes of its faults and vices and soaring up anew into the sky!"

But right now our Phoenix is teetering on the brink of insolvency, like so many other municipalities and States in the country, who also depended on constantly growing tax revenues from property owners who overpaid for houses they were assured would keep going up in price. Government on every level, as well as businesses, shamelessly betrayed the American people in order to pad their own pockets. This is the paradigm which Obama's desperately trying to resusitate. The only place tieing us to Volcker's Vagon will get us is Barrack to the Future.

War: The American Way of Life That's not Negotiable.

2010-02-02T06:07:00.000-08:00

The U.S. Senate has voted to raise America’s statutory debt ceiling to $14.3 trillion. The national debt now equals the GDP, and is growing at a much faster pace. This will force the Treasury to borrow more money to both service existing debt and pay for this year’s $1.3 trillion annual deficit. With Ben Bernanke confirmed for another four-year term as destroyer-in-chief of the U.S. dollar, the plan of the Maestro is apparent by looking through "The Eyes of Laura Wiemar":

Adapted From Richard Hughes, "The Fox in the Attic": (italics mine)

Consumption has always to be paid for. Their War has been very conspicuous consumption but there has been virtually no war-taxation to pay for it on the nail. Thus there was nothing really mysterious about this present exhaustion into outer space of every last cent's worth of new value as fast as it was created: this was a kind of natural, belated capital-cum-income levy - though levied now not equitably by any human governance but blindly, by the Market itself. Of this rationale however the sufferers had no inkling. They could not understand their suffering, and inexplicable suffering turns to hatred. But hatred cannot remain objectless: such hatred precipitates its own THEY, its own someone-to-be-hated. In a hell devoid of real ministering devils the damned invent them rather than accept that their only tormentors are themselves and soon these suffering people will see everywhere such devils, consciously tormenting them: Jews, Communists, Capitalists, Catholics, Cabbalists, Homosexuals - even their own elected government. Millions of horsepower of hatred have been generated, more hatred than the real situation could consume: inevitably it'll conjure its own Enemy out of thin air.

The author's writing about Germany between the Wars. This is what "The Maestro" Greedsphan (a la Pitt in England during the first American Civil War, also known as The Revolutionary War) and GW conjured up. The price would be paid, but not by taxation; and when the pound of flesh was being exacted it would be by inchoate forces few would understand or correlate with the method devised for paying for the Iraq misadventure, and would fit in nicely with the Bush mantra of "plausible deniability". Because, although "the sufferers would have no inkling" of what has befallen, the Fed and the Bush administration knew exactly what the reasons were for this inevitable exacting of the pound of flesh overdue an economy bent on consuming the products of an impoverished work force whose own consumption was kept dampened by the totalitarian grip of a Centralized Government an ocean away. This strategy went hand-in-hand with the "cakewalk" fantasy of the Iraq War. So people's reaction tended to be 'as if' they were now at war rather than 'that' they were at War: almost more appropriate to make-believe than to belief.

This same paradigm of neglecting any form of planning or reining in of consumption, but instead stoking it, will have the same dire effects on the economy that the Wars are having: wringing reality out of it by catastrophe, so that no one will have to be held accountable. This is what conservatives mean by let "Freedom" wring. As the Chinese economy, where manufacturing accounts for 40% of GDP, continues to grow at 10% per annum, ours continues to shrink, while using 4 times their energy input in terms of just oil burnt, meaning that, whereas the Chinese have a balance of productivity vs consumption, the USA has a declining ratio, wherein the percentage of energy inputs into the economy produces less and less currency-earning production, ie, leaving no means to pay for increasing energy consumption save by borrowing. No one in Congress or the Executive has said one word as to how to redress this mushrooming imbalance. It is simply not discussed, because, as both The Bush and Obama administration have declared, "The American Way of Life is not Negotiable". What that assures is that the car-driven, militarized economy, in which there are no real civilian employees, as all aspects of the economy are suborned to militarization, will not even bother pretending to disguise itself any longer: without continued and escalating levels of Military expenditure, the US economy smashes into the brick wall erected by stoking global overcapacity and continued workforce impoverishment.

The similarity to the financial meltdown can be made apparent by using an analogy to the USAIR aircraft that was forced to land in the Hudson River. Just as the pilot, using his goose down control, could've kept the geese from flying into his engines, but didn't bother, as he believed himself astute enough, and his engines powerful enough, to not have to consider such trivialities as a flock of fuckin' geese, so Bernanke, at the helm of the world's economic engine, believed its resiliency so strong, and his own stewardship so masterful, that his "subprime crisis can be contained" attitude convinced him to steer right into the turbulence.

Then, having brought the economy to its knees, without wrecking the ship and killing all the passengers, he considered himself to have "Saved the World". But it is precisely that attitude which caused us to fly blindfolded into danger in the first place, and although we've survived the calamity, we have not emerged unscathed, only he has.

And now, so sits the Military. Coyly referring to our gargantuan War Machine as "defense", we brashly drive it through barbed wire, over Sovereign States, through International Law, oblivious of any weakness, as any deviation from The American Way is simply "Not Negotiable". Then when the inevitable blowback comes, we are already prepped in the language of Hate. The They only awaits an explosion our own policies will cause, but that will have the plausible deniability we've come to love almost as much as ourselves.

AIG: Americans' Income's Gone. Now THAT's Class Warfare.

2010-01-29T10:14:00.000-08:00

Following President Obama's speech, we heard the usual Republican accusations that the President was provoking "Class Warfare". But isn't that what the USA's vile version of Capitolism is? Can't even the tunnel-visioned GOP see that the Supreme Court had just crowned The Superclass's victory with their adjudicated laurels by granting money the status of speech, the Corporations with the status of "persons", and then declaring that said persons could not be constitutionally limited in their "speech", ie spending?

The true captured nature of the Democratic Party, in not crying this blatant contradiction from the rooftops, is thus made manifest.

Meanwhile, even as the Supremes call money speech, and the near collapse of a number of financial institutions, brought about by the Superclass's reckless asset-striping, and insane leveraging and transformation of the Fed into a shill for their mantra of "housing prices never go down", resulting in the near-collapse of the entire global financial system and unrepairable damage to the reputation of the US banking system, and leaving the working class without jobs, the secrecy behind the decision to bail out AIG is allowed to fester.

Free speech is now sacrosanct for the Corporations, but the rest us have to pay for it . Just as the "Free"market, means one in which the Superclass gets to arrange the economic system so as all its profits flow to them, they decide what is free speech and what is not. And, as the revelations about the legerdemain and financial shenanigans that went into the federal government commitment of billions upon billions of taxpayer dollars into making good AIG's speculative bets on debauched financial instruments they still cynically refer to as "securities", is most decidedly what is not. To get that information is going to cost plenty.

David Reilly at BusinessWeek in an article entitled: Secret Banking Cabal Emerges From AIG Shadows, and referenced on http://globaleconomicanalysis.blogspot.com/, details the Federal Reserve Bank of New York's role in what many in Congress believe was the New York Fed’s involvement in the attempt to cover up AIG buyout details and obfuscate the identities of the parties who benefited.

But we are at War. Pursuant to the Patriot Act, any citizen, or newspaper, that gives solace to the enemy, (and investigating the financial system that supports the Corporations that provide the wherewithal to support the troops and provide the armament for them to kill our "enemies", is doing exactly that), is suspect at best; treasonous, if they persist. So Corporate bribes, now considered free speech, since they grease the wheels of commerce and helped bring the system from the brink of global financial collapse, are most definitely under the rubric of "National Security", no matter how you cut it.

Get used to it. Americans' Income's Gone. And if you try to expose exactly why, you may just find out how, although physically incapable of actually being a patriot, a Corporation is much better situated to put on a Patriot act than an individual trying to do his patriotic duty and expose the malfeasance of those who can afford legions of lawyers to line up against him.

So in a sense the Repugnicans are correct. When one side has been so thoroughly routed, the War is over. And because the War's over there is no longer a Class War, so President Obama is inciting Class Warfare by rubbing salt in the wounds of the completely prostrate losers, since the Superclass has already won, and there's nothing the other side can do but utter a feeble denouncement of "no fair".

Financial Planning in the Cigarette Economy.

2010-01-28T09:04:00.000-08:00

Financial Planning now amounts to no more than fueling the Wall St. Superclass that's been empowered by Washington to control your money until you need it, when it becomes obvious it is actually their money, always was.... Like health insurance that you pay for at work, for thirty years, which, once you're in your 50's, you're laid off (part of the plan, BTW), the health care ends, and that tens of thousands of dollars You've sunk into insurance is just vapor: the money's gone, the insurance's gone, and soon you're gone. Perfect financial planning ... Wall St.-style.

From financial experts and economists of real brick and mortar, not the Bernanke-type academics who have a formulated plan that no amount of real world data will change, the consensus is that the deleveraging of America and much of the global economy will trump everything else. So any financial planning that you do on a personal basis is doomed from the start. Think of it this way: a citizen of the Soviet Union in the 80's could do as much planning as she wished, but when the US decided to destroy the economy of that Communist nation, in order to gain access to the (Way overestimated) resources of the Caspian region, it destroyed all the hopes and financial planning of every Soviet citizen.

Today, having fallen into the same trap, which it now boasts it used to bleed the Soviet economy: an endless quagmire of War in Afghanistan, with a dollop of Iraq, and soon to be Pakistan and Iran, for extra measure, the US has dug itself into the same pit, and has neither hope nor plan for escape. The difference is, of course, that the US entanglement was/is a planned entanglement devised by a deranged Superclass of elite oligarchs of self-appointed CEO's of defense Industry (which now includes Burger-King and Starbucks, as they rake in billions from lucrative contracts on US military bases) and Financial TBTF conglomerates and Pentagon Generals.

So, think of the "New Economy" as the "Cigarette Economy": sucker your citizens while they're young into consumption that feels good and gives them a rush for the moment but sucks away at any hope of healthful longevity, leaving a populace that gets to their 50's and then rapidly dies off as they're thrown out of jobs, off health care rolls, and whose pension plans dematerialize into bankruptcy before their eyes.

Perhaps the only way out is to make yourself into a business. Even as the atmosphere has turned decidedly deadly for individuals, it is extremely pro-business. Find out what you're good at, (or bad at for that matter: can you say GM, BofA?), and incorporate. Since all the growth in the economy now comes from The State, make it a product or service that the State needs, the most profitable and lucrative are those bent on destruction, and grow from there. Then just light up and inhale the deadly fumes ..... ahhh now You too are Milken it.

What was the Real Third Target on 9/11?

2010-01-15T12:22:00.001-08:00

Worldwatch Institute's president, Christopher Flavin, as quoted in an article in the Guardian, entitled "US cult of greed is now a global environmental threat", writes: "As the world struggles to recover from the most serious global economic crisis since the Great Depression, we have an unprecedented opportunity to turn away from consumerism. In the end, the human instinct for survival must triumph over the urge to consume at any cost."

First of all, it is only NOW an environmental threat? Helloooo!

But mostly, his, one can only assume, cynical, statement, that we have an unprecedented "opportunity to turn away from consumerism", is hilarious. Every step taken on every continent on the globe, has spurred the productive capacity of the underlying private enterprise infrastructure to force the hand of every human on the planet to greater and greater consumption. What does Mr. Flavin think "government stimulus" is meant to stimulate? Intellectual discourse? Art appreciation? Love of nature, or love of books or love of the study of the wonderful variety of creatures that co-inhabit our globe? These are all faggie, commie, pinko, pursuits long derided and severely punished by social isolation and ridicule by the great consumer machine called the USA.

Upon visiting the Phillipines, the investor adviser Tony Sagami, of Uncommon wisdom, raved, "The 12th most populous country in the world is dotted with skyscrapers, BMWs, Starbucks, construction cranes, and luxury stores." If this is how success is measured by someone from the Empire, that's how Everyone, especially poor Pillipinos, are going to measure it.

“China’s retail sales grew at the fastest pace in more than two decades in 2009 as government stimulus spurred demand for home appliances, cars and electronics in the world’s most populous nation."

NO demand increase for books, art supplies, hobby and crafts paraphernalia. The entire push of the stimulus from governments everywhere are for energy-intensive manufactures, not only in the production of the products themselves, but energy intensive in their use. Big-screen TV's eg, often use at least 4X's the power of the ones they're replacing. Utter passivity and nonchalant laziness are signs of prosperity and success, while actually working is seen as an indication of failure and stupidity (who but poor, stupid Mexicans would actually go out and work in fields sowing, tending and picking food?).

As the British elderly start buying encyclopedias, to keep warm by burning them instead of logs in their fireplaces (another increasing source of sequestered CO2 being released to the atmosphere), it's totally ignored that the "there is no such thing as Society" attitude of the Reagan-Thatcher Mafia of plundering the resources of ones country as a right, using taxpayer dollars for exploration, then shuttling all the profits to a smaller and smaller "entrepreneurial" elite of criminals, just fell to the ground with a resounding crash.

Thus has the North Sea been left with dwindling oil reserves now that the price of that resource fetches north of $80/bbl. But it was sold off, the new supply having flooded the market thereby dropping the price to $10/bbl, where it was when GW Bush took office, leaving Great Britain scrambling for resources and capital now, a mere generation after having tapped a bonanza in its own backyard.

Any attempts to slow the extraction of the North Sea oil would have been/were crushed. We couldn't be left dependent on a bunch of sheiks. No. How much more intelligent to sell off at a discount the entire legacy so as to enrich the aristocracy and then leave the rest of the non-entities, for if there's no such thing as society, that's all we are, to be dependent on that same bunch of sheiks, whose reserves would now have been that much smaller, and the UK's that much larger.

The effect has been to allow, per Max Keiser (“Goldman Sachs Are Scum” | zero hedge.) :“They are literally stealing a hundred million dollars a day. Goldman Sachs is stealing every day on the floor of the exchange. They should be in the Hague, they should be taken on financial terrorism charges. They should all be thrown in jail”. (http://www.smirkingchimp.com/author/matt_taibbi)

He declares during his jeremiad that the crash on Wall St has caused, continues to cause, more collateral damage than the attacks on the WTC and Pentagon.

In other words, what Keiser is saying, that no "patriotic" American wants to hear, is that the attack gave the US denizens a chance to see exactly what was being done to them and by whom. Instead, they watched, no cheered, as the very enablers of the attacks literally wrapped an enormous flag around themselves and the NYSE. As patriotism is the last refuge of the scoundrel, Wall St. brazenly announced their true nature, and all were blind to it.

"Yes, we're scoundrels, but we're YOUR scoundrels," that flag screamed, as they feverishly set out to step up, aided and abetted by their lapdogs at the Fed, their War against the Dollar and the American people. Because, yes, that was the third target of the terrorists on that sparkling day in September. The third undemocratic institution they targeted was the FED, not the Congress or Whitehouse, which at least keep up the facade of democracy. But Wall St, the Pentagon, and the Fed are completely unanswerable entities, with their own cultures, all sharing only one thing: complete disdain and contempt for the masses they purport to serve. All three of these completely undemocratic institutions serve only the Superclass. And given their position on top of the power pyramid, that means, so do we.

So as Max Keiser shouts that Goldman Sachs steals every day, his words'll fall on deaf ears, and the response from GS'll be a nonchalant Cheney-esque shrug of their shoulders ("So?"), as they ask, "Well, what did you think we were doing? That's what Capitalism is you fools."

And, no, Mr. Flavin, the human instinct for survival will NOT triumph over the urge to consume at any cost, because the power to change that is not in our hands. It is in the hands of the Superclass ( David Rothkopf's "Superclass: The Global Power Elite and the World They Are Making") that'll be meeting soon in Davos again, to celebrate another year of their ascendancy over the rest of the cowering, blighted, mass of humanity whose ability to do anything else but consume has been all but destroyed.

The twin tower of government deficits and massive misallocation of private capital will continue to dwarf any attempt to change them until environmental degradation and resource constraint brings them crashing down on our heads, while the Superclass sips their martinis and shuts the gates of their tax-payer-funded guarded compounds until the dust settles and they venture out for their next bout of pillaging.

Big Ben's Time is Up: selected quotes from Ben "The Dice-Throw" Bernanke.

2010-01-08T09:47:00.000-08:00

Bernanke's logic is the Best Argument for Abolishing the Fed. Big Ben "The Dice-Throw" Bernanke: "the magnitude of house price gains seems too large to be readily explainable by the stance of monetary policy..."Yes Ben, that's why it's called the baby BOOM generation. Because of the MAGNITUDE of the demographic. That alone would suggest that reducing the interest rate on their safe allocation of funds was/is (as stated by your own Fed in explaining it's current 0% policy) engineered to force them out of those safe instruments, in a scramble for yield by fund managers, into more risky assets, then, by describing those risky assets, both housing and equities, as safe ("house prices have never gone down on a national scale", except during the great depression", now that ends with an 's').

“The Federal Reserve did not do all that it could have (ie did NOTHING) to constrain excessive risk-taking in the financial sector in the period leading up to the crisis,”

"U.S. house prices have risen by nearly 25 percent over the past two years," noted Bernanke, while chairman of the president's Council of Economic Advisers, in testimony to Congress's Joint Economic Committee. But these increases, he said, "largely reflect strong economic fundamentals," such as strong growth in jobs (there was in fact, no growth in jobs), incomes (ditto - no growth, all the growth in the economy was coming from people taking out HELOCs to draw the "ghost equity" out of their homes, much like borrowing on margin as the value of the stock market rises, and a strategy highly recommended by the Fed who, of course, knew the extreme risk involved in transferring that strategy to an asset such as property which is much harder to sell into a deflating market, hence the cheer-leading of the Goldilocks Economy where house prices never go down) and the number of new households (another figure bloated by ever more people being encouraged to take out loans to become members of "The Ownership Society").

So even as Benron decries Congressional oversight for the oligarchy known as the Fed:

Ben S. Bernanke does not think the national housing boom is a bubble that is about to burst, he indicated to Congress last week, just a few days before President Bush nominated him to become the next chairman of the Federal Reserve.

Federal Reserve Chairman Ben Bernanke said Thursday that there will be "significant losses" associated with subprime mortgages but that these losses should be regarded as "bumps" along the road of market innovation.... AhHAHhAHAHA. Let's read Galbraith: "All financial innovation involves, in one from or another, the creation of debt secured in greater or lesser (do you think we could say 'subprime' would mean lesser?) adequacy by real assets."

"The DiceThrow": "Banking organizations of all sizes have made substantial strides over the past two decades in their ability to measure and manage risks.”

Benron: “By increasing the number of U.S. dollars in circulation, or even by credibly threatening to do so, the U.S. government can also REDUCE THE VALUE OF A DOLLAR in terms of goods and services, which is equivalent to raising the prices in dollars of those goods and services.”

Let's ask Galbraith again: "When banks ("The DiceThrow" Bernanke) discovered that they (He) could print bank notes and issue them to borrowers in a volume in excess of the deposits in the banks' vaults, there was no seeming limit to the debt that could be leveraged on a given volume of hard cash. A wonderful thing." And we call China a currency manipulator?

Ben "The Dice-Throw" Bernanke told lawmakers Tuesday he expects the downtrodden U.S. housing sector to improve by the end of the year,

"We will continue to formulate policy to guard against risks to our dual mandate to foster both maximum employment and price stability.” Continue? When did the Fed, during "The Dice-Throw"'s tenure, do either?

"The civilian unemployment rate is expected to finish both 2007 and 2008 around four-and-a-half to four-and-three-quarters percent."

Feb '08:

"I expect there will be some failures” of smaller banks. “Among the largest banks, the capital ratios remain good and I don't anticipate any serious problems of that sort among the large, internationally active banks that make up a very substantial part of our banking system."

"Like gold, U.S. dollars have value only to the extent that they are strictly limited in supply. But the U.S. government has a technology, called a printing press (or, today, its electronic equivalent), that allows it to produce as many U.S. dollars as it wishes at essentially no cost."

Many homeowners might have saved tens of thousands of dollars had they held adjustable-rate mortgages rather than fixed-rate mortgages during the past decade, though this would not have been the case, of course, had interest rates trended sharply upward...the Fed shortly thereafter started their "baby-step" interest rate increases to as high as 5 1/2%, intending, per "The Dice-Throw"'s statement in defense of his idiocy, to raise them, as the "Taylor rule" suggests, to 7 or 8% before stopping.

As the master of “activist” monetary management, Mr. "The Maestro" Greenspan’s reign at the helm of Fed oversaw a move into uncharted territory with respect to marketplace interventions and manipulations. What was the instrument of this manipulation? Interest rate policy, the only lever available to the Fed that Benron now denies has any effect.

"A particularly important protective factor in the current environment is the strength of our financial system…our banking system remains healthy and well-regulated,…"

"I have no particular regrets. The housing bubble is not a reflection of what we did, as it is a global phenomenon."

Alan "The Maestro" Greenspan, November 23, 2007

“I was not going to be the Federal Reserve chairman who presided over the second Great Depression,” Ben Bernanke told PBS .... note that's in the past tense.

"It wasn't to help the big firms that we intervened," argued Mr. "The Dice-Throw" Bernanke as he discussed intervening to help the big firms.

This would be funny if it weren't so dire. But let's look at the irony instead. The Fed has a dual mandate: full-employment and keep inflation from destroying the monetary system. It long ago gave up on full employment, as it is inflationary, and it is now actively working, by its own admission as justification of its 0% Fed funds rate, to create inflation. In other words, there is no need for the Fed, by its own logic it should be abolished. But as Galbraith says, "Those who are involved never wish to attribute stupidity to themselves."

Let's get it straight, since we're stuck with idiots in high places. When the Fed keeps interest rates at 1%, while inflation rate is even a modest 4%, that's a negative 3% on savings accounts. Meanwhile, that same policy that keeps savings accounts paying Real negative rates, pushes nominal housing appreciation up by 25% in 2 years, that forces people to take risk they otherwise would not, as it makes saving money for your retirement absolutely hopeless. Every dollar you save starts losing its value immediately. The only way to have any growth is to take those savings and plow them into an asset that appreciates over and above the inflation rate. Because, as Einstein said, “The most powerful force in the universe is compound interest”, but he forgot to mention that the most powerful countervailing force in the universe is compound inflation, that sucks the value of your money toward zero by the time you go to spend it (as we'll all see in the not too distant future).

"The Dice-Throw" Bernanke is a liar. If interest rates had nothing to do with the housing bubble then, then they have nothing to do with housing prices now, and so they should be raised. What do you think the odds of that happening are? The banks should be required to pay an interest rate to their depositors of at least what the Fed's paying them to park their reserves. If this a "free market" economy, can you please tell me where I can put my savings outside of the banking system, besides under my mattress? Why is there no competition for the most fundamental of needs: a safe haven for ones savings? Instead we are left with "The Dice-Throw" economy lorded over by a liar and a fool whose sole intent is to force savers to take their money out of bank accounts and place them into the Casino known as the wailing Wall St. Wall St then takes those funds and does, guess what? Invests in the regions of the world that they know are experiencing stronger economic growth than the U.S.:

46.0% South Korea
53.4% Thailand
57.9% Vietnam
58.3% Singapore
74.2% Taiwan
74.3% China
76.3% India

Excerpt from Thomas Wolfe's "You can't go Home again"

2010-01-06T09:41:00.000-08:00

Reading Matta Taibbe's excerpt from Edward Harrison's of Credit Writedowns that was posted on http://www.nakedcapitalism.com/ :

"Everyone had a hand in the bubble, from the congressmen who killed regulatory initiatives to the regulators who snoozed at the wheel to the GSEs to the Fed to the banks to the ratings agencies to the lenders. I don’t think it’s really controversial to say that, but it does seem like there’s an argument brewing about what that across-the-board complicity means."

I couldn't help remembering an excerpt from Thomas Wolfe's "You Can't Go Home Again", that I read in 2005, in the midst of the mania that precipitated the financial collapse, that had sent a tingle down my spine:

"Remember What?"

"Remember when you established what you boasted was 'the fastest-growing bank in all the state' - and weren't too particular what it grew on"?

"Remember when one of "the boys" borrowed money from 'the fastest growing bank' to buy 200 acres on that hill across the river -he turned to the Mayor - and sold the land to the town, for a nice profit, for a new cemetery?"

"Remember what?" - the voice rose suddenly high and sharp. "Do I remember how You've run the town through all these year? Do I remember what a good thing You've made of politics? You've never aspired to public office, have you, Parson? Oh , no - you're much too modest. But you know how to pick the public-spirited citizens who do aspire, and whose great hearts pant with eagerness to serve their fellow men. Ah, yes. it's a very nice little private business, isn't it, Parson? And all 'the boys' are stockholders and get their cut of the profits - is that the way of it, Parson?

"Remember what?" he cried again.

"Do I remember how the broken fragments of a town that waits and fears and schemes to put off the day of its impending ruin? Why, Parson, yes I can remember all these things, and how I was satisfied with, say, a modest 5%. So I am not in the big money Parson. I remember many things, but I see now I have spent my substance, wasted all my talents in riotous living - while pious Puritans have virtuously betrayed their town and given their whole-souled services to the ruin of their fellow men."

Again there was an ominous pause, and when he went on his voice was low, almost casual in its toneless irony:

"And do you think you can go home again?"

Then, as if to emphasize what I have constantly argued, but always to have fall on deaf ears, about the fact that Schumpeter's so-called, much-heralded, "Creative destruction" is always preceded by a mad, always-denied, Destructive creation, Wolfe goes on to describe to a "T", the frenzied, self-congratulatory zeal of the world of finance as it hails its own cleverness and superiority over the re-invention of the wheel yet again, in its ever more unstable form, as Wolfe uses literature to describe what John Kenneth Galbraith would later detail in his "A Short History of Financial Euphoria" as "the vested interest in error that accompanies speculative euphoria":

"Everyone bought real estate; and everyone was "a real estate man" either in name or practice, the barbers, the lawyers, the grocers, the butchers, the builders, the clothiers, all were engaged now in this single interest and obsession. And there seemed to be only one rule, universal and infallible - to buy, always to buy, to pay whatever price was asked, and to sell again within two days at any price one chose to fix. It was fantastic. Along all the streets in town the ownership of the land was constantly changing; and when the supply of streets was exhausted, new streets were feverishly created in the surrounding wilderness; and even before these streets were paved or a house had been built upon them, the land was being sold, and then resold, by the acre, by the lot, by the foot, for hundreds of thousands of dollars.

"A spirit of drunken waste and wild destructiveness was everywhere apparent. The fairest places in town were being mutilated at untold cost. In the center of town there had been a beautiful green hill, opulent with rich lawns and lordly trees , with beds of flowers and banks of honeysuckle, and on top of it there had been an immense, rambling, old wooden hotel.

It had been one of the pleasantest places in the town, but now it was gone. An army of men and shovels had advanced upon this beautiful green hill and leveled it down to an ugly flat of clay, and had paved it with a desolate horror of white concrete, and had built stores and garages and office buildings and parking spaces - all raw and new - and were now putting up a new hotel on the very spot the old one had stood. It was to be a structure of sixteen stories, of steel and concrete and pressed brick. It was being stamped out of the same mold, as if by some gigantic biscuit-cutter of hotels, that had produced a thousand others like it all over the country....

Regional Mall Vacancies in U.S. Rise to Record on Unemployment

U.S. Office, Shopping Center Construction Spending May Fall 13%

If Fed Missed This Bubble, Will It See a New One?

And all we can think to do is try to recreate the destructive, manic idiocy that preceded the bursting of the bubble, as shovel-ready projects stand poised to destroy anything that's still standing that has one iota of grace and beauty and to ravish whatever's left of the countryside to despoil it with more monstrosities no one wants and no one needs. This is what we call progress and what we now force down the throat of the rest of the world at the point of a gun and then get our skirts in an uproar because one madman objects so strenuously to this mayhem that he's willing to blow himself to pieces to try and put a stop to it, or, to at least perhaps, cause a lull in the wanton mayhem we insist is "progress".

At some point someone has to stop us, but since we've decided that full-spectrum domination is our god-given right, no one can. So when our world comes crashing down around us, again brought down by our own blindness and hubris, you can be sure we will have "shovel-ready" scapegoats whom we will blame. That is why Bernanke can be re-appointed with barely a whimper of protest. He best epitomizes the Spirit of the USA: Deny culpability for the consequences of our own actions and shuffle the blame onto someone, anyone, else. The USA is now simply a Greek tragedy and we have now all become Oedipus: willfully blinding ourselves as we fearfully await the third act.

The government Is the free market.

2010-01-01T11:06:00.000-08:00

"Throughout the year – and despite global market and economic recoveries – the Federal Reserve held short-term interest rates down at near zero. Importantly, Fed holdings of mortgage-backed securities ballooned from nothing to end the year approaching $1.0 TN. This unprecedented monetization reliquefied markets, pushed mortgage borrowing costs to record lows, fueled a refinancing boom, and worked surreptitiously to transform hundreds of billions of problematic “private-label” mortgages into (market-appealing) government-backed securities."

As stated above by Doug Noland of Prudentbear.com the government is the Market for MBS, which should now be more-accurately referred to as GBS.

Right now, eg, there are people with 2-income households, no kids, yet so hopelessly underwater they've stopped paying the mortgage. This results in a $50k interest deduction for which they are no longer eligible .. the banks may not be getting their money, but guess who is? The Federal govt and the States. The real ($$$) reason for the Fed's forbearance of accounting legerdemain.

In a quote by Andrew Jackson posted on the IRA's web-site (http://us1.institutionalriskanalytics.com/pub/IRAMain.asp), the crux of the crooks' methodology is revealed to be as old as what used to be referred to as "the Union":

"Experience should teach us wisdom. Most of the difficulties our Government now encounters and most of the dangers which impend over our Union have sprung from an abandonment of the legitimate objects of Government by our national legislation, and the adoption of such principles as are embodied in this act. Many of our rich men have not been content with equal protection and equal benefits, but have besought us to make them richer by act of Congress. By attempting to gratify their desires we have in the results of our legislation arrayed section against section, interest against interest, and man against man, in a fearful commotion which threatens to shake the foundations of our Union. It is time to pause in our career to review our principles, and if possible revive that devoted patriotism and spirit of compromise which distinguished the sages of the Revolution and the fathers of our Union. If we can not at once, in justice to interests vested under improvident legislation, make our Government what it ought to be, we can at least take a stand against all new grants of monopolies and exclusive privileges, against any prostitution of our Government to the advancement of the few at the expense of the many, and in favor of compromise and gradual reform in our code of laws and system of political economy."

Google shut down another financial blog, while Bernanke, the high priest and prophet of the insanity of waste Capitolism has descended to, referred to the "savings glut" again... ie we peasants are no longer allowed to have savings accounts, but are instead advanced "credit", the terms of which can be changed at any time, for any reason, by the credit-issuing institution, granting the government, which now runs these same institutions, co- conspirator status with banksters, whose now-obvious odious intention is to enrich themselves and utterly impoverish their customers by confiscating their wealth via usurious interest payments, and other financial hidden traps, cogently referred to as "innovations", that lie waiting like beartraps, armed with brutal teeth and buried out of sight in small print, to tear the flesh and break the bones of their clientele.

Meanwhile, in The Huffington Post, a "Move Your Money" campaign has been initiated, in which, working with the IRA (institutional risk analytics), a list of more than 5000 banks is used to encourage flocks to move their savings to fundamentally sound institutions and away from money center banks, the true scope of the disaster that continues is made apparent. The one great innovation of the aughts was the ATM, but, of course, the smaller banks don't have the financial clout to have any. Every single one listed for the zip code I plugged in, which was in a major metropolitan area, necessitated a trip downtown whenever I should need cash, as they had no other branches.

Of course, that's only one problem. The main one being that, like all industries since the rise of the internet and financial computerization, should those banks become profitable, the well-financed mega banks will simply buy them up, since they have unlimited access, via the largess of their friend Benron, to the printing press of the US government.

Because without Capitolism, there is no capitalism. What the debacle should have shown us is that without the government's presence in the markets, chaos reigns, and as Martin Wolf stated, we can not "even take the survival of civilisation itself for granted."

Yet, as he goes on to say, "the financial system remains damaged. Not only does it still own vast quantities of the “toxic assets” its “talented” employees created, but the world is not addressing the structural causes of the crisis. In some ways, the oligopolistic banking system that has emerged from the crisis is riskier than the one that went into it."

It is with this backdrop that we blithely re-appoint the smug, over-confident, self-congratulatory fool that presided over the entire globe's slide into a chaos so stark that the survival of civilization itself was in question. To repeat the same actions and expect different results is the very definition of madness. Remember this when the government is incapable of stopping the slide to catastrophe when the next crisis, engineered by the same crooks and charlatans, aided and abetted by the same fool, strikes again.

A Fool and Your Money

2009-12-04T10:21:00.000-08:00

Arundhati Roy, in a series of interviews with David Barsamian that were complied and published in a book entitled "The Checkbook and the Cruise Missile", when talking of the Indian judiciary, said that : "You cannot have an undemocratic institution in a Democracy, as it works as a sort of black hole into which all unaccountable power flows. All decisions are then made by that Institution, because it's the one institution whose policies cannot be questioned."

This calls to mind two things. First, Dick Cheney, the only Vice President who no one ever voted for, as he was nothing more than a party apparatchik who foisted himself onto the Bush ticket, without ever having run for public office. Then once in, he attempted to make his actions unaccountable by maintaining that he was part of neither the executive nor legislative branch of government. Which brings up the second thing: now Bernanke is up to the same trick. Claiming that his “ability to take actions without engendering sharp increases in inflation depend heavily on his independence from short-term political pressures”, he has not only fought attempts by Congress to audit the Fed (despite the fact that The Constitution of the United States empowers the Congress "to coin money [and] regulate the value thereof"), but tried to usurp even more power to the institution, and himself, at the height of the financial crisis last year (exactly as Naomi Klein's "The Shock Doctrine" predicted he would).

Having called the 2004-2007 super bubble the "great moderation", claiming it was brought about by his own superior monetary policies, now that it's burst, spewing caustic lye on everyone's pension savings, and home values, corroding them and their hopes of ever retiring, he washes his hands of any responsibility for the mess that he created during his acid reign, but is completely incapable of "mopping up". He claims that should the very Congress, empowered by the Constitution to coin money and regulate its value, influence monetary policy decisions, it would "undermine the confidence the public and the markets have in the Fed to act in the long-term economic interest of the nation.” But neither does the public have any such confidence, nor do the actions of the Fed for more than a generation been in the interest of any but a small minority of the nation: the denizens of Wall St., who, by their own screed, have nobody's interest in mind but their own, and who hold that if you do give a damn about anyone else, it undermines one's effectiveness. Only when everyone acts in their own selfish interest can the Markets work.

Yet even though all these reasons would make Bernanke unacceptable as Fed Chairman, the tantamount reason is that he is either a liar or a fool, and quite possibly both. Like his predecessor, he thinks that reflating house values and rekindling the mania that caused the collapse of the house of cads in the first place will solve the nation's economic woes. We can then continue merrily shipping jobs overseas and continue our utter dependency on a transportation system that gets more and more onerous and untenable by the day. Not once has the Chairman addressed the underlying economic impossibility of sustaining a consumer-driven economy on the backs of a labor force that competes with Asian peasants ripped from their agricultural lands and herded into cities to work for slave wages who have no home or car payments, no impossibly expensive medical infrastructure or social security, or workman's comp, or unemployment insurance burden, no War Machine, whose fuel needs alone equal those of the entire nation of Sweden, and no Wars, from Drug Wars to Wars on terror, to increase the interest penalty the government pays on its escalating national debt year after year.

There is no recovery, can be no recovery, because things must be allowed to fail before they can recover. Instead all the monetary resources needed to fuel a recovery are, continue to be, squandered on misallocation of capital to sustain atavistic dreams of full-spectrum domination of a minority of mankind over the rest of the planet when it can't even sustain itself without economic legerdemain and financial malfeasance. A status quo Mr. Bernanke is intent on maintaining even though his ability to do so is woefully inadequate.

Perhaps even without a new chairman, the Fed's dual task of stimulating the nation's economy while simultaneously promising a strong Dollar policy would be impossible. But, as even CEO's in the private sector have to resign when their incompetence is so glaringly manifest, it is time to rid the Government of this last vestige of the Bush years, and give someone with credibility a chance.

The WSJ printed an article today that shows the Chairman for the liar he is:

"For gold and oil, Bernanke's low-rate policy works, weakening the dollar so commodity prices go up and providing traders with ample funds to buy into the expanding bubble. But for small businesses and new workers, capital rationing is devastating, spelling business failures and painful layoffs. Thousands of start-ups won't launch due to credit shortages, in part because the government and corporations took more credit than they needed (because it was so cheap).

Under emergency stimulus, corporations are borrowing dollars hand-over-fist, pleasing Wall St. while using the proceeds to expand their foreign businesses. In a more market-oriented allocation of global capital, the U.S. will be a big winner, especially for jobs and small businesses.

The Street utterly loves the Fed's largess, (under Bernanke) earning massive profits from trading unstable currencies, the carry trade (borrow short-term dollars near zero, buy longer-term assets abroad), and the high-margin process of transferring America's capital abroad. (Bingo!)

The hitch is that there isn't much trickle-down to normal jobs and small businesses from the sophisticated, zero-rate arbitrage that is propelling asset prices ever higher."

That capital they speak of comes from the same place all capital comes from, the savings of labor. And those asset prices Bernanke's policy is pushing up are the prices of houses that, together with the downward pressure on wages, pushes them further and further out of workers' reach. There can only be one end to this, and it won't be pretty, but the reaction of Bernanke is completely predictable ... as the stimulus works to provide an anemic recovery, it'll be because of his astute management, and when it comes crashing to the ground, it will be everyone's fault but his own; ...oh... and could you please cash this check? It's for the next million bucks I'll collect for the "great mode: rationing" that the economy will descend into by the time I'm through with it.

Ben Bernie-anke Made Off with the Truth Again: Got Bilked?

2009-11-21T08:55:00.000-08:00

This week, Toll Brothers Inc. CEO Robert Toll said: "Yesterday’s subprime is today’s FHA. It’s a definite train wreck and the flag will go up in the next couple of months: Bail us out. Give us more money.”

Across town, Bernie-anke was saying “Our commitment to our dual objectives, together with the underlying strengths of the U.S. economy, will help ensure that the dollar is strong…”

For those that are unfamiliar with the fact, the Federal Reserve currently has two legislated goals--price stability and full employment- talking up the dollar is in the purview of the Treasury.

Meanwhile Asian governments are threatening (and taking) capital controls as a way of protecting their economies from an invasion of cheap US dollars via the 'carry trade'.

US Fed - Benron Bernie-anke's - policies have driven short-term interest rates to zero and below. This creates free money for the banks, permits a massive carry-trade of speculation against the dollar and puts pressure on "investors" to abandon the safety of Treasuries and chase riskier assets higher. This is not an accident, it is a policy goal... one that's completely at odds with "ensuring that the Dollar is strong".

With no economy to sustain it, the dollar is buoyed solely by its reserve status and the international assumption that it is a safe-haven investment in times of financial turmoil: what Doug Noland refers to as "Monetary Disorder". So what does Bernie-anke know that we don't? The only way the dollar will strengthen is if some global calamity struck.

The most likely and most helpful, would be an air-strike by Israel on Iran. This would accomplish at least 2 goals of Bernie-anke's, neither of which is the legislated one, but having failed miserably at stabilizing inflation it then saddled the economy not only with huge unemployment numbers, but also the liabilities it took on from the banksters. So now the Fed must mask its utter incompetence and take on strengthening of the dollar as its new mandate. Of course, we already know how well this is going to turn out.

But masking problems is what we like to see done, so that is why an attack on Iran is so advantageous. By causing a massive oil panic, it'll mask the real underlying reality of peak oil production having been reached some time late in 2005. With the oil disruption caused by Israel's action, the instability in the market will be ascribed to whatever actions the Iranians will take in retaliation .. done, no more talk of peak oil. When its realities finally come to the surface, Bernie'll either be gone or can just pull out from his stock-phrase portfolio, the perennial favorite, "Nobody could've seen it coming...".

And since the dollar's still seen as a safe haven in times of international turmoil, it'll strengthen against all asset classes, including gold. After all, who cares how much gold you horde if you ain't got the ICBM's to keep US predators from blowing it up?

And with a stronger dollar, oil will get more expensive for the rest of the world and cheaper for US, even if its price doesn't nominally change... which of course, means inflation will go up in the US, but that's the point, that's what Bernie made-off-with the-Fed wants, higher inflation, to get those home prices even more out of reach, so the Treasury's $8k bait gaffes even more foolish fish, 'cause without it, no one's buying the Kool-aid.

So then, what is the Fed's new mandate? Since it's actually ignoring its legal requirements, it can't really be called a mandate, so more its assumption then. Well, since it now working hand-in-glove with the Treasury, its #1 task is the skewering of the dollar, while talking it up, to keep the value of dollar debt held by China, the Gulf States, and Russia deteriorating, and #2, to keep interest rates low, facilitating the burgeoning deficits, national debt and the $ carry trade (which keeps demand for dollars artificially high, a la Japan's carry trade in yen of a mere 2 years ago). This will ensure the collapse in bubbles being blown all over the world. That's when the Fed can contemplate interest rate increases again, as the social unrest...well riots... and destruction of American-owned property on a scale not envisioned by its Masters, I mean Owners, will panic Americorpse into actually investing in American labor, which is much more stupefied, malleable, and just more inert in general, making it much less likely to destroy capital's investments in productive capacity.

The resultant collapse in demand for oil from the two developing economies of India and China will result in the masking of peak oil long enough for the blame to go the next administration, and for the inevitable blow-back (that nobody could've seen coming...") to be blamed on how the world hates our Friedom, as we wheel out the revenge machines for some more hard-earned retribution on infidels, with Palin screaming at the Military: "Drill, Baby, DRILL!

Shhh...Roubini says, ...

2009-10-28T08:35:00.000-07:00

Roubini: "So all the gold bugs who say gold is going to go to $1,500, $2,000, they’re just speaking nonsense. Without inflation, or without a depression, there’s nowhere for gold to go. Yeah, it can go above $1,000, but it can’t move up 20-30 percent unless we end up in a world of inflation or another depression. I don’t see either of those being likely for the time being. Maybe three or four years from now, yes. But not anytime soon."

Hmmmm ... how a little financial meltdown can change one's whole perspective. With people's 401's and IRA's devastated and no hope of providing even a modicum of retirement income, an investment that in 3-4 years will provide 20-30% gains ( with considerably higher upside potential maintained by other financial advisers .. and don't even mention Jim Sinclair) is considered nonsense. That's exactly what my financial adviser at Fidelity told me 5 years ago. A young man named Chin with a degree and as much financial acumen as a ventriloquist dummy. Because, that's all Fidelity (or Lehman's or Bear's, or, well you get the point) looked for in their HR hiring. Just as in the days of Big Blue, which then meant IBM, no Data Center manager could go wrong buying IBM, even if there was a much better deal to be made buying PCM (plug-Compatible Machine) vendors' equipment, (which meant their equipment was capable of plugging into the IBM channel). Similarly, investment banks' HR looks for a degree, and then safely hires those with the appropriate approved university credentials, even though that credential meant only that the "analyst" knew nothing more than how to parrot the notions fed to him like pablum to an infant.

Had I listened to Fidelity's advise, the recovery of my portfolio, to higher than what it was before the meltdown, could not have happened, and Fidelity's advise to steer clear of gold, recorded for my protection, would have no repercussions for them, only for me: I'd be destitute. They'd still be rich, their analysts retained, as they made money for the firm. That is their job. Making your portfolio perform well for you is not. That should be self-evident in a country proudly proclaiming that greed is all that matters, but somehow it escapes most investors, who quaintly believe investment firms have their customers' interests at heart.

Since I started being interested in gold, around 2002, because the goldbugs were the only financial analysts who weren't buying the Kool-Aid of "New Economy" nonsense, the price of the precious metal has quintupled...not in 2002, nor 2003, nor 2004, n0r 2005, but slowly and steadily, gaining each year, so had I listened to Roubini then:

"Maybe three or four years from now, yes. But not anytime soon."

His words would have been music to my ears. I had no intention of spending my savings for retirement sooner than "2/3 years from now" (well meaning then as "now"), so why should I care what roller coaster ride the Stock Market was going to gyrate through if I could be reasonably assured of 20-30% gains if I simply bought gold? Having had to listen to the exact same garbage spewed by the likes of Cramer throughout the 90's, only to witness friends in my industry (computers and networking, which includes telephony) lose everything, it was truly mind-boggling to me that the charlatans could use the exact same strategy and doublespeak to do it all over again, only on a much grander scale.

If Capitalism had proved its superiority over Communism, then exactly what were we doing developing a "New Economy"? The tacit admission is that Capitalism, without the competitive edge furnished by an alternative to its "Greed is good, and everyone trying to fuck over everyone else will magically make everyone better off" philosophy, is doomed to failure by its own absurd contradictions epitomized by Reagan's mentor, Margaret Thatcher's, denial that society exists, and only the individual matters, even as we send young men off to be killed, demanding they surrender their individual self-interest in the name of society.

So perhaps Roubinin's right and "all the gold bugs who say gold is going to go to $1,500, $2,000, are just speaking nonsense". But everyone's speaking nonsense. And since the turn of the millennium, when the Y2K bug was the nonsense du jour, the nonsense of the gold bugs has been, and continues to be, the most sensible nonsense in what has (predictably) turned out to be not a "Goldilocks" economy, but an "Alice in Wonderland" economy, sustainable only by constant warfare, continuous lies, and infinite economic expansion on a finite globe, all fueled by ever decreasing supplies of dirtier and more expensive fuels, driven by consumers being laid off in record numbers, with those keeping their jobs being paid less and working less hours, thrown out of their homes in unprecedented numbers, no prospects for job creation in either of the worlds' largest economies, being told to increase their savings and pay down their credit cards and making sure they spend more, all simultaneously. Even Lewis Carrol'd have trouble being more nonsensical than those expectations .

The Destruction of Credit in the Evil Empire of Debt

2009-10-10T08:46:00.000-07:00

Education, like home-ownership, is now merely a method for tying people to their jobs. One would think that referring to employees not as Personnel, but as sub-human resources would enlighten them to the fact that, to HR, employees are just that, resources. And like other resources, there for Corporations to use up and throw on the slag heap. Since most people now know that promised pensions won't materialize and health benefits are a sham that will be exposed only at that moment when you need them the most, employers now look at level of debt to ensure that their workers are more akin to indentured servants, leaving them more exposed to employer abuses and threats, using the threatened loss of their jobs as extortion to force them into working unpaid overtime hours, giving up vacation and sick time, and always be on call, even when "time off" is granted.
Here in the country that determinedly set out to destroy an entire economic system, while clownishly referring to it as "The Evil Empire", even while simultaneously cheer-leading greed as the driving force behind our own (greed is one of the 7 deadly sins, making our empire, by our own definition, the truly Evil (and proud of it!) Empire). Yet millions of people have gone into debt to "educate" themselves, yet finish college and still don't have a clue, nor one iota of curiosity, as to even what the Fed is, never mind how it or the rest of the Capitalist structure functions.
This ignorance makes it possible for the Ayn Rand/Milton Friedman acolytes to change a partially harmful illusion about human nature into a totally noxious one. Then, as if to make sure that the illusion will bear every possible evil fruit, it invests this proudly vice-driven class with precisely that total monopoly of power which is bound to be destructive of workers' rights, which is what the rabid anti-communist right wanted in the first place. A mechanism was needed to keep those uppity workers in line, and a mountain of debt coupled with a dearth of alternative employment opportunities was just the thing to put them into a virtual strait-jacket.
That's all higher "education" gets you today, and the price we pay for allowing our educational institutions to turn into corporate centers for indoctrination, for which the hapless future greed-mongers are forced to pay for themselves.

Hahaahah: Let Friedom Wring (every cent of your future earnings into the profits of your future employers. Now that's American exceptionalism.)

The Rape of Utopia

2009-10-08T07:26:00.000-07:00

In the PBS special "The Rape of Europa", Directed by Richard Berge and Bonni Cohen, with Joan Allen, the systematic theft and relocation to Germany of trainloads of art from all over Europe is documented. During this documentary, they show many scenes of the aerial bombings of World War II and its effects on the Art of Europe. Especially on public art, something which, for an American, is quite shocking. Not that it was destroyed, but that it existed at all. To see Florence, and then to consider the sweltering abyss known as Houston, is to see that, luckily for us, our cities would have no worries about saving public works of art, as there simply aren't any.

Of course, there's various reasons why that not only is, but should be, so. For example, the magnificent Cathedrals were built while the peasants lived in crushing poverty, the Churches and upper classes extracting money from the impoverished to pay the artisans and craftsmen that put the knowledge of centuries to work to erect monuments to their faith, following the example of the Egyptians. The United States had a different idea of what to do with its wealth, for good or ill.

The same cannot be said for America, which, contrary to what the people of the United States think, is a vast land extending across two continents, with thousands of years of history, of which the United States is only one country. One country whose citizens actually believe that it is America, but it is only in America. Never having bothered to conceive of a name for itself, it settled for a definition, and ever since has usurped the name of the continent for itself.

But what "The Rape of Europa" inadvertently reminds us of is the rest of America. Because as the documentary wrings its hands for the lost, stolen and destroyed art of Europe, and stands aghast at the crimes of Hitler and the Third Reich, it never considers for a moment the fact that Hitler merely did to Europa what Europa did to the entire continents of North, but especially South, America. Inca and Mayan art wasn't just transported across the oceans to the marauding "civilizations" of the most barbaric of continents. It was melted down and destroyed to recapture the metal, the art itself considered worthless, having been wrought by the primitive hands of savages. For centuries the gold and silver artwork of an entire continent was confiscated and shipped to Europe, so its artists could make "real" art, art which we now can use to show how horrible Hitler was and ignore that he was not an aberration, but merely a continuation of the logical result of a christian culture's consideration that the habitat and endowment of the rest of the world was its own. Hitler merely applied the same hubris to Europe itself. A Europe that for centuries considered the White race as the Master race was now confronted with a Reich that merely applied that same philosophy to a narrower subset of that so-called White race.

An entire documentary was constructed and painstakingly filmed and researched, a documentary on art, no less, and nowhere is there even a glimmer of self-awareness that what happened to Europe was nothing more than what Europe had done, on a much larger scale (in fact they use that very concept ... the enormity of the scale of Nazi theft), to the entire globe.

Now, the United States, wrapping itself in the Uber-Capitalism doctrine espoused by Milton Friedman, carries out the same mission: subjugate the economies of the globe to produce the necessities and goo-gahs demanded by the citizens of US, all in the name of the dogma of "free enterprise", even while maintaining the largest nuclear arsenal on the globe at the disposal of that same Europa, should any sovereign nation have the temerity to believe that the wealth within its borders belongs to its citizens.

When we attack Iran, with the same nonchalance which we attacked and destroyed the national treasures of Iraq, there's little doubt that the great art of Persia will be nothing more than fodder for smart bombs, cruise missiles and the great US predators. But we won't call it rape. We'll call it Friedom.

Bernanke calls the shots, Feds: "We win"; Bails : "You lose".

2009-08-22T08:55:00.000-07:00

"We saved the world from disaster," said Fed chief Ben Bernanke in a speech in Jackson Hole, Wyoming on Friday.

"The world has been through the most severe financial crisis since the Great Depression," he said. "As severe as the economic impact has been, however, the outcome could have been decidedly worse."

Wow... Only in America, eh?

We saved the world, and in the very next breath, the voice changes from the active to the passive as "The world has been through....

Now what you should notice is that Benron disavows any responsibility for bringing on the greatest financial disaster since the Great Depression, while simultaneously showering himself with praise because he "saved the world".

The other implication you'll miss ... (sorry... but you always do) ... in his self-serving proclamation, is that it's the world he now considers himself responsible for, not the American polity by whom he's employed and from whom he extracts his overpaid salary and benefits, but to whom he has zero accountability, his recent whining, condescending, tax-payer funded, Town Hall dog-and-pony show notwithstanding.

Which, perhaps, is as it should be when you are the steward of the world reserve currency. But what it means in point of fact is that the citizens of the United States have no Central Bank to perform for the American economy what Central Banks in other Nation States do: act on behalf of their own citizens.

The Bernanke Fed has never been held accountable for the debacle it wrought, leaving President Obama hanging out to dry for all its mistakes, forcing him to incur trillions in obligations and never saying a word to his fellow Republicans to shut up or put up. Instead of going on the road with his President, he goes on his own road tour, touting his own superior abilities, without saying a word to the critics of Obama's outsize deficits, with not a peep about how it was HIS policies, HIS responsibilities, HIS mismanagement of the economy that made those deficits necessary and continue to reward the exact behavior that engendered the collapse.

The most egeregious example of this is the valuing of assets held by collateral by the member banks at fantasy levels while denying loans to the homeowners who actually have to make the monthly payments that create the revenue stream that the banks count on. So the bank holds the deed for your house and says it's worth $300,000.00 on their books, in order to disguise the fact that their technically insolvent. You go to them for a loan because you need surgery to remove a cancerous cyst. LOAN DENIED. The reason? The asset you wish to put up for collateral ... your home ... the same home that Bernanke lets the Bank claim is worth $300,000.00, isn't enough collateral for the $150,00o.00 loan that you need to pay for the operation that the insurance company you THOUGHT you were paying insurance to cover, won't pay for.

Because, of course, the banking cartel knows the house isn't worth even the $150,000.00, but you must keep paying the mortgage and taxes on it as if it were still worth $300,000.00, and they can continue to pretend they have adequate capital ratio to cover their mounting losses, but of course, only on FHA government- guaranteed homes sales, despite a capital reserve ratio that's completely inadequate to allow it to make ANY new loans, or even remain in business, the truth be known.

So this is our great, self-proclaimed Savior, Our most Holy Redeemer?

“Bernanke is a source of certainty,” according to Guy Lebas, chief-fixed income strategist at Janney Montgomery Scott LLC., uh-huh. Certain to plunge us into GD2, certain to continue to promote the interests of the rich over the poor, capital over labor, Wall St over Main St., certain to cement the culture of hubris over economic cooperation, of destructive growth over sustainability, of the dominance of financial oligarchy over any voices of democracy in Congress.

Benron recently spouted: "“Our forecast is for moderate but positive growth going into next year. We think that by the spring, early next year, that as these credit problems resolve and, as we hope, the housing market begins to find a bottom, that the broader resiliency of the economy, which we are seeing in other areas outside of housing, will take control and will help the economy recover to a more reasonable growth pace.” (November 8, 2007)

On that same day, Fannie Mae released its third-quarter 10-Q filing, in which it concluded:

"We have also experienced a significant increase in delinquency rates in loans originated in California, Florida, Nevada and Arizona. These states had previously experienced very rapid home price appreciation and are now experiencing home price declines. The conventional single-family serious delinquency rates for California and Florida, which represent the two largest states in our single-family mortgage credit book of business in terms of unpaid principal balance, climbed to 0.30% and 0.99%, respectively, as of September 30, 2007, from 0.11% and 0.37%... We expect the housing market to continue to deteriorate and home prices to continue to decline in these states and on a national basis. Accordingly, we expect our single-family serious delinquency rate to continue to increase for the remainder of 2007 and in 2008...”

Upon perusing the entire report, Doug Noland, of Prudent Bear.com commented:

"It is difficult for me to believe that the “sophisticated money” will not attempt to be the first ones out of the hedge fund Bubble. Meanwhile, a backbreaking Credit Crunch is about to strangle the U.S. Bubble economy. “Structured finance” is a bust, while the major banks now recognize that this is not a fleeting liquidity crisis. To survive, they will move rapidly to get their risk under control. If there were a more ominous scenario than the one developing, I’ve never thought of it."

This was not a one-time blip, this was a conclusion reached from steady analysis week after week, posted on the internet for free for anyone to read, and anyone with an economists' background couldn't help but see which analysis of the situation in the US was correct.

The re-apppointmnet of Benron is on the same scale of monumental error as the re-election of the man who appointed him, and the calamity it ensures us, on the same scale as the catastrophe, caused by the same arrogant blindness, as 9/11. Both claimed that no one could have seen it coming and ignored the warnings from those that did.

Why would anyone listen to a Benron Forecast? Every time the oracle at the Fed opens his mouth, he's either lieing or wrong, can it be he's sunk to the level of Jim Cramer? Could it be Wall St. uses him as a contrarian indicator? His prognostications are so consistently wrong that there's no other explanation, perhaps that's the certainty Lebas is referrring to.

An End, But no Beginning: Wolfe at the Door.

2009-08-20T10:48:00.000-07:00

The USA, in the fall of 2008, was like the USSR in 1989. It had come to an end and a beginning. In September, in New York, in a marble-fronted, colonnaded building on Wall St that's wrapped itself in an enormous US flag, that both hides and scurrilously boasts of, its scoundrel's heart, there was a sudden crash that was heard throughout the world. The dead and worn out husk of the USA that was had been cracked and split right down the middle. But the living, changing, suffering thing within- the real USA- the USA that had always been, the USA that has yet to be, began slowly to emerge. It came forth into the light of day, stunned, cramped, crippled by the bonds of its imprisonment, and for a long time it'll remain in a state of suspended animation, full of latent vitality, waiting, albeit impatiently, for the next stage of its metamorphosis.

But the leaders of this nation have fixed their gaze so long upon the illusions of a false prosperity that they have forgotten what the USA looked like. Now they saw it: its newness, its raw crudeness, and its strength, and they turned away. "Give us back our well-worn husk, where we were so smug and comfortable", they said. So they tried word magic. "Conditions are fundamentally sound", they said, "I don't anticipate any serious problems among the large, internationally active banks that make up a very substantial part of our banking system", the Fed chairman intoned - by which words they meant to reassure themselves that nothing now was really changed, that things were as they always had been, and how they ever would be, Wall St without end, amen.

But they are wrong. They do not know that you can't go home again. The USA, and the world, has come to the end of something, and to the beginning of something else. But no one knows what that something else will be, only that out of the carnage and the uncertainty, the wrongness of the leaders, grows fear and desperation, and before long hunger'll stalk the streets. Through it all there is only one certainty, though no one sees it yet. The USA is still the USA, and any solution that comes to it will be the USA's.

The collapse of Lehman's was like the fall of a gigantic boulder into the still waters of a lake. The suddenness of it sent waves of desperate fear moving in ever-widening circles throughout the world. Billions of people still do not know what to make of it, and the waters of the lake have closed over the fallen boulder while most people have gone about their daily work just as usual.

But the waves of fear have touched them, and life is not quite the same. Security, even the sense of it, is gone, replaced with dread and an ominous foreboding in the air. It is in this atmosphere of false calm and desperate anxiety that Obama began his presidency. He had seen the boom-mad economy tottering on the brink of ruin. He had read in the eyes of people on the campaign trail the fear and guilty knowledge of the calamity that was impending and that they are still refusing to admit even to themselves ... especially to themselves.

He knows that they are still clinging desperately to the illusion of paper riches, and that madness such as this is unprepared to face reality and truth in any degree whatever. This gives him a premonitory consciousness that he is in for something. For, the "birthers" notwithstanding, he is an American, and, unlike his silver-spooned predecessor, he knows that there's something wounded about America. He knows that there is something twisted, dark, and full of pain which Americans have known all their lives - something rooted in our souls beyond all contradiction, about which no one has dared to write, of which no one has ever spoken.

Perhaps it came from the Vietnam War, and from the ruin of that shameful defeat and its degraded aftermath. Perhaps it came from causes yet more ancient - from the evil of Constitutionally-enshrined, racial-based slavery, and the hurt and shame of human conscience in its struggle with the fierce desire to own a Continent. From the knowledge that the phrase "Life, Liberty, and the Pursuit of Happiness" only comes at the expense of "Death, Slavery, and the Surety of Despair", for those who dare stand in our way. Or perhaps from the tormented and repressed lusts of a harsh and bigoted theology, intolerant and always prowling, stirring stealthily, as hushed and secret as the thickets of Louisiana's bayous.

For it's not only the financial system that was hurt. There is another deeper, darker, and more nameless wound throughout the land. What is it? Is it in the record of corrupt officials and collusive governments, administrations twisted to the core, the huge excess of privilege and graft, protected war criminals and oligarch gangster rule; the democratic forms all rotten and putrescent with disease? The bloated surfeits of monopoly, and the crimes of wealth against the very workers that make such wealth possible? Yes, it's in all these, and in the daily tolling of the murdered children, the lurid renderings of promiscuous and casual slaughter everywhere around the globe, and in the pious hypocrisy of the press with its swiftly-forgotten prayers for our improvement, the editorial moanings while the front page gloats.

But it's not only at these outward forms that we must look to find the evidence of our nation's hurt. We must look as well at the heart of guilt that beats in each of us, for there the cause lies. We must look, and with our own eyes see, the central core of defeat and shame and failure which we, in embracing the lie of the Ownership Society, have wrought in the lives of even the least of these, our brothers.

And why must we look? Because we must probe to the bottom of our collective wound. As men and women, as Americans, we can no longer cringe away and lie. For if we do not look and see it, we shall all be damned, may already be damned, together.

But instead, we continue to avert our gaze; pretend that all we need is a little more time to get back on track; pretend we believe the next lie that'll salvage the tattered remnants of the myth of American exceptionalism even as that very financial system, for which we've mortgaged the future to save from its own calumnies, continues to deliberately undermine the foundations of technological prowess and Industrial productivity on which that exceptionalism was founded. Yet we derailed from that track, not only because the roadbed was rotten, but because the destination it was speeding us toward was hollow.

But instead we foam at the mouth and claim gay marriage will destroy an institution that's been debased to a Las Vegas sideshow; and pontificate over the sanctity of life even as a Secretary of State posits that the death of half a million children was worth the hypocrisy of the Iraqi sanctions; or fulminate over death panels for those who've led long comfortable lives while denying millions of children access to not only medical care, but to even a school lunch.

While billions of the world's poor strive to institute some form of government or societal protection against the vagaries of the ill winds of a heartless economic system, Americans strive mightily to tear them down, preferring to strip themselves naked to the predations of Capitolism than to see anyone they deem undeserving avail themselves of one cent of government largess.

These are not the actions of a prosperous society, but the desperate measures taken by a people who see themselves as besieged on all sides, a people who know, despite all the signs of excess and comfort surrounding them, that no matter how they strive, they can never save that which they earn: they are the actions of a people that see themselves as doomed.

Faith-based Economics

2009-08-11T10:29:00.000-07:00

In the government's Cash for clunkers, no cash is exchanged, and no clunkers, (which per Merriam-Webster's definition= a dilapidated automobile, not a perfectly running car that's less than fuel-efficient) are taken off owners' hands. In an article by Caroline Baum posted on the above-referenced link to Mike Shedlock's website, she describes the broken window fallacy whereby it's believed that breaking a window is good for the economy, as it employs the services of a glazier. Why it's called a fallacy is that the money spent on the glazier could have theoretically been better spent elsewhere. Ms Baum then uses this argument to underpin her own, namely that, in the cash for Clunkers program:

" What is unseen is what would have been produced by the private sector had the government not confiscated future revenue via taxation."

That is a specious argument, and proven, in the last decade, to be consummately false. Just as capitalism's triumphalists have cheered the skewering of the communistic economies, while conveniently forgetting the shameful, horrible abuses by capitolists (not a misspelling, but my coining of the New Mercantilism...Capitalism in the 21'st Century is impossible without Capitolism: the pouring of billions of dollars into a country's Capitol City to gain further advantage for the already advantaged, Adam Smith be damned) whose stinginess and hubris occasioned its birth.

Like that particularly myopic set, Ms Baum seems to forget that we've seen exactly what the private sector would've done with monies not confiscated via taxation: they'd have indulged in currency speculation, hell, they still are speculating, or on new yacht-building companies, more Linens 'R Us, more Sharper Images and more New Homes in far off subdivisions accessible only by more than an hours driving in those new "efficient" SUV's bought with the Clunkers' destruction.

Although far from agreeing with the Orwellian program, it still rankles that this idiocy that the private sector's individual greed and myopia, based on a fallacious assumption of ever-growing energy supply (specifically an ever-growing cheap energy supply), will lead to a balanced humming economy, is still clung to; even after it just failed spectacularly, as its promulgators knew full well it would, in full view of the entire globe.

They simply can't accept the fact that the market is there to serve the people, not the other way around, or that as they had their run, the most enormous misallocation of investment capital in the history of the world took place, in fact, continues to take place, because the government against which Ms Baum rails is in the hands of the very Corporations that need to have their excesses reined in. The monies they generate need to go not to the shareholders or into the coffers of Americorps, but into the hands of the small business owners trying to satisfy the needs of a more and more desperate customer base to buy those things they need to survive, not to use billions of dollars to buy ads to convince the populace they need more brands of laundry detergent and another line of cosmetics, or celebrity scents.

What is unseen in this particular model that the likes of Ms Baum like to ignore, is what would've been produced had the entire economy not been skewed to provide for the stoking of narcissistic vanities by making unprovable ridiculous claims of lasting beauty and health in a culture that celebrates the rise in shares of McDonald's, or Coca Cola ... again, no mention is made of what could be produced in an economy that doesn't have to pay for the deleterious health effects of eating the horrible artery-clogging, soul-killing fare of fast-food as they use their profits to push out more healthful restaurants and bring their death-food to other countries.

So tell me the Cash for Clunkers program is no good because there's no cash, and the trade-ins aren't clunkers, or that it's no good because it increases the CO2 released to the environment, as all those vehicles have to be manufactured, or that having more efficient vehicles induces people to locate further and further from where they work, or because it simply siphons future demand into the present, presaging a future collapse in demand, or that it encourages an expansion of an already glutted productive capacity in car manufacturing, but puleeze, don't continue to harp on this simple-minded rubric that the private sector, ie those with their dollars already tied up in bad investments that they now are focused on the Government making good for them, will magically make malinvestment disappear. It won't. It has, in fact, been made quite manifest, that the opposite will happen. Private investment dollars are by their nature conservative and chase after what they consider to be out-sized risk-free investments; hence the overcapacity in productive capability of everything that is considered hi-margin products: from SUV's to Cisco switches, and the languishing of any company that produces real necessities such as window-glazing.

What we forget in our rush to cash in our own chips, is that that glazier sitting around with no work and slowing losing his skills and going out of business, is that a hurricane will hit someday, but there'll be no one left who has the foggiest idea of how to fix a window.

Market Forces are Armed Forces.

2009-08-10T07:56:00.000-07:00

"We will pay for this one way or another. We will pay to reduce greenhouse gas emissions today, and we’ll have to take an economic hit of some kind. Or we will pay the price later in military terms. And that will involve human lives."
GEN. ANTHONY C. ZINNI, former head of the Central Command, on climate change.

That's a quote printed in the NYT, making it a trifecta of points on which the military and I agree, and making it a co-conspirator on the issue in the Climate change hoax the Republican Party insists scientists the world over are putting over on the world, presumably simply for kicks.

The other two points are Peak Oil Production, and the relative safety of employment in the Armed Forces as opposed to in an American Company as a civilian. Using as much oil as the country of Sweden makes the military very sensitive to the former, and the need to recruit from a more reluctant civilian base during what has been blithely accepted as the new paradigm of Perpetual War, lead them to post the stats of the relative safely of employment by the military on their recruitment website. And those stats only included urban mayhem such as stabbings, fires, muggings, etc, and completely discounted the carnage on the freeways, which claims more loves every 2 weeks than the WTC outrage; but for that cartrocity, there's only acceptance. Why quibble with a transportation system that demands the blood sacrifice of more than 50,000 dead/yr? Who needs those million souls lost every generation merely trying to get from point A to point B? No wonder living in a state of perpetual War barely registers in such a polity's consciousness.

Which is why General Zinni's remark is so, ...well...remarkable. Because the link between climate change and the economy, specifically the global economy, where any idea of any economic system that differs from The United States of America's virulent form of predatory, free-for-all Capitalism is brutally suppressed and any green shoots of a healthier economic system jackbooted out of existence. This has left us with no Plan B, no sustainable economic mode of existence that sustained life for centuries, whether because they were too remote or too subsistence level to bother with, that has survived the onslaught of globalization, will remain intact. From tribes in the Amazon whose home, the rainforest itself, or the Inuit and other Eskimo tribes in the far North, who were too small to have captured Mordor's all-consuming eye, will simply be steam-rolled out of existence.

But with the failure of our fossil-fuel-based, we-win-you -lose, might-makes-right, winner-take-all, system staring us in the face, which is what Gen'l Zinni's statement, albeit obliquely, suggests, there is no viable alternative, because anything that was viable has been trampled underfoot. And any hope for a resurgence of other modes of existence taking root are all frustrated by the OECD's response to the crisis, which is to further fuel their dependence on oil-burning carbon-spewing infrastructure by cash-for-perfectly-good-assets-to-destroy-them, and heralding the fact that now the country of China has become the number one market for new cars, all of which sucks away any resources for investment in a less carbon-intensive future.

So if you wonder about the human lives to which General Zinni's statement refers, ask the American Indians. You can't voluntarily "reduce your carbon footprint" and think that's going to help your grandchildren (or, as has been becoming increasingly clear, even to the most obtuse among us, your children). Or closer to home, look to transit riders, whose fares have gone up dramatically, and armed guards greet riders as they disembark (Especially in San Francisco...higher fares for better service? nope. To pay the goon squad), the same riders who don't smog up the air, but whose taxes pay for $4500/vehicle boondoggles that INCREASE the amount of climate-changing CO2 discharged into the air (http://www.businessinsider.com/cash-for-clunkers-is-selling-more-trucks-not-small-cars-2009-8).

In not signing the Kyotot protocol, President Bush said that it would be bad for the economy. The policies of his 8-year reign assured that we would be even more addicted to oil at the end of it and that any attempt to change that dynamic would be even worse for the economy once he was through, but that those who put him into office and supported him would continue to profit, first from its last splurge, then from its collapse. That is exactly what's happening. Those lives lost Gen Zinni refers to may very well be our own, but more likely they'll be those on other continents, of people less responsible for the conditions that precipitated their demise than us.

But let freedom ring its death knell for others so we can continue our pursuit of loneliness...oops, I mean happiness.

Mr. Obama ....Tear Down this Wall St!

2009-08-04T07:56:00.000-07:00

After seeing "Some Assembly Required"'s (http://ckm3.blogspot.com/) question asking, "Where did the money actually come from, if not from some poor guy on a production line, oil rig, drag line or tractor?", it was a plus to see Paul Krugman write at the end of his last op-ed piece: "Neither the administration, nor our political system in general, is ready to face up to the fact that we’ve become a society in which the big bucks go to bad actors, a society that lavishly rewards those who make us poorer."

Could it be that people are finally beginning to understand the scope of the betrayal and theft that's been perpetrated on us by a renegade, smug oligarchy of criminals with access to the highest echelons of the Federal government? Having read Joe Nocera's Sunday NYT column in which he cringingly grovels at the feet of high finance for having "saved us" from financial collapse, a collapse that they engineered, profited from, and the rubble of which they are unapologetically using to set the stage for the next debacle, siphoning yet another generation's savings into their bank accounts (hidden and stashed away in off-shore accounts), it seemed as though the nation had simply accepted their new state of utter impoverishment and conceded to banksters their freedom to confiscate every nickel the working class has ever saved, and call it "Earnings".

But in an economy, a nation, where ANYone gets paid less than 12 grand a year and the President of the country gets paid less than half a mill, the very idea that these charlatans who actually despise anything approaching real labor, have their billions of dollars of booty, gleaned from looting the economy, referred to as "earnings", there is something rotten to the very core.

And the rot has corroded the very foundation of the economy to such an extent that it gives the lie to any V, W, U, L, or sigmoid shape they wish to call this recession, and reveals it as the depression-sized event it truly is. But not for them....Goldman Sacks America precisely because they consider themselves above the State. The government is only there to serve their needs and keep the citizenry in line. As the Reagan government used the Church of Islam to further its Realpolitikal agenda in the Middle East and fight its fight against the godless commies, and then discarded them like a used tissue when they were no longer needed, so Goldman Sacks America has segued Capitalism to Capitolism, using jingoistic cries for "Freedom" whilst enslaving the polity in inescapable, unpayable debt, with the government as its armed deputized lackey.

But the "resilience" of an economy in which the output of more than 300 million souls is siphoned into the pockets of a few score of depraved megalomaniacs, each vieing for the position of Master of the Universe, was only as elastic as the wealth it had accumulated. Once that had been plundered, from pension plans (well, what they thought were their pensions) and used to build an entire economy of peasant workers a continent away, completely terrorized by their own government, where it was free to foul the air and poison the rivers, Capitolism needed a source of suckers to buy the goods the newly "productive" slave labor was churning out ... and Washington was happy to oblige.

As Benron Bernanke was so kind to explain last week, the Fed is free from the influence of Congress or the wishes of the majority, but, as befits a Capitolist economy, it is not free from Executive pressure or Wall St. machinations. Thus we had a Fed Chairman, Greedspan, cheerleading the extraction of equity built up over a lifetime in people's houses, and being "monetized" for the enrichment of his cohorts on the street while he kept interest rates at such a low level that this newly available cash was called "free money". Thus did Capitolism deliver to the free-for-all market the proceeds from the sweat of the brow "from some poor guy on a production line, oil rig, drag line or tractor", i.e., from the productive economy, into the pick-pockets of the band of ransacking, charlatans of the unproductive, government-supported, smarmy, human debris that make up stoneWall St.

....Mr. Obama.....tear down this Wall St.

It's the Stupid Economy.

2009-07-24T10:13:00.000-07:00

Continuing to try and make sense out of the economic wreckage, and rebuild an economy that's based on reality instead of puerile fantasies of instant gratification and mechanized domination and elimination of every culture on the planet that's not oil-based, there are certain contradictions that must be confronted and discussed as though we were a nation run by adults with some iota of concern for their children's future that supersedes their immediate desire to purchase their love at the discount store.

Although there are many subjects that come to mind, the three that resonate the most are:

Globalization and the Nation State
US Imperialism and Democracy
Peak Oil Production and Predatory Capitalism

Why these three are tantamount is that each of them is impossible to maintain in tandem, yet that is what we pretend we can do, and that is how those in power maintain their positions. In a country where one of the major "news" outlets can actually call itself Fox News, naming itself after a creature known for its craftiness and duplicity, and calling itself fair and balanced while unabashedly championing every flawed policy of the Republicans, while vowing to do its best to destroy the country rather than allow one policy of the opposition to ever see the light of day, there is no outcry against the impossibility of the coexistence of the three topics enumerated above, because only jingoism and Nationalistic charlatanism holds sway. The very idea of rationally discussing such topics is suspect and deemed unpatriotic because it assumes a possibility that the US may be a less than perfect Nation, and our motives less than purely altruistic.

The most important of this triad of topics is peak oil. Because the direction the country took after it lost its predominance as the world's major oil producer, while maintaining its position as, by far, the world's most voracious oil consumer, have colored every National and International policy the US has pursued ever since. With never a discussion, much less an admission, that the change in this most fundamental of dynamics, in an economy completely enslaved to its addiction to profligate energy consumption and perceived god-given right to destroy anything in it path that blocks it from satisfying this all-consuming thirst, the thought that such a monumental change may have altered our relationship with the rest of the world, is dismissed out of hand. The one event, the WTC bombing, that any reasonable person would have thought would surely bring about some kind of soul-searching, some mature questioning of our role of global destroyer of any economic system on the planet that stands in the way of the all-consuming, resource-stripping juggernaut of Predatory Capitalism, was instead used as a pretext to notch the madness up to an even higher extreme, and any who questioned this stratagem was attacked as unpatriotic and treasonous.

Which is, of course, nonsense. The pursuit of Globalization, militarization, Corporatism and Imperialism are all intricately entwined with the reality of Peak Oil Production...which is , of course, why this reality is kept in the background and never discussed. In one of Arthur Conan Doyle's Sherlock Holmes episodes, his perspicacious detective astounds the local yokel investigator by lying in the dirt and extracting an item from the mud, making him look much like a conjuror. When the astonished local asks "but, but, but, how?", the ever-composed Holmes replies: "Because I looked for it."

Having constructed in his mind a sequence of events that must have occurred in order for the facts in the case to have been possible, a piece was missing that was easily recovered once he knew what to look for, and where it was most likely to be found. Similarly, by pretending that Peak oil production is a phenomena in a far off esoteric future, pondered only by wing nuts and America bashers, instead of upon us right now, the power structure can pursue its Imperialistic, Globalized agenda without its own citizens ever looking in the mud for what's quite obviously there for anyone to find who knows what to look for.

There's something in the rigging, Captain: Capitolism

2009-07-23T12:36:00.000-07:00

The Boeing Co.'s (NYSE: BA) profit rose in its second quarter, thanks to shipments of military aircraft. A success of the free market again: huge government contracts that pay even when the contractor can't deliver without raising the cost, calling it an "overrun"; having won with the lowest bid, because it had every intention, right from the outset, of jacking up the price once it was too late for the government to back out. Thereby still paying out huge dividends to its shareholders, which, by any definition of the terms, is Centralized planning, state-sponsored terrorism (since the planes are used exclusively to strafe and bomb civilian targets and populations (when was the last time a US AIR Force jet was threatened by another nation's Air Force? That's right....WWII)), and market manipulation. That's what GSE's do, manipulate the market by providing a government guarantee: the rich take the profits, the country takes the risks. GSE: Lockheed, Martin Marrietta, and Boeing are all GSE's. So is Halliburton, KBR, Exxon/ Mobil.....ok, ok , you get it, the entire free market system is a rigged game, and that' s the whole reason its flailing. Without the backing of the US government, US Corporations would be be non-existent.

But more specifically, the reason the Keynesian stimulus is not working is because it's going into the wrong pockets, the same pockets it was going into before: the military and all its adjutants, and ancillary industries, which now include Burger King and Starbucks. Neither enterprise, having been forced to close stores in America, had to close a single outlet in Iraq or Afghanistan, as they have a captive customer base... and I do mean Base.

All this ties in with Supply side economics and the Orwellian newspeak used to talk about free markets even as they have been deliberately turned upside down and the needs and wants of consumers are dictated to them from a centralized authority that creates demands for everything starting with the very money it needs to produce the goods, and the consumers need to buy them. Everything is as centrally planned as in Soviet Russia: badly. With the difference being that there is no collective, no community, no organization allowed to exist other than the individual and the family structure, barricaded in their suburban trap and thinking they're "free".

We've become so inured to the inability of the economy to function without huge stimulus provided it by military spending that we've blinded ourselves to the fact that such spending is an enormous on-going Keynesian stimulus to the economy. This means that all the wrong industries prosper and grow. Only those with Federal government access and funding via Pentagon contracts survive, as they are the ones that'll be enabled to pay higher dividends, thereby attracting more investor dollars: this is the only free market remnant in what is now Capitolism: if Washington DC isn't your major customer, you lose. Everything else has been outsourced to foreign countries to produce, since the profit margins needed to make them in a country that doesn't allow its industries to use public resources such as rivers and streams as the receptacle of their waste aren't large enough.

More on this next.

Someone Needs to Clean Big Ben's Clock.

2009-07-22T10:15:00.000-07:00

Per today's Washington Post article, BernBanke argued before the House Financial Services Committee that the Fed's actions helped prevent a global economic calamity, and he promised an exit strategy to head off fears of inflation. Somehow he forgot to mention that it was the Fed's (specifically Bernanke's) "fears of inflation" that ratcheted up interest rates to a level that brought on the biggest depression in the world in the first place. Quarter after quarter, in baby steps, to give the market time to unwind their over-leveraged positions and enhance the profitability of the crash, the Bernanke Fed, in order to fight off the specter of inflation, made inevitable by the Greenspan put, and put a little bit of teeth into the Bush Treasury's "strong dollar" stance, while US exports continued to dwindle and banks continued to swindle, brought the financial system to its knees.

The BernBanke pincer play was to trap the ARMageddon buyers of low-cost ninja loans into extortionate, hi-interest home payments, using the same strategy so successfully used on the current generation of college loan recipients, car buyers, and credit card users: trap 'em and sap 'em. One problem with this strategy was, of course, that the States have their own laws, one of which is the non-recourse nature of home loans in most states (something many home buyers themselves were unaware of).

So as the market for new loans got saturated and the profit-outlook of the ilks of Goldman Sacks America started to dwindle, the interest payments from all those it had suckered into loans that they would never, ever, be able to pay off would increase, offsetting the decline in those hefty securitisation fees from a declining new loan volume.

The fly in the ointment of this plan, was (is) of course, inflation. And since the Fed has long since stopped putting even a pretense of functioning for the overall economy, and operates under the sole mandate of providing profitability without risk to the entire banking sector while shifting the risk onto the backs of the rest of us, inflation was the only thing the BernBanke Fed concerned itself with, the rest of the economy could follow the "Free Market" mantra and fall right into the toilet: that's for the politicos to hash out. BernBanke's only job was to provide a smooth road for easy profits for all his friends and supporters who got him the job in the first place. In that respect, nothing has changed, and nothing will.

So, far from "the Fed's actions helped prevent a global economic calamity", the Fed's actions are precisely what caused the global economic meltdown. But, like the journalist who sat close-lipped while Cheney's daughter defended her father's legacy of "Keeping this country free from attack for 8 years", rewriting history in a single phrase, that just happened to be a blatant, ridiculous lie, we sit transfixed while this leftover from the most criminal administration in US history does the same. Big Ben's time is up. Like Condoleeza Rice, stating that "We never discussed planes flying into buildings", even though terrorists had already attacked the WTC with car bombs and there was a movie out in which the very scenario of a plane being commandeered to fly into the White House had played in movie theaters across America, Benron can whine that he never saw the largest financial collapse EVER coming, despite his $200,000.00 paycheck to do precisely that, and still expect to keep his job. Meanwhile, because of his complicity millions of people who were doing their jobs perfectly well will never have another one.

But Big Ben's got one of them thar big gub'ment jobs. He'll never have to worry about accountability; that's just for us private economy stooges. We who don't understand the complex world of high finance. Not that he does either, by his own admission, but it's only in the private sector that competence is monitored, measured, reviewed and employees are constantly threatened, cajoled, and peremptorily dismissed for the slightest misstep. Nope. He's got one of those public sector jobs that's paid for by the very private sector all those public sector employees disdain, because we have to actually (ooowww, gross) produce something. So Benron BernBanke can relax: he's safe. But as long as he is safe, the rest of us are in ever-growing peril: Someone Needs to Clean Big Ben's Clock.

Obama's Politics of Despair: A Nation of Crack and Cable.

2009-07-11T09:35:00.000-07:00

Sung to the tune, from "Mack and Mable", of "I Won't Send Roses", (a performance of which, by Michael Feinstein, can be seen at: http://www.youtube.com/watch?v=6xXn-RKNrmk&feature=related)

I'll first strike poses
And you'll believe,
I'll conjure miracles
Pulled from my sleeves;
The lack of truth in what I say
To stave admission of decay
Will turn you grey kids,
Before your day, kids.

Forget my shoulder
When you're in need,
And fewer birthdays
Is guaranteed.
And when I fleece you, you will be
The last to know
I'll first strike poses,
And poses suit you so.

To some I'm tantric:
Totally Boss;
'Cross the Atlantic,
They call me dross.
I'd be the first one to agree
That I'm preoccupied with me
And it's inbred, kids,
Just ask the Fed, kids.

In me You've placed things,
Like trust and verve,
But rank betrayal's
All you deserve
And since there's now no fighting chance:
We're out of dough.
I'll first strike poses,
And poses suit you so.

As the depression goes rolling along...

2009-04-08T06:54:00.000-07:00

The goal of the PPIP is not price discovery, but creating an artificial price and
generating fees for the dealer and asset management community. But the big payoff could be for the likes of our friends at PIMCO, Blackrock (NYSE:BLK) and the other asset managers who will be called upon to maintain this bloating superslushfund site.

A more cynical view is that complexity is designed to disguise the fact the PPIP enables Federal agencies to take steps well beyond their mandates.

The tragedy is that the time lost between now and when the President realizes he is getting bad advice from Summers & Geithner could be the difference between a very bad recession and a crippling meltdown that is, in part, made worse by a strategy of coverup that represents virtually no change from previous policy.

Countries without a surplus face the constant temptation to devalue their currency.

While the Tata Nano has received much international publicity, India's other automotive innovation - the Reva-i - has quietly become the world's best-selling electric car, with support from two Northern California firms. The Reva-i is unlikely to dent the global market with as much force as the Tata Nano, industry analysts predict.

At $6,000, the four-seat, Reva-i costs three times more than the Tata Nano and holds only a limited appeal to cash and credit-strapped first-time car buyers. "It is very much a second car in the household," said Maini, who added that nearly 40 percent of cars sold in India are second vehicles...so....still think electric vehicles'll slow Climate Change?

“The primary trend is down,” says Richard Russell. In the end, he continues, no matter what Obama and Bernanke do, the primary trend will have its way. The bear market will continue until it “has fully expressed itself.” “Cash and gold,” says Richard, are the only investments you should be holding now; we’re a long way from the bottom.

“The old Wall Street adage about the dangers of catching a falling knife doesn’t seem to be scaring individual investors away from Citigroup Inc.

Remember, this is a depression, not a recession. And thanks to determined government action, it is on its way to becoming a Great Depression. In a depression, you can’t revive the old economy. It needs structural change — eliminating the mistakes of the previous bubble period(s) — and building new businesses with new ways of doing things. “Creative Destruction” Schumpeter called it. Things that don’t work need to be destroyed (in this case human lives)...so that things (in a capitalist structure, that's all humans are: resources...things...if they can't, or won't, work, they must be destroyed, it's simply a mandate of monetary fundamentalism...nothing personal/judgmental, mind you) that do work can make use of the capital more efficiently.

The big surprise of this depression: it will kill the bulls when the bear market rally collapses...then it will kill the bears when the mining and commodity stocks collapse...and finally, it will wipe out the middle-class savers (finally finishing the job Reagan started) when inflation increases and the dollar collapses.

An SDR is “a synthetic currency created by the IMF, whose value is determined as a weighted average of the dollar, euro, yen and pound”. (And exactly how does a weighted average of collapsing currencies create a reserve currency?)

According to a study published this week by the Center for Retirement Research at Boston College, public pensions will need $270 billion in new contributions over the next four years just to stay afloat, and another $100 billion annually for the 20 years afterward. All during the greatest wave of public retirement in U.S. history.

The 55-and-over unemployment rate is at an all-time post-World War II high, while the percent of the total unemployed who have been out of work for 15 weeks or longer is also at a post-World War II high of 43%...those are the ones that got the lead parachute, the alchemists being too busy working on those gold ones for the management class.

Americans across the board are already falling behind on loans at a record rate. In the last quarter of 2008, a record 4.2% of all consumer loans were delinquent at least 30 days, says data from the Fed this week. Another 4% were in default.

“The wheels have fallen off the economy," James Chessen, chief economist for the American Bankers Association, told USA Today. "There have been significant job losses, and that translates into people having a hard time paying their bills."

Although Subprime mortgages are suffering the highest rate of delinquency, the delinquency growth rate among prime and Alt-As, from the beginning of 2008 to the end, more than doubled. Plus, delinquent prime and Alt-A loans far outnumber subprime, which means we have likely yet to see the worst of the housing bust.

Personal bankruptcies in the U.S. were up 38% in March compared with the same time last year. 130,793 people filed for some form of bankruptcy last month. 1.5 million are expected to go under by the end of the year, a 36% hike from 2008.

Dow is up 21.5% over the last four weeks… its best streak since 1933.

Once this rally’s over, we’re going to return to despair like you’ve never seen,” Dick Rule warned.

Nearly 40 airlines around the world have gone under since the recession began.

The slack economy’s loss of output is running at $1 trillion a year.

Throughout this economic downturn, Canada has remained our largest source of oil. While the Saudis shipped us a little over one million barrels every day in January, Canada sent over 2.5 million bbls/day.

This syndrome - declining employment in the core economy, growing reliance on jobs in marginal enterprises or in an unofficial black-market economy, and rising rates of violent crime leading to increased state repression - is likely to be repeated in a range of other countries suffering from the global economic crisis.

The US is scrambling to get Europe and Asia to inflate their own currencies through massive 'stimulus' spending, in order to hide the simple truth - the US will eventually default on its debt.

Around the turn of the millennium, the cash equivalent of the Dow would buy 650 barrels of oil. Today it'll bring you 150 barrels.

Elimination in 1997 of taxes on residential capital gains up to $500,000. If housing prices more than double in a seven-year period without a commensurate increase in income, eventually something has to give.

Thirty-five companies defaulted in March, the highest number in a single month since the Great Depression, according to Moody’s Investors Service.

Peak oil means no more ability to service debt at all levels, personal, corporate, and government.

Americans borrowed too much, and the bankers who made obscene fortunes in fees and bonuses in fraudulent lending managed to leverage this unpayable debt into the greatest collective swindle the world has ever known. The swindle has sent poison into every cell of the macro socio-economic organism, and further swindles are unlikely to revive it...get it Geithner?

Once the first window is broken, all bets are off for social stability.

We mortgaged our future and the future has now begun.

World industrial production, trade and stock markets are diving faster now than during 1929-30. World trade is falling much faster now than in 1929-30: This is a Depression-sized event.

News and Views.

2009-04-01T07:41:00.000-07:00

Investment and vacation homes accounted for 30% of all purchases of existing and new homes in the United States in 2008, the National Association of Realtors said yesterday (Monday 3/30/09).

What the Treasury needs to worry about is a run on the insurers. Annuity and whole life policies are at risk, and the blogs are starting to buzz about it. If customers rush to cash policies in, a number of insurers will be at serious risk.

Once again: the Treasury is pursuing the phantom of a bank-led economic recovery, when it should be fighting the risk of an insurer-led crash. If Americans think their insurance policies and annuities are at risk, it’s a different and much worse sort of crisis.

Bank protection has gotten very pricy during the past month, despite the Geithner plan. The cost of insuring Citigroup’s 5-year senior debt has jumped from LIBOR +300 bps to LIBOR +600 bps between the end of January and the end of March, while Bank of America has jumped from +200 bps to +400 bps.

As the equity price approaches zero, that is, the obligor’s option to default gets closer to the money, the price of the option (reflected in credit protection) rises vertically. The key driver of credit default swap spreads is the perception that banks either will go up a great deal or go down a great deal. Credit default swaps are an option, and the extreme volatility of bank stocks makes options more valuable. Again, they will either go up a lot or go down a lot. Volatility reconciles widening credit spreads and higher stock prices.

In the relative short term, say, the next two quarters, Citigroup’s profits are whatever the government says they are. Timothy Geithner owns 36% of the bank.

Peak Oil's courageous spokesman, Matt Simmons, claims that production from the world's aging oilfields is dropping by as much as 20% a year.

By the end of 2009, two-thirds of the state's banks will be operating under cease-and-desist orders or other regulatory actions, Anaheim-based banking consultant Gary S. Findley predicts. (LATimes) Regulators are preparing for a major wave of failures.

As IBM was firing thousands of American workers last week, the U.S. Patent and Trademark Office published Big Blue's application to copyright a computerized system that calculates how to offshore jobs while maximizing government tax breaks.

City officials and housing advocates here (So. Bend) and in cities as varied as Buffalo, Kansas City, Mo., and Jacksonville, Fla., say they are seeing an unsettling development: Banks are quietly declining to take possession of properties at the end of the foreclosure process, most often because the cost of the ordeal — from legal fees to maintenance — exceeds the diminishing value of the real estate.

Word from China’s Xinhua News Agency is that China and Argentina have agreed to set up a currency swap worth $10.24 billion. That is, trade between the two countries will henceforth be settled in yuan. China already has similar agreements with South Korea, Malaysia, Indonesia and Belarus.

Half of the U.S. work force is on the payrolls of companies with 500 or fewer employees.

Kunstler: What’s going on now is nature’s way of telling you that America’s standard of living has to be reduced by something between 20 and 50 percent. Banking (capital deployment) is already mortally wounded. It remains to be seen how this will affect the food supply half a year ahead in the harvest system. Capital is as big an “input” for our method of farming as diesel fuel or fertilizers made from methane gas. The failure of banking will combine with city and state insolvency to crush public transit, law enforcement, fire protection, and whatever flimsy local safety nets exist to keep the ultra-poor and helpless from die-off.
It's shocking to me that the consensus among the hotshots of climate and energy science and the elder statespersons of environmentalism is that the energy problem merely amounts to finding other means for running cars. The assumption that we must remain car-dependent remains absolutely entrenched among people who ought to know better. Of course, the words “public transit are barely uttered. It’s disappointing to find such idiocy among this particular elite.

Based on the statistics from the Energy Information Administration, the U.S. pumped out more than 9.6 million barrels of oil per day in 1970. In 2007, production barely averaged over 5 million barrels a day. As you can see, we briefly managed to keep production at a plateau before falling down the backside of the peak.

And if you really want to crunch the numbers, the news is even more grim. In 2008, our production averaged 4.95 million barrels per day. We haven't seen a yearly production average under 5 million barrels since 1946.

Stretching across North Dakota, Montana, South Dakota, and southern Saskatchewan is the Williston Basin,home to the Bakken formation, one of the few areas in the US where oil production is expected to increase.

The fall in the 'core core' CPI underlines that deflation might become an issue in Japan with the output gap opening up massively and the labor market getting weaker. Declining demand at home combined with an inflow of cheaper goods from abroad triggered by recent appreciation of the yen, could drive down prices into the feared deflationary spiral.

March 31 (Bloomberg): The U.S. government and the Federal Reserve have spent, lent or committed $12.8 trillion, an amount that approaches the value of everything produced in the country last year, to stem the longest recession since the 1930s.

Deutsche Bank AG Chief Risk Officer Hugo Banziger said the credit crisis is “far from over” and global financial regulations must be overhauled. Banziger said credit spreads are higher than before Lehman Brothers Holdings Inc. collapsed last year, which he said signaled the crisis was far from ending.

The Engineered Depression.

2009-03-29T14:02:00.000-07:00

"This was no accident. Wall Street, Ben and Tim, and their Congressional co-defendants keep saying this was a horrible, unforeseeable accident. Nonsense, it was the result of conscious, planned looting and will be followed by more." Whew. Glad he said that (the 'he' being Jim Jubak of Jim Jubak's report, which I found on Jim Fitch's "Some Assembly Required"), because when I say such things, people think I'm channeling Hillary when she was talking about a vast right-wing conspiracy (Hillary wasn't so nuts, there was in fact, something Auntie Coulture brags about now, a group of "elves" busily at work to entrap her husband).

Isn't it incomprehensible that a stock market can go up 497 points, three days after another 20 banks go kaput? and everything which can go wrong has gone wrong?

Omni National Bank in Georgia Shut, 21st U.S. Failure...Georgia again...hmmmm. It's become increasingly apparent why Tom Wolfe based his novel, "A Man in Full" in California and Georgia, the outright criminality of Texas being a matter of pride for that erstwhile Republic.

Data indicates that Japan's economy, which in past recessions relied on exports to recover, won't be supported by overseas demand.

The "long term investor" now realizes that he or she is simply a mark to be conned by Wall Street...aahhh, if only that were true. Many firms are cutting their matching contributions to their employees' 401k's...they realize they're just throwing money away.

Oil markets may not be pricing in the extent of dwindling output in the world's biggest producer, Russia, a factor that could buoy prices later this year, traders and analysts said.

This month, the brokerage cut its forecast for Russia's crude production this year to 9.1 million barrels a day, a 7% drop from last year.

While the Russian government, whose coffers rely on oil revenue, has eased the tax burden somewhat in a bid to stabilize output, it is unlikely to do anything more, despite producer pleas, as the federal budget looks set to post its first deficit in 10 years.

In early January, Russia's five biggest producers -- OAO Rosneft, OAO Lukoil Holdings, TNK-BP Ltd., OAO Surgutneftegas and OAO Gazprom Neft -- announced an average annual reduction in capital spending of 15% for 2009.

Moscow-based Alfa Bank reckons the annual rate of decline in production at Russian oil fields already in operation totals 15% to 17%, compared with a rate of 7% in 1998. The higher rate implies producers would need to bring 1.5 million barrels a day in new output on stream just for production to stay flat.

"That's just not going to happen," said Alfa's head of research, Ron Smith.

Russia is responsible for about 20% of non-OPEC oil supply. Last week, the International Energy Agency lowered its forecast for 2009 non-OPEC supply growth to zero, largely due to production problems in the Caspian state of Azerbaijan.

Japanese Automobile exports slid 70.9 percent. Companies from Toyota Motor Corp. to Panasonic Corp. fire thousands of workers.

Property abandonment is getting so bad in Flint that some in government are talking about an extreme measure that was once unthinkable -- shutting down portions of the city, officially abandoning them and cutting off police and fire service.

Last year, the city of Youngstown, Ohio, proposed incentives to encourage people to move out of nearly empty blocks and relocate to more populated areas closer to the heart of the city. Some people were offered upward of $50,000, according to news reports. Our throw-away society has effectively reached a new level of efficiency: the throw-away city, to go with the throw-away people.

The amount by which U.S. pensions are underfunded has almost doubled since October to $373 billion,

The U.S. has blocked expansion of the drawing-rights system over the past 12 years, according to the IMF Web site. SDRs were created by the IMF in 1969 to support the Bretton Woods exchange-rate system that collapsed in 1971. They now act as a unit of account, reflecting contributions from members, rather than a currency.

Krugman: Even during the “go-go years,” the bull market of the 1960s, finance and insurance together accounted for less than 4 percent of G.D.P. Until 1982 the Dow Jones Industrial Average contained not a single financial company. In essence, the administration seems to believe that once investors calm down, securitization — and the business of finance — can resume where it left off a year or two ago. Doing what exactly, now that entrapping hopeful fools into financial traps has proven unsavory?

To be fair, officials are calling for more regulation. Indeed, on Thursday Tim Geithner, the Treasury secretary, laid out plans for enhanced regulation that would have been considered radical not long ago.

But the underlying vision remains that of a financial system more or less the same as it was two years ago, albeit somewhat tamed by new rules.

As you can guess, I don’t share that vision. I don’t think this is just a financial panic; I believe that it represents the failure of a whole model of banking, of an overgrown financial sector that did more harm than good. I don’t think the Obama administration can bring securitization back to life, and I don’t believe it should try.

The West's way of thinking: It would be much simpler for us if the world were set up in a more orderly and predictable way. But then, it wouldn't be nearly as much fun. Even the feds could control a simpleton's world. What a dreary place that would be! If you can't be periodically throwing people out onto the streets so that con-men calling themselves "Masters of the universe" can rake in enormous amounts of cash to keep their high maintenance wives on parade, how would life be worth living?

And they all fall Down.

2009-02-26T13:43:00.000-08:00

Japanese exports fell by 45.7% in January from a year ago - the steepest decline since 1957 - as exports to three of Japan's biggest overseas markets fell by record levels. Exports to the United States fell by 52.9%, exports to Europe declined by 47.4%, and exports to Asia dropped by 46.7%, Japan's Ministry of Finance reported.

Ambac Financial Group Inc. (ABK) posted a $2.34 billion, or $8.14 a share,
fourth-quarter loss. General Motors Corp., surviving on $13.4 billion in U.S. aid, reported a $9.6 billion fourth- quarter loss.

The fundamental position of Gregor.us Monthly is that the price of Oil will steadily gain influence over all areas of investment from this point forward and that professionals will need to incorporate this view more habitually into their strategy.

The Royal Bank of Scotland has posted the largest annual loss in British corporate history: $34.4 billion for 2008.

The economic contraction has only curbed demand for crude oil by 300,000 barrels/day in 2008 during one of the worst global recessions in decades.

Peter Schif says "The government should enforce the integrity of free markets, not manipulate them", completely ignoring the fact that the free-for-all market HAS no integrity. It's quite literally a conspiracy of the haves against the have-nots. They pretend openness while myriad shenanigans and tom-foolery goes on behind the scenes to manipulate prices, as well as the books, elevate value, and lie brazenly to the public. Just watch a car ad, like an adult for a change; actually looking to get data for the investment of time it demands. You'll get none. You'll get a car zipping along a mountain road, or a thunderous tank-like vehicle plowing through a rocky stream, and allow yourself to be manipulated by adolescent angst, even in your fifties.

Icecaps around the North and South Poles are melting faster and in a more widespread
manner than expected, raising sea levels and fueling climate change, and the melting of Greenland's ice cover is accelerating. The land-based ice sheets of Greenland and the Antarctic hold the bulk of the world's freshwater reserves and can generate sea level changes of global scale as they melt.

Really makes you hope we can get this carbon-spewing war-machine economy back on track, eh? Let's see? Deal with climate change or starve? hmmmmm. Meanwhile the Pakistan Taliban are mysteriously well-armed, even as more than a third of the military's arms in Afghanistan have inexplicably disappeared.

About 4,000 years ago our ancestors cut down the forests of the Fertile Crescent and turned the whole region into a desert. It worked so well that Indonesia is trying to repeat the feat with the world's third largest rain forest before the Brazilians can with the Amazon. Buy yo fuel now.

S&P: Ukraine's long-term foreign currency rating was lowered to ‘CCC+’, seven levels below investment grade, making Ukraine’s rating the lowest in Europe and on a par with Pakistan.

Gary Gensler, the nominee to head the Commodity Futures Trading Commission and
former Goldman Sachs partner, is the latest from the firm of criminals to join
government to keep the inside traders at GS informed of pending government actions:
keep those shredders ready.

U.S. driving and fuel usage are up, despite the recession.

I want don’t want to believe that things are going to turn out the way they probably will… but policy makers and forecasters who see a recovery next year are probably lying to boost public confidence ... that's their job. But of course this isn't a recession. This is something really quite different in character from anything we've experienced in the postwar era. So many of the benefits of the boom went to the elites. If you have a lost decade plus redistribution, it may not be that dramatic a change for many, many people. People just have to get over the fact that their wealth wasn't worth what they thought it was in 2006. Whether it's their stock
market portfolio or their housing, (or their children's future). If we simply go back to where we were, in 2005, that's surely not the worst thing that could happen to us.”

That's Niall Ferguson, that. Remember those words, you'll think of them with a cynical sneer some day.

"Michelle Obama's Hairstyles, a Retrospective".

2009-02-14T10:06:00.000-08:00

At the bottom of an article on www.huffingtonpost.com, under the rubric "More in Politics", I saw a link to "Michelle Obama's Hairstyles, a Retrospective". Thank God, some serious discussion about...oh yeah... nothing.

World oil production peaked in 2005, the financial debacle we're in right now is a direct result of that fact, as an endlessly expanding credit bubble cannot be maintained with a constrained energy supply, and with 20% of the usage here,in the US, whose main exports are $'s, weaponry and War, the answer lies here. But without asking the questions, what chance is there that we'll arrive at a satisfactory one?

How can a stimulus package in the economy that burns the most coal, per capita, that's dependent on another economy, China, that burns the most coal period, do anything but accelerate climate change and result in a worse economic, now to be coupled with environmental, meltdown?

Christophe de Margerie, CEO of French petroleum giant Total, says that the ability of the industry to increase future production will be below 90 million barrels a day. "The capacity that the oil industry has to go to 93-95 million barrels per day is already over."

Climate-warming atmospheric CO2 has now reached 392ppm, the highest level in the last 800,000 years. The larger portion of this gas will remain in the atmosphere, warming the earth, for well over a century.

In an attempt to level the playing field, the US military has let a third of the quarter million weapons given to the Afghan government to go AWOL - most likely to the Taliban.

On a list of the 25 people to blame for this mess, not including Mr. Peak Oil is strange. Did not the high prices of 2008 and the leveling off of production not have a great deal to do with the collapse? If petroleum availability has stopped growing, so too must economies.

Fully 33% of the 2009/2010 US corn crop will go to make ethanol.

The stimulus package the U.S. Congress is completing would raise the government’s commitment to solving the financial crisis to $9.7 trillion, enough to pay off more than 90% of the nation’s home mortgages.

March Natural Gas, a cleaner alternative to coal, dropped 6.8% (down 21% y-t-d).

“China plans to invest more than 600 billion yuan ($88 billion) in the nation’s
telecommunications and electronics industries, the 21st Century Business Herald reported…”, while we continue to pour trillions, that we don't have, into the failed financial industry. The US role as world leader in technology and innovation is finished. We have consciously transformed our economy into a Militaristic War Machine and the plaything of the Rich so we could indulge in puerile fantasies of unfettered wealth that are naught but a mirage. This is apparently the best that American Democracy can offer its tragically deluded masses. No wonder we need to foist it onto others at the point of a gun.

The end of Prosperity.

2009-02-09T10:55:00.000-08:00

A mob attack on women drinking in a college-town bar is laying bare the limits of freedom for young Indian women. This is where IBM cynically tells its employees is a swell place to move to: thanks a lot, punk.

Not one Republican voted for the House version of the stimulus plan.

Companies in Europe and the Middle East are planning to slash capital expenditure this year by a third on average, dealing a blow to wider economic activity, according to a report by Fitch Ratings. This was because they were conserving cash to preserve their credit rating and control their borrowing costs. Many were also finding they simply could not borrow funds.

During nearly two decades, Japan accumulated the largest public debt in the developed world — totaling 180 percent of its $5.5 trillion economy — while failing to generate a convincing recovery. The only thing that let Japan escape from its trap was a global boom that boosted the nation’s exports. Who will rescue America from a similar trap now that the whole world is slumping at the same time?
Bushenomix stoked inflationary forces purposely. Why? Who benefits from inflation? The answer is government, banks, and the already wealthy, because they are first in line to receive money. Everyone else is screwed. Inflation is theft from the middle and lower classes for the benefit of government, specifically the military, and the wealthy. This is why liberal Democrats and their pundits are so dangerous, the "Conscience of a Liberal" tag Paul Krugman champions is openly supporting policies that continue to destroy middle class America, while pretending otherwise. At least the policies advocated by the Hannity insanity and Mad Rush Limbaugh are truthful about their intentions to crush the proles under the Jackboot of the ruling class, for whom they are the unapologetic, simpering fauns. Whereas Krugman and his ilk pretend to be fighting for the downtrodden, they advocate policies that will ultimately leave them further debauched and crushed under an even more unpayable burden of debt.

Over 30 million Americans are on food stamps (SNAP!)

IMF managing director Dominique Strauss-Kahn said last week that advanced economies are already in a depression.

The US Treasury alone needs to raise $2 trillion in 2009.

German orders fells 25pc year-on-year in December. French house prices collapsed 9.9pc in the fourth quarter, the steepest since data began in 1936....Polish homeowners have had the shock from Hell. Some 60pc of mortgages are in Swiss francs. The zloty has halved against the franc since July.

Summary of the day.

2009-02-04T09:12:00.000-08:00

Bloomberg's reporting: Record 19 Million U.S. Homes Stood Vacant in 2008

Panasonic warns of $4.2 billion loss, to cut 15,000 jobs.

After years of blistering growth, installation of wind and solar power is plummeting due to the credit crisis and the broader economic downturn.

Eastern Europe tops the list of emerging market regions susceptible to a full-blown financial crisis. Unlike emerging markets elsewhere, Eastern European economies are heavily dependent on external financing and current account deficits have been the norm. So, the sharp drop-off in capital inflows - expected in 2009 - will not only be a major blow to growth, but it could also potentially trigger a regional financial crisis. The Baltics, Bulgaria, Romania and Hungary stand out as particularly vulnerable but a crisis in one country could trigger a regional domino effect.

“The present system has been broken; it’s failed the test of the marketplace,” former Federal Reserve Chairman PaulVolcker said Jan. 15 in New York in calling for strengthening regulation.

"Coal is 80 percent of the planet's problems," Dr Hansen maintains. "You have to keep your eye on the ball and not waste your efforts. The No. 1 enemy is coal and we should not forget that." All fossil fuels are a problem, of course, but a coal-fired plant emits twice as much carbon dioxide as a gas-fired plant producing the same amount of electricity.

There is a history of earthquakes triggered by dams, including several caused by the construction of the Hoover dam in the US, but none of such a magnitude (as the 7.9 one in Sichuan possibly causwed by construction and filling of the Zipingpu dam).

The Obama Administration is as obviously and fully hostage to the interests of the financial services industry as the Bush crowd was.

Let's turn to a study by the IMF of 124 banking crises. Their conclusion:

Existing empirical research has shown that providing assistance to banks and their borrowers can be counterproductive, resulting in increased losses to banks, which often abuse forbearance to take unproductive risks at government expense. The typical result of forbearance is a deeper hole in the net worth of banks, crippling tax burdens to finance bank bailouts, and even more severe credit supply contraction and economic decline than would have occurred in the absence of forbearance.

So we the taxpayers are going to eat a ton of bank losses that should instead be borne first by stockholders and bondholders This program should be labeled the Pimco bailout plan, since the giant bond fund holds a lot of bank debt. That show what a fiction Obama's populism is. It's mere posturing and empty phrases. Look at where the dough goes, and it is going first and foremost to the big money end of town. Cui bono, eh?

Just the headlines: FDIC: Fraud Delivers Inexcusable Criminality.

2009-01-29T08:45:00.000-08:00

Despite crippling losses in 2008, employees at financial companies in New York collected an estimated $18.4 billion in bonuses for the year.

Without a single Republican vote, President Obama won House approval for an $819 billion economic plan some companies found a loophole to increase a CEO’s pension by 10% to 40% – even as those very same companies slash pensions for their employees, The Wall Street Journal reported.

The fund (IMF) said that credit losses from bad assets originating in the US would be $2,200bn (€1,662bn, £1,537bn), a sharp increase from its previous $1,400bn estimate.

Banks would be likely to need at least half a trillion dollars in new capital over the next two years simply to prevent their capital position deteriorating further.

(Reuters) - U.S. government officials seeking to revamp the financial bailout have discussed spending another $1 trillion to $2 trillion to help restore banks to health, the Wall Street Journal said, citing people familiar with the matter.

federal regulators on Wednesday guaranteed $80 billion in uninsured deposits at the powerful institutions that service the nation's credit unions. Regulators also injected $1 billion of new capital into the largest of these wholesale credit unions, U.S. Central Federal Credit Union of Lenexa, Kan., after the firm on Wednesday posted an unexpected $1.1 billion loss for 2008. U.S. Central serves essentially as a main clearinghouse for the others in the network.

Officials are wrestling with how to privatize the gains and socialize the losses.

Geithner is the worst of Obama's picks.

California State Teachers' Retirement System, own 10 office buildings in Austin, including the Frost Bank Tower downtown.
The commercial real estate mess is just beginning. Uncollected tax bills are going to soar, and many small to mid-sized regional banks heavily into commercial real estate are headed for bankruptcy.

Hess reports a 4Q08 loss in the oil refining business. Boeing blamed their 4Q08 loss on the unions. Wells Fargo dropped $2.6 billion, which it blames on paying too much or Wachovia. Elsewhere, money sent home by Mexican guests working in the US declined for the first time ever.

The Executive Director of the UN Office on Drugs and Crime is quoted as saying "In many instances, drug money is currently the only liquid investment capital".

Europe's third-largest oil producer Total SA (ADR:TOT), offered $503 million to buy UTS Energy Corp., a Canadian oil-sands explorer. If UTS and its shareholders accept, it'd be Total's third acquisition of unconventional assets since July, Bloomberg reported. UTS shares rose more than 95% on the Toronto exchange on the news.

The Chinese premier, Wen Jiabao, left little doubt that Beijing blamed the United States for the economic breakdown. “Inappropriate macroeconomic policies,” an “unsustainable model of development characterized by prolonged low savings and high consumption,” the “blind pursuit of profit” and “the failure of financial supervision” all contributed, he said.
The most panicky of all, Mr. Roach said, are American consumers, who are retrenching after a decade-long binge fed by inflated housing prices. He predicted that they were only “20 percent into a multiyear” adjustment that would leave them much more frugal.

As many as 40 of the biggest 100 buyout firms may collapse by 2011 as their debt-strapped assets default, according to a 2008 report by Boston Consulting Group Inc., which didn’t identify the firms in its study.

IMF in January 2009 expects total writedowns on U.S. originated assets to reach at least $2.2 trillion from the current $1 trillion (projected as recently as Oct.'09). Raising the needed amount of capital will be difficult going forward--> IMF estimates global capital shortfall of $500 bn forces banks globally to contract credit by a multiple of that amount (i.e. about 4-5 trillion using Greenlaw/Shin/Hatzius/Kashyap methodology) --> we're only half-way through.

FDIC: Fraud Delivers Inexcusable Criminality.

FOMC: Feds Orchestrate Machiavellian Coup d'Etat.

Capitalism is Criminality: POP go the weasels.

2009-01-28T09:06:00.000-08:00

Agape World Inc. of Long Island, N.Y., and Carolina Development from Orange County, Ca. The two faux firms fleeced some 2,500 investors for over $430 million.

Valero Energy said it would close an entire US refinery this quarter as it slashes petrol production and sharply reduces capital spending to manage the economic slowdown, the Financial Times is reporting.

The biggest US refiner has 15 refineries across the country. It said that in addition to shutting its large Texas City refinery, it would close the fluid catalytic cracking unit, which primarily produces petrol, at its Corpus Christi East Plant.
“The sluggish economy is clearly a headwind against demand growth for refined products,’’ said Bill Klesse, Valero’s chairman and chief executive.

Valero Energy Corp (VLO.N) could permanently shut those of its 15 North American refineries it no longer wants to own but may not be able to sell in the current economic downturn, Chairman and Chief Executive Bill Klesse said on Tuesday.

"If you don't want them and you can't sell them, I guess the answer would be yes," Klesse said to an analyst who asked if undesirable refineries might be permanently shut.

Valero has identified its Memphis and Aruba refineries as plants it would like to sell.

Valero also cut its estimate for 2009 capital spending to $2.7bn from its previous estimate of $3.5bn. Analysts had been expecting more than $4bn in capital spending for 2009. The company said that the cut in planned expenditure would have an impact on discretionary projects at many of its refineries.

US drilling services company Rowan Companies Inc. announced today that the company is canceling the construction of one jackup and suspending the construction of two others. In an unscheduled report to investors, Rowan announced a plan to reduce the company's expenditures through newbuild plan revisions. These newbuild construction revisions have allowed Rowan to keep its estimated 2009 capex between $550 to $575 million.

Although, with the banking collapse being all the rage, and decoupling theories finally receiving their deserved scorn, with some left over for the debunking of the theory that the CRE (commercial real estate) bubble would sustain the economy, no mention has been made of the Capex (capital expenditure) boom that was predicted to uphold the economies of the world as the dis-credit-ed bubble and its concomitant housing bubble lost hot air.

These articles, together with many others appearing in the last weeks and months, of major corporations cutting back on capex spending in the face of recessionary forces, should debunk the myth of capex spending coming to the economy's rescue.

Meanwhile, at the banks: "The situation is so extreme and beyond what we've seen in past cycles that management teams are becoming reluctant to predict the relationship between unemployment and credit losses," said Kevin Fitzsimmons, analyst at Sandler O'Neill & Partners.

The Washington Independent notes that Analysts Fear $1 Trillion Credit Card Market Could Be Next Crash.

According to a Bloomberg analysis incorporating data from the Treasury Department and Federal Deposit Insurance Corp. (FDIC) and interviews with regulatory officials and others:

* $300 billion has been spent on Fannie Mae, Freddie Mac (FRE), American International Group Inc. (AIG) and Bear Stearns Cos. (now part of JP Morgan Chase & Co. (JPM).
* $300 billion on Citigroup.
* $700 billion on TARP - though not on what TARP was intended for.
* $800 billion on Fed-directed asset-backed debt-purchase programs.
* $1.4 trillion on FDIC bank guarantees.
* $2.3 trillion on Fed commercial paper programs.
* And $2.2 trillion on other Fed lending and government commitments.

That totals a little bit more than $8.5 trillion.

Throwing good taxpayer money after badly wasted taxpayer money will not fix anything. But throwing out overly leveraged, overly greedy, overly dependent banks and bankers is a good start. But not enough...as Iceland's proven.

It must be recognized and acknowledged that Capitalism is Criminality...there is no difference,
it's merely sanctioned by government, making the behavior un-criminal, legally.

Whereas elevating greed to the height of virtue while simultaneously putting in strong regulations and JAIL-time penalties is one thing, to elevate Greed while removing those penalties and stoking it to a hot flame of mania isn't just inviting criminality, it's sanctioning it, even enforcing it. Because when your competitors take advantage of the lax environment, thereby making outsize profits that consequently entices your shareholders to become their shareholders, you are not fulfilling your fiduciary responsibilities and the sacrosanct marketplace will destroy you.

So for all the sanctimonious denial and hypocritical "How could anybody see this coming?", every economist who actually was one knew this. But every economist simply rolled over and became just a toady for their so-called educational institution or government agency that was raking in the dough as they promised their regulators juicy, multi-million dollar jobs after they've finished what they maddeningly refer to as government "service".

Such service in a restaurant would amount to you seating yourself, getting up and getting your own food and drink, clearing your own table, seating the next patron and then leaving your credit card with the Maitre d'.

"Forty percent of the world's wealth was destroyed in last five quarters. It is an almost incomprehensible number," said Stephen Schwarzman, chairman of the leading private equity company Blackstone Group.

Stephen Roach, Morgan Stanley's Asia chairman, agreed the next three years would be tough:

"The concept of a vigorous 'V'-shaped recovery is for business cycles of the past but not for this post-bubble, post-crisis business cycle. It is going to be a long slog in 2010, in 2011," he told Reuters.

The UK's third largest supermarket chain, Sainsbury's Supermarkets, announced plans today to use its unsold food in Scotland to power a biomass plant near Motherwell, about 15 miles southeast of Glasgow.

The chain's 28 stores in Scotland send 42 metric tons of waste to landfills each week. The effort would divert the waste and produce enough power for a town the size of Inverness, which has a population over more than 50,000. The chain said each metric ton could power 500 homes. The UK has long been criticized for its food waste. A report last year from the government-funded Waste and Resources Action Programme showed that 6.7 million metric tons of food is thrown out in the UK each year, half of which is food that is unopened or untouched.

This is the Capitalist's dream. Food being discarded while barges return to the East empty to the starving millions of the world. And this is at its best. Watch what the future has in store, and remember that we threw away food by the mega-ton while people starved and churches stoked them to ever greater birthrates.

The base of the Statue of Liberty reads:

"Give me your tired, your poor,

Your huddled masses yearning to breathe free,

The wretched refuse of your teeming shore.

Send these, the homeless, tempest-tost to me,

Forgotten is the fact that these huddled masses were created by the most successful economies in the World, awash in gold and stuffed with foods and spices and drugs from around the world produced by slave labor, making their own citizens so much surplus. Blind are we to the fact that the return to the slave economies of the 18'th century occurred right under our upturned noses while we were bought off with cheap credit, mansions we couldn't afford, and chariots that suck down petrol like it's coca cola.

While the USA worked hand-in-hand with China's totalitarian government to shoot down its dissidents so that its population could be brought by cattle car into its sweatshops to make our sweatshirts, with US chanting, "they sweat, we think", the Cheneys and the Carlysle Groups (i.e., the Bushes) and Blackstone, and Paladins of the world, all oil and defense men (ie living on government guarantees), who knew the POP (Peak Oil Production) of the credit bubble would be the end of the world as we know it, would have us all so mired in debt and enslaved by our inability to ever work our way out from under it, have been simply playing us for suckers on the largest scale in human history.... Madoff was a 2-bit hack, completely off the radar screen because the malfeasance on all levels of government completely dwarfed his crimes...and we're still, for the most part, still laboring under the self-inflicted blindness of a delusional citizenry that hypnotizes itself into the belief that the US government is "for" the people.

Well, alright it is. It is for the Rich people.

Capitalism is and always has been designed to create scarcity and enrich and protect a small elite. WW2 forced their hand into sharing the enormous wealth generated by the American economy after the US military carried out the plan of the upper class elite to utterly destroy the productive capacity of the German and Japanese economies. That, however was an aberration. We are now returning to the planned economy Capitalists favor where the uneducated masses are forced to come on bended knees to beg for credit for their education and healthcare in order to be admitted into the high citadels of finance and Government jobs to join the ranks of those who hold sway over the rest of the population that 's prostrate before it. This is what Ike warned about when he warned of mankind hanging on a cross of iron.

The difference is Ike saw this as a bad thing. Today's Upper Class see it as the only answer to POP, which they deride even as they build walls around themselves against its inevitable occurrence. POP was reached in 2005. Since then the world has produced less oil year after year, and will continue to do so into the foreseeable future...make no mistake about it.

This was the reason the Reagan revolution was started and has continued through Democratic and Republican administrations. The West brags it rode to victory in WWII on a wave of oil, and the rich intend to surf on that wave while crushing the rest of mankind beneath it.

If you disbelieve this, then just look at the nature of the States which are buying our debt: the Gulf States and the Chinese. Just as Germany and Japan were forced to remake their economies in the image of the US, so the US elite have forced the American people into the position where we owe our very existence to either totalitarian Communists or anti-gay, anti-women, anti-democratic Sheikdoms. Those are the rulers the US will be kowtowing to more and more as we move into the future, because we have blindly and, deaf to all warnings, placed our economy's, and therefore our country's, future into their hands. The end of the Bush Regime brought the final push into completely unsalvageable hopelessness, following the script laid out in Naomi Klein's "Disaster Capitalism" and followed so well in other economies, such as South Africa's, and pushed by such Chicago School acolytes as Rumsfeld.

If you have not gotten a whiff of the stench of betrayal with which the Uber-Rich are rife, it is merely because along with your senses of sight and hearing, your sense of smell has atrophied as well.

Still no talk about Peak Oil production: it peaked in 2005.

2009-01-27T09:40:00.000-08:00

In a barely noticed move, the administration is funding the so-called "smart-grid" concept to increase efficiency of electricity delivery...or so the purported reason.

But, as with telephony, the real reason is that consumers can then be socked with outlandish energy bills because they had the audacity to run their dryers in the middle of the day instead of at midnight when demand is low.

....The state now looms far larger in many parts of Britain than it did in former Soviet satellite states such as Hungary and Slovakia as they emerged from communism in the 1990s, when state spending accounted for about 60% of their economies.

....Countries struggling to secure credit have resorted to barter and secretive government-to-government deals to buy food, with some contracts worth hundreds of millions of dollars. countries including Russia, Malaysia, Vietnam and Morocco say they have signed or are discussing inter-government and barter deals to import commodities from rice to vegetable oil. The countries have not disclosed the value of any deals, and some have refused even to confirm their existence. Officials estimated that they ranged from $5m for smaller contracts to more than $500m for the biggest. While food prices have fallen from their record high last year, this fall is only temporary, a study by Chatham House, the London-based think-tank, suggests.

...."Among the banks advising Pfizer and arranging a loan package to finance part of the purchase price are Bank of America Corp., Barclays Plc, Citigroup Inc., Goldman Sachs Group Inc., and JPMorgan Chase & Co., said people with knowledge of those banks’ roles."

So here's the bottom line. The taxpayer has kept BofA, Citigroup, Goldman Sachs and JP Morgan alive with TARP money and other goodies. Now these same firms are going ahead and "arranging a loan package" that will keep Pfizer's earnings up (maybe) with mass layoffs in a transaction so large that it will of necessity be anti-competitive even if OK with Justice (which it will be).

...Ironic, then, that, as the conservative era ended in the US in 2008, it culminated with an explosion of permissiveness and irresponsibility that made the free-love hippies of the 1960s look like Southern Baptist preachers. After all, the hippies never cost the American nation over one trillion dollars...now estimated to be more than $3.2 trillion.

Caterpillar to cut 20,000 jobs, Home Depot 7,000, Starbucks 1,000, Sprint 8,000, Microsoft 5,000, Intel 6,000, Ericsson 5,000, IBM 2,800, Eaton 5,200, Clear Channel 1,800, Bose 1,000, Pfizer 8,000, Deere 700, TI 3,400, Philips 6,000, ING 7,000, GM 2,000. The privates sector takes it in the balls..

Emperor penguins - those of Marching fame - are headed for extinction as the sea ice they depend on is disappearing faster than they can evolve to meet the change.

Warren Buffett observed that the world airline industry has not made a dime for investors in a century of manned flight.

There is not one major funded retirement program intact thanks to the manufacturers and distributors of OTC derivatives. The unfunded ones are a total loss. Retirement in the future is totally out of the question. Many now retired will end up in the same situation as those trying to live off fixed income. Both categories are being culled from the human gene pool.

The average Merrill employee got $247,423 in compensation and benefits in 2008: avg BofA? $75g's.

Yes we can-can: the Pointless Misters in Washington

2009-01-26T08:53:00.000-08:00

Think we can't continue the breathtaking scope of political duplicity and malfeasance epitomized by the Bush Administration? With the appointment of Geithner, Summers, and Rub(it)in, the Obama administration says "Yes we can".

Can we name the man named the #8 crook in America by a MarketWatch poll (that would be Robert Rubin)? "Yes we can".

Can we put in charge of the UStreasURY , and thereby the IRS, a man, Geithner, who "neglected" to pay in taxes more than most of us make in a year? "Yes we Can".

Can we appoint a man as Economic adviser someone who thinks exporting America's manufacturing base overseas so as to save on healthcare costs is economically mandated and encouraged, as Jabba-the-Hutt Summers has opined? "Yes we can".

It's change we can believe in; the bills, we're not so sure about.

No wonder the Republican House minority has a Boehner.

Darling stated, "We have a clear view that British banks are best managed and owned commercially and not by the government. That remains our policy."
That is a mind-boggling admission of failure. Banks managed and owned commercially have brought the global financial system to utter ruin. Debauched, incapacitated and completely at a loss of how to generate capital, they are on a life-support system by a government that insists they're doing a fine job of running themselves (right into the ground, as it turns out).

Washington, DC: Diminished Capacity.

2008-12-29T09:55:00.000-08:00

In his editorial in the NYT today, Paul Krugman actually stated: "Our capacity hasn’t been diminished; our workers haven’t lost their skills; our technological know-how is intact."

I feel like we need Lewis Black after reading that claptrap: "bdabdabdabda....whaa?"

We've vaporized enough wealth in the last year to have paid off the entire $10Trillion national debt, and set sail on a course to double it instead. That's decreased capacity, Mr Important Economist.
Every citizen with savings has seen the earnings from them disappear....interest earnings that they can no longer spend, interest earnings no longer there for the State and Federal governments to tax: again, Nobel prize winning economist, an eight year old knows that's diminished capacity (DC).
The shadow banking system is a shadow of its former self and no business plan to reinvigorate it. In fact the very institutions that generated the majority of investment capital no longer even exist...how is that not DC? And the real Banking system is insolvent...again, DC; Washington: DC...Military prowess and respect: DC; students leaving college with $120,000 in debt: DC; armed with a useless MBA in Finance: DC; industrial infrastructure dismantled and shipped overseas: DC; workers on forced time-off without pay: DC.

Item after item, by any metric you wish to employ, the US capacity to do anything has been immensely diminished . You can't set out to destroy the middle class and not expect such a decrease; it's insulting to suggest otherwise. The US Upper Class has seen to it that their ability to enrich themselves without the onus of having those riches taxed is the only capacity that has not diminished, and with Summers, Rubin , and Geithner in the new administration, they've seen to it that it won't be in the future.

The Friedmanite-mare is upon us. You can try to perform the new job description of journalism of lying to our faces all you want, it won't disguise that fact, it'll only suggest that Paul Krugman?: DC.

2008-12-22T11:28:00.000-08:00

Santa and the North Pole.

In years gone by, he'll tell no lie,
He put coal in many a stocking.
Though not his goal, the end result
Was really rather shocking.

To keep them warm, and make their dorm
a little more illuminous,
All those kids, in growing up,
Have burned all that bituminous.

But by degree, as all could see,
It made the planet cold less;
Which in effect, had one defect:
It left poor Santa homeless.

Yes, there is a "They"...they are The Rich, and they own you.

2008-11-13T08:05:00.000-08:00

In 1910, as quoted in The New York Review of Books, the ostentatiously arrogant Aristocrat, Frederick Townsend Martin, dangerously pleased with his own excellence, claimed,

"It matters not one iota what political party is in power or what President holds the reins of office.

We are not politicians or pubic thinkers; we are the rich; we own America; we got it, God knows how, but we intend to keep it if we can by throwing all the tremendous weight of our support, our influence, our money, our political connections, our purchased senators, our hungry congressmen, our public-speaking demagogues into the scale against any legislature, any political platform, any presidential campaign that threatens the integrity of our estate."

Of all the things that changed during the 20'th Century, that attitude is not one of them. The idle rich will destroy the very basis of their own ascendancy before ceding one iota of what they consider theirs. That is why we have revolutions and the carnage of World Wars, two of which have apparently changed nothing.

A case in point is made by the Centre for Economic Policy Research's paper on the Iceland financial debacle (apparently one's frowned on for using the more descriptive, alarming, "Crash": mustn't alarm the peasants), as published in their Policy insight newsletter # 26:

Even if the banks are fundamentally solvent (in the
sense that its assets, if held to maturity, would be sufficient
to cover its obligations), such a small country -
small currency- configuration makes it highly unlikely
that the central bank can act as an effective foreign currency
lender of last resort/market maker of last resort.
Without a credit foreign currency lender of last resort
and market maker of last resort, there is always an equilibrium
in which a run brings down a solvent system
through a funding liquidity and market liquidity crisis.
The only way for a small country like Iceland to have a
large internationally active banking sector that is
immune to the risk of insolvency triggered by illiquidity
caused by either traditional or modern bank runs, is for
Iceland to join the EU and become a full member of the
euro area. If Iceland had a global reserve currency as its
national currency, and with the full liquidity facilities of
the Eurosystem at its disposal, no Icelandic bank could
be brought down by illiquidity alone. If Iceland was
unwilling to take that step, it should not have grown a
massive on-shore internationally exposed banking sector.

That last sentence is the kicker. The Rich knew this quite well. But in keeping with the Reaganite/Thatcherism creed of "Who cares? We're the Rich; we'll do whatever it takes to make us richer." That is, after all, the obvious, if you had been paying attention, Capitalist's Creed...or screed, if you prefer. If an entire country is destroyed by their machinations, they don't care, it's simply Friedmanitemare collateral damage; they don't suffer, they just take the money and run to the next economy that's doing well, and then work to enrich themselves whilst bringing that one to its knees...Next.

Why is this news?

John Kenneth Galbraith wrote, in his "Short History of Financial Euphoria" (dysphoria, more like), that "Recurrent speculative insanity and the associated financial deprivation and larger devastation are inherent in the system". This is a fact well-known by Wall St. financiers who use the knowledge to separate, not only fools, but quite a lot of other people, from their money in a heady daze of speculative euphoria...that's their job. Not to make sure that your 401, or Calpers, or DB (defined benefit) pension fund, or State-insured (by failed institutions such as AIG) pension fund, assures you of a secure retired future.

Why is it news that their allegiance is to the rich? Why are we shocked when we see, decade after decade (1987, 1997, 2007.... what do we need.... a 2x4 to the head?), they skim off the profits accumulated by a shrinking middle-class to stuff their pockets with and fund another bubble in another country, impoverishing them before they turn to the next victim?

Realize this: You have no pension...all that you've saved all your life is not yours...it's theirs:

"....we got it, God knows how, but we intend to keep it".

Time for Regime Change.

2008-11-04T10:10:00.000-08:00

Asia Times online editorial for election day. Every one agrees we need a change from the Bush putsch.

Front Page
Nov 5, 2008

EDITORIAL
Send off the clowns

It is not our place to tell Americans how they should vote. Their concerns are health plans, taxes and, suddenly, socialism. That's their business. We can however tell them what America looks like to us, and it's our business, because America is a 800-pound gorilla in our patch of jungle. We need the gorilla because it helps sustain our ecosystem by consuming stuff we make but can't use ourselves. But for the past eight years our gorilla has been acting like a crazed thing, bringing wars and economic catastrophe. Its antics have made it a pariah and worse - a laughing stock. It's a gorilla that wears a big red nose, a frizzy wig and oversize shoes.

It looks to us like the gorilla has been trained by a bunch of clowns whose goal is universal domination rather than universal

good. Power for its own sake, at any price. It doesn't seem to us that even Americans have benefited from their rule - we see your financial ruin, your war dead (the dead they don't let you see), the wars you are still waging at monstrous cost and without a chance of winning, and we ask: Who has benefited? We see only a growing troop of militant Islamists, chittering with glee, a clan of America's business elite whose greed and excesses have been rewarded with a free lunch, for which you are paying, and a tribe of military industrialists, enriched by your taxes.

These clowns are not stupid. They are experts in the arts of bamboozlement. They won and held power by cleverly manipulating you through sophisticated use of your media and political trickery. Fear and greed: they gave you the former and satisfied the latter, instilling in you fear of a bogeyman under your bed and allowing asset bubbles to inflate to bursting point. Having taken power, they understood they could lie to you with impunity, and so they threw in a few whoppers like Saddam Hussein's weapons of mass destruction.

Now they are telling you that only they and their ilk can save you from the results of their own hubris. They have given you something new to fear: Barack Obama is a socialist! As if they themselves had not abandoned their free market doctrine when it no longer suited them and are now busy using their remaining time to redistribute wealth - giving your wealth to their buddies. The frightening thing, to us, is that so many of you are still listening to them without asking yourselves whether the trainers who cracked the whip at George W Bush are not the same ones who will crack it at John McCain.

Our plea from our patch of jungle to you is: Please look at the big picture. We are part of that big picture, and we need a sane, healthy gorilla, not a pathetic megalomaniac. It looks to us like you do, too.

Allen Quicke is Editor of atimes.com

(Copyright 2008 Asia Times Online (Holdings) Ltd. All rights reserved. Please contact us about sales, syndication and republishing.)

It's an Energy crisis, stupid.

2008-10-13T13:52:00.000-07:00

William Cristal, one of Milton the Monster's acolytes, was on NPR today whining that no one could have seen the financial debacle brought about by the neocon morons' attempts to shrink government by enlarging the private subcontracting government-trough industry to such an extent that the ballooning of government employees, simultaneously with that of the shadow economy of government lobbying, contracting, bureaucracy and "representation" (ie actual members of Congress and other positions of government "service"( only in government does service mean helping yourself)) is the only game in town for anyone looking for a secure future.

And it is secure. Under the radical rule of the neo-cons (they're neither), all responsibility is transferred to the private sector, which always simply demands more cash to do the job it was hired for but is incapable of doing, as, being the private sector, its only responsibility is to grow and make more money for its share-holders, leaving the tax-payers, on whom it parasitically depends, sucked dry; hopelessly drowning in debt.

The list is well-known:

After the WTC bombing, the National Security Adviser, Condoleeza Rice could sit in front of Congress and the American people and declare that she never discussed aircraft flying into buildings, despite a movie with that plot, a threat against the White house during the Nixon presidency, a warning from the CIA, and dire prognostications from Clarke. She should have been fired on the spot....anyone in private industry would've been out the door for such egregious dereliction of their job function. But our public servants no longer consider doing their job as part of their responsibilities: on all levels of government, collecting their paychecks is the only job description they take seriously.

The next outrageous example, is of course, the Iraq War. Warned by numerous voices, but most accurately by Robert Fisk, of the consequences of an Iraqi invasion, they ignored or suppressed anything that did not speak of a "cakewalk" through Iraq. Never did they mention to the Citizens of the US that their plan was to completely destroy the infrastructure of Iraq, and then award multi-billion dollar no-bid contracts to complicit US firms to rebuild it...not that you would have cared one whit if you had known. Here in the "Home of the Brave", we're ruled by our fear and greed. Whenever satisfying the monumental greed of the Ruling class is threatened, they simply stoke the fear of the populace to a red alert level, and we gladly cede to them whatever they demand, in sheeplike acquiescence.

It's no wonder the only way we can instate a Demockracy is at the point of a gun, and then only after having reduced the target country to a pile of rubble. In both of the wars in which we are now engaged, each country had already been pummeled by more than a decade of United States' war-mongering, reaping huge profits for the arms industry...but that wasn't, never is, enough. Here in the land of the brave and the home of the free, we're used to complete immolation of the native population and utter capitulation to our need, our right, to plunder their resources for our enrichment and comfort.

That's why the warnings to desist are, again and again, beforehand ignored; in retrospect, denied.

Next, a related warning, but nonetheless separate, was what the Iraqi War would cost. The voice in the Bush administration that told of the true cost of the war, pretty much to the penny, was summarily dismissed. The pattern is the same time after time. those in disagreement with the idiocy of Washington are marginalized so that their voices are muted, and then, once the crisis strikes, the warnings are, William Cristal-like, denied.

Katrina followed the exact same pattern...warnings ignored beforehand, in retrospect denied, and the profiteers move in to reap their gains, while government aids and abets them and abandons its citizens to their depredations.The next catastrophe, which will follow the same pattern of denial is already apparent, as the real cause of the financial crisis is ignored. Peak Oil Production is the POP no one heard when the credit bubble burst.

That's because the same dynamics are at play. Those warning of the impending crisis are currently ignored and marginalized, and when the catastrophe strikes, they'll be relegated to the sidelines as impotent. Nouriel Roubini is the prefect example. While that clueless buffoon Ben Stein is still printed in the NYT, and Paul Krugman wins a Nobel prize in economics, Roubini is saddled with the "Doctor Doom" moniker and considered a mere curiosity, despite having predicted not only the timing, but severity of the current financial disaster.

All so the racist undercurrents of the US are free to play their part in assuaging the country's conscience, so they can convince themselves all's fine, we're voting McCain in because he's best for the country, not because we'll do anything rather than elect a black president; even vote for our own doom. We'll even do that....just watch....but, please...DON"T whine that you didn't see it coming, or "who could have Known?" You all know....You all see it....but it's the path you'll choose. Anything's better than voting for a nigger. And because that's what you feel, the fate you're so casually walking into, as casually as you cakewalked into Iraq, is going to reap the same whirlwind. Because what's been promised by McCain is all War...all The time...for the rest of our Patriot Act-ruled lives. He suffered for his country, and so godammed it, will you. That's one ppromise a McCain presidency will keep...count on it.

But that's OK...as long as it's still the White house.

2008-10-02T09:13:00.000-07:00

Quoting Mike Rapoport of Dow Jones Newswire, Julian Delasantellis says, "Wachovia Bank, just bought out by Citicorp for $2 billion, had on its last day on its ledgers assets with a book value of $75 billion", and goes on to say that, "Maybe its not that asset values are too low - maybe the entire crisis is the markets telling us that they're too high". To which I can only reply, "Bingo".

While many point the accusing finger at minority borrowers who took out loans they couldn't afford, they were, many of them for the first, and what may prove to be the only, time in their lives, given access to sums they couldn't even begin to wrap their minds around, by "experts" who cajoled them with blandishments about "the ownership society" and "The American Dream".

These experts were, many of them, new to the business themselves, they took their cue from the likes of Mozilo, Fuld, O'neal, and Prince, Charles who played the music to keep the dance going. That dance being the Chicanery Waltz, a ponzi scheme contrived to fool the citizens of the US and the Central Banks of the world, that the imploding US economy, stripped of its manufacturing base, inflicted with middle-class expectations, even while straddled with a shrinking lower class income, and facing an inevitable crisis from the advent of peak oil production, was really robust and "resilient". It was neither.

What it was, was an economy thought by the cognoscenti to have too much money in the hands of the government and the hoi polloi, and this was what the Friedmanites were, and are, hell-bent on changing by, for one thing, scuttling Social Security, and siphoning its wealth, accrued by that very same government they purport to despise's ability to tax its citizens, into the hands of the rich financiers on Wall St. to underpin their failed dystopian dreams of a Spree Market, wherein all the wealth of the nation flows into their hands and is then disbursed to their investments in far-flung lands, leaving the populace, whom they despise and denigrate as morons, bereft of their life's savings (their definition of "Freedom" ... you're no longer encumbered by those nasty, onerous investments), without healthcare, and helpless to stop them, as we will be too old to recoup our losses.

Instead, they "free up" those savings to invest in factories and manufacturing facilities overseas, protected by the military you pay for through taxes on those now lower-paying jobs. Naturally the value of the US economy, now bereft of its productive capacity, can only diminish going forward; so a new paradigm needs to be invented to put lipstick on the slaughtered hog.

It wasn't for nothing that Greedspan was called the "Maestro". Out of thin air he created liquidity and increased affordability for housing by suppressing interest rates below the inflation rate, making all those poor "cheaters", who are now being accused of taking a loans out they couldn't afford, into houses they couldn't afford, because the real value of their savings were being sapped; money they couldn't afford to lose. The so-called negative savings rate is always blamed on bloated, selfish American greed, but that's a lie. By lowering the interest rates to less than the inflation rate, the citizen's of the US were having their savings slowly bled away from them. In an act of desperation to maintain some token of security for their future, as they watched the attack on Social Security as the Number one Mandate of the 2'nd Bush term, leaving them facing an old-age with no resources, they grabbed the lifeline held out from the sinking Titanic: the flailing ARMs.

Even if they couldn't afford the houses, they were told, they could always sell them when the day came, for a profit, getting a 20% annual return. Instead of their savings disappearing year by year, they would grow. The stark choice facing them, given that they had no pension, no Social Security, and no healthcare, was penury or a chance to not only have a vehicle for saving, but a place to live...the choice was a no-brainer, as the smartest men in the room like to say, whenever they want to make you feel stupid for not taking their sage advice, yet leaving themselves enough plausible deniability. With MBIA's current lawsuit against Countrywide, we'll see just how plausible that deniablilty is in a court of Law.

This is why the markets are telling us that the property prices in the US are too high, because they've been artificialy heightened to perpetuate the illusion of American Exceptionalism. But no such exceptionalism exists. The US is bound by the same laws of economics as the rest of the world: if you strip the middle class of its assets, which is what selling off the fruits of decades-long of a Democracy's labor to private interests is, then the value of that economy decreases, it's productive capacity sapped, the welfare of its citizens diminished.

As Adam Smith said in "The Wealth of Nations":
"The scanty maintenance of the laboring poor is the natural symptom that things are at a standstill, and their homeless condition that they are going backward".

The Fed can pour as much borrowed money into the pockets of the financiers that it wants to, but to the foreign lands from which those funds must flow, it has become undeniably apparent that as the onus of repaying those monies must be borne by an increasingly impoverished citizenry, the words of Adam Smith will again ring true. But, the US having already squelched on billions of dollars of their obligations, they will be different words:
"...all borrowers are put on the same footing as bankrupts, or people of doubtful credit, in better regulated countries (italics mine). The uncertainty of recovering his money makes the lender exact the same usurious interest which is usually required from bankrupts." But since those interest rates of the Central Bank regime are set to decrease, the real interest will be paid by way of higher inflation rates, even as the value of assets continues to decline, leaving the specter of a deflation running, thanks to the miracle of globalization, concurrently with a raging commodity price inflation. Welcome to the Friedmanitemare...don't worry about those troops in the street, they're there for your protection.

He goes on to state that among the barbarous nation the performance of contracts (read Credit default swaps) was left up to the contracting parties, which was the cause of the high rate of interest which took place in ancient times. Well, the barbarians are no longer at the gates, they are in the citadel. Which is why the Libor and Euribor are at historic highs.

Liberation from the regime of dollar hegemony must come from sovereign nations withdrawing from the global central banking system to return to national banking within a world order of sovereign nation states where monetary policy plays its proper role supporting national development goals, rather than sacrificing national development to support a network of oligarchies through transnational wage-suppression, export-led growth, and market manipulation via serial credit bubbles and Ponzi schemes designed to entrap the entire population in a web of debt, that eventually becomes apparent as nothing more than a web of lies.

Fried Man Economix

2008-09-25T14:57:00.000-07:00

Coincidentally, I've been reading Naomi Klein's "Shock Doctrine", which outlines the steps taken by the Chicago School of Economists to undermine and replace the economic systems of Chile, Argentina, Poland, and Russia with radical Milton Friedman Free-for-all Market economies. The step of allowing Lehman's to fail, and the completely predictable ensuing caos that would entail, giving the chance for the treasury Secty to step in and claim monarchical powers (Nouriel Roubini was the 1'st to recognize this, when in response to the plan he remarked "This is not A Monarchy"...hah! it is now, buddy) is only the first step in a tried and true formula for a finanial coup d'etat:

In the 1'st daze of the Bush adminsitation, he asked for the privatization of Social Security, needing approximately $1-2 trillion to do so:

$700 billion...proposed b/o pkg
$438 BD (budget Deficit)
$200 F&F
$160 Rebate checks
$85 AIG
$29 BS bailout...sounds cheap now, eh?
-------------------
$1.6 trillion

and it ain't over yet....oh, and nowhere in those numbers are the cost of our wars included, nor the increase in interest payments that an additional couple of trillion dollars'll add to the deficit.

The exact amt of the bailout requested as a boondoggle to Wall St by infusing it with the avalanche of cash from the "privatisation" of SocSec.
Just as he financed his war via the tax reciepts of the Wall ST. Robber Barons, he's repaying that favor now, since the ruse to infuse them with American Workers' savings failed.
But that's just my opinion....I could be wrong.

But even to a clueless economic observer like me, the inevitability of this"crisis" has been well-known, documented and a cause for concern for at least six years... yet if you look at what's happening with Paulson's bailout plan, you'd think the administration just realized there were problems with the economy yesterday.

Feeling guilty about not following the economic system as it was milked to death by scheming fraudsters? I recently signed up for Nouriel Roubini's RGE monitor, as I thought his prognosticaions were right-on years ago. This is what I got (this is just one e-mail):

Greetings from RGE Monitor!

Check out all the great contributions that RGE has published this past week: Nouriel Roubini's Global EconoMonitor, RGE Analyst’s EconoMonitor, U.S. EconoMonitor, Emerging Markets Monitor, Global Macro EconoMonitor, Finance & Markets Monitor, Asia EconoMonitor, Latin America EconoMonitor and Europe EconoMonitor.

On Nouriel Roubini's Global EconoMonitor there are four ground-breaking pieces.

In the first, Nouriel explains that the lack of debt relief to distressed households is the reason why this financial crisis is becoming more severe and why the economic recession - with a sharp fall now in real consumption spending – is now worsening. One way of solving the problem is by creating HOME (Home Owners’ Mortgage Enterprise). In order to understand the idea behind HOME you should read: “We need a new HOLC - more than a new RTC or RFC- to provide massive debt relief to the household sector. We need to create the HOME (Home Owners’ Mortgage Enterprise).”

The second important piece by Nouriel Roubini discusses the demise of the shadow banking system. Among other things, he argues that the next steps of the collapse will be the run on the short term liabilities of hundreds of poor performing and highly leveraged hedge funds and the collapse of highly leveraged LBOs following the recent bust of the private equity bubble. Read: “The Shadow Banking System is Unravelling: Roubini Column in the Financial Times. Such demise confirmed by Morgan and Goldman now being converted into banks”

Nouriel’s third analysis poses an important question as to whether one or more systemically important funds could go belly up and lead to systemic shocks. In his view, even as no major player today is as leveraged as LTCM was in 1998, many of these funds are much larger than LTCM. So while until now the financial crisis has been concentrated among traditional banks, broker dealers and their off balance sheet structures (SIVs/conduits) one cannot rule out that some systemically important hedge funds may get into trouble with systemic consequences. Read: “The unraveling of the Shadow Banking System moves to hedge funds as Schmalpha replaces Alpha”.

Nouriel’s fourth piece defends the creation of HOME and offers a detailed explanation of the 10 steps in this HOME proposal to resolve this most severe financial crisis. Read: “HOME (Home Owners’ Mortgage Enterprise): A 10 Step Plan to Resolve the Financial Crisis”

Also don’t miss the replay of his most recent conference call, where he discusses the path that led us to this current crisis and the way out of it. Listen to: “Financial Crisis and Recession: The Worst is Ahead of Us”
On the RGE Analyst’s EconoMonitor Elisa Parisi-Capone details “The demise of the shadow banking system” Lehman’s default – a systemic event that forced a systemic solution – was the pivotal event that triggered a rapid succession of interventions.
Ayah el Said and Rachel Ziemba review the “Fallout of the Global Financial Turmoil in the Middle East” arguing that the region is not, if it ever was, immune from global trends with various home grown liquidity vulnerabilities exacerbated by global trends. Rachel Ziemba also reviews the recent performance of Singapore’s Investment Fund, GIC. See. “SWF Watch: Government of Singapore Investment Corporation (GIC)”
In U.S. Housing Retention Bill: How Effective in Stabilizing the U.S. Housing Market?, RGE Monitor analysts Arpitha Bykere and Christian Menegatti discuss the U.S. Government’s Housing Retention Bill to refinance mortgages of at-risk homeowners. They argue that this will largely be ineffective in containing the ongoing home price correction, the excess overhang of homes, and will have little impact on mortgage default and foreclosures.
On the U.S. EconoMonitor authors questioned the efficacy and fairness of the government's bailout measures. Tim Duy focused on a blind spot in the myopic bailout plan: "This program will actually reduce regulatory capital as losses are realized. Even after the bad assets are removed, the affected firms still need to be recapitalized, presumably via taxpayer infusions...Try as policymakers might, they cannot forever ignore the fact that we are not Japan; we do not have excess domestic savings to fund such a program...If the Bank of China continues to be a dominant financier of US excess, they have found a way to dominate the US in a way that could never have been achieved militarily. What is the alternative? A tax increase? Tell Americans six weeks before an election that they need to accept a lower standard of living?" See “Fed Watch: Friday Can’t Come Soon Enough“.

How to recapitalize and with whose money are two of the major points of contention in the bailout. Fabius Maximus raises the question of whether taxpayer funds will go into the pockets of insiders, as they did with the Resolution Trust Company and the Iraq War. Fabius Maximus lists these and other bailout concerns in “What do we know about the financial crisis? What are the key questions?”.

In “The Bailout of All Bailouts is a Bad Idea”, Robert Reich reminds policymakers "to pay adequate attention to the people whose wallets really keep the economy going, and who merit more help than the Wall Street tycoons whose carelessness and negligence have put it in such jeopardy."

In ”Financial Meltdown Reshaping Wall Street”, Elisa Parisi-Capone and Christian Menegatti frame the unknowns surrounding Lehman's bankruptcy and the fate of off-balance sheet toxic waste.

Also on the U.S. EconoMonitor this week:
What Wall Street Should Be Required to Do, to Get A Blank Check From Taxpayers by Robert Reich
The Fed giveth, and the Fed taketh away by Tim Price
CEO Clawback Provisions in the Bailout? by Barry Ritholtz
High priority report: a geopolitical sitrep on the financial crisis by Fabius Maximus
Why Paulson and Bernanke are only Partly Correct, and Why Main Street Needs More Direct Help by Robert Reich
The Allure (and Risk) of Silver Linings by James Picerno
Latest Bailout Plan Spin: Its a Money Maker! by Barry Ritholtz
A matched preferred stock plan for government assistance by Charles Calomiris

On the Emerging Markets Monitor Jelena Vukotic develops an interesting analysis of the geopolitical risks within the Eastern European region: “Recognition Practice and Geopolitical Risk in Eastern Europe: Georgia, Kosovo and Beyond”. Nirvikar Singh points out that “The current crisis in the US does not mark the end of financial capitalism, as some windy observers have claimed”. Finally, Steve Keen writes that “We've only just begun” , discussing the seriousness of the subprime mortgages issue and the potential risks to American households.

Also on the Emerging Markets Monitor:
Why You Should Hate the Treasury Bailout Proposal by Yves Smith
Morgan Stanley, Goldman to Become Banks by Yves Smith

This week in the Global Macro EconoMonitor Jeffrey Frankel argues that if Paulson’s $700 bn plan is going to provide capital to financial firms, the government should get a share in the banks’ ownership to prevent all the gains of the rescue plan accruing to people who made the mess in the first place. Read “An Emerging Consensus Against the Paulson Plan: Government Should Force Bank Capital Up, Not Just Socialize the Bad Loans”.
In “And Now the Great Depression”, Barry Eichengreen draws comparisons between the current financial crisis and the Great Depression and differentiates the causes and consequent policy responses of the ongoing crisis with those of the 1930s.
In “Falling Back to a New Redoubt”, Daniel Alpert argues that the government should focus on recapitalizing the banks and dealing with the continued decline in home prices and consequent mortgage default, and offers suggestions on how to make Paulson’s bailout plan more cost-effective.
In “FDIC Won't Run Out of Money, But WaMu May be Toast”, Chris Whalen reiterates that the deposit insurance fund is an accounting entry with the U.S. Treasury with the FDIC fund showing how much cash is contributed by the banks to support the deposit funds and the Treasury advancing the cash needed by FDIC to address bank failures and making the deposit guarantees.

Also on the Global Macro EconoMonitor this week:
Capitalism and Skepticism by Christopher Carroll
Ban on Short-Selling Will Hurt Rather Than Help Broker-Dealers by Yves Smith
Closing Comments September 19 2008 by John Jansen
Moral Hazard Misconception - Part 2 by Ricardo Caballero
A new sitrep, as we move into phase 3 of the financial crisis by Fabius Maximus
Fixing Housing & Finance: 30/20/10 Proposal by Barry Ritholtz
Essential steps to surviving the current crisis by Fabius Maximus
The Mystery of Capital Flows by Sebnem Kalemli-Ozcan
A vital but widely misunderstood aspect of our financial crisis by Fabius Maximus
Implications of Repricing of Dollar Denominated Assets by Menzie Chinn
What To Do (and Not To Do) In A Financial Panic by Christopher Carroll
A Desperate Struggle for Perspective...Againby James Picerno
A Simple Explanation of What Went Wrong by Barry Ritholtz

On the Finance & Markets Monitor, Daniel Gross proposes a put option format for calculating the value of outstanding RMBS contracts. Read:”‘No recourse’ and ‘put options’: Estimating the ‘fair value’ of US mortgage assets”.

According to Mark Thoma’s calculations, the value of subprime related securities may very well be close to zero. In “Who Should Pay for the Bailout?” The same author advocates that the government should implement a rescue plan as soon as possible, and that there should be a progressive tax system put in place, so that those who did not contribute to the credit crisis do not end up paying for it. The “Paulson bailout” by James Hamilton stipulates that modified capital standards and more stringent risk management procedures should be a requirement for any firm participating in the government bailout. In”Why Paulson is (maybe) right” Charles Wyplosz analyses the Paulson proposal and agrees with much of what has been done so far. However, the final judgment of the bailout’s efficacy will have to wait a few years, when the RTC has unloaded the currently toxic mortgage securities.

The idea that Paulson might be right is not a consensus. Indeed, for Luigi Zingales, the government should not bail out the financial industry. Read” Why Paulson is wrong”. For Zingales, the government should force the creditors to restructure, with part of the debt forgiven in exchange for an equity stake or warrants.

Then, in “Crack Addicts and Bubble Markets” Joseph Mason describes the current situation as an “’asymmetric information’ crisis”. He then proposes greater transparency as a solution, both for rating agencies and for accounting regulations. He also has qualms with the current bailout approach proposed by the Fed. In:” What is to be Done?: Interview with Bert Ely”, Chris Whalen conducts an in-depth interview with Bert Ely, a foremost banking expert and lobbyist, about the bailout and the overall state of the banking industry.

Also on the Finance & Markets Monitor this week:
The Unitary Federal Reserve - Crisis Choreography by London Banker
Some Thoughts For September 19 2008 by John Jansen
Terror Attack on US Financials? Details of SEC Short Ban by Barry Ritholtz
SEC Induced Mother-of-All Short Covering Rallies by Barry Ritholtz
When blatant government market manipulation won't help you... the Run on Morgan Stanley by Reggie Middleton
Ameribank: the latest FDIC bankruptcy takeover by Edward Harrison
"Non-Reviewable" - Sometimes there really ARE conspiracies by London Banker
News round-up: 21 Sep 2008 by Edward Harrison
October 18, 1930: NYT on Short Selling by Barry Ritholtz
America appoints a Magister Populi to deal with the financial crisis by Fabius Maximus
Opening Comments September 22 2008 by John Jansen
Opening Comments September 23 2008 by John Jansen
Wall Street, R.I.P. Now What? by James Picerno
Housing Prices: How Far to Go until Bottom? by Menzie Chinn
Banking Expert: Bailout Not Necessary, Industry Can Take Losses by Yves Smith
The Liquidation Trap by Thomas Palley
Main Street or Wall Street? by Mark Thoma
How SEC Regulatory Exemptions Helped Lead to Collapse by Barry Ritholtz
Illiquidity versus Insolvency by Paul Kedrosky
Libor-OIS spread at an all-time high by Edward Harrison
Opening Comments September 25 2008 by John Jansen
The Right Financial Fix by Laurence J. Kotlikoff

On the Asia EconoMonitor, Takeo Hoshi suggests that the government’s comprehensive plan is a welcome step but that it lacks any clear government approach on (near) insolvency of large financial institutions. Read “The Cure for the U.S. Financial System?” He also describes how the failure of Lehman produced serious problems in credit markets not only in the U.S. but also in Japan where the repo market collapsed. See “Lehman Shock and the Japanese Financial Markets”

In “Some Random Thoughts on the Chinese Yuan” Yin-Wong Cheung argues that pushing China to keep appreciating its currency, without other complementary policies in place, can bring more harm than benefits to the global economy.

Also on the Asia EconoMonitor:
Worrying about the banking system by Michael Pettis
Markets surge, but little has improved by Michael Pettis
Japan’s New Prime Minister and Economic Reform by Takeo Hoshi

On the Latin America EconoMonitor we have three outstanding contributions. The first two deal with different aspects of the Paulson plan and discuss how it might affect Latin countries. Read “A Short Note on the Banking and the Banking Crisis in the US” by Antonio Carlos Lemgruber and “The Paulson Plan, Money versus Debt, and the Reversal Auctions” by Luiz Cezar Fernandes. The talk of Latin markets this week has been broader than the Paulson plan and has included the fact that Argentina might offer the holdouts a proposal to pay the debt outstanding. If you want to get a better grip on the holdouts and Argentina, we recommend the latest piece by Eugenio Diaz Bonilla: Some Reflections on Argentina’s Debt Restructuring .

Also on the Latin America EconoMonitor:
Lack of Infrastructure Investment in Brazil: A Constraint on Economic Growth by Vitoria Saddi

On the Europe EconoMonitor Ulrich Fritsche and Georg Erber discuss the slowdown in German productivity. In their view, the extraordinary export performance and competitiveness of the German economy was mainly driven by massive wage restraints and not by productivity gains. Read “Labour productivity growth in good old Germany: is Germany falling further behind?”

As Russian equity markets plummeted in recent weeks, conspiracy theories circulated that Washington was egging on American financiers to punish Moscow for its actions in Georgia. Fabius Maximus argues that even though these rumors are most likely false, they signal that the possibility of financial warfare is on the minds of key people. Read: “Rumors of financial war: Russia vs. US”

Also on the Europe EconoMonitor, Daniel Gross and Stefano Micossi argue that $700bn nationalization of US financial institutions helped save so far many overleveraged Europe’s banks, whose total liabilities in some cases amount to or exceed their countries’ GDPs. For them the solutions for the large institutions can no longer be found at the national level and hence it seems apparent that the European Central Bank will need to be put in charge. Read “European banking on borrowed time”.

That's just from one site. I like to read prudentbear.com, Naked Capitalism, Jim Fitch's Someassemblyrequired, Atol, not to mention the NYT and other pubs....this is just impossible. No wonder we're a nation of addled idiots.

Watching Your Future go down the Drain.

2008-09-12T16:01:00.000-07:00

Sure feels like Friday the 13'th, luckily it comes on a Saturday this month. The natives are abuzzz with talk of the imminent demise of WAMU, AIG, or Lehman's, the logic being, that if the Fed had to take over F&F, whose assets are known to be of a higher quality than most, then what does that say about the garbage held by those scumdogs at Lehmann's, or Wamu?, who was giving loans at the Mexican border ...well, for a fee, let's not get ridiculous.

But all the talk is of how to get back to where we were, or how to profit in a declining economy, how to ride peak oil to vast riches, alternative energy can make you rich, gold is going through the roof, dump dollars and buy foreign currency, all microplans based on your own scheming and oblivious of what directions the New Economy is taking us, for this, L&G's, is finally the New Economy they've been mentioning, but not at all what they were talking about. The New Economy means deprivation and want and lower expectations, as the results of the Smartest Men in the Room being allowed, under the rubric of "Free-Market Fundamentalism" to rig the economy of the Triumphalist United State of America to siphon the productive capacity of the entire globe into their own pockets, so the demand for yachts would sky-rocket, making them invest those dollars, wrung from the sweat of Chinese peasants, into production facilities to make even more yachts and other useless baubles for the Paris Hiltons of the world to flaunt in our face, as we, fools that we are, applaud thier "achievements".

The real New economy will reflect the devastating costs of trillions of dollars in malinvestment for Real Estate and defense spending on which we've squandered the output of the productivity of an entire generation to maintaitn the vanity-driven car culture to this crescendo of madness. The US has and now has inflicted the world with a mania for auto motion. It affects every sinew of the economy. Because the real heart of the economic dilemma is that the staggering cost of the transportation system in terms of infrastructure, resource depletion, healthcare costs, not even including those that result from the carnage from "accidents" (they aren't; they're built-in, as intractably as unemployemnt is in the economy), and the militant mind-set it fosters, is now being added to the fact that the import bill for autos themselves is rising faster than that of oil, as the US automakers continue to offer gas guzzlers. Let's face it, that's where the high margins are; that's what they want to make and sell, using "supply-side" economix: make it and they will come
Although noone believes it, that was the plan all along. Such was obvious from inside the computer industry. As industry after industry spent billions to enhance their IT infrastructure to enable them to rid themselves of all those nasty pesky employees and run them with a permanent skeleton crew, the entire manufacturing infrastructure was reorganized to set in place facilities to serve the needs of the wealthy, by offering luxury goods like SUVs and refrigerators the size of yachts to a citizenry persuaded, and foolishly obliging, to pull "savings" out of their homes and spend it on the "American Dream" of constantly expanding expectations of living off the fat of the ravaged land while the countries that supply them with all the cheap crap provide hordes of enslaved labor to sustain the gluttony and stoke the greed.

The results of which is that we now have an auto industry (and this is just one example in one industry in one country: globalization has had the effect of retooling factories worldwide to supply the Rich, the needs of their own citizens not presenting the high-margin profits demanded by their foreign investors) completely incapable and unprepared to manufacture vehicles the marketplace can afford, since all their plants have been tooled to provide cars to the rich, whose ranks have shrunk dramatically in the last year, and are shrinking even more dramatically now. Because as the Government hails the so-called 3.3% growth rate of the 2'nd quarter, not a single comment has been made about the fact that the unemployment rate is accelerating as the economy grows, so what's going to happen to the unemployment rate as that growth inexorably turns negative? You'll get the answer to that question in the form of a pink slip.

Summer of missed content.

2008-08-26T07:18:00.000-07:00

It's being reported in Bloomberg that Stuart Thomson of Resolution Investment Management Ltd. said: "The banking system relies on trust and at the minute there quite simply isn't any.'' Meanwhile, Larry Summers, whose frightening aspect is reminiscent of Star Wars' Jabba the Hut, warns: "The next administration faces the prospect of having to make the most consequential international economic policy choices in a generation at a time when the confidence of governments in free markets is being increasingly questioned."

Of, course, what he really means is confidence in "regulation-free Markets", which is not the same thing. Summers is famous for his stark blandishment, made in 1981 while at the World Bank, that developed countries ought to export more pollution to developing countries because these countries would incur the lowest cost from the pollution in terms of lost wages of people made ill or killed by the pollution due to the fact that wages are so low in developing countries, and going on to state further that, "the economic logic behind dumping a load of toxic waste in the lowest wage country is impeccable and we should face up to that" (ie rake in huge profits from it to enrich ourselves and ensure our continued full spectrum domination of the econo-sphere). The Netherlands, by the way, got caught doing exactly that, dumping horrible toxic sludge in Nigeria last year, after shipping it around for weeks to cover their tracks. But like our financial geniuses, they got caught with their pants down...and if you've seen the Wall St. boys, you know that can't be a pretty site...talk about toxic waist...eewwww.

So what might those policy choices be, we ask? Even after the fall of Summers from his position at Harvard and now that he and Scholes, (that other Master of the Universe who brought us the LCTM debacle, which started the whole Greenspan-led Fed precedent of gross interference with the still-called Free Market every time the Spoiled Brat Rich Boy Club brings it to its knees using it as their private gambling Casino), are still asked their opinion, it's plain they're feverishly working in the background to kluge together another graft to their money tree, replete with loopholes they can use to continue to game the system for their own aggrandizement.

It doesn't augur well this time around. And the reason is Stuart Thomson's statement. The world held its breath as it watched the spins and loops of the economic roller-coaster, as long as the party kept going and they were making money. But now that it's been revealed to the world the sheer scale of the losses with which Wall St., abetted by their cronies in Washington, intends to stick them, they're not so anxious to pony up for the next hair-raising hair-cut. Now that caveat emptor's been rewritten to an easier understood, "Step right up, Suckers", they've lost their appetite for being Wall St.'s saps.

Good luck boys. But methinks that what Yu Yongding, the former adviser to China's Central Bank, said about the impending implosion of the 2 Enron- style SIV's we refer to as Freddy Mac and Fannie Mae, is spine-tinglingly apropos: "...it's catastrophic. It's the end of the current international financial system".

Sleep tight America, now knowing that the little Foxes are frenziedly working to cover their collective fat ass, disguised as the stewards of your Security, whilst caring only for their own: Faith-based Economics is headed right where it belongs.... into the dustbin of history.

GM Drives itself off a Cliff.

2008-08-23T09:02:00.000-07:00

naked capitalism: "Peak Oil!! Peak Inflation ?!? Peak Credit??"

Having been called a Cassandra for years now, ever since doing a survey for a statistix class at Harvard during the summer of 2002 on the Boston-area's attitude toward the coming Iraq War, I was most interested in reading the above-referenced post of someone calling themselves precisely that (ie Cassandra). After reading said article, together with the news that, as posted by Bloomberg this week at: http://www.bloomberg.com/apps/news?pid=20601103&sid=amGc6ZPSzRLM&refer=us , can there be any doubt that the particularly vicious form of Vampire Capitalism advocated by the US and shoved down the throat of the ROW via the so-called "Washington Consensus", which is little more than the "right means might" philosophy of cower to our power, is an excellent way to enfeeble a strong economy and bring it to its knees by shoveling mountains of cash into the pockets of the rich by privatizing big government and socializing industry?

What the Bloomberg article is saying, is that after spending billions on lobbying that Parliament of Whores we like to call Congress, to keep the CAFE standards low for decades, we the people are now going to be required, by our "representatives", all bought and paid for by that same industry, to shell out billions more for them to do what the Free Market was incapable, apparently, of doing.

So, let's get this straight, GW, by initiating GWII (as in Gulf War II), has not only provided War profiteering to Pay James Baker back for helping putting him in the Whitehouse (Bechtel is one of the largest War profiteers, as was GM's Hummer division), but, by constraining oil supplies, via its invasion, enriched his Texan cronies, Texas being the largest supplier of Oil in the lower 48, created a patronage trough, known as the "Department of Homeland Security", to be filled with Bushies who can suck from the federal teat while lambasting "Big Government", even as, a la McCain, they funnel taxpayers' money into their own pockets, and call it Serving Their Country. It's merely a coincidence that they happen to thereby obtain higher than the private sector pay scales for their total lack of skills, health- care, job security, and pensions, all paid for by the citizens stuck in dead-end private industry jobs with no job security, no healthcare benefits, require skills and/or education that puts them in debt for a decade, and offer only "pay for your own damn pension benefits" plans.

What this should all tell us, and tell us all, is that the particular version of Capitalism championed by the Republicans offers us Medical care and education we can't afford, pension promises, which if they're defined benefit plans, they will either be abrogated or destroyed by inflation, or, if of the 401k variety, mismanaged by professional Financial "experts", of whom, to judge by the retirement plans of the Bear Stearns employees who's savings have been wiped out (if employees of Bear Stearns...employees at the very heart of the financial industry... are incapable of managing their 401k's competently, what chances do you and I have?), will leave us destitute, and can grow the economy only by increasing the federal and state government outlays by unsustainable quantities of debt while simultaneously ballooning asset prices to ridiculous valuations, it's quite apparent that we are all a bunch of suckers who want nothing more than to have bigger and bigger houses built for us not to live in, make bigger and bigger bombs so brutally destructive that we can't use them, while manufacturing bigger and bigger cars that we can't afford to drive, all while paying more and more money for food that poisons us, hospitals that kill us and leaders that sneer at us to live within our means, while they can run billion-dollar campaigns to put them in positions where they can collect millions from graft and bribery, while calling it by nicer names like "lobbying".

But just as "spin" has come into the vernacular, to enable us to talk openly of politicians' distortion of truth and outright lies, cynically hiring Spinmeisters, like Karl Rove, to better package those lies so they're more palatable for public consumption, allowing us to convince ourselves that a lie by any other name is not still a lie, small government has come to mean larger and larger outlays for the military and the War Machine that enables it, while running larger and larger deficits and pushing up the National debt into trillions and trillions of dollars so that when its bankrupt and unable to pay for social security they can simply shrug their shoulders and absolve themselves of any blame...it was the system.

On May 28, 1987, Mathias Rust took off from Helsinki, and, flying at low altitude to avoid radar detection, landed a small, single-engine plane in Moscow's Red Square.
This caused considerable embarrassment to the Politburo, and within a year the entire top echelon of the Soviet military was replaced.

On September 11, 2001, airline jets slammed into NYC's largest towering skyscrapers and into the Pentagon itself, killing thousands and wreaking havoc in not only those cities but to the airline industry and the economy as a whole. Not one government person lost their job. The head of the National Security council was promoted; the bloated Pentagon budget swelled to catastrophic proportions; Afghanistan, the country that we had armed and made hospitable as a haven for terrorist activity was taken over by those same organizations that had made the attacks possible, and, having set the same trap for ourselves that we had, with much braggadocio, and highly publicized with the release of "Charlie Wilson's War", laid for the former Soviet Union, sprang it on ourselves.

By doing so, a small cadre of left-over Reagan-era apparatchiks and felons, together with their new cronies, took over the reins of the federal government. Having an immensely high opinion of themselves they are not far from believing that they form a species apart from the rest of the human race, and, therefore, brook no dissent. As Alexis DE Tocqueville predicted in his magnificent volume on the United States, "Democracy in America": "regard the ... states as (their) subjects and enforce the respect for their own sovereignty under cover of the sovereignty of The Union. Things may be done in the Federal government's name, but in truth, the Union would have ceased to exist."

Wrapping themselves in the flag so as to appear patriotic, they can then maneuver the federal government toward a policy of proclaimed national interest whereas the only interests they serve are their own. Since this is also the stance of the entire US Congress now, there's no one from either party in the legislative branch to cry foul at the Executive branch, as the cry would quickly, without falsehood, be visited upon themselves. For by proclaiming Greed, the very epitome of self-interest, to be sacrosanct, how can the same rulers declare themselves patriotic, which by definition puts the interest of the country above their own?

So the entire government becomes enmeshed in a tawdry web of deceit where, since everyone's culpable, and all that newcomers want is to enrich themselves, there's no one left to hold anyone accountable, even for such an enormous failure of all our National Institutions that the calamity of September 11 represents. Consequently, all it's been used for is a once-in-a-lifetime opportunity to expand federal spending without even a pretense of accountability that has brought us to the downward spiral of loss and defeat for which the US citizenry will pay while its leaders and Aristocracy continue to squander the productive capacity of a great people on realizing their own dreams of attaining Super Wealth by the continuation of the two great vehicles for absconding in the night with the products of labor: Huge budget deficits and Inflation. USA! USA! USA! ... has become a command from the rich: You essay, I'll just sit back and take the fruits of those essays (although I, naturally, won't even stoop to pick said fruit; after all, that's why we allow illegal immigration).

This is the Neo con-game; same as the old con-game.

2008-08-20T10:32:00.000-07:00

Howard Kunstler, author of "The Long Emergency", in a speech in front of the Agora Financial investment symposium, was reported to have stated that: "The American suburb was the greatest misallocation of resources in the history of the world… Why? Because it has no future; because we’re not going to be able to run it…. We don’t have the resource base to run it."

This statement articulates the reason for both the enormity of the current financial crisis and the reason for its intractable nature, at least as measured by the actions the Fed has thus far taken to alleviate it. Because all the Fed has even attempted to do is to put markets back in operating condition while completely ignoring the underlying realities that engendered their dysfunctionality in the first place. The assumption with such a policy is that, once we balance the gyrating colossus, we can work on the underlying problems that are causing it to teeter so dizzyingly on the brink of collapse.

But this assumption is proving to be fatally flawed. Like the assumption that, after the U$ reached peak oil production in the early 70's, we could simply fuel the ever-thirsty behemoth of constantly-increasing U$ energy consumption with imported oil. Like the assumption that a society in which the major corporations, and the federal government collude to reassure the citizenry, via cooked up ideological Free-Market fervor, a la Milton "The Monster" Friedman, in which they pretend to believe that relieving the upper class of any responsibility for any of the rest of society, and then restructuring the tax system to flood them with money, simultaneously relieving them of their fiduciary responsibility to said system, that somehow, via "the wisdom of the marketplace" ( that's just been relieved of its "burden " of paying livable wages by colluding with a Totalitarian regime to provide free labor from an impoverished, prostrate citizenry) can magically grow and prosper into a sustainable future.

But these outlandish assumptions weren’t believed by the ruling class. Unlike the rest of us, they were quite aware that peak oil production was reached in the US as far back as the early 70’s. So were the Saudis, who would have been completely incapable of an oil embargo if the production of US oil had not reached its peak, from which it would inevitably, inexorably decline. And it is from this point in time that one can easily follow the Upper Class plan to confiscate the productive capacity of the US, monetize it, and then export it to regimes in which it could constrain its costs from the clamoring of a middle class it couldn’t control, and continue to reap the profits far into the future, long after the Youessay was destroyed; their profits safe in Swiss Bank accounts and goldbricks, surveying their work in smug comfort from Swiss chalets and basking in the sun at third world resorts with their local minions to cater to their every whim.

Many consign such theses to the realm of conspiracy theories; however this plan is no conspiracy. A conspiracy, by its very definition, is secret. But the US population is so seduced by the illusive prosperity of the trinkets provided by the armed forces of the free market, enabled by its Demockracy, that they’ve failed to note that anything of real value or capable of producing real security via investment in future productivity, has been pawned or conned or cast away. So the rich are free to steal right in front of our eyes, to cavort in their splendor, pervert the justice system, undermine the constitution, plan the destruction of Social Security, disable the regulatory mechanisms of the federal government, leave the States’ Treasuries not just empty but in the red by billions, and build up their own privatized armies, using taxpayer monies (Blackwater armed forces were the first “help” the victims of Katrina saw), monopolize all organs of the media, and use public monies to privatize wealth on a breathtaking scale, all with impunity from, in fact with the blessing of, the public (barring those few “elites” who “read books” and stuff).

So this has been done, not in secret, but in public, right in front of your eyes, using keywords like “freedom”, “Democracy”, “security”, and “liberalism”, together with the same strategy used in the middle east of funding and arming religious fundamentalists to do their dirty work, the Republicans have systematically undermined the democratic voice of the population and replaced it with the intolerant hate-speech of people of “faith” who baptize themselves with the knowledge that they’re doing the work of the Supernatural when they bomb US embassies, murder abortion doctors by shooting them in the back, or bomb abortion clinics. (Once the “War on Terror” was declared by their leader in the US, their Commander in Chief, George W. Bush, the radical forces of Christian fundamentalism have been called off, and not a single outrage of this nature has occurred within the US).

Because just as both the World Wars of the 20’th century were won by the West “riding on a wave of oil”, so the prosperity following those wars was fueled by that same black gold. The major difference being that after WWI, there was no mechanism in place to wrest control of the resultant prosperity from the cold hands of the capitalists and place it under control of those whose blood was spilled and whose backs were broken to produce it. Instead, like now, it all flowed to the richest, who need it the least, but whose greed is insatiable, self-stoked, narcissistically stroked to the level of insanity, by a financial mania and Darwinian justification of their racial and intellectual superiority, even as they descended into Hobbesian tooth-and-nail economic debauchery.

So seeing their black gold running dry, and disdainfully dismissive of the consequences on the very economy that enables their ascendancy, they scramble to destroy each others' enterprises, using high-minded phrases such as “creative destruction” to justify an orgy of self-aggrandizement that would leave the very population that produces their ignoble obliquity destitute. In their back-to-the-future dream world, the subdued population resembles those in authoritarian regimes such as the Middle East and Communist China. All aspirations not consistent with the upper class mirage are crushed by “Homeland Security” forces, while only one “American Dream” is allowed. The all-too-apparent contradiction of there being but one dream for a population exceeding 300 million free people in pursuit of happiness is never questioned. Nor is the fact that in the most prosperous nation in the world, with a GDP larger than that of the next three economies in the world combined (Japan, Germany, and China), the most anyone can dream for is a place to live. That’s why homelessness in America isn’t a problem: it’s a solution.

Remember, "We don’t have the resource base to run it.", but we can generate HUGE profits building it and then tearing it down, using the taxation on the resultant profits to fund an Imperial War of aggression, which will suppress the supply of oil to the world markets, enrich our fellow Oilmen, as the inevitable squeeze in supply and stoking of demand that a War and the Marketing of Huge gas-guzzling, 3-ton, SUV’s and Hummers will engender (deficits don’t matter and conservation is for lily-livered wimps…LIES), and leaving the population in dire financial straits with no one to blame but themselves. This is the Neocon-game; same as the old con-game. Welcome to the Back-to-the-Future world.

And as we continue to relive the economic panic of 1907 in 2007 and beyond, just think, we soon get to relive WWI; 2014’s just a scant 6 years away. As they dust off the old slogans that worked so well then, and are working so well now, we can look forward to another War to end All Wars with renewed relish, because apparently that’s all we care about anymore, destroying other peoples and confiscating their resources in the name of “freedom”, so they can go to those who rightly deserve them …U$.

Suburbia's become part of California's prison system, We don’t have the resource base to run it, but if we build it, they will come. Although they can ill afford to, but such is the new science of behavioral economics, where the prisons are Home Sweet Home and are built by the very population that clamors to be let into them.

Who the Fed cuts cut the Deepest.

2008-08-13T08:04:00.000-07:00

The result of the gerrymandering of the economy in order to encourage misallocation of capital on a massive scale by funneling enormous streams of revenue into assets such as exurban homes, SUV's and the equity markets, was the creation of myriad credit-induced bubbles, the bursting of which, have brought us to our current state of a collapsing financial sector, crumbling infrastructure, and bloated, and growing, Federal and State government deficits. And because these "assets" were then leveraged, via mortgage-backed securities, "collateralized" debt obligations, and the like, they all rode high on a wave of debt, i.e.liabilities, misconstrued as assets. As if loans made to people with no collateral to back them, were as good as those made to fund the building of a factory, which at least had the potential to produce future returns able to finance the payment of the interest on that debt.

So, for those consumers who took out risky loans, and speculated on the pipe-dream of ever-expanding property values, while the citizens of the country in which that property was located continued to have their livelihoods eroded by a Corporate-Government collusion to castrate the bargaining power of labor, and could buy the consumer goods brought to its shores by the productive capacity of those whose totalitarian government brooks no dissent, only by extracting the phantom profits from their property's rising price, the Fed cut of the Discount Rate was a boon...for now.

But they will soon join the rest of us, receiving paltry returns for savings, in experiencing the ultimate failure of the cut as it raises the prices of those very same imported goods, by raising the inflation rate around the globe for those consumers in other countries, where our exported inflation (which is what lowering the interest rate on the World's Reserve Currency does) has caused much more rapidly increasing prices (including for those goods they export to us). But for those who have access to capital at a cost far less than the inflation rate, i.e. the banks, whose deregulation and subsequent chicanery got us into this intractable situation in the first place, the Fed cuts are a Godsend of Corporate Welfare and Stat-ism, explicitly pandering to the needs of these well-endowed Corporate hogs.

This is important , because, even as several articles have been written about the "New Frugality", and that Frugality is the "New Cool", such frugality fights against extremely powerful headwinds, as the Federal Government continues to increase an already unpayable National debt, of which the interest alone ($250 Billion) is equal to half of the Current fiscal year's budget deficit of half a Trillion dollars. This means that no matter how thrifty one may be, the government is spending your money faster than you can save it.

Mistaking depression for delight.

2008-08-02T09:11:00.000-07:00

A friend recently told me in an e-mail: "I am sure u must be delighted about the economy. all of your predictions are coming to fruition."

To which I had to reply:

"Delighted? That's just plain mean. It's like saying that the voices warning about the imminence of an Al-quaeda attack on the US in 2001 were "delighted" at the destruction of those twin soulless monoliths in Manhattan.

To suggest that because I didn't join the silence of the lambs as they flocked to be fleeced by usurers and conmen, dutifully wearing flag pendants in their lapels, is a perfect example of how the repression of any opinion that doesn't conform to the official script of the Age of Reagan, AIPAC, and the PNAC is not thrust upon us, Orwellian style, by an ever-watchful Big Brother, but instead is inflicted on us by the very citizens we wish to enlighten.

The message is do not rock the boat by discussing the perfidy wrought in dark backrooms where financiers, CEO's and politicians, posing as pious Puritans, virtuously betray their country and give their whole-souled services to the ruin of their fellow men.

Because although they offer their usual assured pronouncements upon finance, banking, market trends and property values, it is spine-tinglingly apparent that below all this is just utter, naked, frantic terror - the terror of men who know that they are ruined and are afraid to admit it, even to themselves.

The broken fragments of America waits and fears and schemes to put off the day of its impending ruin ... that you should accuse me of being delighted by this devolution into the maelstrom of anarchy and fear simply because I gave voice to how alarmed I was at the enormity of the fraud that was so bold-facedly, yes even delightedly, brought upon the citizenry, abetted by their own Oedipal (as in it is self-inflicted) blindness, smacks of denunciation.

Vampire Capitalism

2008-07-31T07:41:00.000-07:00

I've noticed that they've used the term "moral hazard" a lot more on TV in the last 6 months than in the last 6 yrs.

Moral hazard is defined as: "The risk that a party to a transaction has not entered into the contract in good faith, has provided misleading information about its assets, liabilities, or credit capacity, or has an incentive to take unusual risks in a desperate attempt to earn a profit before the contract settles."

Sound like gobbledegook, but FDIC insurance gives the most compelling example. Since the Fed has cut its rate to 2%, elderly savers have seen their paltry incomes from their "safe" investments in CD's slashed by more than half, just as their costs have begun escalating relentlessly. What this forces them to do is seek out higher yields, but with an eye to capital preservation, as they have no way to recover from capital losses. This makes them gravitate towards those banks that offer higher paying CD's....ie, those banks that are desperate to re-capitalize because of the emormous losses they've suffered by offering ARMs to the poor, in this case, let's say Countrywide Savings, whose CD rates are in the 4.5% range.

So those banks with the worst record of skating on thin ice and proffering risky loans, with practically criminal intent on raking their customers over the coals, are the very banks that, thanks to FDIC insurance, receive the most funds flowing to them. Without insurance, no one in their right minds would put their capital into an institiution on the brink of failure, with no business plan in place that differs from the one that got them into the treacherous straits they deliberately sailed, in the first place ... and for precisely the same reason: considering themselves TBTF: too big to fail. This is the tacit understanding amongst large financial institiutions, put in place since the failure, and subsequent FED rescue, of Chicago's Continental Illinois National City bank in the 80's, that should their risky behavior bite them in the ass, the FED'll always come to their rescue.

That same model of encouraging risky behavior applies to the health industry as well. Although I'd argue it's a misnomer. Like the "Defence" Dept. As we saw at Pearl Harbor, and 9/11, the US military is uninterested in providing anything as unglamorous as defense...the real money and excitement is to be made in waging War, but then we'd have to admit what we really are, and since that's not pretty, the mightiest military machine ever to straddle the face of the earth prefers to liken itself to a poor little lamb, always having to defend its picked-on little self from unwarranted attacks.

So just as the War dept likes to call itself Defense, the Illness industry likes to refer to itself as the "healthcare" industry, whereas, in a Capitalist society, health is the last thing the Illness industry is interested in, as there's absolutely no money to be made from a society in robust health. And where there's no money, there's no industry, no shareholders, no raison d'etre. The perfect example of this is of course, the so-called "HMO's", whose last interest is in maintaining its patients' health....they are only interested in collecting insurance payments from the employees' Companies, discouraging them from using their services so as to keep the expenses down, and then jettisoning any responsibilty to continue coverage to people who've paid for it for 20 years w/out ever using it, (as they were in good health) when they're laid off, and finally, just when they do need those services, in retirement, casting them off to the responsibilty of the government.

This isthe same model as the financial industry: all the profits to the private sector, all the risk and liability thrown onto the public sector. With the very industry that profitted so handsomely fighting tooth and nail to keep from paying any taxes.

And were they to act any differently, the shareholders would take their money away from them and invest it elsewhere. Because the investments were made in the first place, not to maintain health, but to profit from disease.

Why is this, in America...or more accurately, the United States (which, true to form, has usurped the name America from the continent, because, lacking any Real name, like its former counterpart, the USSR, has to call itself America, as if Mexico and Canada don't exist....if we are America, then Mexicans aren't illegal aliens, are they?, they are as American as you and me...in fact more so, as their ancestoral blood is of this continent whereas yours is not), the bastion of Vampire Capitalism, Champion to the Rich and Privileged, news to anyone?

That's what's Capitalism's all about: Hobbesian, nasty, brutish, Jackboot-in-the-face, Lord of the Flies, might makes right, winner takes all and the rest be damned, survival of the fitttest, kick the losers when they're down while laughing, Triumphalism. Don't you watch Fox News? Have you not listened to a word that Blonde mop-on-a-pole, Anne Colt-face says?

Which gets us back to moral hazard. That term, is, of course, basically the defintinon of Capitalism, where from cigarette companies to Automobile manufacturers, the aim of the Corporation is to sell its own customers products that are poisonous, dangerous, expensive and marketed deceptively to obscure the fact that all the above is true. The whole intent is to kill off its customers once they've procreated, destroying any chance of survival into old age when they're percieved as nothing but a drain on profits.

This is the model, adopted from the Military and Oil industries. The Macho Militancy on which the post-USSR world has been built: the so-called "Washington Consensus". It's Yahweh or the Highway. Without the Soviet Union to point to and say how horrible it is in comparison with our own wonderful selves, the whole pretense of cradle-to-grave socialism has been rent asunder, and capitalism's true colors made unabashedly apparent. The winners, who of course are the American Aristocracy, are allowed to, as in French pre- revolutionary days, no encouraged to, prey on their fellow citizens, who now have no rights, inalienable or otherwise, stripped to the status of denizens in their own country, their own government concerned more with factories in China, (there being no more here) and eviscerating any labor laws still extant here, and cynically giving them the finger while intoning "Let them eat ....", well, it ain't cake this time, unless it's yellow.

Because, if anything , the Privileged Class have attained a whole new level of snide viciousness, as embodied by that hellacios, supercilious, pussy-flashing skank, Paris Hilton.

What's wrong wtih this picture?

2008-07-30T10:16:00.000-07:00

Sunday's NYT included an article on Home-4closures that was accompanied by a photo of a woman who was desperately trying to forestall her own.
She was pictured sitting at her credit-card purchased outdoor table with umbrella, puffing away on a cigarette, with a bottle of unfinished $4 Starbucks, a can of coke, and two other hi-sugared drinks. Even with the wolves are at the door, this woman would not even consider foregoing the pleasure of consuming these completely useless items that, despite the fact that they are poisonous and will only increase her already advanced obesity, she can ill afford. Instead she continues to guzzle sugar, which'll result in diabetes, the treatment of which, she'll expect the rest of us to pay for, as well as any form of cancer or other self-inflicted illess caused/exacerbated by her own blind desire for constant stimulation.

Rather than break the back of the on-going attitude Americans have of depending on the kindness of dangers, we continue to feed the Vampire Capitalism that sucks the lifeblood out of our communities and transfuses it into the already-bloated undead parasitic banking sector, and then stand aghast at the totally predictable results of our decisions.
So despite the fact that I find Gramm's statement that Americans are a bunch of whiners, outrageously callous, at the same time, why is he the only one making it? We've shredded all the social safety nets from our children's generation, even as we've molly-coddled them into thinking they're living in a European-style cradle-to-crave Welfare State. The inevitable head-on collission between these two starkly different realities is bound to leave many more whiners than diners.

Just one little Question

2008-07-28T15:04:00.000-07:00

Hearing the Bush/Paulson duet sing over and over how "The US economy's fundamentally strong, diverse and resilient", how come no one's asking them, then why does the US government have to shore up the failing institutions at the very heart of that economy? If it were sound, diverse or resilient, the extraordinary, extralegal activities of the Fed chairman Benron Bernanke would not be allowed, nor would they be necessary.

Instead, because this administration, in collusion with the "independent" Fed reserve Chairman Alan Greedspin, took that once resilient economy and twisted it into a bubble-induced debt straitjacket to pay for an insane War while lowering taxes to keep the protests of those paying for it muted.

Why is Mike Shedlock the only person I read who has the cajones to say it: "Liars!" From day one that's all it's been with the Bushies, lies lies and lies, and any sycophants that don't go along with the constant lies are summarily dismissed.

Acknowledgements

2008-07-25T08:24:00.000-07:00

Although my backround in IT and the computer industry may be irrelevant, it would be remiss of me not to mention the principle writers who helped me form my views, or whose views I completely co-opted.

Adam Smith , Alexis De Tocqueville and Thomas Wolfe notwithstanding, most of these are ongoing influences: authors that I found on the web, since the world of TV “journalism”, and newspapers in general have completely abandoned the serious topics necessary to remain informed about the world. Some of these, my personal Rock Stars, I will list here, starting with the man who had the most influence in opening my eyes to the true nature and scale of the calamity the American public was being led into in order to enrich the upper class to such an extent that the ensuing Gotterdammerung was totally predictable.

That particular gentleman was Doug Noland, a scribe for David Tice’s Prudentbear.com. With charts of not only the growth of MBS, federal deficits, cad’s, and other debt instruments, he projected their unsustainable growth paths way back in 2003 or so when I started reading him to the present time…charts that could only send chills down the spine of anyone interested in where the policies of the feckless Bushies and their chicaneries were taking us.
And to get to his post, it took about a year of following my nose, disregarding the harlots who echoed the same garbage spouted during the dot.com boom, such as Jim Cramer, that people, inexplicably, still hearkened to…how could this be? How could an entire country, in fact the entire globe, still heed the blandishments of the very coterie of little foxes that brought us the dotcom debacle and the Enron “scandal”? (Of course, the fact that a “news” organization could actually call itself Fox (in the henhouse) News and actually be taken seriously, should have been a clue right there).

So to get to Doug Noland, I first had to go through that stalwart band of dedicated gold aficionados such as James Turk, referred to as “goldbugs”, who rue the day we went off the gold standard and believe the barbaric relic to still have relevance as a basis for monetary value. Their theories took me to Anatole Fekete and his Gold University, Adrian Ash from Goldbullion.com, and Richard Daughty of Mogambo Guru fame from Safehaven .com and ATOL, the best online newspaper (Asia Times online) for opinions outside the American purview, including not only Henry C.K. Liu and the above-mentioned Doug Noland, but Gareth Porter, Julian Delasantellis, Jack Crooks (since left), Chan Akya, Tom’s dispatch , Micheal Klare, even Spengler, a nasty piece of work, and Martin Hutchinson, for a sprinkling of the dark side.

Mike Ruppert’s “fromthewilderness (is Stan Goff still out there?) also had excellent coverage of events the mainstream press didn’t cover, and Stephen Roach of Morgan Stanley looked at the world from a doubting Thomas perspective until going over to the rose-colored glasses crowd just as his more nuanced view of the state of the world was about to be vindicated.

Which brings me to my current faves which includes Naked Capitalism, Nouriel Roubini, IRA, and Mish's (Mike Shedlock) Global Economic Analysis. I first read Mish in a Newsletter called Whiskey and Gunpowder, and his prognostications were so dire, yet undeniably based in fact, as opposed to the fantasy-delusion on the mainstream press, that, together with Peter Schiff's more famous, as they are on video tape, predictions, were like Emma Thompson's in Harry Potter, bone-chillingly accurate.

I know this is all choppy, but I don’t want to forget anyone, and yet know I must, as I‘ve gone through numerous computers on whose drives are still articles and stories I deemed cogent enough for saving, yet that now sit in magnetic limbo, saved but inaccessible , but I plow on and that’s one of the reasons for this, at least now as the computers bite the dust, perhaps the data and the chronicling of the Demise of American Capitalism, indeed of the very USSA, in my humble opinion, can be perused.

To paraphrase Pogo, We've not seen the enemy, because it is US. The longer we retain our self-inflicted, triumphalism-inspired, PNAC-documented, blindness, the more apparent it will become that the USSA will suffer the same consequences of its fatal hubris that the USSR did, and dissolution becomes the only solution.