Canned

Greetings good citizen,

In case any of you were wondering the collapse of our civilization proceeds apace, as evidenced by the continued dilution of the money supply for the benefit of the >One Percent.

Because when the nonsense markets do this for no apparent reason, guess who is playing the role of ‘fuckee’?

Stocks Leap on Budget Optimism
By REUTERS 12:03 PM ET
Wall Street stocks made large gains on signs of progress in talks to resolve the fiscal crunch in Washington.

Talk about ‘blowin’ smoke’, every time they jump share prices like this it dilutes the money supply.

But don’t be cozened good citizen, the markets are going to resume their ‘death spiral’, if not tomorrow then by the end of the week.

As you can see, the >One Percent is throwing a hissy over having their taxes go up to where they used to be before the ‘MBA president’ trashed the global economy.

Investors Rush to Beat Threat of Higher Taxes
By NATHANIEL POPPER and NELSON D. SCHWARTZ
With potential changes in the tax code set to take place on Jan. 1, investors and business owners have begun to protect their income before the end of the year.

Where do you suppose the >One Percent are going to do with their money now that they will have to give so much of it to the government? You don’t suppose the shiftless bastards will keep it off-shore (like the jobs those tax breaks were supposed to create) do you?

Naturally, as we sit here (five years and counting) for SOMETHING to be done about the financial abuse that bankrupted the global finance system, we get this news:

New York Fed Wins Dismissal of A.I.G. Bailout Lawsuit
By REUTERS 1:10 PM ET
The Federal Reserve Bank of New York won the dismissal of a $25 billion lawsuit by the former chief of American International Group, Maurice R. Greenberg, who argued that the A.I.G. bailout was unlawful.

How fucked up is it good citizen that the only guy with deep enough pockets to bring suit against the Fed for bailing out AIG was it’s former CEO?

Now show of hands good citizens, how many of you are ‘surprised’ by this outcome (considering who was the ‘counterparty’ to all of that bad paper AIG, er, ‘insured’?)

Less surprising is who ended up ‘on the hook’ for the whole kit and kaboddle…vous and moi!

While the ‘commander-in-chief’s’ Attorney General has thus far found ‘no cause’ to pursue criminal action against anyone involved.

Needless to say it casts this man’s qualifications to perform the task entrusted to him in a rather poor light…but for some strange reason the corporate owned media isn’t saying a word…and neither, suspiciously enough, are the Republicans…

Thus are we left to wonder how much success they expect to have with this legislation:

European Countries Seek More Taxes From U.S. Multinational Companies
By ERIC PFANNER
European governments are going after American companies, like Google and Amazon.com, that pay little or no taxes in Europe, despite generating billions of dollars in revenue on the continent.

I’m laying odds in the same vicinity of a snowball’s chance in hell. They don’t pay any taxes here so why should they pay them there?

Oddly, smaller, non-multi-national companies are facing a different set of circumstances:

SAS Avoids Bankruptcy After Unions Approve Plan
By THE ASSOCIATED PRESS 11:28 AM ET
All eight unions signed new collective agreements that will see jobs, salaries and pensions cut in the hope of restoring the company’s competitiveness and profitability.

Is it just me or do you see a pattern developing here? Why is it that companies, especially ‘old-line’ companies, lay the burden of making themselves ‘competitive’ on the backs of their hapless employees?

Wouldn’t cutting their prices and slashing the compensation of the front office (who can more readily afford it) be a more sensible approach?

But no, when if comes to executive pay cuts it’s time to ditch the venture! If a VP has to take even a ten cent an hour pay reduction it’s time to abandon ship.

Suppose the company commit blasphemy and stop paying for the staff’s country club membership, oh the scandal!

Cut one and you might as well cut them all! How could you show your face once you’ve proven your company is a piker?

But that’s nothing compared to this news:

Change in Negotiators Shakes Up U.S.-China Trade Policy
By KEITH BRADSHER
Chen Deming, who has led China’s policy on trade negotiations as commerce minister, failed to win a seat on the Central Committee and will be replaced.

How humiliating? The man failed to bring the lapdog to heel and now he’s being ‘replaced’.

This could prove interesting but not nearly as interesting as the revolt that is brewing in China’s countryside.

Will the US decide to send ‘peacekeepers’ in to protect US Interests?

Wouldn’t be the first time, would it?

Thanks for letting me inside your head,

Gegner

Criminals

Greetings good citizen,

It’s been quite some time since I’ve had the chance to, er, ‘borrow’ an article from Ilargi

I have ‘mused aloud’ in the past about how our current circumstances closely resemble what it would look like if criminals hijacked the government.

Well, apparently Ilargi has gone one step better:

Over the past few days, Henry Blodget at Business Insider posted a number of graphs, here and here, which depict something about the US economy that everybody knows to some extent or another, but that most of us won't have let thoroughly sink in. For some because the consequences are too opaque, for others because they are too scary. But make no mistake: we can only continue to ignore or misinterpret them at our own peril. And even then it's terribly late in the game.

The essence of Blodget's argument is this:

"... over the past 30 years, we've generated about $1 of economic growth for every $3 we've borrowed."

So while real (inflation-adjusted) GDP growth looks sort of strong over the past 6 decades:

This, as you can see, cuts you off just when things are starting to get interesting.

I strongly recommend that you click through and read the whole article or you can stay here while I provide you with my own ‘take’ on what Ilargi is pointing at.

The first, er, sticking point I see is the question as to whether or not a criminal organization has the ‘sophistication’ necessary to, er, ‘capture’ the justice department, not just of its native country, but all over the globe!

Naturally, the ‘weak link’ is the legislators themselves. If the criminals could keep raising the bar for re-election they would own them in a very short time indeed. How could they ‘raise the bar’? By monopolistic control of the media and the pricing power that monopoly would provide them.

Now they have a ‘legislature’ packed with ‘their people’.

Who does the justice department ‘answer to’…the legislature!

Soon the Justice department is packed with ‘their people’ as well!

And understand, this ONLY works under a ‘for profit’ commerce model! If we had a ‘truly independent’ media, they would be unable to pull this off.

(Drives my brother-in-law crazy to read the pronoun ‘they’ in the press but in this case the offensive word refers to the criminals that have hijacked our nation, so when you see the word ‘they’, you can mentally insert the word ‘criminal’, ‘kay?)

Um, sophistication? Not so much. Daring? Well it’s pretty bold but again it falls short of genuine chutzpah. The clever part was dismantling legislation intended to prevent exactly this sort of thing from happening…and NOBODY lifted a finger to stop it!

Part of the ‘charm’ (attractiveness, for want of a better term) of such a crime is the unbeleivability of pulling such a thing off.

Not that it can’t be done…no, no, there have been criminals and criminal minds involved from the very beginning as far as government is concerned.

In fact, by examining government operations, the genius lies in how deliberately the government systems AREN’T ‘self-policing’.

The ‘air tight’ compartmentalization lends itself perfectly to a criminal operation…a phenomenon that has often been pointed out but is commonly ‘mis-identified’ as ‘territorialism’ within a given department.

Then there is the ‘lack of prosecution’ (often for blatantly criminal behavior such as murder by drone with the resultant unnecessary loss of life.)

How does a ‘just’ government ‘overlook’ these serious breaches of the human social contract?

Ironically, it doesn’t.

You breach the ‘primary social contract’ at immense personal peril.

Eventually your own people will see how you roll and they’ll murder you for it! And if your criminal co-conspirators don’t get you, the voiceless masses will take the situation into their own hands.

Just as bad as murder by remote control is the practice of ‘disappearing’ people without judicial recourse.

Let me use my tiny soapbox to ask where are the so-called ‘progressives’ that have remained ‘mute’ on the subject of the suspension of Habeas Corpus?

Well, if the (stacked) Supreme Court is okay with it, I guess there’s nothing we can say about it.
Well fuck you!

Here is truly a situation where an injury to one is an injury to all.

But fear not, good citizen. The end of this reckless disregard for your fellow man is drawing to a close.

The criminals have shown themselves for who and what they are.

They have declared war upon us and they shall have it!

Let the bodies hit the floor!

Thanks for letting me inside your head,

Gegner

Insolvency

Greetings good citizen,

Every once in a while you’re confronted with too many choices as far as commentary goes…which is just ducky if you’re an aggregator, the smorgasbord fills itself.

Even I commonly group related articles but today we are all over the spectrum. From the war drums pounding over Iran (How ironic is it that North Korea has decided to {for the moment} ‘fall back in line’?) to another ‘overly optimistic’ reading of the unemployment situation.

Falling lay-offs DOES NOT mean hiring is increasing! It only means lay-offs are down, period!

But let’s not get sidetracked, shall we?

Anyway, last weeks squeaks about $ 4 dollar a gallon gasoline has give way to this weeks rumblings of $ 5 gasoline! (and circles back to our photos of a US destroyer ‘escorting’ an unknown flagged oil tanker through the straits of Hormuz.)

Would our bought and paid for media be willing to ‘pretend’ (a la Gulf of Tonkin) that the ship, if attacked, was US flagged?)

But that is not today’s story.

Nope today’s ‘common thread’ as close as I can tell is yet another US municipality facing…’insolvency’:

STOCKTON, Calif. — The signs of better times are easy to spot downtown: the picturesque marina on the San Joaquin Delta, the gleaming waterfront sports arena, and the handsome high-rise that was meant to house a new city hall. But those symbols are now bitter reminders of how bad things are here today: on Tuesday this city of almost 300,000 moved a step closer to becoming the nation’s largest city to declare bankruptcy.

During a contentious meeting that stretched late into the night, the City Council decided, nearly unanimously, to begin mediation with public employee unions and major bond creditors in what is widely seen as the city’s last-ditch attempt to restructure its finances outside of bankruptcy. Facing a budget deficit from $20 million to $38 million on a budget of roughly $165 million, the Council declared a fiscal emergency for the third year in a row.

“Right now we are a city that has frankly hit a wall,” Mayor Ann Johnston told the Council and hundreds of city residents who attended the meeting. “If the players don’t come together and agree to a fix, then we’re all in big trouble.”

‘The players?’ There are only three tax ‘divisions’ good citizen, commercial, residential and agricultural. Most cities don’t have an agricultural base to speak of (although farming or what could be called ‘agri-business’ is Big in the nation’s most populous state.

The trouble with Agri-business is it has lobbyists who keep taxes and fees low…not that there’s any real danger of this industry being ‘off-shored’…(not that our politicians are smart enough to realize that!)

Then there’s the ‘struggling to be competitive’ industrial sector of the US.

You can’t raise taxes on them, the foreign competition is already killing them from 6,000 miles away! (Figure that one out if you think you’re so smart!)

It’s a proven fact that workers in the cheaper there would starve to death if they had to pay the same prices the US/Western worker does!

But that’s not what the cheerleaders for globalization report (because to do so would be to point directly at financial fraud [and heavily subsidized food!] for our foreign competitors!

What does that leave? The mostly underemployed (and underpaid) ‘residential’ sector.

You know good citizen, I ‘allude’ to these things a lot (and I’m fairly confident that most of you ‘get it’, most of the time.)

BUT, FUCKING TICK-TOCK GOOD CITIZEN, the hands on the clock are moving ever closer to the detonation point, if YOU don’t shut it off, then KA-FUCKING-BOOM!

Which is to point out that if you let the city you live in sink under the waves, there will soon be nowhere to run…and worse, no place to hide!

Hide from whom, you ask?

Take your pick, they’re both criminals after the paychecks stop.

Which is to say more than a few former law enforcement personnel will put their badges to ‘good use’ long after the agency that issued their badges became defunct.

What the hell, a shakedown is a shakedown even after there are no judges!

Now there is ‘Jefferson County’ in Alabama that very publicly went bust then there was that city in Rhode Island that went under due to public pension malfeasance…(and so far NOBODY has been busted for that one either!)

And now it’s Stockton…although wasn’t there another city in CA that led this whole thing off. They ‘disappeared’ it (the city was dissolved and cut up into pieces, which were ‘absorbed’ by the surrounding communities, whether they could afford it or not!)

Ven something…

Anyway, it is neither here nor there because the end result is the same.

What is that ‘end result’?

A Banana Republic, of course!

Where the rich live good and everybody else, the few that survive, scramble for the scraps or rot in jail for ‘stealing’ (what should have been theirs in the first place!)

Funny how it all starts off with the wealth getting ‘concentrated’ in the hands of the devious few…and by the time things start falling apart, nobody seems to know what to do about it.

Which brings us to where we are now.

Because the next step is a semi-permanent state of something resembling ‘martial law’ where it becomes impossible to distinguish between a cop and a soldier…hey, wait a minute! It already IS impossible to tell!

Let the attack begin!

Thanks for letting me inside your head,

Gegner

There and back again...

Greetings good citizen,

Apparently the thinking is you have to be unemployed to even go looking for the ‘help wanted’ listings…and believe me when I tell you, you have to really ‘hunt’ for them in the only place they don’t ‘back up’ (in your local newspaper. Online job postings are eternal in our capitalist fuck you, pay me ethic.)

So a lower level of new claims tells us what?

Only that they are done throwing people out the nearest window…for now.

And, traditionally, it is considered ‘poor taste’ to jettison the baggage during the holiday season.

The only useful thing to come out of ‘A Christmas Carol’ is a palpable fear that the three ghosts wait to this day to ‘treat’ their next victim…

And at least some of these would be ‘Scrooges’ might be reluctant to relive the tyrannies of Christmas past…nor would they be eager to preview what the Spirit of Christmas yet to come may reveal!

So the answer is ‘no’, a reduction in lay-offs during the ‘Holiday Season’ is actually fairly ‘typical’.

Making it difficult to classify this offering. One thing is certain, it is definitely ‘Happy Talk’…

US unemployment claims rise after steady declines

December 29, 2011 — WASHINGTON (AP) — The number of Americans seeking unemployment benefits rose last week after three weeks of declines to a level consistent with modest gains in hiring.

But broader trend over the past month suggests job growth could pick up in the new year. Weekly applications increased by 15,000 to a seasonally adjusted 381,000, the Labor Department said Thursday. Still, the four-week average, a less volatile measure, dropped for the fourth straight week to 375,000. That's the lowest level since June 2008.

Applications generally must fall below 375,000 — consistently — to signal that hiring is strong enough to reduce the unemployment rate. While layoffs have fallen sharply since the recession officially ended two and a half years ago, many companies have been slow to add jobs.

Still, hiring has improved in recent months. Employers have added an average of 143,000 net jobs a month from September through November. That's almost double the average for the previous three months.

There is NO CORRELATION between falling new claims and ‘rising’ anything!

Worse, they have the workforce figures so distorted that is masks 50% of the unemployed!

Why do they do this?

If the public were aware of how badly capitalism is failing they would DEMAND a replacement!

But the working public is, er, ‘unaware’ of their good fortune (and nobody dares to point it out.)

Sure, they hear how lucky they are to have a job all the time…what they don’t know is there are more than six workers for every job in global marketplace!

Only a handful of these jobs require prior experience in the given field. A couple of weeks of ‘hands on’ in most jobs is enough to fill 99% of ALL job requirements…kinda adding mightily to the ‘lucky’ factor. (In many cases you COULD be replaced by a chimp! The only thing saving your sorry ass is chimps can‘t talk.)

Naturally, there is another factor that doesn’t garner much attention in the press and oddly they aren’t trying to keep it secret and that’s the constant consolidation of market share around the globe.

That is how they keep their figures rising when every thing else is falling.

There’s a slightly larger overall market (driven solely by population growth) while there is a steady decline in the number of ‘competitors’ for what markets remain.

This is yet another way to disguise the corrosive effects of globalization and its perverted cousin, the global race to the bottom.

Sadly, if people were paying attention, they might have noticed that the one percent has stolen their children’s future (and left an economic wasteland in its place.)

Ironically, as we are soon to relearn, ‘redundancy is GOOD!’

In an energy scarce future 6,000 mile long supply chains will be unthinkable and sole sourcing will become a defacto crime!

Nobody can live in an ‘economic desert’ nor should anyone be forced to try…(IF they’re not a criminals!)

In a ‘sustainable’ future all supply lines will be as short as possible. If quality considerations dictate that only a certain type of resource is suitable, then those products will be produced as close as practical to that source.

Shipping stuff half way around the planet and back was never a ‘practical’ idea. The bastards who deliberately destroyed our economy (s) knew that (although China is notoriously ‘resource poor’…)

I’m guessing the plan is to secure sources closer to China as the pressure to shorten supply lines builds.

And that may well be the trigger we continue to squeeze, good citizen.

As the cost of shipping goods half-way around the planet and back again becomes prohibitive, the ‘problem’ of being unable to make it ourselves will truly become ‘our problem’…

Thanks for letting me inside your head,

Gegner

Instant acting Kool Aid

Greetings good citizen,

The Dow opened up 125 points this morning driven (presumably) by ‘Happy talk’, which of late has been, er, ‘overly-optimistic’.

Then there’s the “What the fuck have YOU been smoking?” disinformation reserved for Arab Spring and other ‘convenient fictions’

Finally there’s this bull shit (which is on par with instantaneous acting Kool Aid.)

Are ‘investors’ so unhinged that they are confusing the ‘death spiral’ of the Euro-zone with just another ‘bag ‘em and tag ‘em’ rip-off scam?

What is this, the seventh time the Euro-zone has had to be ‘bailed out’? (this year..)

How deep does this rabbit hole go, good citizen and will we ever find the bottom? (which appears somehow connected to our ability/willingness to pay…)

Is a ‘new charter’ the answer (when it appears nobody can afford the old one?) It is highly unlikely a ‘new charter’ will provide more, er, ‘lenient’ terms and conditions than the original.

Would, er, ‘economic blending’ (similar to the US) ‘solve’ this fiscal crisis?

Mr. Williams of Shadow Government Statistics provides us with some insight on the subject

December 4th, 2011

There Is No Sudden Economic Recovery, Just Bad-Quality Numbers and Deteriorating Labor Conditions

Latest Jobs Level Still Well Below Pre-2007 and Pre-2001 Recession Levels

November Unemployment: 8.6% (U.3), 15.6% (U.6), 22.6% (SGS)

Money Supply M3 Annual Growth at 2.7% in November

Potential Euro Disintegration Is Nothing Like the Looming Dollar Collapse 

The very first ‘bullet point’ demonstrates the failure of the unified US system of commerce has had in mitigating, much less curing the general economic malaise globalization has visited upon the world.

Economics 101 good citizen, you cannot live in an economic desert (thus anything that makes that desert worse is, by necessity, ‘bad’!)

The second bullet point only makes the situation that much more dire…labor force participation is still below the 2001 level…so what are the media fucktards crowing about an economic recovery for, to make Obama look bad?

I just walked away for a moment (to walk the dog) and that successfully derailed the rant I was going to unleash on what could politely be called Bush’s third term…(and he’ll get a forth [term] if the useless Democrats don’t dig up a challenger, pronto!)

Let it suffice to say we can only wonder why nobody in the ‘corporate owned media’ has picked up on the fact that labor force participation is so low?

Could the answer be as simple as ‘corporate owned’ and if you report what the man signing your paycheck doesn’t like, not only will the subject not make publication but neither will you!

Now to dot the i’s and cross the t’s we have this story from Jesse of the Cross roads café fame:

"A dollar-denominated deposit made in foreign banks or foreign branches of U.S. banks. Depositors sometimes transfer their funds to European banks in order to take advantage of higher interest rates. The Eurodollar is one type of Eurocurrency. Eurodollars are US currency deposited in banks outside the United States but not always in Europe. Certain debt securities are issued in eurodollars and pay interest in US dollars into non-US bank accounts. Eurodollars are a form of eurocurrency."

I think the term Eurodollars outgrew its origins, as it had come to refer to dollars held overseas outside the jurisdiction of the Fed and the US Federal Government. It started as a movement by certain entities to hold their assets outside the Fed to avoid freezing and seizure of assets, but it become much more broadly used as the dollar grew into the global reserve currency.

So to avoid confusion, Eurodollars will refer to any US dollar held as foreign currency as defined by the BIS. M3 Eurodollars will refer to the discontinued series by the Fed which estimated the dollars held overseas at branches of US banks.

I would agree with the Fed that their definition had become quaintly irrelevant to the markets. I estimate that today the M3 eurodollars represent less than a third of Eurodollars held around the world.

Okay, so what we’ve got here is a world kept on ‘life support’ via ‘creative accounting’.

Um, some (see the Automatic Earth’s 1,000th post) don’t think the global economy will make it to Christmas!

Since all money is ‘funny’ I’m pretty sure they’ll muddle through until the New Year, then they’ll pull the plug (and blame it all on the Mayans!)

As I have stated repeatedly, NONE of this should be/ NEEDS to happen.

Lenders made bad loans, they should suck it up and suffer the consequences.

Given the extremely ‘unstable’ nature of (more for me) capitalism, the whole system should be scrapped and a new one erected…with an eye towards leveling the playing field!

The world is going to come unglued attempting to pay the imaginary debt demands of people who already have more than they can spend!

Does that sound ‘right’ to you?

I didn’t think so.

Thank you for letting me inside your head,

Gegner

Where does it end?

Greetings good citizen,

While I usually make the case for our current downfall being centered on Reagan, he couldn’t have done what he did without the groundwork laid by Nixon…who only won office thanks to LBJ’s flat refusal to seek a second term.

Which is to ask if any of these assholes EVER wore ‘a white hat’?

And the answer is likely no.

Sadly, it doesn’t matter.

How we got here is moot compared to the question of how we are going to resolve this issue.

Yes, we need to understand who was behind this betrayal of our nation so we can insure they are incapable of, er, ‘sabotaging’ efforts to restore balance.

A Simple Plan sweeps away the old power structure completely, even the outdated and useless legal structure would be completely abandoned.

No more lawyers, no more judges and no more legislators.

Who polices the police? The leadership.

Better, leaders are NOT politicians, they have no, er, ‘authority’ to create or interpret the laws as they see fit. (Although they will have to prosecute the law to the best of their ability/understanding. Let it suffice to say ‘dummies’ don’t make leader, you have to be sharp to win!)

Laws will be simple and few, making the task ‘more manageable’.

The central premise behind anarchy is ‘rules WITHOUT rulers’ (and not the ‘anything goes’ no rules happy horseshit the conservatives [who live in the land of ‘make believe’ in the first place] generally contend.)

Who makes the rules? Those who must live under them! (And not just a handful who most often exempt themselves from prosecution in the first place.)

Which is to point out that the law would be a very different animal if EVERYBODY had to obey it.

And that’s the way it ‘should be’, isn’t it?

But we (naturally) digress.

The topic du juor is the aftermath of the ‘Reagan Revolution’ also known as ‘Morning in America’.

The article isn’t clear on who is being quoted here but they make a fair point:

Anyways, here is my take on things after being a long-time trickle down economics person. Awhile back, I came across tax data that showed while Reagan cut A LOT of taxes, he was also forced by threats of veto to also sign into law A LOT of tax increases.

These tax increase were by and large closing of loopholes and tax exemptions, which mainly affected richer tax filers. So much so in fact, that people in the higher tax brackets were paying more in taxes by the start of Reagan’s second term, than when Reagan was first elected.

After looking into this, I still haven’t figured out where history got distorted. However, it seems that what happened during the Reagan years to get things “jump-started” was taxing the rich more, and taxing the middle class less.

And that goes against EVERYTHING that “conservatives” say today.

Why the destruction of the nation’s customer base is suddenly ‘big news’ is mystifying to us older folks but if we keep in mind the younger generation doesn’t know any better the reason behind the current ‘shock and awe’ becomes clear.

Hell, there are adults who BELIEVE Clinton is responsible for globalization.

Why do adults believe this? Because they were too young to remember who first proposed the idea, the original (but by no means the first) corporate sock puppet, St. Ronnie Reagan!

Don’t anybody get the wrong idea about Slick Willy, he is a dyed in the wool conservative from the get go who was very adept at ‘playing the game’. (Unlike the current sock puppet.)

The appearance of bipartisanship is exactly that, appearance.

Just as voting provides the ‘illusion of participation’.

Well Bubba, we have to sweep aside these ‘delusions’ if we are to have any hope of restoring decency and justice to our civilization.

We have to have a framework that supports the ‘rule of the people’ (ALL of the people) if we are to avoid extinction by our own hand.

I have often invited (specific) critiques of A Simple Plan and have yet to receive a single specific quibble much less a problem.

The plan is bullet proof, that’s why nobody can come up with a more specific objection than ‘I don’t like it’ (mostly because you CAN’T get ‘rich’)

Naturally, rich is relative. Under A Simple Plan we would ALL be RICH (but we’d still have to work for a few hours a week.)

Are you all so hopelessly brainwashed?

I don’t think so.

Thanks for letting me inside your heads,

Gegner

Enlightenment...

Greetings good citizen,

The markets are up but what would you expect considering the Fed continues to fuel the surge in stock prices through ‘quantative easing.’

Which is to point out that this current swelling in the value of capital is actually meaningless if it were put in the perspective of a rotting corpse, which is precisely what this phenomenon is reflective of.

As you might imagine, the recent ‘excitement’ over retail sales figures are precisely the ‘smoke and mirror’ hocus pocus one would expect from a shrinking customer base.

Defunct businesses do not report sales figures, these figures can only come from the surviving outlets which now enjoy a bigger share of the market, causing their sales figures to improve.

Worse, many of the ‘survivors’ have shut ‘under-performing’ locations, driving business to the remaining stores. And reporting the results as an ‘increase’…

Nothing from nothing leaves nothing…and that’s a fact, Jack!

Fewer people working and even less shopping does not equal a net increase in sales! IT IS IMPOSSIBLE!

Yet the fucktards expect YOU to swallow it!

Worse good citizen is the ‘basic dishonesty’ these tactics represent.

How can we trust the systems that produce this incredible bullshit?

Short answer, you can’t!

More succinctly, it is this ‘basic dishonesty’ that will lead to the collapse and eventual destruction of our civilization.

Yes good citizen, Debunking Gonzalo Lira and Hyperinflation here we have an argument that is essentially moot. Which is to say pointless because this is not how things will ‘play out’.

As Stoneleigh points out in the beginning of the article (a fact that dovetails nicely with my, er, ‘assertion’ that money is in fact a fantasy, wrapped in an illusion enforced at the point of a gun) that ‘hyper-inflation’ requires isolation. A key separating factor between our current crazed banking system and the economies of Wiemar Germany and that of Zimbabwe.

So no, it won’t be ‘hyper-inflation’ per se that causes our economy to collapse, it will be the sudden necessary shift from fiat currency to ‘in kind’ commodity trading that will cause the financial system to…evaporate.

Once the tax rate reaches zero, the currency becomes ‘illegitimate’ since it is no longer required to pay one’s taxes (talk about a mind fuck!)

However, the basic dishonesty we are witnessing throughout our society will only serve to increase the demand to be paid in ‘items of value’ as the situation continues to disintegrate.


That said, Stoneleigh and I are in perfect accord regarding the ‘ultimate outcome’.

I do not see this as a transitory problem leading back to business as usual, and I mean NEVER returning to what we would now regard as business as usual, let alone doing so in only a couple of years.

Deflation and depression are mutually reinforcing. This is a persistent dynamic that should last at least as long as the last depression, and likely longer as every parameter is worse going into depression this time. We have more debt, far more structural dependencies (on cheap energy and cheap credit primarily), looming resource limitations, far higher expectations, a much larger population, a far smaller skill base etc.

I think we are looking at an economic catastrophe of unprecedented proportions, not a bump in the road that can be quickly consigned to history, if only we face our problems head on. In my view we are going to have to live through deflationary deleveraging, a long and grinding depression, and then quite possibly hyperinflation once the international debt financing model is broken, and with it the power of the bond market to constrain currency printing.

This could easily take twenty years to play out, and even then the upheaval is very unlikely to be over. The last time a major bubble burst - the South Sea Bubble of the 1720s - the aftermath lasted for several decades and culminated in a series of revolutions. This bubble is much larger, and the aftermath is likely to be proportional to the excesses of the preceding bubble. This is why I call the presentation I travel to deliver A Century of Challenges.

Moreover, I do not see a return to what we consider to be business as usual at any point, because our business as usual scenario is critically dependent on cheap energy, and the energy subsidy inherent in fossil fuels has been a once in a planet's lifetime deal. We are going to be living on an energy income instead of an energy inheritance, and this will mean living a life none of us in the developed world will recognize.

UNDERSTAND GOOD CITIZEN, when she says ‘never’, she doesn’t mean in a couple of years, she means right here and now!
The ‘tipping point’ has already been passed even if the MSM is pretending otherwise because acknowledging this event opens the social contract to be re-written!

We no longer enjoy cheap abundant energy so the conditions we must live under WILL change…considerably.

Allowing them to remain ‘the same’ or even ‘similar’ for the few will make things much worse for the rest!

Funny how a ‘little’ hoarding can screw up an otherwise equitable distribution plan. People with ‘income streams’ will be at a decided advantage to those of us with less, er, ‘flexible’ forms of income.

Those with a paycheck that is negotiated on an annual basis will find themselves facing a crisis for most of the year…because it is not in your employer’s interest to pay you a cent more than they absolutely have to.

Since the FUCKING CONSERVATIVES have fucked up the tax structure of this nation, you now have no one to protect you from being ‘shortchanged’ by your employer.

Worse, if you’re ‘two-steps’ down on the distribution chain, your fucked because your employer ‘lacks the leverage’ to negotiate a better deal for himself.

Do you see how this inter-locking piece of shit can cave in quite suddenly?

If there is a ‘common thread’ on the gloom and doom sites it is this, the speed with which collapse can be upon us will astonish most of you.

Everything can be ‘fine’ when you go to bed tonight only to be unrecognizable by the time you wake up in the morning…IF you wake up in the morning.

Be Prepared (for pretty much anything, including deception!)

The depths of their depravity are unknowable and they’ve done some pretty ‘mad shit’ already!

Thanks for letting me inside your head,

Gegner

What's wrong with this picture?

Greetings good citizen,

Those of you with extraordinarily good memories will recall some of my rants about the economy being ‘shrunk to fit’ the ‘new normal’.

This is essentially what a ‘jobless recovery’ results in. Since the, er, ‘customer base’ has been, er, ‘re-proportioned’ (and this is all ‘scam-a-rama’ stuff, you’ve now got people earning a fraction of what you need to make, living like kings, on salaries that you’d starve to death on…)

Did I mention that ALL money is ‘funny’?

Anyway, here we have a article that is more interesting for what it doesn’t say

More Than 8 Million Drop Out of Credit Card Use
November 30th, 2010

Via: AP:


More than 8 million consumers stopped using credit cards over the past year. The decline stems from a combination of consumer choices and bank actions.

An analysis by credit reporting agency TransUnion found that use of general purpose credit cards bearing MasterCard or Visa logos, or issued by Discover or American Express, fell more than 11 percent in the third quarter, compared with the July to September period last year.

About 62 million people now have an active card, compared with 70 million a year ago. [There’s the ‘money quote’ that caught my eye good citizen. Where does ‘economic recovery’ come from if you have shrinking participation by the general populace? Worse is the 62 million ‘active cards’ out of 211 million working aged citizens! Does something look ‘out of whack’ to you?]

The Chicago company found that consumers in the subprime category, or those with low credit ratings, were believed to be without cards mostly because they were shut down by banks after payments fell behind or balances were written off.

“One can quite reasonably infer that’s not voluntary,” said Ezra Becker, vice president of research and consulting in TransUnion’s financial services business unit. Banks have written off record amounts of credit card balances in recent years.

But a significant portion of the decrease in card usage reflects decisions by cardholders to stop using credit, Becker said. “They’re simply either not purchasing as much or paying down balances.”

The question here, quite naturally, is ‘what’s wrong with this picture?’

I think 62 million ‘active cards’ is a very, er, ‘telling’ statistic. It speaks volumes about how whoever ‘controls’ our currency regards the ‘general population.

It’s the same old story, no job, no credit…but guess what, if they ship all of the work to Timbuktu, how the fuck are you supposed to get a job?

Short answer, you aren’t…and it’s not their problem, it’s yours!

Worse, this is the ‘brick wall’ our civilization is up against. If we don’t solve this problem, THERE WON’T BE A CIVILIZATION TO SAVE!

Why are we in this pickle? Mismanagement, the people in charge can’t see beyond the end of their own greed, which is to point out that there are incapable of putting the needs of others ahead of their own selfish desires!

If you’d like an explanation of the current ‘global debt crisis’ that is shaking the EU to its core, click here

You wouldn’t mind if the financial sector knew what it was doing but these idiots are obviously clueless and the more they muck around with the world’s financial markets, the worse they fuck things up!

Thanks for letting me inside your head,

Gegner

'Stealing Home'

Greetings good citizen,

Although few would purposefully draw your attention to the relationships (government often being referred to as a ‘noble’ or ‘civic-minded’ calling rather than the ‘referee’ job it really is.)

If we are ever to see anything that even remotely resembles ‘prosperity’ again you have to get your head on straight.

So we start with ‘the rules’:

All economies are LOCAL, bar none!

Commerce exists to enrich society (not just the owners of commerce!)

Government exists to ensure things are properly managed.

3 basic principles; that’s all it takes to put civilization ‘back on track’.

Sadly, there are some ‘definition deficiencies’ that could be problematic.

Local means local…so being in the same ‘solar system’ doesn’t count.

Society means everybody; not the ‘Bill Gates walks into the room’ effect…so ‘on paper’ everybody is richer…

And ‘properly managed’ means ‘effective distribution’ and not ‘maximized profits’.

There are other ways to ‘twist’ the above definitions but neither of us has all day to bat this ball until it no longer bounces.

No, there is a much more disturbing ball to bounce around, it’s the ‘what kind of fuckhead do you take me for?’ ball.

Let’s shift our attention to the ‘storehouse of value’ for a moment, shall we?

The USA is the number 1 economy in the whole world (based on consumption.)

The media never tires of marveling over how much crap we ‘consume’ (although ‘waste’ is probably closer to the mark.)

I forget the actual statistics but you’ve heard it all before…we make up just two percent of the world’s population and we consume some twenty percent of the world’s output…something like that.

With that as a given, this fuckin’ shithole is along way from being El Dorado, baby!

Being the world’s ‘dumping ground’ makes this the world’s biggest DUMP!

You see, it really is all in how you look at it!

So the relentless cheerleaders of expansion without end want you to believe that we are ‘number one’; just don’t pay any attention to which finger they use to signify this exalted position…

Anyway, we’re ‘top of the heap’ and because of this our ‘storehouse of value’ is also, er, ‘top of the heap’ too.

But is it really?

Our money is (supposedly) worth the difference between what we produce and what we consume.

Well, we know we are the world’s most prodigious consumers but are we really the world’s most prodigious producers?

Hard to believe considering what the unemployment rate looks like, isn’t it?

Worse good citizen, 40% of all people counted as ‘employed’ only work part time…so we are not just ‘good’, we must be fucking ‘great!’

Or we are really, really, really gullible…

Which one do you think it is?

So, how much is the buck in your pocket worth now (considering we consume much more than we produce?)

Understand good citizen, this is the same worthless buck you’re being forced to jump through hoops for…which should make you ask ‘what the fuck am I doing?’

I’m an ‘older’ guy and I’ve seen a lot of changes in my time.

The ‘trend’ that started when I was just a kid has almost reached its final outcome the nation continues to be ‘gutted’ so the wealthy can enslave the net bunch of trusting saps with their credit cards!

This article is from today’s Alternet titled:

19 Mind-Blowing Facts About the Deindustrialization of America

Well, good citizen, you don’t need me to tell you that there is far more than 19 damning facts about how rapacious capitalism has scorched the earth beneath our children’s feet.

Death is too good for these selfish fucks, exile is the only fitting punishment.

Thanks for letting me inside your head,

Gegner

The Power of Gold...

Greetings good citizen,

Global markets are mixed with most of the Western Hemisphere currently trading in negative territory, which tells us what, precisely?

It tells us that ‘officially’ the phantom recovery is still ‘on track’ (even if there is nothing that positively confirms this. No matter how much they crow over data points that would ordinarily be ignored!)

We’re back to the old, ‘it’s not what you say but how you say it’ game, the point is to generate excitement thereby creating plausibility, which is almost believability.

Most realists openly admit we will never achieve anything approaching ‘ideal’ circumstances…but this fantasy bullshit is getting way out of hand!

Which is to ask at what point are you forced to admit that your ‘elected representatives’ are no longer in control of the situation? Does this realization come once it is apparent that no matter who you vote into office, nothing changes (a phenomenon that dates back to the Nixon administration!)

The very foundation of civilization is trust, once that trust has been broken, what passes for civilization collapses.

As the, er, ‘decrees’ of management become more and more dependant on the flimsiest of evidence, trust dissolves and civilization collapses.

But I digress. tonight’s offering isn’t a direct critique of the breakdown of trust…but it does focus your attention on what happens when the whole ball of wax becomes a game of ‘trust me’? (Without the question mark…your compliance is ‘assumed’ because your options are, er, ‘limited’)

Why There is Fear and Resentment of the Power of Gold to Discover Value in the Real Economy

There were a few questions raised about the note on the long term chart of the SP 500 deflated by gold which was posted last night, and which is reproduced here on the right, which read:

"This is why the financial engineers like Bernanke hate and fear gold; it defies their plans and powers."

The chart shows something that most investors have suspected. There has been no genuine recovery in the price of stocks since the decline that cannot be fully explained by the monetary inflation of the dollar, as can be discovered by the ultimate store of value, which is gold.

I thought that this was a fairly straightforward observation, but it apparently jarred a few people and their thinking. So perhaps we have some new readers who are not familiar with the long standing animosity towards gold that is uniformly expressed by all those who promote centralized command and control economies, from both the left and the right. [While I still, er, ‘object’ to ‘monetizing’ gold, there indeed has to be a standard somewhere if only to keep things honest. Otherwise you get what we have today, a bunch of morons pulling valuations out of their butts!]

Can any astute observer doubt the Fed's desire to act in secret and privacy? Their obsession with this is almost unbelievable and beyond comprehension, [Not if their ‘goal’ is to hoodwink the rest of us!] unless one understands that they are in a 'confidence game,' and use persuasion and even illusion to shape perceptions, especially at the extremes of their financial and monetary engineering of the real economy.

This animosity and desire for secrecy was described by Alan Greenspan in his famous essay, Gold and Economic Freedom, first published in 1966. In a fairly amusing exchange between Congressman Ron Paul and the former Chairman a couple of years ago, Mr. Paul asked Sir Alan about this essay, and if he had any corrections or misgivings about it after so many years. Would he change anything?

"Not one word." replied Greenspan.

It helps to understand the dynamics of the money world, which appear so mysterious to those who do not specialize in it, even economists, although they often feign ignorance to promote some cause or avoid unpleasant disclosure.

Money is power. Ownership of the means of production may provide for the control of groups of disorganized labor, but the power of the issuance of money allows for the control of whole peoples and governments, through the distribution and transference of wealth, by the most subtle of means. And this is why the US Constitution relegated this power to the Congress and by their explicit appropriation, and denied it to the States and private parties except in the form of specie, that is, gold and silver which have intrinsic value.

It might be useful to review a prior post in reaction to the self-named maverick economist Willem Buiter, who wrote a few attacks on gold, prior to his leaving academia and the Financial Times to take a position with Citibank. Willem Buiter Apparently Does Not Like Gold

It may seem a bit perverse, but I do not favor a return to a gold, or a bi-metallic gold and silver standard. Each nation can be free to devalue or deflate their own money supply as their needs require, with the consent and knowledge of the people and their representatives. What I do promote is for gold and silver to trade freely without restraint or manipulation as a refuge from monetary manipulation, and a secure store of value for private wealth. When nations adopt the gold standard, they invariably see to 'fix' and manipulate its price, and reserve the ownership to themselves, with the tendency to seize the wealth of their citizen under the rationale of such an ownership, or dominant privilege. Let those who have a mind to it have a place of security for their labor and efforts, and let the state do as it will, with the open knowledge and consent of the world. [As I have pointed out numerous times before, money ‘failed’ at it’s intended purpose, but that didn’t stop its subsequent ‘abuse’ as a social control measure.]

"Gold is not necessary. I have no interest in gold. We will build a solid state, without an ounce of gold behind it. Anyone who sells above the set prices, let him be marched off to a concentration camp. That's the bastion of money."

Adolf Hitler

A draconian approach no doubt. It is much more common for the ruling parties to debase the coinage secretively while advantaging their friends and supporters, thereby manipulating the value of gold and silver covertly. In modern times of non-specie currency one might choose to select a few cooperative banks and the central money authority to manipulate the price using paper and markets, and hope that this scheme will remain undiscovered. But it always comes out, the truth is always known in the end.

"With the exception only of the period of the gold standard, practically all governments of history have used their exclusive power to issue money to defraud and plunder the people." [And the current governments of the world are no exception!]

F. A. Von Hayek

There are any number of amateur economists and investing pundits around these days who betray an almost irrational opposition to gold, becoming jubilant in every decline, and despondent at every rally. And some of them even take the label of 'Austrianism' in their thoughts. Most often this can simply explained as the envy of those who have not prepared for a crisis, and wish ill upon those who have, regretting and hoping for another chance to provide for their own security. And yet they will fail to take advantage of every opportunity to do so, as they are creatures betrayed alternatively by their own fear and greed. [Jesse’s buttering his own bread here, or ‘talking his book’ as many investment advisors will when given the chance.]

And regrettably, there are always those who will say almost anything for money, and the profession of economist seems to be particularly infested with that sort, given the nascent nature of the discipline, and its lack of scientific rigor, being based on principles which do not easily lend themselves to objectification with serious damage to the data being made by the assumptions in their equations and proofs. [Can’t fault his critique here, economists are worse than pollsters or ‘ratings agencies’ who both produce the results they are paid to report!]

But most of all, the financial engineers, politicians, and Wall Street Banks fear gold because it is the antidote to their frauds, and the informant to their confiscation of wealth. [Ironically, it is the people who hold large stores of gold in their possession that provide us with this fiscal ‘bellwether’, otherwise we would have nothing to ‘compare’…]

Do not expect them to capitulate once and for all, but only slowly and grudgingly, as it becomes more difficult for them to sustain their illusions and persuasion. Protecting wealth against official adventurism is never easy.

Understand good citizen that gold is no more money than paper is…and push come to shove ‘civilization’ can’t be sacrificed on a ‘cross of gold’ (because those who ‘control gold now are the same people who brought the current mess to us!)

The only way (don’t you love that phrase, wars have been fought over such assertions!) to correct the longstanding problem associated with money is to ‘legally’ redefine and ‘re-purpose’ it.

Nobody should EVER be used as someone else’s ‘income stream’ because that is the essence of slavery. Erasing that wrong leaves us with a different ‘truth’; that money is only useful to the individual. It serves society as a ‘regulator’ because it regulates the individuals ‘access’ to goods/services that are in short supply.

If we recognize that money is only useful to the individual, we need to also acknowledge that money need not be ‘transferable’ between individuals, and no facility should be made to do the same.

Too bad people don’t like to think because it is here that people lose their appreciation for the beauty of ‘A Simple Plan’.

They start worrying about what would happen if the computers crashed or if criminals decided to use something else as money (like the ‘shadow banks and their derivatives!)

And the answer to both is simple…the rules of work are so rigid that calculating what you should have in the, er, ‘bank’ is a simple mathematical equation (that will likely give you more than you actually had…although ‘hard crashes’ would be rare.) And if criminals ‘invented’ their own money, they’d be ‘exiled’, a rather nasty punishment reserved for those unwilling to play by the rules.

Well, now I’m ‘talking my book’, see, we’re all ‘shameless’ if given a chance.

Thanks for letting me inside your head,

Gegner

Taking (it) On (the) Chin (a)

Greetings good citizen,

Apparently last week’s revelations surrounding the ‘financial improprieties’ involving Lehman Brothers will be ‘the next big distraction’ for the foreseeable future. (Which is to say a couple of days, anyway.)

In a 2,200 page report, it has been revealed that Lehman management, with the assistance of accounting firm Ernst & Young, ‘cooked the books’ a la Enron, which, in essence, ‘defrauded’ the shareowners.

Um, the CEO as well as the CFO of Enron ended up being convicted of criminal wrongdoing in the Enron case but only the CFO actually did jail time…the CEO (Ken Lay) died before commencing his sentence.

More damning is how the Enron ‘scandal’ gave birth to Sarbanes-Oxley, which essentially required the CEO and the other officers of the company to ‘swear’ (via affidavit) that the company’s finances were ‘as advertised’.

Naturally, the question that remains here is whether or not any member of Lehman’s management team will face prosecution.

Which is to ask will this be the instance where we learn that the ‘statute of limitations’ on financial crimes has been reduced to the amount of time it takes the ink to dry?

Hey, ‘who knew’ usury laws were vacated back in 2003, right around the same time the Bush White House was legalizing torture and eliminated habeas corpus?

But let us set this particular ring of the financial circus act aside for now, other matters press.

As I have ranted repeatedly, globalization was made possible through ‘financial manipulation’, that the ‘differences’ between currencies are set by ‘central bankers’, who ‘agree’ on what each nation’s monetary unit is worth.

But that’s not what this article implies which leaves us with a most disturbing conundrum…

Do the respective countries get to ‘declare’ what their currency is worth or is this decision based on something other than their, er, ‘whim’?

I mean, if China says the renminbi is worth 20 cents, why can’t we turn around and say, ‘right back at ya!’ with the dollar? Better, we could, according to this ‘logic’, just ‘peg’ the dollar to whoever’s currency was trying to take advantage of us…then let them try and ‘dump’ their crud here!

Understand good citizen, while China claims their ‘dollar’ is worth roughly one eighth of what our dollar is ‘worth’, their ‘dollar’ buys them four times there what our dollar buys us here!

So their claims are totally bogus! Um, more disturbing, considering how ‘obvious’ this manipulation is, is why we don’t ‘retaliate in kind’?

This begs some mighty peculiar ‘physics’ if money is ‘whatever they claim it is’.

Um, naturally good citizen, the question is ‘who benefits’? You don’t suppose the biggest ‘winner’ here is union hating employers, do you?

Stop right there good citizen…does it look like somebody’s getting ‘screwed’?

Taking On China

By PAUL KRUGMAN
Published: March 14, 2010

Tensions are rising over Chinese economic policy, and rightly so: China’s policy of keeping its currency, the renminbi, undervalued has become a significant drag on global economic recovery. Something must be done. [What we have to wonder about good citizen is the mind-blowing implications of the notion that the ‘value’ of money can be arbitrarily determined!]

To give you a sense of the problem: Widespread complaints that China was manipulating its currency — selling renminbi and buying foreign currencies, so as to keep the renminbi weak and China’s exports artificially competitive — began around 2003. At that point China was adding about $10 billion a month to its reserves, and in 2003 it ran an overall surplus on its current account — a broad measure of the trade balance — of $46 billion. [Wait a minute Slim…the largest single amount of ‘foreign currency’ the Chinese hold just happens to be that of its number one trade partner…the US of A. Worse, this still doesn’t solve the mystery of PPP.]

Today, China is adding more than $30 billion a month to its $2.4 trillion hoard of reserves. The International Monetary Fund expects China to have a 2010 current surplus of more than $450 billion — 10 times the 2003 figure. This is the most distortionary exchange rate policy any major nation has ever followed. [So, again we must ask ourselves…who wins in this bizarre game of ‘giveaway’ and why can’t we ‘correct’ the problem ourselves? Naturally, we CAN correct the problem, BUT ‘somebody’ doesn’t want the problem ‘corrected’.]

And it’s a policy that seriously damages the rest of the world. Most of the world’s large economies are stuck in a liquidity trap — deeply depressed, but unable to generate a recovery by cutting interest rates because the relevant rates are already near zero. China, by engineering an unwarranted trade surplus, is in effect imposing an anti-stimulus on these economies, which they can’t offset. [As I have pointed out previously, you can’t ‘stimulate’ your own economy if it is ‘open ended’, it has to be a closed loop in order to work. Understand, EVERY developed nation pumped huge amounts of ‘stimulus’ into their economies and…it didn’t work. Why? Because it all ‘leaked out’ to China…]

So how should we respond? First of all, the U.S. Treasury Department must stop fudging and obfuscating. [Um, from the tone of today’s revelations about Lehman Brothers, there could be some big time personnel shifts coming in the Obama administration Cabinet.]

Twice a year, by law, Treasury must issue a report identifying nations that “manipulate the rate of exchange between their currency and the United States dollar for purposes of preventing effective balance of payments adjustments or gaining unfair competitive advantage in international trade.” The law’s intent is clear: the report should be a factual determination, not a policy statement. In practice, however, Treasury has been both unwilling to take action on the renminbi and unwilling to do what the law requires, namely explain to Congress why it isn’t taking action. Instead, it has spent the past six or seven years pretending not to see the obvious.

Will the next report, due April 15, continue this tradition? Stay tuned.

If Treasury does find Chinese currency manipulation, then what? Here, we have to get past a common misunderstanding: the view that the Chinese have us over a barrel, because we don’t dare provoke China into dumping its dollar assets. [Um, we really can’t get ‘more fucked’ than we already are AND, more importantly, we can ‘nullify’ any punitive measure they throw at us with the stroke of a pen! It really is ‘that easy’…so why are we being subjected to this ‘bullshit?’ There’s the question they don’t want you asking…because you won’t like the answer!]

What you have to ask is, What would happen if China tried to sell a large share of its U.S. assets? Would interest rates soar? Short-term U.S. interest rates wouldn’t change: they’re being kept near zero by the Fed, which won’t raise rates until the unemployment rate comes down. Long-term rates might rise slightly, but they’re mainly determined by market expectations of future short-term rates. Also, the Fed could offset any interest-rate impact of a Chinese pullback by expanding its own purchases of long-term bonds. [If the Chinese try to ‘dump’ their dollar holdings (something they are cautiously doing and have been for quite some time) the largest ‘effect’ would be a reduction in the value of whatever asset they were attempting to dump. If they try to dump, they end up losing money.]

It’s true that if China dumped its U.S. assets the value of the dollar would fall against other major currencies, such as the euro. But that would be a good thing for the United States, since it would make our goods more competitive and reduce our trade deficit. [Great in theory but the bad news is we don’t have anything to ‘trade’ besides raw materials and food.] On the other hand, it would be a bad thing for China, which would suffer large losses on its dollar holdings. In short, right now America has China over a barrel, not the other way around. [He’s right, as long as you’re cool with the idea of slipping back into the Stone Age, we don’t have enough left of our manufacturing sector to make a thimble, never mind fill one.]

So we have no reason to fear China. But what should we do?

Some still argue that we must reason gently with China, not confront it. But we’ve been reasoning with China for years, as its surplus ballooned, and gotten nowhere: on Sunday Wen Jiabao, the Chinese prime minister, declared — absurdly — that his nation’s currency is not undervalued. (The Peterson Institute for International Economics estimates that the renminbi is undervalued by between 20 and 40 percent.) And Mr. Wen accused other nations of doing what China actually does, seeking to weaken their currencies “just for the purposes of increasing their own exports.”

But if sweet reason won’t work, what’s the alternative? In 1971 the United States dealt with a similar but much less severe problem of foreign undervaluation by imposing a temporary 10 percent surcharge on imports, which was removed a few months later after Germany, Japan and other nations raised the dollar value of their currencies. At this point, it’s hard to see China changing its policies unless faced with the threat of similar action — except that this time the surcharge would have to be much larger, say 25 percent.

I don’t propose this turn to policy hardball lightly. But Chinese currency policy is adding materially to the world’s economic problems at a time when those problems are already very severe. It’s time to take a stand.

While Mr. Panzer of Financial Armageddon takes exception to Mr. Krugman’s argument, I, on the other hand, tend to agree with our most recent Nobel laureate. Were I to criticize him, it would be for taking so long to get here.

Um, something’s still ‘rotten in Denmark’. The Chinese wouldn’t be able to get away with what they’re doing without the consent of some mighty powerful individuals.

Which brings us full circle to yet another disturbing realization, that somebody has seized control of money, thereby claiming virtually absolute rulership of the world.

But most ‘sane’ people ‘pooh pooh’ the very idea of lone psychopaths…not that this individual is operating alone; there are indeed accomplices, plenty of them.

But I believe I proved beyond a doubt the other night that you are all ‘certifiable’, so bear with me as I share my ‘delusions’ with you.

This crap doesn’t happen in a vacuum and ‘somebody’ has to be driving the whole screwy arrangement…somebody so far out there they redefine the term psychopath.

Thanks for letting me inside your head,

Gegner

A 'run' on the Dollar...

Greetings good citizen,

As the nation that has ‘dominated’ the rest of the world through both our military might as well as our dominance of the financial markets, the people ‘managing’ our collective future have screwed up big time.

The ‘responsibility’ of maintaining the global reserve currency has invariably lead to the defacto establishment of a global ‘empire’ that nobody, to-date, has been able to handle.

Which brings into question the notion that any one ‘national’ currency can serve the economic needs of a growing world.

Until a ‘dollar’ is a dollar, no matter where it is coined, becomes a reality, the ‘manipulators’ among us will continue to exploit the ‘differences’ between currencies to their own advantage.

While the ‘rest of the world’ would benefit greatly from a ‘universal’ dollar (well, it would once we eliminated dictatorial regimes that put the leader’s well-being ahead of the people of those nations.) The above ‘rumblings of the ground’ do not lead in that direction.

So we arrive at a situation where we examine the recent push to ‘marginalize’ the US dollar as the world’s reserve currency.

[Tonight’s offering was ‘lifted’ from Jesse’s Crossroads Café.]

BRIC, SCO Discuss Super-Sovereignty Currency, USD Alternatives

By Scott Zhou
June 16,2009
Shanghai

China continued to consider a “super-sovereignty” currency among the countries of Shanghai Cooperation Organization (SCO), an intergovernmental mutual-security organization that met today in the Russian city of Yekaterinburg, in the Urals at the division of Asia and Europe. Members include China, Kazakhstan, Kyrgyzstan, Russia, Tajikistan, and Uzbekistan, with India as one of its four observers.

Right after the SCO meeting, the BRIC country’s (Brazil, Russia, India and China) leaders met formally for the first time. It is not merely coincident that three of them have expressed a desire to adjust their foreign exchange reserve portfolios by reducing the share or volume of US dollar assets.

China has just halted the increase its holding of US Treasury debt. [Not a good sign.] By the end of April, China held $763.5 billion of it, a fall of $4.4 billion, month on month, the first time China has reduced its Treasury holdings. Since May, 2008, China has increased its holding by $260 billion.

Inside China, USD is a hate-more-than-love story. Analysts have long argued that China should be very cautious on buying US government bonds since dollar is bound to weaken. Others hold that US treasury debts are still the best and first choice for China's near $2 trillion foreign exchange reserve.

In March, Madam Hu Xiaolian, the chief of China's State Administration of Foreign Exchange and a deputy governor of the People's Bank of China, China's central bank, said that investing in US national debt is an essential part of China's reserve management. But while continuing to buy US national debt, China is concerned about the risk of the fluctuation in value of its assets. [With good reason, US ‘five and dime’ stores have morphed into ‘Dollar’ stores…because a single nickel or a dime will buy you precisely squat!]

China has announced that it would buy up to $50 billion in bonds issued by the International Monetary Fund (IMF). Meanwhile, Russia and Brazil have said they are planning to buy up to $10 billion in IMF bonds, which would mean selling Treasury bonds. India has expressed the same interest. In April, China, Russia, and Brazil all reduced their holdings of US treasury debt.

China now believes that a long-term dollar decline is inevitable, and the risk to the value of its $2 trillion foreign exchange reserve has become realistic, if not imminent.

China has been a huge beneficiary of the order of the world economy and a monetary system with the US dollar as the reserve currency. China's economy has been anchored by a stable dollar exchange pegged by China's currency, RMB.

But the financial crisis has given China a wake up call that the present monetary system is not sustainable, and neither is China's foreign exchange regime and mode of economic growth, which has been largely based on relentless exporting.

What, then, is the role RMB can play in the future? Russia has been urging China for years to settle their bi-lateral trade in their respective currencies. Brazil intends to trade with China by RMB and the real. Recently Russia suggested making RMB convertible to become an international reserve currency.

China can not challenge US directly. The BRIC summit is a convenient platform for China and the other BRIC powers, set to become the 4 of the 6 largest economic entities by 2050, [This makes the astounding assumption that the US economy will somehow survive.] to put a bit of pressure on the US. Held before the first China-US Strategic and Economic Dialogue in late July in Washington DC, the BRIC summit may give China some leverage in dealing with the US.

Russia is ready to use its exchange reserve to buy securities issued by BRIC countries. In return, Russia hopes the others will be willing to buy financial instruments issued by Russia. The leaders discussed increasing of the share of settlement currencies for trade among them. They also discussed adjusting their reserve assets portfolio in a coordinated way.

At the SCO meeting held just before the BRIC summit and attended by China, Russia and India, China proposed to research the feasibility of using a super-sovereignty currency among SCO member countries.

Kazakhstan president Nursultan Nazarbayev proposed that trade among SCO countries be settled by currencies of member countries. He also suggested that a super-sovereignty currency used inside the SCO eventually become a SCO reserve currency. Russian President Dmitry Medvedev also supported the idea.

Between the croaks of the ‘de-flationists’ and the renewed shrill cries of the ‘hyper-inflationists’ lies the much forewarned about issue of a ‘run’ on the US dollar.

Even today ‘well-placed’ sources insist that a run on the dollar is ‘impossible’. (Mostly because there isn’t another currency in position to take the dollar’s place…or so these experts think.)

Aside from the issue of other central banks avoiding buying additional US debt, we have a different problem, one that has been brewing for quite some time. One we see has finally surged to the forefront of our collective ‘creditors’ agendas.

Should they sell their dollars for whatever they can get for them in one big rush, or should they slowly try to use them to buy as many ‘hard assets’ as they can before it reaches the point where no one will accept them?

Did any of you notice that these large creditor nations aren’t rushing to convert their dollars into Euros? Why do you suppose that is? Could it be because the Euro-zone consumers are as heavily indebted as US consumers are?

The ‘jig is up’ good citizen, the Bric nations know they won’t be selling very much into either the US or the Euro-zone as long as the consumer is ‘down for the count’.

It’s a fool’s game to keep buying the debt of bankrupt nations when the likelihood of default is looming so very large on the near horizon.

Does anyone remember my warnings of collapsing supply lines? Don’t look now because here it comes!

And no, I’m not talking about tomorrow or next week, they’ll hold off until near the onset of winter…then we’ll get hit with suddenly worthless currency.

Will it happen ‘overnight’? Yep, pretty much. It will be like the gas lines of the mid-Seventies, one-day everything was fine, the next, there was no gas!

For a more recent example, it will be like August 2007 when, just as suddenly, the engine of our economy seized solid after nobody wanted to buy our ‘primary export’ of financial derivatives.

Worse, if the ‘government’ wasn’t buying derivatives via Fannie & Freddie, no one would be buying them now either because they don’t trust us!

Which is another way of saying that our economic engine doesn’t exist and hasn’t been replaced.

What does the US make? Debt. How does the US pay its debts? With more debt!

All so a few could be rich…

Thanks for letting me inside your head,

Gegner

Overhaul

Greetings good citizen,

I was perusing The Automatic Earth last night and came upon this encouraging post that we might classify under the heading ‘better late then never’

Summit hears calls for new US economic strategy
By Rob Lever – 11 hours ago

DETROIT, Michigan (AFP) — The United States needs a clear strategy to remain a competitive leader in industry and other sectors of an economy in crisis, business leaders told a national summit that opened Monday.

The three-day summit in Detroit, Michigan aims to develop a national consensus on policies for technology, energy, environment and manufacturing.

"Our goal is to develop a to-do list of actions that will revitalize and revive our economy," said Bill Ford, executive chairman of Ford Motor Co. and co-chair of the summit's opening session.

Ford said the global economic crisis "increases the urgency to begin a national dialogue on the economy."

The meeting reflects growing momentum for the United States to formalize an "industrial policy" similar to those used in Asia and elsewhere to help nurture businesses in a tough global environment. [We could ‘solve’ this problem in a heartbeat by putting an end to ‘currency manipulation’, the driving force behind the ‘cheaper there’.]

The summit also seeks to define policies on energy, environment and technology.

Although industrial policy is often equated with protectionism, Ford and other speakers said the US needs to be tougher with trading partners to maintain prosperity.

"Having no policy is a bad policy," Ford said.

"Other countries understand this and they work hard to maintain a strong industrial base," he said.

"They bend or even break the rules to maintain a competitive advantage over the us. We need to do something different." [Snip]

I abbreviated this piece in the interests of ‘fair use’, TAE may be able to get permission to re-print copyrighted material like this but, me…probably not so much.

While I’m not as careful with stuff taken from the NY Times (it’s already ‘old news’ by the time I ‘Gegnerize’ it) obscure stuff like this post you have to be careful with.

What caught my eye here is the ‘recognition’ that there is no such thing as a viable economic model that works off of imports.

For some bizarre reason, the economists that sold our (idiot) legislators on the ‘benefits of globalization’ neglected to mention consider you need to have something to ‘trade’ besides paper with numbers on it.

I was listening to an op/ed piece on the radio where the commentator was ‘defending’ globalization via the price of steel (It was an attack on the ‘buy American’ clause in the stimulus bill.)

Let’s back up a couple of steps and ask a few serious questions that never seem to occur to these ‘educated idiots’.

Where does the components to make steel come from (steel is alloyed iron.)

You mine them from the ground….for free! It doesn’t matter where you dig them up, it’s the same stuff here as it is in Russia. The ‘price difference’ is totally ‘artificial’, it is the product of currency manipulation.

Yet this clown prattled on about how ‘uncompetitive’ it would be to use ‘more expensive’ domestically produced steel than ‘cheaper’ (but imported from thousands of miles away) foreign steel.

Does this make sense to you?

Let me roll out another chestnut I haven’t used in a rather long time…’whosoever controls (the ‘value’) of your currency, controls you.’

Understand good citizen that the ‘value’ of one’s currency is highly ‘subjective’, very much like the ‘hedonics’ used to boost GDP or to ‘wish away’ inflation.

What’s the ‘fall out’ of this practice? It’s the conundrum of being able to buy Chinese Yuan 6 or 7 for a dollar but each of those Yuan has 4 times the purchasing power of the dollar!

Do you think they’ve got that ‘valuation’ correct?

Naturally, this opens up a huge ‘slippery slope’ of who gets to make these evaluations and why they aren’t tried for treason in their respective nations…

Perhaps more disturbing is the fact that these ‘valuations’ are performed almost exclusively by London…and…Wall Street. Which leaves the even more disturbing question of how our moronic government let’s these self-serving bastards get away with this shit?

(Who is protecting 'our' interests because it definitely isn't our 'bought and paid for' elected officials!)

Which brings us to another even more disturbing conundrum, should we allow the same people/agencies that let the banking community run rough-shod over the livelihood of workers around the world continue to ‘supervise’ these entities?

They haven’t done it for more than thirty years so what proof do we have that they’re up to the job now?

Short answer: none.

Just a few short steps away is yet another indisputable truth…we can’t reform the banking system without first reforming the government. It simply ain’t gonna happen.

Like Mr. Ford in the above article says, it’s time this nation had a long, hard look at itself and joins in a conversation about how we will go about repairing our nation.

Thanks for letting me inside your head,

Gegner