FedUpUSA

Archive for January, 2011

Gibbs: All governments around the world have to be responsive to the people they serve.

Uh huh.

Like the statement Barack made that he didn’t come to Washington to serve the banks?

Like TARP, passed over 100:1 objections of The American People?

Like Obamacare, passed over monstrous objections of The American People?

Like running $1.7 trillion in deficits last year, and over $4.5 trillion in the last three years, with no plan to solve the problem or even slow it down?  Remember, the CBO just updated their projections, after your boss added $500 billion more to the deficit for this year.

Like false claims – lies – on virtually every single political claim made during his campaign?

Like refusal to insist on prosecution of those who filed false affidavits – 150,000 cases of perjury?

Like refusal to insist on indicting Bernanke for perjury before Congress, when he said he wouldn’t monetize the debt?

Like refusal to insist on indicting the banksters that caused this collapse in the first place, even though we have sworn testimony of intentional deception, such as the Citibank bad loans that were made and sold off?

Like refusal to deal with the fact that if we cut to zero every Federal Program other than Medicare, Social Security, Medicaid, Unemployment and Welfare, we would still be running a deficit after you paid the interest on the debt?  That is, you can’t even balance the budget today if you not only cut the Pentagon to zero but you also cut everything else to zero, including the budget for the guy who sweeps your carpet in the Oval Orifice, and this is ENTIRELY your responsibility.

There’s no inflation here, right?  That’s why cotton is up 300% in the last two years, wheat has nearly doubled, oil is trading near $90, oats have more than doubled, soybeans have nearly doubled… all but cotton in the last year?

Responsive to the people Mr. Gibbs?  Really?

What happens when Egypt comes here Mr. Gibbs?  What happens when the budgetary reality becomes realized risk?  What happens when the market collapses because all of this speculation that you have not only encouraged but have driven through policy turns into a 90% stock market collapse and the literal cessation of trucks on the highway and food on the shelves?

Does it have to happen here, Mr. Gibbs, before the government becomes responsive to the people?

The people have spoken. 

Repeatedly. 

You and President Obama have refused to listen and to act in accordance with those wishes. 

Your boss, Mr. Obama, continues to insist that he knows much better than people do, as do you.

Remember Mr. Gibbs: responsive to the people.

That’s your standard.

What are you going to do if the Suez canal is closed over the weekend and oil gaps up to $100, $125, $150 or more?

Your Boss, Mr. Gibbs, and our President, is directly responsible for the food and energy inflation that the world has had to absorb.  We have intentionally abused our status as having the world’s reserve currency and have debased that currency by monetizing debt – an act that Ben Bernanke said he would not do, under oath, before Congress.

YOUR BOSS reappointed him to his office.

This was 20 years coming, but you could have stopped it in 2009.  You could have taken every one of these institutions into receivership and closed them.  You still can.

Instead, you have been and still are performing fellatio on those very same bankers. 

Daily.

President Obama is directly responsible for what is happening today.  He has literally caused people to starve, and now to die.

Let me repeat that: President Obama is directly responsible for what is happening Mr. Gibbs.

He will be held politically responsible, and so will everyone on The Hill who has refused and continues to refuse to act on these issues.

You’re overdue on being responsive to the people Mr. Gibbs, and so is Mr. Obama.

The Market-Ticker

Do you see all of the warning signs that are flashing all around you?  These days it seems like there is more bad economic news in a single week than there used to be in an entire month.  2011 is already shaping up to be a very dark year for the world economy.  The price of food is shooting through the roof and we have already seen violent food riots in countries like Egypt, Algeria and Tunisia.  World financial markets are becoming increasingly unstable as the sovereign debt crisis continues to get worse.  Meanwhile, the number of Americans applying for unemployment benefits is up, foreclosures are up and poverty continues to spread like a plague throughout the United States.  What we are starting to see around the globe is a lot like the “stagflation” of the 1970s.  All of the crazy money printing that has been going on is overheating prices for agricultural commodities and precious metals, but all of this new money is not doing much to help the average man or woman on the street.

Do you remember what the economy was like in America during the 70s?  We had high unemployment and high inflation at the same time.  It was horrible.  Well, all the warning signs are there for a stagflation repeat.  Unemployment is at epidemic levels and it isn’t showing any signs of decreasing much any time soon.  Meanwhile, the crazy money printing that the Federal Reserve and other central banks have been doing is starting to cause significant inflation.  The price of oil is about to cross the 100 dollar a barrel mark and the UN is forecasting that the global price of food is going to increase by 30 percent by the end of the year.

So, yes, there are some really, really good reasons to be incredibly concerned about the global economy in 2011.

Meanwhile, the only solutions that our global leaders seem to be offering are more money printing, more government debt and more financial control by international organizations.

The truth is that we have a real mess on our hands.  The following are 20 economic warning signs that should be of great concern to all of us….

#1 Over the past seven days, the price of wheat has risen by 11 percent as concerns about food shortages continue to grow around the world.

#2 The price of corn is up a staggering 94 percent since last June.

#3 The United Nations is projecting that the global price of food will increase by 30 percent in 2011.

#4 According to the U.S. Department of Labor, the number of Americans applying for unemployment benefits rose last week to the highest level since last October.

#5 According to the Pew Charitable Trusts, of the 14 million Americans “officially” unemployed in December, 30% of them had been unemployed for one year or longer.

#6 Beginning in the month of March, the U.S. Postal Service will begin shutting down up to 2,000 post offices across the United States.

#7 In an absolutely stunning move, Standard & Poor’s has downgraded Japanese government debt from AA to AA-.

#8 72 percent of the major metropolitan areas in the United States had more foreclosures in 2010 than they did in 2009.

#9 Approximately 5 million homeowners in the United States are at least two months behind on their mortgages, and it is being projected that over a million American families will be booted out of their homes this year alone.

#10 According to the Congressional Budget Office, the Social Security system will run a deficit of 45 billion dollars this year.  When the new payroll tax breaks are factored in, the projected “Social Security deficit” for this year swells to 130 billion dollars.

#11 The U.S. money supply has been rising at a pace that is absolutely unprecedented.

#12 Right now, money is flowing out of bonds at an absolutely staggering pace.

#13 The U.S. Bureau of Labor Statistics says that the price of food increased 50 percent faster than the overall rate of inflation during 2010.

#14 According to the U.S. Conference of Mayors, visits to soup kitchens are up 24 percent over the past year.

#15 During the last school year, almost half of all school children in the state of Illinois came from families that were considered to be “low-income”.

#16 Those living in the town of Discovery Bay, California will soon not be permitted to use cash to pay for any public services.  Could this be another disturbing step in the direction of a cashless society?

#17 French President Nicolas Sarkozy says that the IMF should be given the power to enforce new rules that would be designed to prevent “global economic imbalances” from happening.

#18 The U.S. government is currently borrowing about 40 cents of every single dollar that it spends.

#19 According to the Congressional Budget Office, the U.S. government will have the biggest budget deficit ever recorded (approximately 1.5 trillion dollars) this year.

#20 It is being projected that the U.S. national debt will increase by $150,000 per U.S. household between 2009 and 2021.

So is there any good news?

Well, yes there is.

U.S. Representative Ron Paul has introduced a new bill to audit the Federal Reserve.  Let us hope that the move to audit the Fed fares better in the 112th Congress than it did in the 111th Congress.  It would be wonderful if the American people could actually learn what has been going on inside the Fed all this time.

But mostly the news about the global economy is really bad.  There have been some people that have been warning for decades that all of this money printing and all of this government debt would eventually catch up with us.  Now we have almost reached the moment of reckoning that the doomsayers have been warning about for so long, and it is going to be really painful to go through it.

Thanks to the greatest debt bubble in the history of the world, we have been living beyond our means for decades.  When “times were good” it was not because either the Republicans or the Democrats were doing something right.  The truth is that both political parties have been horribly addicted to government debt.  The debt-fueled prosperity that our politicians purchased for us is starting to come to an end, and an economic implosion is coming that most Americans will never see coming.

But hopefully most of the readers of this article are much wiser than the average American.  The warning signs are there.  Now is the time to take action and get prepared.

The Economic Collapse

First, you must sell allegedly “friendly” governments lots of weapons.  You know, aircraft, missiles, guns, ammunition, that sort of stuff.  It helps a lot if the governments have money, and it helps even more if you can convince them to peg their currencies in some way to yours, and they have something you want (think oil.)

Next, having accomplished the currency peg and sales of arms, you then allow your banks to engage in rampant speculation and fraud.  You let them counterfeit your currency with impunity by issuing credit unbacked by anything (which spends exactly the same as does currency, and thus is an effective naked short upon it), so long as they bribe Congress sufficiently with “campaign contributions.”  This is all legal, of course, and where it isn’t you change the law (such as through the CFMA) so it becomes legal.

Having done that, you let your Central Bank pontificate about how “rising stock prices” are good for the economy and “animal spirits.”  You intentionally fail to mention, however, that speculative price and value are not the same thing, and that said companies are drowning in debt to the point that you now need to pay $12 for $1 worth of actual underlying assets, after debt is subtracted.  This, incidentally, is three times the level of speculative premium you had in 2007, just before the market blew up.

In order to support this speculative bubble (which your President is dumb enough to crow about in his “State of the Union” speech) you intentionally flood the market with “liquidity” (that’s a fancy name for “cheap loans.”)  Speculators figure this game out immediately and start driving up the price of everything - not just stocks.  Cotton quadruples in price.  Wheat, corn, oats, copper, oil – all have a rocket strapped to their ass and lit.

Of course producers and processors of food and other items can only pass through those price increases or eat them. They can’t eat them beyond their margin and remain in business, so this starts to leak into the real economy.  The currency pegs mean that most of the inflationary pressure you’re creating doesn’t hit your nation, it’s exported to others.  That exactly how you like it, because you can claim “inflation expectations are well-anchored.”  Perhaps they are in your nation, but in other places they’re extremely unanchored and are not only expectations, they’re realized facts as the basic cost of life spirals up out of control.

This, in turn, provokes food riots in these less-well-endowed nations that you managed to dupe into participating in your outrageous scheme. 

After all, there’s only one thing worse than a hungry man. 

That’s a man who used to be well-fed and now he’s both hungry and pissed, along with being unemployed.

When his belly growls loudly enough, he riots.

And so do his similarly-situated neighbors.

That’s when you find out what the balance of power really looks like between government and the people.  Even in a monstrously-repressive regime such as Egypt, the fact remains that when the people have had enough, the government is fooked.

We should send our entire banking and scamming apparatus – every one of the people responsible for the bubbles and asset-stripping over the previous 20 years and all the policy wonks who have allowed and even encouraged the currency pegs and similar intentional distortions - over to Cairo on a nice Air Force airplane and turn them over to the people.

Let them hold the trial and determine what justice might dictate.  Put it on pay-per-view and have the proceeds go to paying down the national debt.

We won’t, of course.  We’ll claim we’re not responsible in any way.  The bankers will have none of this adhere to them, including Bernanke.  Congress will, for its part, duck the responsibility that it has, in that it has continually allowed the bad debt to be hidden with outrageous actions like demanding that FASB change mark-to-market, bailing out insolvent banks, bailing out Fannie and Freddie and allowing Bernanke to claim that he “would not monetize the debt” – while he was doing so, and then allow him to do so – in the open, naked, without so much as a peep or legislation (or a contempt of Congress charge) to stop him.

This unrest is likely to spread, because unrest means disruption of supply lines, which in turn means prices go even higher.  The same problems that caused this load of crap to happen are being made worse by it, and yet there’s not one peep in the mainstream media nor among Congress as to what actually caused all of this to occur, or any calls for those responsible to be forced to stop it.

There’s an implicit warning in what’s going on over in Egypt today, as if this spreads through the Middle East, and it very well may, and radical elements get their hands on all the nice weapons we sold these nations under the premise of being a “friend” to America, you might want to think about what happens if the Middle East oil conduits get shut down, and whether that might create some “interesting” dynamics HERE in the United States.

The Market-Ticker

In common with much of Britain, my plans for the holidays were sacrificed to an untimely ‘flu. Nasty. Very nasty. But now I gain strength daily and begin to address the backlog of social obligation – including this blog.

One of my frustrations with the bankers, central bankers, regulators and other worthies is their lack of reflection and shame regarding the errors of their past policies which have led to the crisis and the looting of global treasuries. There is no acceptance of personal or institutional responsibility and no public accountability.

Since it would be hypocritical to exempt myself from review, however modest my contribution as a blogger, I thought it might be good to start the year by reviewing what I wrote in 2008 and seeing how it stands up with today’s perspective.

My first contribution to the blogosphere was Looting the Vaults at the Central Banks, published 15 May, 2008.

Any crisis now accelerates the trend toward greater public laxity, private excess and central bank secrecy. A crisis, real or manufactured, is most useful to increase the amount of public money clandestinely extended and diminish public oversight and administrative review of outcomes. This has been the pattern for at least 25 years, and may continue for some time to come before a taxpayer or creditor revolt ends the American spiral downwards towards bankruptcy and corporate tyranny.

It used to be the realm of conspiracy theorists to assert that policy makers in Washington were aligned with the military-intelligence complex in promoting international conflicts for profit or that the Federal Reserve was the tool of Wall Street banks in promoting irresponsible bubbles. Now it is accepted policy, defended openly in the media as right and inevitable, as providing an efficient means for America to meet the “threats” to security and financial stability in a changing world.

The danger of embracing the spin is that the productive economy shrinks from underinvestment and distortions as an increasing share of a slower growing pie gets diverted to government and the cronies who direct government policies.

I think I can safely say that I got that one right. The massive misallocation of public funds from taxpayers (present and future) to bankers in the US, UK and EU needs no further comment. Even in China, more and more credit is being diverted to large, speculative state-owned enterprises as productive, private, smaller companies are starved of credit.

Second up for review, is From Capitalist to Capital-less Economies, published 23 May, 2008:

For a time, the neo-classical economists appeared to have found a financial perpetual motion machine. As consumers, companies and governments borrowed more, they appeared to prosper more. Leveraging the accumulated equity in their homes, the consumers got bigger houses and bigger cars. Leveraging their fixed assets and future revenues, the companies got bigger balance sheets, bigger executive remuneration and bigger shareholder dividends. Leveraging their power of taxation and monetary creation, the governments got bigger militaries, bigger bureaucracies, bigger scope for patronage projects. The bankers intermediating all this debt got bigger too, with bigger bonuses for “loan origination”, bigger fees from M&A, bigger commissions and income from securities and derivatives dealing, and bigger influence with their supervisors to loosen any inconvenient accounting, reporting, audit, scope or expansion rules that might have impaired their freedom to keep the party going.

Free Market became the rallying cry of those who believed in perpetual motion. They passionately decried regulation as impairing the market’s freedom to allocate “capital” to the best likely return. They passionately decried taxes as diminishing the “capital” held by those who would reinvest it in growth. They passionately exhorted consumers, businesses and governments to borrow as much “capital” as they could possibly bear, and to err on the side of profligacy, so that more “capital” would be working to grow their revenues and balance sheets in the “free market”.

But the problem with this perpetual motion machine was that it was all the time grinding the seed corn. The “capital” it was pumping out was not the surplus of production over consumption, but the borrowed surplus of greater fools who believed in the hawkers’ pitch of perpetual motion and laid their meagre savings and accumulated assets on the barrelhead in faith the machine would return them multiplied.

Well, yeah. ‘Nuf said. Only now, the government and central banks are forcibly appropriating what meagre assets may remain through public debt service which must be paid by either taxation or inflation. Either way, we are all poorer for the folly of excess leverage. Deflation in what you own; inflation in what you need.

As the third blog entry for back-validation, I offer Famine Futures: Deregulated Markets and Food Insecurity. The willful refusal of the political class to rein in speculation in essential foodstuffs is the more disgusting in many ways than their channeling of weath to banker cronies. Real people are really hungry, and it is going to get much worse.

Like so much that we have observed in the past eight years of the Bush administration, the origins of the current food crisis can be traced to the recycled policies of the Nixon White House. Henry Kissinger stated the premise succinctly in 1970: “Control oil and you control nations; control food and you control the people.”

With credit, oil and food markets spiralling out of reach of the poor and straining the middle-class, it is worth exploring whether similar policies underpin similar problems. In each industry, a small handful of global companies control supply and a massive increase in ill-transparent speculation acting on pricing in exchange markets forces prices up regardless of the fundamentals of supply and demand. The risks for famine and political instability are huge. One doesn’t need to be a conspiracy theorist invoking the Trilateral Commission to feel that something is very wrong with policies leading to simultaneous crises in credit, oil and food that threaten not just the wealth but the wellbeing of most of the world’s population. . . .

Today global agriculture is dominated by eight multi-national corporations. The policies promoted by successive governments and international institutions including the IMF, World Bank and WTO have aimed at undermining local production, distributed commercial networks, and diverse local markets in favour of mass production, streamlined supply chains and concentrated global market pricing.

As with other areas of our lives, the policies of “free market fundamentalism”, as George Soros styles it, have not diminished risks but increased them. My children are hostages to food insecurity, as are yours and billions of others. A disruption in global food supplies or surge in prices that puts food staples beyond the reach of many low income or middle-class families cannot be offset from the back garden. The exposure of food to pricing in markets open to manipulation and excess speculation puts the lives of millions at risk.

With commodity prices still spiraling upwards, and riots leading to political instability, I wish I had been wrong.

So this week’s back-validation is positive. I wrote well, and I wrote wisely. But nothing changed in 2008 except a few minds that were predisposed to question orthodoxy in any event.

I suspect this is the real reason why I find it hard to raise the pace and passion of 2008 today – although the ‘flu was pretty awful. I can write, you can read, but who will change the world?

London Banker

If you rip off “Crime Stoppers” they’ll bust you.

DALLAS—A federal grand jury in Dallas has indicted Dallas Police Department Senior Corporal Theadora Ross and co-defendant Malva R. Delley each on one count of conspiracy to commit wire fraud in connection with the Dallas Crime Stoppers program, announced U.S. Attorney James T. Jacks of the Northern District of Texas. Ross, 50, of Rowlett, Texas, was arrested midday yesterday and appeared before U.S. Magistrate Judge Jeff Kaplan late in the afternoon. She was released on bond. Delley, 36, is a Dallas resident.

On the other hand, you can peddle worthless securities for years and collect billions in bonuses, and you can even double-dip when you “buy back” some of those securities and keep the money instead of crediting it to the investors (to whom it belongs), which looks an awful lot like raw theft, and at worst you get sued.

Even better, when you get sued, the bank you sue will try to keep the lawsuit from becoming public.

And you won’t get indicted.

The Market-Ticker

The Federal Reserve has painted itself into a very narrow and troubling corner for most of working and middle class America.  The massive debt problems on hand have no realistic way of being paid off and the best path in the eyes of the Federal Reserve is to slowly inflate away the currency and debt.  Yet that brings up some troubling dilemmas.  Think of the cost of living adjustments (COLAs) that many on Social Security once received.  Many of these people purchased homes pre-bubble days and many may have their home paid off.  Yet because a large portion of the CPI is based on housing, the CPI has been falling for the last few years stunting growth in COLAs all the while food and other daily use items are surging in cost.  The Federal Reserve has no allegiance to any country and is only concerned with the safety of the biggest banks.  That is their main charter even though they claim to talk about a stable currency for a country.  Let us see how well they are holding to that mission:

Source:  Shadow Stats

Does the above look like the Federal Reserve has done a good job in maintaining a stable currency?   Of course this is strategically planned and is deliberate.  The purpose of debasing the currency is to make our exports more competitive abroad but remember who you are competing with here.  We are going against places like China who artificially hold their currency low to expand their economy.  Is this really the kind of global policy we are looking for here?  Of course the Federal Reserve is allowing global banks to reap enormous profits all on the back of middle class Americans that allow the legal structure to stay in place and have stolen large amounts of money through bailouts.  The banking industry is merely hoarding money and using most of it in stock market speculation:

Think about excess reserves and why they are so high currently.  Banks knowing the full magnitude of their bad debts are holding on tightly to the money earning guaranteed low rates instead of putting the money to work into the economy.  In other words they don’t believe the US economy recovery hype.  Ask any small business owner how easy it is to borrow money from a big bank in the current economy.  The money is extremely tight.  But larger corporations are able to leverage their money globally and are largely outsourcing their workforce.  It is a troubling dynamic.  These large banks that are only permitted to survive because of US taxpayers are actually using the money to outsource the jobs that saved them from default.  The Federal Reserve is merely lubricating the wheels of the full-fledged global debasement of our currency.  First the currency is debased followed by the workforce.

While inflation is supposedly non-existent, we are seeing the price of commodities bursting upwards:

The above understates the actual reality because it excludes fuel.  As long as you don’t eat, go to school, need medical attention, or use gas then there is likely little inflation in your life.  Otherwise you are living through the Federal Reserve experiment of debasing the US dollar.

Remember how all the bailouts where about saving the US housing industry?  After all, trillions of dollars in bailouts and backstops were given to banks all under this premise.  Let us see how things are going:

So much for that recovery and prices are near their trough and recent data shows prices heading lower yet again.  And of course prices are moving lower!  Home prices were solidly in a bubble.  Homeowners had no way of buying homes at bubble prices without the help of exotic financing from the banks.  Yet right now the banks have been bailed out completely while homeowners who are also taxpayers are left cleaning up the entire mess.  Banks are merely using the bailout funds that were supposed to help the flailing housing market and are betting in foreign markets like Latin America and Asia.  Do you remember that being told to the American public in the dark days of 2008?

Hiring hasn’t improved much in the US with the Federal Reserve going with the quantitative easing machine:

It is an interesting issue.  The banks should have failed for their bad bets.  Yet now we have this slow methodical outsourcing of the US middle class all the while the top 1 percent gets richer and richer.  Adam Smith cautioned nations against this form of predatory corruption brought on by capitalism gone haywire.  This is no longer capitalism but a controlled form of plutocracy protecting the elite via exporting the gains of the masses.  That is the reality.  The debasement of the US dollar hurts most workers who are paid in US currency but the wealthy don’t care since they have accounts denominated in foreign currencies.  What do they care?  Yet quality of life issues are hitting most working and middle class Americans.

The Federal Reserve is concerned about the banks.  That is the bottom line.  They do not care about a stable currency and the proof is in the pudding as they say.  The US dollar has taken a beating over the last few decades.  The Fed is not a government agency yet has the power without Congressional oversight to basically destroy the purchasing power of millions of Americans.  How is that even possible?  Keep in mind that the Fed during this economic downturn has taken on much more than their original charter had mandated.  Is this the kind of world we want where the banks can use the taxpayer as a piggybank with no accountability?  Keep in mind the housing bubble was largely brought on by the Fed thanks to super genius Alan Greenspan who dropped rates to the floor for too long and did no policing of the banking industry which was under the Fed’s jurisdiction.  The banks will continue to go on this road because it is profitable.  The government is largely co-opted and is now designed to protect the established power.  If you like what has been going on for the last decade then you’ll love what we have ahead of us unless something drastically changes in our economic policies.

My Budget360