Stocks and Precious Metals Charts - Without Shame or Honor - Hitmen

 

“The most tragic thing in the world is a man of genius who is not a man of honor." 

George Bernard Shaw

 

"We may make ourselves popular by telling our fellow citizens that they have made Discoveries, conceived Inventions, and made Improvements; We may boast that we are the chosen people; we may even thank God that we are not like other men.  But after all it will be but flattery, and the delusion, the self deceit of the Pharisee."

John Adams, Letter to John Taylor,  29 July 1814

 

“Melancholia is the beginning and a part of mania.  The development of a mania is really a worsening of the disease.  A period of lewdness and shamelessness exists with the worst type of manic delirium.”

Aretaeus of Cappadocia

 

"Time and again we hope for better leaders, but all too often those hopes are dashed.  The reason is that power causes people to lose the kindness and modesty that got them elected, or they never possessed those sterling qualities in the first place.  In a hierarchically organised society, the Machiavellis are one step ahead.  They have the ultimate secret weapon to defeat their competition.  They’re shameless.” 

Rutger Bregman, Humankind: A Hopeful History

 

“The real conflict is the inner conflict.  Beyond armies of occupation and the  the sacrifice of many victims of extermination camps, there are two irreconcilable enemies in the depth of every soul: good and evil, sin and love.  And what use are the victories on the battlefield if we ourselves are defeated in our innermost personal selves?”

Maximilian Kolbe

Stocks had a number of ways to demonstrate that they have put in a decent bottom from this recent flirtation with lower lows.

The action today was not one of them.  

A gap open and sprint higher that flopped into the close reeked of artificiality.

Gold and silver did manage a bounce from the expiration lows, and went out nearer to the highs of the day.

But to extend that in the face of titanic monetary events is key.

The Dollar continued its march higher, taking on the 103 handle and then some.

Or should we more correctly say that this is not Dollar strength so much as Yen and Euro weakness?

And is this Dollar strength more like the receding of the ocean, prior to some greater seismic event?

The strong Dollar has had its impact already, shaving several whole points off GDP in a yawning trade imbalance, fostered by a stronger dollar.

A strong Dollar favors imports, discourages exports, and encourages hot money of finance to seek acquisitions abroad.  

Save yourself from the madness, if you will.

And you may be grateful yet, if you do so moderate your passions, while remaining standing safely and faithfully, on higher ground.

Have a pleasant evening.

Les Confessions d'un Assassin Financier - At Home and Abroad

At Home

"And in some ways, it creates this false illusion that there are people out there looking out for the interest of taxpayers, the checks and balances that are built into the system are operational, when in fact they're not.

And what you're going to see and what we are seeing is it'll be a breakdown of those governmental institutions. And you'll see governments that continue to have policies that feed the interests of -- and I don't want to get clichéd, but the one percent or the .1 percent -- to the detriment of everyone else."

Neil Barofsky

Do you see why there is no real reform now?   Do you understand the hard  choice that a person of honour and conscience is given?  Who will make such an unfashionable choice when they have so few models to follow and almost no moral encouragement to find in this vile era of selfishness and greed? 

Do you understand now why laws that are widely opposed by the people like the secret pre-approval of the Trans-Pacific Partnership can be bullied through a Congress with an approval rating in the single digits, seemingly without a care?





And abroad

“There are two ways to conquer and enslave a country. One is by the sword. The other is by debt.”

John Adams

Do you see why suddenly a nation must be broken by fraud or by force and rebuilt, bent to the will of the powerful.  Why its people can be devastated by harsh policies that make no sense, its sovereignty replaced by a puppet regime, while its assets are privatized and sold?





And if a person follows their conscience and sacrifices greatly for the truth, do you offer any comfort and encouragement, or even a thought or a prayer for them? Are you capable of even caring? Or is it all just another opportunity to make some quick money for yourself?

Would it be any different, if instead of placing bets on the sickness and misery of women and children, you simply murdered them, and took their possessions for yourselves, and sold their clothes, even their teeth and their hair?

It is a hard world after all. And you would become truly exceptional then.

To Understand the News, Follow the Money. To Follow the Money, Follow the Economic Hitmen

"Plunderers of the world, when nothing remains on the lands to which they have laid waste by wanton thievery, they search out across the seas. The wealth of another region excites their greed; and if it is weak, their lust for power. Nothing from the rising to the setting of the sun is enough for them.

Among all others only they are compelled to attack the poor as well as the rich. Robbery, rape, and slaughter they falsely call empire; and where they create a desolate wasteland, they call it peace."

Tacitus, Calgacus' Speech from Agricola

Remembering this may help one to understand some of the things that happen that otherwise may seem to make no sense.   In the pursuit of profit, their hypocrisy and disregard for justice and human life knows no bounds.

I will let you in on a little secret.  Not always, but the worst of them have a 'tell.'  You have to look at the long record of a person's action and mode of acting to assess this.  Are they plain and straightforward, or highly political and evasive in their motives.  Do they often say one thing, and yet do another.  If so, then this is their 'tell.'

The most cynical player will accuse and denounce their adversaries of the exact things that they have in mind, their precise motives, but first, and aggressively so with high indignation.  But their own actions will appear to be without principled cohesion, that is, principles but selectively applied.  Look for the inconsistencies, and if they are there, you know the type of hypocrite with whom you are dealing.

I think they do this because it defeats the ability of their opponent to accuse them of the very things that they themselves are doing.   I have seen this in company politics to geo-political squabbles, over and over.  Bald faced misdirection is almost standard fare these days of spin and propaganda in domestic politics. 

Telling the truth is considered to be naive, embarrassingly clumsy, an automatic disqualification from power. It is almost as bad as bending your knee to the power of God rather than the will to power, when we would all be gods.  Or caring for the poor and the disadvantaged, those disgusting, useless creatures.  Contemptible weakness!  Such are the times.

There is nothing quite so tempting as a poorly managed country with exploitable resources and assets like food, energy, and people.  And if it is well located for other geopolitical purposes, then so much the better.   Winning.

“The enormous gap between what US leaders do in the world and what Americans think their leaders are doing is one of the great propaganda accomplishments of the dominant political mythology.”

Michael Parenti

The New York Fed's Primary Dealers, Liquidity, Monetary Policy, Excess Reserves and Financial Dreadnoughts in Times of Currency War

Someone asked me about Primary Dealers today.   I think it was in regard to liquidity concerns.

Cutting to the punchline, however one wishes to characterize and attribute it, the financial system is once again over-leveraged, over-concentrated, fraught with interconnected with counterparty risk, and fragile.

This is because of the policy failure of the Treasury and the Fed which could be characterized as extend and pretend without engaging in significant reforms and law enforcement in the aftermath of what might be best described as a control fraud. 

I also postulated years ago that when push came to shove, the Fed would gather around itself a few 'friendly banks' which would act on its behalf in private to enforce certain policy decisions in markets in which the Fed and Treasury do not wish to openly operate.  

It is hard to think of any other somewhat moral reason for the government to babysit and subsidize these very expensive and dangerous TBTF monstrosities, except as instruments of policy to provide some degree of freedom to shape events and responses. 

If you want to wage a currency war, you need to have some dreadnoughts packing serious financial throw-weight, and economic muscle.  Think of economic hitmen on steroids.   It may be Machiavellian,  counter-democratic, and expensive, but that is the dictate of strategy if you want to control things and wield power to do what you will, both at home and abroad. 

Is a corollary to the currency war a financial arms race and the construction of institutional behemoths?  I think it might be.  Or it could just be widespread ignorance and corruption amongst the ruling class which certainly is conceivable.  Or some of both.  Why do governments sometimes engage in corporatism?  Take your pick.

So putting that bit of editorial fuss and postulating out of the way, let's talk about some loosely related details of what Primary Dealers are all about.

The Fed uses Primary Dealers to manage monetary policy and its market in Treasury transactions,  first and foremost.   

These operations are both 'temporary' and 'permanent' transactions involving Treasuries, involving repos/reverse repos and purchases/sales respectively. 

I cannot stress enough that in a period of ZIRP, some things are not quite the same and do not carry the same significance as they might imply in 'normal times.'   I think the last chart show the Fed's Adjusted Monetary Base and Excess Reserves helps to illustrate this.

Although the analogy is a bit strained and far from perfect, I think what Bernanke has been doing with the Fed's monetary base and the excess reserves is roughly comparable to what had been done in 1933 with the removal from gold from private hands, and it revaluation afterwards in order to re-capitalize the banks with what was essentially seignorage.

They used gold instead of a platinum coin.  There is no need to confiscate gold when you are not on an external standard, the only constraint being the Fed's willingness to expand its balance sheet, and of course, the value at market of the bond and the dollar, which some conveniently forget when it suits them.

And the 'platinum coin' was a political rather than a monetary play. It is important to keep the two separate, although both are dysfunctional these days. Corruption ranges far and wide.

Certainly Bernanke and Paulsen/Geithner have been much less selective in spreading the wealth to banks, and never engaged in the sort of reforms and bank holiday that the FDR Administration had done.

The management of liquidity in the banking system with particular member banks, non-banks, and foreign entities is not relevant to the Primary Dealers list per se.

I am not sure why they wanted to know this, but since it has been some time I have written about them,  here is a current list of the Primary Dealers from the NY Fed.

"Primary dealers serve as trading counterparties of the New York Fed in its implementation of monetary policy.

This role includes the obligations to:

(i) participate consistently in open market operations to carry out U.S. monetary policy pursuant to the direction of the Federal Open Market Committee (FOMC); and

(ii) provide the New York Fed's trading desk with market information and analysis helpful in the formulation and implementation of monetary policy.

Primary dealers are also required to participate in all auctions of U.S. government debt and to make reasonable markets for the New York Fed when it transacts on behalf of its foreign official account holders."

Here is some additional information about the nature of the Primary Dealer relationship with the NY Fed.

As one can easily see not all banks, including member banks of the Federal Reserve, and not only banks, are primary dealers.  For example, MF Global was removed from this list in October, 2011.

An institution is not required to be a Primary Dealer to borrow funds from the Fed's various lending facilities including the Discount Window. 

And being a Primary Dealer, or a member bank of the Federal Reserve for that matter, does not oblige a Bank to engage in money laundering or rigging LIBOR, or any other markets. That sort of activity is largely engaged at the discretion of the Bank.

There is a distinction therefore, between the management of monetary policy and the Treasury sales, and the Fed's other operations with banks including reserves, excess reserves, and discount lending among other things.  So one has to have some care about drawing broader conclusion from their activities.

With the advent of ZIRP, the role of excess reserves held at the Fed, and the payment of interest by the Fed to the banks on those reserves, has taken on an added importance in the management of monetary policy and system liquidity. 

In regard to foreign dollar transactions, the Fed typically arranges swap lines with foreign central banks,  as they did in the case of the dollar short squeeze we had seen in Europe for example.

At one time I kept detailed spreadsheets of most of the Fed's weekly operations.  I gave that up around the time of the financial crisis, when the Fed's activities became much more convoluted and even less transparent than they already had been.


Current List of Primary Dealers

Bank of Nova Scotia, New York Agency
BMO Capital Markets Corp.
BNP Paribas Securities Corp.
Barclays Capital Inc.
Cantor Fitzgerald & Co.
Citigroup Global Markets Inc.
Credit Suisse Securities (USA) LLC
Daiwa Capital Markets America Inc.
Deutsche Bank Securities Inc.
Goldman, Sachs & Co.
HSBC Securities (USA) Inc.
Jefferies & Company, Inc.
J.P. Morgan Securities LLC
Merrill Lynch, Pierce, Fenner & Smith Incorporated
Mizuho Securities USA Inc.
Morgan Stanley & Co. LLC
Nomura Securities International, Inc.
RBC Capital Markets, LLC
RBS Securities Inc.
SG Americas Securities, LLC
UBS Securities LLC.

Money Supply Figures: Monetary Inflation But Real Economy Is Dysfunctional

"He that gives good advice, builds with one hand; he that gives good counsel and example, builds with both; but he that gives good admonition and bad example, builds with one hand and pulls down with the other."

Francis Bacon

The growth in the MZM and M2 money supplies are very strong, almost remarkably so given the very slack growth in employment and GDP.

So why do we not see any serious inflation in prices?  Or real gains in employment for that matter.

As an aside, I think some of the more 'modern'  and aggressively modified measures of price inflation, like chained CPI, do not measure price inflation at all, but the consumer behaviour of product substitution under increasingly trying circumstances as people cope by reducing their standard of living. That is a measure of gradual deprivation, not inflation.

I would like to see a system where no social policy is passed that the leadership of a country does not accept first.  If there is to be austerity, pension cuts, reductions in medical services and food, let them accept it first for the good of the country and an example to their citizens.  I do not say this out of meanness, but charity.  For the double standard with selective justice is the slow and silent killer of oligarchies.

The velocity of money tells part of the story. Please note that those charts below are based on much longer timeframes to show that they are a trend, and not a short term affect of the collapse.

The 'velocity of money' is a calculation that shows the relationship between money supply and real economic activity as a ratio. It is falling to new lows. Some might even use the word 'plummet.' There is lots of new money, but not so much real activity.

The standard economic answer would be that the US is in a liquidity trap, and the recovery will have lags in employment gains.   The money is added, and then recovery follows, with employment showing the longest delay.  The standard remedy would be to create more jobs, artificially if necessary.  But that is not much different than unemployment insurance and programs like food stamps.  It is kind, and sensible, but not sustainable. 

A liquidity trap is described by Keynesian economics as a condition in which injections of money can support zero interest rates, but fail to generate real economic activity.

I think the current situation in the US and UK in particular involves a serious policy error in the failure to address the problems and imbalances that caused the financialization of the real economy, and its subsequent collapse under the weight of malinvestment and corruption.

Aggregate demand is not stimulated because sufficient money does not reach consumers, as it passes through a corrupt and broken financial and political system, being diverted largely to insiders at 'the top.'  Nothing could be more clear than looking at the statistics regarding income inequality.

Any gains by the large middle and lower classes will tend to be short term and illusory, involving more household balance sheet problems and debt until the system is reformed.  Some of this has to do with a policy bias that considers the vast mass of the people as consumers, but not as workers.

Merely adding more financialized money into an unreformed system will further compound the problems, and ultimately force a more significant crisis and change.  This is true whether done does it via more debt issuance or flashier gimmicks like modern monetary totems.

The underlying social tensions can only be ignored by the comfortable for so long.  As a corollary, applying austerity without reform is insanely self-destructive.  The proof of this is forthcoming.

Japan has been able to hold their system together for a protracted period of slack recovery due to their demographics, their industrial policy position in the world economy, and a largely homogeneous and communal society that cares for its own.  The US and the UK will have a shorter half life I am afraid.

The situation is Europe is a bit different, and likely to result in serious dislocations in their organizational fabric fairly soon if some of the problems there are not addressed.  The monetary union without fiscal cohesion is inherently unstable.  Only fraud allowed it to last as long as it did.

There is a possibility that the current policies in the US may succeed if austerity if not applied, and something happens in the currency war to affect the balance of trade.  I am not optimistic  So let's see what happens.

The UK may provide a good counter example to the US  Some new school of economic thought may find some useful data from that, if they can free themselves from the 'say for pay' mentality that currently impairs the public policy discussion in a disgraced profession.

Michael Hudson: The Financialization of the Economy

I enjoyed this recent essay by Michael Hudson. It is a nice overview of the financialization process, and how the economic hitmen, who had ravaged the Third World, started coming home.

Of course I do not necessarily agree with everything in it. But the things he says make some real sense, and provide a balance to the prevailing economic mythos, and some would say propaganda, that comes out of the mainstream media in support of the financialization process.

Reality economics

December 19, 2012

By Michael Hudson

A review of Norbert Häring and Niall Douglas, Economists and the Powerful (London: Anthem Press, 2012).

“Whom the gods would destroy, they first make mad.”

And if they would destroy economies, they first create a wealthy class on top, and let human nature do the rest. The acquisition of power soon leads to its abuse, to economic and social hubris. By seeking to protect its gains, perpetuate itself and make its wealth hereditary, power elites lock in their position in ways that exclude and injure those below. Turning government into an oligarchy, the wealthy indebt and shift the tax burden onto the less powerful.

It is an ancient tale. The Greeks got matters right in seeing how power leads to hubris, bringing about its own downfall. Hubris is the addiction to wealth and power, an arrogant over-reaching that involves injury to others. By impoverishing economies it destroys the source of profits, interest, capital gains, and even recovery of the original savings and debt principal.

This abusive character of wealth and power is not what mainstream economic models describe. That is why economic theory is broken. The concept of diminishing marginal utility implies that the rich will become more satiated as they become wealthier, and hence less addicted to power. This idea of progressive satiation returns gets the direction of change wrong, denying the basic thrust of the past ten thousand years of human technology and civilization.

Today’s supply and demand approach treats the economy as a “market” in a crudely abstract way, as quantities of goods (already produced), labor (with a given productivity) and capital (already accumulated, no questions asked) are swapped and bartered with each other. This approach does not inquire deeply into how some people get the capital to “swap” for “labor.” To top matters, this approach gets the direction of technological growth and basic business experience wrong, by assuming conditions of diminishing returns and diminishing marginal utility. The intellectual result is a parallel universe, whose criterion for economic excellence is merely the internal consistency of its abstract assumptions, not their realism.  (Life imitates models lol - Jesse)

Häring and Douglas show that the economics discipline did not get this way by accident. They are leading organizers of the World Economic Association, which emerged from the Post-Autistic-Economic movement intended to provide an alternative to mainstream neoclassical and neoliberal economics. (Häring is co-editor of the World Economic Review.)

Toward this end they provide a wealth of references tracing how economics was turned into a propaganda exercise for financiers, landlords, monopolists, insiders, fraudsters and other rent-seeking predators whom classical economists sought to tax and regulate out of existence. This state of affairs reflects the century-long drive of these free lunchers to fight back against classical economics by sponsoring self-serving fictions that depict them as earning their fortunes not in predatory and extractive ways, but by contributing to output as “job creators.”

Any given distribution of wealth and income is treated as an equilibrium reflecting voluntary choice, without examining the organizational and social structures of workplace hiring, production and distribution. The authors provide an antidote to this tunnel vision by pointing to the real invisible hands at work: insider dealing, anti-labor and anti-union maneuvering, and outright looting and fraud. What they mean by power is employers hiring strikebreakers, lobbying for special favors and insider deals, and backing the election campaigns of lawmakers pledged to act on behalf of the 1%.

Criticizing the textbook theory of the firm, they point out that that most production has increasing returns. Unit costs fall as fixed capital investment is spread over more output. As a producer with nearly zero marginal cost, for instance, Microsoft obtains a rising intellectual property rent on each program sold. On an economy-wide level, raising the minimum wage would enable most firms to benefit from increasing returns, by increasing demand.

Firms use political leverage to make sure that anti-labor referees are appointed to the courts and arenas that arbitrate disputes about employment, working conditions and firing. Capital-intensive industries outsource low-skill jobs to small-scale providers using non-union labor. Privatizing public utilities also aims largely at breaking labor union power. Marginalist supply and demand theory implies that each additional worker that is hired increases wage rates, prompting business to oppose full employment policies in order to keep wages low, even though this limits the market for their output.

So technology and diminishing terms are not the reason why wages have been pressed down – or why financial and other non-production costs have been rising for most Western economies. These cost increases are headed by debt charges for leveraged buyouts and corporate raiding, plus CEO salaries, bonuses and stock options. Labor also faces high costs of living as a result of the soaring mortgage debt taken on to obtain housing, student loan debt to obtain an education as a precondition for middle-class employment, and credit-card debt to maintain consumption standards, and rising wage withholding for Social Security and Medicare as taxes become regressive.

This personal debt service (including housing costs) and various taxes absorb more than two-thirds of the typical paycheck. So even if workers did not have to buy any of the goods and services they produce – food, clothes and other basic consumer needs – they still could not compete with labor in less financialized and debt-ridden economies.

At the corporate level, financial engineering is more about raising stock prices than new tangible capital investment. Even this is not being done in ways that serve stockholders’ long-term interest or that of the economy at large. Häring and Douglas give a scathing review of “motivating” managers by paying them in stock options. Managers maximize the value of these options by spending corporate revenue on stock buy-backs instead of new direct investment to expand their business. Even worse, companies borrow to buy their stock or even to pay out as dividends to bid up its price. The “capital” in this gain is financial, not industrial. It also turns out to be anti-labor, as loading companies down with debt enables corporate raiders use the threat of bankruptcy to demand pension downgrades and wage givebacks.  The problem with financial planning is its short hit-and-run time frame aiming at extracting income rather than taking the time to invest in new production and develop markets. Concealing this short-termism with Enron-style “mark to model” accounting fictions, managers take the money and run, leaving bankrupt shells in their wake.

Debt leveraging is encouraged by taxing asset-price gains at much lower rates than earnings (wages and profits), and permitting interest to be tax-deductible. This fiscal subsidy is by no means an inherent feature of markets. It reflects the financial sector’s capture of tax policy, along with regulatory capture to disable the government’s oversight so as to make fortunes by deregulating, privatizing, and popularizing the idea that economies can get rich by going into debt. Neoliberal doctrine demonizes government as the only power able to regulate and tax unearned income and prosecute fraud. This inverts the idea of free markets away from the classical meaning of markets free from unearned economic rent, to connote today’s arena free for predatory rentiers.

This strategy is capped by the power to censor. The misleading and deceptive depiction of the economy drawn by financiers, real estate speculators and monopolists is careful to conceal their own behavior from sight. This is the ultimate power of today’s mainstream economics: to shape how people perceive the economy. The starting point is to distract the public from noticing (and hence regulating or taxing) the real-world power structures at work. They prefer to make themselves invisible, above all the financial power to indebt the economy. It is by financial means, after all, that finance has shifted economic planning out of the hands of government to Wall Street and similar banking centers abroad.

Lobbyists for the 1% popularize a view that today’s economy is a fair and indeed natural inevitable product of Darwinian evolution. As Margaret Thatcher put it: There Is No Alternative (TINA). This narrow-mindedness is enforced by a censorial policy: “If the eye offend thee, pluck it out.” Häring and Douglas describe the academic process of weeding out any offending eyes that might introduce more realism when it comes to predatory behavior and rent seeking.

The prime directive is to depict financial planning as better than that of public agencies. In contrast to the Progressive Era’s endorsement of public infrastructure keeping costs down so as to better compete in global markets, the financial sector seeks to privatize public enterprises – on credit, preferably at distress prices to create new fortunes. The task of today’s mainstream economics, as the authors describe it, is to distract attention away from Balzac was more realistic, in observing that behind every family fortune lay a great, usually long-forgotten theft.

They focus on domestic power rather than spelling out the international dimension of how economic power is wielded. The IMF, U.S. Government and European Union bureaucracy wield foreign-debt leverage to impose the neoliberal Washington Consensus. This is how the European “troika” imposes austerity on Greece to replace democratic government with “technocrats” whose policies serve the 1% in today’s class war. This path leads in due course to the targeted assassinations by which the Chicago Boys imposed their kleptocratic “free market” on Chile under Pinochet, elaborated by Operation Condor assassinating labor leaders, land reformers and Liberation Theology priests and nuns throughout Latin America and in the United States itself. But I can understand that the authors evidently decided that they had to draw the line between economics and its military tactic somewhere, focusing on the economic core itself.

Finance has become the modern mode of warfare. It is cheaper to seize land by foreclosure rather than armed occupation, and to obtain rights to mineral wealth and public infrastructure by hooking governments and economies on debt than by invading them. Financial warfare aims at what military force did in times past, in a way that does not prompt subject populations to fight back – as long as they can be persuaded to accept the occupation as natural and even helpful. After indebting countries, creditors lobby to privatize natural monopolies and create new monopoly rights for themselves....

Read the entire essay here.

Golem XIV - Why Are We Bailing Out the Banks? Part 1

Here is a new essay from Golem XIV that asks the simple question, 'Why are we still bailing out the banks?'

As you know my conclusion has been the power of the status quo and the intractable nature of the credibility trap, going back as far as the economic forecast from 2005.

Why should the rich and powerful stop what they are doing when greed feels so good?  At some point the frenzy is so powerful all one can say is 'more.'  They cannot help themselves.  It is like an addiction, like endless war.

And the downside of reform is not only spoiling you and your fellows 'good thing,' and incurring their displeasure, but perhaps also implicating yourself.  Favors and hidden knowledge go a long way in the halls of power.

Plausible deniability, obfuscation, and the excuse of poor but honestly mistaken judgement are the standard defenses employed by modern financial management,  CEOs, and even former chairmen of the Federal Reserve.

What is most fascinating is that this compulsion to bail out the banks has swept the leadership of the West with little or no dissent, except for a few unruly victims, at least for now.  And maybe Iceland.

Fascism had its fashion in the 1930's.  So why not some new fashionable idea now, as irrational as it may seem? Not the fascism of the jackboot, but a more subtle and clever autocracy of the financial system. None shall buy or sell...

This is nothing new.  Roosevelt is said to have saved capitalism from the capitalists, and Churchill saved Britain from the collaborators and appeasers.  What if there had been no Roosevelt, or Churchill?   What if the face of fascism had not become a raving Hitler, but a Mussolini and a Franco and a Mosley, practical men of business with industrial appeal, worthy of fawning cameos on the cover of Time Magazine?

It is the real motives that are more of a puzzle. Could such destruction be caused by simple greed and a lust for power? There is some precedent for this.

Enjoy.

Why are we bailing out the banks? Part One. The Simple Answer.
by Golem XIV
October 8, 2012

We’ve all seen the film ‘Groundhog Day’. Well, we’re in it. Every morning the radio plays a song which has the chorus, “I rob you babe”. And sure enough when the news comes on, they have. A full five years of pumping money in to the banks and still our leaders will not even consider that they might be wrong. They still insist, as they have from the start, that “There is no alternative’. Call it bail outs, call it QE, call it monetary policy, rescue or suicide, it doesn’t matter. What matters is we’re still doing it.

When our leaders embarked on their policy of bailing out the banks’ private debts, even those of us like me, who believed our rulers were hideously wrong to do so, still harboured a hope that they were at least sincere; that they really were, as they claimed, trying to fix things for all of us. I find this impossible to believe now. If any of the bankers, their experts and our politicians ever were sincere when they claimed we would all be in this together, it now seems terribly clear that none of them has any intention of being with us in what is being forced upon us now.

Just this morning George Osborne and his lick spittle coalition partners have agreed to another £10 billion in cuts to welfare, health, education and the rest while saying that imposing any further taxes on the wealthier will have to wait. They promise to look at that …soon. Promise.

The problem with discussing why we are bailing out the banks is that in the 5 years since the bank debt implosion began, ‘saving’ the banks has now become enmeshed in – and in the headlines replaced by – what the banks and our rulers absolutely insist is an entirely separate ‘crisis’. The financial world and their political friends in all parties have spent two years trying to brainwash us, that the problem is no longer the banks but is a ‘crisis’ of public, sovereign overspend and indebtedness. Putting money in to the banks is now seen as a technical matter rather than anything the public should concern itself about. Indeed there is a desire to return to the idea that the public must stop feeling they should be entitled to have a ‘concern’ about things too technical for them to comprehend ‘in the right way’. The ‘right way’ is to understand that the proper concern of the public should be cutting what the financial experts tell us is the terrible debt problem caused by too much public spending.

The ‘right way’ makes no further mention of public money still supporting the banks nor of the billions more being printed up right now so yet more public money can be lent to them. In fact the right way insists there is no connection between the huge sums nations have pumped in to the banks and the sudden ballooning of sovereign debt in those nations. The ‘right way’ means refusing to see any connection whatever between policies of cutting public spending in the real economy and a shrinking of that economy. No connection at all…obviously. Any economic Phd can see that.

5 years on and more people are more confused than ever. People cannot understand how the same politicians can insist it is essential to keep ‘helping’ the banks with ever larger sums (trillion is the new billion) regardless of what debt it incurs, while with equal fervor insisting it is absolutely imperative that we cut spending on anything other than the banks – because we are in debt. And so with their certainties chained to our legs, we are sinking in to a mire of suffocating confusion, lies and fraud.

Sometimes in a world of increasing confusion it is good to ask simple questions. Why are we bailing out the banks?..."


Read the entire essay including the 'simple answer' here.

No Recovery: Real Median Household Income Continues Its Decline

There is no recovery, not yet at least, except for the one percent.

“You’re really struck by the unevenness of the recovery. The top end took a whack in the recession, but they’ve gotten back on their feet. Everyone else is still down for the count.”

Lawrence Katz, Professor of Economics, Harvard

There is a lot of wishful thinking and perception management going around, but the bailouts and tax breaks are flowing upwards in this predatory economy.

I know. Let's have another bubble, for old time's sake.

The economic hitmen have come home.

This is from John Williams:

Real Median Household Income Is at Its Lowest Level Since 1995. Consumer income remained in contraction during 2011, with both real (inflation-adjusted) median household income and real median individual income sinking on an annual basis. Given consumers lack of ability to expand their borrowing in order to make up for shortfalls in income, the chances of there having been a full economic recovery since 2009 (as reflected in the GDP), or of a recovery pending in the immediate future, are nil.

Excerpts of Alleged Letter from Troika to Greece

This appeared today on the web at Zerohedge.  It is a letter purported to be from the Troika to Greece, with the appearance of a set of demands that was leaked by an anonymous source.

If it is legitimate, and that is a big 'if' given the sources, then it is a bit of an eye-opener, perhaps not so much in the terms themselves, but in the level of micro-managing the Troika wishes to impose on a purportedly sovereign people.

As you may recall the Troika are the European Commission (EC), the International Monetary Fund (IMF), and the European Central Bank (ECB).

From what I have read, the 'bailout' is really a bailout of the debt which is owed to the banks of France and Germany among others, incurred by corrupt administrations heavy with insiders and influenced by banks such as Goldman Sachs, much in the manner of Iceland, Ireland, and other peripheral countries.

The track record of the IMF in such proposed 'reforms' is a national devastation.

I do not believe at all that these measures are stable, practical, or given in good faith as a solution. In other words, they will be back for more. The capitulation on such draconian interference is the path to a parasitic existence, in the manner of the most servile type of colonialism.

Greece might well consider a default on the existing external debts, the issuance of a national currency, reforming the financial system, the imposition of immediate capital controls, democratic safeguards against the rise of extreme domestic elements, and self-sufficiency at any and all costs in the spirit of a war time economy of a nation under siege.

Area: Flexibility of labour arrangements

Measure: Increase flexibility of work schedules:

Increase the number of maximum workdays to 6 days per week for all sectors.

Set the minimum daily rest to 11 hours.

Delink the working hours of employees from the opening hours of the establishment.

Eliminate restrictions on minimum/maximum time between morning and afternoon shifts.

The Greek Experiment: Wir Kinder der Hölle und der Wille zur Macht

What time does the next train arrive, Herr Doktor?








The irony of course is that it is not the Germans but the Anglo-American banks and the global monied interests that have perfected and employed this modern financial warfare, again and again, around the world for the last forty years or more. They have been using debt, money, and the subversion of democratic law to take down whole countries, wage wars of plunder and aggression, create puppet governments, and reduce people everywhere to misery.

Their motto is 'greed is good' and 'der Wille zur Macht.' And they are the terror that spawns the madness, the children of Hell on earth.

"What most occupied the attention of the State Department [in 1934] was the outstanding German debt to American creditors. It was a strange juxtaposition. In Germany there was blood, viscera, and gunfire; at the State Department in Washington, there were white shirts [of the wealthy career diplomats and career politicians], Hull's red pencils, and mounting frustration with [Ambassador] Dodd to press America's case [for full payment of the sovereign German debt]...

In Berlin, Dodd was unmoved. He thought it pointless to pursue full payment, because Germany simply did not have the money, and there were far more important issues at stake...

Through his first year in Germany [1933], Dodd had been struck again and again by the strange indifference to atrocity that had settled over the nation, the willingness of the populace and the moderate elements in the government to accept each new oppressive decree, each new act of violence, without protest...

Dodd continued to hope that the murders would so outrage the German public that the regime would fall, but as the days passed he saw no evidence of any such outpouring of anger..."

Erik Larson, In the Garden of Beasts

They are coming home, little brother. And they are bringing it back with them.  All of it.

"Struggle is the father of all things. It is not by the principles of humanity that man lives or is able to preserve himself in the animal world, but solely by means of the most brutal struggle...I do not see why man should not be just as cruel as nature...Success is the sole earthly judge of right and wrong...The day of individual happiness has passed.

The great strength of the totalitarian state is that it forces those who fear it to imitate it."

The US 'Debt Crisis' in One Picture

And the O-Man can be Aunty.

“Great occasions do not make heroes or cowards; they simply unveil them to the eyes of men. Silently and imperceptibly, as we wake or sleep, we grow strong or weak; and at last some crisis shows what we have become."

Brooke Foss Westcott

From Japan: An Interesting Comment On US Economic Planning, the Dollar, and Peak Cheap Oil

I shared a copy of this video with a friend in Japan earlier today.

Prof. Jeffrey Sachs of Columbia University on the Obama Budget

I received his reply, and it was much more interesting and insightful than I had hoped it would be.  Certainly a perspective that I have heard in none of the US based commentary today, a much longer term and more strategic view. 

I am sure there are plenty of problems which Japan faces that we could discuss.  It has an aging population, very low birth rates, heavy dependence on imports, and a weak military capability.  Its ability to attract and successfully assimilate immigrants is a challenge.  Every country has problems.

I am not quite sure I know the answers about peak cheap oil. But what I think I know is that the challenge to the US is an inability or an unwillingness to think and execute strategically, ie. long term, in non-military matters.  I believe this is a result of its system which is heavily oriented towards short term economic incentives, regional military conflicts, and financial speculation. 

The idea that you would allow what are essentially short term financial speculators to make important public policy decisions with far-reaching, long term consequences seems unusual or even lunatic in most parts of the world, and is certainly not a trend in historically successful organizations.

Within the metrics of energy and infrastructure, the US government is playing checkers in a game of Go.   Its greatest leverage now appears to be an ability to kick over the global economic playing table in an act of self-destruction.  And that threat is wearing thin.


A Japanese perspective on the US budget:

"Unfortunately, the risk of the whole ponzi scheme crashing sooner rather than later is going way up, rapidly.

They want the dollar to go down by 40%, but I think they are going to lose control, and they might wind up with a 90% panic drop in a few months.

As I said, Japan, around 1995, went into a full peak cheap oil panic. A lot of the government borrowing went to what is characterized as "building bridges to nowhere", but I would characterize it as building some bridges to nowhere, building some airports in nowhere, and fixing the entire rail and road infrastructure of the country.

All the bridges and tunnels have been steel plated reinforced, all the bridges are in perfect repair, and the Shinkansen system will next month be extended all the way from Aomori to Kagoshima.

In other words, I think they knew this 15 years ago and did everything that requires a lot of energy, such as steel, asphalt, cement, and completely the public transit infrastructure. The per capital floor space in Tokyo was doubled.

So, if we really do have a decade of serious energy problems coming, Japan has become about as energy efficient as it can be, with further improvements coming as appliances are replaced, etc.

The US has done nearly nothing, although I did note that the gasoline use declined by 7% in one year. There really is a lot of squandering going on. Now, however, the US needs to completely reconstruct its infrastructure, and it doesn't have the money or energy to do it.

This is why I have thought for more than a decade that the trigger for a really nasty collapse of the dollar would be peak cheap oil.

Do they realize that if the dollar drops by half that oil becomes $200 a barrel? Gasoline would be over $5, and the country would be paralyzed. If the dollar drops more than that, the existing infrastructure would become nearly useless and worthless.

I am afraid that the US has already passed the point of no return.  Had the cheap oil continued, the ponzi could have continued for a good while longer.

I think the realization that the cheap oil is gone is the primary motivation for the smash-and-grab behavior we are seeing in the US."

Perhaps, and it might also be the rationale for the increased military presence surrounding the largest known cheap oil reserves in the world.

Irish Prime Minister to Dissolve Government After a Budget Is Passed

Personally I would hope they do not even allow them to pass anything but a pro forma budget and then show them the door, because everything they do is tainted.

The elections will be a referendum on the financial corruption between the banks and the government elites in Ireland as they were in Iceland.

Why the Irish would yoke themselves and their children for years to save the multinational banks is puzzling. But it will not have been the first time that the Irish people were sold by their leaders to the monied powers in foreign lands, and it likely will not be the last.

Bloomberg
Euro Drops as Irish Government Plans to Dissolve After Budget
By Catarina Saraiva
November 22, 2010, 3:20 PM EST

Nov. 22 (Bloomberg) -- The euro fell for the first time in four days versus the dollar and yen after Ireland’s government started to unravel and Moody’s Investors Service said it may lower the nation’s credit rating by more than one level.

The dollar and yen advanced against most of their major counterparts as a drop in stocks encouraged investors to seek refuge from Europe’s financial crisis. The euro slid from a one- week high against the dollar as Ireland’s Prime Minister Brian Cowen said a day after asking for European aid that the government will resign following passage of the nation’s budget.

“Political uncertainty in Ireland could risk the timely implementation of the new budget and the austerity measures required to bring the deficit down,” said Omer Esiner, chief market analyst in Washington at Commonwealth Foreign Exchange Inc., a currency brokerage. “That’s a large negative for the euro.”

Éirinn go brách