Oh Boy! Stimulus!

Peter Schiff talked about the ills of government economic influence in a discussion on CNBC, 12/28/2008.

While others on the panel attempted to argue for accepting the “inevitability” of more financial regulation, Schiff urged that such measures be resisted. The other establishment talking heads bizarrely promoted the idea of accepting government mandated measures despite the fact that they have proven to make the problem worse in the past and have done nothing to stimulate the economy over the second half of 2008. This is akin to being in a car hurtling towards a brick wall and not slamming on the breaks but preparing for the “inevitability” of crashing through it.

“The problem was in the 1920’s, the Federal Reserve blew up a stock market bubble, when it burst we needed to have a severe recession but Hoover wouldn’t let that happen, he tried to intervene, he tried to prop up companies, he tried to keep companies from failing, he was the most interventionist president up until that point - he started the Great Depression,” said Schiff, adding that Roosevelt then compounded the problem through the rest of the 30’s.

Schiff predicted that the ultimate bottom for the Dow would mean it was worth just one ounce of gold and that it would hit a low of value between five and seven ounces of gold next year.

“It’s gonna be a huge decline in the price of stocks and a huge rise in the price of gold as well,” said Schiff, adding that the creep away from the dollar would soon turn into a “stampede”.

Ode to a Modern Hero

One person can still make a difference.

University of Utah student Tim DeChristopher single-handedly disrupted Friday’s auction of Utah’s pristine wilderness to oil and gas companies when he "bought" 22,000 acres of land in an attempt to save the property from drilling.

The sale had been strongly opposed by many environmental groups. Stephen Bloch of the Southern Utah Wilderness Alliance said, "This is the fire sale, the Bush administration’s last great gift to the oil and gas industry."



http://www.democracynow.org/2008/12/22/posing_as_a_bidder_utah_student

The following transcript is from Democracy Now:

AMY GOODMAN: The Bureau of Land Management held a controversial auction Friday to sell oil and gas drilling rights to nearly 150,000 acres of wilderness in southern Utah. The sale had been strongly opposed by many environmental groups. Stephen Bloch of the Southern Utah Wilderness Alliance said, "This is the fire sale, the Bush administration’s last great gift to the oil and gas industry.”

A coalition of environmental groups opposed to energy development on public lands filed a lawsuit last week to block the auction. They struck a deal with the Bureau of Land Management that allowed the auction to proceed on the condition that the leases on the most contested portions of the land will not be issued for another thirty days, until a federal judge hears the case.

Actor Robert Redford has been among those speaking out against the sale of these lands.

ROBERT REDFORD: Anyone who’s been there can testify to the fact that there is no place like these lands. These lands are not Cheney’s and Bush’s. The lands are ours. They’re ours, because they’re a part of our legacy, they’re part of the human American legacy. No place on earth, for anyone—as Congressman Baird has said, no place on earth can speak to the balance of beauty and nature like these areas. And the fact that they would—there’s so much deception, so much sleight of hand here. I mean, how would you feel if you had an heirloom that was centuries-old in your family, and someone came in while you were not looking or they distracted you by creating something over here, and they took it away from you? How would you feel? This is not their land. It’s our land. These are public lands. And the BLM is supposed to be protecting those lands on our behalf.

Now, once these lands are taken away, they’re gone. And gone doesn’t come back. So I feel pretty strongly that we have to do everything. It isn’t a question of trying to talk to them. Forget that. That doesn’t work. They’ve been trashing the environment ever since they came in, almost like they had a duty to do so. But when they trash our lands, and not theirs, and claim it’s their prerogative, then something’s pretty criminal. So I say stop it. Enough is enough. Not only will it not serve the purpose they keep stating—it’s not going to provide any new energy—it’s going to pollute what we’ve already got, and it’s going to take away something that is ours to give to our children, their children and their children and their children. So I feel pretty strongly about this. I appreciate being given the chance to speak to it. As I said before, it’s an emotional situation for me. And we should not allow this to happen. It’s criminal.

AMY GOODMAN: Actor Robert Redford, opposing the sale of Utah wilderness to oil and gas companies. While many environmental groups launched campaigns to oppose the sale of the land, one student in Salt Lake City attempted to block the sale by disrupting the auction itself. Twenty-seven-year-old Tim DeChristopher posed as a potential bidder and bid hundreds of thousands of dollars on parcels of the land, driving up prices and winning some 22,000 acres for himself, without any intention of paying for them.

The Bureau of Land Management must now wait over a month before it can auction off these properties, but by then the bureau will no longer be run by the Bush administration.

Tim DeChristopher was arrested Friday and is scheduled to appear in court later today. He joins us in Salt Lake City.

Welcome to Democracy Now!, Tim DeChristopher.

TIM DeCHRISTOPHER: Good morning, Amy. It’s great to be here. I read your book last summer and really enjoyed it.

AMY GOODMAN: Well, thanks. Why don’t you start off by telling us what happened on Friday? What did you start off planning to do that day? Where were you?

TIM DeCHRISTOPHER: I started off, actually, at a final exam at the university and went straight from there down to the BLM office. And I saw some protesters walking back and forth outside, and I knew that I wanted to do more than that and that this kind of injustice demanded a higher level of disruption. And so, I just decided that I wanted to go inside and cause a bigger disruption.

And from there, I found it really easy to get inside and become a bidder, and went inside and was in the auction room. And once I was in there, I realized that any kind of speech or disruption or something like that wasn’t going to be very effective, but I saw pretty quickly that I could have a pretty major impact on the way this worked. And it just took me a little bit of time to build up the courage to do that, knowing what the consequences would be. And so, I started bidding and started driving up the prices for some of the oil companies. And throughout that time, I knew that I could be doing more and could really set aside some acres to really be protected. And so, then I started winning bids and disrupting it as clearly as I could.

AMY GOODMAN: How does it work? You get a paddle?

TIM DeCHRISTOPHER: Yeah. I just had a bidder paddle and just kept raising it as much as I could.

AMY GOODMAN: And you ended up buying what? Over 22,000 acres of land?

TIM DeCHRISTOPHER: Right.

AMY GOODMAN: And where was this land?

TIM DeCHRISTOPHER: Honestly, I didn’t know at the time. But now it turns out that a lot of that land was the land right around Arches National Park and in Labyrinth Canyon and Mineral Point and beautiful places like that. So it turned out pretty well.

AMY GOODMAN: And now what are your intentions? Or first, I should ask, what was the response of the people in the room? When did they understand who you were? Or did they, at the time?

TIM DeCHRISTOPHER: Once I started buying up every parcel, they understood pretty clearly what was going on. And so, at that point, they stopped the auction, and some federal agents came in and took me out. And from other people who were in the room afterwards, I guess there was a lot of chaos, and they didn’t really know how to proceed at that point. But then, I was away talking to the federal agents at that point.

AMY GOODMAN: When did they arrest you?

TIM DeCHRISTOPHER: Well, they took me into custody there on Friday, and they had me for a few hours. But it was a pretty cordial conversation that I was having with them. I was very clear about what I was doing and why I was doing it. I told them all my motivations and why the environmental movement, as it’s been, and myself included, hasn’t been effective and why I felt it was necessary to take more drastic actions. And so, they took my statement there and decided that I wasn’t a threat, and so they released me. But charges haven’t been pressed yet. That’s going to happen later today.

AMY GOODMAN: I’m looking at the Salt Lake Tribune article on you. It says, “He didn’t pour sugar into a bulldozer’s gas tank. He didn’t spike a tree or set a billboard on fire. But wielding only a bidder’s paddle, a University of Utah student just as surely monkey-wrenched a federal oil- and gas-lease sale Friday, ensuring that thousands of acres near two southern Utah national parks won’t be opened to drilling anytime soon.”

Can you talk about how it is that this land was being auctioned off? And what were the other companies, organizations in the room that were buying it up?

TIM DeCHRISTOPHER: Well, basically, the Bush administration was trying to rush through this auction as quickly as possible to get it done before Obama took office, because they knew that it wouldn’t be acceptable under any other administration other than Bush and Cheney. And so, they just circled vast swaths of southern Utah. Their initial announcement, they included pieces of property that had houses on them in Moab and included property that they didn’t even have rights to drill in or they didn’t have rights to sell off and included a lot of areas around national parks. And so, they rushed through the process and didn’t have time to do adequate environmental impact statements, didn’t have time to take an adequate amount of public comment or even input from other federal agencies. And there was a big battle with the National Park Service, because they were upset over a lot of areas that were included in there. But luckily, they also didn’t have time to make sure that all the bidders were bonded, which is how I got in so easily.

AMY GOODMAN: Is this land you have walked, traveled, enjoyed?

TIM DeCHRISTOPHER: I’ve been around that area a lot, and a lot of southern Utah and the wilderness throughout this state, I’ve enjoyed for a long time. And that’s why I originally came here. I spent my first two years in Utah working for a wilderness therapy program and spending most of my time out there in some of the beautiful lands of Utah.

AMY GOODMAN: I want to go on in the Salt Lake Tribune piece, where it says, “During the confusion that followed DeChristopher’s removal, Sgamma”—I don’t know if I’m pronouncing this person’s name right, Kathleen Sgamma, director of government affairs for the Independent Petroleum Association of Mountain States—“said she had seen Southern Utah Wilderness Alliance attorney David Garbett ‘communicating’ with DeChristopher during the auction. She questioned whether SUWA”—that’s the Southern Utah Wilderness Alliance—“had been acting in concert with [DeChristopher] the BLM dubbed a ‘nuisance bidder.’” That was you. Were you working with other groups in the room?

TIM DeCHRISTOPHER: No, no. There was no kind of a plan or anything. The extent of the communication that the SUWA attorney had with me was he dropped his business card in my lap on his way out the door, as he did with a lot of the other bidders who won land, because they were intending to try to protect some of those afterwards, hoping that the oil companies would be willing to give them up later.

But it was just me in there acting alone. It wasn’t especially premeditated. I got in there and saw the opportunity to make the difference and then realized that, seeing that opportunity, I couldn’t ethically justify not taking it. I knew that as bad as this could possibly turn out, if I ended up going to prison, then I could live with that. But if I saw an opportunity to protect the land of southern Utah and I saw an opportunity to keep some oil in the ground and give us a better chance for a livable future and I passed up that opportunity, then I wouldn’t be able to live with that. And so, I just had to make that choice on my own.

AMY GOODMAN: Tim DeChristopher, you’re not alone. Members of the National Park Service; members of Congress; John Podesta, head of the President-elect Barack Obama’s transition team, have all said the lease sale should be halted or altered to accommodate environmental concerns. What was the response of, well, the protesters outside, now the environmental groups, as your action has become known?

TIM DeCHRISTOPHER: The response has really been overwhelming, and that’s been the most powerful part of the whole thing for me. Over the past two-and-a-half days, I’ve just got an overwhelming amount of support from all across the country and from different parts of the world. People have been standing up, inspired and encouraged to take action on their own, which is really powerful. And people have been coming out of the woodwork to support me. The former director of the BLM, Patrick Shea, has now volunteered to lead my legal team pro bono. And so, he’s on our side in a big way, and he’s a great asset to have.

This has really been emotional and hopeful for me to see that kind of support over the last couple of days, because I did feel like I was putting myself out on a limb there alone, and now, after thousands of supportive statements from people, I see that, you know, for all the problems that people can talk about in this country and for all the apathy and, you know, the eight years of oppression and the decades of eroding civil liberties, America is still very much the kind of place that when you stand up for what is right, you never stand alone. And that’s been really powerful for me to witness.

AMY GOODMAN: Has anyone offered simply to pay for the land that you bid for and succeeded in winning? What was it, at $1.8 million?

TIM DeCHRISTOPHER: Right. There’s been a lot of discussion of that, and I’m not sure if that would completely take the problem away or not, if the people of America just stood up and re-bought the land that was already theirs. That might be an option that we have to pursue, but at this point, we’re not sure.

AMY GOODMAN: So, now there’s two kinds of land. One is what you bid for, didn’t win, but you upped to the price for everyone else, something like to the tune of half-a-million dollars, so other bidders, like oil companies, whatever, had to pay more, because you were in there bidding against them.

TIM DeCHRISTOPHER: Right.

AMY GOODMAN: And then there’s the land you actually bought. Now, that land—

TIM DeCHRISTOPHER: Right.

AMY GOODMAN: —can’t go up again until something like February, is that right? Which means a new administration, an administration who—we know at least the head of the transition team, John Podesta, has expressed concern about the sale of this land. The land whose price you upped just by bidding, though you didn’t win, that could be sold within this ten-day period?

TIM DeCHRISTOPHER: My impression of that is that those oil companies can give that back if they feel like they purchased it in any kind of way that’s not acceptable to them, because I happened to drive the cost of their oil up a little closer to what the actual cost of producing oil is and the actual external costs that all the rest of us are going to have to pay.

AMY GOODMAN: What are the charges you’re facing right now? And are you willing to go to jail?

TIM DeCHRISTOPHER: The charges haven’t been released yet, so I don’t know what charges I’m facing. There’s a good chance that they are going to be significant charges. And, you know, obviously, I’m going to fight those. And, of course, I don’t want to go to jail. And I’m willing to, if it comes to that, but, you know, I’m not looking to be a martyr or anything like that.

I’ve seen the need for more serious action by the environmental movement and to protect a livable future for all of us. I’ve seen that need for a long time. And frankly, I’ve been hoping that someone would step up and someone would come out and be the leader and someone would put themselves on the line and make the sacrifices necessary to get us on a path to a more livable future. And I guess I just couldn’t wait any longer for that someone to come out there and had to accept the fact that that someone might be me.

AMY GOODMAN: Are you a student?

TIM DeCHRISTOPHER: Yes, I’m an economics student at the University of Utah.

AMY GOODMAN: Is this your school break?

TIM DeCHRISTOPHER: Yeah. I just took my last final exam on Friday morning and went straight from there down to the auction.

AMY GOODMAN: Has the University of Utah said anything to you, officials there express support or otherwise?

TIM DeCHRISTOPHER: No, and, you know, I wouldn’t expect them to come out and make any official statement. Some of my professors, a lot of students have contacted me and expressed their support. The professors, especially, have been really supportive and have joined my team so far. And, you know, they kind of did their job beforehand. They kind of did their job in getting me ready for this and committing me to hold true to my values and in teaching me what was going on. In fact, the final exam that I took on Friday morning, one of the questions was about this oil sale and about, if only the oil companies were bidding on this land, are they actually going to be paying the real price for the production of oil? And, of course, the answer that the professor was expecting is no, they’re not, because there’s a lot of external costs that all of us have to pay for the production of oil that aren’t included in those. So they did their part ahead of time in putting me where I needed to be.

AMY GOODMAN: Tim DeChristopher, thank you for joining us. You’ll have an interesting essay to write when you go back to school: “What I Did on My Winter Vacation.”

TIM DeCHRISTOPHER: I guess so.

AMY GOODMAN: Tim DeChristopher is a University of Utah economics student. We will follow his case. He goes to court later today. He disrupted Friday’s auction of Utah’s pristine wilderness to oil and gas companies by buying up some of the land himself.

From Heroes to Zeroes

On December 16, the Bernanke Fed took the most unusual step of lowering the overnight inter-bank lending rate (the federal funds rate) to an unprecedented zero percent with an upside limit of 0.25 percent. The Fed further announced that it will buy “large quantities” of mortgage-backed securities, and is considering doing the same thing with longer-term Treasury bonds. This means the Fed is ready to debase the U.S. dollar to artificially low levels in order to re-inflate the U.S. economy. The Fed wants to trigger monetary inflation and change deflation expectations so they can float excess debts away in a sea of newly created money. Normal functioning of private credit and capital markets is therefore suspended, and so the Fed will micro-manage failing markets for the foreseeable future, or at least as long as U.S. deflationary pressures persist.

The Fed is also taking big chunks of ownership in large private U.S. banks in order to recapitalize them and to let them deleverage themselves in an ‘orderly’ way. Today the White House leaked plans to similarly allow U.S. car manufacturers to enjoy an ‘orderly’ bankruptcy.

Why is our government taking the tack of apparent socialist extremism, and what will be the financial and economic intended and unintended consequences?

First of all, let’s keep in mind that the Fed is the only central bank in the world that is both public- and private-owned. Bankers sitting on the Fed board can make decisions to lend new money to themselves at whatever rate they choose. The entire American financial and fiscal system is run by bankers, either at the Fed or at the Treasury. Indeed, beginning on January 20 (2009), the Obama administration’s Treasury Secretary will be the current president of the New York Fed, Mr. Timothy Geithner, who will be replacing Secretary Henry Paulson, himself a former CEO of the Wall Street investment bank Goldman Sachs. Although the U.S. President initiates and Congress approves the nominations of the seven members (currently only five in exercise) of the Federal Reserve Board of Governors (for a 14-year term), the de facto managing of the Fed is left to bankers. This is done through the Federal Open Market Committee (FOMC) which implements monetary policy through open market operations and other discounting policies and discount loans. It is comprised of the seven members of the Board of Governors and five presidents of the twelve Federal Reserve District Banks. The Chairman of the Fed Board is also the Chairman of the FOMC. The President of the New York Fed is always on the FOMC and acts as its Vice Chairman. The remaining 4 fed member slots are shared and rotated among the remaining 11 District Banks. In fact, the presidents of all twelve Federal Reserve District Banks are present at the FOMC meetings, but only five are enabled to vote at any given time. But, since members of the Fed board often originate from the regional Fed banks or from private banks, bankers are often in the majority in deciding American monetary policy.

Secondly, by taking over private financial markets, the Fed is, in effect, covering its own mistakes (and those of the SEC and of the U.S. Treasury) for having allowed the building up of a shaky pyramid of asset-backed securities (ABS), not the least being the toxic mortgage-backed securities, and the sweaty gambler-like credit default swaps (CDS), amounting to the big giant knee in our collective groin that is causing our continued economic crumpling to the ground.

It is my feeling that the Fed, by creating a bond bubble, is only (surprise!) postponing the day of reckoning and is buying time. When the bond bubble bursts (and believe me, it will burst as all bubbles must), the U.S. economy will be pushed much farther downhill. Many capitalized pension funds will fail, for example, buying many retirees a one-way ticket toward sudden Madoffian-style poverty. Inevitable spikes in interest rates will hurt investments and damage the economy even more.

Meanwhile, a bout of competing currency devaluations has been launched, since other governments and other central banks will have to try to debase their own currencies if they want to avoid importing the worst of the U.S. economic downturn. This will be reminiscent of what happened during the 1930s economic depression. In the mildest of terms, this is not a pretty perspective for the future of fiat currencies.

It seems that the Fed has an uncanny talent for creating financial and economic bubbles. In the late 1990s, after the Asian financial crisis and after the near failure of the hedge fund Long-Term Capital Management (LTCM), in September 1998, the Greenspan Fed flooded the U.S. economy with liquidity and created the 2000 tech bubble. The same Greenspan Fed aggressively lowered the Federal Funds rate from 6.5 percent to 1 percent in 2004, thus paving the way to the worst housing bubble in American history. Now, the Bernanke Fed is at it again, and, by lowering the federal funds rate to close to zero and by announcing that it stands ready to monetize U.S. Treasury debt, it is actively blowing into what has the appearance of one of the worst bond bubbles ever.

The Fed has bestowed so much money on banks in exchange for their bad debts while the banks themselves remain unwilling to lend, that bank excess reserves at the Fed have exploded to more than half a trillion (November 2008), which is ten times what is required. Clearly the economy is in a liquidity trap. There is a lot of money in the system, but it is not circulating. When the Fed creates more liquidity, it is like pushing on a string. By lowering short-term interest rates to close to zero, therefore, the Fed is helping itself before helping others, since it will be paying less interest on Banks’ excess reserves, most of which came from the Fed anyhow.

We the electorate have, through a complete lack of resistance, anger and outrage, permitted the Fed, Congress, the Treasury, and the Executive Branch to wield a massive, blundering hammer on the framework of a delicate and very troubled economy. Our government and Fed, in step with other governments and central banks, are repeating mistakes we should have learned from previous downturns and turning what should have been a bad recession into a full-blown global depression. By allowing the pillaging, we must now prepare ourselves and face the consequences. God have mercy on us for squandering the freedoms so many died to provide and protect, only to watch from beyond the battlefield as we summarily piss away freedoms because we were too busy taking them for granted.

HOPE on a Rope

Project HOPE for Homeowners was supposed to help 400,000 homeowners avoid foreclosure. 312 applied for help.

How many homes were saved from foreclosure? ZERO.

Visit msnbc.com for Breaking News, World News, and News about the Economy

Sleigh Broke, Please Help, God Bless

Ready or Not, Here Comes Round-Two

I've been screaming for many months about the coming second wave of the mortgage meltdown, but to hear Scott Pelley tell it, the pending Alt-A bombs and Pay Option Arm resets crept up on us just last night. It's a shame our leadership (if you can call them that) can only aim their fire extinguisher at the expanding nuclear fireball rather than proactively clearing the flammables before a known approaching conflagration consumes us.

What they're trying to do is like putting out a wildfire with a grass whip and an indian pump. Fire-1, Firemen-0.

In light of the paralyzing 'news' in Pelley's 60 Minutes report, many financiers and real estate pundits are calling for market bottoms as early as spring 2009. Sadly, happy nonsense only loads the opium into the pipe so we can continue to inhale deeply until the bank repos the den. Then we can, with a clear conscience, stare glassy-eyed at the evicting Sheriff and swear we never saw it coming.

No More Mixed Messages

Congress made Detroit Big-Three CEOs get on their knees and beg for bridge loans, demanding what equated to pre-capitalization proof of success concerning how they planned to fix a broken manufacturing model. At virtually the same time, in the same town, the same Congress quite literally forced and continues to shove billions of taxpayer dollars down the throats of the same greedy bunch that got us into this financial crisis in the first place.

Why does no-one seem to notice or care about the obvious contrasting standards?

At least I'm not the only one who wants an answer.

Beyond This Point There Be Monsters

By this morning’s global headlines, world financials seem more like a runaway freight train than an economy responding to heroic (if misplaced) attempts at life support.

By now you’ve heard the Detroit bailout bill got squashed by Senate Republicans. This, combined with increasing feelings of toxicity toward U.S. debt from foreign central banks should mean that Wall Street’s usual Friday dose of Dow- and NASDAQ-smack will be withheld, which should produce the kind of withdrawal symptoms that no one but addicts and rehab centers should ever have to see. Or, another possibility is that we'll all see a heartfelt rush to Detroit's rescue on the Hill today that swoops in and saves us from a serious drubbing... putting off the inevitable pain for another five minutes.

World-market stock prices sank all night and U.S. futures are falling off a cliff as I write this. But as difficult as this should be to watch, if Detroit’s denial of funds is any sign of reasonableness taking hold on Capitol Hill suggesting that the never-ending cash spigot might be turned off at some point, then we may actually be able to find a bottom somewhere from which real recovery can begin. Face it, the continued throwing of cash at every outstretched hand is unethical, unrealistic, unsustainable and unconscionable. Given recent events of late that have propped up unfounded hopes of government intervention in every strapped sector, however, I think the guns are loaded for some real trouble… like protests-becoming-riots sort of trouble. I believe we Americans are about to segue into a new, yet sadly predictable stage in grieving the loss of untold trillions of dollars in wealth, that is, the turn from shock to anger. I believe the manifestation of this displeasure with policy makers, white collar criminals and people whose only crime might be appearing wealthy will not be too subtle.

In my opinion, we are in a very, very different and difficult position than that to which we have become accustomed. No one has full information on the size, scope, and scale of this problem, and our coffers are incredibly stretched while Paulson and Bernanke keep wielding 'solutions' akin to experimental drug trials and exploratory surgery with really blunt instruments. One big market accident or one big blow-up in ANY of the unorthodox strategies intended to provide a soft landing to this plane crash could sink the whole damn thing. I don't think I can get too dramatic here.

As news of Detroit’s cash denial sinks in, there are two major business reports due out today that are cause for concern. First, the Labor Department will release its monthly figures for the Producer Price Index (a measurement of the price of goods at the wholesale level) at 8:30 this morning. PPI is expected to decline 2% for November, according to a consensus of economist projections compiled by Briefing.com, following a decline of 2.8% the prior month. Also at 8:30 a.m. ET, the Commerce Department will release its retail sales figures for November which are expected to show a drop in the neighborhood of 2%.

I would not be too surprised to see automatic trading stops kick in today, but as you know there’s been no predictability anybody could count on in daily market numbers for quite some time. There is still some twisted, macabre comfort in the fact that $8 trillion is holding the American market together; that kind of scratch should give us the feeling of normalcy right up until all hell breaks loose.

8 Really Scary Predictions from Fortune Magazine

Dow 4,000.
Food shortages.
A bubble in Treasury notes.

Fortune spoke to eight of the market's sharpest thinkers and what they had to say about the future is frightening.

http://money.cnn.com/galleries/2008/fortune/0812/gallery.market_gurus.fortune/index.html

Infinite Indemnity

Here is a graph from the U.S. Bureau of Labor Statistics. It compares official government unemployment data for November 2007 and November 2008 over a broad range of job sectors.

(Click on the graph to enlarge)

The data is disturbing. You tell me… are we in a recession or a depression?

Unlike previous recessions since the 1980s, even the health care and education industries are suffering due to misguided FIRE Economy (Finance, Insurance, and Real Estate) investment practices that caused them expand budgets and take on enormous debts and imploding state budgets funded by income and real estate taxes. Federal spending is still strong (and why not--it's other nations' money AND LOTS OF IT) but state spending is collapsing along with state budgets as state and local tax revenues implode.

This is not looking good at all, in my opinion…

We'll Make Great Pets

Americans listen while congress grills the Big Three about the automakers' plans to cut expenses, re-think, re-tool, and re-wire... and the majority of us common folk don't think the companies deserve a dime because they failed to adapt production fast enough to survive these rocky economic times. $34 billion dollars, we tell our congressmen and congresswomen, is a completely ludicrous amount to spend on the idiots from Detroit. That's $100 for every man, woman and child in the country! We'd have to be stupid to give them that money!

But at almost the same time, in the same town, Hank Paulson and Ben Bernanke rushed congressional permission to spend $750 billion to boost the economy, and in only six weeks time that number became $8.5 trillion in cash and guarantees. Much of this money went to banks that said 'no thank you,' but were forced to take the money anyway. If the bank didn't really need it, the bank simply bought other banks. And why not? All that money was pushed on the banks with no strings attached, not even a wink and a nudge! So I guess you can lead a bank to money, but you can't make it lend. Boy, are our faces red or what??

Somehow all our eyes are on the (relatively) inexpensive Detroit loan requests while the REAL money (our money and our children's money and our children’s children's money) gets spent on nobody-knows-what because the plan changes every three days to the tune of about $25,000 for every man, woman and child in the country. It must be the best magic trick in history, because the biggest cube of money anyone could imagine has just disappeared.

Why does no-one seem to notice or care about the obvious contrasting standards? Congress browbeats Detroit and makes car manufacturers get on their knees and beg while showing us how they'll fix a broken manufacturing model, while the same Congress quite literally forces taxpayer dollars at the same greedy bunch that got us into this financial crisis in the first place.

The cold truth is that we Americans will blindly give blank checks with no strings attached to banks who charged us $17.5 billion in overdraft fees in 2007 while we tell Detroit to go piss-up-a-rope for selling us the gas guzzlers that greedy American consumers demanded they provide.

To the rest of the world, we must look like monkeys humping a football.

Reason simply no longer applies, and the irony of our insane and contradictory thinking is not lost on our benefactors. Countries like China, for example, upon whom we rely to purchase our debt so that we can sustain our otherwise unsustainable bone-headed lifestyles, are beginning to realize that investing in American debt is no longer in their best interests. China's disastrous investments in Blackstone, the private equity fund, Morgan Stanley, the investment bank, and Barclays Bank appear to have dulled the appetite for further gambles. Like congress watching Detroit, China is watching the befuddled and bewildered ways our best and brightest financial experts are dealing with the ongoing bloodletting of American capital and liquidity. With China risking massive social turmoil next year as their economy slows and the number of angry jobless grows, a leading Communist Party scholar has warned, it can no longer keep dumping trillions of yuan down American rat holes.

China, and most of the other countries from which we’ve borrowed so heavily, must now deal with rat holes of their own.

Peter Schiff Gets It

The so-called "bailout" is nothing more than very expensive recovery avoidance. Sooner or later we must accept the pain of recovery, or recovery will be forced upon us. The latter option would be most unpleasant.

Cannibalistic, actually.