Franklin Roosevelt's First Inaugural Address: A Fitting Reminder For Our Crisis Today

I remember my grandmother telling me how she and her family listened to this speech on the radio, in the dark days in the depths of the Great Depression. It is still hard for us now to appreciate how desperate and fearful the people were then. We think that we know, but most of us do not genuinely understand. How can we?

"Values have shrunken to fantastic levels; taxes have risen; our ability to pay has fallen; government of all kinds is faced by serious curtailment of income; the means of exchange are frozen in the currents of trade; the withered leaves of industrial enterprise lie on every side; farmers find no markets for their produce; the savings of many years in thousands of families are gone."

I never read it in full, but like most people just remember the famous quote about fear.

It's worth reading this. It shows a mindset in terrible, overwhelming times that was determined to set things right, not to take care of business, but to address the business of the people directly, and not only the immediate concerns of the crisis but the long term problems that caused the financial collapse in meaningful ways.

Ways, I should add, that stood the test of time until they were overturned in the 1990's by the efficient markets ideology and a multi-million dollar lobbying effort by Wall Street.

"There are many ways in which it can be helped, but it can never be helped merely by talking about it. We must act and act quickly. Finally, in our progress toward a resumption of work we require two safeguards against a return of the evils of the old order; there must be a strict supervision of all banking and credits and investments; there must be an end to speculation with other people's money, and there must be provision for an adequate but sound currency."

Compare these words with those of the current president, and his slowness to respond with effective reform, and the ordering of his priorities. Does Obama do anything that is not first vetted by the corporate status quo? The most elite elements of the American establishment engaged in a plot to overthrow the Roosevelt administration, and found an investment climate to their liking in fascist Germany, even into the 1940's. How soon we forget.

Like him or not, FDR was a giant, a great leader, and his priorities were clear in his words and actions. He was a voice of hope and concern for the individual when the better part of the developed world was entwining itself in fascism, corporatism, militarism, and the spiral of self-destruction.

In comparison, for all his hypnotic rhetoric, Obama seems very insubstantial, and you'll forgive me for speaking so plainly, he appears to be a cheap bullshit artist in the service of special interests. And the majority of the Congress with him.

h/t Yves for the link to this speech.

Franklin D. Roosevelt
First Inaugural Address
Saturday, March 4, 1933

"I am certain that my fellow Americans expect that on my induction into the Presidency I will address them with a candor and a decision which the present situation of our Nation impels.

This is preeminently the time to speak the truth, the whole truth, frankly and boldly. Nor need we shrink from honestly facing conditions in our country today. This great Nation will endure as it has endured, will revive and will prosper.

So, first of all, let me assert my firm belief that the only thing we have to fear is fear itself—nameless, unreasoning, unjustified terror which paralyzes needed efforts to convert retreat into advance. In every dark hour of our national life a leadership of frankness and vigor has met with that understanding and support of the people themselves which is essential to victory. I am convinced that you will again give that support to leadership in these critical days.

In such a spirit on my part and on yours we face our common difficulties. They concern, thank God, only material things. Values have shrunken to fantastic levels; taxes have risen; our ability to pay has fallen; government of all kinds is faced by serious curtailment of income; the means of exchange are frozen in the currents of trade; the withered leaves of industrial enterprise lie on every side; farmers find no markets for their produce; the savings of many years in thousands of families are gone.

More important, a host of unemployed citizens face the grim problem of existence, and an equally great number toil with little return. Only a foolish optimist can deny the dark realities of the moment.

Yet our distress comes from no failure of substance. We are stricken by no plague of locusts. Compared with the perils which our forefathers conquered because they believed and were not afraid, we have still much to be thankful for. Nature still offers her bounty and human efforts have multiplied it. Plenty is at our doorstep, but a generous use of it languishes in the very sight of the supply. Primarily this is because the rulers of the exchange of mankind's goods have failed, through their own stubbornness and their own incompetence, have admitted their failure, and abdicated. Practices of the unscrupulous money changers stand indicted in the court of public opinion, rejected by the hearts and minds of men.

True they have tried, but their efforts have been cast in the pattern of an outworn tradition. Faced by failure of credit they have proposed only the lending of more money. Stripped of the lure of profit by which to induce our people to follow their false leadership, they have resorted to exhortations, pleading tearfully for restored confidence. They know only the rules of a generation of self-seekers. They have no vision, and when there is no vision the people perish.

The money changers have fled from their high seats in the temple of our civilization. We may now restore that temple to the ancient truths. The measure of the restoration lies in the extent to which we apply social values more noble than mere monetary profit.

Happiness lies not in the mere possession of money; it lies in the joy of achievement, in the thrill of creative effort. The joy and moral stimulation of work no longer must be forgotten in the mad chase of evanescent profits. These dark days will be worth all they cost us if they teach us that our true destiny is not to be ministered unto but to minister to ourselves and to our fellow men.

Recognition of the falsity of material wealth as the standard of success goes hand in hand with the abandonment of the false belief that public office and high political position are to be valued only by the standards of pride of place and personal profit; and there must be an end to a conduct in banking and in business which too often has given to a sacred trust the likeness of callous and selfish wrongdoing. Small wonder that confidence languishes, for it thrives only on honesty, on honor, on the sacredness of obligations, on faithful protection, on unselfish performance; without them it cannot live.

Restoration calls, however, not for changes in ethics alone. This Nation asks for action, and action now.

Our greatest primary task is to put people to work. This is no unsolvable problem if we face it wisely and courageously. It can be accomplished in part by direct recruiting by the Government itself, treating the task as we would treat the emergency of a war, but at the same time, through this employment, accomplishing greatly needed projects to stimulate and reorganize the use of our natural resources.

Hand in hand with this we must frankly recognize the overbalance of population in our industrial centers and, by engaging on a national scale in a redistribution, endeavor to provide a better use of the land for those best fitted for the land. The task can be helped by definite efforts to raise the values of agricultural products and with this the power to purchase the output of our cities.

It can be helped by preventing realistically the tragedy of the growing loss through foreclosure of our small homes and our farms. It can be helped by insistence that the Federal, State, and local governments act forthwith on the demand that their cost be drastically reduced. It can be helped by the unifying of relief activities which today are often scattered, uneconomical, and unequal. It can be helped by national planning for and supervision of all forms of transportation and of communications and other utilities which have a definitely public character.

There are many ways in which it can be helped, but it can never be helped merely by talking about it. We must act and act quickly.

Finally, in our progress toward a resumption of work we require two safeguards against a return of the evils of the old order; there must be a strict supervision of all banking and credits and investments; there must be an end to speculation with other people's money, and there must be provision for an adequate but sound currency.

There are the lines of attack. I shall presently urge upon a new Congress in special session detailed measures for their fulfillment, and I shall seek the immediate assistance of the several States.

Through this program of action we address ourselves to putting our own national house in order and making income balance outgo. Our international trade relations, though vastly important, are in point of time and necessity secondary to the establishment of a sound national economy. I favor as a practical policy the putting of first things first. I shall spare no effort to restore world trade by international economic readjustment, but the emergency at home cannot wait on that accomplishment.

The basic thought that guides these specific means of national recovery is not narrowly nationalistic. It is the insistence, as a first consideration, upon the interdependence of the various elements in all parts of the United States—a recognition of the old and permanently important manifestation of the American spirit of the pioneer. It is the way to recovery. It is the immediate way. It is the strongest assurance that the recovery will endure.

In the field of world policy I would dedicate this Nation to the policy of the good neighbor—the neighbor who resolutely respects himself and, because he does so, respects the rights of others—the neighbor who respects his obligations and respects the sanctity of his agreements in and with a world of neighbors.

If I read the temper of our people correctly, we now realize as we have never realized before our interdependence on each other; that we can not merely take but we must give as well; that if we are to go forward, we must move as a trained and loyal army willing to sacrifice for the good of a common discipline, because without such discipline no progress is made, no leadership becomes effective. We are, I know, ready and willing to submit our lives and property to such discipline, because it makes possible a leadership which aims at a larger good. This I propose to offer, pledging that the larger purposes will bind upon us all as a sacred obligation with a unity of duty hitherto evoked only in time of armed strife.

With this pledge taken, I assume unhesitatingly the leadership of this great army of our people dedicated to a disciplined attack upon our common problems.

Action in this image and to this end is feasible under the form of government which we have inherited from our ancestors. Our Constitution is so simple and practical that it is possible always to meet extraordinary needs by changes in emphasis and arrangement without loss of essential form. That is why our constitutional system has proved itself the most superbly enduring political mechanism the modern world has produced. It has met every stress of vast expansion of territory, of foreign wars, of bitter internal strife, of world relations.

It is to be hoped that the normal balance of executive and legislative authority may be wholly adequate to meet the unprecedented task before us. But it may be that an unprecedented demand and need for undelayed action may call for temporary departure from that normal balance of public procedure.

I am prepared under my constitutional duty to recommend the measures that a stricken nation in the midst of a stricken world may require. These measures, or such other measures as the Congress may build out of its experience and wisdom, I shall seek, within my constitutional authority, to bring to speedy adoption.

But in the event that the Congress shall fail to take one of these two courses, and in the event that the national emergency is still critical, I shall not evade the clear course of duty that will then confront me. I shall ask the Congress for the one remaining instrument to meet the crisis—broad Executive power to wage a war against the emergency, as great as the power that would be given to me if we were in fact invaded by a foreign foe.

For the trust reposed in me I will return the courage and the devotion that befit the time. I can do no less.

We face the arduous days that lie before us in the warm courage of the national unity; with the clear consciousness of seeking old and precious moral values; with the clean satisfaction that comes from the stern performance of duty by old and young alike. We aim at the assurance of a rounded and permanent national life.

We do not distrust the future of essential democracy. The people of the United States have not failed. In their need they have registered a mandate that they want direct, vigorous action. They have asked for discipline and direction under leadership. They have made me the present instrument of their wishes. In the spirit of the gift I take it.

In this dedication of a Nation we humbly ask the blessing of God. May He protect each and every one of us. May He guide me in the days to come."

Wall Street Thinks You Are a Jealous Little Malcontent

After thinking it over, and listening carefully to the discussion on financial television and the news today in reaction to the proposal for a special bank tax, I can come to no other conclusion. Wall Street thinks that the American people, who came to their aid after the collapse of a monumental and most likely fraudulent bubble, are jealous little malcontents.

They believe that the public wants to limit the bonuses paid by Wall Street because they are just jealous. Or stupid and petty. At least they wish to leave their viewers and readers with that impression.

That's the long and short of it. You, average working stiff and retiree, are just a jealous little malcontent who envies the great success of the financial sector, much like some foreign agitator who attacks the West because they envy its freedoms.

And you are seeking retribution, revenge. That is what this bank tax is all about, retribution.

An economics professor just admitted that he too feels a need for retribution at times, as an emotional response, but being a more educated fellow he sees how negative that is. Instead he proposes that if we must have some bank tax that we divert the funds received into a bank holding fund, a kind of a TARP II, to pay for future financial disasters. Forget about reform. The banks are too smart for it.

I would not call it jealousy or a need for retribution.

I would say that the people as a whole have a sense of right and wrong, a sense of fairness and balance, a sense of outrage that is being held in check by patience, a remarkable forebearance, but wish to see justice done for themselves and their children, because it is the right thing, the only practical thing, to do.

But I can also understand why the Wall Street Bankers and the financial elite would see this as jealousy and envy.

Sociopath: (so⋅ci⋅o⋅path) a person, as a psychopathic personality, whose behavior is antisocial and who lacks a sense of moral responsibility or social conscience.

The most amoral, pathological son of a bitch I ever worked with, who by the way was enormously charismatic and charming when on public display, was a big tech entrepreneur from the Boston area. When his grandiose schemes started to fall apart, as much from the impracticality of his ego as from the fact that no one would trust him any longer, having senselessly betrayed everyone including his closest friends, he said to me in all the sincerity he could muster, "I am failing because people want to drag me down to their level."

And I can assure you, the halls of too many corporations and big government are infested with such power needing, neurotically driven personality types.

This is what renders any notion of self-regulation and efficient markets the romantic fantasy that they are. People are not uniformly rational and moderate in their behaviour. All people are not possessed of a natural goodness and a self-effacing moderation.

This is what makes the rule of law, the Constitution, so indispensable.

This is not to say that their enablers, the financial demimonde, are sociopaths. They are doing what enablers too often do; go along to get along, say and do whatever is required for pay. Camp followers, as they used to be called.

And as for what happened, well, as one well-heeled, successful young manager advised, "Older people are easy to handle. You just scare them. Then they do whatever they are told."

In his mind 'older' was anyone over 40. And as for the rest of the people, well, you just play on their other emotions like hatred and greed and prejudice. He saw absolutely nothing wrong with this, and was so straightfoward and unabashed in this view that it made my blood run cold, because it was clear that he was not alone in this perspective. And it is obvious that Tim, Ben, and Hank did exactly this, and it worked.

And so now they hit the theme that if the banks are taxed, they will just find ways around the restrictions, and keep doing what they wish to do with bonuses and speculation, but may stop lending to the people for their commercial and personal needs, to punish them.

So there you have it. You are a jealous, envious, little nobody desiring retribution from your betters in the land that your fathers fought and died for.

And not only that, but many of your middle class fellows would agree. They would not think this about themselves of course, but about you, the other. The lazy stupid one. There is no easier way to elevate yourself in your own mind than to just put down, impoverish, the other.

And the banks and their enablers in the government will use this, and shape your thinking with it.

You cannot say that you have not been warned. Many times. Money is power, and in a free republic power must be restrained with checks and balances, with a continuing effort and vigilance.

"Banks have done more injury to the religion, morality, tranquility, prosperity, and even wealth of the nation than they can have done or ever will do good." John Adams

There can be no easy truce, no peaceful resolution of the current crisis, until the banks are restrained, and the political and financial systems are reformed, and balance is restored to the economy.

"I believe that it is better to tell the truth than to lie. I believe that it is better to be free than to be a slave. And I believe that it is better to know than be ignorant." H. L. Mencken

Never allow yourself to succumb to hatred and a desire for retribution rather than justice. It is always wrong to hate, because the ultimate tragedy is that we become what we hate, we take the shape of that which possesses our passions, thoughts and attention, we adopt its methods and distortions, even if as in a mirror, until we too are misshapen and lost. And that is the real tragedy, how the whole world can descend into a whirlpool of madness, and become blind. So let us appeal to the law, and to justice, at every turn.

Mr. Obama. Reform these banks.

US Equity Market Options Expiration: Shenanigans Central

For those of you not keeping track, tomorrow is option expiration for the US stock exchanges. This normally precipitates an unusual amount of gaming and painting on the tape, as the writers and holders of puts and calls shove the prices around to inflict the most pain on anyone foolish enough to play their game.

Intel reports after the bell tonight and the market is expecting great things from them.

Tomorrow the US reports CPI, and then heads into a three day weekend, as Monday is Martin Luther King day in the US. Martin Luther King had a dream; and this may not be it.

The SP 500 futures have been the lead sled dog in this rally with the banks carrying the water. The daily chart has a rising wedge on it that is quite ominous, but we recall the rising trend in the 2003-7 stock reflation that never broke, and kept rising on light volumes to the bubble peak. And then of course it collapsed, with the other bubbles, of which it was a symptom, compliments of the Federal Reserve and the Bush Treasury.



Here is the last reflationary bubble that the Treasury and the Fed created. Remember that one?

Who Is the 'One Big Bidder' For US Treasuries?

There are a number of possibilities for the identity of the non-primary dealer domestic source of enormous purchases at the longer end of the yield curve in recent US Treasury auctions.

It could be a misclassification, a branch of a bank representing a foreign power. The problem with this theory is that foreign Central Banks have a reluctance to buy the long end of the curve.

It also could be a legitimate domestic purchaser like a pension fund compelled to match duration of obligations, as is required by a little noted ruling of the US government a couple of years ago. They might be shifting out of other long term instruments with similar durations but more risk.

It might even be PIMCO. They certain have the money as the world's biggest bond fund, and they do offer two Treasury ETF's which, although not directly related to the products bought, might be relevant on a cross trade. And PIMCO has recently been talking down Treasuries in favor of corporates, which doesn't mean anything since traders often 'talk their book.' Still, unless it is for the ETFs it is hard to justify buying the long durations straight up in size. And while PIMCO says they do not like Treasuries, Benny and the Fed said they are buying long to keep interest rates lower. Why doubt them?

And of course, it might very well be the Federal Reserve Bank, or the Treasury via the Exchange Stabilization Fund.

It could also be the big bidder who comes in with some regularity and smashes down the price of the precious metals, with the obvious intent of manipulating the market, like clockwork just after the PM fix in London with some frequency.

It might even be the mysterious bidder who stands ready to buy the SP futures at every weakness, maintaining a floor on the market, and a steady drift higher in prices, with no change in fundamental underpinnings. Their hand in the market is apparent.

It is less probable, given the state of market manipulation by a few big proprietary trading desks riding another wave of cheap FEd money, but it might even be the party that entered the US equity market yesterday at 12:03 PM with a HUGE order (228,000 contracts) to buy the SP futures. As Larry Levin noted, "As of now I don't have a firm answer, but whether it was HFT activity, the "Helicopter," or a massive cross trade, it sure set the bottom in for the afternoon. Everyone in the Dow, Nasdaq, and S&P pits were talking about it and nobody was willing to sell into that massive bid." And so the market rallied once again into its current peak. No doubt it will be blamed on Monsieur Fat Fingers. Funny how lucky the big prop traders are with their reckless accidents, with millions gained from gaming the market, and all by accident.

As the article from the Financial Times indicates, it might never be possible to find out who this is, unless there is an audit of the market that is made public. As Edmund Burke noted, "Fraud is the Minister of Injustice" and it is my experience that opacity is the accomplice of fraud. Who has the most to hide these days?

Personally I think the Fed is buying across the yield curve to affect interest rates, and Treasury takes care of stocks and commodities through the Exchange Stabilization Fund, and friends in a few key banks, but who can say for sure, without the power of wiretap, audit, and subpoena?

If this is price manipulation, no matter the intentions or beneficiaries, it is likely that it is mispricing risk in a big way, misallocating investments, and will eventually will fail. Its failure will cause a great deal of pain in the real economy for innocent bystanders, and will end in tears. And when that time comes, expect those who created the crisis to make the public another offer that they think you cannot refuse, in excess of their last demand for 700$ billions, tout de suite.

You decide what is most likely, and what needs to be done about it, if anything.

More than a few people are wondering at the lack of response from the people in various nations, particularly in the UK and the US. Here is some old knowledge that might prove illuminating.

National Madness
Gilbert Keith Chesterton 1910

"This slow and awful self-hypnotism of error is a process that can occur not only with individuals, but also with whole societies. It is hard to pick out and prove; that is why it is hard to cure. But this mental degeneration may be brought to one test, which I truly believe to be a real test.

A nation is not going mad when it does extravagant things, so long as it does them in an extravagant spirit. But whenever we see things done wildly, but taken tamely, then the State is growing insane...

For madness is a passive as well as an active state: it is a paralysis, a refusal of the nerves to respond to the normal stimuli, as well as an unnatural stimulation. There are commonwealths, plainly to be distinguished here and there in history, which pass from prosperity to squalor or from glory to insignificance, or from freedom to slavery, not only in silence, but with serenity."

And in this slow descent into madness, the worst is surely yet to come.

Financial Times
Direct bids for US Treasury notes lead to speculation over buyer
By Michael Mackenzie in New York
January 14 2010 02:00

Auctions of US Treasury notes this week have attracted extremely strong buying from domestic institutional investors, fuelling speculation that "one big bidder" has decided to defy the conventional wisdom on Wall Street that US government debt is due for a fall.

Yesterday, direct bids accounted for 17 per cent of the sales of $21bn in 10-year Treasury notes, far higher than the recent average of 7.4 per cent. It was the highest percentage of direct bids in a 10-year Treasury auction since May 2005.

On Tuesday, direct bids accounted for a record 23.4 per cent of the bidding for $40bn in three-year notes, up from an average direct bid of 6 per cent.

Market participants say the unusually high level of direct bidding suggests that a large investor is looking to accumulate Treasuries without alerting the primary dealers on Wall Street to its intentions.

"It appears to us that someone is trying to hide their apparent interest in owning these auctions from the rest of the market," said David Ader, strategist at CRT Capital.

Rick Klingman, managing director at BNP Paribas, said: "It is unusual to see such a spike in the direct bid and I would imagine it is one big bidder. There is no way we will find out who it is, not now, or ever."

The surge in direct bidding is particularly notable because it comes after predictions that the record levels of Treasury debt issuance would exhaust investor demand, driving yields higher.

Among the most high-profile warnings came from Pimco, manager of the largest bond fund, which raised concerns about the escalating supply of US Treasury debt.

Attention will now focus on whether there is similar direct demand for today's $13bn 30-year bond sale.

The 10-year notes were sold at a yield of 3.754 per cent yesterday, the highest rate awarded for a note sale since June, when they were issued at 3.99 per cent. At the start of the year the yield on 10-year notes briefly traded at 3.90 per cent, as many investors talked down the prospects for Treasuries. The note traded at about 3.70 per cent earlier this week and was at 3.70 per cent late yesterday.

Under the three main classifications of buyers in Treasury debt sales, direct bidders are generally domestic non-primary dealer banks and large institutional investors. Normally their presence at Treasury auctions is small, as they usually buy debt through the primary dealer network, which currently numbers 18 banks and broker/dealers.