Saturday, July 3, 2010
Thursday, July 1, 2010
Tuesday, June 29, 2010
Tecumseh - (1768-1813) Shawnee Chief
"Live your life that the fear of death can never enter your heart. Trouble no one about his religion. Respect others in their views and demand that they respect yours. Love your life, perfect your life, beautify all things in your life. Seek to make your life long and of service to your people. Prepare a noble death song for the day when you go over the great divide.
Always give a word or sign of salute when meeting or passing a friend, or even a stranger, if in a lonely place. Show respect to all people, but grovel to none. When you rise in the morning, give thanks for the light, for your life, for your strength. Give thanks for your food and for the joy of living. If you see no reason to give thanks, the fault lies in yourself.
Abuse no one and no thing, for abuse turns the wise ones to fools and robs the spirit of its vision. When your time comes to die, be not like those whose hearts are filled with fear of death, so that when their time comes they weep and pray for a little more time to live their lives over again in a different way. Sing your death song, and die like a hero going home." by: Tecumseh -(1768-1813) Shawnee Chief
Always give a word or sign of salute when meeting or passing a friend, or even a stranger, if in a lonely place. Show respect to all people, but grovel to none. When you rise in the morning, give thanks for the light, for your life, for your strength. Give thanks for your food and for the joy of living. If you see no reason to give thanks, the fault lies in yourself.
Abuse no one and no thing, for abuse turns the wise ones to fools and robs the spirit of its vision. When your time comes to die, be not like those whose hearts are filled with fear of death, so that when their time comes they weep and pray for a little more time to live their lives over again in a different way. Sing your death song, and die like a hero going home." by: Tecumseh -(1768-1813) Shawnee Chief
Monday, June 28, 2010
Gold: Assumptions vs Reality
http://www.expectedreturnsblog.com/2010/06/gold-assumptions-vs-reality.html
CREDIT TO CLYMER FOR THE LINK:
THIS ARTICLE WAS POSTED AT ZEROHEDGE BUT IS EASIER TO READ ON THE ORIGINAL BLOG
CREDIT TO CLYMER FOR THE LINK:
THIS ARTICLE WAS POSTED AT ZEROHEDGE BUT IS EASIER TO READ ON THE ORIGINAL BLOG
Sunday, June 27, 2010
SOUNDS LIKE A VALUABLE SOURCE OF INFO TO ME.
THE PARTISANS HANDBOOK
http://www.whatdoesitmean.com/partisanshandbook.html
HERE'S ANOTHER ONE THAT I PURCHASED AWHILE BACK:
Picking up the Pieces: Practical Guide for Surviving Economic Crashes, Internal Unrest and Military Suppression
http://www.whatdoesitmean.com/index713.htm
YOU NEED TO READ THESE NOW SO YOU WILL BE PREPARED FOR THE INEVITABLE CRASH AND SUBSEQUENT SOCIETAL BREAKDOWN THAT WILL FOLLOW.
http://www.whatdoesitmean.com/partisanshandbook.html
HERE'S ANOTHER ONE THAT I PURCHASED AWHILE BACK:
Picking up the Pieces: Practical Guide for Surviving Economic Crashes, Internal Unrest and Military Suppression
http://www.whatdoesitmean.com/index713.htm
YOU NEED TO READ THESE NOW SO YOU WILL BE PREPARED FOR THE INEVITABLE CRASH AND SUBSEQUENT SOCIETAL BREAKDOWN THAT WILL FOLLOW.
YOU HAVE BEEN WARNED FOLKS, DON'T DISMISS THIS AS JUST ANOTHER DISASTER STORY...THIS ONE COULD DESTROY US ALL!
http://www.whatdoesitmean.com/index1382.htm
WE ARE ALL MERE PAWNS IN THE GAME BEING FOISTED UPON US BY THE ELITE MEGALOMANIACS IN POSITIONS OF POWER AROUND THE GLOBE.
THEY ACTUALLY WANT TO SEE BILLIONS OF US DIE TO REDUCE THE PRESSURES ON THE WORLD'S RESOURCES BY ALL OF US 'USELESS EATERS'.
THE ROCKEFELLERS, ROTHSCHILDS, ILLUMINATI, ETC HAVE PUT THEIR PLAN FOR A ONE WORLD GOVERNMENT INTO HIGH GEAR AND YOU ARE GOING TO BE PART OF THE COLLATERAL DAMAGE.
WE ARE ALL MERE PAWNS IN THE GAME BEING FOISTED UPON US BY THE ELITE MEGALOMANIACS IN POSITIONS OF POWER AROUND THE GLOBE.
THEY ACTUALLY WANT TO SEE BILLIONS OF US DIE TO REDUCE THE PRESSURES ON THE WORLD'S RESOURCES BY ALL OF US 'USELESS EATERS'.
THE ROCKEFELLERS, ROTHSCHILDS, ILLUMINATI, ETC HAVE PUT THEIR PLAN FOR A ONE WORLD GOVERNMENT INTO HIGH GEAR AND YOU ARE GOING TO BE PART OF THE COLLATERAL DAMAGE.
Saturday, June 26, 2010
JOHN LOCKE ON CIVIL GOVERNMENT
The Second Treatise of Civil Government 1690
"That the aggressor, who puts himself into the state of war with another, and unjustly invades another man's right, can, by such an unjust war, never come to have a right over the conquered, will be easily agreed by all men, who will not think that robbers and pirates hhave a right of empire over whomsoever they have force enough to master, or that men are bound by promises which unlawful force extorts from them.
Should a robber break into my house, and, with a dagger at my throat, make me seal deeds to convey my estate to him, would this give him any title? Just such a title by his sword has an unjust conqueror who forces me into submission. The injury and the crime is equal, whether committed by the wearer of a crown or some petty villain.
The title of the offender and the number of his followers make no difference in the offence, unless it be to aggravate it. The only difference is, great robbers punish little ones to keep them in their obedience; but the great ones are rewarded with laurels and triumphs, because they are too big for the weak hands of justice in this world, and have the power in their own possession which should punish offenders." John Locke - 1632-1704
http://www.constitution.org/jl/2ndtreat.htm
"That the aggressor, who puts himself into the state of war with another, and unjustly invades another man's right, can, by such an unjust war, never come to have a right over the conquered, will be easily agreed by all men, who will not think that robbers and pirates hhave a right of empire over whomsoever they have force enough to master, or that men are bound by promises which unlawful force extorts from them.
Should a robber break into my house, and, with a dagger at my throat, make me seal deeds to convey my estate to him, would this give him any title? Just such a title by his sword has an unjust conqueror who forces me into submission. The injury and the crime is equal, whether committed by the wearer of a crown or some petty villain.
The title of the offender and the number of his followers make no difference in the offence, unless it be to aggravate it. The only difference is, great robbers punish little ones to keep them in their obedience; but the great ones are rewarded with laurels and triumphs, because they are too big for the weak hands of justice in this world, and have the power in their own possession which should punish offenders." John Locke - 1632-1704
http://www.constitution.org/jl/2ndtreat.htm
GEAB: GLOBAL EUROPE ANTICIPATION BULLETIN FOR SUMMER 2010
http://www.leap2020.eu/geab-n-46-special-summer-2010-edition-is-available-global-systemic-crisis-second-half-of-2010-the-global-system-s-four_a4810.html
THESE PEOPLE HAVE BEEN UNCANNILY ACCURATE ON THEIR PREDICTIONS
THESE PEOPLE HAVE BEEN UNCANNILY ACCURATE ON THEIR PREDICTIONS
DYLAN RATIGAN: Wall Street Reform: Politicians Lie, Media Applauds, America Suffers
http://www.huffingtonpost.com/dylan-ratigan/politicians-lie-media-app_b_625885.html
COMMENT POSTED UNDER THE ARTICLE:
drexl spivy 22 minutes ago (9:58 AM) 0 Fans
Glass-Steagall 1932-1999 -- During this time, the United States achieved the following major accomplishments during a period when our banking system, for the most part, was actually designed to allocate capital for the country's productive purposes, where risk was appropriately priced and client fiduciary relationships were hallmark:
1) Successfully fought an unconditional war against totalitarianism on 2 fronts with victory in little less than 4 years after starting out with only a modest standing army.
2) The US became the sole economic superpower during the 1950s with an unbelievable rise in the general standard of living for most of the population.
3) Led the world in technical innovation in computer technology and aviation culminating in a successful moon landing during the 1960s.
4) Continued advances in medicine and information technology and communciations setting the stage for leadership in the information age through the 1990s.
Since Glass Steagal's repeal (1999-today and forever with the passage of "Fin Reg") our country's hallmarks are the following:
1) The US banking system exploded to become a debt churning ponzi scheme where government's and most individuals became slaves to debt by doing away with a tried and true capital allocation system that for the better part of sixty years brought rising prosperity for most people.
2) War on terror.
3) The Patriot Act.
4) Rendition and Guantanamo.
5) Stop Loss.
6) A housing bubble.
7) Systemic government and corporate corruption.
8) Strip mall graveyards.
9) A gutted production infrastructure.
COMMENT POSTED UNDER THE ARTICLE:
drexl spivy 22 minutes ago (9:58 AM) 0 Fans
Glass-Steagall 1932-1999 -- During this time, the United States achieved the following major accomplishments during a period when our banking system, for the most part, was actually designed to allocate capital for the country's productive purposes, where risk was appropriately priced and client fiduciary relationships were hallmark:
1) Successfully fought an unconditional war against totalitarianism on 2 fronts with victory in little less than 4 years after starting out with only a modest standing army.
2) The US became the sole economic superpower during the 1950s with an unbelievable rise in the general standard of living for most of the population.
3) Led the world in technical innovation in computer technology and aviation culminating in a successful moon landing during the 1960s.
4) Continued advances in medicine and information technology and communciations setting the stage for leadership in the information age through the 1990s.
Since Glass Steagal's repeal (1999-today and forever with the passage of "Fin Reg") our country's hallmarks are the following:
1) The US banking system exploded to become a debt churning ponzi scheme where government's and most individuals became slaves to debt by doing away with a tried and true capital allocation system that for the better part of sixty years brought rising prosperity for most people.
2) War on terror.
3) The Patriot Act.
4) Rendition and Guantanamo.
5) Stop Loss.
6) A housing bubble.
7) Systemic government and corporate corruption.
8) Strip mall graveyards.
9) A gutted production infrastructure.
Thursday, June 24, 2010
Wednesday, June 23, 2010
FROM JSMINESET.COM TUESDAY 6/22/10
Jim’s Mailbox
Posted: Jun 22 2010 By: Jim Sinclair Post Edited: June 22, 2010 at 12:55 pm
Filed under: Jim's Mailbox
Dear CIGAs,
A bankrupt BP is worse for the financial world than Lehman Brothers was for exactly the same reason.
Pedro’s credentials in energy exceed by orders of magnitude those talking heads giving daily BP opinions. In fact, Pedro’s credentials might just be better than all of them added together.
Please read this article closely, and share it with others. It is just that important.
Regards,
Jim
Dear Jim,
The BP crisis in the Gulf of Mexico has rightfully been analysed from the ecological perspective. People’s lives and livelihoods are in grave danger. But that focus has equally masked something very serious from a financial perspective, in my opinion, that could lead to an acceleration of the crisis brought about by the Lehman implosion.
People are seriously underestimating how much liquidity in the global financial world is dependent on a solvent BP. BP extends credit – through trading and finance. They extend the amounts, quality and duration of credit a bank could only dream of. The Gold community should think about the financial muscle behind a company with 100+ years of proven oil and gas reserves. Think about that in comparison with what a bank, with few tangible assets, (truly, not allegedly) possesses (no wonder they all started trading for a living!). Then think about what happens if BP goes under. This is no bank. With proven reserves and wells in the ground, equity in fields all over the planet, in terms of credit quality and credit provision – nothing can match an oil major. God only knows how many assets around the planet are dependent on credit and finance extended from BP. It is likely to dwarf any banking entity in multiples.
And at the heart of it all are those dreadful OTC derivatives again! Banks try and lean on major oil companies because they have exactly the kind of credit-worthiness that they themselves lack. In fact, major oil companies, conversely, spend large amounts of time both denying Banks credit and trying to get Bank risk off of their books in their trading operations. Oil companies have always mistrusted bank creditworthiness and have largely considered the banking industry a bad financial joke. Banks plead with oil companies to let them trade beyond one year in duration. Banks even used to do losing trades with oil companies simply to get them on their trading register… a foot in the door so that they could subsequently beg for an extension in credit size and duration. For the banks, all trading was based on what the early derivatives giant, Bankers Trust, named their trading system: RAROC – or, Risk Adjusted Return on Credit. Trading is a function of credit bequeathed, mixed with the risk of the (trading) position. As trading and credit are intertwined, we might do well to remember what might happen to global liquidity and markets if BP suffers what many believe to be its deserved fate of bankruptcy. The Intercontinental Exchange (ICE) has already been and will be further undermined by BP’s distress. They are one of the only “hard asset” entities backing up this so-called exchange.
If BP does go bust (regardless of whether it is deserved), and even if it is just badly wounded and the US entity is allowed to fail, the long-term OTC derivatives in the oil, refined products and natural gas markets that get nullified could be catastrophic. These will kick-back into the banking system. BP is the primary player on the long-end of the energy curve. How exposed are Goldman sub J. Aron, Morgan Stanley and JPM? Probably hugely. Now credit has been cut to BP. Counter-parties will not accept their name beyond one year in duration. This is unheard of. A giant is on the ropes. If he falls, the very earth may shake as he hits the ground.
As we are beginning to see, the Western pension structure, financial trading and global credit are all inter-twined. BP is central to this, as a massive supplier of what many believe(d) to be AAA credit. So while we see banks roll over and die, and sovereign entities begin to falter… we now have a major oil company on the verge of going under. Another leg of the global economic “chair” is being viciously kicked out from under us. Ecological damage is not just an eco-event on its isolated own. It has been added to the list of man-made disasters jeopardizing the world economy. The price tag and resultant knock-on effects of a BP failure could easily be equal to that of a Lehman, if not more. It is surely, at the very least, Enron x10.
All the counter-party risk associated with the current BP situation means the term curve of the global oil trade has likely shut down. Here we have yet another credit-based event causing a lock-up in markets that will now impede trade and commerce. It looks like an exact replication of the 2008 credit market seizure could ensue all over again – and it could probably be a lot worse. The world is in a far more delicate state now.
Although never really discussed, the world is highly reliant on BPs provision of long-term credit to many core industries. Who makes good on all the outstanding paper that so many smaller oil, gas and electricity companies, airlines, shipping companies, local bus, railway and transportation networks that rely on BPs creditworthiness and performance for? It doesn’t take a genius to figure out how this could all unwind. If BP has to be bailed-out, like a bank, the system will have to print even more unimaginable amounts of money.
The market, intellectually lazy and slow to realization, as it often is, probably has not woken up to it yet – but the BP crisis could unleash damage similar to the banking crisis. A BP failure through bankruptcy could make Lehman look small in comparison, and shake the financial house of cards we live in even more severely. If the implicit danger of the possibilities imbedded in such an event doesn’t make an individual now turn towards Gold at full speed, it is likely that nothing will.
Respectfully yours,
CIGA Pedro
Posted: Jun 22 2010 By: Jim Sinclair Post Edited: June 22, 2010 at 12:55 pm
Filed under: Jim's Mailbox
Dear CIGAs,
A bankrupt BP is worse for the financial world than Lehman Brothers was for exactly the same reason.
Pedro’s credentials in energy exceed by orders of magnitude those talking heads giving daily BP opinions. In fact, Pedro’s credentials might just be better than all of them added together.
Please read this article closely, and share it with others. It is just that important.
Regards,
Jim
Dear Jim,
The BP crisis in the Gulf of Mexico has rightfully been analysed from the ecological perspective. People’s lives and livelihoods are in grave danger. But that focus has equally masked something very serious from a financial perspective, in my opinion, that could lead to an acceleration of the crisis brought about by the Lehman implosion.
People are seriously underestimating how much liquidity in the global financial world is dependent on a solvent BP. BP extends credit – through trading and finance. They extend the amounts, quality and duration of credit a bank could only dream of. The Gold community should think about the financial muscle behind a company with 100+ years of proven oil and gas reserves. Think about that in comparison with what a bank, with few tangible assets, (truly, not allegedly) possesses (no wonder they all started trading for a living!). Then think about what happens if BP goes under. This is no bank. With proven reserves and wells in the ground, equity in fields all over the planet, in terms of credit quality and credit provision – nothing can match an oil major. God only knows how many assets around the planet are dependent on credit and finance extended from BP. It is likely to dwarf any banking entity in multiples.
And at the heart of it all are those dreadful OTC derivatives again! Banks try and lean on major oil companies because they have exactly the kind of credit-worthiness that they themselves lack. In fact, major oil companies, conversely, spend large amounts of time both denying Banks credit and trying to get Bank risk off of their books in their trading operations. Oil companies have always mistrusted bank creditworthiness and have largely considered the banking industry a bad financial joke. Banks plead with oil companies to let them trade beyond one year in duration. Banks even used to do losing trades with oil companies simply to get them on their trading register… a foot in the door so that they could subsequently beg for an extension in credit size and duration. For the banks, all trading was based on what the early derivatives giant, Bankers Trust, named their trading system: RAROC – or, Risk Adjusted Return on Credit. Trading is a function of credit bequeathed, mixed with the risk of the (trading) position. As trading and credit are intertwined, we might do well to remember what might happen to global liquidity and markets if BP suffers what many believe to be its deserved fate of bankruptcy. The Intercontinental Exchange (ICE) has already been and will be further undermined by BP’s distress. They are one of the only “hard asset” entities backing up this so-called exchange.
If BP does go bust (regardless of whether it is deserved), and even if it is just badly wounded and the US entity is allowed to fail, the long-term OTC derivatives in the oil, refined products and natural gas markets that get nullified could be catastrophic. These will kick-back into the banking system. BP is the primary player on the long-end of the energy curve. How exposed are Goldman sub J. Aron, Morgan Stanley and JPM? Probably hugely. Now credit has been cut to BP. Counter-parties will not accept their name beyond one year in duration. This is unheard of. A giant is on the ropes. If he falls, the very earth may shake as he hits the ground.
As we are beginning to see, the Western pension structure, financial trading and global credit are all inter-twined. BP is central to this, as a massive supplier of what many believe(d) to be AAA credit. So while we see banks roll over and die, and sovereign entities begin to falter… we now have a major oil company on the verge of going under. Another leg of the global economic “chair” is being viciously kicked out from under us. Ecological damage is not just an eco-event on its isolated own. It has been added to the list of man-made disasters jeopardizing the world economy. The price tag and resultant knock-on effects of a BP failure could easily be equal to that of a Lehman, if not more. It is surely, at the very least, Enron x10.
All the counter-party risk associated with the current BP situation means the term curve of the global oil trade has likely shut down. Here we have yet another credit-based event causing a lock-up in markets that will now impede trade and commerce. It looks like an exact replication of the 2008 credit market seizure could ensue all over again – and it could probably be a lot worse. The world is in a far more delicate state now.
Although never really discussed, the world is highly reliant on BPs provision of long-term credit to many core industries. Who makes good on all the outstanding paper that so many smaller oil, gas and electricity companies, airlines, shipping companies, local bus, railway and transportation networks that rely on BPs creditworthiness and performance for? It doesn’t take a genius to figure out how this could all unwind. If BP has to be bailed-out, like a bank, the system will have to print even more unimaginable amounts of money.
The market, intellectually lazy and slow to realization, as it often is, probably has not woken up to it yet – but the BP crisis could unleash damage similar to the banking crisis. A BP failure through bankruptcy could make Lehman look small in comparison, and shake the financial house of cards we live in even more severely. If the implicit danger of the possibilities imbedded in such an event doesn’t make an individual now turn towards Gold at full speed, it is likely that nothing will.
Respectfully yours,
CIGA Pedro
Saturday, June 19, 2010
Monday, June 14, 2010
Saturday, June 12, 2010
A POST BY 'STEVE321' ON THE BRIMELOW ARTICLE BELOW
"In the absence of a gold standard, there is no way to protect savings from confiscation through inflation. There is no safe store of value. If there were, the government would have to make its holding illegal, as was done in the case of gold. If everyone decided, for example, to convert all his bank deposits to silver or copper or any other good and thereafter decline to accept checks as payment for goods, bank deposits would lose their purchasing power and government-created bank credit would be worthless as claims on goods. The financial policy of the welfare state requires that there be no way for the owners of wealth to be able to protect themselves.
This is the shabby secret of the welfare statists' tirades against gold. Deficit spending is simply a scheme for the confiscation of wealth. Gold stands in the way of this insidious process. It stands as a protector of property rights. If one grasps this, one has no difficulty in understanding the statists' antagonism toward the gold standard."
-- The above was said by Alan Greenspan, 'Gold and Economic Freedom' in 1966.
This is the shabby secret of the welfare statists' tirades against gold. Deficit spending is simply a scheme for the confiscation of wealth. Gold stands in the way of this insidious process. It stands as a protector of property rights. If one grasps this, one has no difficulty in understanding the statists' antagonism toward the gold standard."
-- The above was said by Alan Greenspan, 'Gold and Economic Freedom' in 1966.
BRIMELOW AT MARKETWATCH ON HARRY SCHULTZ
JIM SINCLAIR POSTED THIS ONE AS SCHULTZ IS ONE OF THE 'MASTERS' OF THE MARKETS WHICH I DISCOVERED BACK IN THE 1970's WHEN I WORKED AT MONEX.
HIS NEWSLETTER IS ONE OF THE MOST EXPENSIVE.
http://www.marketwatch.com/story/hyperinflation-could-happen-suddenly-2010-06-10
HIS NEWSLETTER IS ONE OF THE MOST EXPENSIVE.
http://www.marketwatch.com/story/hyperinflation-could-happen-suddenly-2010-06-10
Monday, June 7, 2010
BILL BONNER OF THE DAILY RECKONING 6/7/2010 PUTS IT INTO PERSPECTIVE
Counting on Government Stupidity
The specious reasoning of Census employment
Bill Bonner
Reckoning from Baltimore, Maryland...
Well, the much-awaited unemployment report came out on Friday. The pundits, analysts, and kibitzers were all waiting. Their mouths open. Their pulses racing. They expected an "I told you so" moment.
Bloomberg polled them a week or two ago. The 2000 of them surveyed were overwhelmingly bullish...with the average forecast of a 27% increase for the stock market in 2010.
They must have thought the job figures would show that the 'recovery' was firmly underway...with unemployment finally turning down in a big way. Then it would be clear sailing...
Oops... Bummer!
It turned out that 95% of the new jobs were census takers - people paid by the government to count the people who pay the government.
It also turned out that people are waiting longer than ever to find a job...an average of 34 months compared to only 16 months in 2007.
Investors' mouths turned down. They sold stocks so they could go home for the weekend without worrying. The Dow dropped 323 points.
The shorthand interpretation? It's a Great Correction...not a recovery.
The census takers illustrate our point. Government spending - including government jobs - do not really make us richer. They make us poorer. If you could make people better off by hiring them to count each other, why not count them twice? Or three times?
The trouble is, no matter how often you do it...or how well you do it...counting people doesn't add to our wealth; it takes away from it. Because it diverts resources - human labor - from worthwhile activities to activities that are a waste of time. And the more people you hire, the bigger the waste...and the poorer you get.
Why count people anyway? So you can apportion seats in the House of Representatives? We got a census form in the mail. It looked official...and very nosey. As far as we're concerned, it's none of their damned business!
But wait a minute. What if the government hired people to do useful things - such as baking and pole dancing? Well, as Jefferson put it, if you expect the government to do your baking for you, you "will soon want bread."
As for the pole dancing, we don't know...
But there's no secret to what makes people wealthier. No magic. No miracles. No free lunches.
People want to believe that the feds can pull off some trick...that they can turn this Great Correction around by stimulating this or regulating that. Or how about tarring and feathering the BP chairman? Or sacrificing a few of Goldman's young virgins? What? There are no virgins at Goldman? Well, how about some old sluts from JPMorgan?
JPMorgan just got fined $50 million - the largest penalty ever handed out by a UK regulator. What was its crime? "Failing to protect billions of dollars of client money by keeping it in segregated accounts," says The Financial Times.
How much did clients lose as a result of JPMorgan's faithlessness?
Not a penny. But they could have lost big-time, said the FSA. And besides, the regulators are getting tough everywhere.
Back in the USA, BP faces criminal charges. We don't know exactly what its crime was either...but with so many laws on the books, it's hard to imagine the giant oil company didn't break a few of them.
Not that we're shedding any tears for the goo pumper. If they can't keep the oil in their pipes, they should get out of the oil business. But it's a tough business. And accidents are bound to happen.
Destroying the oceans and endangering life on planet earth could be called a mistake. But destroying the economy is malicious mischief. Which is what the feds are doing.
So, Friday, the news was let out that the jobs stimulus effort was a flop. And as it made its way from one Bloomberg terminal to the others...the traders sold!
'Risk off'...the traders call it. It means that they are selling their 'risky' investment positions and putting the money into safe positions - notably, US treasury bonds. The dollar rose on the news - and is now near a 4-year high.
The specious reasoning of Census employment
Bill Bonner
Reckoning from Baltimore, Maryland...
Well, the much-awaited unemployment report came out on Friday. The pundits, analysts, and kibitzers were all waiting. Their mouths open. Their pulses racing. They expected an "I told you so" moment.
Bloomberg polled them a week or two ago. The 2000 of them surveyed were overwhelmingly bullish...with the average forecast of a 27% increase for the stock market in 2010.
They must have thought the job figures would show that the 'recovery' was firmly underway...with unemployment finally turning down in a big way. Then it would be clear sailing...
Oops... Bummer!
It turned out that 95% of the new jobs were census takers - people paid by the government to count the people who pay the government.
It also turned out that people are waiting longer than ever to find a job...an average of 34 months compared to only 16 months in 2007.
Investors' mouths turned down. They sold stocks so they could go home for the weekend without worrying. The Dow dropped 323 points.
The shorthand interpretation? It's a Great Correction...not a recovery.
The census takers illustrate our point. Government spending - including government jobs - do not really make us richer. They make us poorer. If you could make people better off by hiring them to count each other, why not count them twice? Or three times?
The trouble is, no matter how often you do it...or how well you do it...counting people doesn't add to our wealth; it takes away from it. Because it diverts resources - human labor - from worthwhile activities to activities that are a waste of time. And the more people you hire, the bigger the waste...and the poorer you get.
Why count people anyway? So you can apportion seats in the House of Representatives? We got a census form in the mail. It looked official...and very nosey. As far as we're concerned, it's none of their damned business!
But wait a minute. What if the government hired people to do useful things - such as baking and pole dancing? Well, as Jefferson put it, if you expect the government to do your baking for you, you "will soon want bread."
As for the pole dancing, we don't know...
But there's no secret to what makes people wealthier. No magic. No miracles. No free lunches.
People want to believe that the feds can pull off some trick...that they can turn this Great Correction around by stimulating this or regulating that. Or how about tarring and feathering the BP chairman? Or sacrificing a few of Goldman's young virgins? What? There are no virgins at Goldman? Well, how about some old sluts from JPMorgan?
JPMorgan just got fined $50 million - the largest penalty ever handed out by a UK regulator. What was its crime? "Failing to protect billions of dollars of client money by keeping it in segregated accounts," says The Financial Times.
How much did clients lose as a result of JPMorgan's faithlessness?
Not a penny. But they could have lost big-time, said the FSA. And besides, the regulators are getting tough everywhere.
Back in the USA, BP faces criminal charges. We don't know exactly what its crime was either...but with so many laws on the books, it's hard to imagine the giant oil company didn't break a few of them.
Not that we're shedding any tears for the goo pumper. If they can't keep the oil in their pipes, they should get out of the oil business. But it's a tough business. And accidents are bound to happen.
Destroying the oceans and endangering life on planet earth could be called a mistake. But destroying the economy is malicious mischief. Which is what the feds are doing.
So, Friday, the news was let out that the jobs stimulus effort was a flop. And as it made its way from one Bloomberg terminal to the others...the traders sold!
'Risk off'...the traders call it. It means that they are selling their 'risky' investment positions and putting the money into safe positions - notably, US treasury bonds. The dollar rose on the news - and is now near a 4-year high.
Sunday, June 6, 2010
Thursday, June 3, 2010
Tuesday, June 1, 2010
Sunday, May 30, 2010
Dan Denning on the accuracy of Austrian Economic Theory
Whiskey & Gunpowder
By Dan Denning
May 27, 2010
Melbourne, Australia
There is a place in life for expert opinion. If a doctor tells us our heart is going to quit because we’re drinking too much beer and not exercising enough, we listen to him. If a physicist tells us that jumping from high places without a parachute could be bad for our health, we listen to him. If Tiger Woods tells us how to correctly hit a one iron or send a saucy text message, we listen to him.
But if a group of economists tells us that a government tax delivers a public benefit, we are inclined to guffaw in their collective face.
Most of the economics profession that gets quoted in so-called respectable publications has studied the wrong textbooks over the last 50 years. They are doctors prescribing remedies based on an incorrect understanding of illness.
Most mainstream textbook economists are reading from the playbook of John Maynard Keynes. They believe, and will say on command – not because there’s any evidence that it works but because it’s how you get tenured and earn grant money or get a government job – that when private demand falls because households and business de-leverage, it is the proper role of government to boost consumption and aggregate demand by increasing public spending. Amen.
As a scientific proposition, empirically speaking, there is zero evidence that this policy works. The one example trotted out is FDR’s spending boom in the Great Depression. But the evidence now suggests that it was war-time production that dragged the American economy out of depression, not morally enlightened fiscally policy.
There no evidence to suggest the big deficit spending really is better than doing nothing. But time after time, the interventionist mantra gets trotted out like the Ten Commandments in the Ark of the Covenant to incinerate anyone who doubts its gospel truth. Yet it’s just a bunch of superstition with very little basis in fact.
Economics is simply not a science in the same way that chemistry and physics are sciences. It’s probably not a science at all, to be honest. Or, if it is, it’s a pseudo science, having more in common with psychology than geology.
Complex adaptive systems like the modern marketplace do not behave mechanistically. They cannot be controlled precisely with the rods and levers of monetary and fiscal policy. To believe so is an enormous – and as we’re finding out – costly error. It’s also massively arrogant and conceited.
There’s a reason the great Austrian economist Ludwig von Mises called his great book “Human Action.” Economics is the study of human action. And human action is sometimes rational, sometimes irrational, sometimes predictable...but ultimately...very difficult to model and predict with charts.
As Nassim Taleb points out, all the most important stuff in your life probably happened or will happen in non-predictable ways. Most of the time, today is going to be like yesterday and tomorrow is going to be liked today. But the most life-changing things happen to you at times you’d have no way of predicting or preparing for. But not everyone is comfortable with this kind of un-planned spontaneity.
Please note the Austrian School of Economics was the only school of economic thought that accurately predicted the current crisis. Why? The Austrians correctly identified the influence of credit (free money to change your life) on human action. Altering the price of money alters incentives and changes individual calculations across the breadth and depth of an economy.
The Austrians pointed out that government-controlled interest rates are the real cause of the business cycle inasmuch as they lead to credit booms and inevitable busts. When the price of money is rigged, the market isn’t free. Only if you understand the “root cause” of the business cycle can you learn how to prevent bubbles from blowing up and popping later. The Austrian answer is, by the way, sound money.
By Dan Denning
May 27, 2010
Melbourne, Australia
There is a place in life for expert opinion. If a doctor tells us our heart is going to quit because we’re drinking too much beer and not exercising enough, we listen to him. If a physicist tells us that jumping from high places without a parachute could be bad for our health, we listen to him. If Tiger Woods tells us how to correctly hit a one iron or send a saucy text message, we listen to him.
But if a group of economists tells us that a government tax delivers a public benefit, we are inclined to guffaw in their collective face.
Most of the economics profession that gets quoted in so-called respectable publications has studied the wrong textbooks over the last 50 years. They are doctors prescribing remedies based on an incorrect understanding of illness.
Most mainstream textbook economists are reading from the playbook of John Maynard Keynes. They believe, and will say on command – not because there’s any evidence that it works but because it’s how you get tenured and earn grant money or get a government job – that when private demand falls because households and business de-leverage, it is the proper role of government to boost consumption and aggregate demand by increasing public spending. Amen.
As a scientific proposition, empirically speaking, there is zero evidence that this policy works. The one example trotted out is FDR’s spending boom in the Great Depression. But the evidence now suggests that it was war-time production that dragged the American economy out of depression, not morally enlightened fiscally policy.
There no evidence to suggest the big deficit spending really is better than doing nothing. But time after time, the interventionist mantra gets trotted out like the Ten Commandments in the Ark of the Covenant to incinerate anyone who doubts its gospel truth. Yet it’s just a bunch of superstition with very little basis in fact.
Economics is simply not a science in the same way that chemistry and physics are sciences. It’s probably not a science at all, to be honest. Or, if it is, it’s a pseudo science, having more in common with psychology than geology.
Complex adaptive systems like the modern marketplace do not behave mechanistically. They cannot be controlled precisely with the rods and levers of monetary and fiscal policy. To believe so is an enormous – and as we’re finding out – costly error. It’s also massively arrogant and conceited.
There’s a reason the great Austrian economist Ludwig von Mises called his great book “Human Action.” Economics is the study of human action. And human action is sometimes rational, sometimes irrational, sometimes predictable...but ultimately...very difficult to model and predict with charts.
As Nassim Taleb points out, all the most important stuff in your life probably happened or will happen in non-predictable ways. Most of the time, today is going to be like yesterday and tomorrow is going to be liked today. But the most life-changing things happen to you at times you’d have no way of predicting or preparing for. But not everyone is comfortable with this kind of un-planned spontaneity.
Please note the Austrian School of Economics was the only school of economic thought that accurately predicted the current crisis. Why? The Austrians correctly identified the influence of credit (free money to change your life) on human action. Altering the price of money alters incentives and changes individual calculations across the breadth and depth of an economy.
The Austrians pointed out that government-controlled interest rates are the real cause of the business cycle inasmuch as they lead to credit booms and inevitable busts. When the price of money is rigged, the market isn’t free. Only if you understand the “root cause” of the business cycle can you learn how to prevent bubbles from blowing up and popping later. The Austrian answer is, by the way, sound money.
Saturday, May 29, 2010
Thursday, May 27, 2010
Tuesday, May 25, 2010
VERY FUNNY SHORT VIDEO
Clarke and Dawe ask the million dollar questions
http://www.informationclearinghouse.info/article25521.htm
http://www.informationclearinghouse.info/article25521.htm
Sunday, May 23, 2010
**1911 Turkey established gun control. From 1915-1917, 1.5 million Armenians, unable to defend themselves, were rounded up and exterminated.
**1929 The Soviet Union established gun control. From 1929 to 1953, approximately 20 million
dissidents, unable to defend themselves, were rounded up and exterminated.
**1935 China established gun control. From 1948 to 1952, 20 million political dissidents, unable to defend themselves, were rounded up and exterminated.
**1938 Germany established gun control in 1938 and from 1939 to 1945, 6 to 7 million Jews,
gypsies, homosexuals, the mentally ill, and 12 million Christians who were unable to defend
themselves, were rounded up and exterminated.
**1956 Cambodia established gun control. From 1975 to 1977, one million “educated” people,
unable to defend themselves, were rounded up and exterminated.
**1964 Guatemala established gun control. From 1964 to 1981, 100,000 Mayan Indians, unable to defend themselves, were rounded up and exterminated.
**1970 Uganda established gun control. From 1971 to 1979, 300,000 Christians, unable to defend themselves, were rounded up and exterminated.
**After the Christian Tutsis had been disarmed by governmental decree in the early 1990s, Hutu-led military forces began to systematically massacre the defenseless Christians. The massacre began in April 1994 and continued until July 1994. Using machetes rather than bullets, the Hutu forces were able to create a state of abject fear and terror within the helpless Christian population as they systematically butchered hundreds of thousands of them.
**1929 The Soviet Union established gun control. From 1929 to 1953, approximately 20 million
dissidents, unable to defend themselves, were rounded up and exterminated.
**1935 China established gun control. From 1948 to 1952, 20 million political dissidents, unable to defend themselves, were rounded up and exterminated.
**1938 Germany established gun control in 1938 and from 1939 to 1945, 6 to 7 million Jews,
gypsies, homosexuals, the mentally ill, and 12 million Christians who were unable to defend
themselves, were rounded up and exterminated.
**1956 Cambodia established gun control. From 1975 to 1977, one million “educated” people,
unable to defend themselves, were rounded up and exterminated.
**1964 Guatemala established gun control. From 1964 to 1981, 100,000 Mayan Indians, unable to defend themselves, were rounded up and exterminated.
**1970 Uganda established gun control. From 1971 to 1979, 300,000 Christians, unable to defend themselves, were rounded up and exterminated.
**After the Christian Tutsis had been disarmed by governmental decree in the early 1990s, Hutu-led military forces began to systematically massacre the defenseless Christians. The massacre began in April 1994 and continued until July 1994. Using machetes rather than bullets, the Hutu forces were able to create a state of abject fear and terror within the helpless Christian population as they systematically butchered hundreds of thousands of them.
Tuesday, May 18, 2010
A MUST READ ARTICLE
http://matterhornassetmanagement.com/2010/05/18/alea-iacta-est/
Yes this is it! We have crossed the Rubicon and events in the world economy are now likely to unfold in a totally uncontrollable fashion. Clueless governments still don’t understand that it is their ruinous actions that have created a credit infested and bankrupt world. They will continue to prescribe the same remedy that caused the problem in the first place, namely more credit and more printed money. The consequences are clear; we will have hyperinflation, economic and human misery as well as social unrest.
Yes this is it! We have crossed the Rubicon and events in the world economy are now likely to unfold in a totally uncontrollable fashion. Clueless governments still don’t understand that it is their ruinous actions that have created a credit infested and bankrupt world. They will continue to prescribe the same remedy that caused the problem in the first place, namely more credit and more printed money. The consequences are clear; we will have hyperinflation, economic and human misery as well as social unrest.
Saturday, May 15, 2010
Friday, May 14, 2010
Thursday, May 13, 2010
Tuesday, May 11, 2010
QUOTES TO THINK ABOUT
"When I contemplate the natural dignity of man; when I feel ... for the honor and happiness of its character, I become irritated at the attempt to govern mankind by force and fraud, as if they were all knaves and fools, and can scarcely avoid disgust at those who are thus imposed upon." - - Thomas Paine - (1737-1809)
He that would make his own liberty secure must guard even his enemy from oppression; for if he violates this duty he establishes a precedent that will reach to himself: Thomas Paine
Liberty is meaningless where the right to utter one's thoughts and opinions has ceased to exist. That, of all rights, is the dread of tyrants. It is the right which they first of all strike down: Frederick Douglass
He that would make his own liberty secure must guard even his enemy from oppression; for if he violates this duty he establishes a precedent that will reach to himself: Thomas Paine
Liberty is meaningless where the right to utter one's thoughts and opinions has ceased to exist. That, of all rights, is the dread of tyrants. It is the right which they first of all strike down: Frederick Douglass
Sunday, May 9, 2010
Thursday, May 6, 2010
JCS Conplan 0300-97 - WHAT THE GUV'MINT WILL DO TO SURVIVE
JCS Conplan 0300-97: "Special-mission Units in Extra-legal Missions to Combat Terrorism in the United States"
http://montages.blogspot.com/2005/01/jcs-conplan-0300-97-special-mission.html
SUPPORTING ARTICLES:
Commandos Get Duty on U.S. Soil
http://www.nytimes.com/2005/01/23/national/nationalspecial3/23code.html?_r=2
Were US Special Forces Involved in the Arrest of Faisal Shahzad?
http://www.thenation.com/blog/were-us-special-forces-involved-arrest-faisal-shahzad
Guardrail Common Sensor
http://www.globalsecurity.org/intell/systems/guardrail.htm
http://montages.blogspot.com/2005/01/jcs-conplan-0300-97-special-mission.html
SUPPORTING ARTICLES:
Commandos Get Duty on U.S. Soil
http://www.nytimes.com/2005/01/23/national/nationalspecial3/23code.html?_r=2
Were US Special Forces Involved in the Arrest of Faisal Shahzad?
http://www.thenation.com/blog/were-us-special-forces-involved-arrest-faisal-shahzad
Guardrail Common Sensor
http://www.globalsecurity.org/intell/systems/guardrail.htm
Wednesday, May 5, 2010
CHALMERS JOHNSON QUOTE
"Four sorrows ... are certain to be visited on the United States. Their cumulative effect guarantees that the U.S. will cease to resemble the country outlined in the Constitution of 1787.
First, there will be a state of perpetual war, leading to more terrorism against Americans wherever they may be and a spreading reliance on nuclear weapons among smaller nations as they try to ward off the imperial juggernaut.
Second is a loss of democracy and Constitutional rights as the presidency eclipses Congress and is itself transformed from a co-equal 'executive branch' of government into a military junta.
Third is the replacement of truth by propaganda, disinformation, and the glorification of war, power, and the military legions.
Lastly, there is bankruptcy, as the United States pours its economic resources into ever more grandiose military projects and shortchanges the education, health, and safety of its citizens.":
Chalmers Johnson, Sorrows of Empire
First, there will be a state of perpetual war, leading to more terrorism against Americans wherever they may be and a spreading reliance on nuclear weapons among smaller nations as they try to ward off the imperial juggernaut.
Second is a loss of democracy and Constitutional rights as the presidency eclipses Congress and is itself transformed from a co-equal 'executive branch' of government into a military junta.
Third is the replacement of truth by propaganda, disinformation, and the glorification of war, power, and the military legions.
Lastly, there is bankruptcy, as the United States pours its economic resources into ever more grandiose military projects and shortchanges the education, health, and safety of its citizens.":
Chalmers Johnson, Sorrows of Empire
THE GOLDMAN CONSPIRACY
6 reasons 'Goldman Conspiracy' must kill reforms
Derivatives-bonus culture needs neo-Reaganomics resurgence to survive
By Paul B. Farrell, MarketWatch
http://www.marketwatch.com/story/goldman-conspiracy-must-kill-bank-reform-2010-05-04?link=kiosk
Derivatives-bonus culture needs neo-Reaganomics resurgence to survive
By Paul B. Farrell, MarketWatch
http://www.marketwatch.com/story/goldman-conspiracy-must-kill-bank-reform-2010-05-04?link=kiosk
Tuesday, May 4, 2010
John Williams: A Hyper-Inflationary Great Depression Is Coming
John Williams: A Hyper-Inflationary Great Depression Is Coming
Posted: May 04 2010 By: John Williams Post Edited: May 4, 2010 at 8:13 pm
Filed under: ShadowStats.com
ALSO FOUND AT JSMINESET.COM
Courtesy of The Gold Report (http://www.theaureport.com/)
ShadowStats’ John Williams has done his math and believes his numbers tell the truth. He explains why the U.S. is in a depression and why a "Hyper-Inflationary Great Depression" is now unavoidable. John also shares why he selects gold as a metal for asset conversion in this exclusive interview with The Gold Report.
The Gold Report: John, last December you stated, "The U.S. economic and systemic crisis of the past of the past two years are just precursors to a great collapse," or what you call a "hyper-inflationary great depression." Is this prediction unique to the U.S., or do you feel that other economies face the same fate?
John Williams: The hyper-inflationary portion largely will be unique to the U.S. If the U.S. falls into a great depression, there’s no way the rest of the world cannot have some negative economic impact.
TGR: How will the United States’ decreased economic power impact global economies? Will the rest of the world survive?
JW: People will find to their happy surprise that they’ll be able to survive. Most businesses are pretty creative. The thing is, the U.S. economic activity accounts for roughly half that of the globe. There’s no way that the U.S. economy can turn down severely without there being an equivalent, at least a parallel downturn outside the U.S. with its major trading partners.
When I talk about a great depression in the United States, it is coincident with a hyper-inflation. We’re already in the deepest and longest economic contraction seen since the Great Depression. If you look at the timing as set by the National Bureau of Economic Research, which is the arbiter of U.S. recessions, as to whether or not we have one, they’ve refused to call an end to this one, so far. But assuming you called an end to it back in the middle of 2009, it would still be the longest recession seen since the first down-leg of the Great Depression.
In terms of depth, year-to-year decline in the gross domestic product, or GDP, as reported in the third quarter of 2009, was the steepest annual decline ever reported in that series, which goes back to the late ’40s on a quarterly basis. Other than for the shutdown of war production at the end of World War II, which usually is not counted as a normal business cycle, the full annual decline in 2009 GDP was the deepest since the Great Depression. There’s strong evidence that we’re going to see an intensified downturn ahead, but it won’t become a great depression until a hyper-inflation kicks in. That is because hyper-inflation will be very disruptive to the normal flow of commerce and will take you to really low levels of activity that we haven’t seen probably in the history of the Republic.
Let me define what I mean by depression and great depression, because there’s no formal definition out there that matches the common expectation. Before World War II, economic downturns commonly were referred to as depressions. If you drew a graph of the level of activity in a depression over time, it would show a dip in the economy, and you’d go down and then up. The down part was referred to as recession and the up part as recovery. The Great Depression was one that was so severe that in the post-World War II era, those looking at economic cycles tried to come up with a euphemism for "depression." They didn’t want to create the image of or remind people of the 1930s. Basically, they called economic downturns recessions, and most people think of a depression now as a severe recession.
I’ve talked with people in the Bureau of Economic Analysis and the National Bureau of Economic Research in terms of developing a formal depression definition. The traditional definition of recession—that of two consecutive quarters of inflation-adjusted contraction in GDP—still is a solid one, despite recent refinements. Although there’s no official consensus on this, generally, a depression would be considered a recession where peak-to-trough contraction in the economy was more than 10%; a great depression would be a recession where the peak-to-trough contraction was more than 25%.
We’re borderline depression in terms of where we’re going to be here before I think the hyper-inflation kicks in. You’ve certainly seen depression-like numbers in things such as retail sales, industrial production and new orders for durable goods, where you’re down more than 10% from peak-to-trough. In terms of housing, you’re down more than 75%, and that certainly would be in the great depression category. With hyper-inflation, you have disruption to the normal flow of commerce and that will slow things down very remarkably from where we are now.
TGR: After a period of recession, isn’t inflation considered a good sign?
JW: There are a couple of things that drive inflation. The one that you’re describing is the relatively happy event where strong economic demand is exceeding production, and that’s pushing prices higher, as well as interest rates. That’s a relatively healthy circumstance. You can also have inflation, which is driven by factors other than strong economic activity. That’s what we’ve been seeing in the last couple of years. It’s been largely dominated by swings in oil prices. That hasn’t been due really to oil demand, as much as it has been due to the value of the U.S. dollar. Oil is denominated in U.S. dollars. Big swings in the U.S. dollar get reflected in oil pricing. If the dollar weakens, oil rises. That’s what you saw if you go back to the 1973-1975 recession, for example. That was an inflationary recession.
Indeed, the counterpart to what you were suggesting earlier about the strong demand and higher inflation is that usually in a recession you see low inflation. The ‘73 to ‘75 experience, however, was an inflationary recession because of the problem with oil prices. That’s what we were seeing early in this cycle, where a weakening dollar rallied oil prices, and then the dollar reversed sharply and oil prices collapsed. We have passed through a brief period of shallow year-to-year deflation in the consumer price index, but, as oil prices bottomed out and headed higher since the end of 2009, we’re now seeing higher inflation, again.
I’m looking at hyper-inflation, which is a rather drastic forecast. This has been in place as an ultimate fate for the system for a number of years. Back in the ’70s, the then Big 10 accounting firms got together and approached the government and said, "Hey guys, you know you need to keep your books the way a big corporation does. You’re the largest financial operator on earth." The government then, as well as today, operates on a cash basis with no accrual accounting and such. Yet, over a period of 30 years, the accountants and government put together generally accepted accounting principles, or GAAP, accounting for the federal government and introduced formal financial statements on that basis in 2002, which supplement the annual cash-based accounting.
If you look at those GAAP-based statements and include in the deficit the year-to-year change in the net present value of the unfunded liabilities for Social Security and Medicare, what you’ll find is that the annual operating shortfall is running between $4 and $5 trillion; not $500 billion as we saw before the crisis or the $1.4 trillion that they announced for fiscal 2009. Now to put that into perspective, if the government wanted to balance its deficit on a GAAP basis for a year, and it seized all personal income and corporate profits, taxing everything 100%, it would still be in deficit. It can’t raise taxes enough to contain this. On the other side, if it cut all government spending except for Social Security and Medicare, it still would be in deficit. With no political will to contain the spending, eventually the government meets its obligations by revving up the currency printing press.
TGR: With all this new paper money coming into the system, wouldn’t we see a bigger bubble than we’ve ever seen prior to a hyper-inflationary great depression?
JW: No, in fact, it’s a very unusual circumstance that we have now. Put yourself in Mr. Bernanke’s situation—he had to prevent a collapse of the banking system. He was afraid of a severe deflation as was seen in the Great Depression, when a lot of banks went out of business. The depositors lost funds and the money supply just collapsed. He wanted to prevent a collapse of the money supply and keep the depository institutions afloat. Generally, that has happened. The FDIC expanded its coverage and everything that had to be done to keep the system from imploding was done. The effects eventually will be inflationary.
In the process, what Mr. Bernanke did was to expand the monetary base extraordinarily, more than doubling it over a period of a year. The monetary base is money currently in circulation plus bank reserves. If you go back to before September 2008, the bank reserves were in the $50 to $60 billion range. Where the currency was maybe $800 billion, we’ve gone over $2 trillion in total reserves. Most of that is in excess reserves and not required reserves that banks have to keep to support their deposits. Normally banks would take their excess reserves and lend them out into the regular stream of commerce, and in doing so, that would create money supply. Instead they’re leaving the excess reserves on deposit with the Fed. Money supply and credit are now generally contracting. We’re going to see an intensified downturn in the near future. I specialize in looking at leading indicators that have very successful track records in terms of predicting economic or financial turns. One such indicator is the broad money supply.
Whenever the broad money supply–adjusted for inflation–has turned negative year over year, the economy has gone into recession, or if it already was in a recession, the downturn intensified. It’s happened four times before now, in modern reporting. You saw it in the terrible downturn of ‘73 to ‘75, the early ’80s and again in the early ’90s. In December of 2009, annual growth in real M3 turned negative. It’s now at a record low in terms of decline, down more than 6% year over year. What that suggests is that in the immediate future you’re going to see renewed downturn in economic activity.
In all the prior instances that I mentioned, this event led recessions, except for ‘73 to ‘75. That’s when you had the oil spike and a recession that came from that. When the money supply turned down in that recession, the economy accelerated in its decline. We’re going to see something along those lines, now, with about a six-month lead time. You’re going to have negative economic growth this year. The implications for that are extraordinary, because the projections on the federal budget deficit, a number of the state deficits, and the solvency and stress tests for the banking system all were structured assuming positive economic growth in the 2% to 3% range for 2010. Instead it’s going to be negative. Many states are going to be in greater difficulty than they thought. Most likely, you’re going to have federal bailouts there. The banks are going to have more troubles. All this means more government support, more government spending, greater deficits and greater funding needs for the U.S. Treasury. We have a global market that already is increasingly reluctant to hold the dollars and U.S. Treasuries.
TGR: The U.S. dollar is still the reserve currency, and it’s holding its value while the euro struggles. Wouldn’t decoupling precede hyper-inflation?
JW: I don’t know if it will decouple from being the reserve currency formally, but it will de facto. The reserve status is the reason the dollar didn’t collapse per se a year and a half ago during the September ‘08 panic. The movement is already afoot, however, to try to relegate the dollar to some status other than a reserve currency. For example, OPEC purportedly is looking to price oil in something other than U.S. dollars. The pressure is there to change the status.
Again, if you start to see a great depreciation of the U.S. currency or a tremendous increase in lack of confidence in the soundness of the government’s fiscal condition, there is a problem. You mentioned Greece, for example. The sovereign solvency issues there are minuscule compared to what we have with the United States, which is the elephant in the bathtub. The markets know it’s there. The central bankers know it’s there. Again, with the downturn in the economy, all the issues are going to be brought to a head. As they come to a head, there will be that effort to dump the dollar. I would expect that, indeed, it will be decoupled from its reserve status, although it could follow after the fact as opposed to before the fact.
TGR: Major economic indicators suggest significant improvement; even the IMF has stated that we’ve averted a global depression. What are you seeing that these governing bodies are not?
JW: What I’m using is a leading indicator of economic activity: year-to-year change in inflation-adjusted broad money supply. We’re now seeing a very sharp year-over-year decline, which has not been seen since the 1990 recession. This indicator does not work always in the upside; it doesn’t necessarily give you a signal for a rising economy. It is, however, basic. If you strangle liquidity you can always contract an economy. Deliberately or not, liquidity’s being strangled. You’re seeing very sharp declines in consumer credit, commercial and industrial loans and commercial paper outstanding.
You are getting happy news from governments, central banks, financial markets, Wall Street analysts and the popular media, which does tend to cater to Wall Street. Such is standard practice. Happy news is what sells and you don’t want to discourage people. The Obama administration, interestingly, started talking-down the economy when it wanted to get its stimulus package in place. As soon as that was done, it started talking-up the economy. Everything was just fine and dandy again. This is the most extraordinary downturn most people living today have ever seen. In terms of modern economic reporting, which basically started after World War II, we’ve never had a downturn as long or as severe. Perversely, the extreme nature of the downturn actually has warped recent reporting of seasonally-adjusted data to the upside.
TGR: Earlier you mentioned that business around the world will survive in the event of a depression. Aren’t there sustainable businesses in the U.S. as well? Won’t an influx of printed currency and green-tech job creation offer some value? At some point, doesn’t stimulus money become real cash producing real goods? Surely the economy would be viable at some level?
JW: Not without income growth. There’s nothing there that you’ve described to me that is growing, aside from inflation. To have sustainable growth in the economy, you have to income growth, net of inflation. That is not happening, and there is nothing in existing government stimulus that will cause real income growth.
Beyond income issues, the problem with the hyper-inflation is that very quickly the use of cash will cease. Let me contrast our circumstance here with a very popularly followed hyper-inflation case that’s now run its course in Zimbabwe. There you had probably the worst hyper-inflation that anyone’s ever seen. After devaluation upon devaluation, they successively lopped the zeros off the bills. If you took a $2 bill that they first issued back in the ’80s and then tried to come up with the equivalent of a $2 bill in the last form of the currency, it would be very difficult to do because it was so worthless. If you put a pile of those together to equal the original $2 bill, it would actually stretch from the earth to the Andromeda Galaxy. We’re talking light years. There are not enough trees on earth to print them. Yet the Zimbabwe economy survived and functioned. They had a lot of problems, but they operated. The reason they functioned was because they had a back-up system, which was a black market in U.S. dollars. People switched out of the Zimbabwe dollar to U.S. dollars. They could live with that. In the U.S., we don’t have a back-up system.
TGR: You mentioned in a recent interview with CNN that you’re recommending individuals move into both cash and gold. With the euro and the dollar in jeopardy, where does that leave us?
JW: I don’t like the euro. I don’t think that’s going to hold together, and I’ve thought so for some time. If it should break up and you have a new German currency, a new mark or something like that might be a strong one option. At the moment I like the Canadian dollar, the Australian dollar and the Swiss franc. For anyone living in the United States, rather than looking at the short-term volatility in the markets and trying to make money off of that, this is the time to batten down the hatches and to look to preserve your wealth and assets.
In terms of preserving the purchasing power of your assets, the best thing I can think of is physical gold. That’s worked over the millennia. I’m not per se a gold bug. It just happens to be a circumstance in which it’s the cleanest asset around for that. You don’t need to put all your assets into gold, but hold some. Hold some silver. I’d look to get some assets out of the U.S. dollar and look to get some assets out of the U.S. When I say outside of the U.S. dollar, again, I look at the Canadian dollar, Australian dollar, Swiss franc in particular. I think they will tend to do particularly well, whereas the U.S. dollar is going to become effectively worthless.
As the dollar breaks down, you’ll also likely see disruptions in supply chains, including shipments of food to grocery stores. People should consider maintaining stockpiles of basic goods needed for living, much as they would for a natural disaster. I sit on the Hayward fault in California. I have a supply of goods and basic necessities in case something terrible happens—natural or man-made—that will carry me for a couple of months. It may take that long for a barter system to evolve, which I think is what you’re going to end up with; at least until a new currency system is reorganized and you get a government that’s able to bring its fiscal house into order. No currency system in the U.S. is going to work unless the fiscal conditions that drove it into oblivion are also addressed.
On a global basis, where the dollar is the world’s reserve currency, 80% of currency transactions involve the U.S. dollar. There’s going to have to be an overhaul of the global currency system. To gain credibility with the public, the powers that be likely will design a system that has some kind of a tie to gold, but that’s purely speculative.
TGR: From a personal investment point of view, you emphasized that this is a time to conserve assets, including gold and other currencies. How else can investors protect themselves?
JW: I like physical gold and silver. I look to gold as a primary hedge. If you can come out of this holding gold, you’ll be in a position where you’ll be able to take advantage of some extraordinary investment opportunities that will follow. With inflation, real estate is usually a pretty good bet. It tends to hold its value over time. There may be periods of illiquidity, though, and it’s not portable. Neither of those limitations is an issue with gold. Maybe gold will become the black market to support U.S. economic activity. It certainly would be the area that people will try to transfer their assets to as time goes along.
You see people now as gold gets to a new high saying, "Oh my goodness, I bought at $200, and I can sell out at $1,100 making a good profit." What people don’t realize is that they haven’t made a real profit. What they’ve done is retained the purchasing power of the dollars that they invested in gold, and they’ve lost proportionately the purchasing power of the amounts left in dollar-denominated paper assets over the same time. Gold is a long-term wealth preserver. Again, where many people are used to an investment environment where they can buy a stock, make a quick profit and then sell, with gold you need to hold on for the long haul as an insurance policy, not as a quick investment.
TGR: Thank you very much for your time.
Walter J. "John" Williams was born in 1949. He received an A.B. in Economics, cum laude, from Dartmouth College in 1971, and was awarded a M.B.A. from Dartmouth’s Amos Tuck School of Business Administration in 1972, where he was named an Edward Tuck Scholar. During his career as a consulting economist, John has worked with individuals as well as Fortune 500 companies. For more than 25 years he has been a private consulting economist and a specialist in government economic reporting. His analysis and commentary have been featured widely in the popular media both in the U.S. and globally. Mr. Williams provides insight and analysis on his website, http://www.shadowstats.com/.
Posted: May 04 2010 By: John Williams Post Edited: May 4, 2010 at 8:13 pm
Filed under: ShadowStats.com
ALSO FOUND AT JSMINESET.COM
Courtesy of The Gold Report (http://www.theaureport.com/)
ShadowStats’ John Williams has done his math and believes his numbers tell the truth. He explains why the U.S. is in a depression and why a "Hyper-Inflationary Great Depression" is now unavoidable. John also shares why he selects gold as a metal for asset conversion in this exclusive interview with The Gold Report.
The Gold Report: John, last December you stated, "The U.S. economic and systemic crisis of the past of the past two years are just precursors to a great collapse," or what you call a "hyper-inflationary great depression." Is this prediction unique to the U.S., or do you feel that other economies face the same fate?
John Williams: The hyper-inflationary portion largely will be unique to the U.S. If the U.S. falls into a great depression, there’s no way the rest of the world cannot have some negative economic impact.
TGR: How will the United States’ decreased economic power impact global economies? Will the rest of the world survive?
JW: People will find to their happy surprise that they’ll be able to survive. Most businesses are pretty creative. The thing is, the U.S. economic activity accounts for roughly half that of the globe. There’s no way that the U.S. economy can turn down severely without there being an equivalent, at least a parallel downturn outside the U.S. with its major trading partners.
When I talk about a great depression in the United States, it is coincident with a hyper-inflation. We’re already in the deepest and longest economic contraction seen since the Great Depression. If you look at the timing as set by the National Bureau of Economic Research, which is the arbiter of U.S. recessions, as to whether or not we have one, they’ve refused to call an end to this one, so far. But assuming you called an end to it back in the middle of 2009, it would still be the longest recession seen since the first down-leg of the Great Depression.
In terms of depth, year-to-year decline in the gross domestic product, or GDP, as reported in the third quarter of 2009, was the steepest annual decline ever reported in that series, which goes back to the late ’40s on a quarterly basis. Other than for the shutdown of war production at the end of World War II, which usually is not counted as a normal business cycle, the full annual decline in 2009 GDP was the deepest since the Great Depression. There’s strong evidence that we’re going to see an intensified downturn ahead, but it won’t become a great depression until a hyper-inflation kicks in. That is because hyper-inflation will be very disruptive to the normal flow of commerce and will take you to really low levels of activity that we haven’t seen probably in the history of the Republic.
Let me define what I mean by depression and great depression, because there’s no formal definition out there that matches the common expectation. Before World War II, economic downturns commonly were referred to as depressions. If you drew a graph of the level of activity in a depression over time, it would show a dip in the economy, and you’d go down and then up. The down part was referred to as recession and the up part as recovery. The Great Depression was one that was so severe that in the post-World War II era, those looking at economic cycles tried to come up with a euphemism for "depression." They didn’t want to create the image of or remind people of the 1930s. Basically, they called economic downturns recessions, and most people think of a depression now as a severe recession.
I’ve talked with people in the Bureau of Economic Analysis and the National Bureau of Economic Research in terms of developing a formal depression definition. The traditional definition of recession—that of two consecutive quarters of inflation-adjusted contraction in GDP—still is a solid one, despite recent refinements. Although there’s no official consensus on this, generally, a depression would be considered a recession where peak-to-trough contraction in the economy was more than 10%; a great depression would be a recession where the peak-to-trough contraction was more than 25%.
We’re borderline depression in terms of where we’re going to be here before I think the hyper-inflation kicks in. You’ve certainly seen depression-like numbers in things such as retail sales, industrial production and new orders for durable goods, where you’re down more than 10% from peak-to-trough. In terms of housing, you’re down more than 75%, and that certainly would be in the great depression category. With hyper-inflation, you have disruption to the normal flow of commerce and that will slow things down very remarkably from where we are now.
TGR: After a period of recession, isn’t inflation considered a good sign?
JW: There are a couple of things that drive inflation. The one that you’re describing is the relatively happy event where strong economic demand is exceeding production, and that’s pushing prices higher, as well as interest rates. That’s a relatively healthy circumstance. You can also have inflation, which is driven by factors other than strong economic activity. That’s what we’ve been seeing in the last couple of years. It’s been largely dominated by swings in oil prices. That hasn’t been due really to oil demand, as much as it has been due to the value of the U.S. dollar. Oil is denominated in U.S. dollars. Big swings in the U.S. dollar get reflected in oil pricing. If the dollar weakens, oil rises. That’s what you saw if you go back to the 1973-1975 recession, for example. That was an inflationary recession.
Indeed, the counterpart to what you were suggesting earlier about the strong demand and higher inflation is that usually in a recession you see low inflation. The ‘73 to ‘75 experience, however, was an inflationary recession because of the problem with oil prices. That’s what we were seeing early in this cycle, where a weakening dollar rallied oil prices, and then the dollar reversed sharply and oil prices collapsed. We have passed through a brief period of shallow year-to-year deflation in the consumer price index, but, as oil prices bottomed out and headed higher since the end of 2009, we’re now seeing higher inflation, again.
I’m looking at hyper-inflation, which is a rather drastic forecast. This has been in place as an ultimate fate for the system for a number of years. Back in the ’70s, the then Big 10 accounting firms got together and approached the government and said, "Hey guys, you know you need to keep your books the way a big corporation does. You’re the largest financial operator on earth." The government then, as well as today, operates on a cash basis with no accrual accounting and such. Yet, over a period of 30 years, the accountants and government put together generally accepted accounting principles, or GAAP, accounting for the federal government and introduced formal financial statements on that basis in 2002, which supplement the annual cash-based accounting.
If you look at those GAAP-based statements and include in the deficit the year-to-year change in the net present value of the unfunded liabilities for Social Security and Medicare, what you’ll find is that the annual operating shortfall is running between $4 and $5 trillion; not $500 billion as we saw before the crisis or the $1.4 trillion that they announced for fiscal 2009. Now to put that into perspective, if the government wanted to balance its deficit on a GAAP basis for a year, and it seized all personal income and corporate profits, taxing everything 100%, it would still be in deficit. It can’t raise taxes enough to contain this. On the other side, if it cut all government spending except for Social Security and Medicare, it still would be in deficit. With no political will to contain the spending, eventually the government meets its obligations by revving up the currency printing press.
TGR: With all this new paper money coming into the system, wouldn’t we see a bigger bubble than we’ve ever seen prior to a hyper-inflationary great depression?
JW: No, in fact, it’s a very unusual circumstance that we have now. Put yourself in Mr. Bernanke’s situation—he had to prevent a collapse of the banking system. He was afraid of a severe deflation as was seen in the Great Depression, when a lot of banks went out of business. The depositors lost funds and the money supply just collapsed. He wanted to prevent a collapse of the money supply and keep the depository institutions afloat. Generally, that has happened. The FDIC expanded its coverage and everything that had to be done to keep the system from imploding was done. The effects eventually will be inflationary.
In the process, what Mr. Bernanke did was to expand the monetary base extraordinarily, more than doubling it over a period of a year. The monetary base is money currently in circulation plus bank reserves. If you go back to before September 2008, the bank reserves were in the $50 to $60 billion range. Where the currency was maybe $800 billion, we’ve gone over $2 trillion in total reserves. Most of that is in excess reserves and not required reserves that banks have to keep to support their deposits. Normally banks would take their excess reserves and lend them out into the regular stream of commerce, and in doing so, that would create money supply. Instead they’re leaving the excess reserves on deposit with the Fed. Money supply and credit are now generally contracting. We’re going to see an intensified downturn in the near future. I specialize in looking at leading indicators that have very successful track records in terms of predicting economic or financial turns. One such indicator is the broad money supply.
Whenever the broad money supply–adjusted for inflation–has turned negative year over year, the economy has gone into recession, or if it already was in a recession, the downturn intensified. It’s happened four times before now, in modern reporting. You saw it in the terrible downturn of ‘73 to ‘75, the early ’80s and again in the early ’90s. In December of 2009, annual growth in real M3 turned negative. It’s now at a record low in terms of decline, down more than 6% year over year. What that suggests is that in the immediate future you’re going to see renewed downturn in economic activity.
In all the prior instances that I mentioned, this event led recessions, except for ‘73 to ‘75. That’s when you had the oil spike and a recession that came from that. When the money supply turned down in that recession, the economy accelerated in its decline. We’re going to see something along those lines, now, with about a six-month lead time. You’re going to have negative economic growth this year. The implications for that are extraordinary, because the projections on the federal budget deficit, a number of the state deficits, and the solvency and stress tests for the banking system all were structured assuming positive economic growth in the 2% to 3% range for 2010. Instead it’s going to be negative. Many states are going to be in greater difficulty than they thought. Most likely, you’re going to have federal bailouts there. The banks are going to have more troubles. All this means more government support, more government spending, greater deficits and greater funding needs for the U.S. Treasury. We have a global market that already is increasingly reluctant to hold the dollars and U.S. Treasuries.
TGR: The U.S. dollar is still the reserve currency, and it’s holding its value while the euro struggles. Wouldn’t decoupling precede hyper-inflation?
JW: I don’t know if it will decouple from being the reserve currency formally, but it will de facto. The reserve status is the reason the dollar didn’t collapse per se a year and a half ago during the September ‘08 panic. The movement is already afoot, however, to try to relegate the dollar to some status other than a reserve currency. For example, OPEC purportedly is looking to price oil in something other than U.S. dollars. The pressure is there to change the status.
Again, if you start to see a great depreciation of the U.S. currency or a tremendous increase in lack of confidence in the soundness of the government’s fiscal condition, there is a problem. You mentioned Greece, for example. The sovereign solvency issues there are minuscule compared to what we have with the United States, which is the elephant in the bathtub. The markets know it’s there. The central bankers know it’s there. Again, with the downturn in the economy, all the issues are going to be brought to a head. As they come to a head, there will be that effort to dump the dollar. I would expect that, indeed, it will be decoupled from its reserve status, although it could follow after the fact as opposed to before the fact.
TGR: Major economic indicators suggest significant improvement; even the IMF has stated that we’ve averted a global depression. What are you seeing that these governing bodies are not?
JW: What I’m using is a leading indicator of economic activity: year-to-year change in inflation-adjusted broad money supply. We’re now seeing a very sharp year-over-year decline, which has not been seen since the 1990 recession. This indicator does not work always in the upside; it doesn’t necessarily give you a signal for a rising economy. It is, however, basic. If you strangle liquidity you can always contract an economy. Deliberately or not, liquidity’s being strangled. You’re seeing very sharp declines in consumer credit, commercial and industrial loans and commercial paper outstanding.
You are getting happy news from governments, central banks, financial markets, Wall Street analysts and the popular media, which does tend to cater to Wall Street. Such is standard practice. Happy news is what sells and you don’t want to discourage people. The Obama administration, interestingly, started talking-down the economy when it wanted to get its stimulus package in place. As soon as that was done, it started talking-up the economy. Everything was just fine and dandy again. This is the most extraordinary downturn most people living today have ever seen. In terms of modern economic reporting, which basically started after World War II, we’ve never had a downturn as long or as severe. Perversely, the extreme nature of the downturn actually has warped recent reporting of seasonally-adjusted data to the upside.
TGR: Earlier you mentioned that business around the world will survive in the event of a depression. Aren’t there sustainable businesses in the U.S. as well? Won’t an influx of printed currency and green-tech job creation offer some value? At some point, doesn’t stimulus money become real cash producing real goods? Surely the economy would be viable at some level?
JW: Not without income growth. There’s nothing there that you’ve described to me that is growing, aside from inflation. To have sustainable growth in the economy, you have to income growth, net of inflation. That is not happening, and there is nothing in existing government stimulus that will cause real income growth.
Beyond income issues, the problem with the hyper-inflation is that very quickly the use of cash will cease. Let me contrast our circumstance here with a very popularly followed hyper-inflation case that’s now run its course in Zimbabwe. There you had probably the worst hyper-inflation that anyone’s ever seen. After devaluation upon devaluation, they successively lopped the zeros off the bills. If you took a $2 bill that they first issued back in the ’80s and then tried to come up with the equivalent of a $2 bill in the last form of the currency, it would be very difficult to do because it was so worthless. If you put a pile of those together to equal the original $2 bill, it would actually stretch from the earth to the Andromeda Galaxy. We’re talking light years. There are not enough trees on earth to print them. Yet the Zimbabwe economy survived and functioned. They had a lot of problems, but they operated. The reason they functioned was because they had a back-up system, which was a black market in U.S. dollars. People switched out of the Zimbabwe dollar to U.S. dollars. They could live with that. In the U.S., we don’t have a back-up system.
TGR: You mentioned in a recent interview with CNN that you’re recommending individuals move into both cash and gold. With the euro and the dollar in jeopardy, where does that leave us?
JW: I don’t like the euro. I don’t think that’s going to hold together, and I’ve thought so for some time. If it should break up and you have a new German currency, a new mark or something like that might be a strong one option. At the moment I like the Canadian dollar, the Australian dollar and the Swiss franc. For anyone living in the United States, rather than looking at the short-term volatility in the markets and trying to make money off of that, this is the time to batten down the hatches and to look to preserve your wealth and assets.
In terms of preserving the purchasing power of your assets, the best thing I can think of is physical gold. That’s worked over the millennia. I’m not per se a gold bug. It just happens to be a circumstance in which it’s the cleanest asset around for that. You don’t need to put all your assets into gold, but hold some. Hold some silver. I’d look to get some assets out of the U.S. dollar and look to get some assets out of the U.S. When I say outside of the U.S. dollar, again, I look at the Canadian dollar, Australian dollar, Swiss franc in particular. I think they will tend to do particularly well, whereas the U.S. dollar is going to become effectively worthless.
As the dollar breaks down, you’ll also likely see disruptions in supply chains, including shipments of food to grocery stores. People should consider maintaining stockpiles of basic goods needed for living, much as they would for a natural disaster. I sit on the Hayward fault in California. I have a supply of goods and basic necessities in case something terrible happens—natural or man-made—that will carry me for a couple of months. It may take that long for a barter system to evolve, which I think is what you’re going to end up with; at least until a new currency system is reorganized and you get a government that’s able to bring its fiscal house into order. No currency system in the U.S. is going to work unless the fiscal conditions that drove it into oblivion are also addressed.
On a global basis, where the dollar is the world’s reserve currency, 80% of currency transactions involve the U.S. dollar. There’s going to have to be an overhaul of the global currency system. To gain credibility with the public, the powers that be likely will design a system that has some kind of a tie to gold, but that’s purely speculative.
TGR: From a personal investment point of view, you emphasized that this is a time to conserve assets, including gold and other currencies. How else can investors protect themselves?
JW: I like physical gold and silver. I look to gold as a primary hedge. If you can come out of this holding gold, you’ll be in a position where you’ll be able to take advantage of some extraordinary investment opportunities that will follow. With inflation, real estate is usually a pretty good bet. It tends to hold its value over time. There may be periods of illiquidity, though, and it’s not portable. Neither of those limitations is an issue with gold. Maybe gold will become the black market to support U.S. economic activity. It certainly would be the area that people will try to transfer their assets to as time goes along.
You see people now as gold gets to a new high saying, "Oh my goodness, I bought at $200, and I can sell out at $1,100 making a good profit." What people don’t realize is that they haven’t made a real profit. What they’ve done is retained the purchasing power of the dollars that they invested in gold, and they’ve lost proportionately the purchasing power of the amounts left in dollar-denominated paper assets over the same time. Gold is a long-term wealth preserver. Again, where many people are used to an investment environment where they can buy a stock, make a quick profit and then sell, with gold you need to hold on for the long haul as an insurance policy, not as a quick investment.
TGR: Thank you very much for your time.
Walter J. "John" Williams was born in 1949. He received an A.B. in Economics, cum laude, from Dartmouth College in 1971, and was awarded a M.B.A. from Dartmouth’s Amos Tuck School of Business Administration in 1972, where he was named an Edward Tuck Scholar. During his career as a consulting economist, John has worked with individuals as well as Fortune 500 companies. For more than 25 years he has been a private consulting economist and a specialist in government economic reporting. His analysis and commentary have been featured widely in the popular media both in the U.S. and globally. Mr. Williams provides insight and analysis on his website, http://www.shadowstats.com/.
Monday, May 3, 2010
NO ONE CARES
http://www.truthdig.com/report/item/no_one_cares_20100503/
No One Cares
By Chris Hedges
Our passivity has resulted, in much more than imperial adventurism and a permanent underclass. A slow-motion coup by a corporate state has cemented into place a neofeudalism in which there are only masters and serfs. And the process is one that cannot be reversed through the traditional mechanisms of electoral politics.
No One Cares
By Chris Hedges
Our passivity has resulted, in much more than imperial adventurism and a permanent underclass. A slow-motion coup by a corporate state has cemented into place a neofeudalism in which there are only masters and serfs. And the process is one that cannot be reversed through the traditional mechanisms of electoral politics.
Sunday, May 2, 2010
ENEMY BELLIGERENT...COULD YOU BE ONE?
ENEMY BELLIGERENT BILL PROPOSED BY JOHN McCAIN AND JOE LIEBERMANN
The Enemy Belligerent Interrogation, Detention, and Prosecution Act of 2010, or S. 3081
http://www.resistnet.com/group/republic/forum/topic/show?id=2600775%3ATopic%3A2175560&xg_source=msg_group_disc
GOOGLE 'ENEMY BELLIGERENT' TO SEE MORE ARTICLES.
CREDIT TO GOLDMELTER FOR THESE LINKS
The Enemy Belligerent Interrogation, Detention, and Prosecution Act of 2010, or S. 3081
http://www.resistnet.com/group/republic/forum/topic/show?id=2600775%3ATopic%3A2175560&xg_source=msg_group_disc
GOOGLE 'ENEMY BELLIGERENT' TO SEE MORE ARTICLES.
CREDIT TO GOLDMELTER FOR THESE LINKS
Saturday, May 1, 2010
TRUE, OR NOT TRUE? DECIDE FOR YOURSELF, BUT AT LEAST KNOW THE POSSIBILITY EXISTS
I HAVE NO IDEA IF THIS INFO IS TRUE OR NOT, BUT STRANGER THINGS HAVE BEEN TRUE IN THIS INCREASINGLY VIOLENT WORLD.
JUST THINK OF THE MANY VULNERABILITIES OF THE UNITED STATES AND HOW MANY OTHER POWERS WANT TO TAKE US DOWN.
THE WORLD IS ON A HAIR TRIGGER AND THE FINAL DEFENSE SEEMS TO BE A NUCLEAR ATTACK RATHER THAN SANE NEGOTIATION.
US Orders Blackout Over North Korean Torpedoing Of Gulf Of Mexico Oil Rig
By Sorcha Faal
http://www.whatdoesitmean.com/index1367.htm
JUST THINK OF THE MANY VULNERABILITIES OF THE UNITED STATES AND HOW MANY OTHER POWERS WANT TO TAKE US DOWN.
THE WORLD IS ON A HAIR TRIGGER AND THE FINAL DEFENSE SEEMS TO BE A NUCLEAR ATTACK RATHER THAN SANE NEGOTIATION.
US Orders Blackout Over North Korean Torpedoing Of Gulf Of Mexico Oil Rig
By Sorcha Faal
http://www.whatdoesitmean.com/index1367.htm
Monday, April 26, 2010
FEMA CONCENTRATION CAMPS IN PLACE AND READY TO RECEIVE OCCUPANTS
CREDIT TO GOLDMELTER FOR THE ARTICLE
http://www.sianews.com/modules.php?name=News&file=article&sid=1062
Article is old. Refers to AG Ashcroft, but is basically very informative as to what the
Guv'mint is prepared to do to the population if anyone tries to take the guv'mint back
by force. We will NEVER take it back by legal means as the criminals are staffed in every
nook and cranny of the system, especially the courts, where final legal decisions are made.
And you don't want to even discuss the Supreme Courts' recent decisions on real people versus corporations and their ability to influence elections with money!
What an outrage!
http://www.sianews.com/modules.php?name=News&file=article&sid=1062
Article is old. Refers to AG Ashcroft, but is basically very informative as to what the
Guv'mint is prepared to do to the population if anyone tries to take the guv'mint back
by force. We will NEVER take it back by legal means as the criminals are staffed in every
nook and cranny of the system, especially the courts, where final legal decisions are made.
And you don't want to even discuss the Supreme Courts' recent decisions on real people versus corporations and their ability to influence elections with money!
What an outrage!
Friday, April 23, 2010
Thursday, April 22, 2010
Wednesday, April 21, 2010
Mark Twain - "Official Physic" (1867).
The mania for giving the Government power to meddle with the private affairs of cities or citizens is likely to cause endless trouble, through the rivaly of schools and creeds that are anxious to obtain official recognition, and there is great danger that our people will lose our independence of thought and action which is the cause of much of our greatness, and sink into the helplessness of the Frenchman or German who expects his government to feed him when hungry, clothe him when naked, to prescribe when his child may be born and when he may die, and, in fine, to regulate every act of humanity from the cradle to the tomb, including the manner in which he may seek future admission to paradise.
ONE OF THE LAST HONEST MEN IN THE WORLD SPEAKS TRUTH
Bill Black's eye-popping opening statement at House FinServ hearing on Lehman Bros. failure
US GUV'MINT COUNTERFEITS MORE FIAT $100 NOTES TO PREVENT COUNTERFEITERS FROM COUNERFEITING THE NEW COUNTERFEIT NOTES
U.S. Government Unveils New Design for the $100 Note
April 21, 2010
2010-4-21-11-26-45-15644
U.S. Government Unveils New Design for the $100 Note
Government to Currency Users:
Know Its Features So You Can Know It's Real
(GT sez: 'Real What?' Valueless Ink and Paper promises ?)
WASHINGTON, D.C. (April 21, 2010) – Officials from the U.S. Department of the Treasury, the Board of Governors of the Federal Reserve System and the United States Secret Service today unveiled the new design for the $100 note. Complete with advanced technology to combat counterfeiting, the new design for the $100 note retains the traditional look of U.S. currency.
"As with previous U.S. currency redesigns, this note incorporates the best technology available to ensure we're staying ahead of counterfeiters," said Secretary of the Treasury Tim Geithner.
"When the new design $100 note is issued on February 10, 2011, the approximately 6.5 billion older design $100s already in circulation will remain legal tender," said Chairman of the Federal Reserve Board Ben S. Bernanke. "U.S. currency users should know they will not have to trade in their older design $100 notes when the new ones begin circulating." (Gee, thanks Ben, I feel better now! All your phoney paper will stay in circulation and lose value.)
There are a number of security features in the redesigned $100 note, including two new features, the 3-D Security Ribbon and the Bell in the Inkwell. These security features are easy for consumers and merchants to use to authenticate their currency.
The blue 3-D Security Ribbon on the front of the new $100 note contains images of bells and 100s that move and change from one to the other as you tilt the note. The Bell in the Inkwell on the front of the note is another new security feature. The bell changes color from copper to green when the note is tilted, an effect that makes it seem to appear and disappear within the copper inkwell.
"The new security features announced today come after more than a decade of research and development to protect our currency from counterfeiting. To ensure a seamless introduction of the new $100 note into the financial system, we will conduct a global public education program to ensure that users of U.S. currency are aware of the new security features," said Treasurer of the United States Rosie Rios.
"For 145 years, the men and women of the United States Secret Service have worked diligently to protect the integrity of U.S. currency from counterfeiters," said Director Mark Sullivan. "During that time, our agency has evolved to keep pace with the advanced methodologies employed by the criminals we pursue. What has remained constant in combating counterfeiting, however, is the effectiveness of consumer education initiatives that urge merchants and customers to examine the security features on the notes they receive." (The REAL CRIMINALS attempting to prevent the amateur counerfeiters from counerfeiting the counterfeit paper promises of a bankrupt guv'mint!!!)
Although less than 1/100th of one percent of the value of all U.S. currency in circulation is reported counterfeit, the $100 note is the most widely circulated and most often counterfeited denomination outside the U.S.
"The $100 is the highest value denomination that we issue, and it circulates broadly around the world," said Michael Lambert, Assistant Director for Cash at the Federal Reserve Board. "Therefore, we took the necessary time to develop advanced security features that are easy for the public to use in everyday transactions, but difficult for counterfeiters to replicate."
"The advanced security features we've included in the new $100 note will hinder potential counterfeiters from producing high-quality fakes that can deceive consumers and merchants,"
(You'll have to leave that quality of counterfeiting to us!) said Larry R. Felix, Director of the Treasury's Bureau of Engraving and Printing. "Protect yourself - it only takes a few seconds to check the new $100 note and know it's real."
The new design for the $100 note retains three effective security features from the previous design: the portrait watermark of Benjamin Franklin, the security thread, and the color-shifting numeral 100.
The new $100 note also displays American symbols of freedom, including phrases from the Declaration of Independence and the quill the Founding Fathers used to sign this historic document. Both are located to the right of the portrait on the front of the note.
The back of the note has a new vignette of Independence Hall featuring the rear, rather than the front, of the building. Both the vignette on the back of the note and the portrait on the front have been enlarged, and the oval that previously appeared around both images has been removed.
GT sez: For more brainwashing materials:
For a more detailed description of the redesigned $100 note and its features, visit http://www.newmoney.gov/
where you can watch an animated video, click through an interactive note or browse through the multimedia resources for images and B-roll.
Also, visit http://www.newmoney.gov/
for information on how to order free training materials for cash handlers, or you may download the materials directly from the Web site. The training materials for the $100 note are available in 25 languages.
April 21, 2010
2010-4-21-11-26-45-15644
U.S. Government Unveils New Design for the $100 Note
Government to Currency Users:
Know Its Features So You Can Know It's Real
(GT sez: 'Real What?' Valueless Ink and Paper promises ?)
WASHINGTON, D.C. (April 21, 2010) – Officials from the U.S. Department of the Treasury, the Board of Governors of the Federal Reserve System and the United States Secret Service today unveiled the new design for the $100 note. Complete with advanced technology to combat counterfeiting, the new design for the $100 note retains the traditional look of U.S. currency.
"As with previous U.S. currency redesigns, this note incorporates the best technology available to ensure we're staying ahead of counterfeiters," said Secretary of the Treasury Tim Geithner.
"When the new design $100 note is issued on February 10, 2011, the approximately 6.5 billion older design $100s already in circulation will remain legal tender," said Chairman of the Federal Reserve Board Ben S. Bernanke. "U.S. currency users should know they will not have to trade in their older design $100 notes when the new ones begin circulating." (Gee, thanks Ben, I feel better now! All your phoney paper will stay in circulation and lose value.)
There are a number of security features in the redesigned $100 note, including two new features, the 3-D Security Ribbon and the Bell in the Inkwell. These security features are easy for consumers and merchants to use to authenticate their currency.
The blue 3-D Security Ribbon on the front of the new $100 note contains images of bells and 100s that move and change from one to the other as you tilt the note. The Bell in the Inkwell on the front of the note is another new security feature. The bell changes color from copper to green when the note is tilted, an effect that makes it seem to appear and disappear within the copper inkwell.
"The new security features announced today come after more than a decade of research and development to protect our currency from counterfeiting. To ensure a seamless introduction of the new $100 note into the financial system, we will conduct a global public education program to ensure that users of U.S. currency are aware of the new security features," said Treasurer of the United States Rosie Rios.
"For 145 years, the men and women of the United States Secret Service have worked diligently to protect the integrity of U.S. currency from counterfeiters," said Director Mark Sullivan. "During that time, our agency has evolved to keep pace with the advanced methodologies employed by the criminals we pursue. What has remained constant in combating counterfeiting, however, is the effectiveness of consumer education initiatives that urge merchants and customers to examine the security features on the notes they receive." (The REAL CRIMINALS attempting to prevent the amateur counerfeiters from counerfeiting the counterfeit paper promises of a bankrupt guv'mint!!!)
Although less than 1/100th of one percent of the value of all U.S. currency in circulation is reported counterfeit, the $100 note is the most widely circulated and most often counterfeited denomination outside the U.S.
"The $100 is the highest value denomination that we issue, and it circulates broadly around the world," said Michael Lambert, Assistant Director for Cash at the Federal Reserve Board. "Therefore, we took the necessary time to develop advanced security features that are easy for the public to use in everyday transactions, but difficult for counterfeiters to replicate."
"The advanced security features we've included in the new $100 note will hinder potential counterfeiters from producing high-quality fakes that can deceive consumers and merchants,"
(You'll have to leave that quality of counterfeiting to us!) said Larry R. Felix, Director of the Treasury's Bureau of Engraving and Printing. "Protect yourself - it only takes a few seconds to check the new $100 note and know it's real."
The new design for the $100 note retains three effective security features from the previous design: the portrait watermark of Benjamin Franklin, the security thread, and the color-shifting numeral 100.
The new $100 note also displays American symbols of freedom, including phrases from the Declaration of Independence and the quill the Founding Fathers used to sign this historic document. Both are located to the right of the portrait on the front of the note.
The back of the note has a new vignette of Independence Hall featuring the rear, rather than the front, of the building. Both the vignette on the back of the note and the portrait on the front have been enlarged, and the oval that previously appeared around both images has been removed.
GT sez: For more brainwashing materials:
For a more detailed description of the redesigned $100 note and its features, visit http://www.newmoney.gov/
where you can watch an animated video, click through an interactive note or browse through the multimedia resources for images and B-roll.
Also, visit http://www.newmoney.gov/
for information on how to order free training materials for cash handlers, or you may download the materials directly from the Web site. The training materials for the $100 note are available in 25 languages.
AND ANOTHER ONE FROM ERIC FRY AT THE DAILY RECKONING
SOMETIMES, THE TRUTH IS SO SIMPLE ...GT
The "Goldman Sachs Phenomenon"
Eric Fry
Now that the American financial sector is safe and unsound once again, has the threat of serious economic crisis genuinely passed? And has the structure of American capitalism actually improved? Or did the Fed merely dress a sow in lingerie and call her a raving beauty?
In other words, what did the Fed accomplish by lavishing billions of dollars upon the financial sector? Was the Fed's inflationary rescue mission really worth all the trouble? Or would the nation have been better off if Bernanke and Paulson had simply gone golfing while Bear Stearns failed?
At first glance, the Fed's rescue seems to have halted a serious crisis in its tracks. The rescue also seems to have preserved the viability of the American banking system. But upon closer inspection, we discover that the Fed's rescue also preserved at least one dysfunctional characteristic of our economic system - namely, an over-reliance on "asset-swapping" activities, rather than "asset-producing" activities.
Australian author, James Cumes, asserts that the US economy has become overly dependent on trading things back and forth, rather than manufacturing goods and selling them. He calls this new reality the "Goldman Sachs Phenomenon."
"In the larger Anglo-Saxon economies," says Cumes, "transfer of ownership [has] supplanted fixed-capital investment as the most common form of what purported to be 'investment.' Investment has become a means of making a fast buck, not by entrepreneurial effort, construction of factories and installation of productive equipment, but by gambling to add market value through mergers and acquisitions...that would lead to higher shareholder value in the marketplace...
"Despite the higher, short-term market values [that might ensue], they would not necessarily add anything to productivity or to the volume or value of final output" - "Inevitably," Cumes continues, "there are social impacts from this deal-maker, day-trader, casino-like type of ownership investment, especially to the extent that it spreads over a more and more major part of the economy...Inequality is dramatically intensified by generous bonuses for senior executives and others in financial firms in the United States and such other financial centres as London."
The Fed's bailout of the financial sector seems to have supercharged the Goldman Sachs phenomenon. Not only do the top dogs at publicly traded financial firms "make bank," they continue to make bank even after destroying billions of dollars of shareholder wealth. And the top dogs enjoy their privileged positions under the watchful, doting eyes of the Federal Reserve and Treasury. No bad deed goes unrewarded.
"Of course, there is justice in rewarding effort and enterprise," Cumes concludes. "That is historically one of the ways in which a capitalist system has justified and maintained itself; but there are other considerations too. "Indeed, if our present essentially democratic capitalism is to survive - and survive securely - it must pay attention to social outcomes. Poverty in the midst of plenty is not a comfortable social situation. Some inequality there will always be but gross and growing inequalities must, over time, be a threat to social, political and even strategic stability, as well as economic and financial stability."
But these "big picture" concerns do not seem to concern the head of the Fed and Treasury. In fact, throughout this crisis, Bernanke and Paulson have assiduously avoided implementing (or even suggesting) any regulatory changes that would impinge upon the limitless liberties of Wall Street's investment banks. The perpetrators of the crisis remain in power and the corporate structures that supported their recklessness remain in place. Instead, incredibly, Treasury Secretary Paulson wags his regulatory finger at hedge funds.
Huh? Why? Hedge funds did not create the crisis, they merely profited from it. Aren't the investment banks the ones who created trillions of dollars of crazy derivatives? And aren't they the ones who loaded their balance sheets with suicidal quantities of leverage? And aren't they the ones who are now receiving billions of dollars of government support?
So here's a radical idea: How about regulating the perpetrators of the crisis, rather than the profiteers? Or maybe the Fed should require all the top-ranking officers of every company that receives a bailout to resign? Or how about one upper-level resignation for every $1 billion a Wall Street investment bank borrows from the Fed's discount window.
This isn't complex stuff, folks. If the Treasury Secretary sincerely wished to clean up and re-regulate the banking system, his new regulations would only require about 50 words:
1. No officer of any publicly traded financial institution may receive more than $10 million per year in total compensation.
2. No financial institution may borrow more than $10 for every one dollar of readily marketable assets (i.e. "Level I" assets) on its balance sheet.
3. No financial institution may incur any liabilities "off-balance sheet."
4. No exceptions.
Implement these regulations and you would have forever eradicated the DNA of financial catastrophe from the American financial system.
But what would critics say about such "draconian" new regulations? (We'll call these regulations the "Level Playing Field Act of 2008.") After choking on their foie gras, they would probably protest, "That's not nearly enough compensation for top officers! You'd lose the top talent!" Then they would protest: "What! No off-balance sheet financing? Are you crazy? That's where all the juice is! You would lose the ability to ramp up return on equity!"
To which we would reply: "Hallelujah!" and "Amen!"... Finally, we could purge the financial system of all the "talent" that has delivered America's most severe credit crisis since the Great Depression. Finally we could purge the system of the "creative" leverage that the "talent" has amassed over the last several years. Finally, we'd have a banking system that would operate like one - a banking system that would provide capital to entrepreneurial endeavors, rather than to catastrophic speculations.
The American financial system does not need "talent" and "creativity." It needs prudence and perspicacity. It does not need creative bankers. It needs dull bankers.
Why? Because the American financial system needs to safeguard its capacity to finance creative and talented entrepreneurs. It needs to safeguard its capacity to preserve the purchasing power of our currency and to safeguard the legendary America capacity to create wealth from the bottom-up, not to destroy wealth from the top-down.
But the American financial system still possesses too much talent and creativity to operate prudently. In fact, Ben Bernanke and Hank Paulson may be the most creative finance officials in American history.
Consider yourselves forewarned!
Eric J. Fry
for The Daily Reckoning
The "Goldman Sachs Phenomenon"
Eric Fry
Now that the American financial sector is safe and unsound once again, has the threat of serious economic crisis genuinely passed? And has the structure of American capitalism actually improved? Or did the Fed merely dress a sow in lingerie and call her a raving beauty?
In other words, what did the Fed accomplish by lavishing billions of dollars upon the financial sector? Was the Fed's inflationary rescue mission really worth all the trouble? Or would the nation have been better off if Bernanke and Paulson had simply gone golfing while Bear Stearns failed?
At first glance, the Fed's rescue seems to have halted a serious crisis in its tracks. The rescue also seems to have preserved the viability of the American banking system. But upon closer inspection, we discover that the Fed's rescue also preserved at least one dysfunctional characteristic of our economic system - namely, an over-reliance on "asset-swapping" activities, rather than "asset-producing" activities.
Australian author, James Cumes, asserts that the US economy has become overly dependent on trading things back and forth, rather than manufacturing goods and selling them. He calls this new reality the "Goldman Sachs Phenomenon."
"In the larger Anglo-Saxon economies," says Cumes, "transfer of ownership [has] supplanted fixed-capital investment as the most common form of what purported to be 'investment.' Investment has become a means of making a fast buck, not by entrepreneurial effort, construction of factories and installation of productive equipment, but by gambling to add market value through mergers and acquisitions...that would lead to higher shareholder value in the marketplace...
"Despite the higher, short-term market values [that might ensue], they would not necessarily add anything to productivity or to the volume or value of final output" - "Inevitably," Cumes continues, "there are social impacts from this deal-maker, day-trader, casino-like type of ownership investment, especially to the extent that it spreads over a more and more major part of the economy...Inequality is dramatically intensified by generous bonuses for senior executives and others in financial firms in the United States and such other financial centres as London."
The Fed's bailout of the financial sector seems to have supercharged the Goldman Sachs phenomenon. Not only do the top dogs at publicly traded financial firms "make bank," they continue to make bank even after destroying billions of dollars of shareholder wealth. And the top dogs enjoy their privileged positions under the watchful, doting eyes of the Federal Reserve and Treasury. No bad deed goes unrewarded.
"Of course, there is justice in rewarding effort and enterprise," Cumes concludes. "That is historically one of the ways in which a capitalist system has justified and maintained itself; but there are other considerations too. "Indeed, if our present essentially democratic capitalism is to survive - and survive securely - it must pay attention to social outcomes. Poverty in the midst of plenty is not a comfortable social situation. Some inequality there will always be but gross and growing inequalities must, over time, be a threat to social, political and even strategic stability, as well as economic and financial stability."
But these "big picture" concerns do not seem to concern the head of the Fed and Treasury. In fact, throughout this crisis, Bernanke and Paulson have assiduously avoided implementing (or even suggesting) any regulatory changes that would impinge upon the limitless liberties of Wall Street's investment banks. The perpetrators of the crisis remain in power and the corporate structures that supported their recklessness remain in place. Instead, incredibly, Treasury Secretary Paulson wags his regulatory finger at hedge funds.
Huh? Why? Hedge funds did not create the crisis, they merely profited from it. Aren't the investment banks the ones who created trillions of dollars of crazy derivatives? And aren't they the ones who loaded their balance sheets with suicidal quantities of leverage? And aren't they the ones who are now receiving billions of dollars of government support?
So here's a radical idea: How about regulating the perpetrators of the crisis, rather than the profiteers? Or maybe the Fed should require all the top-ranking officers of every company that receives a bailout to resign? Or how about one upper-level resignation for every $1 billion a Wall Street investment bank borrows from the Fed's discount window.
This isn't complex stuff, folks. If the Treasury Secretary sincerely wished to clean up and re-regulate the banking system, his new regulations would only require about 50 words:
1. No officer of any publicly traded financial institution may receive more than $10 million per year in total compensation.
2. No financial institution may borrow more than $10 for every one dollar of readily marketable assets (i.e. "Level I" assets) on its balance sheet.
3. No financial institution may incur any liabilities "off-balance sheet."
4. No exceptions.
Implement these regulations and you would have forever eradicated the DNA of financial catastrophe from the American financial system.
But what would critics say about such "draconian" new regulations? (We'll call these regulations the "Level Playing Field Act of 2008.") After choking on their foie gras, they would probably protest, "That's not nearly enough compensation for top officers! You'd lose the top talent!" Then they would protest: "What! No off-balance sheet financing? Are you crazy? That's where all the juice is! You would lose the ability to ramp up return on equity!"
To which we would reply: "Hallelujah!" and "Amen!"... Finally, we could purge the financial system of all the "talent" that has delivered America's most severe credit crisis since the Great Depression. Finally we could purge the system of the "creative" leverage that the "talent" has amassed over the last several years. Finally, we'd have a banking system that would operate like one - a banking system that would provide capital to entrepreneurial endeavors, rather than to catastrophic speculations.
The American financial system does not need "talent" and "creativity." It needs prudence and perspicacity. It does not need creative bankers. It needs dull bankers.
Why? Because the American financial system needs to safeguard its capacity to finance creative and talented entrepreneurs. It needs to safeguard its capacity to preserve the purchasing power of our currency and to safeguard the legendary America capacity to create wealth from the bottom-up, not to destroy wealth from the top-down.
But the American financial system still possesses too much talent and creativity to operate prudently. In fact, Ben Bernanke and Hank Paulson may be the most creative finance officials in American history.
Consider yourselves forewarned!
Eric J. Fry
for The Daily Reckoning
FROM MONDAY'S DAILY RECKONING
Scattering Under the Light of the SEC
Why America hates Goldman Sachs
Eric Fry
Reporting from Laguna Beach, California...
If you shine a light on a cluster of cockroaches, they scatter and hide. But when you shine a light on a cluster of investment banking con men, they simply stare back and reply, "The SEC's charges are completely unfounded in law and fact and we will vigorously contest them and defend the firm and its reputation."
As the entire investing world knows by now, Goldman Sachs is the latest cockroach to scuttle under the spotlight. Last Friday, the Securities and Exchange Commission accused Goldman of defrauding investors out of $1 billion.
The details of the SEC's complaint allege that Goldman failed to disclose "vital information" about a mortgage-back security called Abacus. The SEC said: "Unbeknownst to investors, Paulson & Co. [a hedge fund]...which was posed to benefit if the [securities in Abacus] defaulted, played a significant role in selecting which [securities] should make up the portfolio...In sum, Goldman Sachs arranged a transaction at Paulson's request in which Paulson heavily influenced the selection of the portfolio to suit its economic interests."
Goldman responded in classic fashion - crying "Foul!" and claiming that it is the victim of a gross misunderstanding. Does anyone really believe them? To rephrase the question, does anyone really believe that this single instance of alleged fraud is the only such instance?
This question reminds us of another truism about cockroaches: There's never just one. Any financial firm that is capable of committing a fraud as egregious and flagrant as the one the SEC's complaint describes is certainly capable of committing a second fraud...and maybe even a third or a fourth...or a fortieth.
The fraud the SEC identifies in its complaint against Goldman is not a mere "Oops!" It is a fraud that every licensed stockbroker in the land would recognize as a career-ending no-no.
"The product was new and complex," explained Robert Khuzami, a director from the SEC's Division of Enforcement, "but the deception and conflicts were old and simple."
In other words, a lie is a lie.
Nevertheless, your editor is content to let due process run its course...and to wait as long as necessary for the guilty verdict to arrive.
Whatever the ultimate verdict, Goldman is already "guilty by association" in the eyes of most Americans. It is guilty by its close association with the practices that precipitated the financial crisis of 2008. It is also guilty by its close association with the powers in Washington who decided which firms would receive billions of dollars of emergency assistance (i.e. Goldman Sachs) and which would be allowed to fail (i.e., Lehman Bros.). And most of all, it is guilty by its close association with the obscene sense of entitlement that characterizes Wall Street pay practices.
In short, America hates Goldman Sachs.
So the fact that Goldman may have actually committed a large-scale fraud is a very big deal. Suddenly, the Goldman-haters are carrying loaded weapons...and the ensuing firefight might produce some significant volatility in the financial markets.
For starters, this event might produce a very convenient excuse for a very pronounced selloff. But Goldman is not merely an excuse for a stock market selloff; Goldman is the stock market...and it is also the commodity market and the Treasury market. Goldman is the biggest market maker in the US stock market and among the biggest players in every major commodity market. Goldman is also one of the largest primary dealers of Treasury Securities.
So maybe it is no fluke that most commodities tumbled Friday, right along with the stock market. Gold and crude oil both tumbled more than 2%. And as this new week begins, Goldman's troubles are mounting.
Citing Goldman's "moral bankruptcy," Britain's Prime Minister Gordon Brown called for a full inquiry by Britain's Financial Services Authority in conjunction with the SEC. Germany also said it would ask for detailed information about the case. Both governments had to bail out banks that lost hundreds of millions of dollars on investments marketed by Goldman.
None of this will be good news for the stock markets of the world. And yet, none of this is really a surprise either. Nearly two years ago, in a column entitled, "The Goldman Sachs Phenomenon," your California editor remarked, "The American financial system still possesses too much talent and creativity to operate prudently... Consider yourselves forewarned!" We are re-publishing this column in today's edition of The Daily Reckoning.
Just two months before this column first appeared, JP Morgan Chase had acquired the failing Bear Stearns. As part of the deal the Federal Reserve took responsibility for $29 billion in toxic assets from the Bear Stearns portfolio - effectively handing a $29 billion subsidy to JP Morgan, and establishing a precedent for the hundred-billion-dollar subsidies that would flow to Wall Street's largest firms just six months later.
We smelled a rat back then...and the rat doesn't smell any better now...
Why America hates Goldman Sachs
Eric Fry
Reporting from Laguna Beach, California...
If you shine a light on a cluster of cockroaches, they scatter and hide. But when you shine a light on a cluster of investment banking con men, they simply stare back and reply, "The SEC's charges are completely unfounded in law and fact and we will vigorously contest them and defend the firm and its reputation."
As the entire investing world knows by now, Goldman Sachs is the latest cockroach to scuttle under the spotlight. Last Friday, the Securities and Exchange Commission accused Goldman of defrauding investors out of $1 billion.
The details of the SEC's complaint allege that Goldman failed to disclose "vital information" about a mortgage-back security called Abacus. The SEC said: "Unbeknownst to investors, Paulson & Co. [a hedge fund]...which was posed to benefit if the [securities in Abacus] defaulted, played a significant role in selecting which [securities] should make up the portfolio...In sum, Goldman Sachs arranged a transaction at Paulson's request in which Paulson heavily influenced the selection of the portfolio to suit its economic interests."
Goldman responded in classic fashion - crying "Foul!" and claiming that it is the victim of a gross misunderstanding. Does anyone really believe them? To rephrase the question, does anyone really believe that this single instance of alleged fraud is the only such instance?
This question reminds us of another truism about cockroaches: There's never just one. Any financial firm that is capable of committing a fraud as egregious and flagrant as the one the SEC's complaint describes is certainly capable of committing a second fraud...and maybe even a third or a fourth...or a fortieth.
The fraud the SEC identifies in its complaint against Goldman is not a mere "Oops!" It is a fraud that every licensed stockbroker in the land would recognize as a career-ending no-no.
"The product was new and complex," explained Robert Khuzami, a director from the SEC's Division of Enforcement, "but the deception and conflicts were old and simple."
In other words, a lie is a lie.
Nevertheless, your editor is content to let due process run its course...and to wait as long as necessary for the guilty verdict to arrive.
Whatever the ultimate verdict, Goldman is already "guilty by association" in the eyes of most Americans. It is guilty by its close association with the practices that precipitated the financial crisis of 2008. It is also guilty by its close association with the powers in Washington who decided which firms would receive billions of dollars of emergency assistance (i.e. Goldman Sachs) and which would be allowed to fail (i.e., Lehman Bros.). And most of all, it is guilty by its close association with the obscene sense of entitlement that characterizes Wall Street pay practices.
In short, America hates Goldman Sachs.
So the fact that Goldman may have actually committed a large-scale fraud is a very big deal. Suddenly, the Goldman-haters are carrying loaded weapons...and the ensuing firefight might produce some significant volatility in the financial markets.
For starters, this event might produce a very convenient excuse for a very pronounced selloff. But Goldman is not merely an excuse for a stock market selloff; Goldman is the stock market...and it is also the commodity market and the Treasury market. Goldman is the biggest market maker in the US stock market and among the biggest players in every major commodity market. Goldman is also one of the largest primary dealers of Treasury Securities.
So maybe it is no fluke that most commodities tumbled Friday, right along with the stock market. Gold and crude oil both tumbled more than 2%. And as this new week begins, Goldman's troubles are mounting.
Citing Goldman's "moral bankruptcy," Britain's Prime Minister Gordon Brown called for a full inquiry by Britain's Financial Services Authority in conjunction with the SEC. Germany also said it would ask for detailed information about the case. Both governments had to bail out banks that lost hundreds of millions of dollars on investments marketed by Goldman.
None of this will be good news for the stock markets of the world. And yet, none of this is really a surprise either. Nearly two years ago, in a column entitled, "The Goldman Sachs Phenomenon," your California editor remarked, "The American financial system still possesses too much talent and creativity to operate prudently... Consider yourselves forewarned!" We are re-publishing this column in today's edition of The Daily Reckoning.
Just two months before this column first appeared, JP Morgan Chase had acquired the failing Bear Stearns. As part of the deal the Federal Reserve took responsibility for $29 billion in toxic assets from the Bear Stearns portfolio - effectively handing a $29 billion subsidy to JP Morgan, and establishing a precedent for the hundred-billion-dollar subsidies that would flow to Wall Street's largest firms just six months later.
We smelled a rat back then...and the rat doesn't smell any better now...
Tuesday, April 20, 2010
Goldman's Travails: Don't Get Your Hopes Up
Goldman's Travails:
By Mike Whitney
Screwing people is a "growth industry". And a big organization like Goldman has a reservoir full of snakeoil, so it doesn't have to worry about running-low on reserves. Just stitch-together a bunch of junk securities, dress them up in sequins and gold-lame', dump them off on investors, and rake in big profits when the ship sinks.
http://www.informationclearinghouse.info/article25252.htm
By Mike Whitney
Screwing people is a "growth industry". And a big organization like Goldman has a reservoir full of snakeoil, so it doesn't have to worry about running-low on reserves. Just stitch-together a bunch of junk securities, dress them up in sequins and gold-lame', dump them off on investors, and rake in big profits when the ship sinks.
http://www.informationclearinghouse.info/article25252.htm
Sunday, April 18, 2010
Saturday, April 17, 2010
Pay Garnishments Rise as Debtors Fall Behind
http://www.nytimes.com/2010/04/02/business/economy/02garnish.html?src=me&ref=business
THINK WE DON'T HAVE DEBTOR'S PRISONS IN AMERICA?
THINK AGAIN.
FIRST OUR GUV'MINT DRIVES YOU INTO DEBT,
THEN THE BANKS DRIVE YOU FURTHER INTO DESTITUTION
AND THE COURTS LET THEM.
THINK WE DON'T HAVE DEBTOR'S PRISONS IN AMERICA?
THINK AGAIN.
FIRST OUR GUV'MINT DRIVES YOU INTO DEBT,
THEN THE BANKS DRIVE YOU FURTHER INTO DESTITUTION
AND THE COURTS LET THEM.
REVOLT...THE BOOK
http://revoltthebook.com/
WORTH READING THE WEBSITE PAGE.
I HAVEN'T READ THE BOOK, BUT IT SOUNDS VERY INTERESTING.
POST BY THE AUTHOR ON ANOTHER BLOG:
"a reader of my novel "REVOLT"
(http://www.revoltthebook.com/)
sent me this link. Why? Because when I wrote the original draft in 1997 for the novel I predicted all of this- the narcissistic President with a trouble history, a compliant media, a corrupt Congress and a military willing to follow orders, at least at first. The story revolves around a small community in Idaho that refuses to knuckle under to one more regulation from the aggressive federal government and find themselves under attack, isolated and demonized by a rogue President as "domestic terrorists." When I showed the draft around back in 1997 people laughed, saying no way it could happen here. They aren't laughing now."
You want to see one possible future for America? Read the book.
WORTH READING THE WEBSITE PAGE.
I HAVEN'T READ THE BOOK, BUT IT SOUNDS VERY INTERESTING.
POST BY THE AUTHOR ON ANOTHER BLOG:
"a reader of my novel "REVOLT"
(http://www.revoltthebook.com/)
sent me this link. Why? Because when I wrote the original draft in 1997 for the novel I predicted all of this- the narcissistic President with a trouble history, a compliant media, a corrupt Congress and a military willing to follow orders, at least at first. The story revolves around a small community in Idaho that refuses to knuckle under to one more regulation from the aggressive federal government and find themselves under attack, isolated and demonized by a rogue President as "domestic terrorists." When I showed the draft around back in 1997 people laughed, saying no way it could happen here. They aren't laughing now."
You want to see one possible future for America? Read the book.
Wednesday, April 14, 2010
Riots, Rebellion and Revolution
The Global Economic Crisis:
Riots, Rebellion and Revolution
By Andrew Gavin Marshall
Ratings Agency Predicts Civil Unrest: Moody's is a major ratings agency, which performs financial research and analysis on governments and commercial entities and ranks the credit-worthiness of borrowers. On March 15, Moody's warned that the US, the UK, Germany, France, and Spain "are all at risk of soaring debt costs and will have to implement austerity plans that threaten 'social cohesion'."
http://www.informationclearinghouse.info/article25229.htm
Riots, Rebellion and Revolution
By Andrew Gavin Marshall
Ratings Agency Predicts Civil Unrest: Moody's is a major ratings agency, which performs financial research and analysis on governments and commercial entities and ranks the credit-worthiness of borrowers. On March 15, Moody's warned that the US, the UK, Germany, France, and Spain "are all at risk of soaring debt costs and will have to implement austerity plans that threaten 'social cohesion'."
http://www.informationclearinghouse.info/article25229.htm
Monday, April 12, 2010
Sunday, April 11, 2010
Life After Stuff
Annie Leonard on Life After Stuff
By Annie Leonard
Annie Leonard reveals what gives her strength, even as she and her popular film, The Story of Stuff, are attacked as un-American.
http://www.informationclearinghouse.info/article25190.htm
ALSO:
http://www.storyofstuff.org/
By Annie Leonard
Annie Leonard reveals what gives her strength, even as she and her popular film, The Story of Stuff, are attacked as un-American.
http://www.informationclearinghouse.info/article25190.htm
ALSO:
http://www.storyofstuff.org/
The Cowboy President
The Cowboy President
By Yvonne Ridley
Now that Obama has decided to dispense with judge and jury he is returning the US to the days of the Wild West ... which could make him more of a cowboy president than Bush ever was.
http://www.informationclearinghouse.info/article25189.htm
By Yvonne Ridley
Now that Obama has decided to dispense with judge and jury he is returning the US to the days of the Wild West ... which could make him more of a cowboy president than Bush ever was.
http://www.informationclearinghouse.info/article25189.htm
QUOTE TO THINK ABOUT
" It is extremely dangerous to exercise the constitutional right of free speech in a country fighting to make democracy safe in the world.....
These are the gentry who are today wrapped up in the American flag, who shout their claim from the housetops that they are the only patriots, and who have their magnifying glasses in hand, scanning the country for evidence of disloyalty, eager to apply the brand of treason to the men who dare to even whisper their opposition to Junker rule in the United Sates. No wonder Sam Johnson declared that "patriotism is the last refuge of the scoundrel." He must have had this Wall Street gentry in mind, or at least their prototypes, for in every age it has been the tyrant, the oppressor and the exploiter who has wrapped himself in the cloak of patriotism, or religion, or both to deceive and overawe the people.....
Every solitary one of these aristocratic conspirators and would-be murderers claims to be an arch-patriot; every one of them insists that the war is being waged to make the world safe for democracy. What humbug! What rot! What false pretense! These autocrats, these tyrants, these red- handed robbers and murderers, the "patriots," while the men who have the courage to stand face to face with them, speak the truth, and fight for their exploited victims-they are the disloyalists and traitors. If this be true, I want to take my place side by side with the traitors in this fight.
Eugene V. Debs - The Canton, Ohio, Anti-War Speech. June 16, 1918
These are the gentry who are today wrapped up in the American flag, who shout their claim from the housetops that they are the only patriots, and who have their magnifying glasses in hand, scanning the country for evidence of disloyalty, eager to apply the brand of treason to the men who dare to even whisper their opposition to Junker rule in the United Sates. No wonder Sam Johnson declared that "patriotism is the last refuge of the scoundrel." He must have had this Wall Street gentry in mind, or at least their prototypes, for in every age it has been the tyrant, the oppressor and the exploiter who has wrapped himself in the cloak of patriotism, or religion, or both to deceive and overawe the people.....
Every solitary one of these aristocratic conspirators and would-be murderers claims to be an arch-patriot; every one of them insists that the war is being waged to make the world safe for democracy. What humbug! What rot! What false pretense! These autocrats, these tyrants, these red- handed robbers and murderers, the "patriots," while the men who have the courage to stand face to face with them, speak the truth, and fight for their exploited victims-they are the disloyalists and traitors. If this be true, I want to take my place side by side with the traitors in this fight.
Eugene V. Debs - The Canton, Ohio, Anti-War Speech. June 16, 1918
Saturday, April 10, 2010
Friday, April 9, 2010
Is Canada's Only Bullion Bank Gold Vault Nearly Empty?
CREDIT TO GOLDMELTER FOR THIS ARTICLE:
http://finance.yahoo.com/news/Is-Canadas-Only-Bullion-Bank-prnews-2031376392.html?x=0&.v=1
VISIT: http://www.inflation.us/
http://finance.yahoo.com/news/Is-Canadas-Only-Bullion-Bank-prnews-2031376392.html?x=0&.v=1
VISIT: http://www.inflation.us/
Wednesday, April 7, 2010
Tuesday, April 6, 2010
How Americans are propagandized about Afghanistan
http://www.salon.com/news/opinion/glenn_greenwald/2010/04/05/afghanistan/index.html
CAN WE BELIEVE ANYTHING OUR GUV'MINT TELLS US ANYMORE?
CAN WE BELIEVE ANYTHING OUR GUV'MINT TELLS US ANYMORE?
Saturday, April 3, 2010
Looting Main Street
Looting Main Street
How the nation's biggest banks are ripping off American cities with the same predatory deals that brought down Greece
MATT TAIBBI Posted Mar 31, 2010 8:15 AM
http://www.rollingstone.com/politics/story/32906678/looting_main_street/1
How the nation's biggest banks are ripping off American cities with the same predatory deals that brought down Greece
MATT TAIBBI Posted Mar 31, 2010 8:15 AM
http://www.rollingstone.com/politics/story/32906678/looting_main_street/1
Friday, April 2, 2010
Wednesday, March 31, 2010
Attention Deficit Democracy
Attention Deficit Democracy
By Ralph Nader
A society not alert to signs of its own decay, because its ideology is a continuing myth of progress, separates itself from reality and envelops illusion.
http://www.informationclearinghouse.info/article25116.htm
By Ralph Nader
A society not alert to signs of its own decay, because its ideology is a continuing myth of progress, separates itself from reality and envelops illusion.
http://www.informationclearinghouse.info/article25116.htm
Tuesday, March 30, 2010
Sunday, March 28, 2010
Friday, March 26, 2010
WHY THE DOLLAR WENT UP AND THE EURO WENT DOWN
http://www.bloomberg.com/apps/news?pid=20601009&sid=aRHwSTmkzCb8
Swap Spreads Plunge as Portugal Downgrade Boosts Risk
Swap Spreads Plunge as Portugal Downgrade Boosts Risk
Wednesday, March 24, 2010
Monday, March 22, 2010
Sunday, March 21, 2010
Soviet Subversion of the Free World Press
CREDIT TO CLYMER FOR THIS LINK:
http://video.google.com/videoplay?docid=-2307456730142665916&ei=cHyhS-zhOJ__lQfM0fXwDQ&q=yuri+bezmenov&hl=en#
Soviet Subversion of the Free World Press - 1984
1:21:28 - 2 years ago
Yuri Bezmenov, a Russian born, KGB trained subverter tells about the influence of the Soviet Union on Western media and describes the stages of communist takeovers. This interview was conducted by G. Edward Griffin in 1984. This video has been remastered and is now available on DVD. See http://realityzone.com/bezmenov.html
http://video.google.com/videoplay?docid=-2307456730142665916&ei=cHyhS-zhOJ__lQfM0fXwDQ&q=yuri+bezmenov&hl=en#
Soviet Subversion of the Free World Press - 1984
1:21:28 - 2 years ago
Yuri Bezmenov, a Russian born, KGB trained subverter tells about the influence of the Soviet Union on Western media and describes the stages of communist takeovers. This interview was conducted by G. Edward Griffin in 1984. This video has been remastered and is now available on DVD. See http://realityzone.com/bezmenov.html
“Only the educated are free.”
there is NOTHING more important to your life right now than what you are about to read…if only you have the courage to do so.
http://www.whatdoesitmean.com/indexavt1.htm
http://www.whatdoesitmean.com/indexavt1.htm
Saturday, March 20, 2010
PLEASE DONATE A FEW BUCKS TO THIS WEBSITE PLEASE...IT IS ONE OF THE BEST SOURCES FOR REAL NEWS I HAVE EVER FOUND...GT
Information Clearing House Newsletter
News You Won't Find On CNN
March 19, 2010
Please Help
Our Situation is Beyond Critical.
Donations Are Down 70%
Of the more than 67 ,000 people who receive our newsletter each day and over one million people who visit our website each month, 103 people have provided assistance (Thank you)
We are a long way short of the 342 people we need in order to be able to ensure the continuation of this service.
If Information Clearing House is important to you, please use the link below to make a contribution using Paypal, your credit / debit card or check.
http://www.informationclearinghouse.info/support.htm
or if you prefer to send a check or money order, Information Clearing House, PO Box 365 Imperial Beach, CA 91933. USA.
Low income readers: DON'T send money, just encourage others to subscribe.
http://informationclearinghouse.info/subscribe.htm
To all who have assisted in the past. Thank you. Your help is greatly appreciated. Tom Feeley
News You Won't Find On CNN
March 19, 2010
Please Help
Our Situation is Beyond Critical.
Donations Are Down 70%
Of the more than 67 ,000 people who receive our newsletter each day and over one million people who visit our website each month, 103 people have provided assistance (Thank you)
We are a long way short of the 342 people we need in order to be able to ensure the continuation of this service.
If Information Clearing House is important to you, please use the link below to make a contribution using Paypal, your credit / debit card or check.
http://www.informationclearinghouse.info/support.htm
or if you prefer to send a check or money order, Information Clearing House, PO Box 365 Imperial Beach, CA 91933. USA.
Low income readers: DON'T send money, just encourage others to subscribe.
http://informationclearinghouse.info/subscribe.htm
To all who have assisted in the past. Thank you. Your help is greatly appreciated. Tom Feeley
Thursday, March 18, 2010
KEITH OLBERMANN...ONE HOUR YOU MUST VIEW
http://castroller.com/podcasts/MsnbcCountdownVideo/1526861-MSNBC%20Countdown%20(video)%20-%2003-18-2010-190427
KEITH DEVOTES THE HOUR TO HIS EXPERIENCE WITH OUR HEALTHCARE SYSTEM
AS HE DEALS WITH HIS FATHER'S LAST DAYS.
A MUST VIEW
KEITH DEVOTES THE HOUR TO HIS EXPERIENCE WITH OUR HEALTHCARE SYSTEM
AS HE DEALS WITH HIS FATHER'S LAST DAYS.
A MUST VIEW
Monday, March 15, 2010
THERE IS NOTHING TO DO BUT PREPARE FOR IT...THE SYSTEM WILL COLLAPSE ON ITS OWN
http://dailyreckoning.com/the-patsy-revolt-of-2010/
BILL BONNER SAYS WHAT I'VE BEEN SAYING FOR YEARS...
THE ONLY 'SOLUTION' IS TOTAL ECONOMIC COLLAPSE.
THE REST IS ONLY POSING AND TEMPORARY FIXES
THAT MAKE THE ULTIMATE COLLAPSE EVEN WORSE.
BILL BONNER SAYS WHAT I'VE BEEN SAYING FOR YEARS...
THE ONLY 'SOLUTION' IS TOTAL ECONOMIC COLLAPSE.
THE REST IS ONLY POSING AND TEMPORARY FIXES
THAT MAKE THE ULTIMATE COLLAPSE EVEN WORSE.
MUST WATCH 11 MINUTE VIDEO
http://www.msnbc.msn.com/id/21134540/vp/35841681#35841681
DYLAN RATIGAN AND ELLIOT SPITZER ON THE LEHMAN COLLAPSE
DYLAN RATIGAN AND ELLIOT SPITZER ON THE LEHMAN COLLAPSE
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