Thursday, July 15, 2010

Guest Post: The Dangers Of A Failed Presidency

Submitted by Tyler Durden on 07/15/2010 11:01 -0500 on Zerohedge.com

By Michael Krieger, of KAM LP

If moderation is a fault then indifference is a crime.

-Jack Kerouac

Virtue is persecuted more by the wicked than it is loved by the good.

-Buddha

Having fallen from the eternal, the Evil One's desires are endless, insatiable. Having fallen from pure Being, he is driven by the desire to possess, to fill his emptiness. But the problem is insoluble, always. He is compelled to have and to hold, to possess and consume, and nothing else. All he takes, he destroys. Certainly he rules the material, as he is called the Prince of this World in the gospels - but only of the things of this world.

-Denis de Rougemont



I have been calling Barrack Obama’s Presidency a failure for at least six months now and it seems that I now have considerable company in this assessment as it becomes obvious to most. It is not a failure because of the Republicans. It is not a failure because of events beyond his control. It is a failure because this was a man that filled a depressed and downtrodden nation with the audacity of hope. When I voted for the man I knew it was against my personal financial interests. It was clear what he would do with taxes. Nevertheless, I got to the polls and voted for this fifth avenue creation thinking maybe, just maybe he might do some of the things he said. Most important to me were two issues related to the military-industrial complex (see Eisenhower’s warning on this during his Farewell Address http://www.youtube.com/watch?v=8y06NSBBRtY) and civil liberties. George W Bush was turning America into a depressed police state with perpetual war and consolidation of power between a corporate oligarchy and entrenched political class. A nation where the masses voluntarily gave up many of the liberties the founding fathers fought for merely to ease the fear that consumed them and which was propagated by the administration and the media. I and many others that voted for him even though they disagreed strongly with his economic policies thought he would at least reverse this trend. Why did we think this? Cause he said so. How foolish we were.

That being said, the real answer was certainly not John McCain as I think we would be in just as bad shape with him. I think that what this experience has taught us is that the President of the United States answers to others behind the scene. There are many theories on who these others are but I will keep it very simple. There is clearly a power elite that consists of a union between big corporate and financial oligarchs and career bureaucrats in Washington D.C. These are the folks that pull the strings of all administrations. All you have to do is look at the trends that have been in place since George W Bush and continue under Obama to see what these players want. Bigger government and thus more Federal power, more wealth for the oligarchs (thank you Federal Reserve) and an erosion of the middle class, and reduction of civil liberties in the name of the 1984-like never-ending “war on terror.” I believe in a war on terror of my own. A war against the terror that Washington D.C. is constantly trying to inject into your head so that you sheepishly give away all you rights and power to them. That’s my war on terror.

Ok, so what do I mean by “The Dangers of a Failed Presidency.” I mean that it is July of an election year and Obama’s magic spell that held sway over the American people and the world for about three months has completely washed away. I mean that the printed money mirage recovery that we have had to tragically watch is ending and we have no job growth to speak of other than a few hundred thousand census workers. The public has no appetite for more spending and Bernanke has no cover to print more money (yet). As such, if people think things are in freefall now for this administration just wait and see how the next several months pan out. This then brings me to the following quote:

The bottom line here is that Americans don’t believe in President Obama’s leadership,” says Rob Shapiro, another former Clinton official and a supporter of Mr Obama. “He has to find some way between now and November of demonstrating that he is a leader who can command confidence and, short of a 9/11 event or an Oklahoma City bombing, I can’t think of how he could do that.”

I found this quote in an FT article earlier in the week and it sent chills all over my body. This is how the strategists in Washington D.C. think. They are sick, twisted people. This guy doesn’t even realize how sick and twisted what he said is which is why he said it. Imagine what they say off the record! You can take this quote in many different ways but none of them are good. I am not going to say anything beyond the fact that I would be VERY suspicious if some sort of event occurred before the elections. Google the term “false flag.” Also remember Rahm Emmanuel’s famous quote of “you don’t ever want a crisis to go to waste; it’s an opportunity to do important things that you would otherwise avoid.” Think about this deeply. This doesn’t mean do what the public wants, or follow the constitution. It means that that those pulling the strings of power have the opportunity to do what THEY want, what fits THEIR ideology. Hitler is the most famous modern example of a leader that used a crisis to form his fascist state. Again, I am not talking about Obama in isolation. I am referring to the power structure that has been firmly in place since the 9/11 attacks. Many call it a silent coup. I agree with this assessment.

This email is not meant to create fear. It is actually meant to get people ready if things get crazy for whatever reason. It is a challenge to people. I challenge everyone to think about how they would react should another terrorist attack or something along those lines occur. I was there for 9/11 and I saw the buildings go down in person. I know what it was like to be manipulated by my own government and media in the wake of such an emotional trauma. I also see that what we have done since, with things such as the Patriot Act and two wars that are still ongoing, and I have reflected on how they have changed America for the worse and provided a fertile ground for the elite to take away more of our rights and our wealth. So my rallying cry is that we must be strong and fearless in the face of fearful events. In the wake of anything that may occur in the years ahead we must not react on emotion and NEVER give away our inalienable rights in the name of protection from big brother. Be fearless, strong and resolute. Spend more time with your neighbors and build things up at the local level. If we have those supports then we will be less inclined to cry to the magicians in D.C. and the Federal Reserve for “help.”

Mike

Wednesday, July 14, 2010

"these aren't the droids you're looking for"

GLENN BECK BILDERBERG

Minor Threat- I Don't Wanna Hear It



I was 15 when my buddy Joe and I would cruise all over Dallas in his volkswagon bug and jam out to this Minor Threat tape.

In fact, this song was one of the songs that got listened to the most.

I'll go on record to state that this song "I Don't Wanna Hear It" is one of the ALL TIME BEST punk rock songs ever made!

HERE ARE THE LYRICS:


I don't want to hear it
All you do is talk about you
I don't want to hear it
'Cause I know that none of it's true
I don't want to hear it
Sick and tired of all your lies
I don't want to hear it
When are you gonna realize...

That I don't want to hear it
Know you're full of shit

Shut your fucking mouth
I don't care what you say
You keep talking
Talking everyday
First you're telling stories
Then you're telling lies
When the fuck
Are you gonna realize

That I don't want to hear it
Know you're full of shit

Charlie On The Economy



This dude knows what's up!

Lindstrøm & Christabelle - Lovesick



Do u gonna be there?
Are u sure u gonna call back?
When I'm calling up and all that?
Did u know that I'm thick?
Did u think I would quit?
Did u think I will hang?

Can't u hear I'm sick?
I'm lovesick
Can't u hear it explode?
Like my heart is quick
I'm lovesick
Can't u hear it explode?
All down

Can we make it up?
Can u call it a sound?
Can u move to the beat?
Can I listen in?
Can u feel my beat?
Can u feel the bass?
Can u hear all the clapping?
Can u make it a sound?
Cause I want you happy

Can't u hear I'm sick?
I'm lovesick
Can't u hear it explode?
Like my heart is quick
I'm lovesick
Can't u hear it explode?
All down
All down

U don't know me
U don't know me
U don't know anything
U don't know me

U don't know me
U don't know me
U don't know anything
U don't know me

U don't know me
U don't know me
U don't know anything
U don't know me
U don't know me

Do u gonna be there?
Are u sure you gonna call back?
When I'm calling up and all that?
Can't u hear I'm sick?
I'm lovesick
Can't u hear it explode?
Like my heart is quick
I'm lovesick
Can't u hear it explode?
All down

Can't u hear I'm sick?
I'm lovesick
Can't u hear it explode?
Like my heart is quick
I'm lovesick
Can't u hear it explode?
All down
Can we make it up?

Monday, July 12, 2010

Sunday, July 11, 2010

The Financial Con Of The Decade Explained So Simply Even A Congressman Will Get It

Submitted by Tyler Durden on 07/10/2010 21:13 -0500 From ZeroHedge

Sometimes, when chasing the bouncing ball of fraud and corruption on a daily basis, it is easy to lose sight of the forest for the millions of trees (all of which have a 150% LTV fourth-lien on them, underwritten by Goldman Sachs, which is short the shrubbery tranche). Luckily, Charles Hugh Smith, of oftwominds.com has taken the time to put it all into such simple and compelling terms, even corrupt North Carolina congressmen will not have the chance to plead stupidity after reading this.

Of course, to those familiar with the work of Austrian economists, none of this will come as a surprise.

1. Enable trillions of dollars in mortgages guaranteed to default by packaging unlimited quantities of them into mortgage-backed securities (MBS), creating umlimited demand for fraudulently originated loans.

2. Sell these MBS as "safe" to credulous investors, institutions, town councils in Norway, etc., i.e. "the bezzle" on a global scale.

3. Make huge "side bets" against these doomed mortgages so when they default then the short-side bets generate billions in profits.

4. Leverage each $1 of actual capital into $100 of high-risk bets.

5. Hide the utterly fraudulent bets offshore and/or off-balance sheet (not that the regulators you had muzzled would have noticed anyway).

6. When the longside bets go bad, transfer hundreds of billions of dollars in Federal guarantees, bailouts and backstops into the private hands which made the risky bets, either via direct payments or via proxies like AIG. Enable these private Power Elites to borrow hundreds of billions more from the Treasury/Fed at zero interest.

7. Deposit these funds at the Federal Reserve, where they earn 3-4%. Reap billions in guaranteed income by borrowing Federal money for free and getting paid interest by the Fed.

8. As profits pile up, start buying boatloads of short-term U.S. Treasuries. Now the taxpayers who absorbed the trillions in private losses and who transferred trillions in subsidies, backstops, guarantees, bailouts and loans to private banks and corporations, are now paying interest on the Treasuries their own money purchased for the banks/corporations.

9. Slowly acquire trillions of dollars in Treasuries--not difficult to do as the Federal government is borrowing $1.5 trillion a year.

10. Stop buying Treasuries and dump a boatload onto the market, forcing interest rates to rise as supply of new T-Bills exceeds demand (at least temporarily). Repeat as necessary to double and then triple interest rates paid on Treasuries.

11. Buy hundreds of billions in long-term Treasuries at high rates of interest. As interest rates rise, interest payments dwarf all other Federal spending, forcing extreme cuts in all other government spending.

12. Enjoy the hundreds of billions of dollars in interest payments being paid by taxpayers on Treasuries that were purchased with their money but which are safely in private hands.
Charles' conclusion does not need further commentary as it is absolutely spot on:

Since the Federal government could potentially inflate away these trillions in Treasuries, buy enough elected officials to force austerity so inflation remains tame. In essence, these private banks and corporations now own the revenue stream of the Federal government and its taxpayers. Neat con, and the marks will never understand how "saving our financial system" led to their servitude to the very interests they bailed out.

The circle is now complete: in "saving our financial system," the public borrowed trillions and transferred the money to private Power Elites, who then buy the public debt with the money swindled out of the taxpayer. Then the taxpayers transfer more wealth every year to the Power Elites/Plutocracy in the form of interest on the Treasury debt. The Power Elites will own the debt that was taken on to bail them out of bad private bets: this is the culmination of privatized gains, socialized risk.

In effect, it's a Third World/colonial scam on a gigantic scale: plunder the public treasury, then buy the debt which was borrowed and transferred to your pockets. You are buying the country with money you borrowed from its taxpayers. No despot could do better.
As for part two of this epic con we are all living through, Charles explains as follows:

The Con of the Decade (Part II) meshes neatly with the first Con of the Decade. Yesterday I described how the financial Plutocracy can transfer ownership of the Federal government's income stream via using the taxpayer's money to buy the debt that the taxpayers borrowed to bail out the Plutocracy.

In order for the con to work, however, the Power Elites and their politico toadies in Congress, the Treasury and the Fed must convince the peasantry that low tax rates on unearned income are not just "free market capitalism at its best" but that they are also "what the country needs to get moving again."

The first step of the con was successfully fobbed off on the peasantry in 2001: lower the taxes paid by the most productive peasants marginally while massively lowering the effective taxes paid by the financial Plutocracy.

One Year Later, No Sign of Improvement in America's Income Inequality Problem:

Income inequality has grown massively since 2000. According to Harvard Magazine, 66% of 2001-2007's income growth went to the top 1% of Americans, while the other 99% of the population got a measly 6% increase. How is this possible? One thing to consider is that in 2001, George W. Bush cut $1.3 trillion in taxes, and 32.6% of the cut went to the top 1%. Another factor is Bush's decision to increase the national debt from $5 trillion to $11 trillion. The combination of increased government spending and lower taxes helped the top 1% considerably.
The second part of the con is to mask much of the Power Elites' income streams behind tax shelters and other gaming-of-the-system so the advertised rate appears high to the peasantry but the effective rate paid on total income is much much lower.

The tax shelters are so numerous and so effective that it takes thousands of pages of tax codes and armies of toadies to pursue them all: family trusts, oil depletion allowances, tax-free bonds and of course special one-off tax breaks arranged by "captured" elected officials.

Step three is to convince the peasantry that $600 in unearned income (capital gains) should be taxed in the same way as $600 million. The entire key to the U.S. tax code is to tax earned income heavily but tax unearned income (the majority of the Plutocracy's income is of course unearned) not at all or very lightly.

In a system which rewarded productive work and provided disincentives to rampant speculation and fraud, the opposite would hold: unearned income would be taxed at much higher rates than earned income, which would be taxed lightly, especially at household incomes below $100,000.

If the goal were to encourage "investing" while reining in the sort of speculations which "earn" hedge fund managers $600 million each (no typo, that was the average of the top 10 hedgies' personal take of their funds gains), then all unearned income (interest, dividends, capital gains, rents from property, oil wells, etc.) up to $6,000 a year would be free--no tax. Unearned income between $6,000 and $60,000 would be taxed at 20%, roughly half the top rate for earned income. This would leave 95% of U.S. households properly encouraged to invest via low tax rates.

Above $60,000, then unearned income would be taxed the same as earned income, and above $1 million (the top 1/10 of 1% of households) then it would be taxed at 50%. Above $10 million, it would be taxed at 60%. Such a system would offer disincentives to the speculative hauls made by the top 1/10 of 1% while encouraging investing in the lower 99%.

Could such a system actually be passed into law and enforced by a captured, toady bureaucracy and Congress? Of course not. But it is still a worthy exercise to take apart the rationalizations being offered to justify rampant speculative looting, collusion, corruption and fraud.

The last step of the con is to raise taxes on the productive peasantry to provide the revenues needed to pay the Plutocracy its interest on Treasuries. If the "Bush tax cuts" are repealed, the actual effective rates paid on unearned income will remain half (20%) of the rates on earned income (wages, salaries, profits earned from small business, etc.) which are roughly 40% at higher income levels.

The financial Plutocracy will champion the need to rein in Federal debt, now that they have raised the debt via plundering the public coffers and extended ownership over that debt.

Now the con boils down to insuring the peasantry pay enough taxes to pay the interest on the Federal debt--interest which is sure to rise considerably. The 1% T-Bill rates were just part of the con to convince the peasantry that trillions of dollars could be borrowed "with no consequences." Those rates will steadily rise once the financial Power Elites own enough of the Treasury debt. Then the game plan will be to lock in handsome returns on long-term Treasuries, and command the toady politicos to support "austerity."

The austerity will not extend to the financial Elites, of course. That's the whole purpose of the con. "Some are more equal than others," indeed.

h/t Andrew

Friday, July 09, 2010

Sunday, July 04, 2010

On Why America's 234th Birthday May Not Have Many More To Follow

This post is copied and pasted from Zerohedge:

As overindebted Americans and bankrupt cities and municipalities spend millions to celebrate America's 234th birthday (and delighted by the fact that while the rest of the world is writing in austerity, we actually can still pretend we can afford such demonstrations of affluence) with brilliant if transitory firework displays, it behooves everyone to step away from the symbolic, and consider for a minute the circumstances surrounding this country's declaration of independence. Since at the basis of every action there is always a monetary incentive, for a critical perspective of the economic conditions that led not only to the violent separation of the US from England, but to the subsequent creation of the Federal Reserve, the abolition of the gold standard, and all culminating with the imminent "end of the road” for the financial system as we know it, we present the following essay from reader Matthew Hinde.

I'm sure you know that the primary reason for the American War of Independence was to break from the English banking system of the time. The English Banks wanted the US government and corporations to borrow money from them in order to trade. This is really what the founding fathers of America fought against and won independence from. And so after the war had been won the US financial system was controlled, and all US Dollars were issued, by the US Government. The value of each Dollar was fixed (i.e. there was no inflation) and ALL the banks operated within the financial system. The most significant aspects were that the value of a dollar was FIXED and that the commercial banks were not empowered to create money. This is really what the English banks wanted to be in control of - the power to create money and lend it to the US entities at interest.

After the establishment of the Federal Reserve in 1913, however, the bankers finally got their way in the US. They took control of the US financial system and Fractional Reserve Banking became a reality in the US. What this means is that the financial system was essentially privatized and the commercial banks started to create money “out of thin air” by taking in deposits and then using these deposits to empower them to make loans significantly in excess of those deposits. I'm sure you can see how, through this scheme, the banks had shifted themselves out of a situation where they had primarily been an intermediary between savers and borrowers in the economy, to a situation where they had the authority to create and lend money into the economy.

Practically what this has meant to the American people is that as the banks have created additional units of currency, the value of their savings has been consistently undermined and devalued over time. One could argue that this has been compensated for by interest being paid on peoples’ savings, however the fact of the matter is that this rate has been manipulated down by the Federal Reserve over time, resulting in significant asset price inflation. In addition to this qualitative devaluation of money, as the capital and interest repayments of existing loans has been made, liquidity has been drained out of the economy thereby creating monetary shortages on "main street". So I’m sure you can see from this that the American people have been hit on two sides, firstly the value of their money has been consistently devalued, and secondly the quantity of money in the real economy has also decreased relative to existing debt levels.

From a banking perspective the only real concern for them was the second issue highlighted above (i.e. the fact that the quantity of money in the real economy was decreasing relative to the existing debt levels). This had the effect of reducing the probability that their loans would be repaid. In dealing with this issue the US Government and the Federal Reserve de-linked money from gold in 1971 and since the early 1980s they have also consistently reduced interest rates. The intention behind these efforts was to ensure that firstly, there would be nothing to limit the growth in the money supply and secondly, to reduce the monetary withdrawals (via interest repayments) out of the system. These two steps have both prolonged the functioning of the system as it stands. The long-term fundamental issue of the financial system though is that it is a “closed” system that requires the economy (i.e. all economic entities) to assume greater levels of debt for it to keep functioning. At the end of day there is literally no way out without altering the nature of the system itself.

It is my firm belief that we have come to the “end of the road” for the financial system, as we know it. The myriad of problems that it is creating are only going to get larger as time moves forward – until the US Government takes decisive action to correct the fundamental issues. To this end it needs to fix the value of each unit of currency by linking it to a basket of commodities (not only gold since the total quantity of gold is limited and so that would in turn limit the total quantity of money - this was the problem that resulted in the initial creation of the Federal Reserve), and it needs to eliminate the fact that money can only be created through debt. Under the current financial system, everybody ends up in debt and the banks get to continue reaping from that state. It really is a time for change and I firmly believe that the US will once again lead the world in a new direction, one that is equitable and fair for all economic participants.

When is enough going to be enough?

John Adams - Declaration of Independence

Something to consider on this glorious 4th of July.