FedUpUSA

Archive for the ‘Lies’ Category

The stupid, it burns!

Sadly, Congress and the White House seem incapable of agreeing on substantive measures to tackle the $10.4 trillion mountain of U.S. debt.

But there is one long-overdue piece of important business that can and should get done: The adoption of a more accurate gauge of U.S. inflation that would yield immediate savings and help put the economy on firmer ground. The fix has already been endorsed by lawmakers in both parties, the Obama administration, many economists and a series of bipartisan deficit-reduction panels. Best of all, it would help shore up Social Security. Trustees for the retirement fund on April 23 projected it would run dry in 2033, three years earlier than last year’s forecast.

It has been widely recognized for almost two decades that the current measure, the consumer price index, contains several biases that cause it to overstate inflation anywhere from 0.3 percentage point to 0.8 percentage point, depending on which expert you talk to. The miscalculation has damaging consequences for the U.S. economy. The CPI is the benchmark that determines cost-of-living adjustments for a wide range of government programs, including Social Security and federal employee pensions. It also is used to peg income-tax brackets, exemptions, deductions and credits.

What Bloomberg is talking about is the use of so-called “chained” CPI.

What could possibly be wrong with this little word — “chained”?

If you’ve read Leverage you know that one of the big scams is that the so-called “CPI” (consumer price index), which is what the government calls “inflation”, is intentionally misleading.

Among the intentional distortions are the use of “owners equivalent rent” instead of house prices; the rent for a given piece of property goes down during repressed interest rates, while housing bubbles are encouraged.  That is, it costs less to purchase for investment on a cash-flow basis during such a time, which tends to make prices go up — but rents go down, since cash flow is how rents are balanced in the marketplace.  And housing is the largest single expense for most households.

In addition the percentage computations for CPI are set for a “median” household.  This grossly understates the impact of rising food and energy prices for those who have a less-than-median income, and overstates them for wealthy households.  For example, electricity is allegedly 2.894% (about 3%) of your budget.  It’s less than that for me, and I live in Florida where AC use is rampant.  But for someone who has a $200/month power bill here and a $50,000 gross income, netting around $40,000, their power bill is some 6% of their net income, not 3%.

Food at home is allegedly 8.6% of spending.  For my household it’s considerably less than that.  For a family of four who only makes $25,000 a year I challenge you to feed them for under $200/month.

Then there’s “hedonic adjustment”, which is part and parcel of “chained CPI.”  Some of this is already in the CPI; you can no longer buy a tube television, for example, but the LCD display is some 40% “better” according to the BLS — so the fact that it’s 40% more expensive is not counted as “inflation.”  Of course if your old TV breaks from your perspective you either pay 40% more or have no television at all.

Chained CPI is the extension of this distortion to all changes in purchasing habits that result from price changes and personal economic circumstance, removing that influence.  So as meat becomes too expensive for seniors and they “trade down” to dogfood, chained CPI would eliminate the price increase in meat from the computation by shifting the weighting to dogfood as behavior changes.

This is “hedonic adjustment” on steroids, and effectively allows the government to screw anyone who is impacted by actual price changes by counting their behavior change as a mitigating factor.

The gall of such a proposal is extraordinary — but not surprising given recent history.  It also belies the desperation of the government; the fact of the matter is that monetary inflation and personal income looks like this:

What’s worse is that this income “growth” includes purely financial credit (e.g. credit default swap margin) that doesn’t directly enter the chain of commerce.  If we remove that and re-base to account for income growth net of monetary inflation less financial credit we get this:

If you want to know why the government is so desperate to “rebase” CPI, it’s found in that chart.  Put simply since 2000 you have been serially raped as a consumer in terms of actual spending power.  The common chestnut is that “rising asset prices are good”, yet someone has to appear with money for you to sell to in order to realize that gain; until you sell the alleged “gain” is in fact fictitious as you can’t spend a paper gain, only a realized one.

When government gets to the point that it starts counting dogfood as equivalent to steak in its statistical reports you know the end of the line — the brick wall that we’re hurtling toward — has come within full view, and the closing rate toward that wall is very apparent.

Wait, I thought Germany’s Bundesbank denied this claim?

The Austrian Central Bank will join Germany’s Bundesbank in rejecting as collateral bank bonds guaranteed by member states receiving aid from the European Union and the International Monetary Fund.

“We will do that as well,” Christian Gutlederer, a spokesman for the Vienna-based institution, said by phone today.“We are talking about minimal amounts. It will have very little impact on overall collateral.”

The Bundesbank was the first of the region’s central banks to make use of a change in European Central Bank collateral rules announced on March 23. The ECB no longer obliges members to accept bank bonds guaranteed by governments “whose credit assessment does not comply with the benchmark for establishing its minimum requirement for high credit standards.”

But we were told that Germany was not suspending acceptance…… I guess that was a lie eh?

Looks like it.

Then of course there’s this little ditty….

Prime Minister Mariano Rajoy said Spain’s situation is one of “extreme difficulty”and signaled that his budget cuts are less painful than a bailout would be, as demand for the nation’s debt slumped at an auction.

Wait….. Greece was contained we were told.

That’s a lie too?

Of course it is.  You knew it was.  And it still is.

The biggest lie of all is that The United States can continue to spend its way to prosperity with borrowed money, that The Fed can continue to provide the “free money” that the federal government then consumes with its handouts and economic distortions, and this will continue on forever and Unicorns will crap out pretty colored candies.

Uh huh.

The truth is that eventually bankers, including central bankers, get tired of being people’s patsies and getting paid back with devalued money.  They then say “no mas” and that’s the end of the game.

The Feral Government in the United States has had more than four years to do something about the outrageous excesses of the “ought nots” and in fact did nothing other than giving the pigs at the trough more and more promises to pay that could not be, and will not be, repaid.

This was done to continue to pretend that pensions were solvent, that retirements were secure, that Medicare and Medicaid could continue to be provided and that the economy would “eventually” expand once again and make all of this outrageous deficit spending “money good.”

The entire thing was a scam from 2008 onward.

I warned McCain’s campaign in early 2008.  In the middle of 2008 I similarly warned Obama’s campaign as well.  Obama made noises early on like he understood, but then turned around and blew Jamie Dimon and Lloyd Blankfein under their respective desks, refused to enforce the rule of law, refused to act to force the leverage out of the system and in fact sat back and chuckled while Kanjorski essentially extorted FASB to make legal bank accounting fraud.

We don’t even have a third party, such as the Libertarians, that will stand up and in a loud, united voice demand a cessation of the frauds.  In fact, their presumptive nominee has said in a debate, on video, that “nobody committed any crimes” and yet we not only have state chapters endorsing him the Florida Chair has done so as well.

Not even the so-called “Party of Principle” will take a stand for what’s right and refuse to endorse candidates and support them unless they stop performing obscene acts on the banksters who are robbing everyone in America whether it be from hinky derivative deals, perjury, bogus MBS transactions stuffed full of lies or God-knows-what-else.  Jefferson County Alabama anyone?

Maybe I was wrong to get involved with the Libertarians.  Maybe I’m just wasting my time while they play circle-jerk and patty-cake with the very same banksters (and perhaps that is because they’d like some hinky loans too!)  Maybe this is nothing other than a time and money sink for me when I could be doing something useful, like (for instance) jacking off.  At least I’d get some satisfaction doing that.

The problem is this: You can’t make a bad debt good by claiming it’s good.

You can shift money around so nobody sees exactly who stole what from whom, but the loss is still there and if you keep funding this sort of jackassery then the distortions grow larger by the literal day right up until someone raises a flag and says “uh, that’s bullshit.”

Then it all comes crashing down on your head.

If you remember one of my predictions for this year was that “it” would start in Europe.  Not here, Europe.  But it will come here.  It must, because we refused to do the smart thing and force those who could have taken down their leverage to do so.  Yes, it would have bankrupted some of them.

Yes, politically this would have been “inexpedient” in that they couldn’t have made massive campaign contributions any more.  Yes, it would have (temporarily) led to more unemployment.

But it would also now be over and we would now be really recovering economically.

Instead, we’re still on the edge of the cliff and one by one our fingers are losing their nails, while my level of disgust reaches new highs by the day.

Ah, So There Are No Notes?

Here we go….

In its complaint Monday, HSH Nordbank also alleged that all of the mortgages weren’t assigned to trusts backing the securities (as issued by Barclays) as promised. By not doing so, it hinders the ability of the trusts to foreclose on the mortgaged properties, according to the lawsuit.

“Indeed, without such assignment of the mortgages into the trusts, these so-called ‘mortgage-backed securities’ were not actually backed by mortgages,” HSH Nordbank said. “Plaintiffs would not have purchased these certificates had they known they were not backed by collateral or the notes.”

Oh, you boughth an empty box of chocolates?

Isn’t that special…. I think I’ve been talking about this for quite some time eh?

Now we’re actually seeing the lawsuits that I expected to eventually start showing up, show up.

Now about the rest of those so-called “MBS” that might not really have anything in them, and thus the purchaser literally give his money to the issuing bank for a worthless piece of paper…..