FedUpUSA

Archive for December 25th, 2009

As everyone is engrossed by assorted groundless Christmas (and other ongoing bear market) rallies, and oblivious to the debt monsters hiding in both the closet and under the bed, Zero Hedge has decided it is about time to present the ugliest truth faced by our ‘intellectual superiors’ and their Wall Street henchman who succeeded in pulling off Goal #1 for 2009 – the biggest ever bonus season (forget record bonuses in 2010… in fact, scratch any bonuses next year if what is likely to transpire in the upcoming 12 months does in fact occur).

If someone asks you what happened in 2009, the answer is simple – two things. There was a huge credit and liquidity crunch, and then there was Quantitative Easing. The last is the Fed’s equivalent of band-aiding a zombied and ponzied corpse, better known as the US economy. It worked for a while, but now the zombie is about to go back into critical, followed by comatose, and lastly, undead (and 401(k)-depleting) condition.

In 2009, total supply of all USD denominated fixed income, net of maturities, declined by $300 billion from $2.05 trillion to $1.75 trillion. This makes sense: the abovementioned crunches stopped the flow of credit from January until well into April, and generally firms were unwilling to demonstrate to the market how clothless they are by hitting the capital markets until well into Q2 if not Q3. What happened was a move so drastic by the Fed, that into November, the worst of the worst High Yield names were freely upsizing dividend recap deals (see CCU) – the very same greed and stupidity that brought us here. Luckily, so far securitization and CDOs have not made a dramatic entrance. They likely will, at which point it will be time to buy a one-way ticket for either our southern or northern neighbor, both of which, in the supremest of ironies, transact in a currency that will survive long after the dollar is dead and buried.

Back to the math… And here is the kicker. Accounting for securities purchased by the Fed, which effectively made the market in the Treasury, the agency and MBS arenas, but also served to “drain duration” from the broader US$ fixed income market, the stunning result is that net issuance in 2009 was only $200 billion. Take a second to digest that.

And while you are lamenting the death of private debt markets, here is precisely what the Fed, the Treasury, and all bank CEOs are doing all their best to keep hidden until they are safely on their private jets heading toward warmer climes: in 2010, the total estimated net issuance across all US$ denominated fixed income classes is expected to increase by 27%, from $1.75 trillion to $2.22 trillion. The culprit: Treasury issuance to keep funding an impossible budget. And, yes, we use the term impossible in its most technical sense. As everyone who has taken First Grade math knows, there is no way that the ludicrous deficit spending the US has embarked on makes any sense at all… none. But the administration can sure pretend it does, until everything falls apart and blaming everyone else for its fiscal imprudence is no longer an option.

Out of the $2.22 trillion in expected 2010 issuance, $200 billion will be absorbed by the Fed while QE continues through March. Then the US is on its own: $2.06 trillion will have to find non-Fed originating  demand. To sum up: $200 billion in 2009; $2.1 trillion in 2010. Good luck.

As we pointed, the number one reason why 2010 is set to be a truly “interesting” year is a result of the upcoming explosion in US Treasury issuance. Fiscal 2010 gross coupon issuance is expected to hit $2.55 trillion, a $700 billion increase from 2009, which in turn was  $1.1 trillion increase from 2008. For those of you needing a primer on the exponential function, click here. But wait, there is a light in the tunnel: in 2011, gross issuance is expected to decline… to $1.9 trillion.

And while things are hair-raising in “gross” country (not Bill…at least not yet), they are not much better in netville either. Net of maturities, 2010 coupon issuance will be about $1.8 trillion, a 45% increase from the $1.3 trillion in FY 2009 (and the paltry $255 billion in 2008).

Now everyone knows that the average maturity of the UST curve has become a big problem for Tim Geithner: nearly 40% of all marketable debt matures within a year (a percentage that has kept on growing). In fact, the Treasury provided guidance in its November 2009 refunding, in which it stated that it intends “to focus on increasing the average maturity” of its debt after relying heavily on Bill issuance in H2. Once again, we wish Tim the best of luck.

Why our generous best intentions to the US Treasury? Because unless the US consumer decides to forgo the purchase of the 4th sequential Kindle and buy some Treasuries (and not just any: 30 Year Bonds or bust), the presumption that the Bond printer will have the option of finding vast foreign appetite for its spewage is a very myopic one. We already know that China is a major question mark, and will aggressively be looking at pumping capital into its own economy instead of that of Uncle Sam’s – at some point the return on investment in its own middle class will surpass that of funding the rapidly disappearing US middle class. That tipping point could be as soon as 2010.

As for Japan – the country has plunged into its n^th consecutive deflationary period. Whether or not the finance minister announces yet another affair with the Quantitative Easing whore on any given day, depends merely on what side of the bed he wakes up on. The country will have its hands full monetizing its own sovereign issuance, let alone ours.

Lastly, the UK – well, with the country set to have zero bankers left in a few months, we don’t think the traditionally third largest purchaser of US debt will be doing much purchasing any time soon.

None of this is merely speculation: October TIC data confirmed these preliminary observations. It will only become more pronounced in upcoming months.

How about that great globalization dynamo: emerging markets? Alas, they have their hands full with issuing their own record amounts of both sovereign and corporate debt as well: in 2009 gross EM debt issuance reached an astounding $217 billion, $29 billion higher than the previous record in 2007. Gross EM issuance was particularly high in the last quarter at $73 billion, with October breaking the record for the largest ever monthly gross issuance of emerging market global bonds at $38 billion (January is traditionally the busiest month of the year.) With $81 billion, 2009 was notably a record year for sovereign bonds, while gross issuance of corporate bonds amounted to $136 billion, the second highest level after that of 2007 with $155 billion.

Bottom line: everyone has major problems at home, and is more focused on the supply than the demand side of the equation.

What options does this leave for the administration? Very few, and all of them are ugly. As we stated earlier on, the options for the Fed are threefold:

1. Announce a new iteration of Quantitative Easing. This will be met with major disapproval across all voting classes (at least those whose residential zip codes do not start with 10xxx or 068xx), creating major headaches for Obama and the democrats which are already struggling with collapsing polls.
2. Prepare for a major increase in interest rates. While on the surface this would be very welcome for a Fed that keeps hinting that deflation is the biggest concern for the economy, Bernanke’s complete lack of preparation from a monetary standpoint (we are surprised the Fed’s $200 million reverse repos have not made the late night comedy circuit yet) to a forced interest rate increase, would likely result in runaway inflation almost overnight. The result would be a huge blow to a still deteriorating economy.
3. Engineer a stock market collapse. Recently investors have, rightfully, realized there is no more risk in equities, not because the assets backing the stockholder equity are actually creating greater cash flow (as we demonstrated recently, that is not the case), but simply because taxpayers have involuntarily become safekeepers for the entire stock market, due to Bernanke’s forced intervention in bond and equity markets. Yet the President’s Working Group is fully aware that when the time comes to hitting the “reverse” button, it will do so. Will the resultant rush into safe assets be sufficient to generate the needed endogenous demand for Treasuries is unknown. It will likely be correlated to the size of the equity market drop.

If the Fed decides on option three, we fully believe a 30% drop (or greater) in equities is very probable as the new supply/demand regime in fixed income becomes apparent. We hope mainstream media takes the ideas presented here and processes them for broader consumption as indeed the Fed is caught in a very fragile dilemma, and the sooner its hand is pushed, the less disastrous the final outcome for investors. Then again, as Eric Sprott has been pointing out for quite some time, it could very well be that the US economy has become merely one huge Ponzi, and as such, its expansion or reduction on the margin is uncontrollable. We very well may have passed into the stage where blind growth is the only alternative to a complete collapse. We hope that is not the case.

Merry Christmas and Happy Holidays to all readers.

There are two interesting articles in the WSJ relating to the “Health Reform” bill, one by Karl Rove and the second coming from The Heritage Foundation, a conservative think tank.

Let’s first talk about Karl Rove:

Taxes start going up now, Medicare cuts begin after next fall’s election, and spending for subsidies commences in five years. The price tag is not the first decade’s announced $871 billion cost: It is $2.4 trillion. That’s the cost of the tax credits in insurance exchanges, and the additional Medicaid costs the reform generates, over the first 10 years it’s fully up and running, according to Congressional Budget Office numbers compiled by Republicans on the Senate Finance Committee.

Take the partisanship out and what you have is the above, basically.  On this Mr. Rove is exactly correct.

The tax increases come now, Medicare cuts come after the next election but in point of fact the spending will come never.

I’ll explain after I provide some of the second article:

The purpose of this compulsory contract, coupled with the arbitrary price ratios and controls, is to require many people to buy artificially high-priced policies to subsidize coverage for others as well as an industry saddled with other government costs and regulations. Congress lawfully could enact a general tax to pay for these subsidies or it could create a tax credit for those who buy health insurance, but that would require Congress to “pay for” or budget for the subsidies in a conventional manner. The sponsors of the current bills are attempting, through the personal mandate, to keep the transfers entirely off budget or–through the gimmick of unconstitutional taxes or penalties they dub “shared responsibility payments”–make these transfers appear to be revenue-enhancing.

This “personal responsibility” provision of the legislation, more accurately known as the “individual mandate” because it commands all individuals to enter into a contractual relationship with a private insurance company, takes congressional power and control to a striking new level. Its defenders have struggled to justify the mandate by analogizing it to existing federal laws and court decisions, but their efforts do not withstand serious scrutiny. An individual mandate to enter into a contract with or buy a particular product from a private party, with tax penalties to enforce it, is unprecedented– not just in scope but in kind–and unconstitutional as a matter of first principles and under any reasonable reading of judicial precedents.

Congress has a responsibility, pursuant to the oath of all Senators and Representatives, to determine the constitutionality of its own actions independently of how the Supreme Court has previously ruled or may rule in the future. But it is very unlikely that the Court would extend current constitutional doctrines, or devise new ones, to uphold this new and unprecedented claim of federal power.

Got that second part?

Good, because here’s my prediction.

Congress will somehow manage to put these two bills together and come up with something that both Houses of Congress will pass, and Obama will sign it.

The lawsuits will come immediately thereafter.

They will succeed, because there is simply no justification anywhere in The Constitution, nor can one be manufactured, to force someone under pain of federal fine and/or imprisonment to purchase something from a private party simply as a consequence of being alive.

This is so blatantly unconstitutional that nobody in The House or Senate can seriously expect it to stand.  Therefore, we must conclude that it is not intended to stand – both House and Senate fully expect that mandate to be struck.

When, not if, it is you will discover the what I have said all along is the truth purpose of this so-called “reform” – a single-payer system.

Here’s how it will happen.

1. Congress will pass and Obama will sign something containing this “individual mandate.”
2. This will generate immediate lawsuits which will begin their way through the system, headed for the United States Supreme Court.  That process will take several years.  Note that the so-called “benefits” of this reform will also take several years to show up.  This is not an accident.

    

3. Meanwhile, the taxes begin immediately.  This is exactly what happened in the 1930s by the way – taxes were raised right into the maw of an economic recession, and helped turn it into a Depression.  Such it will be this time as well.
4. Young, healthy people will pay the “fines” under protest and refuse to buy coverage (it’s cheaper than complying with a $15,000/year mandate to pay the $750/year fine!) and join said lawsuits in Step #2.  This will in turn begin to force private companies out of the system (remember, there are also price controls in there!) as adverse selection will not be eliminated as promised.
5. At some point the courts will strike the individual mandate.  Free to not pay the fine or buy insurance and prevented from raising rates adverse selection will collapse the remaining private health insurers.

At this point you have:

1. Permanently higher taxes (since it is constitutional to tax!)
2. NO private health insurers left in the market.
3. The “standards and practices” remaining and impossible to remove (note the super-majority requirements in the bill – intentionally put there to prevent the removal of those standards and practices!)

What comes next?  Unable to impose mandatory individual payments to private companies The Government will then have “no choice” but to put in place a Canadian-style system.

For good or bad, you will get both rationing and a tax-funded medical system in The United States.  Private override insurance may remain available and you may be able to continue to buy health care for cash, but neither is assured – neither can be done (for the most part) in Canada, as just one example.

I do not believe this outcome will be an accident – indeed, I believe it is the intention of the Obama Administration and The Democrats all along.

Those who are ascribing some sort of partisan “liberalism” motive – that is, a desire to take over 20% of the economy – are wrong.  The real desire is to collapse health care spending to around 9-10% of GDP.

Since neither party is willing to have an honest debate and discussion with Americans relating to the amount of care we can afford to provide people, including but not limited to care as we age, for those who are unable to pay for it on their own, and since both parties have been co-opted by the medical device and pharmaceutical industry who have clamored for “more and more” of GDP (while delivering relatively small incremental “benefits” in the form of extending life, albeit at a questionable level of quality), this is what we’re going to get.

Mark this Ticker and come back to it in three or five years – I’d make a fairly large wager that this is exactly what we will not only get but what is the true intent behind this “bill.”

I have written about “strategic defaults” many times in The Ticker, with the most recent being right here:

Therefore, until the law is changed to prohibit the use of said “Strategic” legal containers and the resulting option of business interests – including the banks that are complaining now – to practice selective default when it suits them I stand by my original view:

Strategic Default, in today’s economic, legal and ethical environment, is perfectly within the rights of consumers and they should exercise that right when it makes economic sense, after consultation with both legal and accounting professionals.

This is now showing up in the “mainstream media” – specifically Newsweek:

Um, do any of these people read the Wall Street Journal? Strategic defaults are the American way, and I’m not talking about strapped middle-class borrowers who prefer spending money on vacations to staying current on their payments. Deep-pocketed companies, billionaires, and institutions that can afford to stay current on payments strategically default all the time.

Ding ding ding ding ding.  Give Daniel Gross a cigar!

Let’s cut the crap – again – this Christmas, and restate the obvious:

1. Your legal obligations are within the four corners of the document(s) you sign.  No more, no less.
2. If you, after consulting with legal and accounting advisors, determine that it is in your best interest all in to strategically default on your debts, whether that default be on your mortgage, your credit cards, your HELOC or anything else, YOU SHOULD DO SO.

    

3. You have exactly ZERO ethical or moral obligation to NOT exercise each and every legal option available to you, including bankruptcy, suits for quiet title where “lenders” improperly transacted in some fashion or the exploitation of the very fact that lending was done “unsecured” either in fact or in the letter of the agreement.

Yes, there may be consequences.  In some states wages can be garnished to varying degrees, as just one example.  Lenders do have recourse to one degree or another when you make this decision.  It is not so simple as to say “walk away, there’s no risk and no cost”, because there is both risk and cost.

But the argument that one has a moral or ethical obligation – that there is some “stigma” associated with default – it absolute baloney.

Years ago there was stigma – a man’s word was his bond.  But that is gone now, and it is not you, the consumer who made it thus.  It is in fact the very people who lent you that money who made it so – who proffered documents to you written in 4 point type that were impossible for anyone with less than a PhD to understand (and sometimes even then), that contained intentional tricks and less-than-honest inducements, and who themselves were in fact stuffing bogus loans into securities that they then peddled out to the masses!

Janet Tavakoli has once again opined on this in relationship to Goldman Sachs, which was, as you’re no doubt aware, one of the firms that packaged up HELOC and other “household debt” to be sold off.  Here is what she said in that column:

The answer is that they sold a lot of “hot air” disguised as valuable securities. Goldman claims this was prudent risk management. In reality, Goldman created products that it knew or should have known were overrated and overpriced.

If Wall Street had not manufactured value-destroying securities and related credit derivatives, the money supply for bad loans would have been choked off years earlier. Instead, Wall Street was chiefly responsible for the “financial innovation” that did massive damage to the U.S. economy.

Got it?

You got that “loan” because these institutions provided it to you knowing full well that you could not pay.

That is, they didn’t loan you money expecting you to pay them back, they lent you money knowing you couldn’t pay, sold off loans they knew were bad to other people AND THEN BET AGAINST YOU PAYING!

I will counsel in these pages that you should pay your debts if and only if and when:

• Those who made intentionally unsound loans are indicted, prosecuted and imprisoned for their willfully-fraudulent lending.
• Those who packaged up these loans by stuffing bad loans into paper then sold and resold by others in an orgy of intentional misdirection and fraud are all forced to eat their own cooking, instead of the taxpayer bailing them out.
• The laws are changed so that the practice of both intentionally-unsound lending and strategic default is handled identically for both “big corporations and rich folks” as well as for the ordinary working stiff who is trying to hold his head above water.

In other words I will change my tune if and only if and when those who destroyed the social contract of a man’s word being good on its face change THEIR tune.  Until that time it is my assertion that you are not only within your rights to deal with them as they deal with you BUT YOU HAVE A MORAL AND ETHICAL OBLIGATION TO DO SO AS IT IS THE ONLY MEANS AVAILABLE TO THE COMMON MAN SHORT OF UNLAWFUL VIOLENCE TO STOP THE SCAMS!

Let me be clear: There is no argument to be made whatsoever in the current environment for a “moral or ethical obligation” to pay your debts.  Those debts were incurred in an environment where asset prices (which you used that debt to finance) were fraudulently inflated in “value” through the intentional concealment and bogus “underwriting” and packaging noted above.

This bogus underwriting as I and others have noted was not an accident, it was a means of looting the public both explicitly at the time and then later via taxpayer bailouts – these so-called “profits” were bonused and paid out via dividends and rising stock prices when in fact the “earnings” that led to same were a phantom, an artifice and a fraud!

You and I – ordinary Americans – did not make it thus.  We did not create these value-destroying “assets”, we did not pollute allegedly good paper with loans we knew could not be paid, and we did not glibly sell assets to people in one part of our personal financial operations, claiming they were “money good”, while shorting them in another.

The ENTIRETY of the fraud-laced economy is holding together by one and only one singular thread at the present time: the fraudulently-peddled LIE that you have an obligation to deal at some sort of ethically or morally superior level with a band of brigands, scam artists and fraudsters.

YOUR fleecing will end ONLY when you, the ordinary American, decided you will NOT deal “honorably” with a den of vipers, but instead deal with them exactly as they have dealt with you, and your attitude will change ONLY when theirs does and they make recompense for their past sins.

YOU, America, decide how long you want these firms to screw you on a literal daily basis. 

YOU can stop it tomorrow.  If every American decided to default – on purpose – on their credit cards and mortgages, each and every one of these institutions who has screwed you for the last two decades would be rendered insolvent in less than one month’s time.

YOU have the power America.

Will you use it or continue to cower in the corner before those who, as I have written about for the last two and a half years, have exploited your gullibility and “ethics” to force you into near-literal slavery?

THAT is the question facing you this Christmas.

Sprott Asset Management has "pulled forward" something I intended to cover in my "year end review" Ticker but since he’s put it out there I think I need to cover it now:

As a thought experiment, we separated all the various US Treasury owners and asked our readers whether each group could afford to increase their 2009 treasury purchases by 200%. In the end, we surmised that most groups couldn’t, and prepared our readers for the worst.

Almost seven months later, however, nothing particularly bad has happened on the US debt front. There have been no failed auctions, no sovereign defaults, no downgrades of debt and no significant increase in rates…not so much as a hiccup in the treasury market. Knowing what we discussed this past June, we have to ask how it all went so smoothly. After all – it was pretty obvious there wasn’t enough buying power to satisfy the auctions under ‘normal’ circumstances.

In the latest Treasury Bulletin published in December 2009, ownership data reveals that the United States increased the public debt by $1.885 trillion dollars in fiscal 2009.

….

To our surprise, the only group to actually substantially increase their purchases in 2009 is defined in the Federal Reserve Flow of Funds Report as the "Household Sector". This category of buyers bought $15 billion worth of treasuries in 2008, but by Q3 2009 had purchased a whopping $528.7 billion worth. At the end of Q3 this Household Sector category now owns more treasuries than the Federal Reserve itself.⁸

If you believe that you’re more gullible than I.

Here’s why.

The 2009/3Q Z1 shows an alleged annualized inbound (purchase) flow rate for "households" of $742.9 billion.  This was exceeded only by the 1Q 2009 number of 1066.5, which in the context of the stock market meltdown makes perfect sense.  Likewise, in 2008 Q2/Q3 when the market was falling apart flow rates into Treasuries by households were very heavy as well.

Before you write this off and say "oh but people still are scared and thus not willing to invest in the stock market" you better look below at the Money Market Mutual Fund holdings!  In Q1, Q3 and Q4 of last year this segment saw massive buying of Treasuries.  Not so this year – Money Market funds have been NET SELLERS all year long, and in Q4 the rate of selling has dramatically increased, mostly as a consequence of broker/dealer sales. 

This, of course, is perfectly consistent with the stock market rising – money flows out of Money Market funds and into equities, thus causing Money Markets to be net sellers.

So how is it that "Households" allegedly are (individually, via Treasury Direct?) buying Treasuries at a $700+ billion annualized rate when the other categories under which "households" transact in the markets - via money market accounts, mutual funds and similar instruments – are showing either small increases or significant net sales?

There are other oddities in the Z1 as well related to net borrowing and lending – one of the more important being the fact that GSEs suddenly became negative net borrowers to the tune of more than a half-trillion dollars in the second and third quarter!  Wait – they’re paying down outstanding lending commitments?  I thought The Fed was absorbing all their net new issue and Treasury was backstopping their operating costs?  Hmmmm…… is someone trying to de-lever due to knowledge of "fun times" to come in 2010? Perhaps Timmy knows too, eh?

The two companies, the largest sources of mortgage financing in the U.S., are currently under government conservatorship and have caps of $200 billion each on backstop capital from the Treasury. Under the new agreement announced today, these limits can rise as needed to cover net worth losses through 2012.

Hint: Treasury believes those losses are going to be massive, and so do the GSEs, judging not by statements but by their behavior.

Commercial banks are neither lending OR borrowing, and after what looked to be a let-up in their divestment in the 2nd Quarter it has picked up bigtime once again in their third.  Again: What do they know that we’re not being told about their losses?

I have previously opined (in October) that it is more than a bit unlikely that "Caribbean Banking Centers" have the GDP (or sovereign wealth) to support more than $200 billion in Treasury Security acquisitions:

Who is the real holder of all the Treasuries in "Caribbean Banking Centers"?  You don’t actually expect me to believe that little islands like Antigua and Grand Cayman have the sovereign wealth to support holding nearly two hundred billion dollars of Treasuries, do you?  Is that a vehicle by which back-door monetization can (and has) taken place?  Germany, with a real economy and government, by contrast holds a mere $55 billion dollars, and even Russia (and Hong Kong!) have only $121 billion.

Yeah.

Now we have more than $500 billion in further discrepancies that make absolutely no sense, especially when one looks at the rest of the patterns in the Fed’s most-recent Z1 release.

This, of course, begs the obvious question:

Who really "bought" that Treasury debt – and did it really "subscribe"? 

Or is the truth that there were in fact no buyers for upwards of half of the total Treasury issue in the last year and it was instead monetized – one third openly via Federal Reserve "open market" purchase, and the other two-thirds via "covert" or "stealth" means, complete with bucketing the alleged "buyers" into categories in The Fed’s and Treasury’s data releases?

Yes, Boys & Girls, it’s been a year since we last heard Uncle Jay sing the year in review…

I hate bankers and so should you.  Why? Because bankers steal a little bit of Christmas cheer
every year. For the past several years, bankers have stolen a lot of Christmas
cheer. Like the Grinch from Dr. Seuss’s famous children’s tale, How the Grinch
Stole Christmas, bankers have hearts two sizes too small, and by means of
burglary, they do their best to deprive everyone of Christmas every year. Only
unlike the Grinch, despite stealing from people every year, bankers never learn
and never reform, they never return to the people the vast amounts of money
they stole from them, and they are cold-hearted and arrogant enough to claim
that they are doing “God’s work” (as stated by Goldman Sachs Chairman and CEO
Lloyd Blankfein, when in reality, they do much more harm to society as a whole
than good. And this makes the majority of bankers worse than the even the
loathed Grinch himself.

Since the institution of banking was founded, bankers have
been guilty of deceit, fraud and theft. During Biblical times, “Jesus went into
the temple, and began to cast out them that sold and bought in the temple, and
overthrew the tables of the moneychangers [bankers]..And he taught, saying unto
them, Is it not written, my house shall be called of all nations the house of
prayer? But ye have made it a den of thieves.” (Mark 11:15-17)

Fast forward almost a couple thousand years later, and
bankers were still committing the same theft. In fact, over a period of
eighteen hundred years, bankers learned nothing from being cast out by Jesus
from the temples, and they continued to commit such questionable acts of
morality that even a man of very questionable character himself showed nothing
but contempt for them. Though historians noted that former US President Jackson
committed numerous hateful acts against Choctaw, Chikasaw, and Cherokee
American Indians, Jackson despised bankers so much, that in front of a
delegation of bankers, he stated the following:

“Gentlemen, I have had men watching you for a long time, and
I am convinced that you have used the funds of the bank to speculate in the
breadstuffs of the country. When you won, you divided the profits amongst you,
and when you lost, you charged it to the bank. You tell me that if I take the
deposits from the bank and annul its charter, I shall ruin ten thousand
families. That may be true, gentlemen, but that is your sin! Should I let you
go on, you will ruin fifty thousand families, and that would be my sin! You are
a den of vipers and thieves. I intend to rout you out, and by the eternal God,
I will rout you out.”

Fast forward another one hundred and eighty years, and we
discover that bankers have failed to evolve even a tiny iota from their
deceitful nature. When ex-CEO and former US Secretary Henry Paulson lied to the
American people and to US Congress by asking for more than $800 billion of
funds for the purposes of helping American home owners and then committed the
ultimate bait-and-switch fraud by handing this money to his banking friends, he
epitomized the very warning Andrew Jackson levied against bankers in the
1800’s: “When you won, you divided the profits amongst you, and when you lost,
you charged it to the bank.” In this case, Paulson acted beyond the normal
level of immorality of bankers, and charged the banks’ losses to every single
American citizen.  Unlike the
Grinch, who repented from the error of his ways over a period of a few days,
bankers have refused to repent for the unsound monetary system they have
created for more than two thousand years!

To understand why Jesus threw bankers out of the temple, why
a former governor of the Bank of England stated that banking “was born in sin”,
and why Andrew Jackson, a focus of much hatred and contempt among American
Indians, viewed bankers as so immoral, that despite his own immense character
flaws, he made it his own personal crusade to throw out all bankers from US
government, one must understand how bankers continually rob all citizens of
their wealth every day. To state that bankers lie, deceive, rob and steal from
all citizens every day is not an exaggeration. The means by which they do so
today has drastically changed from the means they employed centuries ago, so
this is why so few people understand that bankers continually rob them.  Most people don’t understand that
bankers ensure the continual devaluation of the purchasing power of all money
in the system by not only literally creating money out of nothing but also by
creating money as debt.

This process, to which they cleverly assign the word
“inflation” is in reality a tax that constitutes a direct theft of your
savings, and no different than the tax British monarch King George imposed upon
the American colonists that triggered the American Revolution. The bankers have
only changed the mechanism by which they collect this tax, and the word that
they use to describe this mechanism. In America, this hidden tax of inflation,
which is a euphemism for the devaluation of the currency that sits in your
savings account, is directly responsible for the following situation that Eric
Schlosser described in his national bestseller, Fast Food Nation:

“It used to be, even in low income families, that the father
worked and the mother stayed home to raise the children. Now it seems that no
one’s home and that both parents work just to make ends meet, often holding
down two or three jobs. Parents increasingly turn to the school for help,
asking teachers to supply discipline and direction.”

The above paragraph described the family life of many
families that lived in Middle America almost a decade ago. Due to an unsound
monetary system that has led to relentless devaluation of the US dollar, the
situation described above will explode in intensity and magnitude over the next
five years, and affect everyone in America, no matter your income level and
socio-economic status. As the US dollar continues to lose purchasing power,
despite a current possible extended rally against the pound and Euro,
middle-class America will sink into the ranks of the poor. If the world operated on a sound monetary system, even in low-income families, the mother could still stay home to raise the children. Today, even in middle-class families, thanks to bankers, the mother does not have the option to stay home and raise the children. When the situation
of both parents working two or three jobs and their kids attending high school
while working 20+ hours a week is still not enough to make ends meet, crime
will explode in America during the next five years. It is the critical problems
of these very families that the bankers are creating through their monetary
policies that will come home to roost in America.

In reality, I don’t hold hatred in my heart for anyone.
Christmas is a time for forgiveness and none among us are infallible and none
among us are without sin. Yet, to be forgiven, those that continually do wrong
must repent, and bankers have yet to do anything that demonstrates that they
have even the slightest amount of regret and remorse for the economic upheaval
and chaos that they have created throughout the world in recent years. The
rich, though they may not care to understand the tale of How the Bankers Stole
Christmas now, should make it their prerogative to understand this as soon as
possible. Why? The current course the bankers have set us on has ensured that
the rich will soon become victims of desperate masses of people in their
country that will see a huge degradation in their quality of life due to the
recent monetary policies bankers have elected to impose upon their
citizens.  When large portions of
the middle class are destroyed, masses of people that never considered stealing
before, will steal and loot due to the simple instinct of survival, and a great
battle between “the haves” and the “have nots” will ensue in future years in
many developed countries, as crazy as this concept sounds today. Should the
people choose to understand “How the Bankers Stole Christmas”, the
inevitable massive increase in crime that will accompany the sinking of the
middle class into poverty can be avoided.

If instead, everyone chooses to buy into the propaganda of
the bankers, then this same scenario, as crazy as it sounds today, will come
true in the future just as the “crazy” stock market crashes I predicted in 2006
eventually materialized in 2008. 
And the biggest culprit of this shameful scenario, should it
materialize, will embarrassingly be our own refusal to see the truth about how
bankers have commandeered today’s “modern” monetary system for their own
benefit, and their own benefit only, to the detriment of every single citizen
they claim to be helping. If one doubts the enormous reach of banker’s
tentacles into governments, then perhaps now is a good time to review former
IMF Chief Economist’s Simon Johnson’s brilliant article, “The Quiet Coup”.