FedUpUSA

Archive for June, 2011

ALEXANDRIA, Va. (AP) — Federal prosecutors are seeking a life sentence for the man convicted of orchestrating a $3 billion fraud while running what had been one of the nation’s largest private mortgage companies.

Defense lawyers, meanwhile, on Friday asked for a term of no more than 15 years for Lee B. Farkas, 58, of Ocala, Fla., the former majority owner of Florida-based Taylor Bean & Whitaker.

Taylor Bean collapsed in 2009 when the fraud scheme unraveled, putting its 2,000 employees out of work. The fraud also contributed to the failure of Alabama-based Colonial bank, which had been one of the country’s 25 largest banks.

Farkas faces up to 385 years after he was convicted in April on multiple fraud counts for masterminding what prosecutors say was one of the biggest bank frauds in U.S. history.

In court papers filed Thursday, prosecutors argued that Farkas should receive the maximum and compared his conduct to Bernie Madoff and other mass swindlers.

A maximum sentence “will send the most forceful and unequivocal message to senior corporate executives that engaging in fraud and deceit in order to pump up your company or line your own pockets is unacceptable and will have severe consequences,” prosecutors wrote, saying that Farkas should receive at least a 50-year sentence.

The sentencing memorandum notes that Madoff, in a $13 billion Ponzi scheme, received a 150-year sentence even though he accepted responsibility and pleaded guilty. Farkas, on the other hand, went to trial and was convicted by a jury, and prosecutors believe he lied on the witness stand and continues to deflect responsibility.

Read More

Insulate participants from risk with policies like the Bernanke Put and you guarantee destruction of both the market and institutional legitimacy.

Identify the common characteristic of these three statements:

1. The Federal Reserve will never let the stock market decline, i.e. the “Bernanke put”

2. The Chinese government will never let property prices decline

3. The European Central Bank will never let Greece default

The answer of course is moral hazard: a person who is insulated from risk will have an insatiable appetite for risky bets because any gains will be theirs to keep but any losses will be covered by the central bank or government. The global financial authorities’ success in propping up assets (stocks in the U.S., real estate in China, banks in Europe, etc.) over the past three years has strengthened this asymmetric disregard for systemic risk into a dangerously quasi-religious faith that central banks and governments have essentially unlimited power to keep asset prices aloft via printing money, manipulation of markets and financialization of their economies.

What happens if markets crumble despite massive, sustained central bank and government intervention? The institutions that created moral hazard will be revealed as false gods, and that faith will be destroyed.

This loss of faith in the transparent functioning of markets will trigger what I call the delegitimization of both the markets and the institutions which have essentially promised a permanent upward bias in assets.

We can see the global scale of this central bank-cnetral State induced moral hazard in the tight correlation of all markets: the stock exchanges rise and fall in near-perfect unison, oil and gold rise and fall in parallel with equities, and so on.

As I have noted before, beneath the surface there is really only one trade in the entire global marketplace: all assets on one side and the U.S. dollar on the other. Correlation is not causation, of course, but it is more than peculiar that every decline in global equities is matched by a concurrent rise in the dollar.

Transparent, independent markets do not move in lockstep. The campaign to prop up all asset classes with implicit guarantees of intervention has completely insulated institutions and punters who believe that the Bernanke Put and the Chinese government’s equivalent prop under real estate is not just policy but a guarantee of god-like power.

Thus the gains from gargantuan speculative bets are yours to keep, and any losses will be made good by the central bank or government. This is the ideal recipe for misallocation of capital and speculative derangement on an unprecedented scale.

Moral hazard is the ultimate perverse incentive: it rewards all that is unproductive and risky and punishes long-term investment and prudent risk assessment.

A second feature of the global central bank’s moral hazard is the necessity to punish any punters who dare to bet against the banks’ manipulations. Thus Fed Chairman Bernanke could opine that oil would decline and presto-magico, a “surprise” release of oil by central authorities occurs the next day.

This second feature of central bank manipulation leaves a market devoid of short sellers and thus of any buyers as markets crumble.

Once trust is lost, it cannot be won back. Once participants’ faith in the markets and in the god-like power of central bank intervention is crushed, the markets will lose participation on a grand scale. The authorities’ favorite game, goosing asset prices to create an illusion of recovery and rising wealth, will be revealed as a global fraud.

Announcements of future interventions will be scornfully dismissed and thus they will have lost their power to prop up the markets.

All of this flows from the very nature of moral hazard: insulate participants from risk and give them unlimited leverage and “free money” to play with, and what you eventually end up with is catastrophe. There is no other possible end state.

Of Two Minds

The site transition is now complete.

Thank you for all your patience and understanding while we once again moved FedUpUSA to another host.

Hopefully, this will be the last time for a while, and we can all get back to spreading the word!

Stop the LOOTING! Start PROSECUTING!

FedUpUSA.org

Don't Tread On Me

Preface: The war between liberals and conservatives is a false divide-and-conquer dog-and-pony show created by the powers that be to keep the American people divided and distracted. See this, this, this, this, this, this, this, this, this and this. So before assuming that privatization is a good thing, read on.

Greece is thinking of selling some islands. Austria is thinking of selling mountains to pay off their national debt. Cities throughout the U.S. are thinking of privatizing their parking meters.

What’s going on?

Well, as I predicted in December 2008, bailing out the giant, insolvent banks would cause a global debt crisis:

The Bank for International Settlements (BIS) is often called the “central banks’ central bank”, as it coordinates transactions between central banks.

 BIS points out in a new report that the bank rescue packages have transferred significant risks onto government balance sheets, which is reflected in the corresponding widening of sovereign credit default swaps:

The scope and magnitude of the bank rescue packages also meant that significant risks had been transferred onto government balance sheets. This was particularly apparent in the market for CDS referencing sovereigns involved either in large individual bank rescues or in broad-based support packages for the financial sector, including the United States. While such CDS were thinly traded prior to the announced rescue packages, spreads widened suddenly on increased demand for credit protection, while corresponding financial sector spreads tightened.

In other words, by assuming huge portions of the risk from banks trading in toxic derivatives, and by spending trillions that they don’t have, central banks have put their countries at risk from default.

Top independent experts say that the biggest banks are insolvent (see this, for example), as they have been many times before.

And a study of 124 banking crises by the International Monetary Fund found that propping banks which are only pretending to be solvent hurts the economy:

Existing empirical research has shown that providing assistance to banks and their borrowers can be counterproductive, resulting in increased losses to banks, which often abuse forbearance to take unproductive risks at government expense. The typical result of forbearance is a deeper hole in the net worth of banks, crippling tax burdens to finance bank bailouts, and even more severe credit supply contraction and economic decline than would have occurred in the absence of forbearance.

Cross-country analysis to date also shows that accommodative policy measures (such as substantial liquidity support, explicit government guarantee on financial institutions’ liabilities and forbearance from prudential regulations) tend to be fiscally costly and that these particular policies do not necessarily accelerate the speed of economic recovery.

***

All too often, central banks privilege stability over cost in the heat of the containment phase: if so, they may too liberally extend loans to an illiquid bank which is almost certain to prove insolvent anyway. Also, closure of a nonviable bank is often delayed for too long, even when there are clear signs of insolvency (Lindgren, 2003). Since bank closures face many obstacles, there is a tendency to rely instead on blanket government guarantees which, if the government’s fiscal and political position makes them credible, can work albeit at the cost of placing the burden on the budget, typically squeezing future provision of needed public services.

By failing to break up the giant banks, governments are forced to take counter-productive emergency measures (see this and this) to try to cover up their insolvency. Those measures drain the life blood out of the real economy … destroying national economies.
Selling the Farm to Pay for Debt Incurred to Make the Rich Richer

Matt Stoller notes:

Privatization takes inherently governmental functions — everything from national defense to mass transit and roads — and turns them over to the control of private actors, whose goal is to extract maximum revenue while costing as little as possible.

***

It isn’t true, as a general rule, that privatization shrinks the public sector. When investor demand for high returns is combined with the natural monopolies of public assets, what often results instead is citizens finding themselves saddled with high fees and poor service.

Even more perniciously, selling infrastructure such as toll roads puts the coercive power of the state in the hands of private actors. We have great public assets built by prior generations. We should and could be building a better country for our children, rather than liquidating what we have.

***

Rep. Peter DeFazio (D-Ore.) pointed out the truth of the Obama administration’s stimulus program: “Larry Summers hates infrastructure. And some of these other economists — they don’t like infrastructure. … They want to have a consumer-driven recovery.”

Both domestic manufacturing and taxation are opposed by the current corporate and political elites. Take the liberal establishment economist Alan Blinder, who horrified former Intel chief Andy Grove when he celebrated as “success” the fact that America today cannot make televisions. Or Michael Boskin, an economic adviser to President Reagan, saying potato chips, microchips, what’s the difference?

The real infrastructure trend in America today is privatizing what is left. House Transportation and Infrastructure Committee Chairman John Mica has been holding hearings on privatizating Amtrak’s Northeast corridor — ostensibly because private capital can more easily bring in high-speed rail.

Kansas Gov. Sam Brownback just turned over arts funding to the private sector, making Kansas the only state without a publicly funded arts agency. Cities across California, meanwhile, are trying to outsource nearly all municipal functions. Chicago famously sold its parking meter revenue to a consortium headed by Morgan Stanley. The Arizona Legislature sold and then leased back its state capitol.

Are these good deals? History would say no. The granddaddies of privatization were Fannie Mae and Freddie Mac, the housing giants whose public role was supporting the secondary mortgage markets. These companies were “private” in the sense that they operated without public accountability. But eventually, their losses ended up on the public’s balance sheet.

Most privatization deals of core public assets have the same essential structure as Fannie and Freddie. Listen to a Goldman Sachs managing director, John Ma, who expressed his reservations about the privatization of Amtrak’s Northeast corridor.

“Structuring these public-private transactions are always a delicate balancing act,” Ma explained, “of what risks the public sector will retain and what risks you’ll try to transfer to the private sector.” Privatization doesn’t actually make something private; it simply divides risks between public and private entities.

In fact, the real allure of privatization is that it offers what looks like a free lunch. The public receives revenue, but privatization keeps the costs hidden by deferring them to the future. Political actors get to close deficits without raising taxes on wealthy interests. And the political muscle is provided by the people who ultimately benefit from the deal — the same way that Countrywide, Fannie Mae and allied private bankers brutalized their political critics in the name of homeownership.

***

For Democrats, the benefits are more subtle. Privatization allows them to paper over the party schism between liberals and neoliberals by spending money for social aims through what is, essentially, an off-balance-sheet channel.

Does this sound like Greece? Creating off-balance-sheet shenanigans to hide debt and try to kick the can down the road, and then having to sell off public assets and impose austerity to try to climb out of the sinkhole of debt?

There’s a reason for that .

Shock Doctrine

As I explained in 2008:

Well-known Austrian economist Friedrich von Hayek wrote:

“Emergencies” have always been the pretext on which the safeguards of individual liberty have eroded.

[Obama's former chief of staff] Rahm Emanuel famously said:

Never let a serious crisis go to waste. What I mean by that is it’s an opportunity to do things you couldn’t do before.

Naomi Klein documented in the Shock Doctrine that the Neoliberals and Chicago school followers advocated a kind of “disaster capitalism”. Specifically, whenever a natural, economic, war-related, or other disaster strikes, these folks pounce and use the opportunity to quickly impose a brand of economic policy which benefits the elite at the cost of everyone else (by increasing unemployment, pushing the cost of essential goods through the roof, and otherwise increasing poverty), while people are still in shock and before they can react.

Publishers Weekly’s review of the Shock Doctrine puts it this way:

The neo-liberal economic policies—privatization, free trade, slashed social spending—that the Chicago School and the economist Milton Friedman have foisted on the world are catastrophic in two senses, argues this vigorous polemic. Because their results are disastrous—depressions, mass poverty, private corporations looting public wealth, by the author’s accounting—their means must be cataclysmic, dependent on political upheavals and natural disasters as coercive pretexts for free-market reforms the public would normally reject.

Amazon’s review of Klein’s book states:

“At the most chaotic juncture in Iraq” civil war, a new law is unveiled that will allow Shell and BP to claim the country’s vast oil reserves… Immediately following September 11, the Bush Administration quietly outsources the running of the ‘War on Terror’ to Halliburton and Blackwater… After a tsunami wipes out the coasts of Southeast Asia, the pristine beaches are auctioned off to tourist resorts… New Orleans residents, scattered from Hurricane Katrina, discover that their public housing, hospitals and schools will never be re-opened.” Klein not only kicks butt, she names names, notably economist Milton Friedman and his radical Chicago School of the 1950s and 60s which she notes “produced many of the leading neo-conservative and neo-liberal thinkers whose influence is still profound in Washington today.”

And Pulitzer prize winning journalist David Cay Johnston provided an interesting example of disaster capitalism, noting that 2 days after 9/11, Congress was thinking about how to help the ultra-wealthy: 

[Johnston]: Both parties are doing this. They’re doing it because they’re listening to a narrow group of very well to do people who do not want to pay taxes, who do not want to share in the expenses of the country that has made them rich. And they want you to pay their taxes. Those are the people who get access. Every politician will say you to, you can’t buy my vote. Generally, that’s true. The problem is that you and I don’t have the real access, and the proof that Congress is thinking about the super rich came two days after 9/11. The House Republican leadership introduced ten bills to address 9/11. One of them was a tax bill. What did it do? It gave estate tax relief, which did nothing for the firefighters and police officers and army sergeants at their desk and nurses and the busboy at the World Trade Center. All of those people that were killed. A tiny handful of people, but that’s what Congress thought these people needed, was estate tax relief even though 99% wouldn’t pay estate taxes.

[Interviewer:] It’s slipping it in as a very opportune time.

[Johnston]: That was just for this group of people. That was just for this group of people, but it’s indicative of what Congress is thinking about, what’s on the minds of Congress are not the concerns of ordinary Americans who want to educate their children, you know, who want to engage in enjoying life. Their concerns are about the super rich and within the super rich, those who are very anti-tax.

As I noted last year, this is a game which both liberals and conservatives play:

Whether that agenda is labelled “conservative” or “liberal”, it is almost certain to benefit the powers-that-be, rather than the average American.

Some inside the halls of power have tried to warn of this risk:

Senator Leahy and the New York Times are questioning Paulson’s use of shock and awe:

• Senator Leahy said “If we learned anything from 9/11, the biggest mistake is to pass anything they ask for just because it’s an emergency”

• The New York Times wrote:
  

  “The rescue is being sold as a must-have emergency measure by an administration with a controversial record when it comes to asking Congress for special authority in time of duress.” 

  ***

  Mr. Paulson has argued that the powers he seeks are necessary to chase away the wolf howling at the door: a potentially swift shredding of the American financial system. That would be catastrophic for everyone, he argues, not only banks, but also ordinary Americans who depend on their finances to buy homes and cars, and to pay for college.

  Some are suspicious of Mr. Paulson’s characterizations, finding in his warnings and demands for extraordinary powers a parallel with the way the Bush administration gained authority for the war in Iraq. Then, the White House suggested that mushroom clouds could accompany Congress’s failure to act. This time, it is financial Armageddon supposedly on the doorstep.

  “This is scare tactics to try to do something that’s in the private but not the public interest,” said Allan Meltzer, a former economic adviser to President Reagan, and an expert on monetary policy at the Carnegie Mellon Tepper School of Business. “It’s terrible.”

But the first world is still being turned into the third world:

When the International Monetary Fund or World Bank offer to lend money to a struggling third-world country (or “emerging market”), they demand “austerity measures“.

As Wikipedia describes it:

In economics, austerity is when a national government reduces its spending in order to pay back creditors. Austerity is usually required when a government’s fiscal deficit spending is felt to be unsustainable.

Development projects, welfare programs and other social spending are common areas of spending for cuts. In many countries, austerity measures have been associated with short-term standard of living declines until economic conditions improved once fiscal balance was achieved (such as in the United Kingdom under Margaret Thatcher, Canada under Jean Chrétien, and Spain under González).

Private banks, or institutions like the International Monetary Fund (IMF), may require that a country pursues an ‘austerity policy’ if it wants to re-finance loans that are about to come due. The government may be asked to stop issuing subsidies or to otherwise reduce public spending. When the IMF requires such a policy, the terms are known as ‘IMF conditionalities’.

Wikipedia goes on to point out:

Austerity programs are frequently controversial, as they impact the poorest segments of the population and often lead to a wider separation between the rich and poor. In many situations, austerity programs are imposed on countries that were previously under dictatorial regimes, leading to criticism that populations are forced to repay the debts of their oppressors.

What Does This Have to Do With the First World?

Since the IMF and World Bank lend to third world countries, you may reasonably assume that this has nothing to do with “first world” countries like the US and UK.

But England’s economy is in dire straight, and rumors have abounded that the UK might have to rely on a loan from the IMF.

And as former U.S. Comptroller General David Walker said :

People seem to think the [American] government has money. The government doesn’t have any money.

Indeed, the IMF has already performed a complete audit of the whole US financial system, something which they have only previously done to broke third world nations.

Al Martin – former contributor to the Presidential Council of Economic Advisors and retired naval intelligence officer – observed in an April 2005 newsletter that the ratio of total U.S. debt to gross domestic product (GDP) rose from 78 percent in 2000 to 308 percent in April 2005. The International Monetary Fund considers a nation-state with a total debt-to-GDP ratio of 200 percent or more to be a “de-constructed Third World nation-state.”

Martin explained:

What “de-constructed” actually means is that a political regime in that country, or series of political regimes, have, through a long period of fraud, abuse, graft, corruption and mismanagement, effectively collapsed the economy of that country.

What Does It Mean?

Some have asked questions like, “Is the goal to force the US into the same kinds of IMF austerity programs that have caused riots in so many other nations?” Some predicted years ago that the “international bankers” would bring down the American economy.

I used to think, frankly, that such kinds of talk were crazy-talk. I’m not so sure anymore.

Catherine Austin Fitts – former managing director of a Wall Street investment bank and Assistant Secretary of the Department of Housing and Urban Development (HUD) under President George Bush Sr. – calls what is happening to the economy “a criminal leveraged buyout of America,” something she defines as “buying a country for cheap with its own money and then jacking up the rents and fees to steal the rest.” She also calls it the “American Tapeworm” model, explaining:

[T]he American Tapeworm model is to simply finance the federal deficit through warfare, currency exports, Treasury and federal credit borrowing and cutbacks in domestic “discretionary” spending …. This will then place local municipalities and local leadership in a highly vulnerable position – one that will allow them to be persuaded with bogus but high-minded sounding arguments to further cut resources. Then, to “preserve bond ratings and the rights of creditors,” our leaders can he persuaded to sell our water, natural resources and infrastructure assets at significant discounts of their true value to global investors …. This will be described as a plan to “save America” by recapitalizing it on a sound financial footing. In fact, this process will simply shift more capital continuously from America to other continents and from the lower and middle classes to elites.

Writer Mike Whitney wrote in CounterPunch in April 2005:

[T]he towering [U.S.] national debt coupled with the staggering trade deficits have put the nation on a precipice and a seismic shift in the fortunes of middle-class Americans is looking more likely all the time… The country has been intentionally plundered and will eventually wind up in the hands of its creditors This same Ponzi scheme has been carried out repeatedly by the IMF and World Bank throughout the world Bankruptcy is a fairly straightforward way of delivering valuable public assets and resources to collaborative industries, and of annihilating national sovereignty. After a nation is successfully driven to destitution, public policy decisions are made by creditors and not by representatives of the people …. The catastrophe that middle class Americans face is what these elites breezily refer to as “shock therapy”; a sudden jolt, followed by fundamental changes to the system. In the near future we can expect tax reform, fiscal discipline, deregulation, free capital flows, lowered tariffs, reduced public services, and privatization.

And given that experts on third world banana republics from the IMF and the Federal Reserve have said the U.S. has become a third world banana republic (and see this and this), maybe the process of turning first world into the third world is already complete.

The Raping of America

Dylan Ratigan writes:

In Chicago, it’s the sale of parking meters to the sovereign wealth fund of Abu Dhabi. In Indiana, it’s the sale of the northern toll road to a Spanish and Australian joint venture. In Wisconsin it’s public health and food programs, in California it’s libraries. It’s water treatment plants, schools, toll roads, airports, and power plants. It’s Amtrak. There are revolving doors of corrupt politicians, big banks, and rating agencies. There are conflicts of interest. It’s bipartisan.

And it’s coming to a city near you — it may already be there. We’re talking about the sale of public assets to private investors… In an era of increasingly stretched local and state budgets, privatization of public assets may be so tempting to local politicians that the trend seems unstoppable. Yet, public outrage has stopped and slowed a number of initiatives.

***

On Wall Street, setting up and running “Infrastructure Funds” is big business, with over $140 billion run by such banks as Goldman Sachs, Morgan Stanley, and Australian infrastructure specialist Macquarie. Goldman’s 2010 SEC filing should give you some sense of the scope of the campaign. Goldman says it will be involved with “ownership and operation of public services, such as airports, toll roads and shipping ports, as well as power generation facilities, physical commodities and other commodities infrastructure components, both within and outside the United States.” While the bank sees increased opportunity in “distressed assets” (ie. Cities and states gone broke because of the financial crisis), the bank also recognizes “reputational concerns with the manner in which these assets are being operated or held.“

The funds themselves are clear when communicating with investors about why they are good investments — a public asset is usually a monopoly. Says Quadrant Real Estate Advisors: “Most assets are monopolistic in nature and have limited competitors, creating the opportunity for stable, long-term investment returns. Investment choices include economic assets and social assets.” Quadrant notes that the market size is between $12-20 trillion, roughly the size of the American mortgage market. “Given the market and potential return opportunities, institutional investors should consider infrastructure a strategic investment allocation.”

As with mortgage securitizations, the conflicts of interest are intense. Pennsylvania nearly privatized its turnpike, with Morgan Stanley on multiple sides of the deal as both an advisor to the state and a potential bidder. As you’ll see, these deals are often profitable because they constrain the public’s ability to govern, not because they are creating value. For instance, private infrastructure company Transurban, now attempting to privatize a section of the Beltway around DC, is ready to walk away if local governments insist on an environmental review of the project. Many of them have clauses enshrining their monopolistic positions, preventing states and localities from changing zoning, parking, or transportation options.

While the trend is worldwide, privatization of public infrastructure only came to America en masse in the 2000s. It is worth discussing, because where it has happened it has sparked deep and intense anger.

***

The American Legislative Exchange Council (ALEC), the influential think tank that targets conservative state and local officials, has launched an initiative called “Publicopoly”, a play on the board game Monopoly. “Select your game square”, says the webpage, and ALEC will help you privatize one of seven sectors: government operations, education, transportation and infrastructure, public safety, environment, health, or telecommunications.

***

The Obama administration has been encouraging Chinese sovereign wealth funds to invest in American infrastructure as a way to bring in foreign capital. It was Chicago Mayor and Democratic icon Richard Daley who privatized Chicago’s Midway Airport, Chicago’s Skyway road, and Chicago’s Parking Meters. Out of office after 22 years, he is now a paid advisor to the law firm that negotiated the parking meter sale.

Ratings agencies are also in the game, rating up municipalities willing to privatize assets, or even developing potential new profit centers around the trend (see the chapter titled “Significant Debt issuance Expected with the Privatization of Military Housing” from this September 2007 Moody’s report).

Where To?

The strikes and riots in Greece, Spain, England and elsewhere are one reaction to the raping of their countries by creditors and politicians.

Others talk about taking the power to create debt away from the giant banks. But the banks (and the politicians which they own) – are obviously against that idea.

Max Keiser believes that Americans will simply stop making their mortgage payments en masse, an idea which many have discussed (and see this).

Will people stand up and demand that the bondholders and other creditors take haircuts? Or will we all be scalped of our national assets, our pension funds, our money … and our freedom? Remember, more and more national security and police services are being outsourced to the private sector, and such military, intelligence and police powers are being used to protect big business. And see this.

George Washington for Naked Capitalism

Do our Congresscritters have the guts to do it?

The FOMC would probably target headline inflation if it moved to an explicit goal, Meyer said. Two percent would be the most likely target, and the time period over which policy makers expect to achieve it will likely be the “medium term,” a vague horizon that makes clear this is not a goal for a one-year period, he said.

2% over 40 years (the average working stiff’s time in the employment marketplace) results in a price index that is 239% of where it was on your first day of work.

Put a different way, such a “target”, if met, results in a fifty-eight percent debasement in your purchasing power over your working life.

Who gets this money?  The banks.  It was literally stolen from you.

This is not a felony resulting in arrest, indictment, prosecution and imprisonment…. why?

It is illegal under current law, by the way.  The Fed’s own mandate says:

The Board of Governors of the Federal Reserve System and the Federal Open Market Committee shall maintain long run growth of the monetary and credit aggregates commensurate with the economy’s long run potential to increase production, so as to promote effectively the goals of maximum employment, stable prices, and moderate long-term interest rates.

Webster’s says that stable means:

stable (adj)

Definition of STABLE
1a : firmly established : fixed, steadfast b : not changing or fluctuating : unvarying c : permanent, enduring

We need to add an “or else” to the Federal Reserve Act to prescribe punishment for violations of The Federal Reserve Act and then lock up every member of the FOMC. 

Twenty years worth of pound-you-in-the-butt Federal Prison appears to be about right as a punishment for this intentional act – an act that, incidentally, has been committed repeatedly, intentionally and wantonly since The Fed came on the scene, and which has averaged not 2% but about 3% over the last 50 years.

The Market-Ticker

NOTE:  While I do agree with my friend Mr. Denninger, I’d also add: