Archive for January, 2012
Confidence among U.S. consumers unexpectedly dropped in January as gasoline prices picked up and more Americans said jobs were hard to get.
The Conference Board’s confidence index fell to 61.1 from a revised 64.8 reading in the prior month, figures from the New York-based private research group showed today. The median forecast of economists surveyed by Bloomberg News called for a rise to 68. The figure was lower than the most pessimistic projection.
Why is this a surprise? As I noted early in the month the Employment Report, which many said showed “improvement” with a +200k headline number, in fact showed job loss when one looked at the household survey, and it is actual consumers who buy actual things, not government fudge-boxes!
Of course we can’t have the truth in the mainstream media off those reports, can we? Never mind that other data has showed a contracting consumer spending appetite and more desperation as credit is being used once again in a “last gasp” attempt to avoid insolvency.
The data is all around you if you care to look — the consumer is collapsing as there has been no recovery of materiality in employment. Just look at the labor participation rate!
Wake up America. The government’s policy of ladling out “free cheese” in an attempt to prevent the adjustment of the economy back to what we can actually afford both at a government and personal level is both futile and stupid. It in fact serves only one purpose — attempting to buy votes.
What is the difference between printing money and counterfeiting? There is none.
Counterfeiting is illegal because it is the false creation of value. The counterfeiter takes low-value paper and turns it into high-value money, which is fundamentally a claim on the real productive value of the economy that issues the currency and recognizes it as a proxy means of exchanging that productive value.
Counterfeiting is illegal because the counterfeiter creates no additional value–he creates only the proxy for value. Creating real value–adding meaningful goods or services to the economy–is tedious, hard work. How much easier to simply transform near-worthless paper into a claim on actual goods and services.
If this is illegal, then would somebody please arrest the Board of the Federal Reserve for counterfeiting? The Fed has blatantly printed money without creating any real value to back up their added claims on productive value. Hence they are counterfeiting, pure and simple. A government based on rule of law would arrest these fraudsters and cons at the earliest possible convenience.
And while you’re drawing up the indictment, can you also charge them with counterfeiting competence and policy, as they have demonstrated the Peter Principle par excellence: the Board has risen to its highest level of incompetence. Their counterfeit policies have wreaked incomparable damage on the real productive economy.
The essence of counterfeit policy–a fake policy that claims to be something it is not–is “extend and pretend.” And the sole goal of “extend and pretend” is self-preservation and the preservation of the Financial Elite which has tightened its grip on the nation’s throat as a direct consequence of Federal Reserve policies–notably “extend and pretend.”
“Extend and pretend” extends the “too big to fail” Financial Sector’s licence to mask its insolvency and its licence to continue issuing debt, leverage and derivatives under false pretences, i.e. that the risk and market value of these instruments are transparent. They are not.
In effect, the banks are also counterfeiters, as they are issuing debt–a claim on future productive value–without adding any actual value to the economy.
Thus the Fed and the Financial Sector are both diluting the base of actual real value with ever-expanding claims on real productive value by printing money and issuing debt. If an economy creates 100 units of productive value, and issues 100 units of currency as a proxy claim on that value to be used as a means of exchange, then there is a 1-to-1 correspondence with the money claim on productive value and the actual value.
If someone prints another 100 units of money and starts buying assets with that money, then they are claiming 1 unit of money still equals 1 unit of production though they have debased the currency so that it actually takes 2 units of money to represent 1 unit of productive value.
This is a con of the first order, which is why counterfeiting is illegal. If counterfeiting is illegal because it is a con, a fraudulent claim on real goods, services and assets, then how can money printing by the Fed (a private bank, mind you) be legal?
It can only be legal in a kleptocracy ruled by a Financial Elite bent on political and financial dominance, a Plutocracy whose wealth is all skimmed from the productive economy via ever-expanding issuance of money and debt.
When corporations and the State are one, we call it fascism. In the U.S., it has taken the form of financial fascism, and the Federal Reserve and Federal agencies (Treasury, Freddie Mac, FHA, etc.) are the handlers and enablers of this kleptocratic financial fascism. They add no value, they only steal value from those who create it.
Charles Hugh Smith – Of Two Minds
The Banks Are Still Scamming
More than half of the derivatives- trading business of Goldman Sachs Group Inc. (GS), Morgan Stanley and three other large banks could fall largely outside the Dodd- Frank Act if they succeed in lobbying regulators to exempt their overseas operations, government records show.
The debate over the reach of Dodd-Frank has been among the most contentious aspects of the regulatory overhaul enacted by President Barack Obama after the 2008 credit crisis. The banks have met with regulators, testified to Congress and filed dozens of letters contending that they will suffer a competitive disadvantage if the regulations apply to their foreign arms.
Bluntly: “F” ‘em.
There’s a simple solution to this problem — if you want to do business with a United States banking license, you will bring all operations worldwide under US laws.
If you don’t want to do that then leave. Some other enterprising entity will then take the business from you, since you won’t be able to run securities in the US at all.
Our market is plenty large to attract entrepreneurs (if not existing smaller banks) to fill the vacuum. The premise that being the largest campaign contributors to both parties should give the banks the ability to effective buy regulators is nonsense — our nation’s response to this, whether from OWS, the “Tea Party” or simply from the American people, should be one giant middle finger and the jingling of a pair of handcuffs for those who want to continue to press the issue.
I’ve had enough of this crap and you should have as well.
Another Law That Doesn’t Apply To “Big (Bank) People”
How many more examples do we need to see before the people demand handcuffs — and threaten that if they don’t see them applied to the pigmen they’ll take matters into their own hands?
Nearly three months after MF Global Holdings Ltd. collapsed, officials hunting for an estimated $1.2 billion in missing customer money increasingly believe that much of it might never be recovered, according to people familiar with the investigation.
As the sprawling probe that includes regulators, criminal and congressional investigators, and court-appointed trustees grinds on, the findings so far suggest that a “significant amount” of the money could have “vaporized” as a result of chaotic trading at MF Global during the week before the company’s Oct. 31 bankruptcy filing, said a person close to the investigation.
Nonsense. Money does not “vaporize.” It goes somewhere through someone. In this case…
As money poured out of MF Global, much of it likely passed through J.P. Morgan Chase & Co. and other banks where the securities firm had accounts, as well as trade-clearing partners such as Depository Trust & Clearing Corp. and LCH.Clearnet Group Ltd., people familiar with the matter said.
Now here’s the scam. Try receiving stolen property as any ordinary business or person and then claim that you don’t have to give it back (even if it’s gone later on) and see how well that works.
You’ll lose and be forced to give it back — even if you don’t have it any more.
There are, of course, exceptions that various entities have managed to get written into the law. One of the more-outrageous in recent years has been pawn shops, where you can find your stolen property, be able to prove it’s yours, and yet be forced to buy it back — even though the pawn shop has no legal title to it as the seller (who stole it) never had title to convey.
Common business balance and in fact the law in virtually every other case requires that if the title to whatever you receive is defective your recourse is against the person who sold it to you — you can’t acquire title to something that the seller never lawfully had!
But when it comes to segregated funds, which are allegedly held in escrow for customers and are represented as same by every brokerage in the land, it appears this principle doesn’t apply. If it did then banks would be really careful about taking moved funds proffered in response to a margin call or other “stress” situation and require proof that the funds were in fact owned by the firm tendering them, lest they be forced to cough them back up.
That in turn would stop these frauds cold.
And make the pigmen legally and financially responsible for their scams.
The only way we’re ever going to see these schemes and scams stopped is when we, the people, demand and are willing to back up our demand to whatever degree is necessary that the same laws that apply to you and I when we accept transfer of some property — that we cannot acquire title to something if the seller does not have lawful title himself — be applied to the pawn shops, the banksters and other “connected” institutions and people.
Think filing for bankruptcy is the only way to get debt discharge? Think again, at least in Greece. While previously we have reported that Greek courts had written off “untenable” debts of unemployed Greeks owed to local banks, Kathimerini describes a landmark case which may have profound implications for the indebted country, in which a fully employed woman has had the bulk of her debt written off. From Kathimerini: “In what could turn out to be a significant ruling for Greeks suffering from the economic crisis, a court in Hania, Crete, has become the first in the country to order that the majority of the debt owed to banks by someone still in full employment be wiped out. Sunday’s Kathimerini understands that the Justice of the Peace Court in Hania based its decision on a 2010 law that allows judges to give protection to people struggling to meet their financial commitments. Until now, the legislation has only been used to give debt relief to unemployed people or those with no substantial income.” This means that virtually every indebted person in Greece, regardless of employment status will rush into court rooms, demanding equitable treatment and a similar debt write down. It also means that the Greek bank sector, already hopelessly insolvent, is about to see its assets, aka loans issued to consumers, about to be written off entirely. And since the ultimate backstopper of the entire Greek financial system is the ECB, the creeping impairments will have no choice but to impact, very soon, the mark-to-market used by both the ECB and the various national banks. Finally, how long before other courts in Europe express solidarity with their own citizens and proceeds with similar resolutions?
On the specifics of the write off:
in the Hania case, the court ruled in favor of a full-time civil servant. The divorced woman, who has three children, asked to be given protection after her banks refused to offer her new terms for combined loans of 112,000 euros. The unnamed woman explained that she did not have any assets she could sell to pay off her debt.
In its ruling, the court deemed that the woman, who has moved in with her parents, needs 350 euros a month to cover her own costs but that the rest of her earnings could be distributed equally among the three banks she owes money to. The judge deemed that this process should last for four years, meaning the woman would pay back some 30,000 euros and the remaining 82,000 would be written off.
And the implications:
Thousands of people have already appealed to the courts for protection under the 2010 law but legal experts believe the decision in Hania may lead to a new wave of appeals by Greeks who still have jobs but are unable to repay their loans.
Needless to say, this simply means that as locals realize that a domino effect in which bank assets are written down will necessitate a collapse of bank balance sheets, and the asset side of the ledge will be unable to support deposits held by local banks. Which is unfortunate as December saw the first modest signs of a rebound in Greek deposits, which rose modestly from €173 billion to €174 billion following years of consecutive declines.
Outrageous! The Government Is Giving Out Free Cell Phones And Free Cell Phone Minutes To Welfare Recipients
Did you know that the federal government is giving out free cell phones and free cell phone minutes to welfare recipients? It may be hard to believe, but it is true. Right now, there are companies that are running advertisements specifically targeted at low income Americans informing them of the fact that all they have to do is sign up and they can get a free cell phone and hundreds of free cell phone minutes every single month and it will all be paid for by the federal government. Some have referred to this as “The Obama Phone”, but that is not exactly accurate. The outrageous federal programs that are paying for this were initiated before Barack Obama entered the White House. But the fact that welfare recipients have been receiving free cell phones and free cell phone minutes under both the Bush and Obama administrations has been confirmed as being true by Snopes. All of this is paid for by “the federal Universal Service Fund”. That is one of those annoying little taxes that you may have noticed on your phone bill. So what is essentially happening is the federal government is taking money from all of us so that they can provide free cell phone service for welfare recipients every single month.
When some of my readers informed me of this free cell phone scheme, I decided that I better go to the source. So I went over to the FCC website, and it turns out that there are two federal programs involved. “Link Up” provides a one-time connection discount on phone service, and it can be applied to the cost of a cell phone. So this is where the free cell phone comes from. “Lifeline” provides a monthly discount on telephone service. So this is where the free cell phone minutes each month come from. The following is a description of these programs from the FCC website….
What Benefits are Available Under the Lifeline and Link Up Programs?
- Lifeline provides discounts on one basic monthly telephone service (wireline or wireless) for qualified subscribers. These discounts can be up to $10.00 per month, depending on your state. Federal rules prohibit qualifying low-income consumers from receiving more than ONE Lifeline service at the same time. That is, qualifying low-income consumers may receive a Lifeline discount on either a home telephone or wireless telephone service, but may not receive a Lifeline discount on both services at the same time. Lifeline also includes Toll Limitation Service, which enables a telephone subscriber to limit the amount of long distance calls that can be made from a telephone.
- Link Up Up provides qualified subscribers with a one-time discount (up to a maximum of $30) off of the initial installation fee for one traditional, wireline telephone service at the primary residence or the activation fee for one wireless telephone. It also allows subscribers to pay the remaining amount they owe on a deferred schedule, interest-free. Federal rules prohibit qualifying low-income consumers from receiving more than ONE Link Up discount at a primary residence. That is, qualifying low-income consumers may receive a Link Up discount on installation or activation charges associated with either a home telephone or wireless telephone service.
Apparently these programs are becoming quite popular.
You can find a company called Safelink Wireless offering welfare recipients a free cell phone and 250 free cell phone minutes a month right here.
You can find a company called Assurance Wireless offering welfare recipients a program that is virtually identical right here.
This is absolutely outrageous, and it is yet another sign that dependence on the government is totally out of control.
Not that assisting the poor is bad. Of course we always want to help those that cannot help themselves. We never want to see anyone go without daily food or sleep in the streets.
But providing the poor with the basics of life is much different from providing them with luxuries such as cell phones.
In some areas of the country, the poor can also receive nearly free Internet service every single month.
Just check out the following example from the Houston Chronicle….
When Comcast acquired NBC Universal earlier this year, an FCC-mandated requirement was that the cable giant offer cheap Internet access to low-income households. Comcast is making good on the mandate through a new program called Internet Essentials.
Families who qualify will be able to sign up for 1.5-Mbps Internet access – the same download speed as AT&T’s basic DSL service – for just $9.95 a month. Customers may also be eligible for a computer that costs just $150 and free Internet training.
Also, a new bill has been introduced in Congress that would give “eligible” households money to help pay for gasoline….
Low-Income Gasoline Assistance Program Act – Directs the Secretary of Health and Human Services to make grants to states to establish emergency assistance programs to pay eligible households for the purchase of gasoline.
These days, as long as you are “eligible”, just about everything you need will either be purchased for you or subsidized by the federal government.
Yes, we will always need programs to help take care of the poor, but some of the things that go on today are absolutely outrageous.
There are millions of people out there that have become extremely comfortable receiving government benefits and it will be extremely difficult to ever get them to give them up.
After all, why bust your behind for 40 or 50 hours a week at some meaningless, low paying job when you can live a similar lifestyle by just depending on government benefits?
The following is a rap video that shows the kind of mindset that is developing all across America. Please be advised that it contains some very strong language. It was done by a rapper known as “Mr. EBT”, and it is a perfect example of the kind of attitude that many welfare recipients have today….
Yes, everyone needs a helping hand once in a while. But if you do have to rely on government benefits for a time, you should be fighting like crazy to improve your situation so that you can get off of them as soon as possible.
Of course the biggest welfare recipients of all are the big corporations. The federal government showers billions upon billions of dollars on them every year, and this has got to stop.
The following example comes from an article in the Weekly Standard….
General Electric, one of the largest corporations in America, filed a whopping 57,000-page federal tax return earlier this year but didn’t pay taxes on $14 billion in profits. The return, which was filed electronically, would have been 19 feet high if printed out and stacked.
Can you imagine a 57,000 page federal tax return?
That is absolutely disgusting and it is a perfect example of how corrupt our system has become.
All year long, GE has people pouring over the tax code just looking for any little tax loophole that it can exploit.
GE made $14,000,000,000 in profits, but they paid less taxes to the government than you or I did.
There is something very, very wrong with that picture.
All of this unnecessary welfare has got to stop.
No more free cell phones for people on welfare.
No more giving billions of dollars in tax breaks to big corporations.
We simply cannot afford it.
The U.S. debt problem is way, way out of control. We have piled up the biggest mountain of debt in the history of the world, and it gets about 150 million dollars worse every single hour.
Sadly, none of this is likely to change any time soon.
The big corporations provide the money that our politicians need to win campaigns, and most of our politicians are very careful not to bite the hands that feed them.
On the other end of the spectrum, our economy continues to crumble and the number of poor Americans continues to increase. So even if we don’t provide them with free cell phones, the truth is that the number of Americans that need basic food and housing is not going to go down any time soon. In fact, it is going to go a lot higher in the years ahead.
We are rapidly becoming a European-style socialist welfare state.
In America today, the poor are absolutely showered with outrageous government benefits and so are the big corporations.
So who pays for all of this?
You and I do.
I am afraid that the joke is on us, and nothing is going to change as long as we keep sending the same kind of politicians back to Washington D.C. over and over.
European Union leaders gather for their first summit of 2012 as a deteriorating economy and struggle to complete a Greek debt writeoff risk sidetracking efforts to stamp out the financial crisis.
EU chiefs arrive in Brussels about 2 p.m. today to put the finishing touches on a German-led deficit-control treaty and endorse the statutes of a 500 billion-euro ($661 billion) rescue fund to be set up this year. Greece and its private creditors said Jan. 28 they expect to complete a deal in coming days after bondholders signaled they would accept European government demands for a bigger cut in their debt holdings.
Uh huh. That’s not the problem. The problem is that Germany is screaming that Greece must surrender its national sovereignty in order to continue to receive “help”, effectively becoming a vassal state of Germany.
In the meantime Sarkozy says he’s going to unilaterally impose a financial transactions tax. One wonders how he’s going to pull that off, given that I don’t think France re-installed a King. Or did they?
Here in the US we still won’t face reality — although it’s at least being talked about in the media now.
The level of debt held now by governments, the financial industry and especially consumers remains a greater drag on the U.S. than in 1983, Reinhart said Jan. 27 in a radio interview from Davos on “Bloomberg Surveillance” with Tom Keene and Ken Prewitt. In the third quarter of 2011, total household debt was 86 percent of GDP, compared with 47 percent in the third quarter of 1983, according to the U.S. Commerce Department.
“The capacity for households to carry on to be the engine of growth that they have been in past recoveries is simply not there,” said Reinhart, a senior fellow at the Peterson Institute for International Economics in Washington.
Until this is recognized and we adjust for it we cannot have the sort of “recovery” everyone wants to see. That is, we never hit the bottom, we never purged the bad debt, and we never set the stage for a “recovery”, instead covering up the problems with more debt and fraud.
In the final three months of 1983, average after-tax personal income had risen 4.2 percent from a year earlier, adjusted for inflation, according to the Commerce Department. In the final quarter of last year, it had dropped 0.8 percent.
Now now, let’s stop the intentional misuse of statistics there Bloomberg, and instead look at what we had just started doing back in 1983….
So did personal income actually rise? Hmmmm…. we added, in 1983, a bit more than $100 billion in GDP. But we also added $176 billion in debt, which means we were borrowing the so-called “increase” in after-tax personal income, we were not earning it. Indeed, here’s the debt and GDP addition numbers for the quarters from 1981 through 1989:
|Quarter||New Debt||New GDP|
We didn’t grow at all — we borrowed from roughly 2x to nearly 5x the increase in output each and every quarter during Reagan’s so-called “recovery”!
This is the fundamental scam that we have run for the last 30 years and we’re still not talking about it honestly! Until we do and we reconcile the overblown asset prices and costs that go into both business and personal life that have come with this debt there can be no durable recovery — only further attempts to blow more Ponzi-style bubbles.
The problem is that in order to blow another asset bubble you need to find an asset where leverage is reasonably low and can be cranked up so as to support it, at least for a while.
But we seem to be all out of those unencumbered assets……