Posts Tagged ‘world war’

The Next World War a re-post

July 23, 2012

We’ve come a long way since this October 2009 post:

Begin quote:

The next World War

This is not a catchy title aimed at getting your attention. This is what our governments are planning if not by choice then by necessity.

(NB) Some of you have complained that the first iteration of this post was too disjointed. I am now altering it to highlight some of the relationships that have been discussed in previous posts in an attempt to connect the dots for those that have not followed my posts previously.

Mike Shedlock puts out a great summary of the illegal shenanigans our governments are tolerating and or colluding in and outlines the basis for what should be public outrage but is not… yet. Mike Shedlock does not go as far as predicting a global conflict. I do. Here’s why:

The defining characteristic of fiat money is inflation. One of the characteristics of inflation is that it brings forward and compresses in time the demand and production cycles.

Thus towards the end of the inflationary dynamic, you have excessive industrial capacity thus low pricing power.

Keep that in mind.

The only reason the West will engineer a war is because the coffers are empty. I know that alarmists have been jumping up and down for decades claiming that the coffers are empty. But they have been and still are empty. The difference is that for as long as a government is able to generate inflation, then you can borrow and spend thus maintaining the appearance of solvency (think of the pension trust fund that has been spent for example). However, inflation has a mathematical limit. Essentially, when interest rates are approaching zero and your entire issue of government securities goes towards servicing the debt, you no longer can borrow.

Printing money is a solution IF the money circulates. But if it doesn’t, then all you are doing is destroying the currency.

http://research.stlouisfed.org/fred2/series/MULT

Keep that in mind too.

Now!

One of the more insidious characteristics of deflationary recessions is that as unemployment rises, social costs go through the roof. However, government tax revenue drops dramatically (because of forced liquidation of which more later).

So, governments have to cut back on social expenditure just at the time that unemployment is rising.The other characteristic of deflation is that it forces a liquidation of assets thereby decreasing nominal earnings and the nominal value of balance sheets. The direct result is that all pyramid schemes and illegal finance arrangements are blown out of the water.

Therefore, we will have rising unemployment and a reduction of social expenditure at a time when many politicians and select members of the business elite will be implicated in scandal after scandal; and trust me, we are not done finding out about illegal or criminal practices. I know this because as the beneficial effect of inflation pumping wanes, government has a vested interest in aiding, abetting and colluding in criminal action (Fannie Mae… Goldman Sachs).

http://globaleconomicanalysis.blogspot.com/2009/10/where-hell-is-outrage.html

http://market-ticker.org/archives/1514-Tying-It-Together-Massive,-Pernicious-Fraud.html

The unemployed, the retired and the students will not take well to the new juncture and civil disorder will follow in short order.Civil disorder means that governments will fall.Politicians in the West are not about to relinquish power and they are certainly not about to admit that they are no better than your garden variety Mugabe.

Before enough unemployed will be roaming the streets looking for some politician to lynch, we’ll have us a world war.

http://www.bloomberg.com/apps/news?pid=newsarchive&sid=a6QpSf.s4NaA

It’s been done before for exactly the same reasons. There is absolutely no reason why it should not be done again.

We don’t need resources. We need to destroy plenty of infrastructure so that we may restart the inflation dynamic. No inflation = government default

Forward this post to anyone and everyone on your mailing list. You are the only ones that can prevent the next world war by forcing accountability and legal consequences on our politicians.

– ADDENDUM MARCH 11TH, 2012 –

As I go over posts written over the past few years, I realize that till very recently I have made use of the words “inflation” and “deflation” in erroneous thus ambiguous ways.

Inflation of course, is the expansion of the monetary base and credit. Deflation is the contrary.

Till very recently, whenever I mentioned “inflation” I meant the expansion of the monetary base and credit. So that is correct. However, whenever I mentioned “deflation” I meant the nominal decrease in asset prices thus in balance sheet.

You will forgive me as I am new at this writing stuff.

Below is the link to as well as the entire text of Mike Shedlock’s post

http://globaleconomicanalysis.blogspot.com/2009/10/where-hell-is-outrage.html

Where The Hell Is The Outrage?

The number of articles and opinions on Goldman Sachs earnings, bonuses, and influence pedaling over the past several days is quite stunning.

Many have pointed out the problems; few have expressed outrage over what is happening in general, not just at Goldman Sachs. Let’s take a look.

My take is at the end.

Letting The Dice Roll

Rolfe Winkler at Contingent Capital is writing Letting Goldman Roll The Dice.

Is Goldman really such an indispensable financial intermediary? One look at the firm’s revenue breakdown shows that it’s more casino than anything else, and some of the markets it makes still put the economy in danger.

Goldman, in other words, generates most of its revenue trading its own money and earning vigorish on customer transactions. It’s a hybrid hedge fund and bookie, with an investment bank and asset management business thrown in for good measure.

With that in mind, one is left to wonder whether Goldman was really worth saving last year. What have taxpayers received for the $50 billion worth of cash and guarantees, for giving Goldman access to the Federal Reserve as its lender of last resort?

Saving Goldman was largely about saving the derivatives market, which is so big and unstable that the death of one counterparty could mean the death of all. With big commercial banks like JPMorgan Chase in deep, saving the derivatives business was as much about protecting depositors and maintaining the integrity of the payment system as it was derivatives themselves.

To Goldman’s credit, they’ve rebuilt their capital levels faster than anyone. Their leverage ratio has fallen from 35 to 16 in less than two years, despite pressure from equity analysts to juice returns by deploying “excess capital”. But at $50 billion, the bank’s mark-to-myth, or level 3, assets remain as high as its tangible common equity, the cushion it has to absorb losses.

Wall Street and its protectors at the Fed and Treasury tell us the bailout was necessary to protect the financial system, to protect Main Street. That may be. But Main Street still owns much of the risk while Wall Street gets all of the profit.

Geithner’s Appointment Book

The New York Times is taking A Look Inside Geithner’s Appointment Book

As Treasury secretary in the aftermath of last fall’s Wall Street meltdown, Timothy F. Geithner needs to keep in touch with the nation’s top bankers. But it seems that he connects with some financial chiefs much more often than others.

An analysis of Mr. Geithner’s calendars, which the Associated Press obtained through the Freedom of Information Act, shows that Mr. Geithner had contact with top executives at Citigroup, Goldman Sachs and JPMorgan Chase more than 80 times during his first seven months at Treasury — while the heads of Bank of America and Morgan Stanley appeared on his calendars a total of just six times.

The Associated Press describes one spring evening when Mr. Geithner had a series of particularly high-powered calls:

After one hectic week in May in which the nation faced the looming bankruptcy of General Motors and the prospect that the government would take over the automaker, Mr. Geithner wrapped up his night with a series of phone calls.

First he called Lloyd Blankfein, the chairman and C.E.O. at Goldman. Then he called Jamie Dimon, the boss at JPMorgan. Obama called next, and as soon as they hung up, Mr. Geithner was back on the phone with Mr. Dimon.

Gee what might those calls have been about? Derivative bets on GM by any chance?

How Goldman Sachs Leveraged $70 Billion In Government Money

Jesse’s Café Américain is reporting How Goldman Sachs Leveraged $70 Billion In Government Money.

Guess which two Wall Street banks were acting as informal agents of the government in order to support the bond and stock markets and reinflate them?

Two big banks that are showing record trading profits, and a small group of enablers and assistants.

Exchange Stabilization Fund – wise, its a near layup when the US fronts you the money and then works with you to take the markets higher. Especially when it is on thin volumes based on ‘news’ which you help to create and control via frequent calls to young Tim who is your coordinator, in addition to all your other well-placed backchannel sources. You get a heads up, you use the futures to prop the markets. You need some good news, some can be arranged. Just like the good old days when Timmy was riding herd on the NY Fed desk.

All for the good of the country. And if you happen to make a billion per month in trading profits, well, that is the price of freedom for a job well done.

Max Keiser On Fraud

Robert Parsons: Is this froth and no substance or is there something to this?

Max Keiser: The word is not froth the word is fraud. JPMorgan, Goldman Sachs, Citigroup, are all engaged in accounting fraud. They are not realizing losses on trillions of dollars worth of bad debts on their books, giving themselves big bonuses this year, deferring losses to next year ….”

Part One

Part Two

The Goldman Tithe

Joe Peyronnin at The Huffington Post is writing Tithe Goldman Tithe

So Goldman Sachs is now concerned its company has a perception problem? They are even going to undertake a huge public relations offensive to turn things around? Well they sure have plenty of money to throw at this problem.

For sure, Goldman Sachs bankers work hard at creating value for their customers and shareholders. And their success should be rewarded. But a report that the firm had set aside about $20 billion for employee bonuses has caused a backlash. Critics say that Goldman Sachs is just back to its old money making ways.

Sadly Goldman Sachs doesn’t really care what Main Street thinks. Rather they are concerned what Congress or the U.S. Government might do.

The projected 2009 Goldman Sachs bonus pool will be around $20 billion, a near record amount. Therefore the average pay out per employee could be more than the $661,490 given in 2007. Memo to Goldman Sachs: most Americans don’t make that much in a lifetime of working.

This year Goldman Sachs should tithe. Take 10% right off the top of the bonus pool, or $2 billion, and donate it to rebuilding New Orleans and the Gulf Coast of Mississippi and Alabama. Tap into their own brainpower to develop a plan to target the money on specific worthwhile projects so it does not get diverted to corrupt contractors and politicians. For starters, money could be used to rebuild the 9th ward of New Orleans, and devastated sections of Biloxi and Bay St. Louis, Mississippi.

Subsequently, Goldman Sachs should donate 10% of their bonus pool each year to a particular cause, helping injured and needy US military veterans, underwriting national after school programs designed to keep kids off the streets and out of trouble, curing diseases and the list goes on.

The US taxpayers supported the financial community when its collapse was imminent. Now it is time for financial institutions to help their country in its time of need.

Goldman’s Public Relations Bind

The New York Times says Bonuses Put Goldman in Public Relations Bind

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Goldman executives are perplexed by the resentment directed at their bank and contend the criticism is unjustified. But they find themselves in the uncomfortable position of defending Goldman’s blowout profits and the outsize paydays that are the hallmark of its success.

For Goldman employees, it is almost as if the financial crisis never happened. Only months after paying back billions of taxpayer dollars, Goldman Sachs is on pace to pay annual bonuses that will rival the record payouts that it made in 2007, at the height of the bubble. In the last nine months, the bank set aside about $16.7 billion for compensation — on track to pay each of its 31,700 employees close to $700,000 this year. Top producers are expecting multimillion-dollar paydays.

Goldman employees reaped rewards that most people can only dream about. Goldman paid out $4.82 billion in bonuses last year, awarding 953 employees at least $1 million each and 78 executives $5 million or more. The rewards for 2009 will be far greater.

Goldman executives know they have a public opinion problem, and they are trying to figure out what to do about it — as long as it does not involve actually cutting pay.

Another Goldman Executive Named To Key Government Post

Glenn Greewald writing for Salon notes Another Goldman executive named to key government post as its profits skyrocket.

Apparently, the U.S. government didn’t have enough Goldman Sachs executives in key financial and regulatory positions so Goldman Exec Named First COO of SEC Enforcement.
In October of last year, a Goldman Sachs Vice President, Neel Kashkari, was named by former Goldman CEO and then-Treasury Secretary Hank Pauslon to oversee the$700 billion TARP bailout. In January of this year, Tim Geithner hired a former Goldman Sachs lobbyist, Mark Patterson, to be his top aide and Chief of Staff. In March, President Obama nominated Goldman Sachs executive Gary Gensler to head the Commodity Futures Trading Commission, which regulates futures markets, even though (or “because”) Gensler confessed to lax regulation during the Clinton administration over the very derivative instruments that caused the financial crisis. In April, Goldman hired as its top lobbyist Michael Paese, the top aide to Rep. Barney Frank on the House Financial Services Committee which Frank chairs.

According to ABC News in October, 2008, Goldman “spent more than $43 million dollars on lobbying and campaign contributions to cultivate friends and buy influence in Washington, D.C. since 1989″ and their “bankers have been the country’s top political campaign contributors this year.” “They are almost in a class by themselves,” said Sheila Krumholz, the executive director for the Center for Responsive Politics. As Michael Moore has been pointing out, Goldman was the number one source of funding for the Obama 2008 presidential campaign. The bailout of AIG — which resulted in massive federal government monies to Goldman — was engineered at a meeting between Paulson, Geithner and Goldman CEO Lloyd Blankfein. Last year, Goldman paid top Obama economics adviser Larry Summers $135,000 for a one-day visit to Goldman.

That the administration continues, so brazenly, to place Goldman Sachs executives in the very government positions with the greatest power over the financial industry illustrates how little effort is devoted to hiding what is really taking place.

Adam Storch COO of the SEC

The Business Insider has posted an image and qualifications of Adam Storch, 29-Year-Old Goldman Guy Who Is Now COO Of The SEC

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Storch graduated from SUNY Buffalo. During college he did a stint as a summer intern at Neuberger Berman and worked at Deloitte & Touche for two years after graduating.

Storch then went to NYU’s Stern School of Business. This lead to a job at Goldman, where he worked for the last five years.

Derivatives Bill’s Loophole May Exempt Most Firms

Gary Gensler, Chairman of the Commodity Futures Trading Commission says Derivatives Bill’s Loophole May Exempt Most Firms.

Legislation by Representative Barney Frank to tighten derivatives regulation contains an exemption that may let most financial firms escape new collateral and disclosure rules, the head of the Commodity Futures Trading Commission said.

A plan offered by the Obama administration would subject all swaps dealers and “major market participants” to new regulations for capital, business conduct, record-keeping and reporting. Frank’s version would exempt corporations from that definition if they use derivatives for “risk management” purposes.

“It is clearly the weakest of all the proposals I’ve seen to date,” said Christopher Whalen, managing director of Institutional Risk Analytics in Torrance, California, in an interview before the hearing. Whalen, who has testified before Congress on derivatives regulation, is an independent bank analyst. “Frank’s committee seems to be intent on gutting any meaningful reform.”

The draft would ease trading and clearing requirements for derivatives dealers such as Morgan Stanley and Goldman Sachs Group Inc., compared with the administration’s proposal.

The Rich Have Stolen the Economy

Paul Craig Roberts, writing for CounterPunch says From Offshoring Jobs to Bailing Out Bankers The Rich Have Stolen the Economy.

Bloomberg reports that Treasury Secretary Timothy Geithner’s closest aides earned millions of dollars a year working for Goldman Sachs, Citigroup and other Wall Street firms. Bloomberg adds that none of these aides faced Senate confirmation. Yet, they are overseeing the handout of hundreds of billions of dollars of taxpayer funds to their former employers.

The gifts of billions of dollars of taxpayers’ money provided the banks with an abundance of low cost capital that has boosted the banks’ profits, while the taxpayers who provided the capital are increasingly unemployed and homeless.

Except for the banksters and the offshoring CEOs, there is no source of consumer demand to drive the US economy.

The political system is unresponsive to the American people. It is monopolized by a few powerful interest groups that control campaign contributions. Interest groups have exercised their power to monopolize the economy for the benefit of themselves, the American people be damned.

Paul Craig Roberts was Assistant Secretary of the Treasury in the Reagan administration. He is coauthor of The Tyranny of Good Intentions.

Tenacious Goldman

Here is one more article, from July, courtesy of New York Magazine: Tenacious G

On the weekend of September 12, 2008, as the financial system shuddered and appeared to be on the verge of lurching to a halt, two Goldman Sachs men, former CEO Hank Paulson and current CEO Lloyd Blankfein, huddled with other banking heads at the Federal Reserve Bank of New York to consider how to stave off disaster. Bear Stearns was dead. Merrill Lynch, run by another former Goldman man, John Thain, was in desperate need of a savior. And now Lehman Brothers was on the brink. As secretary of the Treasury, Paulson asked the banks to come up with a private-funding solution for Lehman before it imploded from lack of cash. But all the banks had been scrambling for cash reserves or strategic mergers to buffer against a rapid freeze in lending. No one was able, or willing, to help. And Paulson, a free-market purist, had made one thing clear up front: The government would not bail out the firm. Lehman Brothers, a longtime Goldman rival, prepared to declare bankruptcy, ending its 158-year run on Wall Street.

By Sunday night, Paulson realized he had an even bigger problem: the insurance giant AIG. AIG had sold billions in credit-default swaps to several major banks, what amounted to unregulated insurance on risky subprime-mortgage investments, the very ones that were bringing down the economy.

Hank Paulson and then–New York Fed chief Tim Geithner called an emergency meeting for the following Monday morning at the Federal Reserve Bank, ostensibly to discuss whether a private banking syndicate could be established to save AIG—one in which Goldman Sachs and JPMorgan Chase, two of the ailing insurance giant’s clients, would play prominent roles.

At the meeting, it was hard to discern where concerns over AIG’s collapse ended and concern for Goldman Sachs began: Among the 40 or so people in attendance, Goldman Sachs was on every side of the large conference table, with “triple” the number of representatives as other banks, says another person who was there. The entourage was led by the bank’s top brass: CEO Blankfein, co-chief operating officer Jon Winkelried, investment-banking head David Solomon, and its top merchant-banking executive Richard Friedman—all of whom had worked closely with Hank Paulson two years prior. By contrast, JPMorgan CEO Jamie Dimon did not attend.

The Goldman domination of the meetings might not have raised eyebrows if a private solution had been forthcoming. But on Tuesday, Paulson reversed course and announced that the government would step in and save AIG, spending $85 billion in government money to buy a majority stake.

Of the $52 billion paid to AIG’s counterparties, Goldman Sachs was the biggest recipient: $13 billion, the entire balance of its claim. The amount was surprising: Banks like Merrill Lynch that had bought credit-default swaps from failed insurers other than AIG were paid 13 cents on the dollar in deals moderated by New York’s insurance regulator. Eric Dinallo, the former New York State insurance commissioner, who was at the AIG meetings, characterizes the decision this way: AIG’s counterparties, Goldman being the most prominent, “got to collect on an insurance policy without having the loss.”

Somehow not recognizing (or perhaps not caring about) the brewing backlash, Paulson continued to appoint Goldman Sachs alumni to positions of power after the AIG decision—he named Edward C. Forst, a former head of Goldman’s investment-management division, to help draft the $700 billion Toxic Asset Relief Program (of which $10 billion went to Goldman Sachs), and then Neel Kashkari, a former Goldman V.P., as the TARP manager. And of course Edward Liddy, former Goldman board member, was already serving as the new CEO of AIG. Suddenly, everywhere you looked, men who had passed through the Goldman gauntlet of loyalty and rewards were now in key positions overseeing the rescue of the financial system. The company was earning its nickname: “Government Sachs.”

Both Rogers and Paulson (who’s publishing a book this fall that will presumably attempt to justify his decisions and save his damaged legacy) have argued that the AIG decision was about saving the system as a whole, not Goldman in particular.

Similarly, they say, when it came to AIG, the firm was “prudent” in hedging its bets, buying credit-default swaps from Bank of America, JPMorgan, Société Générale and other banks in case AIG failed to pay the money it owed Goldman—in effect, hedging its hedge against the mortgage market. Goldman Sachs had no “material exposure” to AIG, they argue. One senior executive goes so far as to suggest the firm might even have benefited from AIG’s demise. “We might have done very well,” he says, “but I wouldn’t be so presumptuous as to say that. Who knows?”

Not a single Wall Street executive I spoke with, including several Goldman Sachs alumni, believe those hedges would have survived an overall collapse of the financial system. A large loss would have been inevitable as lending evaporated, and Goldman Sachs would have struggled to shrink the company to a fraction of its size overnight. But the most glaring argument against Goldman is Goldman’s own: If AIG’s biggest and most important bank customer was hedged against losses in AIG, as it claims, why did the government need to pay Goldman Sachs the full $13 billion?

Lost in the haze of Goldman’s recent record profits is the fact that the firm nearly went under even after the AIG bailout last fall. As the market continued to plunge and Goldman’s stock price nose-dived, people inside the firm “were freaking out,” says a former Goldman executive who maintains close ties to the company.

Salvation came on November 25, a few days after Goldman’s stock price plunged to $52 a share, down from the year’s high of $200 and the lowest price the company had seen since it went public. Again, the white knight was the government. It turned out that Goldman’s conversion to a garden-variety bank-holding company offered an amazing advantage: Goldman now had access to incredibly cheap money. Exploiting its new status, Goldman became the first financial institution to sell $5 billion in government-backed bonds through the Federal Deposit Insurance Corporation, which allowed Goldman to start doing deals when the markets were at a near standstill.

Those FDIC notes they got were lifesaving because they couldn’t issue any debt. If it had gone on another week or two, Goldman would have failed, they would have gone the way of Lehman, and you’d be talking about Lloyd the way you talk about [Lehman CEO] Dick Fuld.”

Even Goldman alumni were struck by the company’s shameless posture in ramping up the leverage again so soon after the government bailouts. “It’s a statement of arrogance,” says one former executive.

Goldman claims that there is a Chinese Wall between the advisory business and the trading business. “There are rules and laws regarding information sharing, and we scrupulously follow them,” says a company spokesman.

But two former clients told me they had observed firsthand how Goldman traded against their interests to improve its own bottom line—one who didn’t like it, the other accepting it with a shrug and saying, admiringly, that Goldman’s ability to convince the world that it is a “client-oriented” business was its most masterful PR coup.

Goldman’s profiting from this ethical gray area was exemplified by the real-estate market and the subprime-mortgage collapse: Goldman Sachs sold subprime-mortgage investments to its clients for years, but then in 2006 began trading against subprime on its own balance sheet without informing its clients, a hedge that ultimately let it profit when the real-estate market cratered. For some, this was a prescient call; for others, a glaring conflict of interest and inherently dishonest, since the firm let its clients take the fall.

Earlier this month, Goldman had an ex-employee arrested for allegedly stealing computer codes that could be used, as the prosecutor noted, “to manipulate markets in unfair ways.” Some hedge-fund traders and financial bloggers have speculated that Goldman itself could have been using the codes for the same purpose.

Now attention is turning to Goldman’s dominance of trading on the New York Stock Exchange—as the exchange’s biggest high-speed program trader as well as a provider of liquidity to other traders—and whether that ubiquity has afforded the firm undue advantage. If Goldman’s database knows nearly every trade that is about to be made, sophisticated computer codes could, theoretically, instantly execute fail-safe trades on Goldman’s behalf milliseconds beforehand. This, some are insisting, is where the company is manipulating the markets and making hundreds of millions of dollars a day.

The New York Magazine article is 8 pages long and well worth a read in entirety.

My Take

As long as the playing field is level, corporations are entitled to make what they can and do with the profits what they want, and that includes granting whatever bonuses a corporation wants.

Let’s see how level the playing field was and still is.

AIG

Goldman Sachs makes the case that it was hedged so it deserved not to lose anything. However, as the New York magazine points out, the odds are high that those hedges were worthless because of the sheer amount of leverage and counterparty risk. Yet, Goldman received $13 billion, the entire balance of its claim on AIG while “Banks like Merrill Lynch that bought credit-default swaps from failed insurers other than AIG were paid 13 cents on the dollar.“

Every financial institution involved should return every cent of that money because they all would have failed without government (taxpayer) handouts.

GM

It is incredibly peculiar that in “one hectic week in May in which the nation faced the looming bankruptcy of General Motors and the prospect that the government would take over the automaker, Mr. Geithner wrapped up his night with a series of phone calls” to JPMorgan and Goldman Sachs.

I suspect those calls were in regards to concerns over the derivative books of JPMorgan and Goldman Sachs. It is no secret that more credit default swaps were bet on GM than there were underlying bonds.

Of course, the realm of possibilities says those calls may have been to arrange last-minute details for a group fly fishing trip to Paulson’s private island off the coat of Georgia. However, the realm of probabilities is much narrower.

Is it too much to ask the precise nature of those calls? I suppose it is.

The SEC Appointment

Is Storch really the most qualified candidate? Will a Goldman appointee overlook or squelch investigation into the practices at Goldman in favor of investigating Aunt Martha or some firms that Goldman just might want to step on?

Regardless, It sure does not hurt when you have someone at the SEC who will turn a blind eye to anything Goldman might have done wrong or is still doing wrong or alleged to be doing wrong.

There are a lot of allegations against Goldman about front running trades, naked shorting, high-speed program trading, and the sheer volume of program trading at Goldman Sachs. What are the odds any of this gets investigated, or that if is investigated any wrong-doing will be found?

Derivatives Legislation

Think any derivatives legislation will be passed that is not specifically beneficial to Goldman Sachs and JPMorgan? Think again.

Influence Pedaling

All hail “Government Sachs” the king of kings and master of the universe of influence pedaling. Salon.Com details position after position of ex-Goldman Sachs employees in positions of influence.

Yes, there is some public anger about Goldman Sachs. Sadly, much of it is misdirected towards the bonuses. The real outrage should be over the favoritism, influence pedaling, and business as usual environment in which Goldman Sachs can do what it wants, when it wants, while in a position to know in advance (and potentially trade off that knowledge) of what the government is about to do.

Where’s The Outrage?

I don’t know about you, but I am outraged.

I am outraged and not just about Goldman Sachs, but about a process that allows, even encourages political pandering, by time and time again rewarding leveraged riverboat gamblers and failed institutions and at taxpayer expense.

I am outraged that real people are suffering massively while the influence peddlers have stolen the country for their own personal benefit.

I am outraged at a political system that is totally unresponsive to the American people.

I am outraged by campaign contribution and lobbying processes that allows corporations to buy votes with donations.

I am outraged how legislators ignored the wishes of the people who clearly did not want these bailouts in the first place.

I am outraged that very little of this is in mainstream media. Why is this stuff not on the frontpage of every newspaper in the country or at least in the editorial pages?

I am outraged that the average US citizen is not aware of any of this, instead depending on CNBC, or “The View” for their interpretation of the world.

I am outraged how special interest groups have exercised their power to monopolize the economy for the benefit of themselves, US citizens be damned.

I am outraged that all these bailout programs are doing nothing to alleviate the massive consumer debt problems. Every program, virtually every program was designed to bailout lending institutions, not consumers.

I am outraged at fees charged by banks receiving bailouts.

I am outraged over government pension plans and government pay scales massively out of line with the private sector.

I am outraged that Congress and this administration thinks the solution to massive budget deficits are still higher budget deficits in excess of a trillion dollars.

I am outraged about indictments. Paulson Admitted Coercion to force a shotgun wedding between Bank of America and Merrill Lynch yet no indictments were handed out. Let the Criminal Indictments Begin: Paulson, Bernanke, Lewis.

I am outraged that US citizens are not concerned enough and not educated enough to demand change.

I am outraged that the two party system has failed. Neither party has delivered meaningful change on budgets, on taxes, on social security, on deficit spending, on the size of government, on military spending, or fighting needless wars.

I am outraged that the Obama Administration promised changed and did not deliver. “Yes We Can” was a lie. The reality is “It’s Business As Usual, Only Worse, With Higher Deficits”.

I am outraged there is not enough outrage over this.

Where the hell is the outrage?

Mike “Mish” Shedlock
http://globaleconomicanalysis.blogspot.com

End quote –

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Is a world war impossible?

May 28, 2011

Of course it is not. Sticklers for semantics might opine that it is not impossible but rather it is improbable.

How do you explain the following then.

Is it not curious how in the past ten years and particularly in the past five Western governments have gradually enacted legislation that could make a total war possible? Starting with broadening the definition of “terrorist”  to encompass actions that till recently had been an integral part of democratic expression thereby turning most law abiding citizens in potential terrorists if, for example, they dissent from the political line imposed by decree by government.

http://www.atlantaprogressivenews.com/interspire/news/2011/05/07/former-cia-mcgovern-speaks-in-atlanta-on-osama-clinton-and-erosion-of-rights.html

McGovern recalled how five years ago, when he challenged Rumsfeld, he did not get beat up by police, and was at least given the opportunity to interact with Rumsfeld.  By contrast, when McGovern disrupted a speech by Secretary of State Hillary Clinton, on February 15, 2011, he was arrested.  All he did was turn his back on Clinton at a speech at Georgia Washington University (You Tube video). After turning his back on Clinton, McGovern was dragged out of the room, and left with blood dripping down his pants.  This seems unbelievable, as McGovern poses no threat, is a 71 year-old calm gentleman, and a respected former CIA official.

Is it not curious that the Lisbon Treaty should have given rise to a political body that despite not being elected has broad executive powers?

And then there is the pesky provision of “Worldwide War” embedded in the National Defense Authorization Act: http://www.infowars.com/obamas-promise-to-veto-worldwide-war-bill-rings-hollow/

And then there is that troubling attitude  that till recently was the almost exclusive domain of tin pot dictators in fringe countries like Tunisia, Syria North Korea or Libya for example and that is becoming ever more prevalent amongst “enlightened” Western politicians.

http://www.infowars.com/government-orders-you-tube-to-censor-protest-videos/

A worldwide war impossible? At this rate, hardly.

PS: By the way. I forgot this little gem from some months back:

https://guidoromero.wordpress.com/2010/11/19/nato-must-prepare-to-launch-military-operations-outside-its-border-after-afghanistan/

So now NATO MUST, in the words of its chief, be prepared for perpetual war; must!

Must??!! Has anyone bothered to ask why we should prepare to launch foreign wars?

On transitioning towards a police state and a re-post

December 27, 2010

The open society steeped in economic and personal freedoms the West has been known for, is gradually succumbing to the inevitable ramifications of a short sighted, self serving and ultimately devastating monetary system. Though some can claim that evidence for this contention is still sporadic and anecdotal, the reality is that it is happening and the trend is ominous.

The exaltation and promotion of the security apparatus in Europe and in the USA is following a well known and, till society wakes up, inevitable pattern.

The first step is to affirm the immunity of the state as an entity above the law and above the constitution

The second step is to re-define and broaden the definition of whom and what poses a threat to the state

You then re-define certain violations from civil to criminal

You then expand and attribute extraordinary powers to the security apparatus

Finally you seek help from citizens to report “suspicious” activity.

http://www.youtube.com/watch?v=Czoww2l1xdw

At this point, a bit of history is instructive. A big hat tip to Alex Jones of Prison Planet

Excerpt with emphasis added:

One common misconception about Nazi Germany was that the police state was solely a creation of the authorities and that the citizens were merely victims. On the contrary, Gestapo files show that 80% of all Gestapo investigations were started in response to information provided by denunciations by “ordinary” Germans.” […]

Gellately discovered that the people who informed on their neighbors were motivated primarily by banal factors – “greed, jealousy, and petty differences,” and not by a genuine concern about crime or insecurity. Indeed, history tells us that any Stasi-like society does nothing to increase genuine security and only turns the host population against each other while decaying the country from within.

Gellately “found cases of partners in business turning in associates to gain full ownership; jealous boyfriends informing on rival suitors; neighbors betraying entire families who chronically left shared bathrooms unclean or who occupied desirable apartments.”

“And then there were those who informed because for the first time in their lives someone in authority would listen to them and value what they said.”

Gellately emphasizes the fact that the Germans who sicked (sic!) the authorities on their neighbors knew very well what the consequences for the victims would be – families torn apart, torture and internment in concentration camps, and ultimately in many cases death – but they still did it with few qualms because the rewards of financial bounties and mere convenience were deemed more important to them.

Which brings me to Stanley Milgram (1933-1984) and his “Obedience Experiment“. And this is the part you should find terrifrying:

Ordinary people, simply doing their jobs, and without any particular hostility on their part, can become agents in a terrible destructive process. Moreover, even when the destructive effects of their work become patently clear, and they are asked to carry out actions incompatible with fundamental standards of morality, relatively few people have the resources needed to resist authority.[3]” […] Later, Prof. Milgram and other psychologists performed variations of the experiment throughout the world, with similar results[4] although unlike the Yale experiment,[dubiousdiscuss] resistance to the experimenter was reported anecdotally elsewhere.[5] Milgram later investigated the effect of the experiment’s locale on obedience levels by holding an experiment in an unregistered, backstreet office in a bustling city, as opposed to at Yale, a respectable university. The level of obedience, “although somewhat reduced, was not significantly lower.” What made more of a difference was the proximity of the “learner” and the experimenter.

The Milgram experiment took place at the time of Nazi war criminal Adolf Eichman’s trial in Jerusalem in 1961 and it makes for fascinating if terrifying reading. In fact, the experiment touched on such horrifyingly dark aspects of human behavior that it was never carried out again till the mid 90s when the results turned out to be exactly the same.

Just in case there may be any doubts, more recent research finds that most people will inflict pain on others if prodded: http://health.usnews.com/health-news/family-health/pain/articles/2009/01/05/researcher-finds-most-will-inflict-pain-on-others.html – left to their own devices to interpret guidelines from the authorities, most people will act upon their hard feelings towards others. Hard feelings that may be nothing more than petty disagreements or perceived competition for jobs, girl/boyfriends, parking spaces or being annoyed at someone making noise at night.

And now, a re-post from January 2010; but first, the conclusion. If alleged terrorists ostensibly hate us because of our way of life, they have already won. Our societies are becoming ever more obscurantist and our governments oppressive just like in dinky countries in remote, tribal and primitive areas of the world where these presumed terrorists hail from.

https://guidoromero.wordpress.com/2010/01/16/fascisms-inexorable-advance/

Politics cannot be separated from economics or social science or the law. All are results of human choice and action and all are intimately related. Some choices come upstream of all others thus drawing a framework within which all others evolve; the choice that is upstream of all others is our monetary system.

The deliberate but arbitrary choice of a fiat monetary system must perforce lead the entity that maintains exclusive control of the monetary system to becoming the largest actor in the economy thus influencing the law thus politics thus the social sciences.

http://grandfather-economic-report.com/piechart.htm

Fascism and/or corporatism is the inescapabale and logical conclusion of a fiat monetary system. As the presumed beneficial role of the currency gradually wanes, government has a vested interest in at first tolerating but then progressively colluding-in and eventually sponsoring legislation that is contrary to stated moral or fiduciary values of yore.

The only question is when does society deem that enough is enough.

But the more important question is how society comes to deem that enough is enough and what legislation it may be capable of vetoing or enforcing in order to avoid the most undesirable, but logical, outcome of a fascist state. That is, when are we collectively going to take the steps required in order to bring order to our monetary system, our economies, our political systems and avoid a perpetual state of war that as of now is guaranteed to evolve into a world war.

I don’t have an answer to that question other than to say that the only true, peaceful and legal instrument that is still within reach of anyone that understands what is going on and that wishes to effect political change is to accumulate gold and silver bullion.

When all is said and done, as our governments, wittingly or not, are hell bent on destroying the currency in order to perpetuate a perceived desirable political system, bullion is the only thing that could alter the otherwise logical course a fiat monetary system dictates.

http://onlinejournal.com/artman/publish/article_5463.shtml

Excerpt (emphasis added):

On Jan. 5, a ruling by the Federal Appeals Court in the District of Columbia gave away the most essential protection of liberty by declaring that the U.S. government is not bound by law during war. The ruling absolves Washington from complying with America’s own laws and from complying with international laws, such as the Geneva Conventions. It makes a mockery of all war crime trials everywhere. By elevating the executive branch above the law, the court gave the government carte blanche.

The rationale offered by the court for refusing to uphold the law came from Judge Janice Rogers Brown, who said that America had been pushed by war past “the leading edge of a new and frightening paradigm, one that demands new rules be written. War is a challenge to law, and the law must adjust.” By “adjust” she means “be set aside” or “be thrown out.”

The U.S. Supreme Court has refused to defend both the Constitution and the principle that government is not above the law. Last Dec.14, the Supreme Court refused to review a ruling by the Federal Appeals Court in the District of Columbia, which dismissed a torture case with the argument that “torture is a foreseeable consequence of the military’s detention of suspected enemy combatants.” In other words, neither U.S. nor international laws against torture can be enforced in U.S. courts. The opinion [PDF] was written by Judge Karen Lecraft Henderson.

The “war on terror,” which is enriching Halliburton, Blackwater (now operating under an alias), and the military/security complex, while denying Americans health care, is running up debt that is a threat to Americans’ purchasing power and living standards. The contrast between America’s sanctimonious rhetoric and the murder of civilians and torture of prisoners has destroyed America’s reputation and caused Europeans as well as Muslims to despise the United States.

The sacrifice of the Constitution and rule of law to a hyped “theorist threat” has destroyed the heart and soul of America herself.

As a poet wrote, “our world in stupor lies.

My final thought is this. We are ostensibly fighting “terrorists” because they threaten our way of life. Clearly, the terrorists have won.

And here you go… (curtailing public spending as precursor to war)

April 9, 2010

As the now famous series of Curtailing Public Spending as Precursor to War on this blog progresses, poster “Eldorado” on the VOY forum brings this nugget to our attention:

http://www.wkyc.com/news/local/news_article.aspx?storyid=133951&catid=3

Excerpt (emphasis added):

JEFFERSON — In the ongoing financial crisis in Ashtabula County, the Sheriff’s Department has been cut from 112 to 49 deputies.  With deputies assigned to transport prisoners, serve warrants and other duties, only one patrol car is assigned to patrrol the entire county of 720 square miles. […] Ashtabula County Common Pleas Judge Alfred Mackey was asked what residents should do to protect themselves and their families with the severe cutback in law enforcement. “Arm themselves,” the judge said. “Be very careful, be vigilant, get in touch with your neighbors, because we’re going to have to look after each other.

And that’s exactly the type of thing you don’t want to do when a crisis is developing. That’s because if the “authorities” should not be able to pull us out of this crisis anytime soon, not only will you have a lot of angry people on your hands but you’ll have a lot of angry people that are armed… not a good thing…

Now read the following article:

http://news.yahoo.com/s/ap/us_concealed_weapons_arizona

Excerpt:

PHOENIX – The Arizona House voted Thursday to make the state the third in the nation to allow people to carry concealed weapons without a permit, sending the governor a bill that would allow Arizonans to forego background checks and classes that are now required.”

See! This is the thing. Events rarely happen in isolation. Rather, what happens is that a series of seemingly unrelated occurrences eventually coalesce into something greater than the sum of its parts.

As the economic crisis develops, tax revenue declines just at the time that social costs are rising. If at the same time the monetary authorities find it difficult to induce inflation into the system as is the case today then government has no choice but to curtail public services and, eventually, terminate some programs.

However, as the inevitable abuse of power, scandals and malfeasance gradually come to light (i.e. AIG, Goldman Sachs, Fannie Mae, Lehman…) students, the unemployed, the destitute, the marginalized and then, eventually, the employed, the retired and the elderly will not take kindly to the new juncture.

So, before mobs start roaming the streets looking for some politician or banker to lynch, we’ll have us our war… the global one this one…because I can guarantee that no main stream politician in the West can ever even countenance the idea to take responsibility for what is happening. Much better to build straw men of evil foreigners and religious nuts that ostensibly threaten our liberty… so that when the shit hits the fan, we can just whip the mobs up into a murderous frenzy and pack them off to the front to fight for their presumably desirable way of life…

… and so the wheel turns…

Gold looking awfully alluring still and ever more…

A bon entendeur…

Eh! No sooner am I finished typing the above that AP reports the following:

http://news.yahoo.com/s/ap/20100409/ap_on_go_co/us_congress_threats

I wish I was wrong but I have to tell you guys this. You better brush up on your self sufficiency skills… sooner rather than later…

Europe, the Euro and other thoughts…

March 22, 2010

I have yet again been at a loss for what to write. Call it writer block. The truth is that I am unable to carry on talking about the same things over and over again trying to get a point across. That’s because there are only so many angles you can explore in attempting to make others see what is going on and, frankly, nothing has changed ever since I started ranting on Facebook now some three years ago. Things have not changed; policies have not changed; attitudes have not changed neither at the political level nor, indeed, at individual level. No one person that is presumably “in charge” has come up with any ideas let alone introduced new policies that might help to mitigate the effects of what by now looks like will be a depression and, in my opinion, will evolve into global conflict.

What I may describe as a typical and widespread state of denial is exemplified by the latest from Ambrose Evans Pritchard in the Telegraph:

http://www.telegraph.co.uk/finance/comment/ambroseevans_pritchard/7494718/Has-Germany-just-killed-the-dream-of-a-European-superstate.html

This is the excerpt that got me going:

Dr Sarrazin should be locked up in a Frankfurt Sanatorium. It was such flippancy that led to the Lehman disaster, requiring state rescues of half the world’s financial system.

AEP throws out this comment referring to the fact that Sarrazin is advocating to let Greece default; i.e. go bankrupt. In this one liner, AEP sums up what is wrong not only with people’s perception of reality but, at a deeper level, he highlights the shortcomings of a fiat monetary system. If you read this blog, you will know that the combination of fiat money and a political system based on personal and economic freedoms must necessarily result in an inflationary dynamic that is inherently exponential thus limited mathematically.  As an exponential dynamic, inflation requires the ever growing intervention of government in the form of, for example, bailouts and subsidies. Thus, as the inflationary dynamic progresses, government’s intervention progressively becomes larger and larger. Think for example of all the car companies or airlines or banks or steel companies that have been saved throughout the past thirty years and that therefore went to feed the current industrial and commercial overcapacity. The problem is compounded by the fact that the companies that are “saved” are rarely the most efficient and are instead, the larger, most bloated and/or the most politically connected. By and large, small efficient companies are allowed to go under. But the large industrial complexes are rarely allowed to.

So the problem is not, as AEP suggests above, that we let inefficient (or corrupt) companies go under. The problem is that fiat money is predicated on the constant expansion of credit and the monetary base that inevitably requires keeping alive entities that logically should be purged from the system in order to maintain a healthy economy. As we keep saving the larger better connected corporations, they become larger still until they become behemoths that suffocate all other entities in their sphere of influence. But, crucially, saving a corporation does absolutely nothing to make it more efficient.

The problem is that if we insist on keeping alive entities that don’t have the intellectual or material capital to exist, our interventions must perforce progressively become larger and larger. Hence your Lehmans, AIGs, Citibanks, GMs, Fords … or your Greeces, Italies, UKs…

Here I am going to digress slightly and tie in to two pieces I have come across recently and that, in my opinion, are both relevant to this discussion.

The first one is a blog post that comes to us from John Williams “SwarmUSA” blog and that elegantly summarizes what you have already read on this blog but in a slightly different format.

http://www.swarmusa.com/vb4/content.php/282-THE-Most-Important-Chart-of-the-CENTURY

And this is the central graphic representation.

http://www.swarmusa.com/vb4/attachment.php?attachmentid=116&d=1269115914

Any resemblance to this blog’s header is not coincidental.

This chart explains why my pet chart the Money Multiplier looks like it does.

Regarding the other fascinating piece I have come across that I think is very relevant to where we find ourselves in today, I owe thanks to the tandem of posters “Mugwump” and “Forestgold” who post on the VOY forums for bringing it to my attention. Incidentally, the VOY forums are some of the more intellectually stimulating forums I frequent or lurk on.

http://www.theatlantic.com/magazine/archive/2010/03/how-a-new-jobless-era-will-transform-america/7919/

As articles go in the main stream press, this is a good one. But what puts it in context it is Forestgold’s find of a piece of research carried out by one Associate Professor Jean Twenge of the University of San Diego that says:

Many of today’s young adults seem temperamentally unprepared for the circumstances in which they now find themselves. Jean Twenge, an associate professor of psychology at San Diego State University, has carefully compared the attitudes of today’s young adults to those of previous generations when they were the same age. Using national survey data, she’s found that to an unprecedented degree, people who graduated from high school in the 2000s dislike the idea of work for work’s sake, and expect jobs and career to be tailored to their interests and lifestyle. Yet they also have much higher material expectations than previous generations, and believe financial success is extremely important. “There’s this idea that, ‘Yeah, I don’t want to work, but I’m still going to get all the stuff I want,’” Twenge told me. “It’s a generation in which every kid has been told, ‘You can be anything you want. You’re special.’”

In her 2006 book, Generation Me, Twenge notes that self-esteem in children began rising sharply around 1980, and hasn’t stopped since. By 1999, according to one survey, 91 percent of teens described themselves as responsible, 74 percent as physically attractive, and 79 percent as very intelligent. (More than 40 percent of teens also expected that they would be earning $75,000 a year or more by age 30; the median salary made by a 30-year-old was $27,000 that year.) Twenge attributes the shift to broad changes in parenting styles and teaching methods, in response to the growing belief that children should always feel good about themselves, no matter what. As the years have passed, efforts to boost self-esteem—and to decouple it from performance—have become widespread.

These efforts have succeeded in making today’s youth more confident and individualistic. But that may not benefit them in adulthood, particularly in this economic environment. Twenge writes that “self-esteem without basis encourages laziness rather than hard work,” and that “the ability to persevere and keep going” is “a much better predictor of life outcomes than self-esteem.” She worries that many young people might be inclined to simply give up in this job market. “You’d think if people are more individualistic, they’d be more independent,” she told me. “But it’s not really true. There’s an element of entitlement—they expect people to figure things out for them.”

Ron Alsop, a former reporter for The Wall Street Journal and the author of The Trophy Kids Grow Up: How the Millennial Generation Is Shaking Up the Workplace, says a combination of entitlement and highly structured childhood has resulted in a lack of independence and entrepreneurialism in many 20-somethings. They’re used to checklists, he says, and “don’t excel at leadership or independent problem solving.” Alsop interviewed dozens of employers for his book, and concluded that unlike previous generations, Millennials, as a group, “need almost constant direction” in the workplace. “Many flounder without precise guidelines but thrive in structured situations that provide clearly defined rules.”

All of these characteristics are worrisome, given a harsh economic environment that requires perseverance, adaptability, humility, and entrepreneurialism. Perhaps most worrisome, though, is the fatalism and lack of agency that both Twenge and Alsop discern in today’s young adults. Trained throughout childhood to disconnect performance from reward, and told repeatedly that they are destined for great things, many are quick to place blame elsewhere when something goes wrong, and inclined to believe that bad situations will sort themselves out—or will be sorted out by parents or other helpers.

Taken together, the article and the excerpt from the book, do add a new dimension to understanding where we are and how we arrived here. The fiat monetary logic is designed to and does thrive on a heightened sense of entitlement of society. Well, actually, it thrives on society not understanding its requirements and implications thus requiring that the state provide a biased and directed type of education. But, nonetheless, you see how we get to where we are.

If you think back to all the various crisis that afflicted us just in the past thirty years for example, you will notice an unmistakable trend whereby our governments’ interventions have become progressively larger from the financial point of view but also more intrusive in the life of individuals and therefore more restrictive.

If you’ve read my blog then you know I think we have reached the end of this inflationary cycle. This is the day of reckoning that alarmists have been warning about for decades. I think we are there. We are bankrupt with no possibility to compensate our bankruptcy with more inflation.

My contention is that we’ve been bankrupt for a good many years. The difference is that for as long as our “leaders” could push inflation into the system, the material effects of bankruptcy could be shunted forward in time. My contention is that we are no longer able to push inflation into the system. We are trying. God knows we are trying. That’s what the dozens of Trillion of Dollars that have been created were aimed at. Bernanke (and by implication all other central bankers around the world) is trying to make good on the promise he made when he stated: “Making sure it [deflation] does not happen”.

However, until some indicators do not tell me otherwise, I think (and it is purely my personal opinion) that this is the end of the road. This is crunch time. And with crunch time we will very likely get us a world war. A war this one, that will have to create the conditions so that our (the West’s) industrial capacity can be revived  while depleting that of other nations and during which we can employ the millions of homeless, hungry and dispossessed that are likely to be crowding our streets looking for some politician or banker to lynch in coming months.