Yeehaaaaa!!!! can’t believe it!!!

And second!!!

Off-topic: politicsCarpers and cynics of the world unite!I just today looked at my post made the other day praising Obama and criticizing the carpers. Thank you for the good and temperate replies. I was expecting to be skewered royally for that post. That is why I waited until now to read the comments — after I was less emotionally attached to what I had written. But now that I have read them, I would like to respond to a few points that were made.“Don’t underestimate the value of carpers and cynics.It’s a thankless job with bad pay.”Guest on 2008-11-22 14:44:29What a great comment! I agree there is value in carpers in the sense that one can learn much more from critics than from supporters. And I certainly have done my share of carping and I am usually cynical too, especially about politicians.So, if I am usually cynical too, why do I support Obama so enthusiastically?To me deciding which presidential candidate to vote for is a fairly simple matter. There is usually a candidate somewhere on the left and one somewhere on the right. I usually ignore fringe party candidates, especially after Gore’s defeat in 2000! IMO, that was the single most pivotal election in my lifetime: just think how different things might be now if Bush had not won that election… But that is another story.So, in choosing between the candidate on the left and the candidate on the right, I consider where the country is at the time. For example in 1980, the economy was a mess. The liberals had pushed things too far with the Great Society welfare state and their unwillingness to tackle inflation, so then I voted for Ronald Reagan. And he and Volcker did the right thing: we took some bitter economic medicine in the ’81 – ’82 double dip recession, broke the back of inflation and got the country on the path to growth and prosperity again.But in 2008, it was exactly the opposite. The conservatives has pushed us too far to the free-market economy side with the disastrous results we are now seeing. So my decision to vote for the Democrat was easy: we need to step back from rigid free-market ideology and clean up the mess. And we need to help the poor and middle-classes who have increasingly been taking it on the chin for the past 28 years.Implicit in my selection criteria is that I ignore the candidate’s specific promises. It is only their overall political and economic philosophy that is relevant to me. The rest are just details that are sure to turn out differently after they take office.As for Obama specifically, my “blind” support of him arises not only from my perceived need for a progressive president now, but from my judgment about his character and his intelligence. I won’t bore you with a detailed list of reasons; they probably wouldn’t mean the same thing to you as they do to me. But it comes down to my assessment that he is the most extraordinary presidential candidate I have seen since JFK.I was very young when Kennedy ran in 1960, but I do remember him as president. He was a very impressive, inspiring leader, and with Jackie and the kids in the White House we had something close to a royal family; it was Camelot. And it was an uplifting time of hope and renewal. His ideas were inspiring and motivated the American people for many years after his murder: the race to the moon and the Peace Corps. Add to that his stare down of the Soviet Union, which was, IMO, the pivotal point in the Cold War that led to our eventual victory. (If Kennedy had allowed the missiles to stay, as Khruschev, thinking Kennedy was weak, believed he would do, the entire course of the Cold War would have been very different from that point onward.)So JFK was an extraordinary leader, and in Barack Obama I see a similar leader, in fact an even more impressive one because Obama is more of a self-made man. JFK was the son of a very wealthy and powerful man who wanted his son to be president. In comparison, Obama was the son of a single mother; so to have risen to the presidency I believe his character is even stronger, and his abilities most likely even greater than JFK’s.And the fact that he did little before winning the presidency does not worry me. Lincoln too did little: 4 years in the House and 8 in the Illinois legislature; and he hadn’t held elected office for about 12 years prior to being elected president in 1860.Finally, what about Obama’s lack of specificity, his “empty rhetoric” with no specifics to back him up. Well, as I have already said, that doesn’t bother me because I am more interested in his philosophy and his intelligence / character than his detailed plans. But would we have expected Lincoln to be able to tell us exactly how he was going to end slavery? Or how he planned to prevent the South from seceding, or to win the Civil War before it started? No, no one can say what decisions must be made in the future, or exactly what things will be done. The only thing we can do is select the best person for the job and then support him or her in their efforts to solve the nation’s problems and to move the country towards peace and prosperity.A guest said,“I don’t know whether to laugh or cry, KJ. Let’s talk in four years, and see how you feel then…”Well it’s hard to imagine how it couold be much worse in four years than it is now after 8 years of W. But, I understand your meaning and I respond: No, let’s have an ongoing discussion from now until then and see how we feel as things progress.Not only that, let’s share our own ideas as to what We should do to help our country and our selves because ideas are much more powerful than bullets and bombs.Lastly,I always reserve the right to change my mind as conditions change, and when Obama makes bad decisions, as I am sure he will do, I will not hesitate to carp and criticize him for it.I hope everyone had a good Thanksgiving and survived Black Friday unharmed.

for mark…Thursday, November 27, 2008 3:00 pmPublic Affairs.http://archive.wbai.org/index.php.. hit play… Thursday, November 27, 2008 3:00 pmPublic Affairs

From a previous thread b/f:”I note parenthetically that like you, Peter JB — God love him — is not an American either (Peter, please correct me if I’m wrong about that — as I recall, you’re an Australian national, right?). I’m not discounting what he has to say, but only noting this in light of your comment that you don’t live in the U.S. and appeared to be seeking views from folks who do.”SWK@ kilgores on 2008-11-29 10:22:48You are correct, I am not a US citizen, however, I did spend ~ 8.5 years living in the USA.

b/f:”People not as sick? Maybe not suffering from obesity and cancer (though cancers are increasing thanks to toxic dumping), but there are other just as traumatic ailments, like AIDS.”"And, while I have to question the actual performance of it (such as whether it’s really only a mechanism to dump expiring products to allow large write offs), there’s a LOT of foreign aid flowing into these third world countries: an economic contraction in the contributor nations will mean sizable falloffs in aid.”@ Mark on 2008-11-29 10:24:30Not as sick!I lived in Switzerland for 12 months where the Swiss will tell you they are the healthiest people in the World, blah, blah… and yet I was puzzled to see the long lines of people daily at the medical clinics starting well before opening time and not dwindling until after closing hours, And, medical helicopters buzzing around 24/7. So, I asked the question; why?The answer was 1. Medical Insurance is compulsory and expensive 2. the result of (1.) inferred that the medical services were then “free”, 3. Since the Vatican had closed many or most of the churches in the country areas due to a lack of priests and the high costs maintaining these centres, the peoples were actually using the doctors as Priests… Sick?Throughout Asia, peoples are far healthier than Westerners; as you say less cancer, obesity just starting (in real terms)and less time to notice the aches and pains of the body, mind and soul; no social nets; Asians imo have far higher energy levels than Westerners and are an expression of work and life responsibilities for far longer hours every day. Very few Asians just sit and do nothing.As regards International Aid: I have commented here in length previously; Aid is about enriching the officials (and all that hangs off them) of those Aid Agencies, with payoffs for local officials, benefit to the home country of the originating Aid Donations, a priori, and expat salaries and conditions for those approved consultants administrating such “loans”. The recipient country receives about 5% of the total package.Health issues are about attitude and pills have limited effect. I do not question the valued work of the many humanitarians who give their lot, i.e. compassion and heart in helping others, as they are to be admired and appreciated with utmost respect; but abused health systems are essentially just political payoffs. Or, most people who get this aid, probably don’t need it.Yes, an economic contraction will be felt by all throughout the World as I have always maintained that there will be no decoupling but where the pain will be felt demographically subject to circumstance and preferences but attitude and getting on with it – can overcomes much of the crap that politicians and bureaucrats say they offer and miserably effect that just appear to make things worse. But, throughout Asia, peoples will fare far better than those Westerners permanently attached to the paps of their political systems upon which they have becomes totally dependant – even for daily thought.

Another illustration that, in this environment there really is no such thing as a free market for the the banking and finance sector anymore. Having investors trying to make money on the sector (either bidding shares up or down) at this point just amounts to inviting players to to a government run casino where the casino hands out the chips for free on the way in the door. And where the casino insures the loss if the player gambles badly and ends up debt.Its sickening to think of this herd anxiously waiting for bailouts and rumours of bailouts so they can madly move their money around in a last-gasp hope to grab what they can from the failing system. I sure think our government has better things to do that to run a casino for these guys right now.Once a bank gets government money, it should be delisted and taken out of the casino game.

Hi, guys and gals:Just calm down. Forget the markets for a long, long time to come. I am going to take out all of my money out of the market as soon as I can. Regardless of what A, B, or C says, markets are going to tank — much, much deeper down the toilet than even our professor has visualized. These markets are being driven over the past some 10 years by the likes of Greenspans and Helicopters. Over the past one years, the market would have gone down by 90%, but for the grace of corrupt politicians in the Congress and equally incompetents in the WH/their cabinet secretaries, and still more opportunists the likes of King Henry and the Helipad. Forget, forget, forget every thing … we have more and very critical issues at hand. Please copy/past following link and given a thought to your investments. Our markets are going to burn like never before. God, save America from coming anarchy created by the politically selfish interests of a certain political party in the Congress. Please don’t tell me that you were not pre-warned.http://forums.wnd.com/index.php?pageId=235&pageNo=1

Great discussion of capital flows here. The Grand IllusionHe calls the ‘capital’ in the system ‘candy floss money’ and argues there is really a lot less of it to go around than one might think.

Repost from last thread. These are some quotes from prior articles by Dr. Roubini. I have observed a change in his tone that puzzles me.Then he says (Sept 16th)Worst of all policy authorities are now running out of bullet and going towards desperate measures that will end up being counterproductive.Now that the collapse of Lehman is leading to the risk of the generalized run on the shadow banking system (the other independent broker dealers, the broker dealers that are part of larger commercial banks such as Citi and JPMorgan, hedge funds, private equity funds, the remaining SIVs and conduits, money market funds, other smaller broker dealers) the policy reaction is to try to build a new set of levies while the financial perfect storm of the century has destroyed the first sets of levies. This reaction includes the following steps.First, the Fed is accepting even more toxic collateral for the TSLF and PDCF, including even equities; so now after having nationalized the mortgage market via the takeover of Fannie and Freddie the government is also starting to manipulate directly the stock market (a step that started with the SEC restrictions on naked short sales of the primary dealers; so the process of turning the US market system in a socialist system controlled by the government is now in full swing. And the Fed takes massive credit and now market risks by its effective purchase of equities. Now he saysDebt might be an option. Effectively through the support of the mortgage the $600bn to buy agency debt and MBS’s the Fed has already been able to reduce the mortgage rates and long term interest rates> If the Fed were to commit to keep the Fed Funds rate close to zero over a long period of time that could push down also interest rates on the long end of the yield curve and other quantive easing might have to be taken. The policy of trying to restart securitization in the consumer credit market: credit cards, auto loans, student loans are a step that was in the right direction. So much more of these activities, The Fed might be forced somewhere down the line to even buy corporate bonds at least high grade of not high yield if the spreads for corporate bonds remain as high as they are right now.Lets throw trillions at the problem. Buying secutities for bad credit cards and consumer loans? Yup. More of that. Lets buy corporate bonds while we are at it. Anything to keep those banks afloat. Speaking of banks…Then he says (Oct 9th)a temporary blanket guarantee of all deposits while a triage between insolvent financial institutions that need to be shut down and distressed but solvent institutions that need to be partially nationalized with injections of public capital is madeNow he saysSecond step that has to be done is the recapitalization of the financial system that has to be much more aggressive. $250bn is not enough practically all of the $700 bn of the TARP will have to be used to recapitalize financial institutions because if you don’t do it given the size of credit losses now already a trillion dollar soon enough two trillion dollar, there will be a massive reduction in lending and assets in the financial system and the credit crunch is going to become much worseUh, what happened to the triage of the zombie banks? As I recall this had to be done rapidly and ruthlessly. There has been no triage of the banks, no recognition of the insolvent ones, no shutting them down. There has been, instead, a more of a blanket bailout approach to avoid stigmatizing some, and bailouts all around.Dr. Roubini, Many of the ‘students’ here are extremely worried about the ‘hope and pray and throw all of the money we got at the problem’ approach being taken now, fearing it will devalue the dollar and cause other completely unforeseen problems, even if it ‘works’. I think we should be urging that these necessary first steps be taken, especially the shakeout in the banking sector.There are 2 possibilities – we are losing the game and the game plan has therefore gone out the window, or the election has occurred and Dr. Roubini is now closer to those calling the plays and therefore has less to say contrary to them.

VRWC,I too have noted the stark change in attitude, particularly with regard to closing the Zombie banks. Dr. R has definitely changed his tune on this important issue without offering ANY explanation. We students of his theories/pontifications remain utterly perplexed…

Scenes From the Global Class WarBy Dr. Michael HudsonOctober 27, 2008On Friday, October 24, the pound sterling dropped to just $1.58 (down from $1.73 earlier in the week, an enormous plunge by foreign-exchange standards), and the euro sunk to just $1.26, while Japan’s yen soared by 10 per cent. These shifts threatened to disrupt export markets and hence industrial sales patterns. Global stock markets plunged from 5 to 9 per cent abroad, and there was talk of closing the New York market if stocks fell more than 1,000 points. Pre-opening trading saw the Dow Jones Industrial Average down the maximum limit of 550 points (largely on foreign selling) before bounding back to lose “only” 312 points as the dollar soared against European currencies.Friday’s currency turmoil and stock market plunge was a case of the chickens coming home to roost from the class-war policies being waged by European and Asian industry and banking squeezing their domestic consumer markets – that is, labor’s living standards – in favor of export production to the United States. The internal contradiction in this industrial and financial class warfare is now clear: To the extent that it succeeds in depressing labor’s income, it stifles the domestic consumer-goods market. This disrupts Say’s Law – the principle that “production creates its own demand,” based on the assumption that employees will (or must) be paid enough to buy what they produce.This has not been true for many years in Europe and Asia. But production has been able to continue without faltering because of an international deus ex machina: consumer demand in the United States.This is not to say that no class warfare is being fought in the United States. Indeed, living standards for most wage earners today are down from the “golden age” of the late 1970s. But the U.S. economy had its own financial deus ex machina to soften the blow: Alan Greenspan’s asset-price inflation that flooded the banks with credit, which was lent out to homebuyers and stock market raiders. Rising home prices were applauded as “wealth creation” as if they were a pure asset, much like dividends suddenly being awarded to one’s savings account. Homebuyers were encouraged to “cash out” on the rising “equity” margin, the (temporarily) rising market price of their homes over and above their (permanent) mortgage debt. So while most mortgage money was used to bid up the price of home ownership, about a quarter of new lending was reported to be spent on consumption goods. Credit card debt also soared. In the face of a paycheck squeeze, U.S. consumers were maintaining their living standards by running further and further into debt.This could not go on for very long. It never has. Debt-financed bubbles can’t last for more than a few years, even when fueled by a self-feeding inflation of asset prices in which households and corporate industry borrow more and more against the rising price of their collateral. But once the housing bubble burst the game was up.The game was up was up not only for the U.S. economy, but also for foreign economies that had geared their industrial production to serve the U.S. market rather than their own home markets. A global industrial slowdown is now threatened, and must continue until foreign domestic markets are nurtured – just the opposite trend from the recent generation of neoliberal anti-labor policies.To understand the dynamics at work, one needs to look at the balance of payments – not so much the balance of trade itself, but the currency speculation, international lending and arbitrage that has dominated exchange rates over the past two decades. Exchange rates no longer reflect relative wage levels, “purchasing power parity” or living costs as in times past. Today, they reflect the flow of international borrowing where interest rates are low and lending at a markup where credit is tight – and then hedging this arbitrage, and jumping on the bandwagon to speculate on which way currencies will go.In this way the balance of payments and currency values have been “post-industrialized” just as domestic economies themselves have been. Instead of promoting industrial growth based on a thriving home market, governments throughout the world have pursued a “post-industrial” financial strategy of “wealth creation.”Japan’s yen crisis – payback for the “carry trade”Nowhere has this been more the case in Japan, whose economy has remained in the doldrums ever since its bubble burst in 1990. For seventeen years straight, quarter after quarter, Japanese land prices fell, and so did stock market prices – and hence, the collateral pledged as backing for loans. This quickly left Japan’s banks with negative equity. The Bank of Japan’s response was to devise a way for them to rebuild their balance sheets – to “earn their way” out of the bad loans they had made.The policy was not to revive the faltering domestic market in Japan or its industrial corporations. From 1945 through 1985, Japanese had a model industrial banking system. But in 1985, U.S. diplomats asked Japan to please commit economic suicide. Angered by the striking success of Japanese industry, U.S. officials asked their compliant Japanese counterparts to raise the yen’s exchange rate so as to make its industrial exporters less competitive, and in due course to flood its own economy with credit so as to lower interest rates, thereby enabling the Federal Reserve to flood the U.S. market with enough cheap credit to give a patina of prosperity to the Reagan Administration. This policy – announced in the Plaza Accord of 1985 – led economist David Hale to joke that the Bank of Japan was acting as the Thirteenth Federal Reserve District and the Japanese government as the Republican Re-election Committee.Japan flooded its economy with credit, lowering interest rates and fueling the world’s largest real estate bubble of the 1980s. The stock market also soared to reflect the rise in Japanese industrial sales and earnings. But after the bubble burst on December 31, 1989, the mortgage debts and stock that that Japanese banks held in their capital reserves fell short of the valuation needed to back their deposit liabilities. To help bail out the banks, Japan’s government urged them to engage in what has become known as the “carry trade”: lending freely created yen credits to foreign financial institutions at remarkably low rates, for these borrowers to convert into other currencies to buy bonds or other assets yielding a higher rate. If the domestic Japanese market lacked credit-worthy borrowers, let them lend to foreigners. As a new source of revenue for the banks in place of loans to domestic real estate and industry, low interest rates enabled them to flood the global economy with credit. This served global finance by providing speculators and “financial intermediaries” with an opportunity to get a free arbitrage ride.Borrowing rates remained high within Japan itself. As veteran Japan watcher Richard Werner (author of Princes of the Yen) recently described the situation to me, “while Japanese small firms were killed by the continued refusal of banks to expand credit (and many a small firm president was killed by having to sell a kidney to the loan sharks he was forced to resort to), foreign speculators received ample yen funds for a pittance.” The silver lining to this credit creation was that Japanese exporters were aided as the conversion of yen into foreign currencies drove down the exchange rate. (Yen credit was “supplied” to global currency markets, and was spent to buy and hence bid up the price of euros, dollars, sterling and other currencies.)So the yen remained depressed, helping Japanese sales of consumer goods, while foreign borrowers were enabled to ride their own wave of asset-price inflation. Speculators could borrow at only a few percentage points interest in Japan, and convert their debt into foreign currency and lend to equally desperate countries such as Iceland at up to 15 per cent.Hundreds of billions of dollars, euros and sterling worth of yen were borrowed and duly converted into foreign currencies to lend out at a markup. Arbitrageurs made billions by acting as financial intermediaries making income on the margin between low yen-borrowing costs and high foreign-currency interest rates. As Ambrose Evans-Pritchard wrote over a year ago in the Financial Times, “the Bank of Japan held interest rates at zero for six years until July 2006 to stave off deflation. Even now, rates are still just 0.5 per cent. It also injected some $12bn liquidity every month by printing money to buy bonds. The net effect has been a massive leakage of money into the global economy. Faced with a pitiful yield at home, Japan’s funds and thrifty grannies shoveled savings abroad. Banks, hedge funds, and the proverbial Mrs Watanabe, were all able to borrow for near nothing in Tokyo to snap up assets across the globe. BNP Paribas estimates this “carry trade” to be $1,200bn.”All this was conditional on the ability of lenders to get a continued free ride. Now that the free lunch is over, Japan’s postindustrial mode of rescuing its banking sector is coming home to roost. It is doing so in a way that highlights the inherent conflict between finance capitalism and industrial capitalism. Whereas industrial expansion is supposed to keep going – and can continue to do so as long as markets keep pace with production – debt bubbles end, usually abruptly as we are seeing today. Now that Iceland has gone bust, Hungary looks like it is following suit.As global currency markets no longer provide the easy pickings of the last decade, the yen carry trade is being wound down. This involves converting Icelandic currency, euros, sterling and other non-Japanese currencies back into yen to settle the debts owed to Japanese banks. This repayment – and hence re-conversion into yen – is pushing the yen’s price up. This threatens to make Japanese exports higher-priced in terms of dollars, euros and sterling. Last week, Sony forecast that its earnings will fall as a result, and other Japanese companies face a similar squeeze in sales, not only from rising yen/dollar prices but from the global slowdown resulting from two decades of pro-financial anti-labor economic policies.Evans-Pritchard rightly accused the world’s central banks of having created this mess. “It was they – in effect governments – who intervened in countless complex ways to push down the price of global credit to levels that warped behavior, as the Bank for International Settlements (BIS) has repeatedly noted. By setting the price of money too low, they encouraged debt and punished savings. The markets have merely responded with their usual exuberance to this distorted signal. Private equity was tempted to launch a takeover blitz at a debt-to-cashflow ratio of 5.4 because debt was made so cheap. The US savings rate turned negative because interest rates were held below inflation.” He should better have said, asset-price inflation. Gains for wealth-holders at the top of the economic pyramid polarized economies. What was rising for the bottom 90 per cent was debt, not asset-price gains from easy money.Financing the U.S. “trickle-down” economy from belowThe soaring yen and plunging foreign currency rates are the result of unwinding the Japanese “carry trade” strategy to rescue its banks. Japanese industry will pay the bill. And despite the fall in sterling and the euro, Europe’s policy of emphasizing exports to the American market rather than to sell to its own domestic labor force looks pretty bad in view of the imminent economic slowdown in store. U.S. consumer spending and living standards will have to fall – and it seems, to fall sharply – in order to finance the “trickle down” economy at the top. Current Treasury policy is to bail out the creditors, not the debtors. The banks are being saved, but not U.S. industry, and certainly not the U.S. wage earner/consumer. Instead of pursuing a Keynesian type of deficit spending in a manner that will increase employment (government spending on goods and services, infrastructure spending and transfer payments), the Treasury and Federal Reserve are providing money to the banks to buy each other up, consolidating the U.S. financial system into a European-type system with only a few major banks. The financial system is to become monopolized and trustified, reversing two centuries of economic policy aimed at preventing financial dominance of the economy.None of the money being given to the banks really will trickle down, of course. Instead, the largest upward transfer of property in over seventy years will occur. The policy of giving money to the wealthiest sectors – these days the financial sector – turns the trickle-down economy into a euphemism for the concentration of wealth. The pretense is that America’s economy needs the financial and property overhead in order for the “real” economy to “take off” again. But a stronger financial sector selling yet more debt to the economy at large threatens to deter recovery, not to speak of a new takeoff.Seeing the imminent shrinkage of the U.S. market, lenders and investors are dumping their shares, not only those of U.S. firms but also stocks in European and Asian export sectors. This is the “inner contradiction” of today’s financial rescue operation. Finance itself cannot survive in the face of a stifled domestic “real” economy.So the world ought to be at an ideological turning point. But the last thing that Europe’s oligarchy wants to see is higher labor standards. Nor does the U.S. financial class. Europe and Asia put their faith in a U.S. consumer-goods market rather than their own. The U.S. financial sector found this appealing as long as consumption was financed by running into debt, not by workers earning more money or paying lower taxes. Industrial and political leaders throughout the world have been so anti-labor that there is little thought of raising domestic living standards via higher wage levels and a tax shift off labor and industry back onto property where progressive tax policies used to be based.Here’s why it is impossible to go back to the past, as if this were some kind of normal condition that can be recovered. When Alan Greenspan flooded the mortgage market with credit, homeowners borrowed against (“cashed out” on) the rise in housing prices as if their homes were a piggy bank. The difference, of course, is that when one draws down a bank account there is less money in it, but no debt is involved to absorb future income in repayment schedules. “Equity loans” have left a debt residue, which now has turned into negative equity with loans still needing to be repaid. This will leave less for consumption. So U.S. consumer spending will fall because of (1) no more easy mortgage or credit-card credit, (2) debt deflation as consumers repay past borrowing, “crowding out” other forms of spending, and (3) downsizing and job losses lead to falling wage income.Lower consumer spending means less sales by U.S. and foreign manufacturers – especially those in countries whose currency is rising against the dollar (e.g., Japan). Lower sales mean lower earnings, which mean lower stock prices. And in the stock market itself, price/earnings ratios are falling as the credit that fueled stock-market speculation by hedge funds and other arbitrageurs is cut back. So the combination of falling price/earnings ratios and falling earnings mean less in the denominator (earnings) to be multiplied into prices (earnings capitalized at the going interest rate).Declining stock market prices are reducing the coverage of corporate pension funds (as well as personal retirement accounts), requiring higher set-asides to fully fund these accounts. In the face of tightening bank credit, this will cut back new corporate spending on plant and equipment, further slowing the economy.As foreign exporters are rudely awakened the dream of an American demand, when will the point come at which Europe and Asia seek to build up their own domestic consumer markets as an alternative? The first problem is to overcome the ideological bias in which central bankers are indoctrinated, in a world where politicians have relinquished economic policy to bankers trained in Chicago School financial warfare against labor and even against industry. It probably is too much to hope that today’s European central bankers and kindred economic managers will drop their neoliberal anti-labor ideology and see that without a thriving domestic market, their own industrial firms will languish. The solution must come from a revived political sector representing the interests of labor, and even of industry itself as it sees the need to revive domestic markets.

We just don’t know and this is the big question we don’t know how smart he is or how secure he is?. He could be just keeping his enemies close to him so as to disarm them when he eventually undermines them. Maybe he’s that brilliant of a strategists, don’t give up hope, we’ll find out over the next 6 months.

The inmates are still running the insane asylum and we wonder why N.R. sounds pro establishment with guys like Rubin his peer making 126 million and calling it peanuts. Economists are bought and paid for just like our politicians.Rubin says not to blame for Citi’s troubles:NEW YORK (Reuters) – Former U.S. Treasury secretary Robert Rubin said the near-collapse of Citigroup Inc <C.N>, where he is a senior counselor, was due to the buckling financial system and not his own mistakes, according to an interview published on The Wall Street Journal’s website on Friday.Rubin, who is also a director at Citigroup, acknowledged he was involved in a board decision to ramp up risk-taking in 2004 and 2005, according to the paper, and said if executives had executed the plan properly, the bank’s losses would have been less.The Journal said Rubin has earned $115 million in pay since 1999, excluding stock options.”I bet there’s not a single year where I couldn’t have gone somewhere else and made more,” said Rubin, according to the Journal.Rubin cited former Federal Reserve Chairman Alan Greenspan as another example of someone whose reputation has been unfairly damaged by the financial crisis, according to the JournalThe paper reported that Rubin said of the current crisis: “what came together was not only a cyclical undervaluing of risk (but also) a housing bubble and triple-A ratings were misguided,” he said. “There was virtually nobody who saw that low-probability event as a possibility.”Rubin told the Journal that the Citigroup board could bear some responsibility and that some things should have been done differently.The former Treasury secretary also gave his support to Citigroup chief executive Vikram Pandit.”Vikram runs this company on a worst reasonable case for this economy. Essentially, the pieces of Citi will look how they do today,” the Journal quotes Rubin as saying.Citigroup could not immediately be reached for comment.

A couple of current columns from a columnist (Harry Koza) in Canada’s Globe and Mail newspaper. He was very early in calling the credit crisis and anticipating the fall out.Waging war against deflation could have nasty consequences (Globe)

… Personally, if you’ll indulge me while I talk my position here, I’m all for a healthy dose of deflation. I have no mortgage and no other debt, got mostly out of stocks a year ago and into cash, so I could make out like a bandit in a deflationary environment. Bring it on, I say.Of course, deflation is a real worry when you have an economy that is based on the Orwellian concept, “debt is wealth.” I don’t get the concept, myself.When the value of your $300,000 house goes up to $800,000 in a bubble market and you re-mortgage for the full $800,000 and take the difference out in cash and spend it, you aren’t suddenly rich: You’re just 800 grand in debt. And this financial mess won’t be over until people again start to understand the painful lesson that debt is not wealth.

Citigroup’s toxic assets should prolong any rescue attempt

… The markets seem to think the Citi bailout was a good thing, that $308-billion is a good backstop, but I’m not convinced. Citi has roughly $2-trillion in assets on its balance sheet, but it also has about $1.2-trillion in off-balance-sheet assets. I suspect that the reason those assets are off-balance sheet in the first place is because they are, essentially, crap, which suggests that we haven’t seen the end of this bailout and that further government cash injections will be needed as those toxic assets come home to Citi’s balance sheet.

Interesting. It seems al Qaeda is winning the chess game at this point by causing Pakistan to move troops away from fighting them; thus forcing the USA to take a larger role in the northwest province, which in turn will anger the Pakistani government and inflame the entire situation leading to unknown consequences.

Yes, I agree that fear WOULD be the proper antidote. But unfortunately, as us folks here know, it’s not allowed to operate: the Fed and government won’t allow fear to come across the doorsteps of their rich friends.Trying to check greed with anything else isn’t going to work.

You’ve pretty much proved my original point: that providing full health care in the US is going to be VERY expensive (owing to the current state of people there, and its “culture”).I’ll still stand by my statement that those in poorer countries don’t have the level of health care that is available in the US. As you note about those in Asia, their need for health care is less because of their lifestyles: they pretty much have to maintain their basic health as they couldn’t afford (don’t have access to) the vast array of technical medical facilities as found here in the West.I would advocate better health for everyone. But subsidizing poor health practices (bad food and sedentary lifestyles) through “medicine” isn’t something that can really be afford long-term.

I wouldn’t be so quick to pin this on al Qaeda. Tariq Ali, whom I have great respect for, doesn’t jump to this conclusion:India’s Leaders Need to Look Closer to HomeAnd there’s also this angle:Iran, Pakistan dump India on pipelineIndia emphasizes deeper ties with IranAnd keep in mind that Hank Paulson was just over in India…

As I have posted prior, this whole financial meltdown is the result of an incestuous conspiracy- between regulators (congress bought and paid for by the Banksters), the Wall St greed machine , USG (Hank is the gatekeeper) and the ratings agencies (to facilitate the easy spread of the deadly toxins). The big beneficiaries are the likes of Rubin et al and it was a great game for all while it lasted.The Banks needed a loose regulatory environment in order to build their dark empires of Ficticious Capital based on Ponzi scheme finance. This was abundantly provided by banking regulations that fostered a whole hidden financial system to grow unfettered in “the shadow banking system” – to which these parasites like Rubin ,Geithner etc are attached like leeches. Now that empires are collapsing, these same Pigmen are still at the trough of the public purse, benefitting from taxpayer funded bailouts of immense proportions.Now, we will hear all the reasons why regulation should NOT be imposed on financial markets. Watch Giethner’s utterances on this issue as he seeks to protect the interests of his REAL masters.Further, my sense is that NR’s tone has changed on transparency of bank assets as conflict of interest plays its part in the jockeying for positions now underway in Washington and elsewhere.This is the game being played- and don’t for a minute think it is “investing”.If you want to play, it makes sense to understand what is motivating those writing the rules.

Ok so more trouble ahead for Russia.This week we will see a new big bailout and a big stockmarket rally. They will try to rescue the automakers for sure the opposite is unthinkable.I just saw a clip where Obama is talking about what his is going to do to rescue the economy. He is going to spend and to mind about the deficit after the economy is on its feet. How can an ecomomy be on is feet with when the goverment is “über” broke/bankrupt. He truly beleive,s an so does our professor, that a economy with such a debtload can recover. Does anyone else agree with the prof and Obama?

Volker’s policies were inhumane.

Actually, it was those who wouldn’t dance that will be rewarded going forward.

don’t forget Krugman, he’s the grand marshal of this Santa Claus parade. The more I think about it getting out of the dollar might be the best strategy – but other than gold to what currency / commodity / ETF?

When Henry Paulson switched the TARP over from purchasing troubled assets to recapitalizing banks, he brought all the big ones in to the scheme to avoid stigmatizing any of them. I would argue that if Citigroup requires an additional TARP injection, an FDIC loss share, and a Fed loss guarantee on the order of $306 billion that it fits the definition of a zombie bank – will you disagree?Also there has been the lack of transparency on the part of the Fed, even telling Bloomberg to pound sand when they were chasing down the beneficiaries of the TARP.I am sorry, I have seen no evidence that there is a clear, transparent process to strengthen strong banks and shut down bad ones, as Dr. Roubini called for. Can you point to some evidence that maybe I missed?

Water bank failing forward?”Senator Heffernan said in the Senate last week in support of an amendment to stop the north-south pipeline from taking water from the basin in a bill setting up the new Murray-Darling Basin Water Authority: “How stupid is it that we allowed the overallocation of water to be converted into a financial instrument? People with a sound mind apparently did that. The consequences of that are a further burden on the financial compensation package that will have to be paid for water that was fundamentally free.”http://business.theage.com.au/business/bankrupt-water-plan-costs-more-than-money-20081130-6ntk.html

I wish to pay tribute to the death of Jdimytai Damour, the Wal-Mart employee who was trampled to death by an extension of the Wall-Street mentality…From Crowd Control? A refelction on holiday shopping violenceby lisamSaturday Nov 29th, 2008 1:50 PMI’ve been involved in countless demonstrations and protests that have been deemed “violent” by both the police forces assigned to control the crowds and the mainstream media who tend to use them as the primary source for their stories.But never in the years that I was involved in massive demonstrations against the corporate control over globalization, did I witness anyone getting trampled or ignored when they had been hurt. Even when the heavily armed riot police would charge a crowd packed in so tight you could barely move, people would find a way to escape and help others in the process. If someone fell to the ground because they had been peppered sprayed or tear gassed, someone would stop and help them, often at their own peril.Yet, the bar of whether or not a protest was worthy of people having bothered to demonstrate at all was whether or not it was “violent.” And if a window or piece of property was damaged, it absolutely overshadowed any chance of the remote possibility that the press may actually talk about the issues that got people into the streets in the first place. Crowds are scary, you see, and protest seems to come with the predetermination that you are automatically violent for stepping out of line in such a visible and audible way. The burden of proof is yours. It is possible to overcome the perilous label, but even then it will likely still carry the name and the notion – you were “non-violent.”But, it wasn’t a political or social protest that became violent yesterday in New York and it was no window or piece of property that was damaged. As the stores opened their doors to surging crowds of people in search of Black Friday bargains, 34 year old Jdimytai Damour was trampled to death as he opened a Wal-Mart store twenty minutes outside of Manhattan to a crowd of over 2000.Some of the bargains people were trying to get to? A 50-inch Plasma HDTV for $798, a Bissel Compact Upright Vacuum for $28, a Samsung 10.2 megapixel digital camera for $69 and DVDs such as “The Incredible Hulk” for $9.After the man was knocked down, people stepped on and over him uninterrupted in their relentless and deadly search for these and other bargains. When other employees tried to help him, they were being trampled too. Thousands of people had lined up the night before in anticipation of a low price shopping extravaganza and were actually angry when the store closed because of what had happened to Mr. Damour, who was pronounced dead at the hospital. The store remained closed for the rest of the day.These people crumpled part of the metal door frame like an accordion. The police spokesman declared that the crowd was “out of control” and described the scene as “utter chaos.” So far, the response has been pretty mild in terms of reactions to this tragedy. In other words, no one is being encouraged to calm down a bit with the sociopathic shopping behavior. No one is being warned to watch out for violent Black Friday shopper mobs next year. The police are, however, reviewing the surveillance video to see if they may press criminal charges, though they say that it’s difficult to identify anyone in the video in terms of culpability.Perhaps they should invite someone from a police force that has done well with identifying and singling out people from video tapes of large crowds who have gathered to bring attention to some issue, though admittedly it sounds like those “violent” crowds are probably a little less rowdy than the holiday shoppers.In all seriousness, however, this is a breathtaking display of which national values are nurtured and what can happen when taken to an extreme. After all, our very first post-911 instruction was to go shopping. With talk of the recession only getting worse, the media hyped up these Black Friday bargains with a passion, fanning the flames of an already determined holiday shopping crowd.Maybe if the values of some of the other “out-of-control” crowdsters, the people marching against war, racism, Wall Street bailouts and economic policies that depend on gross inequalities, were instead supported and embraced, Jdimytai Damour would be alive to celebrate the holidays with his family who, instead, will be planning for his funeral.What a tragedy. And what an important opportunity to talk about our consumption habits and values in this holiday season and beyond. The timing is right – even though we’re still being encouraged to spend, we know that the economy is only going to get worse. The vast majority of people, when asked directly, would see the absolute absurdity in valuing a bargain priced TV more than a human life.So, when you’re gathered around the table or the tree this year with friends and family, take a moment to remember and say a few words for Jdimytai Damour and his family. In doing so, you will remind everyone around you, in a very candid way, what really matters at this time of year and always.

Puppet on a strong… Same rich white men controlling the world’s future, steering it to its inevitable collapse…

Medic, I’m totally on-board with you. I just want people to understand that it’ll also take a major shift on our living style, health wise, and that we can’t afford it unless we give up a lot of the harmful crap that we do (such as preemptive wars).

So Wal Mart should hang out signs:”Shopping could be dangerous fo your health”

ex, what if all the banks are zombies?

http://www.eurointelligence.com/article.581+M5dd9572d37c.0.htmlSatyajit Das has a very elucidating piece on the global illusion that central bank reserves and sovereign wealth funds will finance our sovereign debt.

But it’s not just the US that is in this predicament. And, there are far too many external (read “foreign”) holders of this debt, they cannot just be dumped, this isn’t just an internal matter. This was the main point behind this scheme to “distribute risk.”As Jared Diamond wrote in Collapse, one of the key reasons for the collapse of a civilization is the loss of a key trading partner.

BRAIN DRAIN from AMERICA ?Let’s look at that post above – esp. Parts 9 & 10.”9. The good paper is backed by the Treasury’s ability to tax.10. The Treasury’s ability to tax depends onthe health of the real economy, which at the moment is terrible, in part because the banks will not lend.”Here’s the danger. First, as mentioned above that the US economy is in tatters, and long-term prospects for good tax revenue appear questionable (at best). This means that both federal and local tax rates will need to be increased (and also that Federal spending should be seriously cut – but the steps proposed by Obama go nowhere near the cuts needed).But there is an extra problem.Some of our kids WON’T BE HERE.Why should young Americans remain in the USA, when we have left them this kind of economic future??? They can go elsewhere – it’s as simple as buying a plane ticket. I was thinking about this, and I realized that I might very well have to give that same advice to my own children. It might simply be better for their careers if they consider opportunities outside of America. It’s painful for a parent to consider this possibility, but it’s a realistic evaluation of our future economy.America has been very fortunate to attract the best and brightest people from around the world – for many decades. But this can turn around, especially if we mortgage our economic future that way that we have been doing. We may very well see a “Brain Drain” that starts working in the opposite direction.PeteCA

Tension Increasing Between India and Pakistan?Debka is reporting the following this morning …”DEBKAfile’s military sources report that on Sunday, Nov. 30, Asia’s two nuclear powers, India and Pakistan, took their first steps towards a conventional war. India, claiming evidence of Pakistan’s involvement in the Islamist terrorist assault on Mumbai, placed its air and missile units on war preparedness, while Pakistan, disclaiming the charge, diverted its armed divisions from the Afghan border to its frontier with India.Military experts fear a full-blown war could spill over into combat with tactical nuclear weapons.For the Indian government, the last straw was the admission by Azam Amir Kasab, aged 21, the only terrorist known to have been captured by Indian forces, that Lashkar e-Taiba was behind the assault which claimed 174 lives, injured hundreds and devastated India’s financial capital.This Kashmiri group has links to both al Qaeda and the Pakistani Inter-Services Intelligence agency.From its outset on Wednesday, Nov. 26, the scale, coordination and clockwork targeting of the assault clearly betrayed the hand of a major national intelligence agency. Evidence also mounted that the attackers had reached Mumbai by boat from Karachi.Five months ago, Taliban suicide killers attacked the Indian embassy in Kabul, claiming 60 lives including that of the Indian military attaché. The New Delhi government then found leads to Pakistan’s clandestine service as the prime mover behind the outrage. Washington came up with the same proofs. “If these developments spiral, it could add credibility to views expressed on this blog that the Mumbai incident will lead to regional conflict in SW Asia.It’s worth keeping in mind that Debka often issues scenarios that don’t come true – their articles are intelligence analyses that represent projections (not necessarily actual developments). But every now and then, they also get an early identification of a real trend. We’ll see what happens here.PeteCA

By the way … what Debka is not mentioning in that previous article is that the Mumbai terrorists were:1) Planning an operation with a much larger scale of casualties (target: 5000 dead and Taj Hotel completely blown up)2) Carrying GPS equipment, and presumably maps and coordinates of their targets3) Were sending daily communications by sat phones back to PakistanThis is the background that speaks of a high level of coordination. It’s pretty clear that the Indian Gov’t will expend a lot of effort to try to trace the 2-way satellite communications and the sources within Pakistan. Either Al Qaeda has become much more sophisticated lately, or suspicions that they are getting help appear warranted.PeteCA

I’m sorry, but let’s please refrain from pinning anything bad on “al Qaeda” BEFORE we really know what took place. As a matter of fact, it has NOT been proven that al Qaeda was responsible for the attacks on 9/11: yes, look it up!And, beware of false-flag operations. See my above posting with links about the energy implications/connections in all of this (and why the US’s hands cannot be ruled out).

g , j. ditto.

Yes.

Why wait?

The first and most important step to this crisis and all those which will follow: The public must demand above all else TRANSPARENCY of government and corporations otherwise we are all guessing about the scope of these problems, their consequences and their solutions! Why do you think there are so many different opinions about these issues? It’s like trying to put together a puzzle when half of the pieces are either distorted or missing! If most people could clearly see that the engine is low on oil, then most would agree that we need to fill it up and to fill it with oil not water. Let us demand transparency and full disclosure with severe consequences to those who continue to deceive us!

I agree, but the people in charge seem to have decided transparency now would result in panic/disaster. With W we can be SURE that the Wrong decision will be made; HONESTLY, THE MAN CAN’T STUMBLE INTO A CORRECT DECISION and I’m a Repub.I.E. if we get transparency from W it means we are DOOMED.If we get transparency AFTER OBAMA TAKES OVER WE NEED TO ASSESS WHAT IT MEANS.

Nowhere To Hide, Nowhere To Go@Pete,If my crystal ball “readings” are worth anything pay heed to the above title for this post.The world is going to become a very unstable place. Wars and rumors of wars – to say nothing of protectionist policies will weigh against your notion of a safe haven for your offspring. All that you know is coming to an end.

Mark,My esteem for you just fell very low if you believe this kind of crap.

gsm, 100% correct. gambling while wearing a blindfold is not investing but investing in a ponzi scheme is gambling. i’m pretty sure it’s also illegal. here is “our” liquidity crisis in a nut shell.n.r. is wrong. the first thing is not recapitalize the banks. the first thing is put management of insolvent banks, all banks, in jail while their firms unwind and deflatethe ponzi securities. while this is happening you have time to think about recapitalization of solvent institutions if it turns out there are any. if not, nationalize.some may get out of jail sooner than others. i say the most useful ones with the most helpful information get out first.or not.. many people prefer gambling, especially large sums of other peoples money.

It’s much more lilely, IMHO, that we are going to get some transparency dictated to us. In other words, Wall St has lost so much credibility now that the rest of the world is going to decide proper accounting practises and regulatory standards. At that point we must either comply, or totally lose our place in the global banking system. We’re moving to a point where it’s “game over” for the USA in terms of jiving the ratings or fudging regulatory behavior.PeteCA

m, not my esteem. vertical steel and concrete columns don’t just free fall. it’s not a physical possibility and we’re not entitled to our own facts. assuming that “right” or entitlement is so clinton, bush, cheney, greenspan and that has failed.

g, that was really funny. thanks.

Think about commodity based currencies, Canada, Australia, etc.Australia has a well regulated and stable financial system and a floor on demand for the currency due to the massive exports of resources.Please note, this is not financial advice.

One last comment on the Mumbai terror attacks from me, and then I’ll let it go. This is, after all, an economics blog.The following is logical speculation – or analysis – on my part.It looks like the initial attacks at the train station and the restaurant(s) in Mumbai were in fact diversions. The terrorists may have been seeking to divert the immediate response of the city police and the counter-terror squads. This seems possible because the perpetrators spent only a short time at these locations, and the attacks there were aimed at causing max casualties in a few minutes. After that – the terrorists moved on to the hotels (i.e. primary targets).Therefore, the real plan may have been to quickly take over both hotels (Taj, Oberoi), plant explosives in key points, and completely demolish both buildings. This is consistent with the fact that the terrorists were reported to be carrying RDX explosives in their backpacks and that the attack was timed for late at night (maximum hotel occupancy). Therefore, it’s fair to speculate that the real plan was to create another terror spectacle in Mumbai similar to the Twin Towers in New York. Two major buildings totally demolished – with the loss of all lives inside.If this theory is correct, the attack on the hotels partially failed. Perhaps local hotel security was more determined than the terrorists were expecting, or perhaps the demolition was more difficult than they expected. One thing is certain … all the people inside the hotels who survived by hiding in rooms or behind locked doors are very lucky to be alive at this time.Just speculation based on reported facts.PeteCA

I’d heard of some Mormon who had rung up a ton of debt figuring that the End Days were here, only to find that they didn’t get here fast enough: he got hauled away.

We’ve seen the worst of this for now, like it or not the FED has the power to re-inflate the system and aside for the need of a “new deal” style program from Obama we’ve seen the end of credit crunch and massive deflation. It’s down the road when the dollar falls that people will be facing the greatest difficulties. We’re becoming a poorer nation but don’t expect the end of the world like so many here believe.

RDX explosives or not, there’s no way that you’re going to blow a modern high rise without a LOT of explosives and proper placement of those explosives. I’d suggest that the explosives that they were carrying were for strategic purposes, situational application.The aim was to cause terror. THAT worked.Now, as to who is instigating this terror…

Thanks for the input – one idea based on the comment for Canadian dollars was an S&P ETF hedged to the Cdn$ (ishares – XSP) – problem is that Canada, while commodity rich, depends on the US market e.g. Autos – so I am not sure its currency will be as robust and if US goes protectionist (and I think it will with the Auto sector) that’s bad news for the frozen north.

staying present is a good thing!

Lol. Some people are pretty interesting. I know a married couple who have believed for years that the world will end around Oct. 2009. They live in a trailer, won’t buy anything more permanent than patio furnature and yet she laments that her two teenage children have no ambition and direction in their lives.

re milken – interesting for as i remember the authorities, after they incarcerated him, were forced to supply him a connected UNIX box and connectivity to keep him trading – as nobody else understood his positions:) I often laughed about that but milken’s pardon is now one of influence on a done system so to spend time on it, for me, is a waste.But saying this, milken was talent and such talent is human talent and should be utilized for mankind keeping in mind that crime is crime and needs justice; fair and right justice.And, and but; all ideologies are imposed to control the masses – by those of the lowest common denominator (LCD) – at states of low energy inputs and as such they ALL lack intellect, reason, accord er, physics. They are just a lazy and dumb way of controlling the masses whilst milking the system; they are not designed for the future of our childrens’ children but designed to maintain a present day control in a “status quo of cheap convenience.Please note that the original Constitution that created the United States of America was NOT of any ideology (clues here) – but now it is; brought about by self-serving bureaucrats and ideological fruit-cakes – not to mention out-of-control bankers and political rats encased in Peter’s Principle.People don’t think because it hurts when you start and thereupon, represents work or values, if you prefer. It is far better and easier to be consensually, and ‘the’ “True Believer” – where the system build of rewards are self-enforcing and grant “warm and tingly feelings on demand.We are all guilty of collusion but it is time to break with the past and becomes intellectually adaptive for survival; Most will be needed to be dragged along.A silent thought for that poor man stampeded to death by the mindless and thoughtless “consumers” – Yes it is they that will need to be dragged into the 21st. Century.Ho hum

@Anonymous: “What do I tell my children?”My son majored in International Economics and returned from 2 years with the Peace Corps in Africa. He wants to go to Business School. I send him article after article and tell him it’s not a good choice.I don’t think he really understands the horror of this situation.As for the new leadership – I used to think they would be able to square the circle and get us out of this without endangering their own dominance. But the brazenness of the approach so far seems to indicate that the entire crew of Sachs alumni and their proteges will try to find a way to let the country go bankrupt while they fight to preserve the system. I don’t see anywhere this can lead other than external and internal conflict.

Mark – Sorry but you’re quite wrong about that. In fact, there is a whole demolition industry that does exactly that very thing on a regular basis. They can bring down high-rise buildings with only limited amounts of explosives … and they do it in a very controlled way. See, for example, the following YouTube video which shows the destruction of a high-rise casino in Las Vegas in March, 2007. If you ignore the fireworks and the fantasy light show in the YouTube video, you’ll see that the actual explosives themselves are quite limited. It’s all in the placement of the charges, and the understanding of how to bring down a large building.LinK:http://www.metacafe.com/watch/474724/stardust_demolitionPeteCA

Pasadena, California in the days of American Graffiti

FYI Faber is guest hosting CNBC Asia Squawk at this moment — live feed available at cnbc.com

PhD Engineering YOU GET A CLUE!Read my f*cking posting! I provided a f*cking link to an FBI web page (and to a highly credible journalist site) having to do with questioning the claims that Osama Bin Laden was behind the 9/11 attacks.

I am aware that capital losses can be carried forward. Can you refer me to the IRS form allowing for them to be carried backwards?

g, what? i thought he said something about a 33 year bear market?

Too many people on the depression band wagon, always go in the opposite of the consensus and you’ll do alright.

The guy is probably just tired. I don’t know how much longer he is planning to keep the kind of schedule he does. Perhaps, when things stabilize a little he will start taking it easy.

pjb, thank you for thinking.

My family & friends think that things might worsen a bit, but will wind up being just fine. They don’t believe that they’ll experience much worse than a bit more inflation. They believe that, from afar, they’ll see rising unemployment, layoffs, and some business failures, along with more home foreclosures, but they don’t expect that it will really touch them at all personally. That’s the ‘consensus’ that I’m looking at.The MSM is in CYA (just in case, so that if it does go to depression, they can claim they reported it first, etc) and doom/gloom mode, because doom/gloom sells more than rainbows/kittens. However, very few (with exception to those who are already in trouble) believe that we’re toast, but they do appreciate having some drama to discuss over the dinner table and at the local bar. Am I a bit cynical? I suppose so.Anyway, the MSM is selling news. People pay attention to the news as though it’s a here-today-gone-tomorrow type of commodity. Most people probably believe that ‘depression’ is the current flavor of the month, and that we’ll be on to something else by spring. After all, as my relatives told me over Thanksgiving dinner, recessions have never been all that bad and it’ll be over in no time. I guess we’ll all see about that, eh?

Apparently it is only corporations that can carry capital losses back:http://www.answers.com/topic/tax-loss-carryback

Take a look at these charts, before you decide what the economic future of the USA may be. The concept of the data is simple – it’s the total amounts that are almost beyond comprehension. Then tell me if you still think the US is headed for a normal economic recovery at this point.http://4.bp.blogspot.com/_H2DePAZe2gA/STAqqdE8CfI/AAAAAAAAGks/WrursaMDRIM/s1600-h/expend.pngPeteCA

I’ve contributed OFFICIAL documentation. YOU on the other hand have done what exactly (other than lambaste others and flaunt a title)?

whatever

Mark, isnt it fascinating,everytime the economy about to tank Al-Qaeda aka Moslem Militants do an all out attackcome to think about it, they saved US economy in 2001furthermore usually terrorist actions send a message to the world, a political statementthis is just random killing,India a large country, multiple entry points, enourmous ratio of land to military/police personnel,history of aggression with neighbouring country…PERFECT..

g, the thing is with no transparency you have no investing. you have gambling with a blindfold and insider trading. ie. zombies. or much worse.

Pete,The charts don’t pretty, but the Fed and the Treasury simply can’t see the charts through their rose-colored glasses:1. They simply see the foreigners buying our debt because of the safe haven status of our treasury.2. They simply think they can inflate asset prices and tax people on inflated assets. Never mind the fact that a sane economy is built on building industries and generating wage growth to create wealth, rather than pushing down the cost of borrowing to “revive the economy”.I honestly think when foreigners stop buying our debt that’s when the real trouble begins. This Black Friday I saw a lot of people happily buying crap they don’t need, I wonder what will wake them up…Just my 2 Cents.

pjb, according to the story as it goes…frogs only appreciate the dire potential impact of their environmental stress as it relates to heat shock when the increase in temperature is sudden or accelerating while gradual increase usually results in mortality.but this is the fate of unthinking frogs. investors would not let this happen to their portfolios.

Sorry, forgot to post the link:http://tinyurl.com/5dbg77

ya’llfrom here, it appears to be the largest scam in the history of the world and we are fortunate enough to be a part of it, witness..as was concluded above …”11. Conclusion: A vicious circle has beenestablished in which bailouts becomeunfinanceable. Not because the bailouts are not broad enough, but because the toxic assets are being monetized, and the old toxic debts are just being rolled over in a new form.”.”the toxic assets are being monetized.” is it true? it appears so.does anyone know what these arrangements are? how much and who is receiving payment and for what? the answere is NO. that, my friends, is nothing more than theft. used to be called stealing.theft of what? money. from who? you. by who? the fed. with complicity of who? the treasury, the administration, and the congress.pirates on the high seas have nothing on this. transparency?

From The Daily Reckoning, a remarkable blog (www.dailyreckoning.com):”(look at)the life of the turkey. The animal is fed for 1000 days…and then it is killed. So, if you plotted out the turkey’s life on a chart, it would look great for 1,000 days…each day, the food arrived reliably, and each day, the turkey gained weight. The turkeys would look around and say they were enjoying growth and a bull market. Momentum investors would see it as an opportunity. The quants would run linear regressions on the data and prove that the risk was minimal. “

The voices for monetizing US debts are rising. The temptation to appease this siren song must be awfully strong and growing stronger with each passing day.http://www.businessspectator.com.au/bs.nsf/Article/Desperate-measures-LVSJB?OpenDocument&src=sphThe argument is of course that the inflationary effects are an offset to the deflationary forces working there way through the world’s economy.But once started, when to stop?? We will see the same vested interests ramping up the money printers who also were aiding and abetting the vile Ponzi schemes currently imploding.Ever get that feeling you are but cannon fodder?

“Ever get that feeling you are but cannon fodder?”Lately? ..almost daily..

Transparency = Clarity = Confidence = TrustOur financial disaster CANNOT be cured with ANY amount of $$.Financial Voodoo Potions will only morph this Monster.It seems our financial systems goal is to ultimately Reward those that can Conceal their Risk the Best.This is the disease/ motivation of our system.This disease will kill it’s Host believing it can survive.In this game of Risk, I fear there will be NO winners, only broken game pieces and missing dice.

Tanta of Calculated Risk has passed away.http://calculatedrisk.blogspot.com/2008/11/sad-news-tanta-passes-away.htmlTanta, we’ll our best to get things right, as you taught us. There are no words expressing how much we owe you.

Pentagon to detail military to bolster securityPlan would dedicate 20,000 uniformed troops inside U.S. by 2011http://www.msnbc.msn.com/id/27989275/Planning for some civil unrest in the near future?

In case a terrorist attack doesn’t materialize they can always guard the Brinks trucks on their way from the Fed to Citi.

LOL at the premise “when”. Do you think that the ROW governments haven’t figured it out already? US talking heads can keep right on claiming the sky is blue, whilst the gathering storm clouds are apparent for all to see.What is apparent is that the US Government are going to persist in trying to blow smoke up the worlds arse. They will persist in trying to make the broken model work. How many phantom shares do you think exist in the NYSE? Billions. THe rest of the world is not going to invest in a Fraudulent market. ENd of story.

From Bloomberg Dec 1Industry Shrinks From Asia to EU as Crisis Enters 17th MonthBy Simon KennedyDec. 1 (Bloomberg) — Manufacturing shrank around the world as the financial crisis enters its 17th month, providing fresh evidence that the global economy is in recession and intensifying pressure on policy makers to respond.Purchasing managers’ indexes in Europe, Russia, China and South Africa today showed record contractions in production as the persistent lack of credit hammers demand from companies and consumers.Signs the worldwide slump is worsening pushed stocks in Europe and Asia lower and yields on U.S. Treasuries to record lows as investors sought the safest assets. U.S. factories probably recorded their worst performance in a quarter-century last month, economists said ahead of a report to be released later.“The pace of manufacturing decline has been vicious,” said Kevin Gaynor, head of economic and interest-rate strategy at Royal Bank of Scotland Group Plc in London. “If we thought the last quarter was bad for the global economy, the current quarter is shaping up to be a lot worse.”The MSCI World index of stocks in 23 developed markets today fell 1.1 percent to 883.58 at 12:26 p.m. in London as the deterioration in manufacturing unnerved investors. The yield on two-year U.S. notes dropped as low as 0.95 percent and the rate on 30-year bonds fell to a record 3.387 percent…http://www.bloomberg.com/apps/news?pid=20601087&sid=aiAyjaZkiMy4&refer=home

g, i suspected as much myself. pretty wrong headed direction that was chosen.

you mean guard them from angry citizens who would like to have some of their savings back

but we are nothing much but cannon fodder.Or the other alternative is that we are all killed by UN or by God at the Final Judgement.

hey at the same time as the environment is severely degrading…not to mention the growing threat of terrorism…what’s next? That UN will be needed, urgently, to be given more authority.and then we need a population reduction because neither the economy nor the environment can longer sustain 6 billion of us…might as well ban all religious organisations & get rid of all religious people then. That would solve the population reduction need and the religion-fueled terrorism issue. Weird if it does not come to this. Or this is what you wanted anyway.

Yes, this is more evidence to disprove the right wing’s propaganda that Clinton and the Dems were the primary cause of the whole mess.The facts are there for those who can see them and do not wish to distort reality for their own purposes.

From one of the very best analysts out there.America Must Keep Consumer Liquidity FlowingBy Meredith WhitneyPublished: November 30 2008 (FT)

As an analyst, it is my job to do fundamental research and call it as I see it, and my bailiwick is financials. My outlook has been negative for over a year and, technically, I have been “right” on my calls. Seeing massive capital destruction has brought me no pleasure, but unfortunately I see little on the horizon that would change my outlook. In fact, after observing the US economy so derailed, I feel that I must act as a citizen of this great country to attempt to offer solutions to this economic train wreck we are all involved in.First, I am more bearish today than I have been in the past 18 months. In so far as the market has impacted on the economy, capital destruction has been so intense that multi-trillions in capital raised by institutions through both private and public capital has gone to plug holes and not stabilise the effects of shrinking liquidity to corporations and consumers. More than $3,000bn (€2,365bn, £1,955bn) of available credit has been expunged from the markets and therefore corporate and consumer borrowers so far this year.I estimate that the mortgage market will shrink for the first time in US history and that the credit card market will be 18 months behind it. While just over 70 per cent of US households have access to credit cards, 90 per cent of these people use credit cards as a cash-flow management vehicle, or revolve payments at least once a year. While the credit card market is small relative to the mortgage market, it has grown to play a key role in consumer liquidity. Declining liquidity here will have disastrous effects on consumer spending and the economy. My primary concern is preserving liquidity to consumers, who command more than two-thirds of gross domestic product.There is no doubt that time will be the greatest healer, but there is a strong argument for putting the financial system through a methadone-clinic-style rehabilitation as opposed to the “cold sweats” rehab that we face. The US government appears to feel the same, which is why various versions of direct government lending and quasi- as well as real bail-outs have been announced. Certainly, credit was extended to unworthy borrowers, but the baby is now being thrown out with the bath water. I expect more broad-based credit contractions but, specifically, more than $2,000bn in credit lines to be cut in reaction to risk aversion, constrained capital and regulatory change.Here are some easily adoptable changes that would make a difference.First, re-regionalise lending. Since the early 1990s, key bank products, mortgages and credit card lending were rapidly consolidated nationally. Banking went from “knowing your customer” or local lending, to relying on what have proven to be unreliable FICO credit scores and centralised underwriting. The government should now motivate local lenders (many of which have clean balance sheets) to re-widen their product offering to include credit cards and encourage the mega banks to provide servicing and processing facilities to banks that sold off these capabilities years ago.Second, expand the Federal Deposit Insurance Corporation’s guarantee for bank debt. Banks need to know they can access reasonably priced credit for an extended period to continue to extend new credit lines. Any semi-conscious bank management team knows that capital and liquidity are precious and therefore is hoarding both.Third, delay the introduction of accounting rule FAS 140 until 2011 or 2012. These moves to bring off-balance-sheet assets back on balance sheet for the sake of transparency are a mirage. The primary assets that will come back on to balance sheets are credit card loans. Frankly, there is more transparency in off-balance-sheet master trust data than in on-balance-sheet accrual accounting. Banks cannot afford it now and it will further constrain credit.Fourth, amend the proposal on Unfair and Deceptive Lending Practices that is set to be adopted in 2010. The proposal includes one major change that will lead to a severe unintended consequence – pulling credit from consumers. Restricting lenders’ ability to reprice an unsecured loan will cause them to stop lending or to lend less. This change could cut over $2,000bn in unused credit card lines, or over 40 per cent of unused credit lines. With so many Americans relying on their credit cards as a major source of liquidity, it would be equivalent to a major pay cut.This is no time for partisanship. The situation is too dire. These changes are ones I would never have imagined endorsing a year ago, but these are extraordinary times.

http://www.ft.com/cms/s/0/11344d06-befb-11dd-ae63-0000779fd18c.html?nclick_check=1

Whitney was one of the very few mainstream analysts to not only call the credit crisis but as it evolved she has correctly predicted outcomes (if anything she has erred on the positive side)

Yep. We may actually be moving towards a real decline in total credit for the USA. During previous US recessions the credit curve simply went flat (it stopped growing upwards – but it did not decline). An actual decline would imply a more serious economic outcome, partiuclarly in terms of a sustained drop in consumer spending in the USA.PeteCA

Not a big fan of O but I must say pretty shrewd to select Gates as Defense Secretary.

I think Podesta, as the Chief of Staff, is doing a lot of the guiding and he’s guiding towards people with government experience. Other than Clinton, the previous Dem president was Carter. I agree that they should be looking more broadly though.

Yeah, much to the chagrin of my liberal and progressive friends I pushed this theory. And it’s quite apparent that it’s to continue under the next administration: http://www.alternet.org/blogs/waroniraq/109160/

LOL!

@Guest: “[T]his is the big question we don’t know how smart he [Obama] is or how secure he is?. He could be just keeping his enemies close to him so as to disarm them when he eventually undermines them. Maybe he’s that brilliant of a strategists, don’t give up hope…” 18:53:41It’s possible that we do not know very much about the president-elect because he has not yet exercised any of the real power that comes to the president. But, one thing we do know for certain, and that is that he misled his supporters — the people who voted for him, the press, and the rest of the country with the repetitious promise that he would seek change in Washington, D.C. For him to accomplish this with the team he has assembled, most all of them with Clinton or insider connections, is, of course, impossible. That he lied about his mission in running for president is crystal clear.What was his mission? Was it to ride around in Air Force One and have his meals catered and people gushing at every turn and a four-year accumulation of stadium-filled audiences?Or, might it be that he is working for an underground cabal of conspirators who will allow him to be president while they rape, pillage and destroy the American republic? (Of course, the latter is just a nutty conspiratorial theory.)

d, link don’t link.

I’ve been thinking a lot lately, and I just wanted to float this out there. Please keep in mind, I’m not an economist in any way, shape, or form – so be gentle.I think that this is the endgame for the United States. When you build an economy that is dependent upon ensuring that consumers continually spend more than they make, you’ve set yourself up for a lose/lose situation. At some point, the consumer won’t be able to spend anymore – in other words, there’s some sort of natural limit as to how much an individual or a family is willing to borrow, or how much an institution is able to leverage itself. At some point, the payments stop coming in, because the consumer is paralyzed – which bill do I pay off first when all my bills are 9 months overdue, and the collectors are harassing me night and day?In our economy, consumer spending makes up 2/3 of the GDP(I think that’s the stat I keep seeing). So if consumer spending shrinks, it’s an automatic recession. And if consumers actually retrench and start living responsibly, the economy will fall off a cliff. So what do we see? We see government officials stating that the big problem out there is that “debt isn’t available”. What this means, of course, is that their model is failing, that they need people to enslave themselves to the system in order for the system to work, and that they will have no answer available when consumers decide to throw off the chains of debt and live responsibly.This is very frightening, in my opinion. I think we are living in dangerous and perilous times. This is a classic Catch-22. If people start spending again, we only delay the inevitable. But if people start living responsibly, we’re in for a Depression that I believe will be longer and deeper than the Great One.Any thoughts?

One thing is clear, he displays many characteristics consistent narcissistic personality disorder. e.g. his reaction in today’s press conference when one reporter asked him to reconcile his earlier criticisms of her.

Unfortunately, there is more than a grain of truth in what you say. The govt’s short sighted outlook, slow response to any crises and putting the average American worker’s priorities at the bottom of the list coupled with the uncontrollable greed of the largest corporations has resulted in this “between a rock and a hard place” mess! While many Americans are still blindley addicted to spending as long as they can use credit, the wiser ones have started to put their wallets away. Watch what happens to the higher end of the consumer market in the next 6-12 months especially in the jewelry, high fashion and European auto industry (BMW, Mercedes, Lexus). Because our mindless leaders have stood by watching while we have all been walking on air (credit), many of us are now about to fall down a deep dark hole and although we don’t know how dark or deep it will finally be, we do know that unless you are the super rich, you will be among the last to be thrown a lifeline! A first step solution: the public must demand full disclosure and transparency from the govt and the govt must demand it from the largest corporations; otherwise, will anyone really be able to solve this puzzle when half of the pieces are either disguised, hidden or destroyed?!

Who needs oil anywaysGood News, Miss America?

Ah, today’s press conference – in the rough. When Obama was asked: How can you control your mission when you’ve appointed a clash of rivals, Obama answered, I want strong personalities, I don’t want weak personalities; I don’t want group think in the White House. But the meaning of the Question was, how are you able to have your own policy when your own people oppose it?In a question later, on Pakistan, Obama was asked about going into Pakistan to deal with terrorists (referring to a campaign statement that he would) in light of the fact that some of his appointed security people have made policy statements to the contrary.Already, the accusations that Obama does not control his own policy have begun: he’s in the hole already.Already, Obama is defensive regarding his own team. He introduced his team with the preface (I paraphrase): I set the policy and I am responsible for it and They will be carrying it out.The point: the press is on the offensive, Obama the defensive.

Invest in this good news?Take me to the river…

thanks for that you reset my neck !where i sit – the most used word today is coalition…

Bernanke says Don’t worry, Be happy “No Depression … Just put that out of your minds”It’s only a coincidence that the Fed has been adopting strategies consistent with the official handbook of how to avoid a depression.Meanwhile the yield on 10 year is at 2.7 – China’s manufacturing has collapsed etc…

Re: Ben’s announcement today.I have read that when the Federal Reserve buys Treasuries it is, almost by definition, “printing money”. Is this correct or not?TIA

Nasdaq lurking just over its 52 week low -

Paulson about to speak – time to go really short

Right on, Hubbs.

Get Ready For The Job ExperienceRemember that fellow who sat on a dung heap covered in sores and boils?We really need a jubilee – but that won’t happen.Marc Faber has it right – the USA is in for a L-shaped recession as far as the eye can see – at a minimum and worse hyperinflation at a maximum.

no but it is humans who make the technologies that forge different thinking…are you saying you have no faith in humans as saviours?

Meridith Whitney coming shortly up on CNBC

This is a pretty bad day so far (if you’re long)

Time for a replay…http://fr.youtube.com/watch?v=AePFDl8Aqtk

Whitney Calling Citi to go through earlier lows

Check. It’s a direct injection of cash created by an accounting entry. Then comes direct support for the stock market. Buy stocks! Sell dollars!

don’t give any ideas to Paulson and Bernanke

great comment, Hubbs. And yet the majority of people here are still playing the game. Can you say “addiction”?

Consulting With No-thing Can Be InformativeIt’s called meditation – the other half of the deck that is missing in your worldview. You might try it in the near future when you are out of a job with no-thing to do.Good Luck

The professor is being muted by his buddies in the new administration, it’s bad. We’re losing an independent thinker.

@Jomos,Yes, and while at it eliminate the department of Education, Energy and Agriculture. That ought to balance the budget.

Thanks,I needed that.Does the fat lady sing next?

Remember Man That Thou Art god And Unto GOD Thou Shalt ReturnJubilee – it seems we may be on the same page, except for one important point. The jubliee can only be celebrated after 40 years of wandering in the desert – for that is when one can then enter the Promised Land (=’s a new worldview). It is what is necessary to purge the slavery out of the psyche.

They pushed it back to January so that people will think that we must be approaching its conclusion e.g. the Roubini two year recession is now half over.

good post

And then there is thisBRIC Shoppers Will ‘Rescue World’ Goldman Sachs Says (Update1) lDec. 1 (Bloomberg) — The best hope to keep the global economy growing may be people like Wei Yufang. A peasant who farms a small plot beside the mud-brown Huaihe River in central China, Wei has a modest dream: to buy an air conditioner to give her family relief from the dusty heat that each summer envelops Xiaogang (Little Hill) village in Anhui province.With economies from the U.S. to Japan in recession, Wei and the other 2.8 billion people in Brazil, Russia, India and China may provide the consumer demand needed to counter the slump…

Gee, I wonder where that air conditioning unit is going to come from… And then there’s the little matter of how to power it! Oh yeah, and you have to keep this up, keep expanding, indefinitely!It’ll work up to a point for China, but this still doesn’t address the broader world.Wouldn’t it be great if we could round up all these writers and ping them down and make them address issues in more than a superficial manner?Run rabbit run!

Hey!!Would you lend your money to a guy that would not pay you????Why should banks, (already leveraged 30-50/1) play this game?If they use their “artificially inflated” reserves to multiply loans people will see what inflation really means.

There hasn’t been a “free market” in banking since the 17th Century in ANY country with a central bank (the whole point of a central bank is to control banking). In the U.S. periods without a central bank were characterized by “fly-by-night” fraudulent banks and freely printed fiat banknotes from multiple banks creating monetary chaos; massive credit explosions and panicky crashes were often more localized than today but they were much, much more frequent and disastrous to those affected.

At attempt at Jubilee with respect to CDS payments may be the trigger for the next big dislocation. Check out this link that, was for a short time, listed in the article list here ar RGE monitor, but now, strangely, is no longer linked. Maybe because it is not a credible rumour? EU may halt CDS payments If this kind of thing is the next line of defense, I think we may be about to see a real dislocation of the banking sector, sparked by governments attempts to deal with the CDS bubble by wishing it away.

Pete CA, how about update on spread between physical gold spot price v gold stock? I have never been fan of gold. In the old days it seems there was nothing other than gold. people could grow their own food. There were no electronic gadgets, cars, etc. Weapons consisted of muskets and bows and arrows. There was nothing to value but gold. Today things are far different. I have to go to the store to buy food, gas, TV’s, medicines. “Necessities” such as natural gas, electricity, and water are literally piped into my house, and waste flushed down the drain or at the placed at curbside.In view of the vanishing self sufficiency lifestyle, it seems there are more tangibles of value than gold. Funny how all that ammunition I bought before the gun ban in the 1990s has more than doubled in value. When my colleague went to buy ammo at the Raleigh Dixie Gun show last week, everything was sold out.Thanks to reading this blog, I moved all my domestic stocks into treasuries last year October 2007. That was an easy call to make. I didn’t go far enough though in heeding Nouriel’s warning that there would be no decoupling of foreign markets and economies, I have watched as these have taken back all the gains and more generated in the last 15 years.What is more problematic is to figure out where the next place of refuge will be, as I have a very uneasy feeling about hyperinflation rearing its ugly head in a few years. On one hand, I think maybe going back into equities..of companies that make things rather than shuffle papers like finance or insurance, or even going into physical precious medals. Farmland might be a good idea, except it comes with an eternal money siphon in the form of property taxes.

What a crappy article from Tariq Ali and for pirates to carry out this attack is ridiculous as it needs more than year of planning.Stop posting BS articles.

go away fascists neo-con.

Says MSN Market Events: “In economic news today, Federal Reserve Chairman Ben Bernanke said the U.S. economy remains under stress despite the efforts of the Fed and other Policy makers. To help alleviate the stress, he laid out possible further policy actions, including lowering the fed funds rate, purchasing longer-term Treasuries or agency securities on the open market.”Chairman Bernanke has outlined measures that can only be referred to as more and more of the same. And as the financial crisis deepens, he continues to rob Peter to pay Paul, and Peter is running out of money, which leaves us, as one reporter said today, “in the soup.”Bernanke, as they say, was a student of the Great Depression, but now it begins to look as if he is attempting to recreate the model he studied. Maybe Ben should self-adapt that old refrain, “Ain’t Gonna Study War No More.”Sing it, Ben!I ain’t gonna study Depression no more,I ain’t gonna study Depression no more,Study Depression no more.I ain’t gonna study Depression no more,I ain’t gonna study Depression no more,Study de-pression no more.I’m gonna park my helicopterAway from the market place,Away from the treas-sure-ree,Away from investor greed.I’m gonna park my helicopterWay off Wall, down by Main ~Way off Wall, down by Main.I ain’t gonna study Depression no more!Thank you, Ben.

Why didn’t they just push it back to the eighties so we could be done with it?

Great Depression II?Repeat after me: “Those who are not creditworthy are not being loaned money any more. Those who are creditworthy do not want to borrow money any more.”Did you miss that? “Those who are not creditworthy are not being loaned money any more. Those who are creditworthy do not want to borrow money any more.”It is that simple, just as it was during Great Depression I (and numerous previous Depressions throughout history). Since the prosperity of the period 1982-2006 (the “Great Moderation”) was a direct outcome of excessive credit expansion (much like 1908-1929), once the lenders and borrowers stop their crazy behavior nothing – repeat, NOTHING – can prevent a violent and extensive credit contraction dropping economic activity to a pre-credit-expansion lower level (a phenomenon called a Depression).

Until it can no longer be denied.Which is usually about the same time that they have to ready the public for a new word.Like “depression”.

When I posted that Bloomberg article – it reminded me of the American main stream medias’ depiction/denial of just how serious this global crisis is.Separately the IBER declaration today of a recession that started in December 2007 suggests that they should consider amending their charter to allow more than one meeting per year – or – that they should disband due to their apparent total incompetence.

This is criminal, now you know!The whole time Bernanke and Paulson knew we were in a recession, but the they told the Congress and the American public that the bailout money (for the banks) was necessary to prevent a recession.The bailout money was essentially giving lifeboats to the first class passengers on the Titanic.Does anyone care about holding public officials accountable?

A poem that could have been written for the dynamic duo Paulson-BernankeI would like to swim against the stream of time:I would like to erase the consequences of certain eventsand restore an initial condition.But every moment of my life brings with it an accumulation of new factsand each of these new facts brings with it its consequences;so the more I seek to return to the zero moment from which I set out,the further I move away from it;though all my actions are bent on erasing the consequences of previous actionsand though I manage to achieve appreciable results in this erasure,enough to open my heart to hopes of immediate relief,I must,however,bear in mind that my every move to erase previous eventsprovokes a rain of new events,which complicate the situation worse than beforeand which I will then,in their turn,have to try to erase.ThereforeI must calculate carefully every moveso as to achievethe maximum of erasurewith the minimum of recomplication.Italo CalvinoIf on a winter’s night a traveler

Grazing pattern is established such that animals graze near homesteads with short grazing duration during rainy and cold seasons. Animals are transferred to distant grazing areas during the dry seasons. Quality of forage is normally related to animal performance as well as height and colour of dominant grass species available in grazing areas.The study indicated that there are hierarchical steps that are followed in decision making before shifting herds of cattle to distant grazing areas. Further studies indicated that native multipurpose trees namely, Dichrostachyscinerea, Acacia tortilis and Acacia nilotica thrive well in pastoral areas. These multipurpose trees reported by pastoralists as useful feed resources during the dry season. However, these multipurpose trees have multiple uses that sometimes result in resource user conflicts. The conflicts were reported to occur between pastoralists and charcoal producers because the trees are also valued for good quality charcoal.

correction ;;;;;; above statements need to be in quotes. my error. source http://www.helpguide.org/mental/depression_tips.htm

http://www.cipav.org.co/lrrd/lrrd17/1/kava17005.htm.source for above quote.

Very, very good, Italo! Just one small update: the last line to read ~Thereforewe must calculate carefully every moveso as to achievemaximum banker bailoutswith the minimum of recomplication.

From Financialsense.com 12-01-08: A follow up to the gold discrepency….While we see signs of “big money” moving into gold through machinations occuring with respect to “deliveries” at COMEX, there are other ‘tell tale’ signs that demand for physical metal is in fact SOARING. This is reflected by the recent decoupling of the price of COMEX gold futures and real costs one must incur to obtain physical ounces in coin or bar form. The premiums being paid for physical ounces have decoupled to the point where leading gold web sites now routinely list current ebay pricing for gold bars and coins to achieve “accurate” real world pricing for physical metal.Why Are People Using Ebay For Pricing Gold?The reason that investors are turning to alternate reference sources for pricing physical precious metal is that the COMEX futures derived prices for metal are INCONSISTENT with the empirical robust demand story outlined above. In short, the COMEX pricing model appears to be FRAUDULENT, when despite overwhelming demand for the commodity we routinely and increasingly see “BUYERS STRIKES” in the futures markets like the one we experienced just this morning in gold and particularly in silver.

Phonon Resonance Institute LLC claims that it is possible to create gold from other metals…at this website…http://www.drjoechampion.com/It is probably some sort of a scam, however (thinking on the adage ‘if something sounds too good to be true, it probably is’)…

Reserve Bank of Australia’s Stevens Explains Rate Cut (Text)Dec. 2 (Bloomberg) — Following is the text of a statement by the Reserve Bank of Australia Governor Glenn Stevens after the bank cut its benchmark interest rate by 1 percentage point to 4.25 percent today.At its meeting today, the Board decided to reduce the cash rate by a further 100 basis points, to 4.25 percent, effective 3 December 2008.Recent actions by governments and central banks to stabilize their respective financial systems have begun to take effect. Nonetheless, financial market sentiment remains fragile, as evidence accumulates of weak economic conditions in the major countries and a significant slowing in many emerging countries.Commodity prices have fallen further. This, combined with the likelihood of below-trend growth in the global economy, suggests that global inflation will moderate significantly in 2009.The Australian economy has been more resilient than other advanced economies, but recent data nonetheless indicate that a significant moderation in demand and activity has been occurring. With confidence affected by the financial turbulence and a decline in the terms of trade now under way, more cautious behavior by both households and businesses is likely to see private demand remain subdued in the near term.With that outlook, and with capacity pressures now easing, it is likely that inflation in Australia will soon start to fall. Global disinflationary forces will assist in this regard, though the depreciation of the exchange rate means that the decline of inflation to the target could take longer than would otherwise have been the case…http://www.bloomberg.com/apps/news?pid=20601068&sid=abEE6IWcIvNs&refer=home

g, isaac newton spent a good part of his life trying to dothe same thing. while he succeeded at many of his endeavorsat this, he failed.

Perhaps you’re reacting (logically) to Ben Bernanke’s annoucement that he is going to start monetizing debt (buying US Treasuries directly). Or maybe you’ve just been contemplating the enormous expansion in the US monetary base that has happened recently. Although very little of this monetary expansion has hit Main Street yet – it will sooner or later. No doubt with dramatic effects on the US inflation rate.All the data I’m seeing continues to point to a high demand (globally) for physical gold. The Perth Mint (Australia) is taking no new orders until Jan of 2009. Buying is brisk from the Middle East and Asia. Some Europeans (esp. the Germans) have also been buying a lot – but Germany suffered through hyperinflation and doesn’t want to go back.The COMEX price for gold is still way out-of-synch with what bullion is selling for. This travesty is by now well known. It will hopefully correct itself sooner or later. Meanwhile, anyone can buy gold provided they offer prices above COMEX (10-50% above, depending on offers). Try goldandsilvernow.com I have not dealt with them – but they are establishing an online bid system where you can buy from private sellers.If precious metals are just too volatile, consider investing in imported goods that are durable and hold their value. Back in the 70′s the inflation rate in the USA was high and people hated it. Next time around we’re in for something much worse.Just my thoughts.It’s not easy to avoid loss of wealth. What we’re seeing is a 1-2 knockout punch. Massive deflation of asset prices (note … I said prices), followed sooner or later by massive inflation. It will kill most of the wealth in this country.PeteCA

Well said. It’s with a wink & nod that we will call it deflation and balloon the money supply to continue the status quo.

Enjoyed your thoughts, GSM. Could you help me with ZIRP? What does it mean?

Oops. That was me, GSM. Not “Guest”

Many care. We don’t know what to do. That is the only problem. The military is not under our control.That’s all that is holding the current people at the top. They have no right to it, only the fact of their power, which is now nakedly evident. Bernanke said today, again, that the strength of the US economy would pull the “key financial institutions” through, also that everything possible must be done to protect them.That’s about as plain as English can get, for saying that the top banks matter more than the people.

Jubilee,ZIRP = Zero Interest Rate Policy… I believ this is clearly where the Fed is headed. ZIRP can also be considered an intent of the CB’s if not a policy position.Wiki :”The zero interest rate policy (ZIRP) is a Keynesian macroeconomics scheme for economies exhibiting slow growth with a very low interest rate, such as contemporary Japan.Under ZIRP, the central bank maintains a 0% nominal interest rate. The effect of a ZIRP is to encourage investment throughout the economy by making capital purchases more financially attractive. Whether ZIRP succeeds in achieving this goal is a matter of much debate.”ZIRP devastates savers- be warned.

I suppose this is passe’ , however given the NBER’s announcement of what has been obvious to most here since at least 1Q08, does it now not beg the question of how HONEST is the Fed and the SecTreas?Clearly,they are obscenely and irretreivably corrupted in misleading the national populace about the true state of the US economy and financial situation. After all, what data is available to the NBER that is NOT available to the Fed / Treasury. None- ins short they KNEW a recession had begun and from W on down they set out to mislead, lie and then cheat their way out. It all failed.Or, they are all completely and utterly incompetant.At the heart of the Fed was/is the NY boss Tim Geithner. He was/is privvy to the whole plethora of vital economic data that clearly identified a recession was underway. Did anybody see any utterances from Geithner alerting to the dire situation the US now faces – despite being privvy to this critical data? No, of course not.What Geithner did do was arrange several very sizeable bailouts for his mates before the whole house of cards finally collapsed. He now get’s a seat at the big table.My whole point here being that I don’t think it wise to look for solutions from within this group of corrupt and conniving criminals.In large part they and their organisations are the core problem.

“The bailout money was essentially giving lifeboats to the first class passengers on the Titanic.”Very well put.

The Fed can create money from trees – so maybe it’s not so far fetched.

Ha ha! Yes, the Fiat tree. I hear they grow in New York City.

WFC is at the top of Whitney’s hit list (see here CNBC video posted somewhere above)

Battery park

g, these people only work for the majority to the extent the majority are benefited by the wishes and insights of the few. this is the essence of our banking system and it’s perversion as we are witnessing. i like this line which suggests a possible solution .. “Diverse wetland habitat may benefit alligators by providing a variety of foods for different size classes.”the bankers and ‘capitalists’ , you can see it, have homogenized the cultures of the world for the sake of consumerism. mcdonalds in paris. someone needs to write that song. loosing diversity in habitat in the name of free market globalism. in the quote the author is suggesting that diversity in wetland …may BENIFIT ALLIGATORS. we need survival economic habitats with diversity before we can succeed with a globalist model. the big alligators cannot evolve to be so big as to destroy their own habitat. this is suicide. paulson and bernanke work for j.p. morgan who works for ????? america super sized, thinking out side the bun.the other thing i wonder is ; when in deflation, you describe insolvent institutions as zombies and then you transfer wealth directly to the rich at the expense of the unborn, when does the population in this environment recognize that they are giving birth to zombies? when do we refer to the unemployed, in debt, millions as zombies? and when do we recognize we are fools.i agree, i prefer the honest too. they don’t. they are maintaining a sucker bear market as has been said above.

Now let me think about this for a minute: NEBR was 12 months late in announcing to the public the start of the recession while the stock market began to fall from it’s high about 12 months ago also mirroring the inflation numbers (see above); And now, while our trustworthy news outlets reported retail sales increasing since Black Friday, the stock market has dropped another 7%. Who should I believe?

You should believe $GSPMS on http://www.stockcharts.comPeteCA

Looking at the latest prices for US T-Bills and Treasuries (see $IRX and $UST on http://www.stockcharts.com) I’m having a really hard time believing the US financial system is stable right now. Frankly, it looks a lot more like a disaster waiting to happen.PeteCA

$IRX is up 400% today – what gives?

GFMSee Steve Saville’s link here:http://www.321gold.com/editorials/saville/saville120208.htmlIt's always interesting when you plot data over very long time periods. It supports my observation (above) from looking at the latest data on UST’s – the US financial system appears to be getting unstable.PeteCA

and this from CRNeither of these graphs suggest anything positive for the credit markets or the economy.http://calculatedrisk.blogspot.com/2008/12/a2p2-spread-blow-out.html

I am afraid Prof Roubini is not as independent as we would like him to be.

BrainTrust Progress Report: December 1The BrainTrust has conducted its first meeting; there were about 20 participants. We voted to adopt this mission statement.“We are going to build and use grass-roots power to influence the evolution of the global economy.”That mission is very broad. Everyone realizes that we must considerably narrow its scope in order for the mission to be achievable. This “narrowing” could be, and maybe ought to be the subject of considerable debate among the thinkers that frequent this blog.Upcoming BrainTrust DebatesTo kick off these debates, we will post a series of questions into this blog along these lines:Debate 1: What’s the problem? We don’t have a precise definition and consensus about which problem the BrainTrust should tackle. This is the most important strategic decision we’ll make, so help us get it right.Debate 2: What are the goals? We’ll need to specifically identify the set of goals we must reach in order to solve the problem we identified in Debate 1Debate 3: What is our strategy? What’s the best way to apply our limited resources to achieve the goals we identified in Debate 2?We will use the debates to frame key votes which will be conducted during our next conference call. The votes will be used to affirm the group’s commitment to one course of action among the many discussed during the debates.Watch for these posts – they’re coming up shortly. There’s no doubt now that our economy is in serious trouble. We need to convert fear and concern to action. The BrainTrust is going to do something – help us figure out the what, when, and how.

Financial Disaster Will Lead to Civil Disorder in 2009 or 2010, Says Secret Citibank Memohttp://www.naturalnews.com/News_000556_gold_civil_unrest_financial_bailout.html

An internal memo from a top Citibank analyst reveals what the banks really think about the global financial situation, and the outlook is grim.”The world is not going back to normal after the magnitude of what they have done. When the dust settles this will either work, and the money they have pushed into the system will feed through into an inflation shock,” wrote Tom Fitzpatrick, Citibank’s chief technical strategist.He goes on to explain that the massive money creation efforts by the Federal Reserve and other central banks will end with one of two things: A resurgence of inflation, or a fall into “depression, civil disorder and possibly wars.” Either outcome, he says, will cause the price of gold to skyrocket. Gold will push to well over $2,000 per ounce, he explains.The timing on all this? Sometime in either 2009 or 2010, said the analyst.… …

No they (at least the Fed and the current crew at Treasury) know exactly who they work for.

Lord Sidcup, many thanks for making this statement! It’s one of those subtle underminings that have allowed us to get to where we’ve dehumanized ourselves (which allows the system to then place further controls on us).

Police State 2009: Pentagon to Militarize USA with 20,000 Armed Troopshttp://www.naturalnews.com/News_000567_Posse_Comitatus_police_state_Pentagon.html

In direct violation of the Posse Comitatus Act, which forbids military troops from playing a role in domestic law enforcement, the Pentagon has announced plans to station 20,000 armed, uniformed troops inside the United States where they will walk the streets, ready to “respond to terrorism events,” says the Pentagon.It’s against the law, but since when did the Bush Administration or the Pentagon pay any attention to law in the first place?Here at NaturalNews, we’ve warned about the coming police state for many years. Now it is upon us, with the mass militarization of our cities and streets. It won’t be long before we’ll start hearing “papers please” as we try to move about our own cities in a nation many people foolishly believe to still be “free.”This recent push, of course, stems from the New York subway threat, which for all we know was entirely made up by the U.S. government for precisely this purpose — to scare the population into accepting 20,000 troops on the streets. It’s a lesson the Bush Administration learned well with the 9/11 terrorist attacks: People will gladly give up their freedoms if you scare them to death with real (or engineered) terrorist events first.Oh, and don’t forget what the terrorist hate us for. “They hate America because it’s free,” say the war apologists. So their plan, it seems, is to take away America’s freedoms before the terrorists do!So now, with 20,000 troops walking the streets brandishing military weapons, it is the U.S. population that will be terrorized by the aggressive military presence. Think about it: When you walk into an area with lots of military personnel sporting assault rifles, do you feel comfort, or do you feel fear? Normal people feel more fear. They intuitively think, “Gee, there must be something dangerous here, or there wouldn’t be armed military personnel standing guard,” and they feel a sense of apprehension.The real reason for 20,000 troops?It’s ridiculous to think that 20,000 troops can offer any meaningful response to a terrorism event. If a dirty bomb goes off, or a chemical weapons attack takes place, the only thing left to do will be to clean up the bodies, and you don’t need 20,000 military troops to do that (National Guard troops can handle it just fine).20,000 troops also aren’t going to prevent a terrorist attack. Do you think the terrorists walk around in orange jumpsuits with the word “terrorist” painted on the back? No, they blend in like everybody else. They easily got by airport security in 2001, and they can easily make their way through the streets of the USA in 2009, regardless of a military presence.So what’s the REAL reason for stationing 20,000 military troops in the U.S.?… …

I know what you mean James, because that sentence freaked me out the first time I red it.But it could be that the ‘they’ is just referring to e.g. the folks in charge in the U.S. or something like that. As to the magnitude of what has been done I am not sure. The naturalnews.com article has a link to this article at the UK newspaper The Telegraph, but it seems to have been edited more than once…http://www.telegraph.co.uk/finance/comment/ambroseevans_pritchard/3526645/Citigroup-says-gold-could-rise-above-2000-next-year-as-world-unravels.html

perhaps a Google search (or Google news search) on Tom Fitzpatrick (the Citibank chief technical strategist quoted in the article) would help you find some other article with more info. Or an email address ot Mr. Fitzpatrick?

@ Outer Beltway: “Why Germans just hate to spend, spend, spend”… Excerpt: US, French and British officials puzzle over Germany’s refusal to tackle the recession head-on. German leaders, meanwhile, cannot see why their taxpayers’ money should go into encouraging precisely the kind of behaviour – reckless lending, careless borrowing and overconsumption – that precipitated the financial crisis.”Perhaps the Germans have a memory. Perhaps they remember how the Allied Powers scorned their principles of sound government and destroyed the German economy with the Treaty of Versailles, September 10, 1919, under the dominating thumb of President Woodrow Wilson.Compare what happened to Germany with the “chains of Versailles”* with what’s happening now in the United States of America. In Germany, our leaders:Deprived the German people of territory, including vital mineral areas,Deprived her of her merchant fleet,Saddled her with impossible payments in reparations,Gave the new Czechoslovak state 3.5 million people of German ancestry and speech.The mark’s purchasing power went to zero and the crash in Germany came in 1923.Samuel B. Pettengill wrote in “Reader’s Digest”, October 1951, that a widow’s receipts from her husband’s life insurance were “just enough to buy a meal.” Drew Pearson on March 22, 1951, said that a cup of coffee “cost one million marks one day, a million and a half the next and two million the day following.”And so were sewn the seeds for WWII. President Franklin Delano Roosevelt said later to his Secretary of State James F. Byrnes that the German survivors of WWII “for a long time should have only soup for breakfast, soup for lunch and soup for dinner (p. 182 of Byrnes’s book, “Speaking Frankly” 1947).Germany’s crowning blow came after WWII when her conquerors dismantled her industrial plants, and actually trucked out the machinery to re-assemble the plants on Soviet communist soil.Today, America’s ruling billionaire plutocracy is maneuvering the following:Displacing America’s blue-collar workers with lower-pay illegal immigrants to profit international corporations, and substituting her professional workers with cheaper H-1b’s and L1 visa workers,Relocating her manufacturing base on Third World soil,Saddling her mid-to-upper middle classes with the sustenance payments for housing, schooling and providing health care for the corporatists’ new low-pay work force,Devaluing the currency earned and saved by the American people as the store of their labors,Providing offshore tax havens for the plutocracy to avoid taxes,Replacing her representative government with corporatist-lobby government.As to the current financial crisis, the whole issue of low-income housing and the forcing of municipalities and states to provide housing for the lower incomes was conveniently applied to benefit corporations. To top it all off, the plutocracy maneuvered mortgage lending to make trillions in money off subprime loans to people who couldn’t pay and/or on houses that allegedly weren’t there and, then, in the blind canyon threw up their hands and said the taxpayers will have to pay.So I ask you, from whence comes the vertical economic pen stroke necessary to make a U- or V-type recession out of this ongoing L-recession? IMO, it isn’t there. The plutocracy has bankrupted the land of plenty.* http://simple.wikipedia.org/wiki/Treaty_of_Versailles

Diversity is the spice of life. How come we forgot this? Yes, the SYSTEM finds diversity inefficient as it makes it difficult to force things into boxes.Regarding feedback loops, it’s not that we have too many, it’s that we don’t have enough negative feedback loops. Daniel Quinn does a good job at describing this.

Maybe Michael Moore should make a movie entitled “The Ben and Hanky Horror Fed show” where the real economic data and workings of the Fed and Treasury are slowly revealed to worldwide economists who then become so horrified at what’s really been going on and either try to save the world or kill themselves trying!

Though today’s “plutocracy” is not the same animal as the one that imposed the Versailles treaty, I share your outrage about today’s political economy. Kaiser Wilhelm aside, it will be interesting to see if Germany can maintain this more independent approach and also how it’s going to play inside the EU, most of which is following the US model.Incidentally, the quote about Germany wasn’t posted by Outer Beltway – check it again.

Beth: I’ll send you a response tonight. But please don’t go out and sell the family jewels today. What’s happening is a slow-motion process. That chart I referred to in the post just above (Saville’s article) is plotted over a very long period of time. It takes time for these things to happen.PeteCA

First we have to cut the Fed out of the whole process, ban it, rubbish it.

Thank you very much, Guest, for your insight, and for pointing out my mistake in referencing the quote on 12:10:52 to Outer Beltway, rather than to the bytheway. My apologies to all for the mixup.

We got out of the last Depression by winning WWII. Then the dollar was king, cause the world was at our feet. Seems a lot different this time. Who are we going to fight, Al Quaeda doesn’t have enough money to make it worthwhile. Maybe it’ll be like the SNL skit – the Russians will show up at our front door. This time, we surrender and throw ourselves on their mercy. For a tiny handful of rubles.

It’s always nice to hear about others who “get it!”From the link:Personally, I’ve learnt more about revolution from my garden than anywhere else. Watching and working the soil, the many parallels between the processes of birth, health, decay and inter- relationship taking place in the garden, and those in human society, have convinced me that the only true and lasting changes must come from the roots up. In human terms, not the politics of leaders, but the experience of each individual in the running and living of their own lives. If you have nothing to be responsible for, you have little interest in the organisation of your needs. That apathy allows others to gain power over you by their assuming responsibility for your needs, power and responsibility being the two inseparable faces of the same coin.Today most people have abdicated all responsibility for even their most basic needs, such as finding their own work, food, building their own shelter, making their own clothes, maintaining their own health, educating their own children; then turn around and wonder why they are treated as a commodity, why they have no influence in modern society. Then too, there is the seemingly inescapable shadow-face of civilisation; alcoholism, child abuse, the abuse of women, vandalism, mugging, abuse of privilege, corporate greed, racial hatred; the desperate catalogue of a society unnaturally caged in, the human zoo plucking out its own fur in vicious fistfuls. The labyrinthine complexity of our society seems to defy understanding, leaving us at the mercy of a whole gamut of enthusiastic saviours, from the therapist to the jackboot, each trading on little more than their own prejudices. Yet as a healthy person arises from a healthy environment, so a healthy plant grows from a healthy soil; then a healthy society must arise from – what? Strangely simple though it may seem, the structure of any society arises from its patterns of use and access to land. We do not have a healthy pattern of land use.

Ok, what are you drinking (or smoking)? Where can I get some?

“The world is not going back to normal after the magnitude of what “they” have done? I know Citibank’s strategist Tom Fitzpatrick means the “Federal Reserve and other central banks,” but didn’t Citibank put its thumb in the Fed’s pie and pull out a few billion plums? And now it says, “What a good bank am I?”

And then there’s this Randolph Bourne (1918) article:“War is the Health of the State”

Asking the the elite class money creators to forgive the debt is what you’re saying. Those that are in power don’t just give up their slaves voluntarily.

Good. Lot of stuff going on. Check your home e-mail tonight.OB

Yep. Plenty of connections. nthebank@comcast.netEuropeUS

g, this is why people are taught to hate history. your observations, comparisons and conclusion appear to be impeccable and put the lie to the accepted world view or delusion that is perpetrated on the people of the world by the “mass media.” the moral and practical implications should be obvious to a free and democratic people. justice. i think there is a department in the federal government that has that word in the title. all americans should contact that department and see if they plan on changing the title? thank you for your memory, thinking and writing.

Paper gold?

Dec. 2 (Bloomberg) — The U.S. government should insure municipal bonds to promote job growth and help repair the nation’s tax-free credit market, New York Mayor Michael Bloomberg said today.

Paper Gold = certificates of ownership “backed” by real gold in the bank vaults.These should be used or trading (on an exchange) as physical gold have wider spreads and are more difficult to transport, etc., etc.If you believe in banks you can use certificates for investing too.In fact some countries allow you to redemption your physical gold using your certificates.But if you fear confiscation… => Physical Gold for investing.

Report: World at Risk of Bio, Nuke Attack says this article:http://www.abcnews.go.com/TheLaw/LawPolitics/story?id=6375476&page=1And besides, the environment is unravelling!! Your children will die!! The economy is collapsing!! Your children will go hungry!! Keep up the fear factor!! Something HORRIBLE will happen if you don’t spend on Spendagon, I mean Pentagon…if you don’t spend on the malls…if you don’t spend…Funny they have not told us to spend to keep the environment afloat? Probably because it can be hard to come up with coherent stories, I mean studies to support this…

Maybe Mark Mitchell at Deep Capture has some insight into why ” The world is not going back to normal after the magnitude of what they have done”:If President-elect Obama is serious about pulling the economy out of its death spiral, he must urgently appoint a task force to investigate our nation’s clearing and settlement system. Specifically, the American people need to know how it has come to be that a black box outfit on Wall Street is empowered to handle (or, rather, completely fumble) securities transactions worth more than $1.5 quadrillion – that’s 30 times the gross product of the entire planet – without any real government oversight.This black box organization–the Depository Trust and Clearing Corporation (DTCC)–claims to “centralize, standardize and streamline processes that are critical to the safety and soundness of the capital markets.” In other words, if somebody sells a security, the DTCC is supposed to make sure that a real security is cleared, settled, and delivered to its purchaser.But it does not do that. We have long known that the DTCC enables brokers to routinely fail to deliver the stock that they have sold on behalf of their hedge fund clients. All the while, the DTCC has waged a fierce and grossly misleading public relations campaign aimed at convincing the public that illegal naked short selling (which results in extended failures to deliver) is not a problem.This is appalling given that even the exchanges’ limited data show that failures to deliver peaked at more than 2 billion shares last summer, just before the SEC issued its temporary “emergency order” protecting 19 financial companies from naked short selling. That is, on most days in June, there were more than 2 billion phantom shares circulating in our markets.In fact, the problem is much larger than that. Many fails occur “ex-clearing” and in other parts of the system that are not monitored by the exchanges. But we do not know precisely how large the problem is because the DTCC has refused to release complete data.What is certain, though, is that 70% of those failures to deliver were concentrated on no more than 100 companies – driving down the companies’ share prices, and making it difficult for them to raise the capital they needed to survive. The affected companies included Bear Stearns, Lehman Brothers, Washington Mutual, Merrill Lynch and several dozen other now-defunct financial firms.And it is not just stock that isn’t getting delivered. Euromoney, the most respected financial publication in Europe, has revealed that there are massive failures to deliver even of U.S. Treasuries. “Failures in U.S. Treasuries were 8.6% of all treasuries outstanding in the first five months of this year, compared with 1.2% in the first five months of 2007,” Euromoney reported last week. “That has ballooned further over the past three months, hitting more than $2 trillion for almost the entire month of October – more than 20% of the daily treasuries trading volume.”More than $2 trillion worth of phantom Treasuries – that cannot be good for the economy.Bloomberg Newswires, meanwhile, recently reported that investors are complaining that Goldman Sachs is routinely failing to deliver corporate loans that it sells. According to the complainants, Goldman’s traders are selling debt that they do not own in order to further the destruction, and profit from the short selling, of public companies that are its own clients.This is not surprising. Goldman is the proud owner of what used to be called Spear, Leeds & Kellogg – a brokerage that was long known as the most egregious perpetrator of naked short selling. Goldman has, of course, joined the DTCC and few miscreant hedge funds in trying to cover up the problem.A similar outrage is occurring in the market for credit default swaps (bets that borrowers will default on their debt). Hedge funds and brokers are selling (quite often to themselves) virtually unlimited numbers of these swaps, even when they do not correspond to any real underlying debt. These are phantom swaps – and the increased volume creates the perception that target companies are on the verge of collapse, which of course, benefits the hedge funds, which are simultaneously short selling the phantom stock..The DTCC has the authority to crack down on delivery failures. It has the power to tell us who, exactly, is committing the crimes.Unfortunately, the government has no power over the DTCC. Officials from the Securities and Exchange Commission, which has limited oversight, admit that they have no clue how the DTCC operates and that they visit the organization only once a year.So, of course, the DTCC protects the criminals. It protects the criminals because it is owned by the criminals. That is, the DTCC is a quasi-private organization owned by Wall Street brokers – the very same people who serve the hedge funds who seek to profit from the destruction of our economy.This seems to me like a pretty big scandal.And yet, aside from the excellent but sporadic reports from Bloomberg and Euromoney, the media continue to act as if there is nothing to see. The financial crisis, we read over and over in The Wall Street Journal, was caused by those bad subprime mortgages—end of story.This is what we read because too many journalists have only two kinds of sources: hedge fund managers and people who do nothing more than repeat what they hear on CNBC. And CNBC has two kinds of sources – those same hedge fund managers and people who do nothing more than repeat what they read in The Wall Street Journal.And thus is the conventional wisdom woven from a vicious cycle.We can only “hope” that the new president’s economic advisers are honest people who know that truth resides in the details – not in the noise, not in a black box, and not in the tacky mansions of Greenwich, Connecticut.* * * * * * * *P.S. One encouraging sign is that former Deputy Secretary of Commerce Robert Shapiro has been named to Obama’s transition team. Shapiro is one of the world’s foremost experts on naked short selling and failures to deliver. He has plowed through the data – he knows all the details – and he understands the seriousness of the problem. Maybe he can make the president understand, too.

what ya mean with that? What you are listing are in the media because they are the reasons.Isn’t everything created for a purpose? Yet the people that are part of carrying out the purpose need reasons that they can relate to for it to be carried out. You cannot come up with the reasons suddenly as they must have been accepted as true and this process takes time.There are people who do not believe in ‘global warming’, for example. But who cares to investigate.

Wow. I can’t understand how naked short selling isn’t fraud, pure and simple. I think the FBI needs to visit DTCC and take away a few filing cabinets.

Part of the answer is to look at the reciprocal of the question: How do current earnings benefit from leverage, then subtract the amount or ratio. Could one say that current estimated earnings of the S&P500 are levered and overstated by 25%? $80 to $60? The point is valid, current earnings are based on leverage being available and priced normally. Both of those conditions are not present, corporate debt is not readily available, nor cheap. Earnings to de-lever as well.

That cheered me up!

Amen! I have been preaching about DTCC operations here for over a year. The reality is that the FED has oversight of the DTCC because it is a member which also implies that Congress has authority too since it has the ultimate power over the FED! The reality is that the DTCC is so omnipotent that nobody dare shake the branches of the tree for fear that things might just fall and boink them on the head. Let’s take a peek inside:The interesting thing is that if we look at the original movement to electronic clearing, we can see that due to physical constraints paper certificates were indeed a drag on operations. Nobody who has been around markets for 30-40 years would argue otherwise. The problem was that the masses could not implement electronic clearing in the 70′s and early 80′s. Only big institutions could afford the computers and programmers at the time (the PC was still just a glimmer). The “bridge” solution was to allow the big brokers to implement electronic clearing and to invite the masses to participate by holding securities in “street name”. The security’s owner was Cede & Co. (DTCC nominee name). Under existing law the DTCC became the legal owner of the security. You, the one who ponied up the money, are the “beneficial owner”. This is why there is no direct correspondence between you and the issuer of the security you ‘bought’. The correspondence is all via proxy (usually your broker). With both electronic and paper clearing coexisting side by side, there was always room for discrepancies to crop up and literally no way to systematically verify the source of the discrepancies. In short, the system greatly increased efficiencies and it was recognized that these discrepancies were the ‘cost’ of progress.However, the ‘brilliant’ minds at the investment banks soon realized that these “street name” securities could be manipulated to their benefit. In fact, these securities can be counted as the investment bank’s own collateral! When you pony up your money you are effectively giving the broker free money (actually they have the gall to charge you for the money you give to them). Due to the way the system works coupled with direct broker to broker transactions, the DTCC can never be sure that what its records have agree with what actually is occurring (the DTCC’s records are supposed to reflect reality, but there are too many holes and discrepancies for it to actually attain that goal). The end result is that the investment banks have had access to free capital via the ‘system’. This was akin to the fractional reserve scheme granted the C-banks!Eventually, the Commercial Banks realized that there was no way for them to compete with this “street name” system. They wanted at piece of the action and eventually Glass-Steagall was repealed. The deal in all this was that they would provide more capital to the system and both I and C-banks would benefit. This was fine with the I-banks now because a large portion of the securities were now being held in street name. In other words, there capital base was leveling off and they could lever up much more. However, with the C-banks at the table, the I banks created collateralized securities based on C-bank assets. How did this help? First, with the banks assets now converted into securities, it allowed these assets to be held in “street name” and voila new capital and more leverage was available. As for the C-banks, they benefited by getting an immediate pay out against their portfolio via the proceeds from the sale of the collateralized securities. Money that they can then multiply via fractional reserve banking and this increased their available collateral and therefore their ability to leverage higher. The kicker is that these bank securities which had been privately/institutionally held could now be also sold to the masses. Not only did the C-banks increase their customer base, but the asset got to be used twice! First in the traditional sense by a buyer via the collateralization and secondly via the ownership privileges of having the security held in “street name”The party was on. I think if someone were to do a retrospective of the driving force behind many actions over the last 30+ years they would find that everything was geared to transport more collateral to financial institutions to allow them to lever it so that the country got the maximum use out of each dollar. 401Ks were another mechanism to feed collateral, drawing foreign investments expanded the available pool, and housing was collateralized to again provide more collateral, etc.My point is that, over these last decades, if an action could increase the collateral available to financial institutions then it bubbled into existence. If an action reduced capital available to financial institutions then it was cancelled. This is the real basis behind the ‘freedom’ allowed to reign in the markets.As a mater of fact, I think that in retrospect we are going to find out that the seed that this mess grew from is now the grown tree is withering and bringing this all down. You see, all exchange traded securities are now required to be DRS (Direct Registration System) eligible. This has been an ongoing situation since 2006. This new system again was as obvious as its older sibling “street name” and had no rational argument against it. Yet, it was the beginning of the end of the feed the collateral game. This was the first major step in reducing capital available to financial institutions. You will find that all major/minor financial players now use DRS and it is the lowly small investor and 401K holder/mutual fund holder who still uses street name. This new system curbs the mismatches and discrepancies by having the issuer of the security directly involved in its movement about the financial system. Technically, the DTCC’s, the issuer’s , and the broker’s records should all agree! Because the communication is now directly between the issuer and the owner, there is less margin for hanky-panky. The legal owner and beneficial owner are again one and the same under DRS.

You mean it isn’t already?

http://www.telegraph.co.uk/news/worldnews/asia/india/3540964/Mumbai-attacks-Terrorists-took-cocaine-to-stay-awake-during-assault.html

What more “PROOF” do you need.http://www.google.com/hostednews/afp/article/ALeqM5hPm5YQEVvvzvVKFelWoMuJ8Ca8Rw.McConnell blames Lashkar-e-Taiba for Mumbai attacks4 hours agoWASHINGTON (AFP) — US Director of National Intelligence Mike McConnell late Tuesday blamed Lashkar-e-Taiba for the deadly attacks in Mumbai, the first time a US official publicly fingered the group.”The same group that we believe is responsible for Mumbai had a similar attack in 2006 attack on a train and killed a similar number of people,” said McConnell, speaking at Harvard University. “Go back to 2001 and it was an attack on the parliament.”McConnell did not mention Lashkar-e-Taiba by name, but the group, which fought Indian rule in divided Kashmir, is notorious for a deadly assault on the Indian parliament in 2001. That attack pushed New Delhi and Islamabad to the brink of war.The radical Islamic group, whose name means “Army of the Pious,” has past links to both Pakistani intelligence and Al-Qaeda.McConnell, the top US intelligence official, said he did not see the Mumbai attack as a new form of terrorism.”If you examine the groups we think are responsible, the philosophical underpinnings are very similar to what Al-Qaeda puts out as their view of how the world should be. It is a continuation,” he said.About 10 gunmen landed in rubber dinghies in Mumbai and wreaked havoc with automatic weapons and hand grenades, in an assault that killed at least 188 people and injured more than 300. The dead included 22 foreign nationals.In his speech, McConnell emphasized the difficulty in fighting shadowy Islamist groups such as Al-Qaeda and Lashkar-e-Taiba.”Democratic systems that promote free speech and free movement and open discussion are incredibly vulnerable to someone who is willing to die in the context of a suicide bomber or a suicide attack,” McConnell said.Washington has been dropping hints for days that the group was behind the attacks: a US counter-terrorism official speaking on condition of anonymity told AFP on Saturday that Lashkar-e-Taiba may have been responsible for the attacks. A spokesman for the Pakistan-based group denied any involvement in the Mumbai atrocities.US officials had warned India in October hotels and business centers in Mumbai would be targeted by attackers coming from the sea, according to US news media reports.Indian intelligence officials intercepted a phone call on November 18 to an address in Pakistan used by the head of Lashkar-e-Taiba, revealing a possible attack from the sea, ABC News reported.Indian police believe that top Lashkar-e-Taiba member Yusuf Muzammil masterminded the Mumbai attacks, the Wall Street Journal reported Tuesday.Muzammil was identified as the brains behind the attacks by Ajmal Kasab, the only gunman who was captured alive, an unidentified senior police official told the US business daily.Pakistan outlawed Lashkar-e-Taiba after the 2001 attack on the Indian parliament, though Indian officials allege the ban has not been enforced.Separately, ABC News reported that the attackers were also armed with five bombs, two of which were described as sophisticated.

Good question. But you may have to post this to the new thread

Sure, OK, nuke ‘em all. Yeah, that’s the ticket!Seems that all the “best and brightest” were telling us that Saddam Hussein was involved in 9/11.You’re still a troll! And odds are high that you’re wrong (as is typical of all the FOX News/Ditto Heads that leap onto any bandwagon at the drop of a hat).