The Pentagong Show

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

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.