Jobless report rattles markets

Greetings good citizen,

Um, the markets closed ‘up’ today but it was rather obvious that they ‘painted the tape’ at the close of trading…even the near vertical finish in the last twenty minutes of trading only put the Dow up 11 points.

I’m sure nobody is ‘shocked’ to read the warnings that the recovery is likely to be more ‘muted’ than originally anticipated. That seems to be a ‘sign of the times’ where suddenly everything is ‘surprising’ or ‘disappointing’, depending on the news.

Ironically, this begs the question of how these ‘analysts’ keep their job being wrong so often, the only other ‘occupations’ that are more forgiving is weather forecasting, followed by professional sports.

Understand good citizen that tonight’s headline has been altered to reflect the market’s ‘positive finish’, so we proceed with tonight’s offering

Jobs Report Unsettles Wall Street [Just not for the whole day…]

By JAVIER C. HERNANDEZ
Published: January 8, 2010

A grimmer-than-expected report on the United States job market rattled Wall Street investors on Friday, spurring a rally in government bonds as traders looked for a safe haven.

Across the board, prices fell: the dollar weakened, and crude oil remained below its 15-month high for a second day. At the same time, two-year Treasury notes posted their largest gains since last month. [Um, a barrel of oil is going for $ 83 +, which is somewhat higher than it’s been in a while.]

The day began with disappointing figures from the Labor Department, which reported that the United States economy shed 85,000 jobs in December. That surprised many analysts Some had ventured that employers, encouraged by signs that the recovery would endure, might have even added jobs.

There was some hope amid the lackluster numbers: the government said employers actually added 4,000 jobs in November, backtracking on its original estimate of 11,000 losses for the month. [Um, as we all know, this is a positively astounding development considering there are no freaking jobs out there anywhere, and positively nobody is hiring! Must be more of those miraculous ‘government accounting methods’ working their magic…or is proper to call it ‘voodoo’ when it involves raising the dead?]

Those dissonant figures highlighted the erratic nature of economic renewal, but came as encouraging news to some investors

“There’s been enthusiasm about the pace of the recovery, so this wasn’t a great number,” said Uri D. Landesman, head of global growth at ING. “But it’s hardly a disaster.”

Gegner here…let’s take time out for a moment to consider what’s really going on. Defaults are off the charts, people are losing their jobs left, right and center.

What do you suppose scares our creditor’s spitless right now? If the job market isn’t going to turn around, people will know they aren’t getting a pay increase. Um, no raise (or even the prospect of one) will put people who are currently ‘juggling’ their payments is a bad place…and they will more than likely ‘triage’, paying only the bills they absolutely need to pay. Place where the climate is, um, less agreeable puts residents under extra pressure, although most localities prohibit cutting off utilities to a home that has minor children or elderly folks living there during the ‘winter months’…come Spring, all bets are off, you pay up or you get shut down.

So that is ‘why’ the MSM is sticking to the ‘fantasy’ that economic recovery is right around the corner…the lies don’t cost them anything, their credibility is already shot to hell.

In afternoon trading, the Dow Jones industrial average was down 0.22 percent at 10,583.58. The broader Standard & Poor’s 500-stock index fell 0.11 percent, slipping below its 15-month high, and the technology-dominated Nasdaq climbed 0.36 percent.

The Dow was held back by declines in shares of Coca Cola, which fell 2 percent after JPMorgan Chase downgraded its rating on the company.

Overseas, European markets fluctuated but by the close had gained momentum. Investors were weighing a report showing the unemployment rate in the euro area had reached double digits in November for the first time since the introduction of the currency a decade ago. [Now we can all wonder what that has to do with the price of tea in China…although it does tell us one thing, there ain’t no recovery over there either…]

Next week, United States investors will begin to get a glimpse of how companies fared in the fourth quarter of 2009. Analysts said that as investors dissect earnings reports, they are expecting companies to show growth in revenue — not just nimble cost-cutting efforts. As the recovery takes hold, investors are looking for reassurance that companies can sustain growth, and that consumer demand is returning.

Let’s wish the investors ‘good luck’ with their search for ‘solid economic recovery’, because it isn’t there.

Everytime you look at the numbers, the data gets more distressing. Like the latest blurb about how there are currently more government paper pushers than people employed in the manufacture of goods.

By definition, a paper-pusher is ‘overhead’; their job doesn’t ‘create’ wealth, keeping that person employed is pure ‘cost’. If you want to add insult to injury, government employees enjoy benefits that in many cases don’t even exist in the private sector.

Again, Euro-Zone Jobless Rate at Double Digits stories like this cast a rather daunting shadow on the prospects for economic recovery anytime soon…if at all.

And that just might be the hell of it good citizen, you could very well be starving/freezing yourself to death in a vain effort to pay off debt that’s going to ‘disappear’ anyway.

When civilization collapses, nobody is going to come looking for your lawnmower…

Thanks for letting me inside your head,

Gegner

MSM vs. The Blogosphere

Greetings good citizen,

I have speculated rather extensively on the subject of whether or not ‘elected officialdom’ would feel obliged to tell us if the mooring for ‘life as we have come to know it’ were about to shatter into a jillion pieces…

I also believe that I have made it quite clear it is my opinion that our ‘public spirited’ representatives would, er, ‘decline’ to share (much less admit) that things were less than absolutely wonderful, a ‘phenomenon’ we are provided with ample evidence of whenever we are subjected to ‘government statistics’.

Um, naturally, the operative word here is ‘opinion’…although it does dovetail nicely with the huge and growing gap in what passes for reporting between the MSM and the Blogosphere.

One would seriously question if the reports are being submitted from the same planet, so widely do the two diverge from one another…

Tonight’s first offering is an example of reportage from the blogosphere, where it is easy to observe the level of detail and intellectual totally absent form most MSM reporting…

The topic (also rarely covered in the MSM) is our own monetary system… [Purloined from today’s Asia Times]

China in Treasuries cul-de-sac
By Henry CK Liu

[We join this offering ‘mid-stream’, please click the link for the entire article.]

Monetary economists view government-issued money as a sovereign debt instrument with zero maturity, historically derived from the bill of exchange in free banking. This view is valid only for specie money, which is a debt certificate that can claim on demand a prescribed amount of gold or other specie of intrinsic value. But fiat money issued by a sovereign government is not a sovereign debt but a sovereign credit instrument.

Sovereign government bonds are sovereign debt while local government bonds are agency debt but not sovereign debt, because local governments, while they possess limited power to tax, cannot print money, which is the exclusive authority of the Federal government or a central government. When money buys bonds, the transaction represents sovereign credit canceling public or corporate debt. This relationship is rather straightforward but is of fundamental importance.

Money issued by government fiat is now exclusive legal tender in all modern national economies. The State Theory of Money (Chartalism) holds that the general acceptance of government-issued fiat currency rests fundamentally on government's authority to tax. Government's willingness to accept the fiat currency it issues for payment of taxes gives such issuance currency within a national economy. That currency is sovereign credit for tax liabilities, which are dischargeable by credit instruments issued by government in the form of fiat money.

When issuing fiat money, the government owes no one anything except to make good a promise to accept its money for tax payment. A central banking regime operates on the notion of government-issued fiat money as sovereign credit. A central bank operates essentially as a lender of last resort to a nation's banking system, drawing on sovereign credit. A lender's position is a creditor position.

Thomas Jefferson famously prophesied: "If the American people allow the banks to control the issuance of their currency, first by inflation, and then by deflation, the banks and corporations that will grow up around them will deprive people of all property until their children will wake up homeless on the continent their fathers occupied ... The issuing power of money should be taken from the banks and restored to Congress and the people to whom it belongs." This warning applies to all other peoples in the world as well.

Government levies taxes not to finance its operations, but to give value to its fiat money as sovereign credit instruments. If it chooses to, government can finance its operation entirely through user fees, as some fiscal conservatives suggest. A government does not need to be indebted to the public. It creates a government debt component to provide a benchmark interest rate to anchor the private debt market, not because it needs money. Technically, a sovereign government need never borrow. It can issue tax credit in the form of fiat money to meet all its liabilities. And only a sovereign government can issue fiat money as sovereign credit.

If fiat money is not sovereign debt, then the entire conceptual structure of finance capitalism is subject to reordering, just as physics was subject to reordering when man's worldview changed with the realization that the earth is not stationary nor is it the center of the universe. The need for capital formation to finance socially useful development will be exposed as a cruel hoax, as sovereign credit can finance all socially useful development without problem. Private savings are not necessary to finance public socio-economic development, since private savings are not required for the supply of sovereign credit. Thus the relationship between the national private savings rate and public finance is at best indirect.

Sovereign credit can finance an economy in which unemployment is unknown, with wages constantly rising to provide consumer buying power to prevent production overcapacity. A vibrant economy is one in which there is persistent labor shortages that push up wages to reduce overcapacity. Private savings are needed only for private investment that has no intrinsic social purpose or value. Savings without full employment are deflationary, as savings reduces current consumption to provide investment to increase future supply, which is not needed in an economy with overcapacity created by lack of demand, which in turn has been created by low wages and unemployment.

Um, ‘fair warning’, the rest of the article is just as ‘dense’ and assumes that you already have a firm grasp of basic monetary principles…which only makes it that much more mysterious as to why ‘economists’, supposed ‘experts’ in money and it’s management, get it so wrong, so frequently?

As further proof, we arrive at tonight’s second offering with the foreword of caution being that I howled when I first read this. Not because the situation is humorous in itself, but because it struck me as, er, ‘ludicrous’ the way it is so accurately presented.

[Purloined from: The Automatic Earth]

January 6 2010: Iceland, or Size matters

Ilargi: The case of Iceland and its financial shenanigans is, if nothing else, intriguing and amusing. Not for some of the people involved, I know, and I mean no disrespect. But it is in the way the situation is dealt with and in how various parties try to come out on top.

A short background: Iceland had 3 main banks who all, albeit to various degrees, made unrealistic profits for investors and depositors in early 21st century times, and then went bust. One bank, Icesave, which had many clients in England and Holland, owes these clients some $6 billion, a sum the Iceland government is held responsible for and initially seems to have agreed to pay. The people of Iceland, all 320,000 of them as it were, have started questioning why they should pay for foreign investors' losses with banks with whom they have no connection other than that they happen to be located in their country.

Britain's decision to put Iceland on some terror alert list because of the banking affair is likely a big factor in this, as well as in the decision by the president to let the people decide in a referendum on February 20 whether they want to pay back the losses of foreign investors who had accounts with Icesave only so they could get a few basis points more interest on their funds. It doesn't look like they will.

Which may put Iceland on some black list, with the IMF threatening to withdraw emergency funds and Scandinavian loans in peril. The Dutch threat to block Iceland's entry into the EU is seen in Reykjavik as similar to Britain's terror list boondoggle. The prevailing sentiment these days among the geysers can best be summarized like this: "We may be small, but we ain't your bitch". And that is a sentiment that may provoke a lot of sympathy, provided the Icelanders play their cards right.

In the next 6 weeks they will come under huge international pressure to pay up or else, for there's nothing the international community fears more than members who don’t play by the rules, no matter how inane and insane they are. Plus, of course, Iceland is not some small African nation full of poor black people, it’s a small European nation full of the kind of people that wealthy US and EU citizens can identify with: white and relatively affluent. They could be your neighbors. They could be your family. They could be you.

So how reasonable is it for Britain and the Netherlands to demand restitution of losses suffered? Interesting question. The answer is not that easy, since it begs the next question. Who is to blame for the losses? There's the bankers, who went megalomaniacal, and got much bigger than banks based in what is population-wise not more than a mid-size town ought to be. But Iceland is a member of the EEA, the European Economic Area, which gives its banks the right to expand to the rest of the EU.

So alright, let's see. First to blame: the bankers. Second: The Icelandic government, who should have regulated its banks much closer. Third, the governments of Holland and England, who should have done due diligence and demanded far more strict guarantees from the banks. Fourth, the Dutch and British investors, individuals, local governments and companies, who all should have read the fine print. Fifth, the people of Iceland, who were living it up with the cash floating in freely. [Um, naturally, not ALL Icelanders. It really pisses me off when people make blanket assertions like that…]

But we all know how blame moves. The investors point to their own governments, who didn't warn them. These governments point to the government of Iceland, which didn’t warn them. That government points to the bankers, who went nuts, but who they still have to cover for. And last, the people of Iceland point to all of the above and say they should all have been wiser, and the fact that they were not doesn’t mean Icelanders now have to fork over, no matter how certain parties like to interpret laws and regulations. Some things just don't feel right.

And what do we feel about this, who are not directly affected by any of it? Well, try this one on for size. If you allow me to numb and dumb down the numbers a bit, the US at 308 million citizens is about 1000 times bigger than Iceland (320,000). Which means that the US equivalent of what the British and Dutch are demanding from Icelanders would be, loosely, $6 trillion. Now what would you say the odds are that the American people would agree to pay that kind of money, if it were payment for what their banks have (mis-)done in the past, to a group of foreign investors? Let's say Chinese and Japanese? [Which, without putting too fine a point on things, is indeed the case…]

I may be wrong, of course, but I have the feeling that I know what Americans would think of that. They'd be marching in the streets, on their way to embassies and consulates, if not private businesses. They'd say: we have a hard enough time ourselves as it is, and we ain't paying no foreigners who weren't making sure they knew what they were doing.

The same reaction would come in London and Amsterdam as well, naturally. Funny thing is that the governments there were very quick to guarantee their citizens' losses, and only after that claimed them back from Reykjavik. There doesn't seem to be any legal obligation for them to do so, it looks more like an election-related issue. There are all sorts of depositor protection schemes in place, that's true enough, but everyone could have known that the established $30,000 guarantee from Iceland for every depositor account wasn't worth much, given that it’s backed only by the full faith and credit of 320,000 people. Britain is what, 200 times bigger than that?

But in the end, as I'm pondering all this, what is probably the most interesting part of it is that the American people ARE in fact in the same boat as the Icelanders. The main difference between them may well be that the latter stand up for themselves, where the former don’t understand what's going on. The US government has indeed already pledged $14 trillion in public funds (with a total risk of up to $24 trillion) for US bank losses. It's just that American banks are covered by the ability of the US to borrow enough money in international markets to cover their losses, something for which Iceland is simply too small. And also, the US gets to bleep around with accounting rules, so bank losses can remain hidden for a long time (though not forever).

So while it may look like the situations are entirely different, they’re not really. On the ground level, it's the citizens who are being forced to pay for institutional gambling debts, the old adage of keep profits private and make losses public. China doesn't go to Obama to demand payment guarantees tomorrow morning, but it's all just a matter of size. That size determines that the Icelandic situation is far more transparent, since smaller make simpler. But down the line, the Iceland banks weren't the greatest gamblers, it was Wall Street and the City of London. And the $20,000 that Icelanders "owe" per capita (in the eyes of others) isn't really the issue, it won’t kill them. They just take a stand against what they see as bullies.

The amount Americans "owe", though, is already more than twice as much per capita at $14 trillion. And there's no end in sight, since none of that money has been used to actively solve problems, it's all merely hiding them for a while longer.

In other words, here's waiting for the moment Americans become more like Icelanders, and stand up against bullies (I'm sure Oprah has advice to provide on the topic). But also, here's not holding any breath, and here's expecting that by the time any sizeable group stands up, the amounts owed will be a multiple of $20,000 and enough to generate debt and poverty for years, if not decades, to come.

And you know what the funniest thing about it all is? In America it wouldn't even take 320,000 people standing up, for real, to change policies and history in a heartbeat.

But they're not there. They’re in Iceland.

Size matters. But so does courage.

Um, Alternet ran a piece today mourning the ‘reluctance’ of the citizens of the US to ‘protest’ the crimes committed in their name by their alleged ‘elected officials’.

Um, we might even wonder ‘why’ the populace of ‘the land of the free and the home of the brave’ doesn’t stand up to the brazen criminals who have usurped our nation.

Why won’t we fight is exactly the wrong question, and the fact that it is being asked, both loudly and repeatedly says something else, it tells us that the perps are afraid. Afraid that they’ve pushed us too far…that when all hell finally does break loose, there won’t be any mercy…no mercy and no quarter.

The time for ‘gentile protest’ and political solutions has passed, it’s too late for that now. The giant has been awoken and it won’t slumber again until it is sure that it is safe to go back to sleep.

Understand that the giant isn’t a rational creature, it can’t be reasoned with. It’s head is filled with nonsense, it is unable to recognize right from wrong, the only thing it knows is what threatens it…and right now a very large and very poor giant sees a very small but very wealthy threat, that ‘class war’ thing I was babbling about yesterday…

Strange when push comes to shove, how money don’t count for a whole lot.

Thanks for letting me inside your head,

Gegner

Class War

Greetings good citizen,

As the great ‘Ponzi Scheme’ we call ‘the American Dream’ continues to unravel, one theme keeps repeating over and over again…

Are you worthy?

This is a bit of an odd question which most of us (rightly) don’t feel qualified to answer. It is assumed that you are indeed worthy until your actions prove otherwise. Think all of the bad things you like, thoughts are not deeds. Thoughts that go unvoiced are impossible to prove, none of us are able to see/hear what goes on in the mind of another, much less prove that another is ‘guilty’ of thinking…er, ‘harmful’ thoughts.

So we might wonder what being ‘worthy’ has to do with the current turmoil coursing through our rapidly decaying social framework.

Who would be trying so vigorously to sort the ‘worthy’ for those who are not? It is perhaps a more interesting question to ask what yardstick the ‘sorters’ are using?

But we already know, don’t we? It is the same measurement that has always been used when measuring ‘social status’…$

Either you ‘have it’ or you don’t, there is no ‘in-between’.

Which begs the perplexing issue of why everyone who isn’t ‘demonstrably’ wealthy thinks they are at still ‘middle class’? (Is this because nobody wants to admit to being ‘working class’?)

Could this be because the fastest growing ‘class’ happens to be ‘the working poor’?

Um, we still haven’t nailed down what ‘worthiness’ has to do with anything but make no mistake about it good citizen, this is Class war

[Hat tip: Jesse’s Crossroads Café]

Class Warfare: American Style

Matt Taibbi's reaction to the ZeroHedge story with regard to Turbo Tim's lifting of the government support on Christmas Eve for the GSE's was exactly my own.

What he does not overtly say is that this is class warfare, and it is becoming worse in the US than at any time since the 1930's. And the outcome of this will be a fundamental test of the US commitment to its republic.

The media stokes the viewing public with emotion-based and virulently distracting arguments about liberal versus conservative, while the gentrified class skins them all alive.

One only has to watch the 'news shows' on American television to see the lack of real content and discussion, with diametrically opposed 'strategists' hurling sound bytes at each other with all the depth of a schoolyard standoff.

It is comfortable to retreat into an 'us versus them' view of the world, and the noble class in the States is all too ready to facilitate that appeal to the darker emotions. People know deep down that it is a scam, and believe that it is easier to go along and get yours while you can, than actually attempting to change a system grown corrupt in an aging empire.

This explains more than one might imagine. Why do the economists continually excuse outrageously unsustainable economic behavior and financial systems that are as productive as games of chance? Why do some media outlets obviously take sides and pander to the worst biases in their viewers, supplying them with easy reflexive answers to any suggestion that something might actually be wrong? Why do adult people fall for this and regress to childish name calling so readily?

It is because they are afraid. They know the system is broken, that the country is in for hard times, and that the work of reform is going to be difficult and painful. [This will only be true if the ‘pain’ isn’t shared equally.] It is so easy to adopt whatever red or blue meme, whomever you think is going to deliver undeserved wealth to you, or at least safety and position. As always look for a fall guy, some identifiable and out of favor group. The search for scapegoats may be violent. [You can substitute ‘will’ for the word ‘may’ in the prior sentence.]

At turning points such as these, when the time is right, a 'great man' will stand up and many will follow. Who will it be, and what principals and principles will they represent?

Obama was such a one, but he is obviously like the character of Robert the Bruce in the movie ‘Braveheart’, or perhaps the Bruce's father, who chooses practically and cynically to support the nobles. He is finished; no one will follow him as his betrayal becomes too painfully obvious.

Will it be the banal fascist with the easy answers, the vile leftist with retribution to offer, or a 'Braveheart' who has nothing to offer but hardship, and freedom? [Does anyone fit the last prescription? There is no one beside myself who has a workable vision of the future that doesn’t involve a reversion to slavery and feudalism and the subsequent restoration of Monarchy.]

America is not alone in this. The UK is further along the path. We may see the first expression of the future of the West in London than in Washington. Only the future will tell.

"There's class warfare, all right, but it's my class, the rich class, that's making war, and we're winning." Warren Buffett, New York Times, November 26, 2006.

"The class warfare is over -- we lost. I want to make that announcement today. Working people lost. The middle class lost." Dennis Kucinich, 18 December 2009

In the short term there will be quite a bit of jostling at the middle of the ladder, by those who fancy themselves, or their children, suited for the new nobility and so seek to perpetuate the status quo, with a lot of kicking and dog eat dog going on at the lower levels as the ladder shortens, trying to knock the immigrant, the less connected, off into the abyss, to feed the beast.

Out of all of this will come something different and most likely something unexpected. It’s an old story, one that replays over and over. The remedy is sound reason and the Constitution, but these forces have been in retreat for the past ten years at least. Reform and justice have few friends while the looting of a generation is in progress.

"For what we’ve learned in the last few years as one scandal after another spilled onto the front pages is that the bubble economies of the last two decades were not merely monstrous Ponzi schemes that destroyed trillions in wealth while making a small handful of people rich. They were also a profound expression of the fundamentally criminal nature of our political system. In which state power/largess and the private pursuit of (mostly short-term) profit were brilliantly fused in a kind of ongoing theft scheme that sought to instantly-cannibalize all the wealth America had stored up during its postwar glory. In the process keeping politicians in office and bankers in beach homes while continually moving the increasingly inevitable disaster to the future.

That is a terrible story and it is also sort of a taboo story, since we don’t really have a system of media now that is willing or even able to digest that dark and complicated truth. Instead, our media — which has always been at best an inadvertent accomplice to these messes — is basically set up to take every revelation about the underlying truth and split it down the middle, feeding half to one side of the political spectrum and one half to the other, where the actual point is then burned up in the useless smoke of a blame game.

The essentially complicit nature of the two ruling political parties was in this way covered up for decades, as the crimes of the Democrats were greedily consumed as entertainment by the Limbaugh crowd while the crimes of the Bushies became hot-selling t-shirts and bumper stickers for the Air America listeners. The abiding mutual hatred the red/blue groups shared consistently prevented any kind of collective realization about the structure of the overall scheme...

Everyone had a hand in the bubble, from the congressmen who killed regulatory initiatives to the regulators who snoozed at the wheel, to the GSEs to the Fed to the banks to the ratings agencies to the lenders. I don’t think it’s really controversial to say that, but it does seem like there’s an argument brewing about what that across-the-board complicity means. [And the stunning silence surrounding this issue is perhaps the most disturbing aspect of the whole affair!]

My own personal feeling is that our recent bubbles weren’t much different than pyramid scams and lotteries; they’re the handiwork of an essentially regressive and deeply cynical political organization that systematically hoovers up taxes and investment money mainly from middle-class suckers, where it eventually gets eaten in short-term cashouts and mostly blown on sports cars and tropical vacations and eye jobs for the trophy wives of Wall Street executives. Crackonomics: take literally all the spare money from four square city blocks and turn it into one tricked-out Escalade.

For me the basic dynamic of the mortgage bubble is some Ivy League dickwad hawking a billion dollars of securitized subprime mortgages to a pension fund, and then Hobie-sailing off into the sunset with a bonus after they all blow up. Of course my seeing it that way might have a lot to do with my own personal psychological prejudices, and I get that some other person with different hangups might choose to focus on Barney Frank deciding to “roll the dice on home ownership” with the GSEs... [I’m not going to go into that here…]

This GSE story is a big one, but if it gets used as a path back to a “The Market Reacted Rationally” version of history, we’re screwed. It has to be looked at as an important part of a diabolical whole, a symbiotic scheme in which the banks and the state were irreversibly intertwined in an enterprise that on both sides was never about market economics, but crime. Because otherwise… the diversionary notion that one side or the other is wholly to blame is part of what makes the whole scam possible..."


Why would you care? Why be concerned about the other? Because when the time comes, there may be no place to hide. Madness makes few rational distinctions between what is and is not worth preserving. Time to listen to the survivors, and not imagine that this time it will be different.

"First they came for the intellectuals, and I did not speak out—because I was not a intellectual;
Then they came for the communists, and I did not speak out-because I was not a communist;
Then they came for the trade unionists, and I did not speak out—because I was not a working man;
Then they came for the disabled, and I did not speak out—because I was not disabled;
Then they came for the gypies, and I did not speak out—because I was not a gypsy;
Then they came for the Catholics, and I did not speak out—because I was a Protestant;
Then they came for the Jews, and I did not speak out—because I was not a Jew;
Then they came for me —
and there was no one left to speak out for me."

Sort of an interesting choice of closing statements, don’t you think? The above verse is most commonly told as a cautionary tale about fascism, although the basic question: ’when is it time to speak up?’ rings loud and clear.

You’ve already been blamed in hundred of news articles and opinion pieces for not ‘standing up’ for what you believe…but that’s because it has been proven that standing up and speaking out only gets you branded as a subversive, as someone who bears watching.

Ironically, in for a penny, in for a pound…if you’re going to accept that level of risk, you’re going to wait until ‘the message’ you send is certain not to be ignored.

When the time is right, you’ll know…because you won’t be alone…and it’s unlikely you or your companions will be unarmed adding a extra level of commitment to the message.

Is it really ‘protest’ if you must bow to ‘authority’ and be herded by police every step of the way? Is it still a demonstration if you are ordered to stay miles away from the object/group you are protesting? Is it still protest if the very speeches containing your grievances first need to be vetted by the minions of those you are protesting against?

Is it time to speak up, good citizen?

Interestingly enough, we already have…and the infamous they have continued to ignore us.

What do you suppose comes next?

Thanks for letting me inside your head,

Gegner

Get the Hell out of Dodge!

Greetings good citizen,

After yesterday’s, er, ‘stellar’ performance, today’s markets couldn’t get out of their own way…which isn’t particularly surprising.

You see, I’m not the only one who has serious misgivings about the, er, ‘soundness’ of today’s financial markets. As I have stated before, only a fool would risk their own money in today’s extremely, er, ‘gamed/rigged’ markets.

Worse good citizen…what we’re seeing…what’s being ‘passed off’ as market activity is actually nothing more than the ‘remote control’ machinations of the big trading desks, playing with public funds.

Why isn’t anyone raising a stink? Well, technically, this isn’t illegal.

Um, once again this is another ‘unsettling’ instance of Ilargi and I ‘channeling’ one another…

[Hattip: The Automatic Earth]

January 4 2010: Get the hell out of Dodge

Ilargi: Right, Americans and their economy. Well, it's an ideal situation, isn’t it? Every marketeer’s wet dream. That is, through appealing to people's need and desire for hope and good tidings, you succeed in making them believe that they will benefit from the very things that hurt them more than anything else in the world. You have them convinced that black is white. This is what the US government, media, and big industry are pulling off, and since they do it so well, nary a soul is any the wiser for it. You use their very own cash to deceive them, by boosting markets for a while, which makes them believe the future is rosy, and you can use the resulting economic lull to take as much of their wealth as you can possibly carry.

All it takes to convey the positive message and image are rising stock markets and still bad but slightly less awful unemployment and housing numbers. That’s how desperate people are for their hope. They’ll believe just about anything. They don’t even want to know that these somewhat positive numbers have been bought with their own money. That banks haven't tumbled yet simply and only because their losses have been transferred to public accounts.

And you've got to give it to the marketeers: it's not yet 100% sure that the US economy will crash, and all hope asks for is a 1% window. At least theoretically, the US can still get out from underneath its debt yoke. It would probably have to grow its economy by over 10% or so for the next three decades or so, which is, to put it mildly, not bleeding likely, but it's not 100% impossible. Play your story line the right way, hand them some words they can believe in who are so eager to believe, and the people will let you rob them blind in broad daylight. And give you an encouraging smile and pat on the back for working so hard while you're at it.

There is no better way to summarize the year we just left behind, 2009, nor the way 2010 has started. And it's brilliant.

It's of course nothing new that once inside the government, you can get to play with lots of other people's money, but still, for those that run these games and marketing campaigns it must have been a profound Aha-Erlebnis, a Eureka moment, when they realized there really wasn't any restriction that would force them to stop when the average US citizen's balance sheet read zero. That that was just the beginning, and taking control of the government effectively means you can push the average US citizens' balance sheet into breathtakingly deep negative territory, nobody has even pointed out a limit yet, so deep that you can plunge Americans into far greater debt than they will ever be able to pay off in their entire lives, just by assuming control of the government. America as a bottomless pit. As long as they don't notice it, or don’t recognize it for what it is, and as long as you tell them it’s for their own good, you can keep at it for quite a while. Need a higher debt ceiling? Congress will never vote you down, because the show must go on. And if you can't be bothered with Congress, there's always Christmas Eve.

And whether it’s the fact that about one in 50 Americans now lives in a household with a reported income that consists of nothing but a food-stamp card (on top of the many millions who get only a $200-$300 monthly unemployment benefit), or whether it's the Christmas Eve move to free Fannie and Freddie from all monetary constraints, or the recent measures to prevent an apparently expected and feared run on money market funds from materializing, all of it fits one and the same playbook. If you choose to not understand that, and instead focus on another fleeting high on Wall Street, I would by now be mighty tempted to say that you are welcome to what you got coming.

You can sell a president through an effective marketing campaign. You can also sell his policies the same way. Neither the man nor the measures need truthfully be anything like the image you paint of them, no more than a car or a detergent need anything but a feel-good recognition factor. Both the person and the acts only need to resemble as much as possible what people would like them to be. The best liar wins. The secret of life is honesty and fair dealing…if you can fake that, you've got it made, said Groucho. That’s not some sort of accident, it's what the country was built on.

And they only need to do it for as long as it takes to move all gambling debt magically off the books of the players and onto the national public balance sheet. Then when the loot has been loaded into the get-away planes, trains and automobiles, they will get the hell out of Dodge and slip away like so many thieves in the night as literally as they can. Après ça, le deluge.

Hopefully it is clear how Ilargi ‘echoes’ the sentiments I voiced in last night’s piece. We, the public, are being systematically ‘ripped off’ because the safeguards against such an unlikely event have been defeated.

Uh, here we enter the world of speculation…because we are left to wrestle with the idea of what can be gained by robbing a bankrupt nation?

Then we have the other side of the same blade…that which was stolen can easily be ‘de-monetized’, negating the loss. This move will definitely, er, ‘rile up’ our creditors but if the choice is ‘half a loaf vs. nothing’ they should be willing to be reasonable.

So, in order for the ‘rip-off’ to be successful (even temporarily) SOMEONE has to stay behind to insure that what has been stolen remains ‘money good’ until it can be converted into an asset that can’t be (easily) ‘de-monetized’.

At the end of the day it’s all about ‘the greater fool’ and it will ultimately hinge upon ‘retribution’.

Will ‘society’ pay the price or will the perps get punished? Interestingly enough, the answer is likely a mixed bag. The ‘disruption’ of the financial network will inflict huge losses upon the fabric of society, which in turn will punish those responsible through the law of unintended consequences.

Which is to say the foolish perps will lose far more than they gain…but so will everyone else.

Share the pain…it’s not nearly as ‘amusing’ as it seems…

Thanks for letting me inside your head,

Gegner

Up, up and Away!

Greetings good citizen,

Not only do we begin a whole New Year but we also embark on a brand new decade (for those of you who get excited over that sort of thing…)

I hope you all enjoyed your holidays as much as I did…and for anyone who laments the end of the holiday season, take heart…you’ll soon be seeing a lot more of your relations than you ever thought possible!

Um, I just finished perusing the Daily Rag and challenging my math skills by counting how many open positions were advertised in the Help Wanted section…it’s been averaging 7 jobs for the past five months…but today I had a finger left over…no, not nine jobs but four (jobs, total!) (And you’re being mighty picky by stating that your thumb ‘technically’ isn’t a finger…)

Anyway, did I wish you all a ‘Happy Freaking New Years’ yet?

Just don’t ask what there is to be happy about, or better yet, be advised that ‘happy’ is a relative term…

Which is another way of pointing out that you’re a lot happier then you realize you are, to hear those zany Libertarians tell it, you should be ecstatic to be permitted to draw another breath while you ponder all of the things you are ‘free’ to do. (And understand the ONLY reason those pricks aren’t charging you to breathe is because nobody can make a convincing case that they ‘own’ the air…)

But that aside, with the holiday’s over, the real ‘investment season’ begins as investors position themselves to coin tons of cash so they can ‘sell in May then go away’…

Nice work when you can get it, eh?

Well, it looks like 2010
is off to a great start if, as the ‘help wanted’ ads prove, for no particularly good reason…

Markets Start New Year With a Leap

By JACK HEALY and DAVID JOLLY
Published: January 4, 2010

Encouraging reports on manufacturing on three continents pushed markets higher on Monday, the latest indications that the economy continued to recover despite jitters in the housing markets. [What do you suppose they’re ‘manufacturing’, foreclosure notices?]

The Dow Jones industrial average rose more than 166 points or 1.6 percent in afternoon trading, and the broader Standard & Poor’s 500-stock index was up about 1.6 percent, amplifying earlier gains in markets in Europe and Asia.

An increase in commodity prices lifted shares of oil and gas producers and companies that make industrial materials like plastic and chemicals. Oil futures topped $81 a barrel, their highest levels in two months, on concerns about an energy dispute between Russia and its neighbor Belarus. [Um, geez—I’m going to guess that tomorrow we’ll be told that the sinking USD is the underlying cause behind the sudden jump in energy/commodity/equity prices…they have, of late, gone hand in hand. Is it just me or does anyone else have a hard time turning a massive loss in purchasing power into ‘good news’? (While the already wealthy wax even wealthier… WTF!)]

The Nasdaq got a lift from an analyst’s report that upgraded shares of the Intel Corporation, whose shares were about 2.8 percent higher. The Nasdaq was 1.6 percent higher by late morning.

Investors embraced a report from the Institute for Supply Management showing that manufacturing activity rose in December, bolstered by increases in new orders, inventories and employment. [Wait a minute Slim, isn’t today the first working day of the New Year? So who the fuck was putting this data together over the holiday weekend, or, more succinctly, just how ‘accurate’ are these obviously ‘slap-dash’ figures? Yet the Dow still rises 160 + points on this decidedly ‘shaky’ information…]

The group’s manufacturing index rose to 55.9 from 53.6 in November. It was the highest reading since April 2006, but economists warned that the recovery in manufacturing could wane as businesses finish restocking their depleted inventories. [Left to our feeble imaginations is the issue of how much smaller our manufacturing sector is four years after it’s last ‘positive’ reading. A smaller manufacturing sector would make a positive reading less difficult to achieve. Just as the overall size of US payrolls continue to diminish, which is scary all by itself because some people are paying themselves huge sums and the total is still dropping!]

“Much will depend on the consumer,” Joshua Shapiro, chief United States economist at MFR, wrote in a research note, “and we feel that the headwinds for consumer spending (the foremost of which are ravaged balance sheets and lingering labor market weakness) remain too brisk to expect much help on this front.” [Which naturally begs the question of just who is buying ‘the stepped up production of three continents’? Isn’t this just one more example of pundits talking out of their backsides because that’s what they’re paid to do?]

European shares were buoyed by a report showing that manufacturing output in the euro zone rose in December at the fastest pace since September 2007. The final Markit Eurozone manufacturing purchasing managers index rose to 51.6 points in December from 51.2 in November, in line with an earlier estimate, marking the fifth consecutive month of improvement. [Um, if it’s been moving up by a tenth of a percent a month, that’s some mighty feeble ‘improvement’.]

Rob Dobson, an economist at Markit, said that the data confirmed expectations that manufacturing in the region had “ended the year on a positive note,” representing “a marked turnaround from the unprecedented downturn at the start of the year.” [Um, is I too much to expect a concrete example of this? Did they sell more cars or did they build any new production facilities that provided their people with better paying jobs? Is it too much to ask for some specific examples?]

And in China, the latest survey showed that manufacturing activity expanded at the fastest rate on record in December. The HSBC Purchasing Managers’ Index rose to 56.1 from 55.7 a month earlier to reach its highest level since the survey began in April 2004. [Um, really now? You’d think this was a ‘100%’ improvement when it is really the same four tenths of a percent seen here in the US. Understand, China’s ‘manufacturing sector’ is many times larger than it is in the US, so those four tenths of a percent represent a substantial amount more activity than they do here; So we’re still talking ‘apples and oranges’! (More like apples & watermelons…just saying, ya know?)]

On Wall Street, investors seemed to shrug off a government report showing a slump in construction spending, which fell a seasonally adjusted 0.6 percent in November to its lowest levels in six years. The Commerce Department reported that construction spending in November was 13.2 percent lower than November 2008. [This has yet to stop the morons from pointing to (infintisimal) improvements in the ‘month over month’ data.]

Spending on home building fell 1.6 percent, accounting for much of the weakness. [A decided lack of creditworthy customers will also continue to kick the piss out of the Real Estate sector…but hey, let’s not let the facts stand in the way of the ‘recovery’.]

The numbers provided another sign of weakness for the country’s housing market. They could foreshadow more trouble for construction companies, which are struggling with tight credit and a drought of business, as interest rates begin to tick back up.

On Tuesday, investors will receive another indicator of the housing market when the National Association of Realtors releases new figures on pending home sales.

Later this week, the government will release its monthly unemployment report. Forecasts expect the unemployment rate to rise slightly, to 10.1 percent, from 10 in November, and job losses to continue to slow, but some observers say the report could show a net gain in payroll jobs for the first time since the recession began. [And if you believe that I’ve got some prime subterranean real estate you’d be interested in…see my opening remarks…]

Automakers will report their latest sales figures, for December and 2009 overall, on Tuesday.

Shares closed higher in Europe after a mixed session in Asia.

In Tokyo, the benchmark Nikkei 225 stock average closed 1 percent higher. The main Sydney market index, the S&P/ASX 200, rose 0.1 percent. But the Hang Seng index in Hong Kong slipped 0.2 percent, and the Shanghai composite index fell 1 percent.

Among the biggest gainers worldwide was Japan Airlines, which soared 31 percent after a government-controlled lender increased its financing for the distressed carrier.

The FTSE 100 index in London rose 1.6 percent, or 87.46 points to 5,500.34, while the DAX in Frankfurt was up about 1.5 percent or 90.87 points, to 6,048.30. In Paris, the CAC-40 rose 1.97 percent or 77.64 points to 4,013.97.

Gold was up $14.28 at $1,111.60 an ounce.

The dollar, which was lightly traded Friday, was mixed against other currencies. The euro rose to $1.4351 from $1.4337 Friday in New York, while the British pound rose to $1.6170 from $1.6151. The dollar fell to 92.82 yen from 93.02. [Um, geez Louise, it looks like the dollar sank against all of the currencies shown here…so where’s the ‘mix’?]

The yield on the benchmark 10-year United States Treasury note rose four one-hundredths of a point to 3.87 percent.

Um, last week I had a reader point out that I was never ‘happy’ with the performance of the market…and he was right, I’m not.

Because the ‘performance’ of the market doesn’t tell us anything useful…except that the already wealthy are getting even wealthier for no apparent good reason.

Well, actually, it may be more ‘disturbing’ than that, considering that for the first time in history, the investment banks are now ‘backstopped’ by the US Treasury.

If you don’t think this is ‘a time to worry’, you need to re-think your priorities!

What’s wrong with this picture good citizen? Well, lets start with the top two percent of the population owns 99% of all of the stocks and go from there.

Now we take that little factoid and match it up with the fact that these same two percent have been granted access to the US Treasury at, get this, zero percent interest! They can borrow money for free and invest it in the stock markets…and if they lose it, oh well! The taxpayer will simply lend them more…at no interest!

How else do you suppose the stock market has ‘recovered’ so swiftly…nay, ‘painlessly’?

What has most (rational) observers shaking in their shoes is the fact this can’t go on indefinitely. This is not an ‘economic recovery’ by any stretch of the imagination AND they can’t keep spending like this as revenues dwindle to nothing.

So we are left wondering when we are going to feel that sickening ‘thud’ that comes when you reach the ‘bottom of the barrel’?

All of this ‘Happy Talk’ is merely camouflage for the ‘looting’ of the US treasury…what has most of us seriously worried is how these brazen criminals intend to ‘cover their tracks’.

Bush was sure he would never be ‘brought to justice’...the current gang seems equally as confident…which tells us what precisely?

Perhaps Elliot Spitzer has lifted the curtain and shown us what we already know, that the problem here isn’t a lack of legislation but a lack of enforcement that comes from ‘legislative capture’. When the people charged with upholding the laws turn criminal, it’s time to break out the noose.

Thanks for letting me inside your head,

Gegner

Land of the Rising Sun or is that Sunset?

Greetings good citizen,

Just gathering the last few details for tomorrow night’s ‘annual’ get together…which doubles as a warning for you not to expect a new post for a couple of days. I’ll be ‘entertaining’ tomorrow evening and probably land myself back in ICU sometime early Friday morning!

Um, just kidding…although considering how this year has gone, it’s nothing to joke about.

Moving along, the ‘Stupidity index’ barely budged (ain’t none of those brokers ‘investing’ their ‘bonuses’ in the damn markets…they must know better, which tells the rest of us something all by itself.)

Most of us suspect 2010 is going to be a real ‘pisser’, especially for the, er, ‘optimistic’ among us who are looking for a ‘recovery’. It ain’t happening and it ain’t gonna happen.

Without further adieu, let us proceed with tonight’s offering to have a peek at what the desperate new government of Japan has up its sleeve…

Japan Unveils a Plan for Growth Emphasizing Free Trade in Asia

By HIROKO TABUCHI
Published: December 30, 2009

TOKYO — Still struggling after its worst recession in generations, Japan announced a long-term growth strategy on Wednesday that aimed to tap into the dynamism of its Asian neighbors, create millions of jobs in new industries and drive economic expansion of at least 2 percent a year over the next decade. [You’d think these ‘chowder heads’ would smarten up! It was the ‘race to the bottom’ that caused the global economy to crash, they literally ‘pauperized’ their customer base…there are now too few customers for too many goods, funny how cutting everybody’s salary produces outcomes like that…]

The Japanese economy has eked out growth in the last two quarters as its mainstay exports have rebounded amid signs of recovery worldwide, particularly in China, the country’s biggest trading partner. [You know that is nothing but another dose of ‘self-serving’ propaganda; worse, if it weren’t for their own huge ‘stimulus’ program, China’s GDP would be in negative territory! (And perhaps it is, we have no way of knowing.)]

But a swelling public debt and a persistent decline in prices and wages are raising fears that Japan’s economic recovery could soon run out of steam. Prime Minister Yukio Hatoyama has been under pressure since he took office in September to come up with a practical plan to reinvigorate Japan’s economy.

“Indeed, the consensus view is that the economic recovery will at least stall, if not fall into another recession” early next year, Masamichi Adachi, a senior economist at JPMorgan Chase, said in a recent research note.

Mr. Hatoyama’s short-term remedy for Japan’s economic troubles has been to funnel money to struggling households, including offering new cash subsidies for families with small children and free high school education.

But his government has appeared distracted by a dispute with Washington and a campaign finance investigation. And budget constraints have forced Mr. Hatoyama to backtrack on some promises, hurting his popularity.

“The new government’s ability to take action is being tested,” he said at a news conference on Wednesday. “We will do whatever it takes to achieve this.”

The government’s new blueprint for economic growth in the long run is more global in outlook. The government says that it will push to create a free trade zone in Asia by 2020 to leverage the region’s economic growth, and that it will make Haneda Airport in Tokyo a 24-hour hub for international flights. [Um, who else thinks their major malfunction has been to much ‘long term planning’ and not enough short term action? Japan has just completed their second consecutive ‘lost decade’ and guess what? Capitalism isn’t showing them a way out…]

Japan also needs to become less reliant on the United States and bolster economic ties in Asia, Mr. Hatoyama said. [Why do you suppose he came to that particular conclusion? There’s nothing weird about it, it is the exact same decision US investors/executives made nearly 40 years ago…and they should all swing for treason!]

“Until now, our connection with the United States has been very strong. Naturally, this will continue to be the case in terms of our national security. But for economic growth, it is necessary to look closely at Asia as a new frontier,” Mr. Hatoyama said. [Naturally because he sees the great benefits free trade zones have brought to the US, a failing jobs market and out of control immigration as people are forced to move where the jobs are.]

The plan envisions creating a $540 billion market for environmentally friendly technology and renewable energy that would employ 1.4 million people. It seeks to create 2.8 million jobs in the health and care-giving sectors to serve Japan’s aging population. [Um, gee, I wonder what this is going to do to our own politicians ‘green collar’ strategies? Is there enough ‘green’ business out there for everyone? You already know there isn’t.]

The new strategy calls for efforts to more than triple the number of foreign visitors to Japan, to 25 million by 2020, and create new jobs in a bid to support the country’s ailing tourism industry. [Sure, there’s another fine example of thinking ‘outside the box’, the world is going broke so why don’t we pour a ton of money into a rapidly shrinking tourism market! The income to be captured from tourism is shrinking, not growing. As energy becomes scarcer, the number of tourists will shrink radically for a couple of reasons with the principal reason being it will no longer be ‘safe’ to travel…the ‘richer’ you are, the less safe it will be.]

The plan aims to expand Japan’s economy at an average rate of 2 percent over the next 10 years, with a goal of increasing gross domestic product to 650 trillion yen, or $7 trillion, from the 473 trillion yen projected for the current fiscal year. [How bizarre is it that the world’s second strongest/largest economy has a dollar that’s worth roughly a penny everywhere else?]

The government will bring the unemployment rate to the 3 percent range in the “medium term” from 5.2 percent in November, Mr. Hatoyama said. [WTF! Here we have an economy that has suffer for more than twenty years and they only have 5% unemployment? Unemployment jumped 5% in the last 12 months and it is still rising! Um, is this one of the benefits of a high savings rate? (Actually no, it isn’t…their ‘safety net’ is different than ours, it closer to what they have in Europe.]

Analysts say those goals are unrealistic, however, given Japan’s shrinking population and low rate of immigration. The government has also offered scant details on how its economic plan would be financed.

“A lack of government willingness to tackle the severe challenges of fiscal consolidation, and an aging population, prevents firms and households from feeling confident about the future beyond the next fiscal year,” Mr. Adachi said.

It’s beginning to look a lot like the definition of the word insane…keep doing the same thing and expecting a different outcome!

Worse, good citizen, I think people are starting to catch on that nobody is willing to take a fresh approach to some very critical problems.

Naturally, I am inferring that our leaders are scared to death of looking at alternatives to ‘market capitalism’ because that’s what’s ‘broken’….and if we don’t fix it, civilization itself is what will collapse.

Um, let’s get to the really ‘disturbing’ part here good citizen. They can keep ‘the game’ rolling but they have to keep reducing the number of players so the rich can stay rich and do nothing while the rest work to get nowhere.

Well, we are now looking at a major ‘re-alignment’ in the ‘allocation of resources’ and millions of ‘end-users are suddenly going to find they can’t ‘access’ what they need to live…and there ain’t a friggin thing they (or the law) can/will do about it.

So there will be riots. The people ‘protesting’ their treatment will be rounded up and removed from society…at first there will be food and somewhat ‘humane’ treatment but that won’t last long. It won’t be long at all until these ‘outcasts’ will be starved beyond their endurance and there will be more riots...which nobody will hear about...because these ‘camps' will be in the middle of nowhere.

Maybe some of the relatives of the victims will band together and free their people, but that’s about the only hope they have of ever seeing the outside of a barbed wire enclosure while they still live.

Which is a very sad note to end 2009 on…but there it is.

Thanks for letting me inside your head,

Gegner

Things that make you go 'hmmn.'

Greetings good citizen,

Science isn’t for everyone (as evidenced by the dreck Hollywood continues to produce by the bucketful. Who funds this crap anyway?)

Um, if you’d rather perform your own dental work than be assaulted by news from today’s ‘scientific frontier’ then this article won’t be to your liking…but that does nothing to alter the ‘likely outcome’ of this kind of research.

Yes good citizen, I am often astonished by the mind-numbing lack of curiosity displayed by the average individual (not that I particularly blame them…so far technology has primarily been used to make things more difficult rather than easier. Your ‘solitude’ was the first item to be sacrificed on the altar of ‘high tech’, your ‘privacy’ followed immediately behind, for those of you who (mistakenly) think solitude has no value…)

Um, we are about to engage in a ‘word substitution’ game, something it is critical for you to understand because none of this makes sense if it is taken solely in its highly ‘altruistic’ frame of reference.

Every time you read the word ‘disease’ I want you to substitute the word ‘death’, because this is what they’re really after. It is the very real, present day continuation of a search that has been going on since before the Conquistadors and Ponce de Leon…

Um, why should you care what the very rich are funding with their money? I think you’d be very naïve to believe that the taxpayer isn’t the principal backer of this research through ‘block grants’ made to our nation’s university system…

Which brings us full circle to the real issue here, if the ‘secret of immortality’ is discovered (understand, this is the ‘end result’ of defeating death.) then who gets to partake? What is the determining factor that makes one ‘worthy’?

The public funded the research but the only publicly funded research that has produced ‘free’ benefits is flu research…and even those ‘free’ flu shots are paid for by the government…after the government hands over its bought and paid for research to ‘private’ drug companies for nothing…

Which is another CF altogether, but you see where I’m going with this.

Um, there is an even darker side to this conundrum so I’ll ask you directly; would you be willing to throw your fellow humans ‘under the bus’ in exchange for your shot at ‘immortality’?

The whole world looks very different when you start looking at it through the ‘lens of forever’.

Which begs a more interesting question: who do you want to share ‘eternity’ with?

[Um, if you think this would make a great plot for a novel you’re too late, I wrote it nine years ago!]

In New Way to Edit DNA, Hope for Treating Disease

By NICHOLAS WADE
Published: December 28, 2009

Only one man seems to have ever been cured of AIDS, a patient who also had leukemia. To treat the leukemia, he received a bone marrow transplant in Berlin from a donor who, as luck would have it, was naturally immune to the AIDS virus.

If that natural mutation could be mimicked in human blood cells, patients could be endowed with immunity to the deadly virus. But there is no effective way of making precise alterations in human DNA.

That may be about to change, if a powerful new technique for editing the genetic text proves to be safe and effective. At the University of Pennsylvania, Dr. Carl June and colleagues have used the technique to disrupt a gene in patients’ T cells, the type attacked by the AIDS virus. They have then infused those cells back into the body. A clinical trial is now under way to see if the treated cells will reconstitute a patient’s immune system and defeat the virus.

The technique, which depends on natural agents called zinc fingers, may revive the lagging fortunes of gene therapy because it overcomes the inability to insert new genes at a chosen site. Other researchers plan to use the zinc finger technique to provide genetic treatments for diseases like bubble-boy disease, hemophilia and sickle-cell anemia. [Time to expand on the idea of what makes ‘death’ a treatable disease; your body’s built-in ‘self-destruct’ mechanism, something most of you are ignorant of.]

In principle, the zinc finger approach should work on almost any site on any chromosome of any plant or animal. If so, it would provide a general method for generating new crop plants, treating many human diseases, and even making inheritable changes in human sperm or eggs, should such interventions ever be regarded as ethically justifiable. [True, ‘ideally’ you’d be born without a ‘self-destruct’ system, but most people’s self-destruct mechanism doesn’t activate until they reach ‘sexual maturity’…sort of gives a whole new meaning to the term ‘coming of age’.]

Zinc fingers are essential components of proteins used by living cells to turn genes on and off. Their name derives from the atom of zinc that holds two loops of protein together to form a “finger.” Because the fingers recognize specific sequences of DNA, they guide the control proteins to the exact site where their target gene begins. [False impressions are easy once you start playing in the realm of ‘theoretical possibility’…in ‘theory’ turning off your built in self-destruct mechanism would enable your body to repair itself, er, perfectly, um, forever. The ‘false impression’ comes in defining what you have actually achieved, which is best described as beating death by ‘natural causes’ rather than the much more certain ‘bullet proofing’ which would defeat death in all of its manifestations. (Near) immediate ‘re-generation’ is another ball of wax entirely and will probably be a long time coming, if ever.]

After many years of development, biologists have learned how to modify nature’s DNA recognition system into a general system for manipulating genes. Each natural zinc finger recognizes a set of three letters, or bases, on the DNA molecule. By stringing three or four fingers together, researchers can generate artificial proteins that match a particular site. [What we don’t know good citizen is what they are already capable of…did you know that color television existed (in military research facilities) prior to WWII?]

The new system has been developed by a small biotech company, Sangamo BioSciences of Richmond, Calif., and, to some degree separately, by academic researchers who belong to the Zinc Finger Consortium. [Note the ‘public/private’ aspects of this, er, ‘partnership’…]

Sangamo was founded in 1995 by Edward O. Lanphier II, a former executive with a gene therapy company. Reading an article by Aaron Klug, the British crystallographer who discovered the zinc finger design, he saw the technique’s potential for genetic manipulation. He bought a company Dr. Klug had founded and worked with him and researchers like Carl O. Pabo to improve the technique and develop combinations of zinc fingers to match any sequence of DNA letters.

“We now have a full alphabet of zinc fingers,” Mr. Lanphier said, “but when we started the company it was like typing a novel with two fingers.”

Zinc finger proteins have many potential uses. One is to link them to agents that turn on or turn off the gene at the site recognized by the fingers.

More powerfully, the zinc fingers can be deployed as a word processing system for cutting and pasting genetic text. Two sets of zinc fingers are attached to a protein that cuts the DNA in between the two sites matched by the fingers. The cell quickly repairs the break but sometimes in a way that disrupts the gene. This is the approach used in destroying the gene for the receptor used by the AIDS virus to gain entry to white blood cells. [Ho Ho! What a ‘useful trick’ this will turn out to be!]

Or, if DNA for a new gene is inserted into a cell at the same time as the zinc fingers that scissor the DNA, the new gene will be incorporated by the cell’s repair system into the DNA at the break site. Most gene therapy techniques use a virus to carry new genes into a cell but cannot direct the virus to insert genes at a specific site.

“I think it’s a broadly applicable technology that has already allowed experiments that would not have been possible before,” said J. Keith Joung, a biologist who designs zinc finger proteins at the Massachusetts General Hospital.

Daniel F. Voytas, a plant geneticist at the University of Minnesota, said the zinc finger technique would allow breeders to change the oil composition of any plant, the types of carbohydrates produced or the way carbon dioxide is captured. “We can go in and make any change we want to any plant species,” Dr. Voytas said. [You can be sure he doesn’t mean ‘any’ literally, at least at this stage of the game…but that’s the question, isn’t it? We don’t know for sure where they really are…]

Zinc fingers can also be used for “trait stacking,” the positioning of several beneficial genes at a single site. This avoids heavy regulatory costs because genetically altered plants must be tested for safety for each site that is modified.

The zinc finger technology has taken many years to prepare because of the difficulty of designing the fingers and also of preventing them from cutting the genome in the wrong places. Only a handful of laboratories are currently using the technique, but proponents expect to see rapid growth.

The Zinc Finger Consortium, founded by Dr. Joung and Dr. Voytas, makes the method available free, and researchers need only pay for materials. But there are some 200 steps in Dr. Joung’s recipe for making zinc fingers, and it takes time and dedication to do them all correctly. [Perhaps we don’t want to know what happens if you DON’T do them correctly…yet another question without a good answer.]

The alternative is to buy zinc fingers. Sangamo has a commanding patent position and has licensed Sigma-Aldrich, a large life science company in St. Louis, to make zinc finger proteins for researchers. Sigma-Aldrich’s charge for a zinc finger protein that cuts the genome at the site of your choice is $39,000, with a discount for academic researchers. Zinc fingers that cut well-known human genes cost $12,000. Sigma-Aldrich has used the technology to generate rats with genetic defects that mimic human disease. A schizophrenic rat can be had for $100. [Um, I’m sure you can get all the schizo-rats you want for nothing on Wall Street…]

David Smoller, president of Sigma-Aldrich’s biotechnology unit, licensed the technology from Sangamo in 2006 when he felt the company had proved it worked. “This technology is just amazing,” Dr. Smoller said. “It’s a game changer.” [Which leads us to wonder how much the game is already changed?]

Sangamo has licensed the use of zinc fingers to Dow Agrosciences for creating new crop plants, and has reserved medical uses for itself. It has four Phase 2 clinical trials in progress, including treatments for diabetic neuropathy and amyotrophic lateral sclerosis.

In an ambitious effort to cure AIDS, Sangamo and the University of Pennsylvania started a clinical trial in February. [Now there’s a treatment that would prove quite lucrative, although we still seem to be looking at the old ‘how much would you pay to save your life?’ proposition.]

The AIDS virus enters the T cells of the immune system by latching on to a receptor called CCR5, but about 10 percent of Europeans have a mutation that disables the CCR5 gene. People who inherit two disabled copies of the gene do not have CCR5 on the surface of their T cells, so the AIDS virus has nothing to grab. These people are highly resistant to H.I.V.

In the zinc finger approach, the patient’s T cells are removed, and zinc finger scissors are used to disable the CCR5 gene. The treated cells are allowed to multiply, then reinjected into the patient. In experiments with mice, the treated cells turned out to have a strong natural advantage over the untreated ones, since those are under constant attack by the AIDS virus.

Whether or not zinc fingers will make gene therapy practical remains to be seen. “It’s a little too early to know since clinical trials are in their early stages,” said Dr. Katherine A. High, a hemophilia expert at the University of Pennsylvania.

Dr. Matthew H. Porteus, a pediatric geneticist at the University of Texas, said, “I think it has the potential to solve a lot of the problems that have plagued the gene therapy field.” But Dr. Porteus noted that even the most carefully designed zinc fingers seemed to do some snipping away from their target site, a potentially serious safety problem. [Therein lies the ‘downside’ of playing with ‘the building blocks of life’. There is the potential to do more harm than good, like in the film ‘I am Legend’.]

Zinc fingers could be the gift that stem cell researchers have been waiting for. Stem cells taken from a patient may need to be genetically corrected before use, but until now there had been no way of doing so.

Dr. Rudolf Jaenisch, a stem cell expert at the Whitehead Institute in Cambridge, Mass., reported in August that he had successfully singled out three genes in induced embryonic stem cells with the help of zinc finger scissors designed by Sangamo. “This is a really important tool for human embryonic stem cells,” Dr. Jaenisch said. The technology has not yet reached perfection. Some of the zinc fingers Sangamo provided “worked beautifully,” he said, but some did not.

Zinc fingers may also make technically possible a morally fraught procedure that has been merely a theoretical possibility — the alteration of the human germ line, meaning the egg or sperm cells. Genetic changes made in current gene therapy are to body cells, and they would die with the individual. But changes made to the germ line would be inherited. Many ethicists and others say this is a bridge that should not be crossed, since altering the germ line, even if justifiable for medical reasons, would lower the barrier to other kinds of change. [Here there be monsters…and not just the creepy crawlies that infest the silver screen! Would you ‘suffer’ serious mutation as the price of immortality? Would you let them replace your skin with bullet-proof ‘Rhino hyde’? Or would you let them imbed horns or tusks on you, or perhaps poisonous fangs? Understand that once you ‘sign up’ for these ‘modifications’ you are by default ‘surrendering your humanity’ for their protection. Sounds ‘attractive’ on the surface but understand they won’t make the ‘mistake’ of making you ‘invulnerable’, they’ll kill you for sure if they think you’re too tough to manage. They’ll have the upper hand and you’ll know it…’nice’ is for appearances sake only, they don’t want the masses to ‘know’ they are evil incarnate.]

Several scientists were reluctant to discuss the issue, or dismissed it by saying that even zinc fingers did not meet the error-free standards that would be required for germ-line engineering. But zinc finger scissors are so efficient that only 5 to 10 embryos need be treated to get one with the desired result. This could make it practical to alter the germ line.

Since the germ lines of rats and zebra fish have already been altered with zinc finger scissors, “in principle there is no reason why a similar strategy could not be used to modify the human germ line,” Dr. Porteus said. The kind of disease that might be better treated in the germ line, if ethically acceptable, is cystic fibrosis, which affects many different tissues.

The disease could be corrected in unfertilized eggs, using the zinc finger technique, Dr. Porteus said. But he added, “I don’t think our society is ready for someone to propose this.”

Honestly now, how many of you were aware that modern science was capable of doing the procedures outlined in this article? If you’re not a genetic engineer, I’m going to guess very few of you.

Indeed, some of what they share here appears to be ‘cutting edge’ but is it really cutting edge if it appears in the newspaper?

Continuing our mental exercise, have they already succeeded in making someone, um, can’t really use the word ‘immortal’ because they are still capable of being killed or of dying in an accident. What would be an appropriate term? Could we call them ‘death resistant’?

Whether they’ve succeeded or not, does anyone doubt that somebody somewhere isn’t diligently mapping the path that leads to the ‘vanquishing of death’?

The only thing we know for sure is we’re twenty years closer to the first immortal walking among us since the ‘Jewish hippy kid’ checked out for parts unknown almost two thousand years ago.

Left to our imagination is who will be ‘left behind’ when this modern form of ‘eugenics’ takes on a life of its own…the overlords didn’t want to spend the money to educate the brats of their, ‘employees’. They will prove equally ‘resistant’ to footing the tab for ‘enhancing’ their own workforce. So what will become of those who can’t afford to ‘upgrade’ their, er, basic packages? Will they get what they need from the military? Which makes for another interesting puzzle, what if certain ‘improvements can’t be reversed AND it isn’t safe to let one so equipped to return to civilian life…what happens then?

Anyway, most of you know that I don’t think civilization will last long enough for any of this to become a problem.

Not only am I surprised to still be posting but I’ll be doubling surprised to still be posting this time next year.

Yeah, while this makes for a fun mental exercise, that’s about as far as it goes (with the possible exception of things they keep in cages in secret locations that nobody knows about except their creators.)

Things that make you go ‘hmmn…

Keep an open mind good citizen,

Thanks for letting me inside your head,

Gegner