Fall of the Republic

is the latest movie by Alex Jones.  This should move him up a few notches from 25 on President Obama's "unofficial" shit list. If your in the mood for some light comedy ... this probably isn't it. The power of this movie is really delivered through the words of the politicians and those in power themselves. Expert commentary provided by the likes of Gerald Celente and several others, is just helping to elaborate upon the obvious.

Dollar hits a crisis point

Dear MSM wackos,

If you think the economy is recovering, you must be mad...

Amidst the confrontational G20 meeting in Pittsburgh this week, news emerges from the wires that the dollar will soon be dead. Reuters gently announced the news that several foreign nations are now bailing on the dollar. "The U.S. Federal Reserve said it would begin to scale back short-term cash auctions in early 2010, while the European Central Bank, the Swiss National Bank, and the Bank of England announced they would curtail steps taken to ensure dollar liquidity."

I love that last part.

Of course, China, the largest holder of US debt, has long ago announced its plan to avoid the dollar and invest in raw materials and other commodities. In fact, they are not buying our debt at all anymore.

One has to wonder who will buy all this debt we have accumulated? The answer quickly seems to be no-one, and the talk around Wall Street water coolers is that the dollar is doomed.

Japan will not touch our debts, and now it looks like the EU as well as the Bank of England will also say, "Thanks, but no thanks ..."

If the Fed cannot sell our debt, (except to themselves through Caribbean off-shore Ponzi Schemes), while Congress is in the middle of approving another increase to their record debit limit, we will have a problem, Houston.

Yes it's true folks, the dollar is definitely dead.

When will it happen? Can't tell for sure, but when the selling starts ...



Car alarms? I don't think so. That piercing sound you hear would be newly created sound weapons provided by way of military contract.

Inside closed doors they're just carving up the worlds resources, that's all.

Black Friday and the Black Plague

Tomorrow starts the beginning of the (official) 2008 Christmas holiday season, and seems to be setting in quickly for a long slow march towards the new year as weary consumers search for the beginning of something to look forward to.

Personally relieved at the prospect of fewer people on the roads and in the air this week as I head to Las Vegas for business (no rest for the wicked), the rat race is planning on spending it's hard earned money in a more frugal manner.

No doubt, the view from the passenger window as I look down over Chicago on my way west won't look much different than it always has - a mass of development and urban sprawl we call progress will still be immersed in it's daily activities unabated. The queues may be smaller up close, but from a comfortable distance there is still the marvel of the human condition ever moving forward towards it's individual and collective goals humming along underneath the setting sun.

After all there is always tomorrow and tomorrow and tomorrow. Someday, whether it's January 21st, or July 4th or some other day in our future, things will be better for me and you.

However next year may be full of more of the same as far as the economy goes, and in other news ...

Environmental scientists warn that the dangerous levels of CO2 (at 350 PPM) which sparked the last period of global warming has already arrived and are now pleading governments and anyone listening to try and reduce levels immediately. Certainly drastic steps are needed despite the fact that in creating a new environmentally friendly economy will need to utilize traditional means of production just to get there.

While world oil resources are most likely past peak supply levels, it's certainly reassuring at least for now that prices in the past month and the foreseeable future will remain low.

Now it seems there is already another highly destructive strain of bacterial infection is spreading through the world and has begun to take hold in the US and around the world via infected rats.

Unfortunately, this article (linked above) does not provide us with information about the likelihood of death and it's method of dispersal. So we can only hope that scientists will share more information with us as soon as it becomes known.

Still it seems our race is still strangely connected to the condition of the common rat no matter how far away you try to look at it.

Simply Off the Charts

Life these days seems to be taking even more disturbing turns with each passing hour, or two.

For instance, I was really shocked to read that Michael Jackson had to sell his Neverland Ranch last month. Even though it's been a long time since I've thought of the man as sane, something inside my psyche was dumbfounded with the thought of Michael having to give up something so valuable, at least to him.

And I guess he isn't the only one.

From the loss of innocent lives from famine, disease, lack of water, or war to the economy and environment it seems that we are all living in days where all statistics seem to be going off the charts.

Like a bad dream, to me, the thought of America shedding it's automotive industry through bankruptcy is something that can't possibly be happening. I mean, can it? Even if we didn't invent the automobile, we sure came close and it was these manufacturer's that provided real wealth, and a whole lot more, to this country for over 100 years. While smaller and emerging nations like South Korea and India jump into the automotive industry, more than 3 million Americans can't figure out how to save just one of the Big Three.

And from what I hear, everyone couldn't really care less. From lenders balking at customers who want to take out a loan to buy an American car to (mostly) Republicans who would rather just give it all to the largest banks, no one seems to care. Even the CEO of GM has said he would rather not accept a bailout from the Government and let the entire company fail than step down. This while he and his co-horts fly into Washington on chartered jets to ask for money.

Basically, our manufacturing base is for all purposes dead in the water and the life guard is busy oiling up the pretty babe with pearls tanning on the beach.

Now I can't remember how much we've given to Citi et. al. recently, but it certainly pains me to see that they've decided to pay us back by announcing a record downsizing of more than 70,000 people. To date, trillions have already been handed to our financial industry and all we get are more mergers and terminations. And lending hasn't recovered at all, especially while home prices continue to decline throughout the country leading me to think of this neat jingle ... Have a home, forget getting a loan!

Originally there was supposed to be a great bailout which would magically save us all, but after half of it has already been spent to little effect, now Paulson seems too afraid to take any more risk for fear of looking bad or something has decided not to do anything more until the new administration takes office about two months away. Simply incredible to think that he blames the problems he's having on the government taking too long to pass the legislation, but then when he does have it, would prefer to sit on half and just wait.

From imports, and exports piling up at our shipping terminals to the utter failure of our government to do anything of any real importance it's becoming quite clear to me that the IMF's new take on the economy not recovering until 2010 is probably overly optimistic.

While Bush & Co. are busy pouring over a record number of pardon requests, raking the environment by allowing for useless oil drilling in and around our most sacred national parks (like Utah's Arches National Park) and planning quaint little sleep-overs and dinner parties for guests, like a slew of other businesses and homes throughout America, the Big Three will be out on the streets by Christmas.

Lame duck session is right. Even if Obama is every bit the excellent President everyone wants him to be, it's hard to see what he or anyone will be able to do because the problems are too many and too far gone. Not to mention that fact that everyone is still too busy making out like chicken little over each and every appointment and suggestion that emanates from the transitional team, there is a very real possibility the lame duck session might continue for some time after January 20th.

What people are failing to see is that there is a very real possibility there won't be a recovery to come, and that realization is just off the charts.

So we've had a good run and in that time even produced some great hits, but like Michael we can't afford to live in our Neverland Ranch anymore.

Cities begin to cry for help

The wave of economic fear is quickly spreading to the Midwest as Chicago's Mayor Richard M. Daley sounded dire warnings that massive layoffs will occur in several of the cities largest corporations before the end of the year, and the beginning of next year as well.

Saying, "Each one [company] tells me what they're laying off, and they're going to double that next year. We're talking huge numbers of permanent layoffs for people in the economy. It's going to have a huge effect on all businesses."

With grim repercussions in shrinking the tax-base even further, it is now left up to the final solution of raiding lock-box funds in order to prevent the city's looming bankruptcy.

While only the most prepared cities throughout the country have special funds tucked away, others have to take a direct approach like reducing services, cutting operating expenses, raising fees and taxes further stressing out consumers.

As home foreclosures continue unabated in October, like a dog caught between two bowls of dog food on either side of the kitchen, Fannie May and Freddie Mac continue to loose money like a sieve while being mandated to stop all future proceedings.

In fact, a judge has just prevented another mortgage underwriting company to do the same. Saying in essence, go take a huge financial loss and cease all home reposessions. Needless to say, the 50,000 homes it's no longer making money from will most likely force H & R Block to request Federal Assistance in the near future as have most companies in the US.

From banks large and small, investment firms, (now quickly becoming a thing of the past), the auto industry and Governors across the country, the 700 billion looks like a small drop in the pond compared to what is really needed to stop the bleeding.

Especially now that it looks like Treasury Chief, Hank Paulson, will be spending most of it just trying to keep our largest banks solvent by directly purchasing stock. This while over 44 million adults don't have health care, let alone a job or a home to come to at night.

The thing that scares me concerning Daley's comment yesterday is mention of the word, "permanent" which to me suggests a pretty long time. Now, with no other jobs or opportunity available the city will be placed in a quickly deteriorating situation of needing to provide more services with a continuing decline in resources.

Now, Chicago is a big city and has been witness to several difficulties in the past, so I would assume at some point it will recover again but unfortunately I wouldn't bet on too much assistance from the Federal Government as Daley noted, "[who] can just print the money."

Word on the international markets is that no one is buying US backed IOU's anymore which are what need to be sold in order to print the money. As our national debt spirals out of control, so goes the Federal Government's ability to pay it back. Right now all we can hope to do is pay interest. Can you imagine that monthly check?

Now that we really need help, it looks like the Fed has been out drinking pretty heavily and spent our money on other stuff.

Looks like we're due for a long hangover.

Rating the Economy

US May Lose Its 'AAA' Rating
Published on 11-11-2008

Source: CNBC

The United States may be on course to lose its 'AAA' rating due to the large amount of debt it has accumulated, according to Martin Hennecke, senior manager of private clients at Tyche.

"The U.S. might really have to look at a default on the bankruptcy reorganization of the present financial system" and the bankruptcy of the government is not out of the realm of possibility, Hennecke said.

"In the United States there is already a funding crisis, and they will have to sell a lot more bonds next year to fund the bailout packages that have already been signed off," Hennecke told CNBC.

In order to solve or stem the economic slowdown, Hennecke suggested the US would have to radically reduce spending across all sectors and recall all its troops from around the world.

As for a stimulus package, there is not much of an industry left to stimulate back into life, Hennecke said.

Who is steering this ship anyway?

While stock markets continue to feed off of one another in a seemingly never ending downward spiral that saw the Dow well below the 9,000 mark last week, people all over the world are busy holding their collective breath hoping this week might possibly be better.

And it might. Or better put, it better or we will all be suffering in a world of hurt.

With the stock price of many US companies like GM and Ford sitting at close to zero, it's hard to conceive that they could fall any further, but again, anything seems possible especially in this environment.

On Saturday, there were revelations that GM would possibly merge with Chrysler, but on Sunday there was the news that GM had already been in talks to merge with Ford beforehand. Then in an unusual move, both talks were suspended until the economy improves making it easier for a merger to take place.

However, even the head of the IMF has said not to expect any sort of recovery until late next year. I would say that even that estimate is optimistic.

GM, having already lost 70 billion dollars since 2004, is also looking for a bailout package, but the industry may only get around 50 billion or so if they're lucky. So it seems possible that the big three will quickly become a single entity, or face total bankruptcy if action isn't taken soon. Should a merger take place between GM, Ford and/or Chrysler expect massive layoffs and several US plant closures as they search for elusive profits and scale back similar product lines.

Individual states like Wisconsin will offer "too good to pass up" incentive packages in order to keep these plants form closing, but market conditions and basic viability will dictate their choices in this chaotic market.

Of course any talk of merger during this period of economic instability will result in massive layoffs, even more than usual as companies are looking to simply survive the crisis not prosper.

Currently the US has an estimated six percent unemployment rate, but we can expect this number to jump considerably in the months ahead. Already there are reports of massive budget shortfalls in several states like California, Illinois, Florida, etc.

For example, the Illinois comptroller recently reported a shortfall of over a billion dollars and stated they haven't been able to pay many of their bills. As these bills continue to pile up, several non-profit organizations and other contractors are on the brink of collapse. Many are attempting to hold out as long as possible, but most will not remain open by Christmas unless the state can find the money it desperately needs.

Like the auto industry, states are also facing a perfect storm of sorts.

With the credit markets all but dried up, there is no money to borrow to pay for what it owes. As more and more people find themselves out of work the tax base continues to shrink leaving less revenue to collect. So increasingly states will have to mimic corporate America and reduce their budgets further, or face the looming issue of bankruptcy.

As the downward spiral continues with the weakest falling first, we can expect property taxes (at least) to rise, services to be eliminated and projects to be shelved as the crisis begins to effect everyone.

Adding to the problem are millions of baby boomers who are seeing their retirement savings dry up almost completely leaving the majority of them with little option but to continue working for several more years. Many won't be able to keep their jobs, some will, but either way they will directly compete with the rest of us for the few remaining jobs left.

Luckily many of them already have homes that are bought and paid for, but this may be their only real investment left and it's certainly not a good time to sell.

Re-energizing the credit markets would go a long way toward helping the problem, but by most estimates the bubble is only half over. There are still massive problems lurking in the books of several companies in the US and around the world, so even if the government intervenes nothing will change until virtually all the bad debit is accounted for.

Some of these obligations will come due over the next two weeks and already there is talk of more companies, insurance providers and banks on the verge of collapse.

Both GM and Ford are already highly leveraged by well over a trillion dollars through credit default swaps as are issuers Hartford, MetLife, and Prudential on the insurance side.

As these issues continue to surface in the days, weeks and months ahead it will only fuel an increased sense of panic, especially on Wall Street.

Unfortunately while Main Street holds it collective breath, world politicians and the economies they represent are increasingly playing the blame game while on the surface appear to be cohesively working together.

It's becoming obvious that during the remainder of this lame-duck presidency, there will be little done to calm investors, sooth the nerves of companies and states facing bankruptcy, or placate other increasingly angry nations as we drive into uncharted territory.

As the election draws near one thing is for sure, the problems of Iraq, Iran, Afghanistan, energy, global warming and the economy started or ignored by this administration will need to be corrected by someone else.

And we've been told time and time again that our economy is simply too big to collapse, but like the largest cruise liner of it's time, all it takes is a lack of observation (or regulation) and a half-hidden iceberg to sink something of truly Titanic proportions. Leaving us all to ask, who is steering this ship anyway?

October Blues

For a hundred years or more, the American economy has dominated world markets, spurred unparalleled technological innovation and amassed vast amounts of capital well beyond any other nation in history.

Now, on "Black Monday" where, despite injecting hundreds of billions of dollars into credit markets by governments around the world, the final days of American economic hegemony are being increasingly discussed, not in the dark, quiet corners of conspiracy blogs, but in the national media and in legislative circles.

I'm sure this must be a surreal experience for some to see 1 trillion dollars of taxpayer money being thrown into the world economy only to see it being virtually ignored by the huge sucking sound coming from another almost 700 point drop in the Dow.

In just two days of trading we have been witness to a drop over 1,000 points. And on Tuesday, October 7th the total loss widened to over 1,500 in a continued world-wide decline in which the solvency of Brazil, Iceland and Pakistan have now come into question.

Tell me how we can stop the markets from crashing when our main solution is a huge bloated plan that is only designed to go into effect in a few weeks time at the earliest. At this rate, there might not be too much left for the bailout to save.

Unfortunately, from the time the bill was signed until today, the only other instrument the Fed has discussed is playing around with interest rates.

Obviously, we need more than getting housing prices to stabilize, and "confidence" to solve this epic crisis.

The bubble created by deregulating our housing market may have started this whole mess, but I wouldn't be too sure that our own governments 10 trillion dollar debt, among other things, won't add to these problems.

So it isn't too hard for us to see why lenders aren't feeling very generous lately, especially when average personal debit is over 10,000, not including our bill for financing this latest mega-bailout.

But is the answer just simple confidence? I highly doubt it. Consumers are also being socked with higher property taxes and fees at home, while states like California teeters on the brink of bankruptcy themselves. Fortunately, the price of gas is down for now, but that has also resulted in the devaluation of the Russian stock market by over 30 percent.

What we are really seeing is the spread of the housing debt bubble as it's moved from consumers defaulting, to the banks merging and crashing, and finally, to the solvency of governments themselves.

As prices fluctuate widely, companies, and even countries, will be seen to teeter on top of a precipice. So it's much wider than a domestic issue in which the average price of homes in the US can act as the silver bullet to world-wide stability.

The debit is already in circulation, and the bad bets made on the bad debit are also in circulation, making their rounds, too.

Sadly, our economy is about to go bust and our dominance over the world around us will be drastically reduced. But the issue that faces us now is not being properly addressed, and the people who are about to spend our money to help revive the economy are the very ones who perpetuated this whole mess in the first place.

In the short term, there are no real signs of relief either. Most companies expect a weak holiday shopping season to end out the year, and the only thing we can really look forward to is next spring where hopefully someone will buy a damn house.

Certainly, if the principle credit lines are not restored soon, people may have jobs but they might not be getting paid at all. And as the market continues to tank along with our home value and almost every other measure of our net worth, this just doesn't give us too much to be confident about.

Winners and Losers

In almost any game there is always a winner and loser, except for those rare times the game your playing allows for a draw of some sort. Even a coin has been known to land on it's side from time to time, but in the end there always seems to be the struggle of man to want to turn everything he does into some sort of a game.

Take a look at the movement of combining modern warfare with the video game industry and it's all to obvious that we've come a long way towards turning even the most hated of things into something possibly even fun.

But what's so fun about life now that we have experienced the single largest drop in the stock market's history? Well, I am sure that even on this day, there were winners and losers.

You wouldn't know it from watching the TV though as the pundits told us we had just lost over a trillion dollars. You also probably don't know that during these historic economic times, some are treating this like it's just like a game. Unfortunately, there are millions of us who have no idea there is even a game being played, so it's all on us.

It's called the game of economic redistribution where your money goes into the hands of the wealthy elite. Some have called it "trickle down", but in effect its more like "evaporate up".

The longstanding argument is that if you give all the perks to the top one or two percent of us, then they will in turn provide more for us in terms of job creation, etc. But in all these years the American taxpayer has seen jobs leave our country, and other ones being given away here at home. Of course many of these breaks still don't keep our industries from collapsing either, so the majority of us have yet to see any benefit from this unique economic model.

Now we are being asked to bail them out? And when we do, it's our money being lost in the markets? Seems like even if we win, we will lose this one.

It's a little ironic that Bush Co has given us all appeasement money after the first election and earlier this year, but in his last days will ask for it all back plus plenty of interest.

Who made up these rules anyway?

Market bets against hope

The Market is Now Pricing In the Genuine Possibility that the US will Default on Its Debt

While the chances that our economy will go into default has increased from 8 in January to over 25 basis points by mid September, the Daily Telegraph also reported that, as a result, market interest rates have also spiked going from -50 to 150 basis points in the same time.

Speculators have become increasing skeptical the sudden US move to price in another trillion dollars in government debt is a good one, and have bet against us. The result is making it harder for Uncle Sam and many Wall Street firms to seek the financing our economy needs to survive this crisis.

According to the George Washington blog posting on Saturday.

"You've heard of "credit default swaps". They are a type of derivative where one person places a bet that a certain company will go out of business, and another person on the other side of the contract places a bet that the company won't go out of business (see this and this).

Well, people are now starting to increase their use of credit default swaps to bet that the U.S. will default on its ability to pay on its treasury debt."

Last week we were witness to a wild ride on Wall Street and it looks like we are headed for more volatility in the future as the market reaction to more government debt is turning very negative.

As Reuters reports, as of Monday morning opening of the Asian markets ... "Stock futures off on rescue detail worry"

It seems our top economists are also helping to trigger the alarm bells this time. Avi Zenilman from the Politico reports Sunday that the experts have weighed in and don't seem too impressed.

This week will certainly see more wild fluctuations on Wall Street, and in markets abroad, sending us ever higher into the precipice of a final turn in one direction or the other. How long the markets can endure this dizzying pace of turmoil is anyone's guess, but we are certainly in need of stability not ever-increasing volatility.

Taxpayers get socked 1 trillion dollars

U.S. Govt. Soaks Taxpayers to Bail Out Wealthy Elite; $1 Trillion Rescue Fund Lands at Taxpayers' Feet

Published on 20-09-2008

Source: Natural News

"In its complete abandonment of free market principles, the U.S. government has banned all short selling of nearly 800 financial companies and set up a $1 trillion off-the-books "rescue" fund in an attempt to sweep financial losses under the rug while sending the bill to taxpayers. If you or I used the same accounting practices in our own businesses, we'd be arrested for serious white collar crimes, but the U.S. government respects no law and is now fully engaged in Enron-like accounting schemes to create the appearance of financial safety while it drives our nation deeper into unacknowledged financial disaster. ... Today, by shifting $1 trillion in debt to the taxpayers and suspending free market trading rules, the U.S. government has guaranteed its own financial demise."

Too good to be true

I knew there was a good reason not to “play” the stock market. Jim Willie writes for Kitco today:

"Hidden inside the AIG bailout funding package, surely hastily cobbled together, but carefully enough to include a totally corrupt clause, was a handy dandy clause that permits raids. The conglomerate financial firms are permitted at this point to use private individual brokerage account funds to relieve their own liquidity pressures. This represents unauthorized loans of your stock account assets. So next, if the conglomerate fails, your stock account is part of the bankruptcy process. Finally the corrupt USGovt and corrupt Wall Street houses are desperate enough to put into policy, stated by the US Federal Reserve, outlining the authorized raid of your money. Beware.

In the olden days, this sort of thievery resulted in a rope, a tree, and a horse scared out from under the perpetrator. Now? The government in cahoots with the Fed actually helps the bankers steal the money."

FDIC by another name

In my wildest dreams, as I am sure may of us have had at one point or another, was an image of me vacationing in the most exotic of places living up the big life from my fat bank account swelled by the winnings of the lotto. Ahh, the life of sipping pina coladas by the calm ocean side as I listen to the ramblings of my overly large-breasted cohort.

And I have to admit that, from time to time, these visions of doing nothing other than enjoying my winnings have kept me up at night trying to figure out what, in fact, that money would buy me.

After dwelling upon this luxurious lifestyle for more than a mere second or two, I would inevitably picture what would happen if these funds were to dry up. But then the thought of keeping smaller nest eggs of 100,000 planted in various bank accounts throughout the country came to mind, and the fear simply faded. A restful happy slumber would come soon after.

Of course, try as hard as one might to pick the lucky numbers each week, I have yet to hit the jackpot. As for me, not being a gambler at all, my odds are probably worse than most. One must play the game so to speak. But while I pay my respects at the gas pump, there is always that inner temptation and the seemingly endless wait to pay the cashier behind the long lines of other patrons whenever the Megabucks kitty sits at over 200 million or so.

Unlike other dreams and thoughts, striking it rich by dropping a dollar or two once a week, certainly isn't unique. And neither is the notion of diversification. After all, logic backed up by that special sticker on my bank tellers window tells me, and most everyone else, that's the smart way to go.

How hard it must have been to live in the days of the Great Depression without the assurance of the Federal Deposit Insurance Corporation backing up my deposits. As hard as I try to imagine, sleeping on top of my cash-hoarded nest egg just doesn't materialize. I mean, how much space does someone really need to have in order to protect 200 million? Possibly a Dick Cheney sized vault?

Surely, it has to be virtually impossible to protect your cash money when it sits somewhere hidden just out of sight in your own home. Especially, if you like to have guests, or plan on raising a family. I mean, what would happen if there was a fire, or for that matter, almost any natural disaster. Poof! There would be nothing left. Frightening thought.

But sadly, that is just what seems to be happening in the markets today, and there is the very real possibility that own our self-made financial disaster could lead to the possibility that the FDIC will not only be unable to protect us, but actually contribute to the problem itself.

All this talk about a vast storehouse of money stashed away by the Fed in case of rainy days like this, intended for the sole purpose of helping the American taxpayer out in times of need is just that. Talk.

Since its inception, banks have been contributing funds to the FDIC by charging us various fees. What contributions are made by an individual bank is calculated via a ratings system determined by the Fed that ranks each insured member based upon the likelihood of failure. And just like credit for you and me, the more risky the customer the higher the fee.

Now, you might think that hoard of money has got to be pretty big by now right? Well, not so fast. Turns out this money doesn't just go to some huge vault hidden underneath a mountain somewhere at all. And there isn't even a lock box, so to speak. For all this time, these small fees you and I have been paying, go directly to the Fed who in turn can decide to spend them as they please. Whatever amount the FDIC says they have on hand, well, it isn't really on hand at all. Most of it has already been spent on various other things anyway.

Bridge to nowhere anyone?

What is worse is that these small fees change as the conditions do. So as an insured bank begins to hit rough water, their fees increase as well. Of course, this all gets passed on to their customers who may or may not decide to shift their deposits somewhere else. It's a sort of self fulfilling prophecy. One that seems to be materializing right in front of us now.

Have your banks fees been rising of late? Well, now you know why. Want to know where your money is going? Not to some fortress of economic resurrection that is for sure.

So now there is talk that the FDIC is running out of cash because they have been using it to bailout so many of its members of late. The talk is that when the time comes, the FDIC will have to raise its rates even higher and possibly borrow additional money from the Fed.

Either way, these options are nothing more than additional taxation sifted through various government mechanisms to cloud our understanding of the truth.

And this can't be anything other than the notion of putting lipstick on a pig, could it?

How proud we must all be to know there is a nice sticker, and the fine-tuned words of officials assuring us we will all be protected in times of need!

Socialism American Style

Over the weekend, intense negotiations were taking place at the highest levels of our government attempting to solve this country's myriad of problems from environmental disaster and dwindling natural resources to economic catastrophe.

And it seemed as though some sensibility had come over the newly emerging socialist tendencies of our financial system when the Fed announced Sunday that it would not come to the aid of Lehman Brothers - even though it had rescued a string of similar companies in previous months. But by Wednesday, it had again decided to come to the aid of another company, AIG. Then shortly afterwords it announced a bailout of our automotive industry as well.

Yet, with all of this "rescuing" going on, by midday the stock market was still down by over 300 points.

It is certainly becoming hard to keep track of all the socialist firsts this government is making these days. Bailout after bailout from investment firms, banks, home lenders, insurance companies, and now our auto industry.

Taking into account that the fallout from Lehman Brothers will far outweigh the collapse of WorldCom, (which was previously the largest corporate bankruptcy in American history). The sheer number of companies that would have become bankrupt hadn't the government stepped in is becoming enormous, both in size and quantity.

Our economy, as reflected through Wall Streets books, would be well beyond tatters by now hadn't these bailouts occurred. This is not even accounting for the several regional banks, like WaMu and SunTrust that have also seen better days before playing the game of unregulated predatory lending.

And yet, just as in physics, these losses don't just vanish into nothing because of the governments massive bailout program. There still needs to be an accounting for every dollar whether its shifted from private to public coffers, or from liquid to gas.

You can change the substance of something, like water into steam, but it will always retain the identical mass.

So, in essence, these massive bailouts happening practically everyday are going to have to be paid for by someone. Welcome to socialism American style.

Now we as taxpayers won't have to pay for it all as there will be numerous vultures lurking in the wings just waiting to scoop up the stinking remains of the corporate victims left behind. Of course, we will also welcome foreign "investment" from Britain, Europe, China and the Middle East.

And the trend will continue for as long as there is money to be made in swooping in and taking what we think are failed businesses. Just like the sale of the Sears Tower in Chicago, it's happening all around us from Wall Street to Main Street, fire sale after fire sale. If not our government, it will be another American company, if not another American company, then it will be another foreign company, or even country.

While this is taking place, larger numbers of Americans will find themselves without employment and wondering how much their personal burden will be to the government come tax time. Doubt we will be getting any rebate checks anytime soon.

Funny to imagine all of this could have happened in just eight short years, but that is the nature of our economy. Change can happen fast.

Now, the bottom is far from being over and already the American taxpayer is left holding a pretty horrible bag of corporate debts, the FDIC is running out of "insured" money, and the Fed is suddenly finding itself backed into a corner without any good options.

In fact, the Fed is now finding out that it is not able to set its rates because they are being set for them at record high levels by a market that is more concerned with hording its reserves, or using them to pay off these bad bets made in the derivatives market.

At the same time, the American consumer is also left with little to no options itself. The job market, as weak as it is, is our saving grace and the inbred system of payroll deductions, FICA, Medicare, et. al. will ensure that the government gets the money it needs to keep ticking along saving the country from its own mistakes. However, as good paying jobs are being replaced by increasingly menial labor and lower paying positions in an ever decreasing job market, this is also becoming a slippery slope.

Unlike the 60s, we can't just burn our draft cards so to speak and decide not to support a government who has had little to no regard for its constituents because the same paper that feeds us feeds our government. It's just like a modern version of indentured servant-hood, a step away from slavery but a form of ownership never-the-less. That combined with out right to demonstrate or protest having been taken away, as is now the case, we have in effect become "sheeple".

If the government was held accountable for its actions, and we had a say, this wouldn't be the case as our money would most likely pay for things we wanted them to, but not anymore. Through the system of corporate news cycles, we are made to believe what we should think, and so our power is reduced further.

With all options seemingly off the table for the Fed, and the American people, it seems like the game is up and we have lost this bad game of poker. How big the loss becomes will certainly be much more than the devastation of Hurricane Ike and Katrina put together, but in similar fashion, we will be left holding the bag paying for the mistakes of greedy people who have effectively brainwashed our entire political system.

We can only hope that after this man-made disaster has come full circle the wasteful debris of human greed is washed away like the bad paper they helped to create.

Until then, comrades, I will save a seat for you in Siberia.

American Gamblers

Heard of he phrase, "put your money where your mouth is?" Well, if you're an American investor, you probably live by that phrase and are eating it right about now.

For some time the American economy has moved away from the production of goods and entered into the services industry. The end of the industrial revolution happened sometime shortly after WWII as the United States began to expand its global reach, providing other countries, such as Japan and Germany with the resources necessary to compete with our companies here at home. We did this through the Monroe Doctrine in Europe and under the reconstruction efforts of General Douglas McArthur in Asia.

By the 70s, it was becoming a hard pill for many Americans to swallow. And we are still in the process of losing our manufacturing base to foreign competitors, most notably China and southern Asia now.

Hard pill? Quite. The US has enjoyed being the primary manufacturing hub of the world since shortly after the American Revolution. Our continued innovation and subsequent manufacturing of these inventions, have provided this country with the ability to become the strongest nation on earth.

Interestingly, almost all finished goods prior to the Revolution were produced in England and then re-sold to consumers all across the world. Take clothes made from cotton as an example. American farmers would grow and then sell the cotton to manufacturing companies in England who would then make clothing items and, in turn, transport them back overseas to be sold as a final product. This was the case for almost every conceivable product, including tea.

As for the English, this system worked wonders for their economy until its colonies wanted to produce their own goods without having to bear the additional cost of shipping, or pay "unfair taxes" on these goods. The British knew a good thing when they had it and tried very hard to hold on to the advantage as long as possible.

However, after WWII the United States willingly gave several nations, (formally our enemies) the ability to directly compete with its own companies at home by building up their manufacturing bases even better than they were before. Often even better than our own.

Fortunately, the resourcefulness of Americans would lead to the growth of the services industry which quickly began to prosper in conjunction with the technological revolution. Again, the United States had a great deal of opportunity to prosper economically, and dominate, for a very long period of time.

However, we are currently struggling to remain competitive with other industrialized countries in the innovation of new technology, and we have long ago given them the reins of production. Those latest iPods that enter the market right before Christmas every year, are made in China. From the development of the iPhone, it has taken all of one year for an Asian company to develop and market a competitive product, which sells for a third of the price.

The services industry has followed the same path as manufacturing has, repeating pretty much the same mistakes. In order to remain competitive, American companies have decided to provide most its services off-shore. Because of the governments unwillingness to regulate how business do their business, this trend has continued unabated for almost two decades now. The result of which has provided for the emergence of several other countries as players in the world market.

Then in the late 90s, a new type of economy began to bloom here in the US and it was called the derivatives market.

Lets take a quick step back and glimpse a shortened snapshot of the history of the American economy.

First, we provided raw materials for others to produce, selling vast quantities to other countries and then buying the finished product later. Then we quickly became the world leader in manufacturing, but after about two hundred years of (mostly) unabated prosperity, we decided to provide other countries with the ability to directly compete with us. While this was happening, we painfully transformed our economy from production of goods to the servicing of these goods. Not too long afterwords, we decided to save a little money and sacrifice quality to save a buck here and there shipping the bulk of the service industry overseas. Now, the bulk of our capital is used to speculate on those very goods and services we used to own themselves.

In essence, we are now a country of gamblers. No matter how you look at it, the derivatives market is nothing other than sheer speculation with no guaranteed outcome. That is why anyone who is smart gets insurance on it, or doesn't play the game at all.

According to the richest man in the world, Warren Buffet has talked about the derivatives market using the terms, "ticking time-bomb","A fool's game", and "weapon of mass destruction."

Now, derivatives are nothing like stocks traded on Wall Street. They are very different things all together mainly because the vast majority of derivatives are traded outside of the market and are not held on a company's "audited" balance sheets. They also have really nothing to do with anything other than the concept of risk.

Stock is ownership in something. A derivative is really nothing other than "absence of risk" in something like a stock, or really anything you would normally put your money in. The upside is that the potential returns are generally faster and often larger.

Now why would I include this singular type of trading into the overall picture of our entire economy and equate it with our real economy? Simple. Because since 2003, the derivatives market has been larger than our combined global monetary wealth.

That's right, we (the entire global community) are no sitting on basically nothing other than sheer speculation which is now estimated at over 500 trillion dollars. In essence, Wall Street has become the new Las Vegas, but have put up our hard-earned money and savings as collateral.

What's worse is that they have continued to hide their devious accounting from the federal government, and lied to us about the true nature of the risks involved. Of course, none of this would have been allowed to occur if it hadn't been for the fed to give its OK, and it did this under the leadership of Alan Greenspan who now tells us we are about to head right off the cliff and into possibly another Great Depression.

How nice.

Also, unlike stocks which will last indefinitely-until sold to another buyer, or the company itself is sold, (or goes belly up), all derivatives have an expiration date associated with them.

This is why banks and investment firms, among others, have needed access to cash quickly or risk total collapse. This money is being used to pay off its bad bets in the derivatives market.

Now derivatives are not really sold in a market like Wall Street so to speak. By the derivatives market I mean to say whenever there is a buyer and a seller brought together to create a market.

Because there is no real regulation of derivatives, any seller of a derivative can find their own buyer willing to risk a future outcome. And this is why banks are swallowing up investment firms. Investment firms have basically purchased bad derivatives from banks who cannot pay them back for these loses when they are due. If these banks did not take them into their fold, then they in turn would be held to pay for these bets gone wrong, and as a result, probably go belly up themselves. That would be a really, really bad thing because our money is in those banks.

So, while investors have for years been telling the public that the best strategy for the American consumer is to take a long-term conservative approach to investing our money, they have essentially ignored their own advice and played craps with our hard-earned money we give them in good faith.

This while certain politicians have told us to quit "whining" about the economy and then gone ahead and decided to use taxpayer money to bail out these very same banks and investment firms who put us all here in the first place.

Make no mistake about it, until the derivatives market is brought under tight regulatory control, which I doubt it ever will be. The American consumer will continue to be mislead by the very people we are supposed to be putting out trust in.

But again, this shouldn't really be news to you.

Bank Dominos

Well after a good year or two of abject denial, the game of bank domino's is finally here.

Of course the first real sign of this came back in March of this year, but with the quick action of the Fed, as well as the support of the EU and Asian banking systems we were able to delay this deadly game. Unfortunately, their quick initial reaction only helped to make things just that much worse, and instead of letting those foolish banks deal with their own self-made problems, we will now have to foot the bill.

It is almost funny to hear from the mainstream media that the bailout of Fannie May and Freddie Mac will cost only 200 or so billion dollars and that we are only a year at most away from recovery.

We still seem to place out faith in what the corporate media keep telling us, even after it is evident they have lied to us time and time again.

This week may finally be the week when a real sense of the true impact of the economy comes home to rest, but again, this will only be the beginning. There are the debt markets and derivative markets to consider as well, but I won't get into that here.

In the coming weeks, and possibly months, we'll find out that the Fed will not be able to keep itself afloat let alone the several banks and investment houses it has decided to assist. This is why it decided to let Lehman Brothers fall by the wayside, and will probably continue to let others fail well into the future.

If other countries believe that the Fed is over-extended, then there will be a worldwide panic never seen before and most of the financial impact will hit overseas first before it comes back here to the US. No one will want anything to do with the dollar because it's real value will actually be negative.

However, given the global nature of the modern economy, the backlash will hit suddenly like a backhand slap.

Already, airlines in Europe are folding, almost weekly now. Let's see how many more airlines fail abruptly before the end of the year, (some estimates are up to 60 worldwide). And what about next year?

Since March alone there have been 90,000 factories shut down in China, and there's a huge surplus of trade goods sitting at the docks. Many, many more factories will follow for the same reason they succeeded in the first place-they have no margins.

And neither did the airlines. Really the only margins that were left in this modern economy was kept in the hands of big banks and the government, but now their margins are quickly disappearing in smoke.

Of course, our government hasn't had profitability since Bush & Co. took office, but never-the-less have been running on the "good faith" of other countries to lend us the money, but soon those IOUs will come home to rest.

Facing the bailout of so many financial institutions, and itself, while continuing a policy of spend, spend, spend there will be no recovery. Foreign capital will dry up almost completely as these nations will be too busy helping themselves out of this terrible jam.

This begins a downward spiral until a true bottom is reached. Unlike a well, this bottom isn't something that one can simply quantify, or set in stone because the factors which have caused this haven't been corrected. And until they have been, there will be almost no limit to how far our collective economies will tumble.

One thing is for sure, this will spell the virtual end to the global economy as we know it today. By the time there is any semblance of stability, transportation costs will be much too high for small ticket goods to be shipped vast distances. Airline travel will be limited to the wealthy few, and smaller nations will balk en-mass, as they are already beginning to do now, to our version of global prosperity.

As such, the global peg the US dollar once had will be erased forever, and with it our vision of an American hegemony for the world.

How long we continue to keep our head in the sand is entirely up to us, but either way the real damage has already been done. Even if the housing market stabilizes, the economy will feel the pain for several years to come for several reasons.

The American consumer is completely tapped out. Other than the wealthiest 1 percent, the rest of us saddled with our own debt, will now be paying for the governments bailouts over the past year, a continued trade deficit that will not longer be paid for by other countries, and a failed government straddling itself with even more debt as the baby boomers begin to retire en mass.

Now, because there is little manufacturing base left in this country, there is only the hope that the American consumer will lead the economy back on its feet, and as is already evident, we have nothing left with which to buy our country back into prosperity.

So, until those economic dominoes stop falling around us and we have emerged from our own collective debt to again spend our economy back into prosperity there will be no recovery in sight.

Of course, it is the system that let us down. The abject deregulation of the financial industry, the constant lies of "All is Well" that are fed to us via mass media, and the inability of the government to do anything other than make things worse, we might not see the end of the tunnel for a very, very long time.

Ironically, those countries which will be least effected by this world-wide game of dominoes are the ones we are getting closer and closer to war with right now. That is, other than the Gulf states bordering Saudi Arabia.

Comparisons of the Past

Several experts have recently said that our current economic crisis is unlike any other financial disaster in US history since the Great Depression, which began in 1930 and finally ended in 1954. A good comparison? Sorry, I don't buy it.

Now if my memory serves me correctly, the reason for the onset of the Great Depression can be attributed to just a few cliff notes. Everyday people were able to invest in the stock market due to the increasing use of telecommunications systems and mass urbanization. Investors were able to purchase on margin, often at a 10% rate. Our currency was pegged to an asset which could rise and fall in value - gold. There was literally no federal banking system in place, so people's deposits weren't insured.

When the stock market crashed, people went to withdraw their money from the local bank, and it just wasn't there and neither were their jobs when they got back. Of course, the environmental catastrophe called the Dust Bowl also played a factor. Unemployment at its peak hit around 30%.

While on the surface these two periods in American history can look similar, there are more reasons why they are very different.

Why are they so different? Today it's credit not margin that's killing us. After the roaring 20s, our government was sitting on a huge stockpile of wealth and enjoyed a substantial trade surplus (due to the export of oil and other natural resources). Now, our government is perhaps the largest holder of debit. Instead of being a net exporter, we are a nation that survives primarily from imported goods. Back then, there was no real system in place to regulate the financial industry. Now it's the industry itself that has spawned a legacy of greed through deregulation.

You might say things started looking bad for us around the time of Hurricane Katrina when so many people's lives were devastated never being able to recover. Unlike the Dust Bowl however, environmental disasters like Katrina are the result of a global climate crisis which shows no signs of recovery, not because of over-farming in soil depleted regions.

I guess I could go on, but suffice it to say we are looking at something much larger in scope than the problems faced by previous generations.

Great projects like the Hoover Dam, Mt. Rushmore and the Golden Gate Bridge were built as government projects that employed people and injected money into the the system by providing jobs. Currently, our government is seemingly committed to injecting money it doesn't have anyway (by simply printing, or borrowing more) into the capital market.

Now unlike then, it seems they have committed to bail out mortgage companies Fannie May and Freddie Mac as well as hundreds of banks and investment brokerage firms through the Fed and FDIC. According to this article, total debit could be in the range of 70+ trillion dollars. The FDIC has 54 billion in reserve. Social Security, at most, 11 trillion.

Try to picture this. You're going to the bank to take out all of your money in exchange for cash because credit doesn't look so good anymore. OK sounds good, there's no reason to panic. Now picture everyone doing this at the same time, and in effect shutting down the bank itself. Your bank. OK, still no problem because you'll manage to get some of it back seeing that your deposit is federally insured right? Wrong.

Looks like instead of building great projects and employing people putting wages back into our hands, our tax money is being used instead to bail out the very financial institutions that have played a role in creating this crisis.

Soon there won't be enough money left in our pockets to fuel the huge tanker ships that come from China which supply us with the meaningless trinkets we used to make ourselves.

This time it won't be like the last time and it shows every sign of being dramatically worse. So, until the entire nation wakes up and our government starts actually working for us, we as a nation will continue our perilous journey into uncharted territories.

November's Bitter Pill

What will happen in the next four year's with the Bush factor at the helm of American politics?

I was just considering this recently as a friend of mine had asked me last night when I stumbled upon one of my older blogs. The frightening thing is that parts of that post are already ringing true as the reference to the Artic National Wildlife piece shows.

Upon further reflection though, there are probably a few things I may have left out, or overlooked. November's bitter pill is more than just something hard to swallow for us anymore. Worldwide attention to the U.S. election has never been so great, indicating the true impact this presidency has had in the last four years, not only in this country, but in virtually every corner of the globe.

Other developing countries, especially emerging democracies in eastern Europe see our election as justification for rigging their own. Sure you can call it a democracy, but it certainly doesn't look like one. The once pristine image of American Democracy is fading in the eyes of the world and people are understanding that you can still rig elections to maintain power.

The divided EU, whose economy and currency continue to gain momentum since November, will tear at the heart of the NATO alliance, and between eastern and western Europe. The imperial nations of the past can once again resume their colonial land-grabs in developing countries rich in natural resources. Tension across the Atlantic will only continue to weaken the U.S. as Europe will be seen as the more stable bet worldwide.

Powell's resignation signals a more conservative direction for American interests worldwide. Make no mistake, Condi Rice will be what Colin could never be; George W.'s yes man, or woman. This pattern of replacing moderate conservatives throughout the administration will just further divide our nation and those whom we come into contact with in the next four years.

This leaves just two possible scenarios for the international community. Complete subordination, or a combined resilient response to our contempt of the modern global community.

American's could soon be tried for War Crimes by an international court. "In recent months, there have been other indications that the international community is taking a harder line toward U.S. behavior.

At last July's Annual Session of the OSCE Parliamentary Assembly, a resolution was passed condemning the use of torture in the U.S.-led global war on terrorism. The assembly called on all participating states to follow international commitments laid out in the Geneva Conventions and the UN Convention Against Torture.

Around the same time, the UN Security Council refused to extend the exemption from prosecution in the International Criminal Court for U.S. forces. Previously, U.S. forces were left exempt from prosecution in any UN-authorized mission. But after the torture scandal at Abu Ghraib prison, the UN Security Council let the exemption lapse, despite heavy lobbying by the United States.

Also in July, the International Court of Justice ruled that the wall being built by Israel and supported by the U.S. violates international law because it cuts into Palestinian land as determined by the 1967 borders between Israel and Palestine.

Perhaps seeking to capitalize on the momentum of the ICJ ruling on the Israeli wall, a group of 41 British members of parliament sent a letter to UN Secretary General Kofi Annan on July 20, asking him to seek an advisory opinion from the International Court of Justice on whether the war on Iraq was legal.

Hungary, Poland, and even England are beginning to turn away from us. Not just in terms of military support but also politically. The United States will continue to erode its respect to the rest of the world and stand even more isolated.

This general anti-American feeling will continue to spread into the commercial markets eventually lowering the dollar with respect the the Yen and Euro making it more difficult to repay even the interest on our national debt. The significance of this effect on the stock market could only be replaced with the privatization of Social Security.

But I wouldn't expect the EU to be very divided for long. Eastern-block nations will quickly seek to align themselves with their stronger neighbors politically. In fact, I would suspect that virtually the only nation to continue its full-support of US foreign policy would be Israel.

"Exactly how international relations will play out over the next four years may not be easy to predict. But it is clear that many nations won't tolerate what many consider the continued lawlessness of the United States. "

Stolen Election 2004 Website

"In Election 2000, the Bush regime stole the election and got away with it.  Now, in Election 2004, there is new evidence that Bush and the Republicans have stolen the 2004 election by electronic voting fraud in states with E-Voting without paper trails, scrubbing the voter rolls of Democratic voters, and destruction of paper ballots in heavily Democratic areas." This site has some interesting information, links to related sites, and its own blog.

News continues to trickle forward about a few thousand votes here, another few thousand votes there going to Bush and not Kerry. North Carolina may have to hold their state elections again because of widespread problems with their machines. Just seems increasingly clear to me that while the Democrats may have won the ground war bringing in record voters, the Republicans won the ground war when it came to rigging the elections on all levels.

Even the money pouring into the 527's that Bush and Co. kept calling attention to as being "Bad for America" was tapped into much more than their defeated counterparts, who coincidentally took most of the blame for having created this election "loophole" in the first place.

Will historians look back at this period and talk about it as America's experiment with Aristocracy? I guess we'll all have to wait and see if Jeb gets the nod next.

In the meantime, can someone PLEASE FIX THOSE STUPID MACHINES!

Impending Financial Disaster

"Bush Administration's Mounting Fiscal Disaster"

November 5, 2004

President Bush said yesterday, "I earned capital in the campaign, political
capital, and now I intend to spend it." Translation: President Bush
and congressional conservatives plan to drive the country into severe economic
distress by permanently extending supply-side tax cuts for the wealthy,
privatizing Social Security, and giving more handouts to corporations with no
means to pay for these schemes. All of this domestic spending will come on top
of potentially hundreds of billions of dollars that will be spent in Iraq and
Afghanistan.

* President Bush and congressional
conservatives have promised trillions of dollars in corporate kickbacks and tax
cuts for the wealthy. Over the past four years, conservatives spent
lavishly on a faulty Medicare drug program, corporate tax subsidies, a bloated
farm bill, and multiple rounds of tax handouts to the rich. Now they want
to gut Social Security by opening a $2 trillion hole in the retirement program
and ensuring billions in handouts to the financial services sector.


* They have no intention of paying for these schemes. The days of
conservative fiscal hawks are long gone. The current crop of conservative
leaders believes it's their duty to capture government resources to dole out as
they see fit. They care little if the government falls into bankruptcy or
the American economy grinds to a halt. The current situation makes it
impossible to properly prepare for the retirement of the baby boom retirement,
yet the president has offered no viable solutions to our longer-term fiscal
challenges.


* The president's corporate backers will be laughing all
the way to the bank while American taxpayers will be forced to clean up the
mess. Who wins in this scheme? Energy companies, the pharmaceutical
industry, health insurers, and the financial services sector all paid lavishly
to elect Bush and his cohorts and now expect a return on their investment. But
generations of American taxpayers will have to pay to clean up this fiscal
disaster long after the president has retired to the ranch."

Daily Talking Points is a product of the American Progress Action Fund.