Thursday, May 7, 2009

Full Disclosure

Greetings good citizen,

Yet another day of ‘jubilation’ on Wall Street as ‘The Fraud’ proceeds a pace. Yes good citizen, the media would have you believe that Mr. Market is ‘happy’ to hear that Bank of America ‘only’ needs $30 odd billion to meet capitalization requirements!

What really amazes me is these numbers have been ‘leaked’ nearly two weeks ago but won’t be ‘official’ until tomorrow…leading the inquiring mind to wonder ‘is this a scam?’ I mean, ten, three or six of twelve to nineteen banks failed or didn’t fail these ‘stress tests’ where banks were allowed to used their own models to gauge their financial health.

This exercise in ‘confidence building’ smacks fairly loudly of being a ‘con’...yet the markets rallied!

Except not everybody is buying and talk about a ‘smokescreen’, insiders are selling twice as much as is being bought…but because the bank stocks are so cheap, it’s not difficult to mask the fact there is a massive sell-off raging right now! So now you know the real reason why these loser financial stocks have not been ‘delisted’ from the Dow, even though they have broken the $10 a share rule…

Did I mention ‘fraud?’

Why anyone, never mind the US government, would invest as much as a penny in this obviously corrupt racket is beyond comprehension.

With the above as a given, how ‘confident’ are you in the so-called ‘stress tests’ now?

If you haven’t already, run, don’t walk to your benefits administrator and withdraw from your 401k plan now! Get it while there’s still something left to get!

The markets aren’t ever (in your or your children’s lifetimes) going to reach 14,000 (much less 10,000) again.

But don’t take my word for it, I am not an economist nor am I anyone’s idea of a financial advisor. On the other hand, I think I can spot a scam when I see one.

Which brings us to tonight’s offering one of Ilargi’s best yet!

The Engines of Expansion (and their counterpeers)

Ilargi: The main difference -and 'distance'- between a financial slash economical crisis and a full blown all out political crisis in a democratic political system can be overwhelmingly found in two simple issues.

1. What do the parties subject to the crisis, the citizens (voters), business leaders and policy makers, see and expect going forward?
2. How truthful, and more broadly, how open, are the various parties amongst each other and towards the other parties?

We’ve been bombarded with guesses, estimates, broken promises and above all figures about the stress tests for 19 banks that have been conducted in the US. Two days before Thursday's latest announced deadline for publication of the data, how many among us still have faith that what will be publicized, be it Thursday or even later, will be close enough, for our liking, to the real objective truth? I can't look into your head, but I'd venture that this faith is subject to serious erosion. Paul Miller at FBR says only one bank, JPMorgan, effectively passed the test. I suggest you remember that for Thursday. Mind you, the official announcements will primarily be directed at confusing you, so by Friday morning you won't be able to tell left from right.

If this were an exception, the damage would be limited. It is not. Every single financial rescue and bail out policy undertaken in the past year and change by two -seemingly- different administrations have one thing in common more than any other: the way in which, and the degree to which, they are explained to the public, who happen to be forced to pay for all of it (ALL of it), is shallow at best and for all intents and purposes non-existent in most cases. Moreover, what does find its way into the public eye through a media industry that has long given up any semblance of truth finding, has a highly questionable degree of veracity.

There are in America today, as per the polls, millions who trust Obama no matter what he does, and many more whose curiosity is satisfied by the messages his spin campaign puts out. You need only to look at the rise in the Dow or the S&P indices to see that the campaign largely works so far. Even though there's no evidence that anything there says overall financial and economic conditions have improved, it does indicate a high level of gullibility. I refuse to even contemplate that I'm the only person who'd be baffled by the fact that the AIG bonuses blow-out fizzled as it did, and led to no other outrages, while injustices a thousand times larger go unnoticed.

But all that's just the way in which the second part of how you go from an economical crisis to a political one pans out. And it becomes boring, once you figure out that no-one can be trusted to believe in what they say, that presidents can be, and are, sold like detergents, that is, in reference to people's base instincts instead of their rational grasp of their lives. Bad enough as the lack of truth and openness may be, I do think that the number one reason I mentioned above that causes a financial crisis to explode into a political one, is more important (and I say that knowing that they feed off each other).

To reiterate, I posed this question: "what do the parties subject to the crisis, the citizens (voters), business leaders and policy makers, see and expect going forward?" The reason I think this is even more important than all the lies (I saw all politicians MUST lie or change jobs years ago), is that an entire gamut of policies all based on dead wrong assumptions on where things are headed is far more harmful than doing the right things without telling voters. I know, I risk eating my own tail here, don't I? Then again, what can you possibly expect to come from this:

Federal Reserve Bank of Minneapolis President Gary Stern said : "....come the middle of next year, I would expect to see a resumption of healthy growth".

Followed by:

"... it is difficult at this stage to identify with conviction the engine, or engines, of expansion..."

See, it's a tremendous confidence booster to have Fed officials declare "healthy growth" is just around the corner, and follow that up with admitting they have not a single clue where that growth would come from. I believe, I believe. That's why what these people see going forward is crucial. And if you look closely, that's all we've got, and that's all we get, belief. [Where’s the Beef?] And even without getting into the semantics of what sort of growth is "healthy" when you, just to name an example, have a ocean of plastic the size of Western Europe floating on top of the Pacific Ocean, cleaning up of which would take more than the entire and rapidly diminishing annual US GDP, at a certain point you’ll be forced to look into the mental health of Mr. Stern and all his counterpeers. Thing is, it'll be way too late once we get around to doing that. And that's how, and why, we find ourselves in a political crisis.

You can have a system in which a handful of people get very rich and are hardly questioned doing it. The one thing they will have to provide doing it, though, is enough basic resources for the rest of society to simply survive. A home, food, water, heating, clothing. We've today come to a point where those basic needs are used by the few to maintain and enhance their share of the riches, at the cost of what the many can't do without if they wish to live. And that will not work. There is no growth in sight going into the future. There is either redistribution or battlegrounds. I see preciously few around me who’ll voluntarily choose the first option.

Like Ilargi, I’m not holding my breath for ‘redistribution’. I’m betting on ‘battlegrounds’.

They’ve already turned 5 million homeowners into refugees and oil is jumping 2 to 3 dollars a barrel per day, despite the current glut.

Expensive oil makes for expensive food, not a good recipe for social order when the job market is flat line.

Hungry, homeless people that can’t find work will be even more upset when the handouts dry up as well.

The shelters are full and the food pantries are tapped dry now. What will happen when another 5 million homeowners are tossed into the street?

I dunno, but I’m going to bet it won’t be pretty.

All so a few can be rich…

Ironically, it doesn’t have to be like this. We need only re-arrange the boxes a bit and we’ll all prosper.

It’s a pity we are ruled by those who don’t have a clue what ‘wealth’ is.

Thanks for letting me inside your head,


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