Helping Homeowners In Michigan
Archive for the ‘Lies’ Category
The Danger Debt Poses to the Western World
January 8th, 2012 | 
Author:
When Carlo Ponzi, a dishwasher from Parma, Italy, immigrated to the United States in 1903, he had $2.50 in his pocket and a million-dollar dream in his head. He was able to fulfill that dream, at least temporarily.
The scheme continued. Ten investors turned into 100, and 100 investors turned into 1,000, until the scam was discovered. Ponzi spent many years in prison, and he died a pauper in 1949. But his name remains important to every criminologist today — and every economist.
Economists use the term “Ponzi scheme” to describe a disastrous mechanism in which someone pays off old debt by constantly taking on new debt. The repayment of the debt — the most recent loans, plus interest — is deferred into the distant future, fueling an eternal process of debt refinancing.
It’s the classic pyramid, or snowball scheme, practiced by thousands of con artists after Ponzi. The most spectacular case was that of New York financier Bernard Madoff, who was responsible for losses of about $20 billion by 2008. Snowballs are set into motion, becoming bigger and bigger as they roll along. In the worst case, they end in an avalanche that takes everything else with it.
Western economies have not acted much differently than the fraudster Madoff. In 2011, they were virtually inundated with bad news and old sins. Almost everyone — in Europe and in the United States — has been living beyond their means, from consumers to politicians to entire countries. Governments have become servants to the markets upon which they have become dependent.
Bigger Snowballs
On an almost weekly basis, the reports have become more worrisome and the sums of money involved more staggering. Many are now concerned that, as 2012 begins, the snowballs will only get bigger — and roll faster:
- There are the banks in Europe, which will have to repay about €725 billion in combined debt in 2012, including €280 billion in the first quarter alone. With the private market largely off-limits to them, the banks have had to rely on the European Central Bank (ECB) to bail them out. The ECB is now lending them fresh money — as much as they want — at minimal interest rates.
- There is a country like Italy, which has an exorbitant amount of debt to service at the beginning of the year. About €160 billion in debt will mature between January and April; the total for the entire year is about €300 billion. The government in Rome is already having trouble finding buyers for its bonds.
- There is the ECB, which is creating billions essentially out of nothing. On an almost weekly basis, it is acquiring bonds that no one else would buy from Portugal, Spain and Italy and, in the process, it is turning into a reluctant financier of nations. This financial aid already amounts to €211 billion.
- There is the European Commission, whose president, José Manuel Barroso, supports the use of so-called euro bonds. These bonds, which would be issued jointly by the countries in the monetary union, would amount to an accumulation of collective debt on top of national debts.
- There is the €440-billion euro bailout fund, of which €150 billion are already promised to Greece, Ireland and Portugal. But because this amount is still not enough, the finance ministers have decided to “leverage” the fund, a seemingly harmless term for bringing in additional lenders, thereby multiplying the volume of credit.
- And then there is the United States, which only remains solvent because the Congress in Washington keeps raising the debt ceiling. The American government already owes its creditors about $15 trillion. Stay tuned for the next installment.
In other words, there are plenty of snowballs that have started rolling and getting larger with each rotation. Some aspects of the economic system in the industrialized countries resemble a gigantic Ponzi scheme. The difference is that this version is completely legal.
Living on Credit
Old debts are paid with new ones, with borrowers giving not the slightest thought to repayment. This has been going on for a long time, far too long, in fact. It was only with the eruption of the financial crisis in 2007 and the outrageously expensive bailouts of banks and economies that many people realized that the entire world is living on credit.
“Debt is rising to points that are above anything we have seen, except during major wars,” economists at the Bank for International Settlements (BIS) concluded in a recent study. “The debt problems facing advanced economies are even worse than we thought.”
This is even true of seemingly rock-solid Germany. In the third quarter of 2011, German public debt amounted to €2.028 trillion, an increase of €10.8 billion over the debt level just three months earlier. Germany’s public debt grew by about €120 million a day — or more than €80,000 a minute — between July and September.
To make matters worse, this increase occurred in a quarter marked by plentiful tax revenues and a significant decline in unemployment. But debts increase independently of whether times happen to be good or bad.
The End of the System
The same thing is happening almost everywhere. In the first decade of this century, which was by no means a weak period economically, countries more than doubled the level of debt — to an estimated grand total of $55 trillion by the end of 2011.
The United States leads the pack with its national debt of $15 trillion, followed by Japan with about $13 trillion. Germany’s €2 trillion looks almost paltry by comparison. Today, the three major rating agencies award their highest credit rating to only 14 countries in the world.
The fact that nations are continually spending more than they take in cannot turn out well in the long run. The word “credit” comes from the Latin “credere,” which means “to believe.” The system will only function as long as lenders believe in borrowers. Once the belief in the creditworthiness of borrowers is destroyed, hardly anyone will be willing to buy their securities.
When that happens, the system is finished.
This is precisely what happened with Carlo Ponzi’s scheme. And now entire countries are suffering suspiciously similar fates. They are no longer being taken seriously.
Meanwhile, it is also flaring up in the United States once again, with Democrats and Republicans blaming each other for the nation’s debts. Instead of taking responsibility and consolidating the budget, President Barack Obama prefers to rail against the Europeans’ approach to crisis management. They, in turn, refuse to tolerate any interference, especially from the United States, which they blame for being the source of the financial crisis in the first place.
In this fashion, the Old World and the New World are tossing the blame back and forth, while confidence in politics and its ability to avert collapse is dwindling on both sides of the Atlantic. Is there still a way to stop the avalanche, or at least to diminish is destructive force? Why do countries that collect taxes have to borrow money in the first place?
Part 2: Of Good Debt and Bad Debt
Lutz Goebel is used to borrowing money. The 56-year-old businessman is the managing partner of the Henkelhausen Group, a German mid-sized company that specializes in motors in the western German city of Krefeld, with 240 employees and €65 million in annual sales. The debt Goebel incurs is of a completely different nature than the country’s debt.
Five years ago, Goebel had the opportunity to buy another company’s gas-engine service division. Goebel was convinced that it was a worthwhile investment, and that the resulting net revenues would ultimately exceed the €1.5 million he had to borrow to pursue the deal. “It paid off,” he says today.
As president of the German Association of Family-owned Businesses, Goebel represents the interests of 5,000 companies throughout the country. The owners of these businesses usually borrow funds only when they intend to make significant changes or build something new. For them, debt is a necessary part of developing their companies.
There are undoubtedly good reasons to go into debt. Companies use debt to finance investments. Private citizens use it to pay for major acquisitions, like automobiles or real estate. Most are aware that they have to economize as long as they are using current revenues to pay off the principal and interest on their debt.
It can also make perfectly good sense for governments to go into debt, such as when a government seeks to stabilize its economy with additional spending to ward off a recession. It particularly makes sense when governments borrow money to pay for real assets that will also benefit future generations, like a bridge or a kindergarten.
Everyone Benefits
Finance experts call this form of the solidarity principle “pay as you use,” in which future generations are expected to pay for the rest. In addition to leaving the assets — bridges, kindergartens and the like — to its children and grandchildren, the current generation also leaves a portion of the financing up to future generations, and everyone benefits from it.
The only problem is that countries hardly ever use this instrument in such a productive and far-sighted manner. Nowadays, governments usually borrow money to finance their daily expenditures, like paying the salaries of government employees or servicing existing debt.
Of course, there are also people who live unrestrained financial lives. Readily available credit at every bank makes it more likely than ever that they will be tempted to abuse it. Living on credit used to be considered somewhat disreputable, but not anymore. In the third quarter of 2011, Americans had $700 billion in outstanding credit card debt. There are likewise undoubtedly many companies with lax payment policies. The number of major corporations with excellent credit ratings has been consistently declining for years.
Nevertheless, there is still a difference between private and public debt. Citizens and companies usually have real assets to serve as collateral against their debt. The value of a government, on the other hand, is — with the exception of a few companies, properties and land — primarily virtual, namely, that it enjoys the priceless privilege of being able to issue bonds. It borrows money from citizens who, in return, receive a bond that promises repayment of the principal plus interest.
In the 14th century, northern Italian rulers applied this principle for the first time. The British historian Niall Ferguson sees the invention of the government bond as “the second great revolution” in the economic world, following the introduction of credit by banks. It served as the foundation for the ascent of money, according to Ferguson.
No Incentive for Responsibility
Since then, the state has been able to constantly print new securities, which it uses to replace the old ones. Debts are not repaid but “refinanced.” In other words, they are passed on to future generations. This trick seduces governments into treating their finances with less solemnity, and it deprives them of any incentive to live within their means.
They have also provided the securities with a special advantage: Banks, savings banks and insurance companies, the main purchasers of European sovereign bonds, are not required to back the bonds with equity capital, unlike with loans to private citizens or companies. The bonds have been treated as “especially safe” — at least until now.
Everyone benefits from this system. Through the bonds, the banks acquire from the issuing governments apparent security on their balance sheets, fictitious assets. And, for governments, the banks serve as constant new buyers for their securities.
The state creates the illusion of freedom from risk to satisfy its self-indulgence, at least until the Ponzi moment arrives: when the last shred of confidence has been gambled away and no one buys bonds anymore.
Were a business owner to run a business in the same way, he or she would soon be forced to declare bankruptcy. “Family business owners borrow money to invest it. Usually the government borrows money to consume today,” says German business leader Goebel. And, he adds, “while a businessman takes on the risk and liability for his company, in the case of countries, it is almost always the next generation that suffers.”
Debt is thus a double-edged sword. When used prudently and in moderation, it enhances prosperity. “But, when it is used imprudently and in excess, the result can be disaster,” the BIS economists warn in their study. Today’s world has become a Ponzi planet.
Part 3: Germany’s True Liabilities
Just how much the German government struggles with financial planning is evident in its handling of pensions for the country’s 1.7 million civil servants. The 16 German states already spend about 15 percent of their tax revenues to pay for the retirement benefits of government employees, a percentage that Bernd Raffelhüschen, an economist in the southwestern city of Freiburg, predicts will grow considerably. In fact, he sees a veritable wave of costs rolling toward Germany in the middle of the coming decade.
All of the civil servants who were hired in the 1970s and 80s will soon go into retirement. German federal, state and local governments hired so many people between 1970 and 1980 that personnel costs tripled to about €75 billion.
Raffelhüschen, working for the Market Economy Foundation, regularly investigates which financial obligations the government and the social insurance agencies enter into without establishing any reserves for the time when the benefits will come due. His conclusions represent Germany’s true debt burden.
In addition to the official national debt of roughly €2 trillion, there are €4.6 trillion in future benefit promises to retirees, the sick and people requiring nursing care — commitments that are not documented anywhere. When these commitments are included, Germany’s real debt is not 80 percent of GDP, as quoted officially, but 276 percent.
Simply Doesn’t Concern Them
The social security coffers contain absolutely no reserves for members of the baby-boomer generation. “As a result of our government’s generosity, we are creating substantial financial burdens for future generations,” says economist Raffelhüschen. But no one really wants to hear this. Besides, all of this will happen so far in the future that many feel it simply doesn’t concern them.
Next to pensions, health insurance is the second-largest item on Raffelhüschen’s list, accounting for a shortfall of €2 trillion. The inevitable aging of society will only exacerbate the problem. With age or, more precisely, with the number of old people, healthcare spending rises dramatically.
In Germany, a gainfully employed person under 65 costs the government health-insurance system an average of €134 a month. The average for people older than 65 is €379, or almost three times as much.
As a result, an invisible mountain of social insurance debt rests on every German citizen’s shoulders. According to Raffelhüschen, to pay off this debt, each citizen would have to pay the government €307 a month throughout his life — all because the government makes financial promises it cannot keep. It even touts its promises as benefits, and yet citizens are the ones paying for them in the end. The method has been part of the system for generations.
A Short History of Debt
There was a time when the government had no trouble amassing reserves. In the 1950s, then-Finance Minister Fritz Schäffer took in so much revenue — or spent so little — that he was able to save. There was talk of the so-called “Schäfferturm,” or Schäffer Tower, an allusion to the Julius Tower in Berlin, where the Germans stored the gold paid to them by the French in war reparations following the Franco-Prussian War in 1870-1871.
Of course, Schäffer benefited from the fact that the 1948 monetary reform provided West Germany with a new fiscal start. The old money was hardly worth anything anymore, with 100 Reich Mark being exchanged for 6.5 deutschmark. In addition, the country’s liabilities were reduced — by a factor of 10 to 1. In other words, the conditions were favorable for the pursuit of sound economic policy.
Six finance ministers later, when Social Democrat Alex Möller assumed the office in 1969, the zeitgeist had changed — and so had the payment morale. The economy was booming, there was more work than available labor, and it seemed that the coalition government of the center-left Social Democratic Party (SPD) and the pro-business Free Democratic Party (FDP) could pay for anything, including such extras as winter bonuses for construction workers, bypass roads for rural communities and fitness programs sponsored by the government health-insurance system to combat the adverse effects of affluence. The government health-insurance system more than doubled its expenditures between 1970 and 1975.
When Möller resigned in 1971 to protest such profligacy, his fellow Social Democrat Karl Schiller (“Don’t congratulate me; send me your condolences instead”) took his place. But Schiller lasted only a year, and when he resigned he said he was unwilling to support the government’s devil-may-care policy.
A Taste of What Was to Come
That, though, was just a taste of what was to come. The economy began to slow, especially after the oil price shocks of 1973 and 1979, and unemployment rose steadily, but the government of then Chancellor Helmut Schmidt (SPD) behaved as if Germany were still in the midst of its economic miracle, spending far more than it took in. During Schmidt’s chancellorship, sovereign debt grew from €39 billion to €160 billion. It was this ballooning debt that eventually brought down Schmidt’s governing coalition in 1982.
The next surge of new borrowing occurred seven years later, after the fall of the Berlin Wall. Instead of just raising taxes, then Christian Democratic (CDU) Chancellor Helmut Kohl decided to finance German reunification on credit. Some €1.5 trillion in costs relating to reunification remain unpaid to this day. Most of the money went into consumption — far too little was used for investment. It was the same old mistake.
Finally, it was the financial crisis that, beginning in 2008, sharply drove up the national debt once again. The bank bailouts in addition to the economic stimulus packages have been a heavy burden on public coffers. The German government has forked over about €80 billion for various programs, including the controversial cash-for-clunkers program.
Governments are invoking John Maynard Keynes, the great British economist, as they use borrowed money to stimulate the economy, and yet they are consistently ignoring the second, unpleasant part of the equation: paying off the debt. Not a single German finance minister has balanced the budget since 1970.
Part 4: The Failures of the Political Class
Why is this the case? For Lars Feld, the answer is short and unambiguous: “political failure.” The 45-year-old Freiburg-based academic, the youngest member of the German Council of Economic Experts, which advises the government on economic issues, combines economic expertise with insights from other disciplines, especially political science. For Feld, the concept of “fragmentation” is essential to explaining the tendency to accumulate debt.
According to the fragmentation concept, debt levels increase the more parties are involved in the government — and competition there is for funds among cabinet ministers to satisfy their respective constituents. The Americans refer to this as pork barrel politics. Each tries to take as much as possible while contributing as little as possible.
For politicians, this means: “Every member of parliament tries to bring as many public projects as possible into their election district in order to secure re-election, hoping to distribute the costs across the entire population,” Feld explains. It is also true that the more often a government is replaced, the faster the government debt increases.
Is a Dictatorship More Responsible?
The reverse is also true. Strong governments with absolute majorities have the lowest tendencies to incur debt, especially when a powerful finance minister remains in control for a long period of time. Does this suggest that parliamentary democracy, which naturally promotes fragmentation, is to blame for unsound fiscal policy? Or, to put it cynically: Is a dictatorship more responsible when it comes to fiscal policy?
Aside from the fact that dictators have also been known to devastate their countries financially, voters ultimately have themselves to blame for the excesses. Scientists refer to “rational ignorance” when citizens deliberately avoid dealing with uncomfortable issues. People overestimate the benefit of current tax cuts and fail to recognize that today’s debts are automatically tomorrow’s debts, as well. In other words, people want to be deceived.
Politicians are all too happy to adhere to this pattern of behavior, while at the same time mercilessly taking advantage of it. In his dissertation, Berlin economist Gerrit Köster found that, between 1964 and 2004, German finance ministers tended to plan tax cuts so that they would come into effect in election years.
Perhaps this also explains why the Social Democratic heads of government in the city-state of Bremen remain popular, despite the fact that Bremen, with a per capita debt of €27,000, is Germany’s most heavily indebted state. It is often precisely those municipalities that can least afford it that are the most lavish spenders.
Two Portable Toilets
Economist Adolph Wagner observed the phenomenon in the mid-19th century and used it to formulate his “law of expanding state activity.” Wagner contends that the state constantly seeks new activities without paying heed to whether the expansion is even necessary and, most of all, whether it will pay off. Expansion serves primarily one purpose: to justify a government’s existence. Many of the things for which cities, states and the federal government borrow money turn out to be pure waste.
From the €130,000 a year the northern city of Lübeck spent to rent two portable toilets to the €11,000 the western town of Büren paid for four alpenhorns so that local musicians could play music with guests from the Austrian sister town of Mittersill, each year Germany’s taxpayers’ association documents cases of how poorly government entities manage their funds — especially when the economy is doing well — and how little willingness there is to economize.
At least Bremen has now vowed to curb government spending. The state plans to reduce annual new borrowing from the current level of €1 billion to €120 million. It should be noted, however, that these figures apply to the gradual reduction of new borrowing, not the debt itself.
“Bremen can no longer extract itself from this debt spiral on its own,” says Bettina Sokol, the president of the state audit office. But how else is it to do so?
Part 5: Strategies for Reducing Debt
What can a country do to not only curb increasing debt, but also to reduce the size of its overall debt? There are many possibilities, and they are differentiated mainly by the magnitude of the sacrifices, and by who bears most of the burden.
The most brutal method is the debt haircut, which is reserved for hopeless cases like Greece. Creditors are forced to give up a large share of the funds they are owed. Banks and insurance companies and, ultimately, ordinary savers and the insured, whose portfolios and policies also contain Greek bonds, are the ones who suffer.
A government bankruptcy — which is precisely what a debt haircut amounts to — is by no means an unusual occurrence in economic history. France declared bankruptcy eight times between 1500 and 1800, while Spain could not meet its obligations seven times in the 19th century alone. “The progress of the enormous debts which at present oppress, and will in the long-run probably ruin all the great nations of Europe, has been pretty uniform,” Adam Smith, the Scottish philosopher, wrote in 1776.
In the early 19th century, as a consequence of wars and revolutions, Greece spent half of its time in insolvency or debt-restructuring. The euro-zone countries ought to have been forewarned when they accepted the Greeks into the currency union.
Greece experienced a particularly unusual bankruptcy in 1922, when then Finance Minister Petros Protopapadakis ordered that all banknotes be cut in half. The one half remained currency, but was worth only half as much as the original note, while citizens were required to exchange the other half for a government bond. A quite literal debt haircut.
From Flirtation to Marriage
A softer, almost elegant strategy to achieve debt relief is the path leading through inflation. Prices increase, as do incomes and taxes, while debts remain nominally the same, thereby losing value in relative terms. They are essentially eliminated by means of inflation, with citizens being partly expropriated in the process.
If an inflation rate of 4 to 6 percent were tolerated for several years in a row, as American economist Kenneth Rogoff argues, countries would be able to make significant strides in the direction of solving the debt problem. However, the rate of inflation cannot be controlled at will. As the saying goes, if you start flirting with inflation, you will have to marry it.
Most of all, the inflation solution is only effective for getting rid of old debt. For each new euro a country borrows, creditors will demand higher interest in return, which ultimately increases the debt level even further.
Which leaves the two conventional methods of debt reduction.
First, the government can increase its revenues by simply raising taxes. The financial basis for such an emergency move certainly exists: Germans possess total net monetary assets of about €3 trillion, as well as real estate assets worth about €5 trillion. But the most likely candidate is the inheritance tax. Despite the estimated €300 billion in assets that are transferred to heirs each year, in 2010 Germany collected only €4.4 billion in inheritance tax. Even the electricity tax generates more revenue, at €6.2 billion.
The second option is for the government to reduce spending by limiting goods and services. The government will in fact be forced to take this cost-cutting approach because new debt ceiling limits will soon apply. Under these rules, the federal government’s new borrowing is limited to 0.35 percent of GDP, which is currently about €9 billion. The instrument inspires hope that the trend to incur more and more new debt can finally be stopped. It is “the only correct approach,” says entrepreneur Goebel.
Far More Difficult to Generate Growth
But there are also exceptions to the law. The government can loosen the debt brake during economic downturns, as well as in the case of natural disasters. What is also missing is a clause stipulating that surpluses in good years be used to pay off old debts — and not for tax cuts.
But a consolidation of finances is certainly possible, as Italy, Spain and Belgium demonstrated in the late 1990s. These countries managed to substantially reduce their debt levels. Spain, for example, trimmed its debt from 67 to 36 percent of the country’s economic output within 10 years. Of course, this sort of turnaround was also made possible by the fact that Spain’s economy proved to be so dynamic at the time.
Growth is undoubtedly the best way to get out of the debt trap. After World War II, the American economy grew at a faster rate than the national debt. As a result, the debt ratio was automatically reduced.
Nowadays, however, an aging and shrinking population makes it far more difficult to increase economic output. This means that slow-growing countries like Japan or Germany can hardly serve as the reliable borrowers of tomorrow. Rising economies like China, India, Indonesia, the Philippines or Vietnam offer more security. Ironically, for the rating agencies, it is the shaky candidates of the past that could very well be the most reliable economies of the future.
In the West, on the other hand, it is now the state that must increasingly assume the role of growth engine. To do so, it borrows money and tries to reduce government debt with the additional value added. Kurt Biedenkopf (CDU), the former governor of the eastern German state of Saxony, describes this as a fatal process in which the government takes on new debt to finance growth in order to pay off old debt.
The Power of the Purse
Biedenkopf recently proposed a concept with which he argues the debt burden could be paid off within a generation. Under the concept, all liabilities would be transferred to a foundation, dubbed the “German Financial Agency,” to which a portion of tax revenue would be allocated in order to slowly reduce the debt, thereby bypassing the parliament. But it is questionable whether the members of that parliament would readily agree to be deprived of the power of the purse.
A plan unveiled by the German Council of Economic Experts in November seems more realistic. The council proposes establishing a fund that would assume all the debts of euro member states that exceed the Maastricht ceiling of 60 percent of economic output. Under this plan, the total debt of about €2.5 trillion would be paid off within 20 to 25 years, partly through tax surcharges.
Whatever approach the Western world uses to combat its debt crisis — be it austerity measures, taxes, inflation or, what is most likely, a mixture of the three — solving this problem will shape the lives and work activities of a generation.
“If history is a model, we can expect to see many years of debt repayment,” the McKinsey management consulting firm predicts in a study. In other words, the debt avalanche is inevitable, and the only question is whether countries can protect themselves in time.
It is not as much a question of putting a stop to speculators or penalizing rating agencies. Such skirmishes are merely a distraction from the responsibility that politicians bear when they constantly incur new debt to service old debt. But it is also the responsibility that voters bear for rewarding such behavior, and that the banks bear for being so consistently dependent on the government to bail them out whenever they gamble away their money.
Secretly, they all know that a Ponzi scheme has never turned out well.
Alexander Jung – Spiegel
Posted in Banks, Corruption, Crime, Criminals, Cronyism, Debt, Deficit Spending, Deficits, Economic Crisis, Economy, EU, Euro, Europe, European Union, Financial System, Fraud, Government, Leverage, Liars, Lies, Money, politicans, Politics, Ponzi | 
Comments Closed
MF Global: The SERIOUS Issues Reach Mainstream Media
As I opined rather quickly when MF Global collapsed, the real risk is not that a futures merchant went under. Brokerages go under all the time — I went through two “consolidations” after 2000 and in both cases my assets and trading accounts were simply moved over to a new entity. How “forced” those were is open to some question, but from my perspective I went to bed one day with an account at “X” and woke up with one at “Y”. Nothing disappeared.
The problem occurs when you wake up and assets have disappeared. This has become a disturbingly-common pattern of late, from Bernie Madoff to Stanford and now MF. As Reuters reports:
(Business Law Currents) A legal loophole in international brokerage regulations means that few, if any, clients of MF Global are likely to get their money back. Although details of the drama are still unfolding, it appears that MF Global and some of its Wall Street counterparts have been actively and aggressively circumventing U.S. securities rules at the expense (quite literally) of their clients.
MF Global’s bankruptcy revelations concerning missing client money suggest that funds were not inadvertently misplaced or gobbled up in MF’s dying hours, but were instead appropriated as part of a mass Wall St manipulation of brokerage rules that allowed for the wholesale acquisition and sale of client funds through re-hypothecation. A loophole appears to have allowed MF Global, and many others, to use its own clients’ funds to finance an enormous $6.2 billion Eurozone repo bet.
Yep.
What most people don’t understand is that when you open a brokerage account you allow your assets to be used to ”borrow, pledge, repledge, transfer, hypothecate, rehypothecate,loan, or invest any of the Collateral”
Absolutely standard boilerplate language.
But here’s the problem — this is “in accordance with Applicable law.”
This use, incidentally, is why brokers scream that trades are “just $5!”
Well, yes. But your money is being used by the brokerage, more or less, as collateral.
But there’s a difference between earning on your funds and securities (which brokerages do all the time) and stealing your assets. The latter occurs when the law is circumvented — whether legal or not.
And it appears that it was — UK laws appear to contain no limits on the amount of hypothecation or re-hypothecation that can take place. MF Global thus appears to have transferred client assets outside of US jurisdiction where they were then subject to much looser — effectively zero — in the way of risk controls!
But the underlying means by which this escaped surveillance is the same means by which both Lehman and Enron blew up — the use of off-balance-sheet vehicles to hide total risk exposure.
Specifically, these “repo to maturity” deals which our current law permits to be booked as “purchase and sale” agreements, thus realizing the expected coupon flows as “profit.”
The flaw in this reasoning is that a “true sale” must be just that — it must leave you with no obligation beyond the execution. But that’s not true here — if the collateral declines in value either in the interim or at maturity the entity can be forced to make up that shortfall either through posting more margin or through an offsetting settling charge.
As such allowing this to be taken off the balance sheet is an outrage, as there is a continuing obligation and risk of loss that goes beyond the date when the agreement is consummated. That is, it’s not a “true sale” despite being able to be counted as one under existing law.
The myth that is operative here is that lending to sovereigns is “zero risk” and thus the face value of a sovereign bond is the value at maturity. This fiction leads to the accounting treatment. But this is a factual lie — not only now, but always, because lending to a sovereign is nearly always, as a matter of both fact and law, unsecured.
As such there is nothing other than a bare promise standing behind these loans – and governments break promises all the time.
If you remember some of my earliest rants from 2007 they focused on the off-balance-sheet games that were being played at the time. I called them nuclear financial weapons of mass destruction because they are — such vehicles are always a scam in some form, as the only reason to use them is to hide from customers, regulators and the common public the amount of risk you have on.
That is, they have as their essential purpose in each and every case the intentional hiding of the amount of leverage that the entity involved has taken on, and thus it serves to intentionally overstate the amount of loss that entity can absorb before it is rendered bankrupt.
In short, in each and every case the intent is to deceive and thus induce other parties to enter into transactions at terms they would not be willing to transact under were they to know the truth.
THEY ARE THUS INHERENTLY FRAUDULENT CONSTRUCTS IN EACH AND EVERY CASE AND IF WE HAD AN ACTUAL JUSTICE SYSTEM IN THIS COUNTRY EACH AND EVERY INSTANCE OF THESE CONSTRUCTS WOULD BE TREATED AS A SERIOUS FELONY RESULTING IN ARREST, INDICTMENT, PROSECUTION AND IMPRISONMENT.
We learned this when ENRON blew up with their infamous “barge” transactions and then once again in 2008. Yet despite these two stunning examples and absolute proof that the essence of these transactions is the intentional hiding of risk and deception of clients and counterparties we have refused to prosecute these “instruments” as unconditionally unlawful acts despite the fact that their essential purpose is in every case the deception of others.
And now we have farmers and others who did the right thing — who engaged in ordinary financial practices that have existed for centuries and which should have involved no execution risk of materiality at all – who once again got robbed through the intentional hiding of risk and this intentional deception.
The damage is to systemic liquidity and confidence. The games are still being played this morning over in Europe in a furious attempt to “restore confidence” but in point of fact the underlying scam lies here — and until it is addressed and stopped there will be no resolution or stability.
The Agriculture Committee this morning is once again playing “dog and pony show” while Eric PlaceHolder refuses to indict and Obama says that “nobody did anything unlawful.” This is a blatant and outrageous lie by all parties in the government — off-balance sheet acts are in each and every case an act undertaken with fraudulent intent as their entire purpose is to conceal the risk and size of a given transaction.
And finally, let me reiterate what I’ve said since this story broke: So long as there are off-balance-sheet liabilities and derivative contracts have preference over deposits — both of which are true in the present time — this very same risk is present for anyone with a BANK OR INVESTMENT ACCOUNT OF ANY TYPE in The United States. If you believe otherwise you are wrong.
Posted in Banks, Corruption, Crime, Criminals, Debt, Economic Crisis, Economy, Financial System, Fraud, Leverage, Liars, Lies, MF Global, Money |
Comments Closed
Mark-To-Lie As A Business Model = FAIL
There is probably nobody in the political/government scene that I detest more than Ben Bernanke. But this does not mean that politicians showing the mental acuity of a 2-year old should feel free to take false shots at his policy actions and those of The Fed generally.
Yet they have.
Bernie Sanders, for example, has been screaming about “$16 trillion in secret loans” for a while. He can probably technically defend his claim, but to do so he has to perform some rather interesting mathematical gymnastics. For example, if I loan you $100, and the next day you pay me back and then borrow it again, doing this 10 times, how much did I loan you? A reasonable man would say that $100 was lent repeatedly. A media whore looking for headlines would say it was $1,000. The latter is Bernie.
Nor is he alone. Alan Grayson, who started out a very reasonable politician and then went off into the weeds with hard-left socialism (which he couldn’t pay for) has made the same sort of charge and sadly, Yves over at Naked Capitalism has given him ink:
Page 131 – The total lending for the Fed’s “broad-based emergency programs” was $16,115,000,000,000. That’s right, over $16 trillion. The four largest recipients, Citigroup, Morgan Stanley, Merrill Lynch and Bank of America, received over a trillion dollars each. The 5th largest recipient was Barclays PLC. The 8th was the Royal Bank of Scotland Group, PLC. The 9th was Deutsche Bank AG. The 10th was UBS AG. These four institutions each got between a quarter of a trillion and a trillion dollars. None of them is an American bank.
Again, if I borrow the same $100 over and over again….
Alan, you ignorant ass (or mendacious bastard — pick one.)
It continues, of course, but once you find the first intentional (or ignorant) distortion you no longer need to keep looking.
Bernanke, for his part, appears to be rather annoyed and has written a rebuttal aimed at Congress’ Financial Services Committee. He’s right in many areas, but in being right he intentionally glosses over where the real devil-style acts are and have been within The Fed.
Let’s pick on a couple of things:
“The article also fail to note that the lending directly helped support American businesses by providing emergency fuding so they could meet weekly payrolls and on-going expenses. The commercial paper funding facility, for example, provided support to businesses as diverse as Harley-Davidson and National Rural Utilities, when the usual market mechanism for their day-to-day funding completely dried up.“
Notice what’s missing here: Any exposition or explanation on exactly why a firm like Harley-Davidson needs to borrow money to make payroll.
Perhaps most of America (and most of Congress) has never run a business. I have — since I was much younger, both as either a near single-person show, one with a couple of employees, and then one with a bunch. You never, ever borrow to make payroll – if you actually have to do that you’re on the brink of bankruptcy and only through pure luck do you avoid it.
Bloomberg printed their own rebuttal to Bernanke’s screed and within the scope of their original article and the rebuttal spot-on correct. The problem is that they, like Ben, intentionally and studiously avoid the actual issues, save one: The “lender of last resort” function which is a proper central bank function, is supposed to always be at a penalty and yet it is flatly impossible to argue that a 0.01% interest rate is at a “penalty” to a market that is demanding much higher interest rates (or refusing to lend at all) because it believes the entities seeking to borrow are lying.
That, at its core, is the problem, and that is a problem The Fed has been facilitating for a very long time — and is facilitating today.
The real scandal in the 2008 crisis, which has not been stopped, is the fact that there was then and still is now an unknown number of financial institutions that are factually bankrupt and hiding it.
One example will make this clear — Colonial Bank, which blew up.
The bank’s last-filed 10Q, dated March 31st 2009, showed $14.1 billion in alleged “assets” (loans held for sale and investment) with $450 million in loss reserves (expected losses), or about 3% of expected loss. That’s not great, but it’s also not catastrophic.
Here’s the problem – In August, five months later, the bank detonated and was closed. BB&T “acquired” the bank. Their internal “deal book” which was published showed a nearly-identical $14.3 billion in loan assets but $5 billion – not $450 million – in expected losses.
In other words when BB&T came in they found eleven times the losses claimed by Colonial’s 10Q just five months earlier. Put another way 35% of the bank’s “assets” were worthless.
This is the underlying scam that nobody’s talking about: The carrying of alleged “assets” on balance sheets at entirely-unrealistic valuations, which is why credit locked up in 2008 and why it always threatens to do so — the person who you wish to borrow from doesn’t believe he’ll get paid, and the so-called “collateral” you intend to post is worthless.
Everyone talks about “market confidence” but in point of fact there are two sorts of “confidence” — the confidence that the market will remain “orderly” and thus you’ll get paid (in which case the so-called collateral is a formality and nobody really cares if its used dogfood) and the confidence that the claimed asset values you post via that collateral actually has the value claimed so the loan you’re taking out is really secured.
Why am I banging on this drum? Because it’s still going on.
There is no way you are ever going to get me to believe that Colonial lost 35% of its asset value in five months’ time post the collapse itself — if you remember, “mark to lie” became legal post Kanjorski’s hearing and thinly-veiled threat to FASB, which folded like a cheap suit.
Indeed it was that hearing that effectively “made legal” what Colonial and every other firm was doing and must be presumed to still be doing, as even a cursory examination discloses that these same sorts of games are almost-certainly still occurring to this day.
Earlier this year CreditSights claimed that US banks have $147 billion in outstanding home equity lines behind underwater firsts — that is, entirely unsecured borrowing as a HELOC gets zero recovery should an underwater first default. Bank of America has some $47 billion, JP Morgan $41 billion, Wells $39 billion and so on.
Note that Wells’ latest 10Q shows $88 billion in total second-line exposure – in other words according to CreditSights 44% of that total is impaired and in a default is worth zero. Yet Wells claims just $893 million in reserves against this portion of their portfolio – or 1/43rd of the unsecured and thus, if the first defaults, worthless loan balance.
That is ridiculously inadequate and yet this is today — not 2005, 2006, 2007 or 2008. It is going on right here, right now, in the present tense.
Wells is not alone — they’re just easy to analyze as their 10Q isn’t cluttered with a hundred different subsidiaries and similar things that make analysis difficult. You can look at any of the big banks and you will see the same sort of game being played — and it’s entirely legal under current US law.
This is why the market locked up in 2008 and the problem has not been fixed. Until it is there is no actual solution and any demand for actual good collateral that arises will result in an immediate resumption of the credit lockup of 2008 and a “new” financial crisis.
If you want to know why the banks and government are so desperate to try to stop the inexorable decline of home prices, this is the reason. But there’s no way to fix this problem in the main other than through defaults as the loans that were made had no foundation in the actual ability to pay. Defaults, however, expose the truth of these balance sheets — the loans in question are worthless behind an underwater first and that $39 billion is more than a quarter of Wells’ equity value in home equity lines alone!
Note that we’ve not dug into the commercial real estate lending, which is a problem as well — all the strip malls and other commercial property that was built out during the bubble and yet has no realistic lease-out prospect at anything that comes close to amortizing construction and operating costs. Some are managing to roll due to ridiculously suppressed interest rates but that will and must eventually end, and when it does the fact that these loans are deeply impaired will float to the surface and start stinking up the financial system as the dead fish that they are.
The Fed claims that it lent only to “sound” financial institutions that were “solvent.” On any sort of objective analysis this must be declared a bald lie — only through the making of utterly fanciful marks could such a claim be sustained and that was the entire point of the spring 2009 hearing — bludgeoning FASB with the full force of Congressional threat.
But making the telling of lies legal does not change the fact that they’re lies; all it does is prevent you from being thrown in the slammer for telling them. As we saw with Colonial the fact is that the claimed “asset values” were fantasies and just a few short months later that fantasy detonated. The truth – a monstrous loss for the FDIC and BB&T’s examination and publication of their “deal book” for the acquisition — then became apparent and what I and a few others had been saying for more than two years at that time was vindicated as factually correct.
The problem is that this same dynamic and set of facts must be assumed to be in place at all of the existing large financial institutions and it is an utter impossibility for the FDIC to cover 35% losses against the balance sheet of even one large financial institution, say much less all of them in a cascade failure.
The politicians on both sides of the aisle are demagoguing Bernanke and The Fed — on one side we have those claiming that Ben loaned out wild multiples of what was actually outstanding at any point in time (a lie) and on the other we have people claiming (including Bernanke himself) that Ben loaned only to sound institutions and that doing so “prevented a Depression” but that is a lie as well as there is absolutely no reason to believe that the claimed “asset values” on these balance sheets in any way reflects reality. The so-called “aversion” of a Depression and chain-reaction collapse is due to nothing more than backstopping liars — a temporary condition that amounts to doubling down every time you lose at the Blackjack table in the hope that you’ll get good cards before you run out of money.
Unfortunately the housing market shows no signs of actually bottoming — and it won’t until we get back to much lower prices, perhaps as low as 1x annual incomes on an average basis. The collapse of the tax base on a municipal and state basis along with the lies on these balance sheets will eventually be exposed. We have built a debt pyramid that requires ever-increasing amounts of debt to keep the balls in the air but the ability to service more new debt has been exhausted.
This is not supposition — it is a fact that cannot be argued against as we reached the point in 2007 where more than $6 in new debt was being put into the economy for every $1 of “growth”; returning to this state of affairs is mathematically impossible and attempting to evade the inevitable consequences futile.
For four and a half years I have pointed this out and have called for the truth to be exposed and the results accepted. Our government had to shrink by some 20% in 2007 in order to accomplish this, along with dealing with the resolution of the large financial institutions in the United States. Instead of doing so we have “doubled down” on deficit spending and lies on balance sheets, and people like Bernanke and Paulson have repeatedly claimed that their actions have “avoided” a Depression. Today, four years into the lie parade, we have now managed to pile up a need to shrink the size of government by half to restore balance and that required shrinkage grows each and every day that we refuse to accept that which must occur.
Unfortunately for those who argue otherwise there have been repeated examples in actual realized bank failures that have validated my position — that these balance sheets are lies and that the firms involved are all deeply underwater, remaining operational only through intentional and willful aversion of lawfully-required regulatory oversight.
I’m no fan of Bernanke and in fact have plenty of ugly things to say about him in this regard, but we do nobody any good in attacking him on a false premise. Go after him on the actual sins he has committed and the intentional and willful lies of regulators and executives — there’s plenty of “red meat” there and on that foundation you will find solid support in both history and fact.
Posted in Accounting Tricks, Banks, Ben Bernanke, Corruption, Debt, Economic Crisis, Economy, Federal Reserve, Financial System, Fraud, Government, Liars, Lies, Mark To Market, Money |
Comments Closed
How The Banks, President And Congress Steal From You
Read carefully folks, as you’re about to get an economics lesson…..
Nonfarm business sector labor productivity increased at a 2.3 percent annual rate during the third quarter of 2011, the U.S. Bureau of Labor Statistics reported today, with output and hours worked rising 3.2 percent and 0.8 percent, respectively. (All quarterly percent changes in this release are seasonally adjusted annual rates.) From the third quarter of 2010 to the third quarter of 2011, output increased 2.4 percent as hours rose 1.4 percent, resulting in a 0.9 percent increase in productivity. (See tables A and 2.) Labor productivity, or output per hour, is calculated by dividing an index of real output by an index of hours worked of all persons, including employees, proprietors, and unpaid family workers.
The productivity measures released today are based on more recent and more complete data than were available for the preliminary report issued November 3. (See Revised measures.)
Unit labor costs in nonfarm businesses fell 2.5 percent in the third quarter of 2011, reflecting the 2.3 percent increase in output per hour combined with a 0.2 percent decline in hourly compensation. Unit labor costs rose 0.4 percent over the last four quarters. (See tables A and 2.) BLS defines unit labor costs as the ratio of hourly compensation to labor productivity; increases in hourly compensation tend to increase unit labor costs and increases in output per hour tend to reduce them.
This is deflation in the economic sense. That is, you produce much more with your labor and are paid slightly less — on balance you receive more per unit of labor output.
In this case you produced on a wage-hour adjusted basis, 2.3% more (annualized) than you used to. Note very carefully that this output improvement per-unit-of-labor-cost comes as a consequence of your efforts, and thus it belongs to you.
What this means to you, the common man, is that you should be seeing an approximately 2.3% deflation in prices overall. That is, the CPI, to be neutral on an economic balance basis, should be reflecting a 2.3% decrease in the cost of everything bought, because everything bought has to be made, and thus labor always is the source of economic output.
Well, how’s that been working out for you folks?
If you want to know why you have continually seen your standard of living destroyed over the last 30 years, here’s your answer in bright white-hot lights. Your productivity increase has been stolen by the banks and governments of the world — it is taken from you by compounded inflation!
Let’s assume a 2% productivity increase per year over 30 years. Let’s also assume a 2% inflation rate over 30 years. This is what it looks like, starting with a baseline of “10,000″:
Your cost of living has gone up by 78% in notional dollar terms but it should have gone down by 44%!
The spread between those two lines was literally stolen by the banks and government acting intentionally as a group. They defrauded you, stealing your economic output and improvement in productivity, using it to hide the impossibility of continual deficit spending. Summed, the line is flat — but it should not be; that improvement in standard of living belongs to you, not them.
This morning Obama’s lap-dog spewing spokesperson was on CNBC telling us that we must have higher taxes on “rich people.” This is just another sop to attempt to extend the ponzi scheme a bit further in an attempt to deflect attention from the above chart — the truth of how your wealth has been serially and intentionally stolen by taking from you that which is rightly yours — the natural mild deflation that comes from improvements that you generate through increased labor productivity.
That which you generate through your labor is your property and it has been stolen from you.
You’re being screwed by the politicians and banksters through an active and intentional series of confiscations of your labor engendered through manipulation of the nation’s currency, enabling trade, tax and government spending policies that cannot work in the long term. Over the last 30 years you should have seen your purchasing power increase by nearly 100%. Instead your purchasing power has been robbed from you through intentional inflationary policies, depriving you of the fruits of that productivity improvement.
Wake up America.
Posted in Banks, Corruption, CPI, Crime, Criminals, Debt, Economic Crisis, Economy, Federal Reserve, Financial System, Fraud, Government, Liars, Lies, Money, Price Inflation, Theft |
Comments Closed
The Great Swindle (From Both Right and Left)
Comes now this morning into my email notification that The Daily Bell has not only ripped off my commentary and opined upon it (legitimate) they further attributed it to CNBC (not kosher folks.)
But let’s examine their opinion a bit, shall we?
Dominant Social Theme: By expanding the regulatory state, we can make things better.
Free-Market Analysis: One of the main emergent US dominant social themes is that the government and regulators must step in to clean up the market and make it safe for investors. The idea is that the larger modern marketplace is very necessary for the functioning of modern society and that one must “clean up fraud” so that people will “trust” the market again.
This meme is being enunciated aggressively all over the place lately, and we have done our best to point it out. It is based on a misapprehension and is placing good people into rhetorical boxes where they decry modern finance but turn to the US’s penitentiary-industrial complex for solutions. Here’s more from the article excerpted above:
Uh, no.
Expand the regulatory state? How about we actually enforce the laws that already exist? And for those that are not laws but written as laws, how about if we either turn them into actual laws (instead of lying about what they are) or repeal them so that nobody thinks they’re a law when they are not?
It is against the law, for example, to swindle people. It’s a crime. And as I pointed out here, the Right side of the aisle, including the Tea Party, refuses to address the fact that our nation’s largest financial institutions are serial violators of the law to the point that nearly all would have committed their “third strike” and be disbanded (the equivalent to life imprisonment) by now.
There is no shortage of laws under which to actually prosecute.
The Daily Bell goes on to sling around the common mud of “fiat funny money” and allege that but for The Fed there would be no problem at all. This, however, is a lie, for two simple reasons:
- The Fed is already constrained in what it can do — it has a mandate for stable prices (that is, zero inflation) that it has serially and repeatedly violated for its entire 100 year history, even prior to the implementation of the so-called “dual mandate”, and yet there has been no enforcement. Why not? There is no punishment called out in that law, just as there is no punishment called out in the former enabling law for the OTS and thus “backdating” deposits by IndyMac bank didn’t lead to a criminal indictment against either IndyMac or the so-called “regulator” who did it. A “law” or “regulation” without a punishment for violations is no law or regulation at all — it is a mere suggestion. As such these so-called “laws” are nothing more than sops for the fools at places like The Daily Bell who love to point to all these “laws” and then claim that “more regulation” is futile. That would be true if those were actual ineffectual laws but due to the lack of a punishment clause they stand as nothing more than blank pieces of paper.
- The proffered solution, free market currencies, is just another sop to idiocy. Government will always denominate its current taxes due in something. Whatever that something is will be the defacto currency of the nation and will be the majority — by far — currency that is used for transactions. The “why” is simple: Nobody in their right mind wants to wake up some morning and find that their currency du jour has been devalued by some sort of debauchery and their taxes due but not yet paid have suddenly doubled or more, instantly bankrupting them. The simplest and “zero cost” way to hedge against such an event is to transact in the currency you pay your taxes in. Sorry folks, but logic resolves this conflict and it doesn’t go where the Paulites would like; you must employ magical thinking to get to their claimed nirvana.
Indeed, the problem with the “free market” currency solution is that if you do not resolve the actual problem — the lack of The Rule of Law (that is, #1) so-called “free market” people will intentionally create the situation in #2 and get away with it!
That, incidentally, is the history of monetary systems going all the way back to the American Revolution and beyond. Indeed if you look at historical inflation rates prior to The Fed you will find ridiculous changes in the valuation of the currency over very short periods of time. 10, 20, even 30% swings in valuation were common. If you happen to believe that the fact that over the long haul the “more or less stable value” was preferable to what we have today you’re cherry-picking your timeline — get it wrong by a year or so and you’d either have made a bundle or been bankrupted.
Unfortunately life doesn’t work this way; you fall in love, you get sick, you get well, you find a job, you lose a job, your roof leaks, you get hit by a bus and you die all on a very unpredictable timeline. But those who pull the strings through government are more than happy to use your series of unfortunate events to screw you blind and steal everything you have — and absent The Rule of Law, they will.
Our latest little corruption was sent to me here, from the Fed weekly balance sheet:
Where did that $45 billion go? Oh, in the nice catch-all bucket called “Other”, right? What’s in “Other”?
Let’s see…. the GSEs are in there (Fannie/Freddie), the IMF is in there, the UN is in there, a lot of things are in there. So which “other” was this and why wasn’t it identified with specificity? Oh that’s simple: There is no rule of law when it comes to Fed operations as there is no “or else” to be found anywhere in the Federal Reserve Act of 1913, as amended.
Thus The Fed could “decide” that Fannie and Freddie paper was “ok” to buy, even though the black letter of the law says otherwise. They could point to their own “interpretation” and since there was no “or else”, if they interpreted wrong, even intentionally wrong, there was no cost to them personally that could be imposed. Ditto for “Maiden Lane” and their other machinations.
In this case it appears they bailed out someone yet didn’t tell us who it was. Gee, with all the turmoil in the markets you can’t find someone who needed to be bailed out, can you? 
Those who argue for “End The Fed” have yet to reconcile the fundamental nature of the problem: It is not The Fed that is the issue, it is the presence of so-called “laws” with no penalty for non-compliance that is where the problem resides.
In point of fact The Fed’s actual mandate for stable prices is exactly correct. Followed to the letter we have no debasement of the currency over time, no inflation, and you can save a mere 7% of your income — if your Social Security taxes were then to be merely returned to you in retirement along with that 7% you would have an effective 20% saving rate for retirement and would need exactly nothing beyond that for a reasonable retirement lifestyle similar to that of your working years! If you saved nothing you would still have a 13% saving rate and we would meet the mandate of the “social safety net” allegedly to be provided.
If the “law” had actually been followed there would have been no ramp in credit compared to GDP because it could not have been funded. There would have been no Internet bubble, no Housing bubble and no crash. House prices never would have gone materially over 2x incomes and likely would be between 1x and 2x. Medical and college costs would be what they were then. Wages would have risen with productivity but not beyond, and you would have kept that standard of living increase instead of having it stolen by the vipers of Wall Street and the Capitol. Jobs would not have been offshored and there would have been no incentive to hire illegal aliens and displace American workers.
So why didn’t it happen this way? That’s easy: There is no “or else” in these so-called “laws.”
Ending The Fed will do exactly nothing without fixing this problem. Competing currencies will do nothing without fixing this problem. In point of fact essentially every current economic issue we face is found, at some point, in this singular premise.
Those who continue to beat on the “End The Fed”, “Competing Currencies” and other similar-sounding drums are either missing the mark because they fail to analyze the problem or worse, they’re shilling for those who are looking for yet another way to rob you blind when the current scam, which is about to collapse, comes down around their ears.
Don’t fall for it.
Posted in Banks, Corruption, Debt, Democrats, Economic Crisis, Economy, Financial System, Government, Law Enforcement, Lawlessness, laws, Liars, Lies, Money, Partisanship, Republicans |
Comments Closed
GDP: Oops, We Lied!
Wow, now we have “more complete” data…. and of course the revisions always go the same way…
The “second” estimate of the third-quarter increase in real GDP is 0.5 percentage point, or $15.0 billion, lower than the advance estimate issued last month, primarily reflecting downward revisions to private inventory investment, to nonresidential fixed investment, and to personal consumption expenditures that were partly offset by a downward revision to imports.
In other words we were entirely too optimistic in pretty much all the things that mattered.
This should not surprise, of course….. just like we see the same pattern with the jobless claims every week that are virtually always “revised up” later on, making the current week report look better.
Posted in Economic Crisis, Economy, Financial System, Fraud, GDP, Government, Gross Domestic Product, Liars, Lies |
Comments Closed
proudly supports:
Bill Still For President
for Congress
Michigan 11th District
By Bill Still
There is only one answer for the world economic situation; monetary reform.
1. No More National Debt
2. No More Fractional Lending
PDF PowerPoint Congressional Patriots Federal Reserve Balance Sheet Paulson's Lies Bernanke's Lies FedUpUSA Archive Mathematics of Failure Media Kit Door Hanger Corruption Flier Bank Flier Made In America A list of products and services made right here in the USA. Choosing to buy American made products preserves and creates American jobs.