The Pentagong Show

The Pentagong Show
United State of Terror: Is Drone War Fair?

Friday, December 4, 2009

A Fool and Your Money

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.

Saturday, November 21, 2009

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

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!

Wednesday, October 28, 2009

Shhh...Roubini says, ...

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 .

Saturday, October 10, 2009

The Destruction of Credit in the Evil Empire of Debt

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.)

Thursday, October 8, 2009

The Rape of Utopia

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.

Saturday, August 22, 2009

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

"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 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.

Thursday, August 20, 2009

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

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, which both hides and scurrilously boasts of its scoundrel's heart, there was a sudden crash that was heard around 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. Unlike the USSR, 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, those 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 Capitalism 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.

Tuesday, August 11, 2009

Faith-based Economics

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.

Monday, August 10, 2009

Market Forces are Armed Forces.

"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 (

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.

Tuesday, August 4, 2009

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

After seeing "Some Assembly Required"'s ( 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.

Friday, July 24, 2009

It's the Stupid Economy.

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.

Thursday, July 23, 2009

There's something in the rigging, Captain: Capitolism

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.

Wednesday, July 22, 2009

Someone Needs to Clean Big Ben's Clock.

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.

Saturday, July 11, 2009

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

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:

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.

Wednesday, April 8, 2009

As the depression goes rolling along...

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 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) 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.

Wednesday, April 1, 2009

News and Views.

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.

Sunday, March 29, 2009

The Engineered Depression.

"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?

Thursday, February 26, 2009

And they all fall Down.

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 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.

Saturday, February 14, 2009

"Michelle Obama's Hairstyles, a Retrospective".

At the bottom of an article on, 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.

Monday, February 9, 2009

The end of Prosperity.

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.