Business / Economic / Financial
[ This link to a somewhat more cumulative blog posts page will precede current days news since most all topics remain current in terms of impact and longer-term effect and can be searched by topical index term more easily. The same is provided since the blog site http://alpeiablog.blogspot.com has just been censored as to size by google which is typical for google as nsa / cia / gov’t shill as more are becoming aware of. The same is true for microsoft, another co. that’s seen their best days and relies on the government to maintain their monopoly. Up to now the better page http://www.scribd.com/alpeia is provided for ease of formatting and clarity thereby while the Washington Post page is the real deal but without formatting http://www.washingtonpost.com/wp-srv/community/mypost/index.html?plckPersonaPage=PersonaComments&plckUserId=alpeia&newspaperUserId=alpeia ]
WHO ELSE IS CLUELESS IN THE FINANCIAL SECTOR? [ As I’ve previously said and reiterate here, the lunatic frauds on wall street are criminally insane and the only way to stop / deter their debilitating churn and earn among other computerized frauds is prosecution, jail, fines, and disgorgement! Once again they’re back to their huge fraudulent gains as seen this reporting period despite growing problem bank list, worthless paper from the prior fraud in the (hundreds of) trillions now marked to anything, and look at August results and worse to come, that money for their commissions / premiums must come from someplace, viz., the bubble which will crash. ] Graham Summers ‘Here’s a zinger of a news story:
Barclays Plc had no idea how big Lehman Brothers Holdings Inc.’s futures-and-options trading business was when it considered taking over the defunct bank’s derivatives trades at exchanges in 2008, a Barclays executive said.“Lehman’s books were in such a mess that I don’t think they knew where they were,” Elizabeth James, a director of Barclays’s futures business, testified today in U.S. Bankruptcy Court in Manhattan. James worked on Barclays’s purchase of Lehman’s brokerage during the 2008 financial crisis.-- Bloomberg
I’ve railed for months that the central issue surrounding the Financial Crisis (derivatives) was not only misunderstood but completely ignored by the mainstream financial media. Here we are, nearly two years after Lehman Brothers went bust, and they’re telling us that Lehman had “no idea” what its options and futures exposure was.
Let’s put this into perspective.
The notional value of the derivatives market at the time that Lehman went bust was somewhere between $600 trillion and $1 Quadrillion (1,000 trillions). It was a market of inter-linked paper contracts entangling virtually every financial institution (including some non-financials), country (Greece, Italy used derivatives to get into the European union), and county (Birmingham Alabama is one example) in the world. As a market it was at least 20 times larger than the world stock market and somewhere north of 10 times World GDP.
In other words, this was the giant white elephant in the living room.
And here’s Lehman brothers, one of Wall Streets’ finest, most respected financial institutions which had been in business for over 150 years announcing that it had “no idea” “if it had sold $2 billion more options than it had bought, or whether it owned $4 billion more than it had sold.”
In today’s world of trillion dollar bailouts, $2-4 billion doesn’t sound like much, so let’s give some perspective here… in its golden days, Lehman Brother’s market cap was roughly $47 billion. So you’re talking about bets equal to an amount between five and 10% of its market cap. Not exactly chump change.
And Lehman had no idea where it was or how much it really owed.
Mind you, we’re only addressing Lehman’s options and futures derivatives, we’re completely ignoring its mortgage backed securities, collateralized debt obligations (CDOs), and other Level 3 assets. Options and futures are literally the “tip of the iceberg,” the most visible portion of the behemoth that was Lehman’s off balance sheet derivative issues. After all, these are regulated securities, unlike most derivatives.
Now, if the above statement doesn’t send shivers down your spine, have a look at the notional value of derivatives exposure at the top five financial institutions in the US (mind you, this chart is denominated in TRILLIONS). [chart]
If Lehman had “no idea” what it owned even when it came to options and futures (regulated derivatives), what are the odds that these other firms, whose derivative exposure is tens if not hundreds of times larger than that of Lehman’s, might similarly be “in the dark’ regarding their risk?
Moreover, who on earth might be on the opposite end of these deals? Other US counties like Birmingham Alabama (which JP Morgan transformed into 3rd world country status)? Other countries like Italy or Greece (who used Goldman’s financial engineering to get into the European Union)? My next-door neighbor’s house? Tim Geithner’s long-lost tax returns? WHO KNOWS?
The point is that the very same issues that nearly took the financial world under in 2008 still exist today. In fact, this time around the systemic risk is even more severe.
Consider that the Credit Default Swap (CDS) market which nearly took the financial system down in 2008 was roughly $50-60 trillion in size. In contrast, the interest rate based derivative market is in the ballpark of $500+ trillion.
Indeed, US commercial banks alone have $182 TRILLION in notional value of interest rate based derivatives outstanding right now. To put that ridiculous number in perspective it’s 13 times US GDP and roughly three times WORLD GDP…’
Predicting This Year's Bank Failures ‘The FDIC’s quarterly banking profile, providing data for quarter 2, was released today. The number of 2010 United States bank failures will likely exceed the 2009 failures, the FDIC reported. This was as I reported in this space back in May. Thus far this year there have been 118 bank closings, which compares to about 80 by the same time of year in 2009. The number of banks on the problem list is still rising. It is now at 829 banks…’
Equities Update: A Waffling Day Ends August in the Red by Midnight Trader 4:25 PM, Aug 31, 2010 --
- NYSE up 8.9 (+0.1%) to 6,704.15
- DJIA up 5 (0.1%) to 10,015
- S&P 500 up 0.04 (+0.4%) to 1,049
- Nasdaq down 6 (-0.3%) to 2,114
GLOBAL SENTIMENT
- Hang Seng down 0.97%
- Nikkei down 3.55%
- FTSE up 0.45%
UPSIDE MOVERS
(+) SKS report says private equity offer in the works.
(+) TASR wins patent dispute.
(+,-) ANF gets upgraded but ends lower.
(+,-) GPS gets upgraded but ends lower.
(+) ENER beats with earnings.
DOWNSIDE MOVERS
(-) RIMM down on negative analyst comments.
(-) WINN continues late-evening decline that followed earnings beat, outlook weighs.
(-) ISLE reports unexpected loss.
(-) MON guides for FY at low end of previous range.
(-) SEED revenue declines.
(-) DG turns lower after beats with earnings, raises guidance.
(-) CHOP beats with earnings.
MARKET DIRECTION
Stocks end little changed after being jostled by mixed signals from the latest economic data and the Federal Reserve's assessment of economic conditions. Friday's looming jobs report is also keeping a lid on activity this week.
But monthly declines mark the first negative August in five years and the deepest losses for that month in nine years; the DJIA ends the month down 4.3%, the S&P 500 down 4.8%, and the Nasdaq down 6.2%.
Telecom shares helped the S&P 500 gain Tuesday and helped to crimp some of the broader losses for the average recorded for August. Financials gained today but were among the leading decliners for the month.
Still, the economy remains a key trading driver.
In minutes released this afternoon, Federal Reserve officials signaled at their August meeting that they would consider going beyond a modest program to purchase government debt if necessary to boost the economy, the AP said.
Minutes show the central bank recognized that the economy could need further stimulus beyond the debt purchases. Those are intended to lower interest rates on a range of consumer loans.
The minutes, which were released Tuesday, did not spell out what new steps might be taken. But they do indicate that the officials focused attention on the modest move the Fed did take at the meeting, which would invest a small amount of proceeds from its huge mortgage bond portfolio in Treasury securities.
Some Fed officials argued that reinvesting proceeds from the Fed's holdings of mortgage securities "could send an inappropriate signal to investors about the committee's readiness to resume large-scale asset purchases," the minutes said.
Earlier, the Conference Board said its consumer confidence index rose to 53.5, from a revised 51 in July. Economists polled by Thomson Reuters expected a slight increase. A reading above 90 indicates a healthy economy.
Also today, the Chicago PMI fell to 56.7 in August from 62.3 last month. The drop was slightly worse than economists forecast.
Commodities ended trading mixed as crude futures succumbed to downbeat investor mood and gold trended higher.
Crude oil for October delivery closed down $2.78, or 3.7% at $71.92 a barrel on the New York Mercantile Exchange.
Gold for December delivery closed up $11.10 to $1,250.50 an ounce. In other metal futures, silver was up 1.66% to $19.39 a troy ounce while copper fell $0.06 to $3.36 a pound.
Market recap: Stocks closed mixed, making up ground after the Fed's minutes showed the economy would need to get worse before providing more support. Although the Dow eked out a gain, it was the worst August for the index in nine years. Tuesday, August 31, 4:00 PM At the close: Dow +0.05% to 10014. S&P +0.03% to 1049. Nasdaq -0.28% to 2114.
Treasurys: 30-year +0.75%. 10-yr +0.27%. 5-yr +0.22%.
Commodities: Crude -3.92% to $71.77. Gold +0.9% to $1250.40.
Currencies: Euro +0.1% vs. dollar. Yen +0.8%. Pound -0.76%.
Ron Paul to Fed, Ft. Knox: Show Me the Gold at Minyanville
The Deteriorating Macro Picture ‘Over the course of the last 18 months I’ve been adhering to a macro view that can best be summed up as follows:
- The explosion in private debt (excessive housing borrowing, excessive corporate debt, etc) levels would reveal the private sector as unable to sustain positive economic growth, de-leveraging and deflation would ensue.
- Government intervention would help moderately boost aggregate demand, improve bank balance sheets, improve sentiment, boost asset prices but fail to result in sustained economic recovery as private sector balance sheet recession persists.
- Extremely depressed estimates and corporate cost cutting would improve margins and generate a moderate earnings rebound, but would come under pressure in 2010 as margin expansion failed to continue at the 2009 rate.
- The end of government intervention in H2 2010 will reveal severe strains in housing and will reveal the private sector as still very weak and unable to sustain economic growth on its own.
The rebound in assets was surprisingly strong and the ability of corporations to sustain bottom line growth has been truly impressive – far better than I expected. However, I am growing increasingly concerned that the market has priced in overly optimistic earnings sustainability – in other words, estimates and expectations have overshot to the upside.
What we’ve seen over the last few years is not terribly complex in my opinion. The housing boom created what was in essence a massively leveraged household sector. The problems were compounded by the leveraging in the financial sector, however, this was merely a symptom of the real underlying problem and not the cause of the financial crisis (despite what Mr. Bernanke continues to say and do to fix the economy) …’
(8-31-10) Dow 10,014 +5 Nasdaq 2,114 -6 S&P 500 1,049 -0- [CLOSE- OIL $71.92 (-54% for year 2008) (RECORD TRADING HIGH $147.27) GAS $2.74 (reg. gas in LAND OF FRUITS AND NUTS $3.11 REG./ $3.26 MID-GRADE/ $3.35 PREM./ $3.69 DIESEL) / GOLD $1,251 (+24% for year 2009) / SILVER $19.39 (+47% for year 2009) PLATINUM $1,526 (+56% for year 2009) / DOLLAR= .78 EURO, 84 YEN, .65 POUND STERLING, ETC. (How low can you go - LOWER)/ 10 YR NOTE YIELD 2.47% …..… AP Business Highlights ...Yahoo Market Update... T. Rowe Price Weekly Recap – Stocks / Bonds / Currencies - Domestic / International This Is a Secular Bear Market and The End of Buy and Hold … and Hope MARKET MANIPULATION AND HOW THE LATEST BUBBLE-FRAUD PRE-COMING CRASH IS BEING ACCOMPLISHED 3-11-10 6 Theories On Why the Stock Market Has Rallied 3-9-10 [archived website file] Risks Lurk for ETF Investors The bull market that never was/were beyond wall street b.s. when measured in gold Property Values Projected to Fall 12% in 2010 Jan 31, 2010 The Week Ahead: Risk Is Off the Cliff; Unwind Has Begun Jan 31, 2010 01-13-10 Forecast for 2010 from Seeking Alpha Contributor THE COMING MARKET CRASH / CORRECTION 1-28-10 Maierhofer (01-15-10) 11 Clear Signs Economy Sinking Economic Black Hole 1-22-10: 20 Reasons Why The U.S. Economy Is Dying And Is Simply Not Going To Recover Current Economic / Fiscal Charts Trendsresearch.com forecast for 2009 1-7-10 Crash is coming! ‘WORST ECONOMIC COLLAPSE EVER’ Must Read Economic / Financial Data This Depression is just beginning The coming depression… thecomingdepression.net MUST READ: JEREMY GRANTHAM’S QUARTERLY UPDATE 25 January 2010 (850 on the S&P) by TPC The Next Wave of Collapse is Coming Sooner than you think Sliding Back Into the Great Depression ABSOLUTELY, ABSURDLY, RIDICULOUS! SELL / TAKE PROFITS WHILE YOU CAN SINCE MUCH, MUCH WORSE TO COME!
Gold Surges To Near $1,250, As Stealthy Flight To Safety Accelerates, Stocks Oblivious As stocks continue to correlate with exactly nothing, and are once again lost in their own HFT dreamworld, which fools Atari in believing the toxic crap it is churning millions of times each second is worth something (and the exchanges gladly continue to pay liquidity rebates for said churn), the capital continues to quietly flow to safety.
Bankrupt Miami in Fiscal Emergency, Breaks Employee Contracts, Hikes Property Taxes In an enormously foolhardy attempt to make ends meet, in spite of the fact that Miami home prices have been hammered and 1-in-8 are unemployed, the County keeps pouring on the painful tax and fee increases.
Gold Rallying to $1,500 as Soros’s Bubble Inflates Investors are accumulating enough bullion to fill Switzerland’s vaults twice over as gold’s most- accurate forecasters say the longest rally in at least nine decades has further to go no matter what the economy holds.
30 Statistics That Prove The Elite Are Getting Richer, The Poor Are Getting Poorer And The Middle Class Is Being Destroyed Not everyone has been doing badly during the economic turmoil of the last few years. In fact, there are some Americans that are doing really, really well. While the vast majority of us struggle, there is one small segment of society that is seemingly doing better than ever.
Obama promises new efforts to boost economy (Washington Post) [ New efforts with the same old failed team covering for the previous same old failed team? The same promised new efforts which were nothing new at all; viz., focus on new war in Afghanistan, increase budget deficits, a penchant for the very perps who precipitated the financial crisis and who should have been prosecuted, jailed, fined and disgorgement imposed, etc.. No details? What’s the matter wobama? Teleprompter not working? ]Obama offered no new proposals during brief remarks in the Rose Garden, saying he would provide details "in the days and weeks to come."
Car sales, spending up, but experts not convinced of trend (Washington Post) [ I’d say time for ‘mouth to mouth resuscitation’ and a closer look isn’t even necessary. Some experts? Just ask any guy on main street. Treading water? I’d say time for post-mortem on the drowning victim.] But a closer look at those car sales raises questions about whether the auto market - and consumer spending as a whole - are indeed on an upward arc or whether they are just treading water.
Obama to loosen rules on technology exports (Washington Post) [ Oooooh! Sounds like a continuation of the ‘clinton plan’ regarding missile among other technologies to China which worked so well for america in maintaining its prominently global position vis-Ã -vis communist china et als. Come on! wobama’s so done! Let the next president determine the probity of such a course! ] White House is overhauling the decades-old rules for the export of sensitive military and other technology, jettisoning what industry groups criticize as an antiquated "Cold War" set of regulations.
In the Middle East, it's still 1947 (Washington Post) [ Indeed it should be! Among the few times the cia was correct, and they’ve been trying to put square pegs in round holes ever since, to america’s substantial detriment. I wonder what what those american sailors of the US Liberty killed by the israelis would say? USS Liberty Survivor Threatened by Unknown Israeli This is what happened to Phillip F. Tourney, decorated war hero and survivor of Israel’s premeditated attack on the USS Liberty 43 years ago. On the evening of Aug. 6, Tourney was verbally threatened by a foreign national claiming to work for the government of israel. As for the purported disdain shown for war mongerer netanayahu, if only wobama’s actions matched his words, the same would represent a major plus for him and the nation of america, so sorely in need of pluses whether the same be budgetary or economic or geopolitical. In fact, for America to abrogate 1948 would guarantee America’s survival, prosperity, and global hegemony in the most positive sense. ]
Obama speech on Iraq has risks (Washington Post) [ Yeah, very true indeed! The main one being that he’s supplanting that illegal, unnecessary, nation-bankrupting war with yet another in Afghanistan which will not be lost on those who supported his candidacy based on promised end to unnecessary war policies which have diverted time, attention, ill-afforded resources including personnel and continue to do so even as defacto bankrupt america crumbles. ]
In the Eye of a Financial Katrina - http://seekingalpha.com/author/wall-street-sector-selector Sunday, August 29th, was the fifth anniversary of Hurricane Katrina’s landfall along the Gulf Coast and all of us vividly remember the horrific images of that day and the days and weeks after. Five years later, the Gulf Coast has come a long way but most would agree there’s still have a long way to go and many scars yet to be healed. In the world of money and investing, the Financial Katrina hit three years ago this month with the beginning of the sub prime meltdown that led to the “Great Recession.” For the past year or so, we have been in what appeared to be a recovery but now looks more like the eye of the storm; today it is quite likely that the second wall of the hurricane is now rapidly bearing down upon us. The news this week was intensely negative and the only bright spot came on Friday with Chairman Bernanke’s speech at Jackson Hole in which he essentially told us, “don’t worry, be happy” and that all would be well. In spite of the Chairman’s calming tone, Wall Street Sector Selector remains in the “red flag flying” mode and we believe that an intense storm lies just ahead. Looking at My Screens On a technical basis, one can only be bearish and the two charts below tell a quick and scary story. [ chart courtesy of StockCharts.com ]In the chart of the S&P 500 above we see the “death cross” highlighted by the downward pointing arrow wherein the 50-Day Moving Average crossed below the 200-Day Moving Average which is a widely followed indicator of lower stock prices ahead. In the upper box we see the 14-day RSI pointing upwards from relatively oversold levels indicating that a short term bounce could be forthcoming, while the red horizontal line shows the support at 1040 which was tested and held every day last week. From this display we can conclude that we are in a bear market, slightly oversold and near support that, if broken, could lead to a quick drop to the July lows of 1010. [ chart courtesy of StockCharts.com ] The point and figure chart above paints an even more ominous picture. A double bottom “sell” signal was generated on August 11th and the index has now broken through the blue bullish support line, indicating the onset of a new bear market in this major index. Support and resistance lines in point and figure charting tend to act like firm walls and mark major turning points in direction, and this recent trend change is the first since March, 2009, when the lows were hit and last year’s unprecedented rally began. The breach of this bullish support line is a major development and in my opinion is an unmistakable sign that it’s time to head for the storm shelters. The View from 35,000 Feet The fundamental news was equally shocking this week as existing home sales declined to 3.8 million units for July from a previous level of 5.26 million. This number is a record low and single family home sales were at the lowest levels since 1995. Truly we are in what could only be described as a housing market depression, and this comes in spite of historically low mortgage rates that people appear to be ignoring. Seemingly almost nobody wants to buy a house at any rate or any price. New home sales fared no better, declining to record lows, as well, while 25% of mortgage holders are currently “upside down” in their homes, owning more than they’re worth, and 15% are in some part of the foreclosure process. Beyond the dismal news from the housing market, the July Durable Goods report was dismal and points to an ongoing slowdown in capital spending and on Friday 2nd Quarter GDP was revised downward to 1.6% from a previous 2.4% in what could only be described as a terrifying result in light of the stimulus and Federal Reserve intervention required to generate this paltry number. More and more analysts are pointing to further reductions in GDP for 3rd Quarter towards flat or even negative territory while the stock market seems currently priced for 1.5-2.5% growth and this creates a situation which is unlikely to have a positive outcome going forward. Looking across the spectrum of noted analysts, we find Princeton economist and former Federal Reserve member Alan Blinder writing an article in the Wall Street Journal titled, “The Fed is Running out of Ammo” and noted Yale economist Robert Shiller appeared on the Wall Street Journal’s “Big Interview” and said that a double dip “may be imminent.” And finally Albert Edwards, the noted analyst from Societe General says to look for 450 on the S&P 500, a roll back to 1982 levels. Fidelity reports that in the second quarter 25% of people took hardship withdrawals from their 401ks, a number that represents a 10 year high, to help them meet living expenses and the ECRI remained in recessionary territory with a -9.9% reading last week. On Friday Intel (INTC) cut its earnings and revenue forecast and across the Atlantic Ireland was downgraded and given a negative outlook by S&P. Also in Europe, interest rates and Credit Default Swap pricing continued to rise as their sovereign debt situation continues to erode confidence in the outcome of the European Central Bank’s historic intervention efforts of a couple of months ago. The bond market remains priced for Armageddon, forming what many say will one day be the biggest bubble of all time and lead to a historic crash in the bond market somewhere down the road. But on Friday, Dr. Bernanke cheered world markets when he told us that he expected no double dip, that growth would continue and improve and that he and his colleagues stood ready to do whatever it takes to avoid deflation and that he had the tools to lead the global economy to recovery. This upbeat assessment comes after unprecedented government stimulus, interest rates lowered to near zero and $1.7 Trillion of asset purchases by the Fed since the onset of the Great Recession. So one can only wonder how this is going to work. If the medicine hasn’t worked so far, why would a little more of the same medicine make a difference? What It All Means As we’ve been saying for weeks, a double dip looks highly probable with the odds growing daily, lower stock prices look likely and to make your chest feel even tighter, summer is almost over, traders will be back from the Hamptons, the kids will be back in school and we’re about to enter the dreaded month of September which is historically the worst month for stock market performance. At Wall Street Sector Selector, we remain in the “Red Flag” mode, expecting lower prices ahead, and we forecast that the second storm wall of the Financial Katrina is about to hit. The Week Ahead To say that a major week lies ahead is a massive understatement. Economic Reports: A busy round of economic reports this week will give us a look at personal income and spending, home prices, manufacturing and what the Federal Reserve really thought at their recent meeting with everything leading up to the climactic Non Farm Payroll report on Friday. Certainly all of this will be food for thought going into the long Labor Day weekend. Tuesday: 0900: Case/Shiller 20 City Home Price Index 0945: August Chicago PMI 1000: August Consumer Confidence. 1400: FOMC Meeting Minutes Wednesday: 0815: July Construction Spending 1000: August ISM Index 1400: August Auto Sales Thursday: 0830: Initial Unemployment Claims, Continuing Unemployment Claims 1000: July Factory Orders 1000: July Pending Home Sales Friday: 0830: August Non Farm Payrolls 0830: August Unemployment Rate 1000: ISM Services Sector Spotlight: Leaders: Silver, Oil, Copper Laggards: Mexico, Global Shipping, South Korea This week we’re heading for Southwest Florida for a last week of R&R before school starts and reality strikes after the long Labor Day weekend. We hope to have a nice time on the beach and not see any tar balls between our toes. Sadly, I’m sure this year’s Labor Day celebration won’t be a particularly happy occasion for the 14.6 million of our fellow citizens who remain unemployed and I can only wish them the very best and a speedy return to gainful employment and happier days ahead. Disclosure: RWM, PSQ, SH, SEF, EFZ, SKF, VXX, S&P 500 Put Option
Jim O’Neill Suggests It May Be Time For The US To Give Up On Our Own Middle Class, And Focus On China’s Zero Hedge | China will be ecstatic that the US will now be funding the development of its own middle class. As for ours… Oh well.
The Elites Have Lost the Right to Rule Zero Hedge | When you get too many people of a particular mindset (in this case highly quantitative and academic) to aggregate in a field that is very much a people business and one where “street smart” common sense is of extreme importance you are asking for serious trouble.
Ron Paul: Where Is the Gold? [ As I’ve previously written, I believe that beyond the gold plate, Fort Knox has been looted. ] New American | Congressman Ron Paul revealed that next year at the start of the newly inaugurated 112th United States Congress, he would introduce a new bill to audit the U.S. gold reserves.
Ron Paul: ‘There Might Not Be Any Gold In Fort Knox’ Paul, a longtime critic of the Federal Reserve and U.S. monetary policy, said he believes it’s “a possibility” that there might not actually be any gold in the vaults of Fort Knox or the New York Federal Reserve bank.
Obama’s Department of Justice Puts Out Master Patriot Hit-list The word constitutionalist is now shorthand for the sovereign citizen movement, in other words people who support the Constitution and the Bill of Rights are violent cop killers.
Government Think Tank Calls For Infiltrating Conspiracy Websites Furious that state involvement in major terror attacks is being exposed to a wider audience than ever before via the Internet, a UK think tank closely affiliated with the Downing Street has called for authorities to infiltrate conspiracy websites in an effort to “increase trust in the government”.
The Death Of Cash? All Over The World Governments Are Banning Large Cash Transactions Legislation currently pending in the Mexican legislature would ban a vast array of large cash transactions, but the truth is that Mexico is far from alone in trying to restrict cash. All over the world, governments are either placing stringent reporting requirements on large cash transactions or they are banning them altogether.
Two Men Held On Terrorism Precrime Charges as Anti-Muslim Hysteria Reaches Fevered Pitch Kurt Nimmo | The arrest of two men in Amsterdam on “preparation of a terror attack” charges could not have come at a more opportune time.
‘Vaccine Deaths’ Reaches Top of Google Trends Matt Ryan | Alex Jones would like to commend and thank everyone for their continued support in the InfoWar.
Vaccine Deaths And Injuries Skyrocket As Cover-Up Implodes Paul Joseph Watson | Global revolt against deadly vaccines spreads as cases of debilitating illnesses, soft-kill side-effects and even instant deaths become widespread
Report: Israel planning to attack Hezbollah arms depots in Syria Israel is planning to attack Hezbollah arms depots and weapons manufacturing plants in Syria, the Kuwaiti newspaper Al Rai reported on Saturday. The report is based on Western sources who asserted that Israel has increased its military force level along the northern border in the Golan Heights and Mount Dov areas.
USS Liberty Survivor Threatened by Unknown Israeli This is what happened to Phillip F. Tourney, decorated war hero and survivor of Israel’s premeditated attack on the USS Liberty 43 years ago. On the evening of Aug. 6, Tourney was verbally threatened by a foreign national claiming to work for the government of Israel.
EU Popularity Plunges Right Across the Bloc People’s confidence in the the European Union has dropped to record lows in most countries amid a placid response to the rising unemployment and the troubles of the eurozone, a Eurobarometer published on Thursday shows.
China’s Central Bank Chief Rumored To Have Defected Rumors have circulated in China that People’s Bank of China Gov. Zhou Xiaochuan has left the country. The rumors appear to have started following reports on Aug. 28 which cited Ming Pao, a Hong Kong-based news agency, saying that because of an approximately $430 billion loss on U.S. Treasury bonds, the Chinese government may punish some individuals within the PBOC, including Zhou.
Drudgereport: AMERICA RUST- India's economy races 8.8%...
Russian economy grows 4.0%...
German unemployment rate 7.6%...
FDIC MESS: 829 BANKS AT RISK...
48 HOURS: 21 American soldiers killed in Afghanistan...
Worst August For Stocks Since 2001...
Congressional Travel Stipends Probed...
Dems face midterm meltdown...
Ron Paul questions whether there's gold at Fort Knox, NY Fed...
Dow Falls 140 Points; Banks, Industrials Slide...
1 OUT OF 6 TAKE GOV'T AID...
Homelessness Up 50% In New York City...
OBAMA BLAMES BUSH AGAIN FOR ECONOMY … [ bush (et als) does deserve blame but with flawed pro-fraudulent wall street among other non-policies and continued nation-bankrupting war, wobama is a distinction without a difference and has bought it and can no longer shirk responsibility with the blame game ] ...
Iran state media call French first lady prostitute...
EDUCATION SEC URGED STAFF: GO TO SHARPTON RALLY
Bernanke, other leaders talk economic policy (Washington Post) [Yeah, they can talk the talk, but we all know based upon reality, ie., that no-recession thing aka financial debacle / disaster, etc., we’re still feelin’ in a very big way, they just can’t can’t walk the walk!]
Google wants in on the social networking game This Tweet -- "Google to launch Facebook competitor very soon" -- unleashed a sense that the online world as we know it was about to fundamentally change.
Stocks up [america down] (Washington Post) Previously reported economic growth, upon which hundreds of rally ‘points’ were predicated, revised down by 50% of the actual 1.6%. This is typical but no small laughing matter which bespeaks the wayward ways of wall street that got us to this debacle which also includes defacto bankruptcy of the nation. So, GDP down, consumer confidence down, and stocks rally like no tomorrow (which is the fraudulent wall street time horizon … they’ll just commission on the way down). Am I missing something here, particularly when a more sobering view from a rational player, INTEL, is far more credible? One former fed chair likened no-recession-helicopter ben bernanke’s factually deficient, empty words to ‘a doctor telling a patient he’s not sure of what the problem is (that economic uncertainty thing he referenced), but if his leg gets worse he can always amputate.’ Previously, as pertains to the jackson hole no-recession-helicopter-ben b*** s*** non-event / talk. Fed action signals new activism (WP) [ Riiiiight! The activist fed! That’s all we need. As if we needed more of what brought us to this point! Certainly the fed’s role in the continuing and current financial crisis / debacle cannot be ignored or disputed. Nothing like a hegelian methodology to create the very problems for which they are called upon to offer solutions, increasing their sense of importance, and concentrating power thereby. (Think about it. It is really rather quite absurd that each meeting time the financial markets hold their bated breath for these incompetent boobs). Then there’s the cover-up with an opportunity for enrichment of some, usually the tight-lipped yes-men then ever after and forever bonded in what becomes tantamount to an almost fraternal link by ‘virtue’ of the crime thereby. No, I’m not saying their initial missteps were necessarily badly intended, but the manipulations thereafter to obfuscate their incompetence (senile greenspun, no-recession-helicopter-ben, etc.) comes at a great price and is nothing less than tantamount to or just outright crime. I’d abolish the fed without hesitation or compunction. After all, at this point of decline and defacto bankruptcy of the nation you certainly can’t point to success nor argue their indispensability. Then there’s also the missing trillions, over-printing of fiat currency, and all that sub rosa activity with the worthless fraudulent toxic paper which I believe is being supplanted with ultimately hard currency to the great benefit of the frauds and great detriment to the nation.]
Fed vows to act if economy stalls (Washington Post) [ Wow! Really! Sounds like a plan! A ‘no-recession-helicopter-ben’ plan! One former fed chair / bk. pres. likened no-recession-helicopter ben bernanke’s factually deficient, empty words to ‘a doctor telling a patient he’s not sure of what the problem is (that economic uncertainty thing no-recession-helicopter-ben referenced), but if his leg gets worse he can always amputate’
New rules for your money (Washington Post) [What they really mean refers to the lack thereof; that new defacto bankrupt american reality and all that flows therefrom in the most negative sense. ] In this era of high unemployment, flat home prices and do-it-yourself retirement savings, some traditional rules of saving and investing are due for an overhaul.
Why is the recovery faltering? (Washington Post) [ Oooooh! ‘Dat ben! He gives such great, unctuously soothing talks. Along with wobama, we must consider this time, a time for defacto bankrupt American decline with the cocomitant rise of b*** s*** . The watchwords are no longer (as in Hollywood and elsewhere) ‘pastics’, ‘computer chips’, but rather b*** s*** and more b*** s***! I truly must say, almost as a ‘revenge to Samuelson economics kind of thing’, that Mr. Samuelson here talks symptoms rather than (structural) causes and totally misses the (big) macroeconomic picture and should be chastised for faulting prudence.]
Make Sure the Bunker is Well Stocked Mike Whitney Information Clearing House August 29, 2010 Robert Herz was forced to resign from his job as as chairman of the Financial Accounting Standards Board (FASB) because he insisted that the banks assign a fair value to their assets. That’s not what you’ll read in the papers, but it’s true just the same. Herz [...]
“Monetary Shock and Awe”: The Fed prepared to launch most Radical Intervention in History There’s no talk of green shoots any more, and even the deficit hawks have gone into hibernation. It feels like the calm before the storm, which is why all eyes were on Jackson Hole this morning where Fed chairman Ben Bernanke delivered his verdict on the state of the economy on Friday.
Debt, Depression, Default. America is in Deep Trouble Items we customarily purchase, i.e., shoes, clothes, cars would become too expensive. Consequently, the American financial woes would result in a global financial decline. The enviable American standard of living will decrease and the next generation will be saddled with insurmountable debt, not of their making.
The US Government Matches Every Dollar In Tax Revenue With A Dollar In New Debt In our attempts to simplify the comprehension of the ongoing serfdomization of the US population, we would like to present one of the more persuasive charts which the administration would likely be loath to demonstrate.
Helicopter Ben Bernanke Says Everything Is Going To Be Okay Don’t worry everybody. Federal Reserve Chairman “No Recession Helicopter Ben” Bernanke says that the U.S. economy is going to be just fine, and that if it does slip up somehow the Federal Reserve is ready to rush in to the rescue. That was essentially Bernanke’s message to an annual gathering of central bankers in Jackson Hole, Wyoming on Friday.
China is Unloading its Treasury Bonds Oil Price | It looks like the smart money these days is found in China.
Collapse Survival Will Be Tribal: Begin Recruiting Now Human World Order | The controllers are orchestrating the collapse of the American economy and society right now, albeit in slow motion, but it is already crumbling.
The US Government Matches Every Dollar In Tax Revenue With A Dollar In New Debt In our attempts to simplify the comprehension of the ongoing serfdomization of the US population, we would like to present one of the more persuasive charts which the administration would likely be loath to demonstrate.
Mullen: National Debt is a Security Threat [Daaaaah!]The national debt is the single biggest threat to national security, according to Adm. Mike Mullen, chairman of the Joint Chiefs of Staff. Tax payers will be paying around $600 billion in interest on the national debt by 2012, the chairman told students and local leaders in Detroit.
U.S. birth rate falls again, a possible effect of economic downturn The number of babies born in the United States has dropped for the second year in a row, according to new federal statistics released Friday that provide more evidence that the nation’s economic troubles are affecting the birth rate.
Is Ben Lost? [Yes!] Butter ‘The much awaited speech by Ben Bernanke, on Friday, was a bit of a non-event. It was interesting, however, to see the 30 Year bounce, from 3.55% to 3.7%, the moment that Ben explained his cunning plan to push long-term interest rates down. But at least we learned that $140 billion of the $1.25 billion the Fed advanced to buy agency debt and MBS, got repaid. One question Ben: “How much did you pay for the $140 billion that got repaid? Did you make a profit, or are you going to wait until Ron Paul’s audit before you let us know how that went?.” I know I’ve got a dirty mind, but I can’t help thinking that if Ben had made a profit on that transaction, he would have been crowing about it. I loved this bit, particularly the “Thus”:
Thus, our purchases of Treasury, agency debt, and agency MBS likely both reduced the yields on those securities and also pushed investors into holding other assets with similar characteristics, such as credit risk and duration. For example, some investors who sold MBS to the Fed may have replaced them in their portfolios with longer-term, high-quality corporate bonds, depressing the yields on those assets as well.
Hmm…
- Even Alan Greenspan and Larry Summers conceded that there is absolutely nothing that the Fed can do to change long-term Treasury yields. But, now Ben the Boy is saying that he can do that, he must be Superman!
- Good to see that Superman is also taking the credit for pushing down yields on agency debt and toxic MBS. Obviously he is a genius, the Maestro is re-incarnated, Err…but here is one little thing; he’s the only guy buying that garbage.
- Oh, and whoopee, Ben thinks that the “investors” (translate deadbeat zombie banks), who sold him their (toxic) MBS, have all rushed out to buy corporate bonds. I’m not quite sure what planet he’s on. I thought they either kept the money on deposit with the Fed, or bought Treasuries to repair their capital adequacy. Note the “may”…as if he didn’t know!
But this was the kicker, admittedly hidden away between jargon-heaped on jargon, but there all the same:
(Al those good things managed)... provide further support for the economic recovery while maintaining price stability, the Fed has also taken extraordinary measures to ease monetary and financial conditions.
I especially love the part about “further” support. As if the banks are going out and lending money to Main Street, as opposed to simply using their free, Fed supplied, get-out-of-jail card to create an illusion of solvency whilst they “extend and pretend”. Similar to what happened in Japan after their bubble burst. The real gem, however, was the idea of “maintaining price stability”. What that means is stopping assets prices (house prices, commercial real estate, and to some extent stocks) from going down to where they have to go, before market clearing can start. Funny how when asset prices were bubbling through the roof, that was not considered “inflationary” by the Fed and was not something to be concerned about. But, when asset prices fall through the floor, that is considered deflationary (or disinflationary), and is very bad. Ben looks to me suspiciously like a greenhorn lost in the woods who used up all his ammo shooting at shadows. And yet, there is the Big Bad Wolf of private sector deleveraging faster than he can run the printing presses, (and more importantly, get that money out into the real world) lurking round the corner.’
Sotomayor Says Court May Rule to Limit First Amendment in Response to Wikileaks Kurt Nimmo | Sotomayor’s comment is a warning that the Supreme Court may soon use the Wikileaks case restrict the First Amendment.
The Nazification of the United States Paul Craig Roberts | September 11 destroyed American liberty, the rule of law and the US Constitution.
Fidel Castro: Osama bin Laden Worked for CIA Guardian | Fidel Castro reveals what many of us have known for years — Osama bin Laden was a prized CIA asset.
Conclusive: Global Distribution of Rockefeller-Funded Anti-Fertility Vaccine Coordinated by WHO Jurriaan Maessen | It is a dream long cherished by the global elite: an anti-fertilization program with the aim of reducing the world’s population
We Need A Revolution, Not A Movement Chuck Baldwin | The Tea Party movement, while still a force with which to be contended, has already been diluted and compromised.
Corporate Media Dismisses Castro’s Bin Laden Claim As Far-Fetched Conspiracy Theory The corporate media wasted little time in seizing upon controversial Cuban leader Fidel Castro’s comments about Osama bin Laden being a U.S. spy to deride the claim as a far-fetched conspiracy theory, and yet the fact that Bin Laden was once a CIA protégé and has been used time and again to the benefit of the U.S. government’s geopolitical agenda is a documented fact.
Drudgereport: 7 US troops killed in latest Afghanistan fighting...
Castro: Osama bin Laden is US spy...
PAPER: CIA secretly paying Afghan officials...
7 U.S. troops die in Afghanistan violence (Washington Post) [ I was discussing my opposition to the contrived conflict in Iraq with a former air force man with high (top?) security clearance from economic, geopolitical, and humanitarian perspectives; and further, mentioned I had sought and gotten an appointment to West Point (I was exempt) so I could go (Vietnam) as an officer rather than a grunt who were being used as mere cannon fodder as now in Iraq (I also related the fact that I am thankful, for a multitude of reasons, I changed my mind in light of then new realities). He replied, quite seriously, that’s what they’re there for… No they are not! But yes, that is their unequivocal, unforgiveable attitude beyond the b*** s*** (look at cheney-5 deferments, bush-powderpuff duty courtesy of poppy bush, clinton-draft dodger, wobama-never served, etc.. Just a destructive waste!) The latest deaths bring to 42 the number of American forces who have died this month in Afghanistan after July's high of 66.
U.S. officers weary and humbled (Washington Post) [ Indeed they should be; and, if they are able to make sense of the last 2 decades particularly, they are certifiably true american crazy, a condition in the u.s. and among it’s war mongering allies that is found in self-destructive abundance. No joke! And then there are the crimes / frauds. My position is also that such frauds as the disappearance of the 360 tons of $100 bills, etc., and similar such frauds should come right off the top, a direct reduction in their budget allocation particularly in light of the defacto bankruptcy of the nation! ] How Iraq vets make sense of the last seven years will affect how america wields its military power [very poorly indeed!] .
Is the U.S. exporting terrorism? (Washington Post) [The newspaper that never sleeps…The Washington Post
WikiLeaks Release: CIA Red Cell Special Memorandum – What If Foreigners See the United States as an ‘Exporter of Terrorism’ [Which of course is the reality, along with israel; you do recall those israeli operatives who were caught cheering the 911 hit, the so-called pearl harbor event so cherished by the neo-cons.] The document states, “This report examines the implications of what it would mean for the US to be seen increasingly as an incubator and ‘exporter of terrorism.’” However, it doesn’t go on to mention the U.S. state sponsored terrorist activities of the Proactive, Preemptive Operations Group (P2OG).
We’re Already In Recession [actually a depression] Harding ‘‘… look at the trend. After an unusual four straight quarters of negative growth in the severe 2008-2009 recession, the recession ended in the September quarter of last year when GDP managed fragile growth of 1.6% for the quarter, and then improved to 5.0% growth in the December quarter.It was understood that much of that growth was temporary, fueled by government spending, and spending by consumers provided with government bonuses and rebates, as well as temporary rebuilding of inventories by businesses. But it was expected that with that jumpstart the recovery could continue on its own legs.So, it was a bit of a surprise when GDP growth slowed to 3.7% in the March quarter of this year while those programs were still having an influence. But economists still expected the economy would grow at a 3% pace in the June quarter even with those programs winding down, and for the rest of the year.So, it was a real disappointment when second quarter growth was reported a month ago as having been only 2.4%. Plus, when additional data became available for May and June, the last two months of the second quarter, and those reports were increasingly negative, economists predicted that Q2 GDP growth would be revised down to only 1.3%.On Friday, the revision was released, and it showed growth last quarter slowed significantly, but only to 1.6%, not as bad as the latest forecast.The media and the stock market, starving for good news–and with the market short-term oversold after being down 10 of the previous 13 days–took it as a positive. But let’s get real.The issue is not whether economists got their forecast right or wrong, but the degree to which economic growth is slowing. And a trend of 5% growth in the December quarter, followed by a 1.3% decline to 3.7% growth in the March quarter, followed by a 2.1% decline to 1.6% growth in the March quarter is a chilling rate of decline.Now factor in that economic reports so far for July and August, the first two months of the third quarter, have been significantly worse than those of May and June, and significantly worse than economists’ forecasts, with the relapse pretty much across the board; in the housing industry, manufacturing, retail sales, consumer and business confidence, the decline in U.S. exports, and so on.It’s not a stretch then to think that economic growth is declining by another increment of more than 1.6% this quarter, which would have it in negative territory, already in recession.In his speech Friday morning at the annual economic symposium in Jackson Hole, Wyoming, Fed Chairman Bernanke, while saying he still expects the economy to grow in the second half “albeit at a relatively modest pace” did not put forth a very convincing argument, using such phrases as “painfully slow recovery in the labor market”. . . “economic projections are inherently uncertain”. . . . “the economy is vulnerable to unexpected developments” . . . “the recovery is less vigorous than we expected.”Nor did he seem confident that the Fed’s depleted arsenal of tools to re-stimulate the economy would be effective if needed. Two of the four possible actions he mentioned seemed to suggest consumers and markets could be fooled into confidence with mere talk.His brief list of four possible actions were, “1) conducting additional purchases of longer-term securities [bonds and mortgage-related securities]; 2) modifying the Fed’s FOMC meeting communications to investors; 3) reducing the interest the Fed pays banks on their excess reserves. And I will also comment of a fourth strategy, proposed by several economists- namely, that the Fed increase its inflation goals.”Providing details on two of the four possible actions, he said, “The Fed’s current statement after its FOMC meetings reflects the FOMC’s anticipation that exceptionally low interest rates will be warranted ‘for an extended period’ . . . A step the Committee could consider if conditions called for it, would be to modify the language to communicate to investors that it anticipates keeping the target for the federal funds rate low for a longer period of time.”As for the fourth possible action in his list of four, he said the Fed could alter the phrases it uses to communicate its goals for inflation by “increasing its medium-term inflation goals above levels consistent with price stability.”That’s scary stuff if those are two of the four actions the Fed sees as its best options to re-stimulate the economy.Also of concern, in its report revising Q2 GDP growth down to just 1.6%, the Commerce Department reported that corporate earnings declined significantly in the second quarter, after-tax earnings rising just 0.1%, compared to the gain of 11.4% in the first quarter. Meanwhile, Wall Street continues to ratchet up its earnings estimates.On the positive side, consumer spending, which accounts for 70% of the economy, rose 2% in the second quarter, compared to 1.9% in the first quarter. But the bad news is that the reports since, on consumer confidence and retail sales in July and August, have been big disappointments.Putting it all together, don’t be surprised if a couple of months down the road we learn the economy was already in recession in the current quarter.’
Cramer Gets It Wrong With “Mass Panic” GDP Forecast [To the contrary, among the few times cramer got it right … I mean, come on … you don’t think that initial number and now this better than all forecasts is correct … one couldn’t be that dumb. ]
Fed vows to act if economy stalls (Washington Post) [ Wow! Really! Sounds like a plan! A ‘no-recession-helicopter-ben’ plan! One former fed chair / bk. pres. (Brusca) likened no-recession-helicopter ben bernanke’s factually deficient, empty words to ‘a doctor telling a patient he’s not sure of what the problem is (that economic uncertainty thing no-recession-helicopter-ben referenced), but if his leg gets worse he can always amputate’.] U.S. markets rebound on news that central bank will step in if conditions unexpectedly worsen.
China is Unloading its Treasury Bonds Oil Price | It looks like the smart money these days is found in China.
Collapse Survival Will Be Tribal: Begin Recruiting Now Human World Order | The controllers are orchestrating the collapse of the American economy and society right now, albeit in slow motion, but it is already crumbling.
10 Leading Retailers Close Stores Mish’s Global Economic Trend Analysis | Signs of weak consumer discretionary spending are popping up in multiple places.
U.S. Postal Service Starts Quoting SDR to Dollar Conversion Rates, and IMF Endorses Replacing Dollars with SDRs I have repeatedly pointed out that it is possible that the IMF’s special drawing rights (SDRs) will become the world’s reserve currency. And as I noted in April 2009, there is some possibility that the “Bancor” will ultimately fill that role.
Why Are Home Sales Plummeting? On the surface, it is because the government’s tax-credit for first-time home buyers lapsed in April. It takes a couple of months lag-time between buyer purchase decisions and the actual close of escrow, and so the expiration of the tax-credit is just now hammering the market.
Bearish Sentiment Officially Reaching Fever Pitch Friday promises to be a huge day (at least in the early going) with both the Fed and the Q2 GDP revisions potentially giving investors more reasons to panic. The questions: is panic hitting peak levels?
Drudgereport: Analyst: CITIGROUP 'Cooking the Books'...
Banks back switch to renminbi for trade; Incentives to move from dollar and euro...
THE SPEECH: Bernanke under pressure to prop it up...
'RECOVERY SUMMER' ENDS SICK
GDP REVISION: 1.6%
Says recovery softer, Fed prepared to buy more...
Weaker GDP raises stakes...
WIRE: What Biden didn't mention on stimulus...
ZUCKERMAN: The Most Fiscally Irresponsible Government in History … along with bushes’...
Joint Chiefs Chairman: National Debt is a Security Threat...
Recession pushes US birth rate to new low...
RECOVERY BUMMER: Youth employment lowest since 1948...
Thousands line up before dawn for mortgage help in Palm Beach County...
Report on Fannie, Freddie gives new theory for collapse (Washington Post) Since ‘it’s always something’, time to contact Rosanne Rosanna Danna to straighten this out! Tiny tim geithner, God bless us everyone, ‘has also pointed to the weight of souring guaranteed loans as a source for the companies' troubles. …Riiiiight! Guarantee’s are the thing! … Rosanne Rosanna Danna, formerly of SNL fame needs to chime in with what her mama always used to say, ‘ It’s always something ‘ . Of course, it matters little to the frauds and what their frauds are on wall street what the something is said to be since the reality is … ‘This is a global depression. This is a secular bear market in a global depression. This was a manipulated bull (s***) cycle in a secular bear market. This has been a typically manipulated bubble as has preceded the prior crashes with great regularity that the wall street frauds and insiders commission and sell into. This is a typical wall street churn and earn pass the hot potato scam / fraud as in prior crashes.’
Flow of imports drags down economic growth (Washington Post) [Ah, eureka! So that’s what did it! Nothing to do with transferring productive capability overseas / elsewhere as warned against by Ross Perot and celebrated by those long-term thinking frauds on wall street. Well, we still have the worthless paper to move around and commission as warned against by Morita of Sony fame.]
Chossudovsky: China could already be world’s largest economy
Stocks slip as caution about the economy returns (Washington Post) [Caution? Is that what they’re calling reality these days? ] Stocks fell Thursday after early gains from a better report on jobless claims faded in late trading, sending the Dow Jones industrial average to its first close below 10,000 since early July.
Is the U.S. Bankrupt? [YES!] (at Motley Fool) The Administrative Office of the U.S. Courts recently reported that bankruptcy filings between April and June hit a four-year high. Consumer bankruptcies rose 21 percent while business bankruptcies increased eight percent. The list of corporate bankruptcies over the last couple of years includes big names like Lehman Brothers, Washington Mutual, and GM. And financial institutions like Bank of America (NYSE: BAC), Citigroup (NYSE: C), Wells Fargo (NYSE: WFC) received billions of dollars through the federal government's Troubled Asset Relief Program. Should investors add the U.S. government to that list of big name bankruptcies? I recently asked Boston University economics professor Lawrence Kotlikoff, author of Jimmy Stewart is Dead: Ending the World's Ongoing Financial Plague with Limited Purpose Banking.
Mac Greer: Larry, I noticed the headline or the title of a recent article that you wrote, US is Bankrupt and We Don't Even Know It. So with that in mind, what is your take on the economy these days?
Larry Kotlikoff: Well there is a lot of uncertainty, as rightfully there should be. We have seen the financial sector implode basically because of the systematic production and sale of trillions of dollars of fraudulent securities under the cover of proprietary information, so nobody really had the ability to look inside big companies like Bear Sterns or Merrill Lynch to see exactly what they owned or owed. That problem remains today, even with the passage of Dodd-Frank. There is no requirement that the financial industry come clean with respect to what it is doing with our money, so every major financial player says you can't see what we are doing because we have the Midas touch. We are going to beat the market, and if we show you, everybody will see our secret formula for making you a mint. As a result, they have a great cover to produce fraudulent securities. And then when there is a sniff of fraud, one can easily presume that everything they are doing is fraudulent, which may not at all be the case. And then there is a run against those institutions as we saw with Bear Sterns and Lehman Brothers and all the other ones because of the perception that so much of their holdings were fraudulent and that their reporting was fraudulent. And of course the rating companies and the regulators and the boards of directors and the members of Congress were all, in effect, in bed with each other to achieve this result. I don't see anything that has fundamentally changed, so that is one major area of fragility. We could have another meltdown in the financial market tomorrow because as Dick Fuld [Lehman former CEO] said, he claims that their balance sheet was just fine and that this was all just a panic, it was not connected with any facts. Well, he said that every institution on Wall Street --- Goldman Sachs (NYSE: GS), JP Morgan (NYSE: JPM) -- could have experienced the same thing. His concern about this happening to other companies is well taken. So we have a financial system that is set up to fail again, and we have a fiscal situation which is a complete and dire mess. It could lead to a financial panic that could lead to a much bigger meltdown of the financial system than we have seen.
Greer: Is the U.S. bankrupt?
Kotlikoff: Bankruptcy means not being able to pay your future bills. If you can't pay your current bills, your creditors are already after you so you already are bankrupt. If you can't pay your future bills, that really is the operational definition of going bankrupt or being bankrupt. The U.S. government can't pay its future bills. These bills, in total, in present value, exceed the revenues by $202 trillion. This is based on taking the data projected by CBO (Congressional Budget Office) back on June 26 of this year, when they put out their alternative fiscal scenario, which is their best long-term projection of government spending, including servicing the official debt, and government revenues. And if you present value the differential between spending and revenues, including extrapolating beyond their projection which is important to do, you get a fiscal gap of $202 trillion. To come up with $202 trillion in present value, you'd have to immediately and permanently double all taxes we have. You'd have to do it immediately. We're talking here about running a 5% GDP surplus this year instead of running a 9% deficit. So I don't see that happening. We have to cut spending or we have to print money. Either way you're cutting spending so either way you're, in effect, reining in spending promises. And that suits my definition of bankruptcy. And I think there are ways of cutting spending and getting our fiscal house in order but we need to engage in radical surgery here and not putting on the band-aid that this administration is so fond of.
Greer: One of our Motley Fool writers recently interviewed Euro Pacific Capital President Peter Schiff. In 2006, he was predicting the economic downturn, and he now says that we are, "In the early stages of a depression now. It is going to be a horrific experience for average Americans who are going to watch their standard of living plunge." Do you agree?
Kotlikoff: Well, this has been a depression so far for millions of Americans. It didn't have to happen. It is really man-made. We have the same physical capital and human capital sitting here in place. We don't have to stay in a depressed state. The problem is that things are not coordinated. We don't have buyers optimistic about getting paid salaries and we don't have sellers optimistic about being able to find buyers, so everybody is kind of sitting on their hands. We can have some, a bunch of KISS's, which are "keep it simple, stupid" solutions to our problems, and lots of people throughout the country realize this, that we need to fix things fundamentally. We can't do it with 2,000 page bills that make bureaucratic structures that are basically clogging up our economic arteries, even more bureaucratic…
10 Practical Steps That You Can Take To Insulate Yourself (At Least Somewhat) From The Coming Economic Collapse The Economic Collapse | Most Americans are still operating under the delusion that this “recession” will end and that the “good times” will return soon.
America’s Debt: The BIG Wave Damien Hoffman | This, my friends, is only the tip of the iceberg of what will unfold should we choose to kick the proverbial can farther down the road.
S&P Says US Should Act to Protect AAA-Rating: Report The United States government needs to take steps to preserve its top AAA-rating, a Standard & Poor’s Ratings (S&P) official told Dow Jones newswire in an interview published on Thursday.
It pays to riot in Europe Dublin has played by the book. It has taken pre-emptive steps to please the markets and the EU. It has done an IMF job without the IMF. Indeed, is has gone further than the IMF would have dared to go.
The Economy When Debt Is Everywhere As a result of austerity, imposed on Greece by its Illuminist led government, unemployment has hit 70% in some places. The country’s budget deficit has been reduced by 40%, truly draconian. Spending by government has been cut 10%, which is more than double what the EU and IMF has required.
10 Practical Steps That You Can Take To Insulate Yourself (At Least Somewhat) From The Coming Economic Collapse Most Americans are still operating under the delusion that this “recession” will end and that the “good times” will return soon, but a growing minority of Americans are starting to realize that things are fundamentally changing and that they better start preparing for what is ahead.
China Buys Euros as Fear of World Depression Grows Webster G. Tarpley | The one certainty is that there is no recovery, and that the second wave of a world economic depression dominates the world.
Economy Caught in Depression, Not Recession: Rosenberg Positive gross domestic product readings and other mildly hopeful signs are masking an ugly truth: The US economy is in a 1930s-style Depression, Gluskin Sheff economist David Rosenberg said Tuesday. ‘Positive gross domestic product readings and other mildly hopeful signs are masking an ugly truth: The US economy is in a 1930s-style Depression, Gluskin Sheff economist David Rosenberg said Tuesday. Writing in his daily briefing to investors, Rosenberg said the Great Depression also had its high points, with a series of positive GDP reports and sharp stock market gains. But then as now, those signs of recovery were unsustainable and only provided a false sense of stability, said Rosenberg. Rosenberg calls current economic conditions “a depression, and not just some garden-variety recession,” and notes that any good news both during the initial 1929-33 recession and the one that began in 2008 triggered “euphoric response.”
Op-Ed Columnist - The Third Depression - NYTimes.com Economic Policy: Nobel Prize-winning economist Paul Krugman says the US is in the "early stages of a third Great Depression. The Third Depression By PAUL KRUGMAN Published: June 27, 2010 ‘Recessions are common; depressions are rare. As far as I can tell, there were only two eras in economic history that were widely described as “depressions” at the time: the years of deflation and instability that followed the Panic of 1873 and the years of mass unemployment that followed the financial crisis of 1929-31. Neither the Long Depression of the 19th century nor the Great Depression of the 20th was an era of nonstop decline — on the contrary, both included periods when the economy grew. But these episodes of improvement were never enough to undo the damage from the initial slump, and were followed by relapses. We are now, I fear, in the early stages of a third depression. It will probably look more like the Long Depression than the much more severe Great Depression. But the cost — to the world economy and, above all, to the millions of lives blighted by the absence of jobs — will nonetheless be immense. And this third depression will be primarily a failure of policy. Around the world — most recently at last weekend’s deeply discouraging G-20 meeting — governments are obsessing about inflation when the real threat is deflation, preaching the need for belt-tightening when the real problem is inadequate spending. In 2008 and 2009, it seemed as if we might have learned from history. Unlike their predecessors, who raised interest rates in the face of financial crisis, the current leaders of the Federal Reserve and the European Central Bank slashed rates and moved to support credit markets. Unlike governments of the past, which tried to balance budgets in the face of a plunging economy, today’s governments allowed deficits to rise. And better policies helped the world avoid complete collapse: the recession brought on by the financial crisis arguably ended last summer. But future historians will tell us that this wasn’t the end of the third depression, just as the business upturn that began in 1933 wasn’t the end of the Great Depression. After all, unemployment — especially long-term unemployment — remains at levels that would have been considered catastrophic not long ago, and shows no sign of coming down rapidly. And both the United States and Europe are well on their way toward Japan-style deflationary traps …’
Go to following pages for above links:
http://www.albertpeia.com/currentopics2ndqtr10108.htm
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http://www.albertpeia.com/alresume.htm
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