The Shape of Things to Come

Greetings good citizen,

Sometimes it just blows my mind when I contemplate just how corrupt the whole system has become.

Some would have you believe things are no more corrupt now than they’ve ever been…and that would be a lie. This is not to ‘minimize’ past corruption, I am merely pointing out there is more now than there’s ever been.

Why would I say that? Because now, unlike in the past, we are running out of everything…and we have no ‘back-up’.

Is this ‘failure to plan?’ It most certainly is…and this failure is deliberate. The morons think we’ll be so ‘distracted’ by the sudden shortages that we won’t notice (or chase) the thieves responsible for the ‘premature’ drying up of the supply chain.

Why is the ‘Real Estate’ market suddenly crumbling to dust? What value will a ‘stack of lumber’ have if you can’t heat it? One might also wonder what advantages such flimsy structures hold without electricity?

It is debatable as to whether or not the ‘non-oil’ portions of ‘the grid’ will be shut down by the ‘fuck you, pay me’ crowd but chances are good this is how it will go down (at least in the beginning.)

Then there is the ‘flipside’ of this coin…

What do you do for a living, good citizen? Can you ‘do it in the dark?’ and if you can, can you do it on a ‘cash and carry’ basis? (Because there won’t be any ‘electronic fund transfers’ without electricity…)

Not only is my current employer, er, ‘poorly equipped’ to continue to provide his service without the benefit of gasoline, but our main clients can’t do what they do ‘in the dark’…

Perhaps more challenging would be the ‘utility’ of the high-rise buildings they currently employ…how willing would you be to climb 40 plus floors (on foot) to reach your ‘corner office’?

All sorts of ‘challenges’ sticking their heads up out of the ground, isn’t there?

Let’s not forget about the other half of dealing with ‘the world’s worst weather’…how would you clear the streets with no fuel for the snowplows?

Then, there is the most ‘ticklish’ part of the whole proposition…how would you get what you need, where it was needed, when it had to be there?

Slow everything down to a crawl (if not a full stop…we’re talking about adding days for what we used to be able to accomplish in minutes…) then wonder how you will ‘hold on’ while you wait for the next piece you need to complete the task at hand?

This backs up in a dozen different directions…and like I said, the collapse of the supply chain will be the most difficult factor to overcome.

Which is to point out there was a damn good reason why the old system relied heavily on ‘redundancy’.

Then we have to deal with the stickiest part of the whole situation…no phones, no lights and no Internet/TV.

Think about the teeming masses…deprived of mindless entertainment…what do you suppose they’ll do to amuse themselves/express their displeasure? Most people have grown up with the ‘idiot box’ in their midst. Worse, those of us who have abandoned ‘government sanctioned’ entertainment has replaced it with the WWW.

What will those idiots who walk around with cellphones stuck to their ears do? There is now a whole generation of people who don’t remember when you had to find a public phone booth if you wanted to make a call.

We aren’t talking ‘click’ and it’s ‘lights out’…but we are talking about being ‘weaned’. When the ‘long emergency’ begins electricity will only be available during ‘business hours’ or say from six AM to six PM.

Then, as supplies dwindle, cutbacks will be instituted (disguised as ‘shortages’)

Not taken into consideration here is the effects this will have on people living in ‘hostile’ climates. You can’t turn your furnace off without your plumbing freezing and bursting, its as simple as that.

Sub-zero temperatures outside quickly produce sub-freezing temperatures inside.

Ya know, little things.

Anyway, tonight’s offering offers us a brief glance at ‘the shape of things to come’…

Pandora’s box of toxics

Ilargi: As the European situation looks more dire and confusing by the day, and a sinister web of accusations and legal challenges spreads from Goldman Sachs through the rest of Wall Street, what do the stock markets do? Of course they’re dancing on their tables, party hats and all. So to speak. By now it may be time to really start wondering who’s buying all those shares. Anyone not involved in manipulation should perhaps have their heads examined. Leigh Skene at Lombard Street Research thinks it’s the very Wall Street investment banks which face increasing scrutiny that purchase the shares and keep the sputtering machinery afloat. He may well be right. Does that mean they’re buying stocks with your TARP funds? That, too, may well be right.

Still, what future is there in a scheme such as that, which "solves" a bank debt problem by turning it into a sovereign debt one, only for as long as the charade can last? And how long can it last? Well, look, our economies need a modest growth rate at all times just to keep from from spontaneous crumbling. If we were to pay off our debts, they would have to expand probably somewhere in the double digit percentages. For years to come. [Do you see ‘why’ I preface tonight’s piece the way I did?]

But even then, we'd figure out at some point that paying off the debt is an illusion, a receding horizon the end of which, and the pot of gold, we'll never reach. It’s easy to pretend we can pay it off as long as interest rates keep being forced down artificially by governments and central banks operating under the illusion that it’s they who set the interest rates. Pretense like that, however, is as fleeting as it is temporary. The Acropolis is a fine place to find out how true that is, and why. Meanwhile, we’ve truly come to live in a financial hologram. [An ‘illusion’ good citizen.]

Let's see how all our genius economists and politicians fare once the bond markets push up interest on debt three or four-fold in your society too. Who will offer you bail-outs and loans when that time comes? Think you won't need them? Think again. Really, do. Even with ultra-high growth and ultra-low interest rates it would take many years to solve the debt in all but a few western nations, years in which austerity would have to be the leading principle. [For the ‘paycheck peasants’, the ‘owners will continue to laugh at our misery.] But austerity hinders growth, and it hinders our lifestyle. So we’re not going to pick that option unless and until we’re forced to, like it’s going to be forced on the Greek population soon. And then we’ll react like them too: we’ll be fighting in the streets.

If it’s the investment banks (and Fed, and Treasury) that keep the stock markets alive, what is likely to happen when the investigations and lawsuits move from civil to criminal, growing in number like so many bacteria in a petri dish? And what will become of the trillions of dollars that our governments handed to them? Will we get it back?

Finally, finally, there are people looking into the dealings of the main US ratings agencies, Fitch, S&P and Moody's, which have doled out AAA's for, or so it seems, anything that moves -money-. As is the case with SEC vs Goldman, a first official accusation against even one of these agencies could open and break the levees that hold Wall Street above water. Every single AAA rating given to a piece of crap paper, and there've been thousands upon thousands of them, is a potential court case. The individuals and institutions who've bought the stuff (invested?!) have often lost huge amounts of money, and will think nothing of a few million in lawyers' fees. Next step: the regulator for the agencies. When did they know what was happening? And so why was nothing done? [Naturally, this assume there is still something to ‘get’. The perpetrators of these crimes have long since moved their ill-gotten gains beyond the reach of criminal courts…for all of the ‘good’ it will do them.]

TARP Special Investigator General Neil Barofsky may be the first to open up Pandora‘s box of toxics for real: he threatens to go after the New York Fed for their actions in the AIG case. If this plays out the way it should, large swaths of government will be too mired in legal threats to do much governing while few or none of the main banks will be able to do anything but defend themselves in courtrooms. [Will this come to ‘light’ or will they sweep it aside to ‘preserve the union’? (Like the rotting carcass is worth ‘saving’!)]

In that light, it would make sense if either the courts become a massive sideshow to divert attention from the deteriorating economy, or they'll all just decide at one point that it's easier to simply let the economy go off a cliff, so no-one has time or money left for endless expensive litigation. If the debt is threatening to be forced out of the vaults and closets, a process lawyers can at least accelerate, all bets are off, and survival mode will kick in.

Um, said my piece up front, good citizen…don’t really have much to add.

Given my ‘illustration’ of how poorly ‘weaning’ would go in the large swaths of the world that aren’t ‘temperate’, you can pretty much bank on the idea that these areas will be ‘cut-off’ abruptly…with no ‘energy allowances’ at all.

I could go on for hours/pages but it would just so much ‘mental masturbation’…pointless really.

Prepare…

Thanks for letting me inside your head,

Gegner

As good as it gets...

Greetings good citizen,

“If it ain’t broke, don’t fix it!” These are words of wisdom often heard from capitalists, who urge everyone to harken to and abide by their judgement. Considering the, er, ‘opposition’ to financial reform, the capitalists among us apparently think the financial markets are not in need of fixing.

Um, dictatorship, masquerading as ‘communism’ failed. What do you suppose the odds are that two decades after the, er, ‘passing’ of Soviet Communism, Western Capitalism would ‘fail’ as well? (Leaving Chinese Communism, which has ‘morphed’ into ‘State Capitalism’, a system that is frighteningly similar to the economics of Nazism) as the ‘last man standing’.

The ‘reality’ is that capitalism failed out of the box BUT it was the only way to abandon monarchy while retaining the ‘essence of royalty’, the ‘absolute power of the owner’.

For those that this works for, it works very well, but alas, like monarchy, the number of opportunities are, sadly, ‘limited’.

Is this really “the best we can do?”

The crowd currently in charge wants you to believe that. All they’re asking for is ‘enough time’ to ‘straighten things out’.

Guess how long that will be?

You have to go all the way back to the Washington presidency for the answer to that one.

Now matter how many times they, er, ‘try’, they ALWAYS fail…which should tell you something all by itself.

So, IS this the BEST we can do?

There’s little point in fighting a revolution if nothing is going to change, is there?

Although I have already told you that the ‘price’ of doing nothing is a Banana Republic, a land where the rich stay rich and everyone else shudders in constant fear as they make the best of abject poverty. (While constant ‘low level’ warfare rages all around you as the victims of government outrages wreak revenge upon the traitors living among them. This sort of redefines the term ‘the long war’ as well as ‘terrorism’ itself.)

So it’s time to ask yourself a very fundamental question good citizen and that question is, ‘is this really ‘as good as it gets?’

Nobody (except the marauding rich) is ‘happy’ with the way things are…but without a clear, viable alternative, revolution is pointless.

That is why I created A Simple Plan , Without something to revolt ‘for’ a revolt is unlikely to happen…even under ‘Banana Republic’ like conditions.

Yes good citizen, without a ‘light at the end of the tunnel’ a clearly defined ‘better place’ to fight for, even totalitarian oppression will remain unopposed…and that’s just what the capitalists are counting on.

You are NOT ‘free’ good citizen, you only enjoy the ‘illusion of freedom’, provided by the ‘illusion of participation’. You have no say about the laws you live under and no input regarding the circumstances you are forced to endure.

It truly is a land ruled BY some people FOR the rest of us.

Understand that ruthless capitalists have ‘Zero Tolerance’ for incompetence (and even less for ‘insubordination’) within their organizations YET they expect/demand that YOU accept repeated ‘failure’ on the part of your elected representatives as ‘the price of an ‘imperfect’ system…

Is this the ‘Best we can do?’

If you think what we have can’t be improved upon then our species is doomed to extinction…and good riddance to it!

Moving on to a totally unrelated topic we arrive at tonight’s offering.

The Economic Policy Error Behind the Stock Market Rally

"The 20th century has been characterized by three developments of great political importance: The growth of democracy, the growth of corporate power, and the growth of corporate propaganda as a means of protecting corporate power against democracy."

Alex Carey

The strategy of the Bernanke Federal Reserve and of the Obama Administration's economic team is fairly clear: prevent the bank failures of the 1930's by propping up the biggest banks with huge infusions of publicly subsidized capital, and hope that they start lending again as the economy recovers. [Naturally, this begs two questions, who can take on more debt (at usurious interest rates) and are they ‘creditworthy’? Understand good citizen, this is NOT a stable foundation to base a civilization upon!]

Failure number one of course is that the banks that they chose to support are not responsible banks engaged primarily in lending to small business and localized activity. Those banks are the local and regional banks and they are failing in record numbers. The banks they chose to save are those who have heavily contributed to the campaign coffers and job prospects of Washington politicians. Goldman Sachs, for example, is a glorified hedge fund dedicated to speculation and enormous amounts of leverage. One only has to look at the source of their profits to understand what it is that they do. [It’s all about ‘money’ good citizen UNTIL it becomes all about survival, which is a totally different game.]

Bernanke has (so he thinks) cleverly tied up much of the liquidity with which he has infused the banks as reserves which are paying riskless returns thanks to his innovation in sustained a floor under the ZIRP. But if you look at what he is doing, all Bernanke has done, even in his buying a trillion dollars of bad mortgage debt, is rescue creditors who engaged in reckless speculation during a housing mania that the Greenspan Federal Reserve had fostered. [Which, as Jesse points out, has done us zero good. (Beyond keeping the banksters mollified…which was indeed Benber’s sole intent.)]

The lack of productive investment and genuine stimulus for the real economy is appalling. Bernanke and his colleagues Larry Summers and Tim Geithner would have us believe that they had no choice. But informed and experienced commentators such as William K. Black have told us how they have misrepresented their choices. Their current path seems to lead to a 'zombie economy' at best, in which the Banks are doing well, but almost everyone else suffers, particularly the lower and middle classes who obtain their income from the real economy. At worst, the bubble bursts again, and there is another leg down, with greater damage done. [Here Jesse invokes a Banana Republic without using the actual term…]

So what would have worked? The Fed and Treasury could have backed the public instead of the banks. They could have increased the FDIC coverage to much higher levels, and then started dismantling the Wall Street banks through orderly liquidations. They needed no new laws or tools to do this. And financial reform and higher taxes on those who obtain outsized wealth without productive work would have curtailed a recurrence. [How ironic is it that Wall Street is holding the nation’s ‘retirement savings’ (such as they are) ‘hostage’ so ‘shutting down’ Wall Street investment banks isn’t going to happen…]

So why did they do what they did? Are they in league with the banks? Was this some sort of conspiracy? No, I doubt this, although there are far too many secretive aspects to completely dismiss it. [Um, it is a mistake/error to dismiss ‘conspiracies’ out of hand, this whole meltdown is not an ‘accident’ by any stretch of the imagination!]

None of these men have ever held a real economy productive job in their entire lives. They were always the pampered products of the academy, Wall Street, and the government.

So they took care of their own, because that is their world view. It has been said that the Federal Reserve is the worst place to locate certain aspects of banking regulation, because they have a complete aversion to ever allowing a bank to fail. It runs against their nature. And couple this with a career experience in which the world is viewed through the lens of cost plus management, and privileged power, and their inability to make the tough decisions seems more understandable.

And the promise of future positions, and large amounts of lobbying money to their friends and mentors and sponsors, and the policy error that is ruining the country seems more understandable. [In case you don’t recognize it good citizen, he’s talking about rampant corruption that bridges the political/economic divide…]

So now we have another asset bubble in the making, a new Ponzi scheme in the US equity market fomented by the Wall Street Banks packed with public funds, seeking to drive prices higher, for the apparent reason of obtaining confidence from the public, but with the effect of selling assets at inflated prices to public institutions yet again, with the inevitable collapse to follow when the reality of their value is discovered.

What a shame. What a disappointing performance for a reform government that promised change that the people could believe in.

"...surveys show that the usual investors in major rallies – pension funds, hedge funds and retail investors – have not been net buyers of equities. And he says the most likely explanation for this anomaly in the biggest stock market rally since the 1930s is that major investment banks are the anxious buyers. [So it’s ‘scam-a-rama’ good citizen, hurry and pile on before its gone!]

“Their buying would appear to be for one of two reasons. Firstly because they think the authorities will prevail in their (so far unsuccessful) efforts to inflate their way out of debt liquidation; or secondly because they are too big to fail and so can afford to take a huge gamble that enough buying will convince others to rush in and buy their inventory of risk assets at even higher prices." [And sadly, this ‘greater fool’ shit usually works…but there’s hell to pay in the long run.]

Financial Times, Equity Rally Not Driven by the Usual Investors, Financial Times, April 28


And it should be noted that the Wall Street demimonde, the financial media, the financial commentators regulators and legislators, are widely supportive of this, because they draw their pay and employment prospects from an enlarged financial sector. So they are natural enthusiasts.

And of course there is the mainstream media, which is generally silent, or simply pleads confusion and ignorance, when things financial are discussed out of deference to their corporate owners, and the difficulties of actually engaging in investigative journalism, rather than acting as a guest host to a competitive debate among lobbyists and ideologues. It is the path of least resistance, and greatest returns. And it leads to an economy that consists of little else besides usury, propaganda, and fraud.

Why be negative? Better to be playing safe while the New Rome burns.

Again, Jesse may be using the term ‘burns’ as a ‘figure of speech’ but in reality it could be a ‘long ‘hot’ summer’…

There is a very real danger that we will soon find ourselves faced with ‘the long emergency’ with martial law being declared in hard to police urban areas and, er, ‘random patrols’ monitoring the situation in the troubled suburbs.

This is how it begins good citizen. The troops are called up to ‘maintain order’ and then the government starts ‘cracking down’.

Um, this is a logistics nightmare and a ‘deserter’s’ dream…as things turn to shit, the soldiers charged with ‘watching you’ will begin to worry who is watching their loved ones…and as the violence escalates, so does the ‘rate of attrition’.

Left to our collective imagination is whether or not instituting a draft is effective when it comes to occupying your own country?

Bizarrely, Banana Republics seem to be heavily reliant on mercenaries…

Thanks for letting me inside your head,

Gegner

Hypnotized

Greetings good citizen,

It is, er, ‘puzzling’ that the markets, after recovering most of their value (for no apparent reason) have suddenly ‘reversed course’ (again, for no apparent reason.) Which begs the question of who is Wall Street ‘screwing’ now? Because you KNOW the so-called equity markets have NO BASIS IN REALITY.

Officially, it is, er, ‘fear’ over Greek insolvency that is behind the latest market ‘hiccup’ but honestly good citizen, we’re talking a nation roughly the size of the State of Michigan with a population of ‘only’ 11 million…

Think about it good citizen, if a tiny nation like this can cause the global economy to go into a tailspin, we’ve got much larger problems than the corporate owned MSM is willing to admit to.

On the other hand this could be an indication of just how, er, ‘false’ the world’s fiat currency regimes really are…which begs a different question, what the hell are you killing yourself for?

Or, why doesn’t everybody have to bust their balls AND do without the way you’re forced to?

It is only through ‘currency manipulation’ that the ‘cheaper there’ even exists…one major screwjob right there in front of your eyes! How else are you being played for a ‘chump’? (Not that there is very much you can actually do about it...if you want to continue to live indoors and eat regularly…what? You’re not doing that either? Well, don’t look now but it looks like you’re taking it in both ends! How’s that taste anyway? [Purloined from: Some Assembly Required]

"I Don’t Think They’ve Learned Anything"

Those are the words of David Roche of Independent Strategies, who is "well known for his outspoken but prescient views" according to his website. Roche is referring to the U.S. government in general and the Federal Reserve in particular. He believes our beloved Central Bank should be raising rates now, not waiting for an "extended period." He's right, of course, but the U.S. economy still requires emergency life-support. Without that intervention, we would have the Depression we so richly deserve after a 25-year credit bubble.

First the CNBC video (ht Tim Iacono) and some selected quotes followed by some commentary. [Video is interesting (if you like busty blondes) but not particularly ‘worthwhile’ from an informative perspective. (Nothing ‘new’ here.)]

Roche: What they’re trying to do is start off more bubbles. If you look at consumer spending, it is picking up. Of course it’s picking up. U.S. households now get more money from the government than they pay in taxes … So, what the authorities are trying to do is actually to add state leverage, government bond leverage to private sector leverage so that the bubbles go on and the consumption goes on. At the same time, of course, because money is free to the banks, the banks don’t want to lend that much, so they will actually buy government bonds — which enables the government to give out some more money...

The real problem in America is that the consumer needs to save and not borrow to buy the American Dream. He needs to earn it, not borrow... Until that lesson is learned ... [will it be learned?] Yes it will be learned. It will be learned when the next credit bubble, which will be a sovereign credit bubble, goes [belly-up]. There will be no more policy tools left to bail the world out of its own profligacy. That's when it will be learned. [Um, once again we have a capitalist ‘nitwit’ who totally ignores the level of ‘control’ the average individual has over their ‘paycheck’. If we restrict the market for housing only to those who write their own paychecks, the pool of ready buyers shrinks to virtually nothing…which leaves the banking sector in a mighty, er, ‘bloated’ position.]

Roche is contemptuous of U.S. government policy. And why wouldn't he be? America does not have a real economy. America has a phony stimulus-driven "free money" economy. Public debt has replaced private debt in a futile attempt to keep the credit-based consumption party going.

I don't know where Roche got the idea that our government is giving away more money to households than they pay in taxes. Yes, we had/have cash-for-clunkers, the 1st-time home buyers credit, a few ineffective attempts to keep people in their houses, etc. And then there's all the unemployment payouts and food stamps. Despite all of this spending, most of the "free money" is going to the insolvent financial system, not to households. [Um, don’t forget all of those states who are using federal dollars to fund their now exhausted unemployment funds…and those frigging ‘food stamps’ aren’t ‘free’ either!]

Other than that nitpick, I agree with everything Roche says. We truly do have a money merry-go-round as he describes. In fact, I don't think Roche goes far enough. Things are worse than Roche believes. So many Americans can not save any money. They're living paycheck-to-paycheck or couldn't raise $2000 dollars in a pinch if their lives depended on it—which they might. People in the middle or at the bottom can't boost their savings and the people at the top don't have to. News comes today of a study published last February that shows who is unemployed by income level.

Unemployment_income_decile
Unemployment Rates in the U.S. for Workers in Selected Deciles of the Household Income Distribution, 4th Quarter 2009 (in %). You can see who takes it in the shorts when the house of cards falls down.

That's clear enough, isn't it? We have well-entrenched class system in the United States based on money. Much of this inequity is the result of an insane policy in which Americans effectively traded good-paying jobs for cheap foreign goods during the Era of Globalization. I described how this worked in “When In Doubt, Blame China.” [Rather than the REAL culprits, the fucking capitalists who directly benefit from this unsustainable ‘race to the bottom’.]

Suppose you have a phony economy like this one. If you're a policy-maker in the White House, the Treasury or the Fed, you either know the economy is phony or you don't. If you don't know it, you are clueless, and David Roche's criticisms apply. If you do know it, and you're partly responsible for it, you will certainly want to cover-up that reality for as long as possible, at least until 1) you're out of power or 2) dead.

So, have "they" learned anything? Well, no, and they're not going to. It makes no difference whether you were sold down the river knowingly or unknowingly—you're still between a rock and a hard place. It makes no difference whether Ben Bernanke just recently figured out what a bubble is. Over the longer haul, it makes no difference if the Fed raises rates now or later after an "extended period." The damage is already done. That's why the Empire is in Decline. [But not for those responsible for the ‘gutting’ of our nation, they’re doing fine!]

I can trot out the numbers, and you will believe me or you won't believe me. In one forum I ran across, DOTE was described as a "doomerish" website. Let me correct that superficial perception. DOTE is a reality-based website. You could just as well label David Roche a doomer, or all of the other smart people I've quoted on this blog who are warning that we're up shit creek without a paddle.

I'm sorry—that's just the way it is.

At the risk of ‘belaboring the obvious’, I too consider these pages (My blog) to be ‘reality-based’ even if the content and my ‘take’ upon it could be considered…er, ‘suspect’.

The ‘value’ I offer you good citizen is a ‘different perspective’ you won’t find elsewhere. There is not ‘capitalist’ solution to this, er, ‘crisis’ and you can believe me when I tell you, the only ones who will ‘suffer’ once what passes for our economy ‘evaporates into nothingness’ will be the suddenly ‘superfluous’ worker.

Those who extracted their fortune from you will have expanded their ‘market share’ in the same places they sent your job to…so they will do just fine.

If nobody needs you here in the hollowed out wasteland formerly known as the USA, it’s not their problem…it’s yours.

If you think they have you beat, then you’re beat.

If you can see that you still have a job to do…well, carpe deim, soldier!

Thanks for letting me inside your head,

Gegner

Hysteria...

Greetings good citizen,

After yesterday's post on the value of 'truth' we encounter more MSM reporting that has nothing to do with 'facts'.

What this spells for our society is decidedly grim. It is not a good environment to raise children in.

It can't be just me. I can't be the only one flabbergasted by the blatant, er, 'distortions' the MSM regularly passes off as 'fact'.

Um, this case is fairly well documented here, I will let the following speak for itself:

From the Mall to the Docks, Signs of Rebound

By PETER S. GOODMAN
Published: April 25, 2010

PORTLAND, Ore. — The docks are humming again at this sprawling Pacific port, with clouds of golden dust billowing off the piles of grain spilling into the bellies of giant tankers.

In Portland, Ore., Kevin Weldon prepared soda ash for export. Exports rose in the first two months of the year by nearly 15 percent compared with a year earlier. [Avast there all ye skeptics and behold what now passes for US ‘economic might!’ Note the ‘similarity’ these ‘raw materials’ hold with the exports of other ‘Banana Republics’…]

“Things are looking up,” said Dan Broadie, a longshoreman. No longer killing time at the union hall while waiting for work, instead he is guiding a mechanized spout pouring 44,000 tons of wheat into the Arion SB, bound for the Philippines.

At malls from New Jersey to California, shoppers are snapping up electronics and furniture, as fears of joblessness yield to exuberance over rising stock prices. Tractor trailers and railroad cars haul swelling quantities of goods through transportation corridors, generating paychecks for truckers and repair crews. [Um, given that only a teeny-tiny percentage of the population actually ‘owns’ stocks, it is ‘irrational’ in the extreme to point to rising stock prices as an expression of ‘consumer confidence’…(but what the hell else are they going to point to? There’s nothing there.)]

On the factory floor, production is expanding, a point underscored by government data released Friday showing a hefty increase in March for orders of long-lasting manufactured items. In apartment towers and on cul-de-sacs, sales of new homes surged in March, climbing by 27 percent, amplifying hopes that a wrenching real estate disaster may finally be releasing its grip on the national economy. [Yesterday’s article, which is from the WSJ, by the way, about the 9 year ‘overhang’ in the housing market tells a different story! Is Mr. Goodman an idiot or does he just think you are?]

After the worst downturn since the Great Depression, signs of recovery are mounting — albeit tinged with ambiguity. Despite worries that American consumers might hunker down for years — spooked by debt, lost savings and unemployment — thriftiness has given way to the outlines of a new shopping spree: households are replacing cars, upgrading home furnishings and amassing gadgets. [Understand that despite all of this ‘happy talk’, State sales tax revenues continue to hit new lows, so who the fuck are they shitting?]

Many economists estimate that consumer spending — which makes up some 70 percent of American economic activity — swelled by 4 percent during the first three months of the year, more than the double the pace once anticipated. Some have nudged upward their estimates for economic growth to more than 3 percent this year. [Um, who ‘anticipated’ what and more frustrating, what the fuck is it supposed to mean? Isn’t this the same as saying ‘water is wet’?]

“Consumers are showing extraordinary resilience,” said Bernard Baumohl, chief global economist at the Economic Outlook Group. “There’s a lot of pent-up demand out there that is now being unleashed. The whole supply chain system is now being revitalized.” [Talk about your ‘baseless assertions’, what evidence does he have of that wild-ass claim?]

While few dispute signs of recovery across much of the economy, significant debate remains on how robust and sustained it will be. The lingering effects of the financial crisis have some economists envisioning a long stretch of sluggish growth. [Sadly, what passes for our economy has shrunk so much that the few examples provided here probably do cover the bulk of it. This in itself is a terrifying admission, yet it is not what the MSM is saying, is it? Where are the real reporters when we need them?]

But recent months have delivered a stream of news bolstering the notion of a more vigorous recovery. Technology companies have racked up substantial sales. After a decade of painful decline, manufacturing is tentatively adding jobs. Retail sales increased by 9.1 percent in March at established stores compared with a year earlier, according to Thomson Reuters, marking the seventh consecutive month of growth. Exports swelled in the first two months of the year by nearly 15 percent compared with a year earlier, according to the Commerce Department. [Sadly good citizen, it is not…unusual for the media to, ‘misstate’ economic data…these percentages likely represent more than meets the eye, like the ravages of ‘deflation’ which looks remarkably like inflation in an economy that no longer produces what it consumes.]

Still, much of the improvement appears the result of the nearly $800 billion government stimulus program. As that package is largely exhausted late this year, further expansion may hinge on whether consumers keep spending. That probably depends on the job market, which remains weak.

“The recovery is under way, and it’s better than expected, but it hasn’t become self-sustaining because the job market hasn’t developed yet,” said Mark Zandi, chief economist at Moody’s Economy.com. “I don’t think we’re there yet.” [So what is it good citizen, is this a ‘recovery’ or isn’t it? It seems, despite the ‘irrational exuberance’, the jury is still out…]

In a sign of the anxieties still gnawing at households, the University of Michigan Consumer Sentiment Index this month plunged to a preliminary level of 69.5 compared with 73.6 in March. [Honestly good citizen it is difficult to imagine ‘consumer sentiment’ being very high out there in the middle of the ‘economic desert’…sometimes it seems like they pull these polls out of thin air, ‘shaping them to fit’ the job of manipulating public perception…]

Still, even that number represented a substantial gain over the record low of 55.3 reached in November 2008. And many economists dismiss such surveys as indicative of what people think, as opposed to what they do.

What they are doing increasingly is shopping. [Again, that’s not what the sales tax data tells us! Talk about ‘thin’, later on this article takes us to a Porche dealership, like we all have a couple collecting dust in our driveways…as ‘evidence’ of the ‘economic recovery’…]

“I’m certainly interested in spending now that the stock market seems so relaxed,” said Dan Schrenk, an information technology consultant, as he stood outside a Best Buy store in the Portland suburb of Beaverton. [Real intellectual giant, that Dan is!]

Last year, Mr. Schrenk’s income declined as local companies put off servicing computer systems. He and his wife cut back on dinners out and purchases. [While hundreds of Dan’s neighbors gave up living indoors and eating regularly altogether after their jobs were outsourced!]

But in recent weeks, Mr. Schrenk’s stock portfolio has expanded. He has picked up five new clients. [What ‘A’ has to do with ‘B’ is and likely will remain, a mystery…]

“I’m feeling very optimistic,” he said. “People are just far more interested in spending money.” [Isn’t that the whole ‘point’ of money, Dan? But you are the clever one, aren’t you?]

So, there he was, shopping for an iPad.

On the other side of the country, at the Garden State Plaza mall in Paramus, N.J., Marie Bauer, who sells clothing for a living, was feeling similarly emboldened. [This is Classic…this is the entire economic recovery in a fucking nutshell!]

“I’m working more now,” she said. “I bought myself a watch.” [Anyone want to bet its NOT a fucking Rolex?]

As John D. Morris, a retail analyst with BMO Capital Markets, wandered past stores like Gap and J. Crew on his weekly “mall check,” he spotted large numbers of women 25 to 45 years of age — prime earning years. [It would be far more interesting if John shared ‘why’ the women were there…perhaps more interesting is why he chooses to spend his free time ‘cruising the malls’…is he trying to pick up 12 year olds?

“The mainstay of the mall is back,” he said. “That’s your signal that we’re in a more meaningful recovery with staying power.” [Um, what is missing here is a number…does more than a single customer constitute an economic recovery…or were there ‘too many to count’? In which case mall security has a little problem on its hands…doesn’t it? People are still broke and John has pointed to nothing that proves these females weren’t simply window shopping on a nice spring day…it’s the sales tax data that is calling John a LIAR…or a moron, take your pick.]

A year ago, Columbia Sportswear, the Portland-based apparel brand, was turning away some retail customers whose finances seemed worrisome. Now, Columbia has one of its largest order backlogs.

“People saw that the world didn’t come to an end,” said Timothy P. Boyle, Columbia’s president and chief executive. “Maybe they just said, ‘Hey, I can at least spend a little bit of money.’ ” [Because ‘a little bit’ of money is all they have…and their underwear looks like Swiss cheese…but what the heck, nobody sees your underwear.]

Spending power has been enhanced by a monumental reduction in household debt, which has shrunk by about $600 billion since the fall of 2008, according to Equifax credit data analyzed by Economy.com. That amounts to about $6,300 a household. [Um, first, WTF! Second, it is far more likely evidence of a change in ‘household income allocation’, which is what happens when YOU STOP PAYING YOUR MORTGAGE!]

“Household deleveraging [This is a ‘different’ way of looking at it!] is clearing the decks for better consumer spending going forward,” said Mr. Zandi. Still, some economists note that many consumers are reaching into savings to finance spending, suggesting consumption could run out of fuel. [This is ‘double-speak’ for people will eventually be forced to pay for lodging once more, drying up this source of, er, ‘extra income’. Oh, another big, er, mis-statement…paying down your credit cards is NOT the same as ‘savings’, even if these nitwit economists are unable to distinguish between the two…]

“Look at employment and income,” said Brian Bethune, chief United States financial economist at the economic analysis firm, IHS Global Insight. “It’s glacial. If we don’t get strong growth in employment and income, we’re really just building this up as a house of cards.” [Um, we’re well beyond the ‘house of cards’ stage, this entire article falls neatly into the ‘Shoveling shit against the wall, hoping some of it sticks’ phase of the game.]

The American savings rate climbed during the recession but has recently fallen. Among households in the top fifth of American incomes — those earning $98,000 a year and up — the savings rate dropped to 2 percent of income in the first half of 2007 and then spiked above 14 percent by the middle of 2008, according to an analysis of Federal Reserve data by Economy.com. By the end of last year, the savings rate of this group had slipped back to 3.5 percent. [Um, Bubba…you can’t judge the whole economy on just the top 20%, the other 80% are drowning here…but that’s the ‘new normal’ for ya…]

Since the end of World War II, the first year after a recession tends to feature growth at roughly twice the pace of the decline during the downturn, implying a current pace exceeding 7 percent. Yet even optimistic economists assume the economy is growing at perhaps half that rate. [Why these idiots persist in comparing the current, er, ‘disaster’ with past financial crises escapes me, this time is NOTHING like any of the past events so it is beyond dumb to even try to draw parallels between them!]

“I keep calling it a half-speed recovery, not the full-speed-ahead recovery that we typically get after deep, prolonged recessions,” said Stuart Hoffman, chief economist at PNC Financial Services Group in Pittsburgh. [Um, Stewy, it doesn’t matter what you call it…it’s still a fucking train wreck!]

But at a Porsche dealership in downtown Los Angeles, the sales manager, Victor Ghassemi, has seen sales rise by about 5 percent in recent weeks, a trend he attributes to rising stock portfolios. [Did I tell you…what a friggin’ hoot! Um, left to our imagination is what constitutes a ‘5% rise’ in sales…are they running a special on oil changes?]

“People get tired of holding on to their money, or just sitting at home and not doing anything,” he said. “People love to shop. And you take that privilege away from somebody, it lasts about a year. Eventually, people want to come back. They want to buy new merchandise, a new product, to make them feel really good about themselves.” [Um, has the nation gone ‘insane’ or did Mr. Goodman make these comments up? Perhaps he just has a knack for picking very, er, ‘optimistic’ people to interview…’wildly’ may not be an overstatement here…]

The key question is whether this burst of consumption will prompt businesses to hire, adding paychecks needed to amplify economic growth and replace the eight million net jobs lost in the course of the recession. [Um, it’s hard to say what kind of jobs are gong to replace the lost jobs of mortgage brokers, Real Estate sales people or autoworkers…all who earned rather substantial incomes BEFORE things went to hell…maybe they can get jobs performing oil changes at their local Porche dealership?]

Optimists suggest this is already unfolding, pointing to the addition of 162,000 net jobs in March, the biggest surge of hiring in over two years. In this view, job growth amounts to a corrective after excessive layoffs during the worst of the crisis. [Um, ‘excessive’? If, as asserted here, employers laid-off too many workers, they would have been ‘recalled’ as soon as it became evident production was falling behind…]

“You didn’t fire people because you had a judicious plan about how to run your company,” said Robert Barbera, chief economist at the research and trading firm ITG. “You fired pell-mell, because you were afraid you were going to lose access to credit.” [Um, surprisingly, firms in stock market related businesses have laid-off fewer workers than one would expect. Bob’s comment is indicative of what drove lay-offs in that industry, which is heavily reliant on the availability of credit.]

Now, he argues, companies are guided by a new anxiety that demands hiring: fear of missing out on the profits of fresh growth. [This is (again) a phenomenon ‘unique’ to the stock markets that doesn’t often act the same way the ‘real economy’ does.]

Still to come, he added, is a wave of spending from American businesses.

“They are awash in cash,” Mr. Barbera said. “They’re in a position to step up spending across the board.” [Except consumer demand just isn’t there…people don’t have the money (and the ones who do already have what they want!) so there is little reason to build up inventories.]

Technology companies are already benefiting from strong consumer growth. Sales of PCs rose more than 5 percent last year, trumping analysts’ predictions of double-digit declines. [Um, this is more likely related to computers being ‘dirt cheap’…and once people have upgraded, there goes the market for another three years!]

This month, Intel, the world’s largest chip maker, reported its highest first-quarter revenue in history. Google added about 800 jobs over the first three months of this year, and Amazon has added 1,800. Intel plans to hire 1,000 to 2,000 employees this year. [Again we have ‘mis-direction’ in play…what we don’t know is ‘where’ Google or Intel is planning on adding to their workforce…and if it ain’t here, it does the US economy zero good!]

Silicon Valley is already cashing in on the return of Wall Street, as trading houses fold profits into new high-speed computer systems aimed at securing a competitive edge. [Yet another example of a net ‘bad thing’ being touted as a ‘plus’!]

Global trade holds promise. At the Port of Portland — a major shipping point for commodities harvested as far east as the Great Plains — the tonnage of goods swelled by 42 percent during the first three months of the year compared with a year earlier. Minerals like soda ash — an important industrial ingredient to make glass and detergent — increased by 93 percent. [Honest to fuck good citizen, ‘once upon a time’, before the Republican’s hijacked the government and off-shored our economy, the word ‘industrials’ in the Dow Jones actually meant something! Today the Dow is mostly financials…which doesn’t bode well for our future economic viability.]

Activity here and at ports along the Pacific coast is generating business through related industries. Rail freight traffic was up nearly 8 percent in March from a year earlier, according to the Association of American Railroads. That has bolstered revenue for Greenbrier, a Portland-based maker of rail cars that was hard hit during the recession. [Again, our railroads are a mere shadow of what they formerly were, we’re talking ‘picking fly shit out of pepper’ here.]

At Diversified Services Inc., a truck repair business in Mira Loma, Calif., general manager Dave Pilarcik is contemplating hiring, as customers put their fleets back on the road.

“For the first time in a long time,” he said, “I’ve seen a little bit more movement.” [Um, define ‘a little bit’, Dave. Are we talking the same thing as two houses last year vs. three this year, constituting a 50% improvement?]

Stephanie Rosenbloom contributed reporting from Paramus, N.J., Ashlee Vance from San Francisco, and Michael Parrish from Los Angeles.

I returned to work at the beginning of the month, got my old job back…but two guys left and I’m the only one who got ‘recalled.’

So what was once a nine-man crew is now a five-man crew…and I still have plenty of time to read.

Um, it’s hard to determine what is more disturbing, the ‘flimsiness’ of the evidence or the willingness of the MSM to mis-represent the situation for the public in exchange for a stinking paycheck?

But I’m not alone in criticizing the bought and paid for ‘corporate press’…

Here’s what Mr. Panzer has to say on yesterday’s ‘bogus’ earnings report from Caterpillar.

The Unrecovery?


According to the world's largest maker of construction equipment, the global economy is humming on all cylinders:

Caterpillar raised its prediction for world economic growth in 2010 to 3.5 percent, from 3 percent in its previous forecast. The U.S. may expand 3.5 percent while developing countries may grow more than 6 percent, the company said.

“Economic conditions are definitely improving, particularly in the world’s developing economies,” Chief Executive Officer James Owens said in the statement. “Industry activity and orders are significantly higher than last year and are at record levels in some areas.”

But is it? If you drill down into today's "better-than-expected" first-quarter results, the revenue data seems to tell a different story. Consider the following posts from two of my daily must-read blogs:

"How Could This Be A Recovery With Caterpillar Sales Like These?" (Business Insider's The Money Game)

Earlier we noted that Caterpillar's (CAT) quarterly earnings could basically be boiled down to: Asia good, America bad.

An 8-K filed later on emphasizes this point, and looking at the chart we're really perplexed as to how one might consider the US economy -- at least when it comes to the kind of earth-moving equipment that Caterpillar says -- in recovery.

Retail Sales of Machines by region for the 3-month rolling period compared with the same months of the prior year are:

chart

Down 21% from the first three months of 2009? What's going on here?

Shorthand good citizen, Wall Street and the MSM chose to, er, ‘emphasize’ Cat’s Asian performance and ignore the bloodshed both domestically and around the globe as well.

So, how does yesterday’s ‘Happy Talk’ from the NY Times look now?

But wait, we aren’t done…here are ‘words of warning’ from our favorite trader, Jesse of Crossroads Café fame:

SP Futures Daily Chart

The Federal Reserve and the Administration seem intent on creating another bubble, or rather reflating an old one in US dollar heavy financial assets, in order to prolong the mother of all bubbles, the credit in US dollars bubble.

They are doing it selectively, with the banks carefully apportioning the excess liquidity into financial assets held by a relatively fewer amount of Americans who own stocks, while savers are heavily penalized.

When the credit bubble begins to totter things will become quite chaotic, and the panic this next time around may be terrific, dwarfing that so-easily forgotten repentance and regret of 2007-8. More than panic: hysteria.

I think it is now too late for a real reform. The Democrats have squandered their mandate from the people, and the Republicans are crony capitalists marching in lock step with the Banks, who seem to be in control once again. But I could be mistaken, and would be glad if I am.

When the US dollar and economy roll over it will make quite a wave that will swamp many boats. But these things take time. Once they start to happen, it moves slowly at first, but then gains a momentum and becomes almost unstoppable.

I am not quite sure how much water the USS Leviathan has already taken on, and how big the hole might be. But I firmly believe that the iceberg has been struck, the damage done, and the process has begun. The lifeboats are being quietly provisioned and reservations taken for the officers and crew, and the upper decks.

Again, these things take time, and there is always hope until the end. But there is less and less that can be done as the process continues to unfold, with no serious repairs, and only distractions for the passengers, and encouragingly false announcements, from the bridge.

Don't feed the sharks. Wait for this to break support and trend.

Methinks we will witness a massive ‘sell in May then go away’ this year…and what a ‘sell off’ it will be! What’s going to puzzle the media is who the fuck is buying all of this overvalued dreck…and the answer will be, basically, nobody…because you, the taxpayer, are (finally) tapped out.

Jesse uses the term ‘hysteria’…let me put that into context for you. Imagine walking into a store and nothing on the shelf has a price on it. You look at the entrance and notice a sign that explains this ‘new’ phenomenon. Everything is priced at the moment of sale…the merchant has been advised that ‘replacement costs’ are rising by the minute as supply lines collapse everywhere.

Nobody knows where they can get their hands on replacement merchandise or how much the replacements will cost…so they have no idea what to sell their ‘on hand’ inventory for…

Um, to make it more interesting…you have an ‘urgent’ need for some diapers and aren’t in the mood to be dicked around, (especially since people are starting to freak out over the pricing thing.) Gasoline is selling for $20 a gallon (because nobody knows where the next load is coming from.)

You don’t want to hang around in the open any longer than necessary…the pricing thing has caused people to become desperate and gunmen are grabbing people off the street and forcing them to empty their bank accounts at the nearest ATM.

The guy at the cash register has a gun…are you ready to die for a package of disposable diapers?

Not for the last time do you wonder where all of the cops are? You’d think they’d be ‘busy’ but you’d be mistaken…the cops are ‘hiding’. Engaging in gunfights with crazy people isn’t part of their job description, especially when the crazy people outnumber them.

Sort of redefines the term ‘Yo-Yo’, doesn’t it?

Understand good citizen, that is just a ‘taste’ of things to come…it gets a lot ‘crazier’ depending on who is holding the gun.

Thanks for letting me inside your head,

Gegner

Guilty Plea?

Greetings good citizen,

I am a big fan of ‘truth’ and I promote it at every opportunity, thus do we arrive at tonight’s offering which examines the ramifications of ‘deviating’ from the path of truth and righteousness (not to be confused or conflated with [decidedly twisted] Christian ideology.)

To cheat one of us is to cheat us all.

Which is to point out that by turning a blind eye to improper behavior, it encourages its spread, until, as the cheats are wont to claim, ‘everybody is doing it!’

Um, this piece is wonderful in its ‘asked and answered’ context…are we all to blame for the corrupt mess our society has become?

[Purloined from: Jesse’s Crossroads Café]

The Financial Crisis: Are We All Responsible?

"Whoever commits a fraud is guilty not only of the particular injury to him who he deceives, but of the diminution of that confidence which constitutes not only the ease, but the very existence of a society."

Samuel Johnson

As the hearings and scandals progress, and the revelations and charges start to cut closer to the heart of the credit swindles, inevitably there will be a movement to say, "We are all responsible. Let's allow bygones to be bygones, it was all a misunderstanding. Let's move on to something new. Justice is not important, and cannot be done."

There will be long accountings of how the problems arose, and how changes in the banking laws, broker deregulation, and the erosion of elite privileges compelled the Wall Street banks to take more and greater risks, to violate unspoken understandings about customer relationships, to take great risks, to bend the laws, to use money and influence to suborn perjury and the breaking of oaths, and to generally undermine the fabric of government. [We all know ‘what’ was done but very little attention is being paid to ‘why’…and if we don’t unearth the motivation behind such ‘mass robbery’, we will remain powerless to prevent a, er, ‘relapse’…]

There will be long analyses that suggest that trust has been lost, the trust that binds the social and financial interactions of people. And there will be an effort to regain that trust, to promise change and reform, and of course, justice.

As for justice they will say, but aren't we all responsible? Didn't we all believe the promise that 'greed is good?'

No. [Naturally, all emphasis is mine.]

The overwhelming majority of people are hard working, honest in their dealings, more concerned with raising families than ruling others, if anything distracted by their day to day problems. Long suffering, patient to a fault, too willing to the give the Wall Street bankers the benefit of the doubt for the very reason of their own good natures. They could not imagine themselves doing the things of which these men stand accused, so they cannot believe that others would so willingly lie and deceive, cheat and steal, attack the very heart of the nation, while wrapping themselves in a flag of hypocrisy, for a few more dollars that they can hardly need or even personally spend. [And that’s the hell of it good citizen, these fuckers ALREADY HAD more money than they could spend, amassing more for themselves did them little good while harming (ruining) millions of innocent, hardworking families!]

And why? Because it feeds their sickened hearts, their pathological egos, and the need to make others suffer loss for their own gains. It sets them apart from a humanity which they hold in contempt intermingled with a nagging self-hate, makes them feel superior and worthwhile, and at the extreme even as gods among men. [It, once again, could be even worse than it appears, good citizen. How far would YOU go to maintain a status quo that you were the beneficiary of? This ‘well’ is a lot deeper and we’ll plumb those depths after this excellent article concludes.]

So when the fresh public relations spin and propaganda from Wall Street and the financial sector's demimonde starts this week, and seeks to confuse the issues and distort the true nature of the fraud, recall who profited and who lost, who was caught with their hands deep in the pockets of the many, and even now stand arrogantly unrepentant with the ongoing misery of others to their account. And who stood idly by while charged by sworn oaths with protecting the innocent, the unsuspecting many, from the predatory, lawless few.

"When bad men combine, the good must associate; else they will fall one by one, an unpitied sacrifice in a contemptible struggle." Edmund Burke


The banks must be restrained, the financial system reformed, the economy brought bank into balance, and justice done though the mighty fall, before there can be any sustained recovery.

Um, that last line there (which I bolded) is/has become Jesse’s ‘signature’.

Bottom line good citizen is there can be no ‘recovery’ until ‘justice’ has been restored and that’s not going to happen as long as criminals remain in charge of the justice system.

Worse, this brings us full circle with the ‘cause’ of (the past 3) crises…

They want you to believe that these calamities are all due to ‘serial stupidity’…but one right after the other? It defies explanation, never mind logic!

Then there is the ‘other side of the coin’; the ‘thieves’ in question certainly didn’t ‘need the money’ so what were they really after?

What else is our bastardized ‘medium of exchange’ useful for? Bizarrely, money (as it is currently used) is also equated with power.

Anyone else who has noticed the, er, ‘logarithmic progression’ of wealth since the 60’s has noted that the price of crime has risen dramatically, what used to be easily had for thousands now costs millions or billions…which has lead to the theft of trillions!

Naturally, good citizen, society can no longer afford this kind of ‘extravagance’. Nor is the simple answer offered here, of money = power the, er, ‘final answer’.

Does it strike anyone as curious that ‘mercenaries’ have come back into, er, ‘fashion’ after having been abandoned by ‘free societies’ over a century ago?

Think about soldiers whose loyalty is bought and paid for and what advantage that provides over the ersatz ‘citizen soldier’? The Merc is far more likely to shoot at what he’s paid to shoot at, even if they are ‘nominally’ on the ‘same side’ as the target.

The paycheck doesn’t have a conscious…

Thanks for letting me inside your head,

Gegner

A Fool's Game...

Greetings good citizen,

Apparently the ‘talking point’ of the week regarding the (to everyone else) ‘phantom recovery’ is home sales. When I saw that the local rag as well as F.A. picked up on the news, I had to ‘pile on’.

Ironically, the ‘micro’ story in the local rag is more…er, interesting than the broad brush used by the MSM, who make no excuses for the fact that the uptick in sales is directly related to the soon to expire Federal Tax break.

What I found…er, ‘amusing’ is how locally, February sales are up 50%, yup, last year they sold two houses and this year they sold three!

Hooray, the economy is roaring back to life! Or, as Mr. Panzer points out: “those who see signs of a recovery in the residential real estate market should probably be thinking about checking into rehab:”

Which isn’t the half of it good citizen.

What does the ‘housing crisis’ mean to you? It means you will be highly unlikely to EVER recoup the price YOU PAID for you home, let alone squeeze out any ‘profit’.

And yeah Bub, you WILL sink a ton of money into the stack of lumber just keeping it up…and it is unlikely you’ll ever see any of that back either! [But this is not the bank’s problem, is it ‘sucker’?]

Bad enough the ‘overhang’ (the sheer number of unsold/foreclosed properties) is enormous, it is even more troubling that incomes across the nation are sinking like a rock, shrinking the pool of buyers down to virtually ‘non-existent’. Which is to point out that in a market like this, only an idiot would buy one of these ‘losing investments’…

Oh, PS by the way…housing prices here on the upper ‘Right Coast’ haven’t fallen hardly at all…but wages sure have! Wonder just how upset the ‘Cranky Yankee’ is going to be when he realizes nobody can earn enough to pay his asking price? [Because they are still ‘asking’ for stupid money for fairly basic housing…$460,000 for a 3 bedroom cape (that sits basically in a swamp.)]

Those houses in Ohio and Illinois are selling for spit for a reason…there are NO jobs. If you don’t bring your job with you, you aren’t about to find one out there in the economic desert.

So who is buying these properties that they can’t give away?

Don’t have the answer to that one good citizen but I can tell you this, they must be some kind of stupid! (Because this goes well beyond simple ignorance!)

Well, good citizen let us proceed with tonight’s offering for a look at how the ‘American Dream’ is going to end…

9 Years’ Worth of Homes

Economic theory has it that prices tend to rise when demand exceeds supply. But when the potential inventory of homes for sale by banks -- which is aside from the properties that homeowners and builders might also be looking to unload -- is equivalent to nine years' worth of demand, as detailed by Real Time Economics in "Number of the Week: 103 Months to Clear Housing Inventory," that suggests those who see signs of a recovery in the residential real estate market should probably be thinking about checking into rehab:

103: The number of months it would take to sell off all the foreclosed homes in banks’ possession, plus all the homes likely to end up there over the next couple years, at the current rate of sales. [Understand good citizen, buyers are still ‘stretching’ to get into homes as well as putting down as little money as possible up front.]

How much should we worry about a new leg down in the housing market? If the number of foreclosed homes piling up at banks is any indication, there’s ample reason for concern.

As of March, banks had an inventory of about 1.1 million foreclosed homes, up 20% from a year earlier, according to estimates from LPS Applied Analytics. Another 4.8 million mortgage holders were at least 60 days behind on their payments or in the foreclosure process, meaning their homes were well on their way to the inventory pile. That “shadow inventory” was up 30% from a year earlier.

Based on the rate at which banks have been selling those foreclosed homes over the past few months, all that inventory, real and shadow, would take 103 months to unload. That’s nearly nine years. Of course, banks could pick up the pace of sales, but the added supply of distressed homes would weigh heavily on prices — and thus boost their losses.

Um, don’t you just LOVE stories like this one? Stories where ‘real ‘Merikun Patriots’ are damning the torpedoes and moving ‘full speed ahead’ with the dumbest thing they have ever done!

What also isn’t discussed good citizen is how without all of those idiots paying all of that interest, the banking system would collapse!

The worthless banks don’t run on ‘love’ good citizen, regardless of how much of ‘God’s work’ they pretend they do.

The whole predatory banking system operates on raping you, early and often! If the loan is stupid, it doesn’t matter…the belief is there will be another sucker along any minute, just begging to be relieved of their cash!

Except Mr. Merchant decided he didn’t need to pay his customers enough to buy his products…other employers would take care of that little ‘detail’. Until they all ‘got with the program’ and began slashing payroll…now nobody’s employees can afford anybody’s products!

Because the currency of a country that makes nothing is worthless. Don’t look now good citizen but here we sit!

We’re literally ‘eating’ I.O.U.’s (for as long as that lasts…then ‘watch out!’)

It’s even worse than it appears good citizen and you can only wonder why the MSM ‘glosses over’ these ‘little details’.

Thanks for letting me inside your head,

Gegner

Capitalist Debtopia!

Greetings good citizen,

The kids return to school Monday and there isn’t a good reason to keep ‘goldbricking’ (leaving all of the ‘heavy lifting’ to the ‘ideologically tainted’ crowd…)

Which is not to say things are ideologically ‘neutral or free’ here…I have my own agenda, which isn’t nearly as disturbing as the mainstream one tends to be.

Some may consider that agenda a ‘lesser evil’ and I’ll be the first to admit it is purposefully ‘heavy handed’, if only to counteract the pervasive permissiveness that has driven our civilization to the brink (and likely beyond) of collapse.

The ‘ideologically tainted’ are, naturally, capitalists and it is maddening to see ‘fuck you, pay me’, defended as a viable economic model while it collapses all around us.

So it is that we arrive at tonight’s offering for a detailed look at ‘Kleptocracy’ and the empire it built…

The End Of Debtopia

Greece is turning into history's first failed debtopia, an economy that thoroughly eviscerated its production and earned income foundations to replace them with consumer spending on cheap imported goods and asset inflation, both fuelled by massive foreign debt. Naturally, GDP growth kept zipping ahead for a while, but so what? To arbitrarily extend the ketchup economics of Larry Summers, Greeks shut down all of their tomato-processing factories, borrowed a ton of foreign money to turn factories and farmland into expensive condos and bought cheap imported ketchup, instead. Naturally, there were lots of domestic jobs in home construction at first, but as soon as credit conditions turned sour it was game over.

Greeks no longer make anything that anyone else wants to buy at the price Greeks demand (see chart below), cannot earn enough money to service their debt properly and - quite obviously - cannot maintain a lifestyle that rose to unsustainable levels because of that ever-higher debt. Furthermore, they cannot devalue their currency to increase competitiveness and inflate their way out of debt. Their only choice is domestic deflation and even the head of IMF has pointed this out: "The only effective remedy that remains is deflation" he said a few days ago.

Of course, what Mr. Strauss-Kahn means when he says "deflation" is fresh loans in exchange for a reduction in the domestic cost of production, i.e. lowering workers' wages and benefits, plus a healthy dose of deregulation. In other words, the standard IMF medicine administered many times with dubious results (think Argentina.)

Quite apart from the obvious retort of "lower the cost of making what?", since the Greeks no longer make ketchup, I fear that the IMF's plan for Greece will prove an utter failure, at least as it is envisioned right now. While I agree that deflation is absolutely necessary, since being a member of the eurozone Greece cannot perform a competitive currency devaluation, I strongly disagree with the type of deflation that is needed. To wit, I would recommend debt and asset deflation, to bring fixed costs in line with what the economy can earn. [Sadly, both of those factors cannot be controlled outside of domestic markets, giving importers a huge advantage at the risk of ‘social cohesion’…]

For example, residential and commercial real estate prices should come down enough so that wages and business earnings may once again comfortably cover its purchase or rent. Right now they don't, and by a wide margin (e.g. an apartment in Athens can cost several times more than the average single-family house in the U.S.) Similarly, the country's total debt load should be reduced - instead of increased with more loans from the EU or IMF - to a level where it can be serviced properly by the real economy.

And as an aside maybe I should point out the debtopic similarities between Greece and the United States? Ah, but the U.S. has its own currency and can devalue at will, you may retort. Can it, really?

First, don’t get sidetracked good citizen by asking what does Greece have to do with our own situation here in the US. As Hellacious points out, our, er, problems are identical and so are the ‘capitalist’ solutions to those problems.

You may note, Hellacious doesn’t point out or even consider that there are ‘non-capitalist’ solutions to what is seldom officially recognized as a ‘solvency crisis’…because our debt-driven social model is what ‘caused’ the crisis! (And hardcore capitalists don’t want to start a ‘debate’ centered on the ‘viability’ of capitalism.)

What ‘caused’ the crisis, good citizen…well, many accuse ‘greed’ but it is really too much money chasing too little return that caused all of the reckless, er, ‘bets’ that went sour, (as they always will when you try to produce something out of nothing.)

IF the outcome is that we abandon our predatory social model, it could be a net positive…but I am doubtful that those who value their own creature comforts more than they value ‘civil society’ will surrender their ‘advantages’ willingly.

As you well know, criminals aren’t born, they are created…no irony should be lost on the fact that both ends of the financial spectrum create them, albeit, they are two entirely different varieties, one that can be, er, ‘redeemed’ and one that is beyond redemption…

Guess which one you can fix?

Now contrast that with the crisis facing civilization, and magnify it by ‘who’ is nominally in charge of, er, ‘solving’ the problem…

Thanks for letting me inside your head,

Gegner

Gone Fishin'...

Greetings good citizen,

Today I’m going to attempt to step away from the alarm bell and try to calmly share my ‘concern’ that the situation isn’t at all what the media would like you to believe it is.

There’s no need to hyperventilate over Goldman Sachs, the only ones who DIDN’T already believe they were a bunch of criminals were their own employees…(and even then it wasn’t unanimous.)

We’re six months away from the mid-terms and the media is already ‘pushing’ the idea that the party of ‘no’ will be swept back into power…

You know what they say about propaganda, ‘keep repeating until true’

Given how the democrats have, er, ‘squandered’ the majorities and ignored the mandates the public provided them…I think this spells big trouble for the ‘two parties you can’t tell apart system’.

Honestly good citizen, what do you think we should do about this…er, mess?

We could do nothing…but we are headed straight for ‘Banana Republic’ status (and that, sadly, is the ‘best case’ scenario…the worst case is an all out collapse.) But, We’re trying to be ‘adults’ here and not resort to ‘extreme outcomes’ (regardless of how likely they may be…)

Am I wrong good citizen? Am I blowing this up out of all proportions? Is this merely the ‘back and forth’ that all, er, ‘free nations’ experience from time to time?

Worse, am I merely displaying a ‘lack of faith’ and a degree of ‘negativity’ that have suddenly become commonplace out there in the ‘real world’?

If we all just ‘believed’ that everything was going to work itself out, it would, wouldn’t it?

If we put our ‘game faces’ on and went out there and gave it all we had, we’d be unstoppable, wouldn’t we?

That’s what the fucking Chuckle-heads would like you to think good citizen. Things suck NOT because you are getting screwed, big time but because YOU don’t BELIEVE things are going to get better…all by themselves! (Seriously good citizen, why would you want to get law enforcement involved? They are only going to complicate matters and they might even crush out the ‘Animal Spirits’ so important to the proper functioning of the markets…)

Actually, truth be told, how many of you are secretly wishing Wall Street gets beat big time in court…and all of those billions they paid out in bonuses will get ‘clawed back’…and then they’ll get ‘fined’ on top of that!

Well, it’s nice to have your ‘fantasies’, isn’t it?

So I’ll leave you with those ‘happy thoughts’ while I take a couple of days off to be with my kids…

Don’t blow nuthin’ up while I’m away…

Gegner

Echoes

Greetings good citizen,

History buffs know today is the 200 + anniversary of ‘The Shot Heard Around The World’ (know here, where it happened, as ‘Patriot’s Day’.) My fair state is in ‘Holiday mode’ but that is the exception, the stock markets and other ‘capitalist enterprises’ couldn’t justify sacrificing a days profits to the cause of freedom.

I mean hell, wasn’t the main idea behind the revolt to cement the wealth of the owning class? Didn’t all of those farmers sacrifice their lives so their children could become the merchant classes ‘debt slaves’?

Yeah, it seems there was some ‘misunderstanding’ about the cause/purpose of the revolution…but the fools bought it and their children are paying the price (even if that price continues to go up! It’s hard to believe that 230 years later and we’re still getting suckered by the same bunch!) Of course, it wasn’t their prosperity that they dangled before us like a prize, it was our freedom…and we’re still not there yet!

It is this realization that we have come ‘full circle’, that we have lost everything we thought we gained from the original revolution that makes today’s ‘new normal’ so dangerous.

Which is to ask if the time has come for a new revolution, one that acknowledges a reality the beneficiaries of yesterday’s social caste system refuses to see?

Too many workers and not enough jobs isn’t the kind of thing you can safely ignore for very long…

But that, ironically, is NOT the topic of tonight’s offering

CREDIT BUBBLE BULLETIN

It’s about trust
Commentary and weekly watch by Doug Noland

Perhaps last week will provide somewhat of a needed market wakeup call: Washington may have orchestrated a powerful reflationary backdrop throughout the financial markets. There are, however, myriad financial and economic aspects to the bust that will not be disappearing anytime soon. Trust in Wall Street and the marketplace is these days anything but impenetrable.

Some of you may remember when I regularly ran ‘The Credit Bubble Bulletin’ as my Monday offering…what you may not know is why I stopped.

The Asia Times is, above all things, a conservative/Libertarian online publication…and you frequently encounter their barely disguised contempt for government. Let’s look at the opening paragraph again, shall we?

“Washington may have orchestrated a powerful reflationary backdrop throughout the financial markets.”

Who is responsible for this ‘pumping up’ of the money supply? Our ‘elected representatives’ or the Republican ‘political appointee’ fondly known as ‘Zimbabwe Ben’ (and his faithful Republican sidekick Timmy?)

Geez, aren’t both of these guys members of the party of ‘fiscal responsibility’ (like the guy who originally appointed them?)

But let’s not fall into that trap…

Is The Fed a ‘closely held-private enterprise’ that is NOT required to reveal its book BECAUSE it is NOT publicly traded?

Which is to point out that despite the name, The Fed has NOTHING to do with the Federal Government. So where do these government hating FUCKTARDS get off claiming that the actions of a privately held corporation (something they worship, by the way) are instead the actions of our badly broken and corrupted government?

Seriously good citizen, how bad is it when our elected officials actually believe they are ‘window dressing’, elected to provide the public with the ‘illusion’ of representation?

Don’t you think the time has come to shake things up? (And not just for the sake of doing it either…)

Some of you are likely confused because you know I claim to be an Anarchist…but anarchists DON’T hate ‘governments’, it’s the Rulers we can do without.

Anarchist believe in ‘self-rule’, that the people should have a say in deciding the policies they will live under, rather than having those rules or worse, the end result of decisions they had no hand in being thrust upon them…like a war of choice.

True anarchists have another ‘funny belief’, they think that once you have exempted yourself from a rule, you have violated the whole ‘rule of law’. (Understand, ‘Fake anarchists’ are indistinguishable from Libertarians, neither believes in the rights of others. Like the typical Wall Streeter, they live in the world of ‘me’.)

Sadly, there are many instances where ‘it’s okay if you’re a free market lovin’ capitalist’! (But everybody else better toe the line.)

Now that I have alerted you to the author’s ‘conservative bias’ (as well as my own socialist leanings) we can proceed.

Irrespective of Friday's allegations regarding Goldman Sachs and the market pullback, reflationary forces have attained considerable momentum; massive government borrowings and ultra-loose financial conditions have incited a self-reinforcing stampede into risk assets. Almost US$50 billion exited money market funds in the past week alone, boosting the 15-week outflow to $380 billion. Money fund assets are down an incredible $900 billion in just 12 months, a historic wall of finance unleashed upon global risk markets.

The Morgan Stanley Retail index closed yesterday above its previous all-time high set all the way back in April, 2007. From its low of 68.41 in November of 2008, the Morgan Stanley Retail index has tripled in price. While down almost 3% on Friday, the S&P500 Regional Bank index sports a 2010 gain of 34.8%. During the height of the credit crisis, I wrote that I believed the US economy was heading into a depression. I was wrong. [This is a bizarre admission because he is really ‘mincing words’ here. What he is admitting is that while a large swath of the economy sank into ‘permanent’ depression, never to recover, the, er, ‘core economy’, much reduced in size, will, er, ‘continue’ to prosper. Which is to point out that it’s only a ‘recession/depression for some of us, ‘the chosen few’ are dancing like it’s still 1999! Perhaps the most disturbing aspect of this outcome is how fucking ‘Libbies’ are perfectly cool with it…]

A commentator on CNBC the other day suggested that the credit crisis had only interrupted an ongoing bull market. He explained that the complexion of the marketplace traditionally changes after a true bear market. New leadership emerges, while the old favorites tend to languish during the market recovery. This commentator argued that market leadership has changed little, and I can't disagree. I just don't share his sanguine interpretation of market dynamics. [CNBC has about as much ‘credibility’ as Faux News…so be wary of anyone citing either of them.]

The Federal Reserve and Treasury's historic reflation interrupted the US (and global) economy's sorely needed period of adjustment and rebalancing. I would argue that market leadership has not changed specifically because government intervention precluded economic restructuring. Massive government credit inflation has, at least for now, sustained the existing economic structure - buy retailers, regional banks, homebuilders, restaurants, etc. It's back to bubble-economy business as usual. [Um, hard to know what to make of assertions that there should have been no, er, ‘interference’ from the government in the operation of the sacred ‘free markets’ except that the rocks would be much bloodier had the government not cushioned the blow…although we can clearly see ‘who’ got most of the benefit!]

The bone I have to pick with the bulls relates to their view that buoyant markets are signaling the emergence of a sound and sustainable recovery. I see instead a desperate policymaker crisis response re-igniting credit bubble excesses and fomenting only deeper systemic distortions. Last week, Fed chairman Ben Bernanke suggested that the strong market environment is confirmation of the soundness of policymaking and market trust that Washington will get its fiscal house in order. Fed officials are again deluding themselves and, in the process, indulging asset market inflation and destabilizing speculation. [He KNOWS only a tiny portion of the global markets are going to, er, ‘bounce back’ but he can’t admit that because we victims are to be kept deaf and dumb on our short march towards the coming Banana Republic…]

But I've been to this movie before. I'm familiar with how the plot develops. And I have an abundance of gray hair and wrinkles as evidence of the number of reflations I've observed. I know how asset inflation fosters optimism in the bullish camp and discredit to bearish analysis. [Really now, Ding-dong is newly wed with an infant child…but this is supposed to be ‘short attention span theater, you’re not supposed to remember those confessions.]

Loose "money", as has been the case throughout history, breeds excess and malfeasance. The Wall Street/mortgage finance bubble was a fiasco, and last week's allegations against Goldman Sachs are a reminder of how ugly things turned in the waning days of the subprime mortgage scheme. Clearly, there was way too much "money" sloshing around - so much to be made so quickly by gaming the system and fleecing the less-informed. [This is a very bizarre claim, coming from the mouths of perennial scammers that are ‘gold-bugs’]

The destruction and inequitable redistribution of wealth are the hallmarks of financial bubbles. Today, trillions of securities are created globally on the basis of the creditworthiness of the borrowers coupled with perceived adeptness of policymakers. It is quite amazing how quickly trust has been restored. A new bull market is celebrated, while another bout of monetary disorder has unfathomable amounts of "money" sloshing around for the taking. [Which is to point to the broken status of the financial markets, there’s something larger than meets the eye going on here…]

At the center of it all, policymaking at home and abroad has distorted market perceptions and market-pricing mechanisms. The unsuspecting again have little notion of the underlying risks they are accepting. Fleeing zero rates and chasing inflating securities prices, investors have again been left dangerously exposed to another financial bubble and a postponed economic restructuring. It may never be called "fraud" or "misrepresentation". The outcome will be about the same. At the end of the day, markets are made or broken on trust.

Um, it’s not just the markets that will collapse one the flood of funny money is exposed for the fraud that it is.

Civilization will, er, ‘disappear’, vanish like it never existed…and if you don’t have a deep hole to crawl into, it is unlikely you will survive.

Oh, yet another ‘word of caution’… if that hole ain’t ‘secret’, odds are you’ll never exit.

At the ‘risk’ of repeating myself, tonight’s offering is just one more instance of someone belaboring the obvious…nothing has been ‘fixed’ nor is it likely to ever be fixed…because the Banana Republic is on the way.

Citizens of the US labor under the false belief that the economy and prosperity includes all of us, only the Europeans seem to recognize that economic inequality is a by-product of Royalty.

Understand good citizen, time is running out and this is the third massive ‘shrinkage’ of the economy in as many decades…and still the ‘happy talk’ persists!

They’ll happy talk you right into a mud hut (while convincing you that you’re ‘lucky’ to have that) as they sign you up to slave your ‘productive’ life away (for which you get nothing….)

Wake up and smell the coffee good citizen while there is still coffee to smell!

Thanks for letting me inside your head,

Gegner

Road to Perdition...

Greetings good citizen,

In what looks like a game of ‘follow the leader’, almost every financial site is featuring a story asking if their readers ‘think’ Goldman Sachs committed fraud.

Naturally, it doesn’t matter what YOU think, most of us want an end to the farce in the Middle East but we got the classic ‘How’s it feel to want?’ thrown at us.

Most of us ‘think’ the war is, er, ‘unproductive’ but it seems our so-called leaders think otherwise…not that we would have received action more ‘in tune’ with the majority opinion from other candidates.

It’s not a big stretch to envision candidate Hillary screaming ‘bomb here, bomb now!’ and candidate McCain made no secret of his commitment to ‘the long war’.

Perhaps more curious is how the only candidates that may have been more inclined to react in line with ‘public sentiment’ all got the ‘bums rush’ from the MSM as being ‘unfit for office’.

But I digress…although not by much.

Once again good citizen the name of the game is ‘perception management’.

Does it strike you as odd that is has taken three years for the SEC to, er, ‘file charges’ in an incident that screamed ‘fraud’ at every step of the way?

It’s like a bad movie, the public has been, er, ‘dissatisfied’ with the decisions of our lawmakers and our lawmakers have been ‘acting’ like they have an extreme hearing problem.

Screams to protect US jobs have been answered with ‘illegal immigrant’ witch hunts. Speculators driving up the price of crude has been met with illegal invasions of sovereign nations…making us wonder what kind of morons we send to Washington?

Which is to say we are once again confronted with a ‘leadership’ that is convinced they know better than the average citizen what is ‘good’ for them…

It is only the occasional MSM article that makes even the vaguest reference to the blatant level of ‘perception management’ the DOMINATES the ‘news cycle’…

So we arrive at tonight’s offering

[Kudos to Gretchen Morgenson for, if nothing else, daring to speak the truth…albeit, the only way this piece got past an editor is as a ‘counterweight’ (and a feeble one at that.)]

This Bailout Is a Bargain? Think Again
By GRETCHEN MORGENSON
Published: April 16, 2010

IT’S way too early to tally the costs of the government’s various efforts to help our nation’s financial institutions survive the credit debacle. But that hasn’t stopped anonymous Treasury officials from claiming in recent days that their Armageddon-avoidance will wind up costing far less than many feared. [This merely points to something we all know, just how, er, ‘careless’ Mr. Obama’s choice of Treasury Secretary has proven to be…]

One Treasury estimate, leaked to The Wall Street Journal last week, put a price tag of $89 billion on the financial bailout. That’s far below the $250 billion the Congressional Budget Office estimated last year or other analyses that put the all-in number at $1 trillion or more.

It is understandable, of course, that Treasury might want to transmit good news about bailouts the same week Americans were rushing to meet the I.R.S.’s tax deadline. And given that Treasury is run by Timothy F. Geithner, the man who doled out bailout billions as president of the Federal Reserve Bank of New York, his current minions certainly have an interest in peddling the view that the price of these rescues has become less onerous. [Sadly, the facts contradict such ‘happy’ (if not downright ‘glib’) pronouncements.]

But before we break out the Champagne, let’s look at the costs this estimate included — as well as those it left out.

What the $89 billion included were costs associated with stabilizing Fannie Mae and Freddie Mac, the mortgage finance giants; loan guarantees by the Federal Housing Administration; and liquidity programs offered by the Federal Reserve, such as those authorizing the purchase of mortgage-backed securities from financial institutions. It also included the Troubled Asset Relief Program — which, nameless Treasury officials contended, may someday generate a profit.

But if the Treasury wants to provide a full assessment of the costs of this financial debacle, it will have to add some more beads to its abacus.

“If you are going to do a ledger, you have to do a full and complete ledger,” said Christopher Whalen, editor of the Institutional Risk Analyst. “To talk about making money on short-term transactions with the TARP while you have this huge cost to the nation is incongruous.”

A major factor missing from Treasury’s math is the vast transfer of wealth to banks from investors resulting from the Fed’s near-zero interest-rate policy. [‘Near Zero?’ Nice of them to bring up this ‘floating’ interest rate thing…reminding us of the unanswered question of ‘who’ gets to borrow at zero interest and who is ‘penalized’ at .25% interest?]

This number is not easy to calculate, but it is enormous. The Fed’s rock-bottom interest-rate policy bestows huge benefits on banks because it allows them to earn fat profits on the spread between what they pay for their deposits and what they reap on their loans. These margins are especially rich on credit cards, given their current average rate of 14 percent and up. [Again we need to ‘qualify’ the above statement by adding ‘with your good credit’, because that’s the only way you are still getting 14% from a chiseling credit card company!]

The losers in this equation are savers and investors, especially people on fixed incomes. “All interest-sensitive investors have been transferring what they should be receiving to Uncle Sam and the banking industry,” Mr. Whalen said. “And you are talking about a lot of money.” [Here’s a class ‘A’ slippery slope. We start with a crisis ‘caused by’ too much money chasing too little return…then we turn around and cry about all of the savers who can’t ‘protect’ their, er, ‘liquidity’…their ‘capital’ is being devoured by (crooked) investment vehicles as well as by officially ‘non-existent’ inflation.]

Then there are the losses suffered by the Federal Deposit Insurance Corporation when it has to take over faltering institutions. The estimated cost to its insurance fund is $6.65 billion for the 43 banks that have failed this year. The fund is financed by bank fees.

Treasury’s recent figures also don’t reflect hits that may result from loss-sharing arrangements the F.D.I.C. set up with healthy banks to persuade them to take on the assets of failing ones. How much the government might have to swallow as part of that program is unknowable now, but Mr. Whalen said he expects such losses to hit $400 billion when all is said and done. [This is, in my assessment, a very conservative number indeed!]

There are also costly consequences of our government’s relatively easygoing approach to bank assistance, a practice Mr. Whalen calls “extend and pretend.” [Yet more evidence that the economy (or what passes for it) is being ‘held together’ by accounting fraud…]

“The refusal of the Washington political class to address the issue of bank insolvency quickly via restructuring and recapitalization has extended the economic recovery process by years,” he said. “Lending will continue to shrink and real economic activity is suffering. The cost of ‘extend and pretend’ goes into the trillions of dollars of lost economic activity.” [Naturally, it is debatable if the ‘over-extended’ consuming public is capable of generating /absorbing this phantom ‘economic activity’?]

By allowing the banks to keep bad loans valued on their books at unrealistic levels, the government has prolonged the agony of this downturn. Mr. Whalen suggested that the government should have made the banks write down loans to realistic levels a long time ago, while letting them keep the TARP money as a financial cushion. [Crap good citizen, just how pervasive is this ‘there’s no such thing as ‘good government’ meme? The capitalist freakazoids blow up the economy and now it’s the government’s fault? You can see where this is going good citizen; it’s only a matter of time before this becomes YOUR fault for accepting a paycheck from your employer. You ‘should have’ told them to stick it and slowly starved to death (for the good of the economy) while continuing to selflessly surrender your labor for that same ‘greater good’. Your employer would be ‘grateful’ for your sacrifice while (somewhat unkindly) defending their action by stating “I can’t help it if they’re stupid!”]

Instead, the banks were encouraged to pay back TARP and put off the day of reckoning when it came to assessing the real-world value of the toxic assets lurking on their books. And so the shrinkage of the banking system continues. [A ‘banking system’ that was far larger than the ‘real economy’ could support, which goes a long way towards explaining why it melted down!]

Of course, the $89 billion estimate also excludes big costs associated with the implied government guarantees of large, interconnected and clubby financial institutions. Dean Baker, co-director of the Center for Economic and Policy Research in Washington, estimated last year that 18 large banks that the market viewed as too big to fail received advantages — such as artificially cheap funding costs — worth $34 billion a year.

Such financial benefits represent yet another cost of the banking crisis and the continuing actions the government is taking to protect our system from the mistakes of megabanks. Even if Treasury doesn’t want to acknowledge them, they’re real. [This is worse than it appears good citizen because it is not that the Treasury is ‘ignorant’ of these facts, it is their willingness to lie about it that ‘should be’ your chief concern…if we can’t trust the people running our society, who can you trust? Which is the same as asking how you/they can sleep at night?]

ANDREW G. HALDANE, executive director for financial stability at the Bank of England, examined some of these costs in an excellent speech last month before the Institute of Regulation and Risk in Hong Kong. Calling such costs “banking pollution” and the “noxious byproduct” of systemic risk, Mr. Haldane took a stab at measuring some of them.

In past financial crises, Mr. Haldane noted, costs appeared to be “large and long-lived, often in excess of 10 percent of pre-crisis G.D.P.” But he said that current estimates in the United States that peg bailout losses at around $100 billion represent less than 1 percent of domestic output. (This is the relatively rosy view Treasury is promoting.)

He said low-ball accountings “are almost certainly an underestimate of the damage to the wider economy” as a result of the crisis. World output last year was thought to have been 6.5 percent lower than it might have been had the crisis not occurred. Globally, this translates to $4 trillion in lost output, he said.

He also says such losses can be “permanent” or “persistent.”

“Measures of the costs of crisis, or the implicit subsidy from the state,” Mr. Haldane said, “suggest banking pollution is a real and large social problem.”

Sadly, it is one that our leaders here at home seem more willing to underplay than control.

You know and I know that the TARP was a $700 billion dollar deal…so $89 billion is basically bullshit. As the ‘overseer of bailouts’ put it, the taxpayer is on the hook for some 23 ‘Trillion with a ‘T’ dollars worth of, er, largely fictional assets. So how we ‘got off light’ is a rather mysterious claim unless they are referring to the ‘perps’, who have gotten of light indeed!

What is perhaps ‘comical’ is how they keep inventing new, colorful phrases to avoid using ‘harsher’ terms, like theft and fraud.

What do you suppose ‘banking pollution’ really is? Is someone guilty of taking a steaming dump in the money supply and none of these wussies are up to the job of cleaning it up?

Most perplexing good citizen is the financial system is based upon trust…so how much confidence does this doubletalk that only takes a small fraction of the larger picture into consideration give you?

Worse, it won’t straighten itself out.

So what are you gonna do?

The price of remaining idle is a Banana Republic…and I sure don’t want to do that to our kids.

Time to ‘nut up or shut up’ good citizen,

Thanks for letting me inside your head,

Gegner