FedUpUSA

Archive for August 11th, 2011

Everyone who voted for Obama should feel betrayed, ashamed and disgusted.  Anyone who still trusts, admires and respects Obama is a fool.  Here is my political fantasy: I wake up one day soon and hear the news that President Obama has a fatal brain tumor and will soon resign.  Praise the Lord!

If you have any doubt whatsoever about how bad a president Obama is, then take the time to read this incredibly fine essay by Drew Westen “WhatHappened to Obama?”

Obama has no real, meaningful principles, nor passion and courage to say and do what the US
desperately needs.  He repeatedly fails to publicly identify the enemies of the state and rally public support for fighting evil and corruption in the political system.  For a supposedly smart guy he  ppears to ordinary people as brain dead.  His presidency makes a compelling case why we need a constitutional amendment creating the option for American voters to recall a president.

Far too many people will wrongly believe that voting to reelect Obama is better than voting for any Republican.  They are dead wrong.  Better to not vote at all for any presidential candidate or vote for a third party candidate.  Lesser evil voting has been one of the primary causes of the decline of American democracy, allowing the total corruption of the political system by money representing the interests of the rich and powerful.

Sticking with Obama or giving him another term is idiocy on steroids, like remaining on the sinking Titanic rather than escaping in a lifeboat.

There is only one thing that everyone can see Obama stands for and is totally committed to: staying in office.

Even more depressing than having a failed president is that Americans are not doing what citizens in Greece, England and Israel have been doing in response to their economic suffering: rioting in the streets.  Our brain dead president seems matched by a brain dead public, victimized by evil forces controlling the economy.  The wealth of the nation has been extracted by greedy elite and corporate interests.  Even in this awful economy that rivals the Great Depression in the pain inflicted on a large fraction of the public consider these remarkable facts revealed in a recent article.

Tiffany’s first-quarter sales were up 20 percent to $761 million.  LVMH, which owns expensive brands like Louis Vuitton and Givenchy, reported sales growth in the first half of 2011 of 13 percent.  PPR, home to Gucci, Yves Saint Laurent and other brands, said its luxury segment’s sales gained 23 percent in the first half.  Profits are also up by double digits for many of these companies.

BMW more than doubled its quarterly profit from a year ago as sales rose 16.5 percent; Porsche first-half profit rose 59 percent; and Mercedes-Benz said July sales of its high-end S-Class sedans — some of which cost more than $200,000 — jumped nearly 14 percent and sold more cars in the United States than it had in any July in five years.

Nordstrom has a waiting list for a Chanel sequined tweed coat with a $9,010 price. Neiman Marcus has sold out in almost every size of Christian Louboutin “Bianca” platform pumps, at $775 a pair.

Get the point?  The cancerous political and economic corruption in the US is in a terminal stage.  The core reason why we have a dysfunctional government is that we have a two-party plutocracy owned by rich and powerful interests.  Obama has shown that he too is a puppet of moneyed interests; he does not fight for the poor or the middle class.

Americans seem paralyzed by distraction, delusion and outright stupidity.  If not we would be witnessing the beginnings of sorely needed Second Amemican Revolution.  With two corrupt political parties controlling the political system the only solution is using what the Founders had the wisdom to give us in the Constitution: an Article V convention of state delegates that could propose constitutional amendments, which are the only route for obtaining genuine reforms of our political system, such as getting all private money out of politics.

Harvard Law School is hosting a Conference on the Constitutional Convention this September.  The justification for it includes this correct view: Reform of any kind is stalled by a status quo that profits from blocking change.

In other words, things have gotten so awful that we cannot vote our way out of our national mess.  We must work through out states to reform government.

Pay attention to this: A new Rasmussen Reports national telephone survey found that just 17 percent of likely US voters think the federal government today has the consent of the governed, the lowest level ever measured.  Sixty-nine percent believe the government does not have that consent. Fourteen percent are undecided.  Time for the revolution.

Consistent with this finding was a new Washington Post survey that found 78 percent dissatisfied with the way this country’s political system is working.  But proof of how brainwashed or stupid Americans are is that 77 percent believe: “Whatever its faults, the United States still has the best system of government in the world.”  This means that they still do not understand the urgent need for restructuring and reforming the political system.  Mass riots in the streets may be needed to fix the system.  As more and more Americans suffer in a terrible economy that may be coming.

Joel S. Hirschhorn - delusionaldemocracy.com

We blew it.

We, the people, and governments, blew it.

In 2007 I began writing about the banks and the fraudulent accounting that they were employing world-wide, and had been for decades.  The premise of holding things on their balance sheet at “unobservable” prices, yet counting them as assets and claiming that they were “money good” is in fact a scam as that “value” is predicated on one and only one thing – trust in the person making the claim.  There is no externally-observable and verifiable confirmation on these valuation claims – it is a parlor trick in that the alleged “chocolates” have proved time and time again to be used dog food.

Bear Stearns and then Lehman blew up when the charade of their claimed valuations became subject to reasonable doubt, the market refused to accept their collateral and claims of “value” and ultimately those “values” were exposed as falsehoods, resulting in the destruction of the company and loss of all shareholder value.

Now it’s happening again.  Bank of America is trading at half of their claimed book value.  There are only two possibilities: The book value is a lie or the market is radically wrong about valuation.

The “black box” at the time was counterparty derivative exposure – and still is.

We refused, after the 2007/08/09 crash, to force full and complete transparency on these books of risk by forcing them all onto an exchange with nightly mark-to-market and the posting of cash margin against any underwater positions.

Clearinghouses do not solve this problem.

This morning we have Grasso on CNBS once again trying to defend the practice of these “customized OTC derivatives.”

Abject nonsense.

These so-called “customized” derivatives are nothing more than an ability to rob customers by denying them the ability to see, in real time, bid, offer, open interest and size across the entire market.  This in turn means that the bank on the other side can take advantage of its customer because the customer is severely disadvantaged.

This is one of the banks’ big money-makers – and why not?  When the customer can’t see it’s easy to rob him blind!

But it is this very structure, along with allowing banks to mark their assets wherever they wish along with understating provisions and releasing loss reserves far in excess of reason that allows playing with earnings numbers but results in gross overstatements of value – and capitalization.

Ultimately, as the market calls “BS!” on the claimed values, rumor becomes reality as the nobody will accept your claim of solvency if you potentially are on the hook to pay them but the market says your book value is half of what you claimed it to be!

The solution to this is to prevent banks from playing this game.  One Dollar of Capital ends all of this cock-and-bull nonsense instantaneously by requiring that for each dollar of unsecured lending – that is, a loan that is not backed by a market-priced asset – the bank must have one dollar of actual capital – free-and-clear cash or a cash-equivalent (which is NOT pledged in a repo or other transaction.)

It also ends the ability to crank leveraged returns by banks, of course.

But is this bad?  No, it’s good – because all of the panics in recent memory have had to do with banks that have lost confidence.  1987.  The Asian and Latin American implosions.  2007/08.

And now.

This morning the source of the dive is a rumor from un-named sources that Asian banks are “reducing counterparty exposure” to French banks.  The effect was instantaneous – it detonated our futures, sending them down more than 30 handles, or about 3%, in minutes.

We cannot stop these rumors and the periodic panics that are easily-ignited and destroy value until we get rid of the ability of banks to lie and obscure asset valuations.  Only when we demand that these institutions place an actual dollar of capital behind every unsecured act of lending, no matter how it’s conducted (e.g. in derivatives), and that every asset be marked to the market on a daily basis and treated as unsecured if the claim is made that no market price is available will this crap end.

This is NOT about fiat .vs. hard-backed currencies.  It has nothing to do with the form of money and everything to do with the issuance of credit against hot air – that is, nothing – where the liability created is real but the asset’s value is a myth.

Our CONgress and Executive, along with Ben Bernanke, must be held personally accountable for their utter refusal to stop the balance sheet games and false claims of value.  This is nothing more than state-sanctioned fraud and our refusal to put a stop to it is now threatening to once again blow our markets and economy straight to Hell.