FedUpUSA

Archive for April 13th, 2011

Gee, he didn’t only vote for TARP, he supported it.

Yeah, and he did exactly nothing about those Wall Street “problems” he rants about after the fact either, including refusing and failing to shut those banks down and break them up.

Click “play” to start right where Ryan makes excuses for his vote. 

I’m going to go hurl now – we’ve established what sort of snake Ryan is, which simply amplifies what I’ve said thus far – his so-called plan is a farce and will do nothing to solve the problem.

You vote for these jackasses you deserve what you get.

Dailybail

Commentary: Crony capitalism continues

By David Stockman

This is part two of a two-part series by David Stockman. Read part one.

GREENWICH, Conn. (MarketWatch) — The destructive result of the Federal Reserve’s earlier housing and consumer credit bubble became the excuse for embracing a destructive zero interest rate policy which is self-evidently fueling even more destruction.

This destruction is namely, the exploitation of middle class savers; the current severe food and energy squeeze on lower income households; the illusion in Washington that Uncle Sam can comfortably manage $14 trillion in debt because the interest carry is close enough to zero for government purposes; and the next round of bursting bubbles building up among the risk asset classes.

Moreover, the Fed soldiers on with its serial bubble-making, even though it is evident that the hallowed doctrines of modern monetary theory and the inherently dubious math of Taylor rules have failed completely.

Indeed, the evidence that the Fed no longer has any clue about the transmission pathways which connect the base money it is emitting with reckless abandon (e.g. Federal Reserve credit) to the millions of everyday pricing, hiring, investing and financing outcomes on Main Street sits right on its own balance sheet. Specifically, if the Fed actually knew how to thread the needle to the real economy with printing press money it wouldn’t have needed to manufacture $1 trillion in excess bank reserves — indolent entries on its own books for which it is now paying interest.

So in the present circumstances, ZIRP and QE2 amount to a monetary Hail Mary. There is no monetary tradition whatsoever that says the way back to U.S. economic health and sustainable growth is through herding Grandma into junk bonds and speculators into the Russell  (RUT 823.92, +1.65, +0.20%)  .

Admittedly, the junk-bond financed dividends being currently extracted by the LBO kings from their debt-freighted portfolios may enable them to hire some additional household help and perhaps spur some new jobs at posh restaurants, too. Likewise, the 10% of the population which owns 80% of the financial assets may use their stock market winnings to stimulate some additional hiring at tony shopping malls.

That chairman Bernanke himself has explained in so many words this miracle of speculative GDP levitation, however, does not make it so. The fact is, if transitory wealth effects add to current consumer spending, they can just as readily subtract on the occasion of the next “risk-off” stampede to the downside. Indeed, the proof — if any is needed — that cheap money fueled asset inflations do not bring sustainable prosperity lies in the still smoldering ruins of the U.S. housing boom.

In truth, the Fed’s current money printing spree has no analytical foundation, and amounts to seat-of-the-pants pursuit of a will-o’-wisp — the idea of a perpetual bull market. Like the Bank of Japan, the Fed has made itself hostage to the global speculative classes, and must repeatedly inject new forms of stimulus to keep the bubbles rising.

This is the only possible explanation for its preposterous decision to allow the big banks to resume dissipating their meager capital accounts by paying “normalized” dividends and by resuming large-scale stock buybacks. These are the same financial institutions that allegedly nearly brought the global economy to its knees in September 2008, according to the Fed chairman’s own words.

In what is no longer secret testimony to the FCIC (Financial Crisis Inquiry Commission), Federal Reserve Chairman Bernanke claimed that the Wall Street meltdown “was the worst financial crisis in global history” and that “out of maybe 13…..of the most important financial institutions in the United States, 12 were at risk of failure within a period of a week or two”.

That testimony was recorded just 15 months ago, but the financially seismic events it references have apparently already faded into the dustbin of history. Still, even if the dubious proposition that the banking system has fully healed were true, what did the Fed hope to accomplish besides goosing the S&P 500  (SPX 1,314.41, +0.25, +0.02%)  via speculative rotation into the bank indices?

Well, there are no other plausible explanations. Certainly the stated theory — namely, that by green lighting disgorgements of capital today the Fed’s action will facilitate bank capital raising and new lending in the future —merits a loud guffaw. The fast money has already priced in whatever dividend increases and share buybacks may occur before the next banking crisis, but the last thing these speculators expects is a new round of dilutive capital issuance by the banks. Stated differently, the bid for bank stocks unleashed by the Fed’s relief action is predicated on speculators’ pocketing any near-term “surplus” capital, not leaving it in harms way.

Moreover, even if the Fed’s action had the effect of bolstering, not depleting, bank capital the larger issue is why does our already massively bloated banking system need more capital in any event? The reflexive answer is that this will help restart the flow of credit to Main Street, but it doesn’t take much digging to see that this is a complete non-starter.

The household sector is still saddled with massive excess debt — unless you believe that the credit bubble of recent years is the sustainable norm. The fact is, prior to the Fed’s easy money induced national LBO, debt-to-income ratios at today’s levels were unthinkable. In 1975, for example, total household debt—including mortgages, credit cards, auto loans and bingo wagers—was about $730 billion or 45% of GDP

During the 1980’s, however, this long-standing household leverage ratio began a parabolic climb, and never looked back. By the bubble peak in Q4 2007, total household debt had reached $13.8 trillion and was 96% of GDP. Yet after 36 months of the Great Recession wring-out, the dial has hardly moved: household debt outstanding in Q4 2010 was still $13.4 trillion, meaning that it has shrunk by the grand sum or 3% (entirely due to defaults) and still remains at 90% of GDP or double the leverage ratio that existed prior to the debt binge of the past three decades.

So the banking system does not need more capital in order to increase credit extensions to the household sector. In fact, the two principal categories of household debt — mortgage loans and revolving credit, continue to decline as American families slowly shed unsupportable debt. The only reason total household debt appears to be stabilizing in recent quarters is that student loan volumes are soaring, but this growth is being funded entirely by the Bank of Uncle Sam now that private bank loan guarantees have been eliminated.

Indeed, the startling fact is that the approximate $1 trillion of student loans outstanding — sub-prime credits by definition — now exceed the $830 billion of total credit card debt by a wide margin. While this latest student loan bubble will end no better than the earlier credit bubbles, the larger fact remains that the household sector is only in the early stages of deleveraging. Not the least of the self-evident motivating forces here is that the leading edge of the household sector — the 78 million strong baby boom generation — appears to be figuring out that it is not 1975 anymore, and that retirement and old age are approaching at a gallop.

This obvious household deleveraging trend remains a mystery to the Fed and to the Wall Street stock peddlers who occasionally moonlight as economists. One recent air ball offered up by the latter is that the ratio of debt to disposable personal income (DPI) has dropped materially, and that this proves the household sector has been healed financially and is ready to borrow again. Specifically, the household debt-to-DPI ratio has fallen to 116% from a peak of 130% in late 2007.

Read More At MarketWatch

It seems like wherever you turn there is bad news for the U.S. economy.  Unemployment is rampant, the cost of gasoline is going up, the cost of food is going up and American families are getting poorer.  Millions of jobs continue to leave the country and everyone is wondering why it seems like the “American Dream” is dying.  American consumers are absolutely swamped with staggering levels of credit card debt, student loan debt and mortgage debt and each year the consumer debt crisis only seems to get worse.  For millions of American families the money problems never seem to end.  Meanwhile, our politicians are doing next to nothing to fix our horrific national debt problem.  So yes, there are a whole lot of reasons to be absolutely disgusted with the U.S. economy.  We are living in the greatest debt bubble in the history of the world, and anyone with half a brain can see that we are heading for complete and total disaster.

A lot of Americans do not like to read about economics, but what has been going on over the last few years has been nothing short of extraordinary.  The Federal Reserve has basically tripled the adjusted monetary base.  We have now been conditioned to accept that trillion dollar deficits are “normal”.  The U.S. dollar is being systematically destroyed right in front of our eyes and most Americans don’t even seem alarmed about it.

Our entire financial system is coming apart.

The signs are everywhere.

The following are 25 reasons to be absolutely disgusted with the U.S. economy….

#1 There are now 6.4 million fewer jobs in America than there were when the recession began.

#2 In Southern California, the average price of a gallon of gasoline is $1.00 higher than it was at this time last year.

#3 The average price of gasoline in the United States has jumped about 20 cents in just the last two weeks.

#4 Over the past 12 months the average price of gasoline in the United States has gone up by about 30%.

#5 In the 8 days leading up to the “historic” $38.5 billion budget deal, the U.S. national debt increased by $54.1 billion dollars.

#6 The $38.5 billion in budget cuts that the Republicans and the Democrats have agreed to represent approximately one percent of the federal budget.

#7 During the 2010 campaign, the Republicans promised voters they would cut $100 billion from the budget for 2011.  Instead, they gave in when the Democrats offered just $38.5 billion.

#8 The Obama administration had been estimating that the federal budget deficit for fiscal 2011 would be approximately 1.6 trillion dollars.  Now it will likely be somewhere around 1.55 trillion dollars which will still be an all-time record.

#9 According to numbers released by Deloitte Consulting, a whopping 875,000 Americans were “medical tourists” in 2010?.

#10 The median pay for CEOs increased by 27 percent during 2010.

#11 Thanks to globalism, U.S. workers now must directly compete for jobs with workers in places such as Indonesia.  In Indonesia, full-time workers make as little as two dollars a day.  So how are Americans supposed to compete with that?

#12 Last week, the price of gold set a new all-time record on Tuesday, on Wednesday, on Thursday and on Friday.

#13 The price of silver rose almost 7 percent last week alone.

#14 Total home mortgage debt in the United States is now about 5 times larger than it was just 20 years ago.

#15 According to the Economic Policy Institute, almost 25 percent of U.S. households now have zero net worth or negative net worth.  Back in 2007, that number was just 18.6 percent.

#16 Americans now owe more than $903 billion on student loans.

#17 According to the New York Times, as of 2009 the wealthiest 5 percent of all Americans had 63.5 percent of all the wealth in America.  Meanwhile, the bottom 80 percent had just 12.8 percent of all the wealth.

#18 According to a recent report from the National Employment Law Project, higher wage industries accounted for 40 percent of the job losses over the past 12 months but only 14 percent of the job growth.  Lower wage industries accounted for just 23 percent of the job losses over the past 12 months and a whopping 49 percent of the job growth.

#19 The first week of air strikes in Libya cost the U.S. government about 600 million dollars.

#20 The price of corn has more than doubled over the past year.

#21 According to the U.S. Bureau of Labor Statistics, the average length of unemployment in the U.S. is now an all-time record 39 weeks.

#22 Back in the 1950s, corporate taxes accounted for about 30 percent of all federal revenue.  Today they account for less than 7 percent of all federal revenue.

#23 If the U.S. government eliminated all discretionary spending and all defense spending it would still not balance the budget.

#24 It is being projected that U.S. government debt will rise to about 400 percent of GDP by the year 2050.

#25 Americans spend approximately 27.7 billion dollars a year preparing their tax returns.

That last statistic really gets me.  During the month of April the American people are going to be spending massive amounts of time and money to prepare their taxes.

But what do Americans get in return for their taxes?

What they get is a government that is completely and totally incompetent.  Our “leaders” are running the greatest economy in the history of the world into the ground, but unfortunately most Americans have no idea what is happening.

Why are Americans so clueless?

Well, the truth is that over time we have been turned into a nation of idiots and morons.

To get an idea of just how “dumbed down” we have become as a nation, just check out this Harvard entrance exam from 1869.

I wouldn’t have a prayer of passing that exam.

What about you?

Thanks to the slothfulness of society, the deficiencies in our education system and the toxins in our food, air and water it has become hard for most of us to think clearly.

Most of us are fat, dumb and totally clueless.  The entire economic system is being shredded and most of us just drool and turn up the television a little louder.

If we have money problems, most of us just run out and apply for another credit card.  If our state and local governments run into financial problems they just borrow even more money.

Of course the biggest offender of all is the federal government.  What our politicians are doing to future generations is not just criminal.  It is beyond criminal.  It is absolutely unconscionable.

So please excuse me if I am absolutely disgusted with the U.S. economy.

We took the greatest economy in the history of the world and we wrecked it.

How in the world are we going to explain this to our children and our grandchildren?

The Economic Collapse

As we sit waiting with baited breath for the whitewash by our so-called Attorneys General that are going to screw the people they allegedly serve (that’s the public, not the Banks) we get this:

The fraud perpetrated on the Court, Debtors, and trustee would be shocking if this Court had less experience concerning the conduct of mortgage servicers.  One too many times, this Court has been witness to the shoddy practices and sloppy accountings of the mortgage service industry.  With each revelation, one hopes that the bottom of the barrel has been reached and that the industry will self correct.  Sadly, this does not appear to be reality.  This case is one example of why their conduct comes at a high cost to the system and debtors.

Fraud.  Got that?  Not my words, the Judge’s.

The question is not simply “did you pay as the bank asserts you had to?”, and if the answer is “no”, the remedy is “get the hell out of the house.”

Uh uh.  That would be fine if the banks, on a provable basis in each and every case, always performed exactly as the contract required.  But we have seen time and time again that they don’t in myriad ways.  In the case at bar we have payments that were made and not applied, among others offenses and in fact according to the testimony reflected in this order the loan was current, had those payments been applied.

This case appears to date back more than three years to the latter half of 2007.  For three years justice has been delayed and, but for a judge sitting at the Bar who refused to be snowed and steamrollered, justice would have been denied.

Fraud is not punished with a handslap and a promise not to do it again.  It is punished via huge fines and imprisonment.

So where are those sanctions, Attorneys General? 

Who are you blowing under the desk, Attorneys General, instead of doing your damn jobs?

Tickerguy thanks The Honorable Elizabeth Magner.

4closurefraud.org

In RE Wilson Motion for Sanctions Granted

Former economic advisor to Ronald Reagan, David Stockman talks about how we are headed towards a thunderous conflagration due to both parties’ unrealistic goals.

Guess what?  The Democrats and the Republicans are both lying to us again.  So what else is new?  The truth is that the great “budget crisis” which supposedly took us to the verge of a government shutdown was just a whole bunch of political theater.  Even the Associated Press is declaring that our politicians used “accounting sleight of hand” to reach the $38.5 billion budget cut figure.  Not that $38.5 billion was an impressive number to begin with.  $38.5 billion would just be one percent of the federal budget.  But once you strip away the accounting charades, the real budget cut number is somewhere around 14 trillion dollars.  It turns out that the “budget cuts” include money left unspent from previous years, earmarks that were going nowhere, unused census money and programs that Obama was already planning to cut.  The more you examine the “budget deal”, the more it becomes obvious that the Republicans and the Democrats had no intention of doing anything serious about our debt problems.  The U.S. government is still going to run a record-setting budget deficit in 2011 and both the Democrats and the Republicans are to blame.

So should we be surprised that our politicians have been lying to us again?

Of course not.

But if something is not done about our soaring debt it is absolutely going to crash our financial system.

According to the IMF, the U.S. government will have to borrow an amount of money equivalent to 29 percent of GDP this year alone in order to finance its budget deficit and its maturing debt.

That is what you call a crisis.

But neither political party seems the least bit serious about the national debt.

The Republicans are proposing even more tax cuts without saying how they are going to pay for them, and they even tucked an increase in military spending into the “budget cut” deal.

The Democrats don’t seem to want to cut much of anything.  In fact, most Democrats seem to believe that government debt is not much of a crisis at all.

Our politicians love to talk about “cutting the budget”, but nothing ever gets done.  Both parties have been promising us “fiscal responsibility” for decades but both parties have never delivered.

Sadly, the American people have not held our politicians responsible for this.

This latest episode just reveals how much of a joke Washington D.C. has become.  In the 8 days leading up to the “historic” $38.5 billion budget deal, the U.S. national debt increased by $54.1 billion dollars.

Our politicians are standing by and doing nothing while the financial future of this nation is being destroyed right in front of our eyes.  It is now being projected that by the year 2021, interest payments on the national debt will amount to $1.1 trillion dollars a year.

Fortunately, some bloggers out there are starting to wake up to just how pathetic this latest “budget deal” really was.

For instance, Tim Fernholz of the National Journal recently posted the following….

For example, the final cuts in the deal are advertised as $38.5 billion less than was appropriated in 2010, but after removing rescissions, cuts to reserve funds, and reductions in mandatory spending programs, discretionary spending will be reduced only by $14.7 billion.

In fact, some conservative bloggers are becoming absolutely furious with the duplicity of the Republican party.  In a recent article on Business Insider, John Ellis really let John Boehner have it….

It turns out that the budget agreement that all parties were hailing this past weekend as a “great achievement” is in fact a joke.  Any Republican who was elected with even a sliver of Tea Party support is now duty-bound to vote against it on Friday.  Every 2012 Republican presidential hopeful is now duty-bound to demand that it be voted down.

But Boehner is already saying that it is time to “move on” and that he is really going to “get tough” during the next battle.  Boehner is claiming that the “war” over the debt ceiling is going to be about “trillions” instead of “billions”.

The American people are certainly in the mood for something to be done about our debt crisis.  According to a new NBC/WSJ poll, the vast majority of Republicans and the vast majority of independents do not want the debt ceiling raised.  Even Democrats are roughly split on the issue.

John Boehner is promising that the Republicans will not agree to raise the debt ceiling without “serious steps in the right direction”.

So what pathetically low number will cause John Boehner to cave in this time?

Obama is already taking a strong stand on the debt ceiling.  He is demanding that the Republicans send him a “clean bill” and is warning that they must not “play politics” with U.S. government finances.

On Monday, White House press secretary Jay Carney stated that “the consequences of not raising the debt ceiling would be Armageddon-like in terms of the economy.”

You know what?  To a certain degree Carney is right.  If the U.S. government hits the debt ceiling the financial markets will likely go haywire.  That would cause the big boys up on Wall Street to start putting tremendous pressure on Boehner.  There is no way that Boehner would watch chaos unfold on Wall Street and not end up flinching.

Not that Boehner was ever serious about cutting the federal deficit.  He was not serious about it during the Bush years and he is not serious about it now.

This is all just a whole lot of political theater.

Meanwhile, most Americans are not even paying attention to all of the financial fraud being committed by the “fourth branch of government”.

Of course the Federal Reserve is not actually part of the federal government at all.   But they do get to spend trillions and lend trillions without ever having to get the approval of Congress, the president or the American people.

For example, most Americans don’t realize this, but the Federal Reserve has been handing out hundreds of millions of dollars in nearly risk-free loans to their friends and even to the wives of their friends.

Unfortunately, the Federal Reserve is above the law and is not accountable to anyone.  In fact, we can’t even get our politicians to authorize a comprehensive audit of their books.

The truth is that our system is soaked in so much fraud that there is no way that it will ever recover.

We have turned our backs on the principles of our founding fathers and so now we pay the price.

The U.S. national debt is now over 14 times larger than it was 30 years ago and it is currently rising by well over 4 billion dollars every single day.  This debt will destroy our financial system.  We are stealing the future from our children and our grandchildren.

It is so sad to see what is happening to America.

The Economic Collapse