Dueling Realities

Greetings good citizen,

Really should have had this done earlier but other matters pressed. In case you didn’t notice we had another ‘sideways’ day in the markets today, after they headed for the basement first thing.

Equally as disturbing is how Europe was having an absolutely horrible session…until (you guessed it) the NYSE opened!

Speaking of contradictions and other nonsensical happenings, the headlines say the Mittster is on the attack after the latest economic news broke…

Could numbnuts be talking about this headline?

U.S. Economy Grew at 2% Rate in 3rd Quarter
By NELSON D. SCHWARTZ

More positive consumer activity and a healthier housing sector outweighed the effects of the drought, caution on the part of businesses and weaker exports.

Maybe Mitt is championing those downtrodden exporters, you know the guys who send work overseas? (because besides raw materials and food, the same products third world countries export, we don’t export Jack…unless you count our fucking jobs, which are exported wholesale to the lowest bidder thanks to assholes like Romney!

But that’s not what the corporate owned media reports. No, instead we get stories like this:

Olympics and Asset Sales Help Lift Comcast Profits
By BRIAN STELTER

An increase in the average payment for a video subscription — to more than $150 month — helped the cable company offset a decline in the number of subscribers.

People cutting back on expenses because their bosses can’t find it in their hearts to give out raises will commonly cancel their cable service.

And nearly doubling their fee is how the cable company keeps their shareowners smiling!

Don’t you wish YOU could do that to your employer?

But if you tried it you probably end up like these guys:

Spain’s Economic Misery Hits New Threshold
By RAPHAEL MINDER 3:20 PM ET

Unemployment passed 25 percent, a picture so dark that it could help Prime Minister Mariano Rajoy in his case against more austerity.

Naturally good citizen, the problem isn’t high unemployment in Spain; it’s intolerably high unemployment across all of Western civilization!

But that isn’t a problem the further East you go:

Billions in Hidden Riches for Family of Chinese Leader
By DAVID BARBOZA

It is unclear how much Prime Minister Wen Jiabao, who has staked a position as a populist and a reformer, knows about the $2.7 billion in assets his family has amassed.

If that same story were unfolding here in the US the politician in question would remain adamant that they knew NOTHING about any, er, ‘self-enrichment’ and power brokering that is performed by relatives of the powerful around the world…because we don’t have laws that prevent it.

That is why the global economy is fucked too! The corruption is ‘universal’ and because of that the collapse will be total because the whole system needs to be replaced.

And of course we have the issue of what do we replace it with?

Should we try communism, maybe hoping to get it right this time?

Um, no…I’m pretty sure communism won’t work…because it fails to address the weakness inherent in money.

So, should we try capitalism again, honestly this time?

Fat fucking chance. Honest capitalist is the very definition of the term ‘oxymoron’.

Why don’t we try that anarcho-syndicalyism thingy?

Because they don’t do anything about the printing press either!

I know, let’s return to the ‘gold standard’!

Which way do you want to ‘dial it in’? Do we make gold worth a billion dollars an ounce or do we go back to $20 an ounce and start going in the other direction with fractional cents to make what we’ve got stretch far enough?

Naturally, this too will, er, ‘finance’ crime in all of its myriad forms. There is but ONE viable answer and that, good citizen is A Simple Plan which has NO ‘tangible’ currency.

It also makes it illegal to place anyone in debt…which is the primary basis for coercion. If somebody breaks your favorite toy, go get a new one…and maybe pick up a back up while you’re at it!

Shit happens and you can’t live life holding others responsible for every tiny thing that goes wrong!

Just like the idiot practice of awarding somebody money when they suffer a loss. Money doesn’t bring the lost item back and, if it can be replaced with money then it wasn’t ‘lost’ in the first place.

No cash is a small price to pay for a world free of crime and corruption, not that the chiselers among us won’t try to make you ‘pay’.

And that’s why YOU will be granted an avenue of recourse that has long been outlawed.

If you want to know what that avenue is you’ll have to look it up.

Thanks for letting me inside your head,

Gegner

Doin' Mom proud!

Greetings good citizen,

I’m the wrong gender to be contemplating the ‘meaning’ behind Mother’s Day, although if the ‘statistic’ I read yesterday is correct, the $1.9 BILLION spent on ‘flowers for mom’ is all the ‘meaning’ commerce needs to flog this Sunday ‘non-holiday’.

You can bet psychologists and socioligists have a field day batting around the ‘value’ of holding forth a ‘day of celebration’ for this institution or that cherished ideal.

Understand, commerce has dug through the dung heap of human emotion and exploited (or at least attempted to exploit) every one they could find.

But we digress (as usual.)

Back to the ‘Destruction of our civilization!’

In keeping with ‘tradition’ (this blog has been around for a while) we will visit one of our favorite sources for economic input.

No. 367: April Labor Numbers, Money Supply, Dollar and Precious Metals
Subscription required May 6th, 2011

• Increasingly Misleading Seasonal-Factors Continued to Pummel Accuracy of Jobs Data • April Household Survey Showed 190,000 Employment Drop
• April Unemployment Rates: 9.0% (U.3), 15.9% (U.6), 22.3% (SGS)
• Broad Money Supply Gains in April
• Underlying Inflation, Dollar and Precious Metals Fundamentals Unchanged [More; but you need to subscribe to see it.]

Um, if we start ‘from the top’ we encounter the wildly inaccurate unemployment data the government uses to determine whether or not they need to ‘extend’ benefits beyond the ‘standard’ 26 weeks.

This summer will mark the 4th year since the crisis began…and we are supposedly going into our 2nd year of ‘recovery’.

But my point would be that the only two numbers that matter are the two you never see published. One is the current size of the, er, ‘working age population’. This number stands, as of last month, at 239 million. Then we look at the official size of the ‘civilian workforce’, which currently stands at 139 million, we see a ‘gap’ of 100 million workers.

Understand that the 139 million ‘includes’ the 13.8 million people currently drawing unemployment benefits! So if we look at how many ‘jobs’ there are in the economy we arrive at 126 million (roughly.)

Hard to say what’s more disturbing, the fact that the size of the civilian workforce has grown by almost 20 million since the last time I looked or the fact that our system of commercce basically tells half of us to go suck our thumbs?

Now we need to come back to another significant ‘datapoint’; the one where there are six applicants for EVERY open job.

Now, remind me, where, precisely, is that ‘recovery’ they keep babbling about?

Not for nothing good citizen but where do any of you think this is headed? What do YOU suppose the ‘logical outcome’ of this sort of…well, economic collapse (for the lack of a better description) will be?

And we’re not talking ten years from now and we’re also not talking ‘maybe’ here.

We’re talking this summer and that, my friends, is just WEEKS away!

Can they keep things ‘limping along’?

We’ll see.

Um, the second bullet point is a shocker because it is mentioned nowhere else in the corporate owned media…and sometimes the ‘difference’ between the household survey and the ‘birth/death’ model is debated for our benefit...

For some reason they chose to remain silent on the topic this month…probably too many other ‘contrary indicators’ to put up a spirited defense of the flagging economy.

So, the ‘wildly optimistic’ birth/death model says the economy added 244,000 jobs while the household survey says the economy lost 190,000. Is the ‘real answer’ somewhere in the middle?

How long do you think they can keep the ‘deception’ up?

It has been going on for years now, maybe decades.

And by this point in the game only the dumbest among us believe these so-called ‘statistics’.

The third bullet point is unsurprising considering April marks the (official) ‘end’ of ‘quantative easing’.

The final bullet point is a bit disconcerting because the erosion of our purchasing power will soon become a major factor in the coming economic meltdown.

Again, the ‘equation’ is pretty simple: when your income doesn’t meet your outgo working for somebody else becomes pretty pointless…worse, it is a waste of YOUR valuable time!

You can only afford to make someone else rich if the effort provides you with what you need to ‘get by’.

The ‘Kabuki Dance’ (of capitalism) is going to stop someday and when it does all hell is going to break loose! Many will die in the scramble that follows…your primary objective is not to be one of them.

I’m in the camp that says the dance will stop sooner rather than later. You have to decide for yourself whether or not the situation is, er, ‘salvagable’.

Under the it all ties in depending on how you look at it category, we have this piece from Ilargi to provide you with a ‘contrasting’ perspective.

Ilargi: There are two main stories going into the weekend: first, the US BLS employment report, and second, the Greek situation - German magazine Der Spiegel suggested Athens might want out of the Eurozone, and issue its own currency again.

First things first: when, as happened on Friday, stock markets rise while the official U3 unemployment rate goes up (to 9% in this case, U6 reached 15.9%), it's obvious that there's a huge disconnect between those same markets on the one hand, and Joe and Jane Main Street on the other. As usual, to know what really goes on, you have to look below the surface of the numbers. I thought I’d leave it at this, quoted from Mike Shedlock’s take:

In the last year, the civilian population rose by 1,817,000. Yet the labor force dropped by 1,099,000. Those not in the labor force rose by 2,916,000. In January alone, a whopping 319,000 people dropped out of the workforce. In February another 87,000 people dropped out of the labor force. In March 11,000 people dropped out of the labor force. In April, 131,000 dropped out of the labor force. The 4-month total for 2011 is 548,000 people dropped out of the labor force.

Many of those millions who dropped out of the workforce would start looking if they thought jobs were available. Indeed, in a 2-year old recovery, the labor force should be rising sharply as those who stopped looking for jobs, once again started looking. Instead, an additional 548,000 people dropped out of the labor force in the first four months of the year. Were it not for people dropping out of the labor force, the [U3] unemployment rate would be well over 11%.


Ilargi: Indeed, I’d venture that if you add in all those who’ve left the work force since 2008, you’d end up way above 11%. All in all, the total number of people in the working age population who are not in the labor force hit a new all time high of 86.248 million in April. And Wall Street likes that.

Um, I personally think it is unfortunate that Ilargi chose to quote that ‘rabid Libertarian’ ‘Mish’ as there is no ‘Libertarian solution’ to the current crisis.

Worse, the datapoints quoted are without reference points, rendering them meaningless.

You would have to go to the BLS report in question to make sense of the information.

But I’d opine the piddling monthly fluctuations don’t tell us much, the two ‘gross’ numbers I point to (the overall working aged population and the number of employed) tell you all you need to know.

And what do you ‘need to know’?

That our current system of commerce doesn’t ‘work’, nor can this be ‘fixed’ by re-arranging the pieces. Nothing short of a complete overhaul will rectify the situation and that complete overhaul starts with the government/legal system itself!

You have more ‘rights’ than our chiseling founders granted good citizen and its high time we stood up and claimed them!

Down with ‘wage slavery!’

Thanks for letting me inside your head,

Gegner

Intelligent vs Educated

Greetings good citizen,

Like a train wreck, it depends on which car you were riding in as to whether or not your world has already ‘crashed and burned’.

The part that sucks is the people who could least afford it were seated in the figurative ‘front’ of the train, so they continue to get bombarded by the cars crashing in from behind them.

Which is to say the ‘hits’ just keep on coming.

To give you an idea just how ‘slow’ this slow-motion train wreck is, my ‘car’ hit the proverbial wall in 2001 and I’m still ‘standing’ (in a manner of speaking.)

I am fortunate to have a spouse capable of ‘picking up the slack’…not that she’s particularly ‘happy’ about this turn of events.

But as you can see here, I am far from being ‘alone’ in having the ability to support my family stripped away from me. [Hat tip: Some Assembly Required]

Which returns me to the topic of what was on my mind when I awoke this morning to what sounded like a thunderclap.

Which is too point out that not all trips to ‘dreamland’ take us to the land of make believe.

And that perhaps is what was so unsettling about where my head happened to be at when I was so rudely awakened.

Dunno what I was, er, ‘dreaming’ about but I woke up thinking, “what use is intelligence (sic education) if you can’t use it?”

Take a good look at the ‘mess’ our civilization is and understand that there isn’t ONE, not one ‘decision-maker’ who doesn’t have a first rate education (which is to say a ‘sheepskin’ from a top notch school.)

What the fuck was the point? I’d dare say we’d have done, er, (figure of speech here) ‘just as well’ with a bunch of dropouts running things.

In fact, since the implication is that most people who can afford to go to Ivy League schools pretty much ‘buy’ their degrees, I’m probably not too far off the mark, don’t you think?

Worse, if you aren’t going to become a CIA/FBI/NSA ‘spook’ then you can attend a ‘technical college’ and train for what is basically an ‘entry level’ position in some of the lowest paying fields the ‘service economy’ has to offer.

‘One of’ being the operative words here. I’ll remind you again that if you work for a paycheck, regardless of how large it may be, you’re still A FUCKING PEASANT!

And since 99% of us fit that description, the idea is to make it ‘universal’.

Better for us all to be Indians than for half of us to be content to ‘pretend’ to be Chief.

More importantly, as society becomes more complex, ‘competency’ will start to be a real issue, (it already is!) We can no longer afford to hire ‘minders’ for overpaid incompetents.

Worse, the minders have to ‘work around’ their incompetent ‘superiors’, making them mostly ineffective…leading to the mess you wake up to EVERY FUCKING DAY!

The truly disturbing part of this whole situation is how the incompetent like nothing better than for you to remain as ignorant as possible of their bungling or that the situation could be considerably better managed!

How unfortunate is it that what you see is ‘as good as it gets’?

The job is theirs, they bought it fair and square!

If that’s not bad enough then we have this piece which makes us wonder if they are, er, eating their words?

Looks like ‘hyper-inflation’ is back on the menu, not that it was ever really off, it was merely ‘misinterpreted’ as ‘deflation’.

As Mr. Williams explains it, if the economy shrinks faster than the money supply, the end result is ‘hyper-inflation’.

Although we are once again confronted with potatoe/potato debate, if you end up in the same place does it matter what you call it?

With ‘the same place’ being defined as a situation where money becomes ‘virtually worthless’ because nobody has any. Which is another disturbing property of ‘a legal construct’.

Unlike money, resources are a ‘constant’.

Which is to point out that when ‘barter’ re-emerges it will be wildly popular with the ‘self-sufficient’ crowd, which is to say those ‘self-reliant, Libertarian types’.

Yes, the ‘not so intelligent’ crowd will once again fail to consider what they are giving up by abandoning a ‘medium of exchange’.

Can you say ‘healthcare’?

Who would have the time to pursue medical training if they also had to hunt and farm? You can’t barter from an empty cart…

Worse, who could afford medical treatment if all you had were a few animals and a small vegetable patch?

It’s a two edged sword, isn’t it? On one hand the ‘ability to pay’ isn’t there and on the other, the necessary support (drugs and medical tools such as tests and diagnostics) would also cease to exist if ‘money’ were abandoned.

How disturbing is it that without ‘abandoning money’ we are already facing a crisis centered on the ‘general inability’ to pay?

Which is our cue to don our double thick, screw down tin-foil hats as we zip across to examine the other side of the deeply disturbing ‘competence’ coin.

As I have pointed out numerous times, the ‘trend’ we are following is far too, er, mercenary to be mistaken for ‘incompetence’.

It certainly appears that our ‘best and brightest’ indeed know precisely what they are doing…they only want it to LOOK LIKE ‘incompetence’ so to better deflect suspicion from their decidedly disturbing goals.

There are a few ways to address the twin crises of Peak Oil/Peak resources but only ONE WAY to kick the can further down the road and that is to eliminate the, er, ‘surplus population’.

Let the supply lines collapse and BILLIONS will die in the ensuing, er, ‘confusion’.

Left to your imagination good citizen is whether or not YOU are considered part of the ‘surplus population’?

The answer lies in the paycheck, if you don’t ‘own’ an income stream, you’re ‘expendable’.

Thanks for letting me inside your head,

Gegner

Fog of War

Greetings good citizen,

It really is quite a show to watch as our nation is dismantled by the self-interested into little ‘fiefdoms’ that the perps will be both unwilling and unable to control.

Perhaps most curious is the failure to put an end to the blatant ‘pillaging’ of our economy.

The reason is even more disturbing…’we’ aren’t equipped to handle this kind of crisis. Our government was established on the premise that commerce would desire to flourish in the local marketplace.

We don’t have the tools (nor will we get them in time) to restore balance to our economy.

Left to our imaginations is whether or not our elected leaders are too stupid or if they are in fact too corrupt to perform the job they were elected to do? (Or is it a simple case of being ‘rudderless’, that they have been, er, ‘neutered’ by the self-interested and are therefore ‘unable’ to act?)

As I have opined previously, what is the point of even having ‘elections’ if the winner is forced to take their marching orders from the same, er, (corporate) ‘gatekeepers’?

How long do you suppose we can keep stealing from Peter to pay Paul?

It should come as no surprise to anyone that Republican governors are taking it upon themselves to reduce unemployment benefits (how long you can collect) to ‘save’ businesses from being ‘overtaxed’ (for throwing their workforce into the streets!)

Who are these psychopaths and how do they get elected to public office?

Sadly, only the owners of ‘the printing press’ (media) know who really ‘won’ a given election.

This is why I advocate the we abandon the practice of ‘electing’ legislators and vote directly on the law ourselves!

Of course, things would be ‘different’ under A Simple Plan.

Nobody would ‘own’ the media or any other avenue of commerce, they wouldn’t be ‘for sale’ (so they couldn’t be ‘held hostage’.)

NOBODY would be able to ‘sell’ anything to anybody because the ONLY way to get money would be to work for it (put in your time and collect a paycheck!)

It is essential to understand that the reason things are so screwed up right now is because money is being ‘abused’ in the worst possible way!

It is just as essential to understand that money is nothing more than a legal construct intended to RESTRICT ACCESS to high demand/perishable goods or services.

AND THAT’S ALL it’s good for!

The practice of putting a dollar figure on EVERYTHING (for the purpose of creating as many ‘income streams’ as possible) has produced some pretty tragic consequences/ outcomes.

That’s the ‘context’ in which you should read Mr. Krugman’s offering for today.

NONE of this should be happening, none of it!

But… sadly, it is.

When the Wall Street liquidity addicts get their daily fix from Bernanke, they can ignore the news from Portugal on sovereign debt default, and the other ominous warning signs in the financial and political systems.

It's a cynical game, in the vein of the financial fraud that has replaced an efficient capital allocation system in the US.

You will not hear economists talk about this problem, just as they did not discuss the pervasive fraud in the mortgage backed securities market before it caused a financial collapse. It is safer to explain what just happened after it is completely obvious to everyone, over and done. And yet they still call for the same old remedies, of either stimulus or tax cuts for trickle down effects, both pointless options when the system is broken.

The Fed and the Treasury think they can support the economy by keeping the stock market up. The wiseguys on Wall Street will continue to encourage and take advantage this policy error, transferring the wealth generated by debasing the public money into their own pockets, while the regulators are paid to look the other way. It is very remniscent of the failing Soviet empire and the rise of the oligarchs.

That is what is happening now. This is why gold and silver continue to rise despite the best efforts of the financial engineers to halt this 'alarm system.'

There is a day coming in the not too distant future when many will realize the situation as it really is, and then there will be a panic.

I take small comfort to see that I’m not the only one walking around with a bowl of vinegar under my nose…(figuratively speaking, I’m not nearly graceful enough to literally accomplish such a thing…)

It’s ALL relative…even though the following comes with a ‘shift mental gears with me’ warning…

NONE of the problems facing our civilization can be solved if we fail to restore ‘justice’, that ‘equal treatment under the law’ doctrine we’ve been trying to achieve for centuries now.

No irony should be lost on the fact we have failed repeatedly to even come close…nor should an be lost on how severely things have degraded since they stopped even pretending to care.

To which I’d add, where is your ‘God’ now you slimy cockroaches?

Bizarrely, the Bible Thumpers will point to today’s levels of, er, depravity and bemoan the lack of ‘piousness’ in our society (which is really a complaint that the ‘take’ from the collection plate is falling.)

I mention this because of the high likelihood that ‘fundamentalism’ will play a strong role in persecuting (read ‘execute’) anyone who doesn’t, er, ‘worship’ properly…

Like I said previously, anyone who claims to ‘speak for God’, put a bullet in ‘em!

Thanks for letting me inside your head,

Gegner

Casting stones....

Greetings good citizen,

Well, I guess the ‘thought experiment’ landed flat on its face…oh well.

For my next trick I am going to put you all to sleep in under thirty seconds…

Time me now because here we go!

Tonight’s offering examines the one sector of society that still has a strong, functioning Union…the public sector.

Yessiree Bob, whether you’re a teacher or you work for the highway department, chances are excellent that you are also a dues paying Union member.

And over the years your union has taken good care of you (although one could argue that the ‘kindest’ employer of them all employs you…the taxpayer!) [Better, while the taxpayer cuts your paycheck, unlike the private sector, you don’t answer to them! Your boss is a weasely politician and he doesn’t dare mess with you because of the grief the union can cause him!]

Um, by my calculations you should have nodded off by now so there’s no need to keep writing…

Hat tip: Cryptogon ]

Federal pay ahead of private industry

Federal pay has become a hot political issue in recent months because of concerns over the federal budget deficit and recession-battered wages in the private sector.

Federal pay has become a hot political issue in recent months because of concerns over the federal budget deficit and recession-battered wages in the private sector.

PAYCHECK

The typical federal worker is paid 20% more than a private-sector worker in the same occupation. Median annual salary:
Federal Private Difference
$66,591 $55,500 $11,091

Sources: Bureau of Labor statistics, USA TODAY analysis

By Dennis Cauchon, USA TODAY
Federal employees earn higher average salaries than private-sector workers in more than eight out of 10 occupations, a USA TODAY analysis of federal data finds.

Accountants, nurses, chemists, surveyors, cooks, clerks and janitors are among the wide range of jobs that get paid more on average in the federal government than in the private sector. [Hmmn…interesting place to set the bar, you’d think State workers would also enjoy an advantage over their ‘private sector’ counterparts.]

Overall, federal workers earned an average salary of $67,691 in 2008 for occupations that exist both in government and the private sector, according to Bureau of Labor Statistics data. The average pay for the same mix of jobs in the private sector was $60,046 in 2008, the most recent data available.

CHART: Federal salaries compared to private-sector

These salary figures do not include the value of health, pension and other benefits, which averaged $40,785 per federal employee in 2008 vs. $9,882 per private worker, according to the Bureau of Economic Analysis. [Um, excuse me? Does it look like the employer (you and me) is getting…er, ripped off? Understand, this is not the employee’s or even the Union’s fault…the INSURANCE COMPANY is the bandit here!]

Federal pay has become a hot political issue in recent months because of concerns over the federal budget deficit and recession-battered wages in the private sector.

Sen. Scott Brown, R-Mass., made federal pay an issue in his successful campaign to fill Edward Kennedy's seat and is fighting for a pay freeze. [Believe me what I tell you, Jerky ran the usual ‘vote for me, I’m a Rep…Independent!’ campaign which was virtually devoid of issues…he didn’t run on nothing except his military background and his Japanese pick-up truck…]

The federal government spends about $125 billion annually on compensation for about 2 million civilian employees. [Understand good citizen, Legislators and Judges make astronomical (compared to the private sector) incomes with benefits the average worker only dreams about!]

"The data flip the conventional wisdom on its head," says Cato Institute budget analyst Chris Edwards, a critic of federal pay policy. "Federal workers make substantially more than private workers, not less, in addition to having a large advantage in benefits." [Leave it to the Libbies to provide cover for the greedheads! (The Cato Institute is a Libertarian ‘think tank’ which is weird because there is no evidence to support the notion that libertarians actually think!)]

But National Treasury Employees Union President Colleen Kelley says the comparison is faulty because it "compares apples and oranges." Federal accountants, for example, perform work that has more complexity and requires more skill than accounting work in the private sector, she says. [One can only imagine it must take a considerable amount of skill to torture the economic numbers into the figures the government publishes…nobody is claiming that the pay differential isn’t ‘hush money’.]

"When you look at the actual duties, you see that very few federal jobs align with those in the private sector," she says. She says federal employees are paid an average of 26% less than non-federal workers doing comparable work. [Um, it is more than a little counterproductive to claim public sector employment is ‘more difficult’ than private sector employment due to all of those horny congress critters chasing you around! Apparently board level executives have been known to give politicians a run for their money when it comes to the sexual harassment of their employees!]

Office of Personnel Management spokeswoman Sedelta Verble, says higher pay also reflects the longevity and older age of federal workers. [Um, that’s just cruel! Rubbing in the fact that private sector employees have a shorter ‘shelf life’ than their unionized counterparts enjoy.]

USA TODAY used Bureau of Labor Statistics data to compare salaries in every federal job that had a private-sector equivalent. For example, the federal government's 57,000 registered nurses — working for the Veterans Administration and elsewhere — were paid an average of $74,460 a year, $10,680 more than the average for private-sector nurses.

The BLS reports that 216 occupations covering 1.1 million federal workers exist in both the federal government and the private sector. An additional 124 federal occupations covering 750,000 employees — air-traffic controllers, tax collectors and others — did not have direct equivalents, according to the BLS.

Federal jobs have more limited salary ranges than private-sector jobs, some of which have million-dollar payouts. [Um, it appears they are saying private sector employment ‘enjoys’ ‘million dollar payouts’…especially if you work on Wall Street.]

Key findings:

• Federal. The federal pay premium cut across all job categories — white-collar, blue-collar, management, professional, technical and low-skill. In all, 180 jobs paid better average salaries in the federal government; 36 paid better in the private sector.


•Private. The private sector paid more on average in a select group of high-skill occupations, including lawyers, veterinarians and airline pilots. The government's 5,200 computer research scientists made an average of $95,190, about $10,000 less than the average in the corporate world.

•State and local. State government employees had an average salary of $47,231 in 2008, about 5% less than comparable jobs in the private sector. City and county workers earned an average of $43,589, about 2% more than private workers in similar jobs. State and local workers have higher total compensation than private workers when the value of benefits is included.

Job comparison

Average federal salaries exceed average private-sector pay in 83% of comparable occupations. A sampling of average annual salaries in 2008, the most recent data:
Job Federal Private Difference
Airline pilot, copilot, flight engineer $93,690 $120,012 -$26,322
Broadcast technician $90,310 $49,265 $41,045
Budget analyst $73,140 $65,532 $7,608
Chemist $98,060 $72,120 $25,940
Civil engineer $85,970 $76,184 $9,786
Clergy $70,460 $39,247 $31,213
Computer, information systems manager $122,020 $115,705 $6,315
Computer support specialist $45,830 $54,875 -$9,045
Cook $38,400 $23,279 $15,121
Crane, tower operator $54,900 $44,044 $10,856
Dental assistant $36,170 $32,069 $4,101
Economist $101,020 $91,065 $9,955
Editors $42,210 $54,803 -$12,593
Electrical engineer $86,400 $84,653 $1,747
Financial analysts $87,400 $81,232 $6,168
Graphic designer $70,820 $46,565 $24,255
Highway maintenance worker $42,720 $31,376 $11,344
Janitor $30,110 $24,188 $5,922
Landscape architects $80,830 $58,380 $22,450
Laundry, dry-cleaning worker $33,100 $19,945 $13,155
Lawyer $123,660 $126,763 -$3,103
Librarian $76,110 $63,284 $12,826
Locomotive engineer $48,440 $63,125 -$14,685
Machinist $51,530 $44,315 $7,215
Mechanical engineer $88,690 $77,554 $11,136
Office clerk $34,260 $29,863 $4,397
Optometrist $61,530 $106,665 -$45,135
Paralegals $60,340 $48,890 $11,450
Pest control worker $48,670 $33,675 $14,995
Physicians, surgeons $176,050 $177,102 -$1,052
Physician assistant $77,770 $87,783 -$10,013
Procurement clerk $40,640 $34,082 $6,558
Public relations manager $132,410 $88,241 $44,169
Recreation worker $43,630 $21,671 $21,959
Registered nurse $74,460 $63,780 $10,680
Respiratory therapist $46,740 $50,443 -$3,703
Secretary $44,500 $33,829 $10,671
Sheet metal worker $49,700 $43,725 $5,975
Statistician $88,520 $78,065 $10,455
Surveyor $78,710 $67,336 $11,374

There are a few arguments going on here, naturally, the thrust of this article is that Federal workers are overpaid. (and have way better benefit packages than you’ll find in the private sector…below the glass ceiling.)

Oh yeah Bub, your ‘average’ (unionized) civil servant is a lot better off financially than their private sector counterparts…BUT the ‘crème de la crème’ of pay/benefit packages are still the exclusive domain of the private sector.

So once again we find the MSM using their ‘bully pulpit’ to rouse the rabble or worse, mis-direct their anger.

Not getting paid enough…whose fault is it? Your employer makes enough and to spare (and he gets his by denying you yours!) Like the old adage goes, ‘It’s not what you make, it’s what you keep.’

We could look at this article as an example of what workers in the private sector ‘should be’ making, but their bosses aren’t being held accountable.

This is why employers HATE unions…because unions hold employers accountable. If it weren’t for our ‘elected representatives’ selling our unions out, we’d still enjoy a vibrant, thriving economy.

Um, those who have betrayed us owe us a debt…and it will soon be time to collect.

Thanks for letting me inside your head,

Gegner

The Devil is in the Details

Greetings good citizen,

It is not uncommon for ‘like-minded’ writers to ‘echo’ each others point of view, which is to say tonight’s offering could be considered an ‘echo’ of last night’s post.

While last night dealt with the ‘breadth’ of the global crisis by looking at the slow motion/long term destruction of global civilization, tonight’s piece looks at a specific aspect of the crisis that has yet to be corrected, much less concluded.

As some of you may have noticed, I have taken to making my ‘arguments’ here in the intro rather than saving them for the end. It keeps the articles themselves cleaner and, mercifully, ends these missives faster than would otherwise be the case.

So…I’d once again caution you that many of the ‘dire predictions’ made by other writers should be tempered by the fact that ‘push’ most often is followed by ‘shove’ and it is all downhill from there. Meaning predictions that we’ll be saddled for decades with unmanageable debt should be tempered with the knowledge that this debt will ‘disappear’ once the money is no good.

Understand that money, along with the debts created by money, are entirely ‘conceptual’.

Not to put too fine a point on it but they don’t expect you to pay, they expect you to die!

Just a thought to keep in the back of our mind as you struggle to make sense of Ilargi’s main point.

March 3 2010: Swaps and Robbers

Ilargi: First off, apologies for the publishing hiatus, dear ones. Getting flooded and swamped out will do that to you. I never before spent time in an officially declared catastrophe zone (one notch over emergency, if I’m correctly informed} but I did so over the past few days in French Bretagne, or Brittany for those English readers who are spelling-challenged (there seem to be many of them around here). I’m on a tour, if you hadn’t noticed yet, of TAE readers who had invited me over the past two years. Some, if not all, of them now live to regret their promises.

But so anyway, down to business: swaps. Over the past few days, a number of opinions on them appeared. None too positive, mind you. But what are they worth, both the opinions and the swaps themselves? Let’s look at the short and curly wild boar sort of approach, why don’t we? Since in the end, no matter how complex instruments may be, their fall-out will always be as simple as it is dirty, and it will be those who don’t know CDS from DVD’s who are most affected, not the "brilliant" minds who created the stuff in the first place.

And, to add another chapter to the peak oil versus finance crisis parable, maybe understanding the way CDS have perverted our economies will make people see why peak oil has and [typo?] had nothing to do with our present economic downfall. Not that I hold out much hope, mind you; I sometimes think I’m talking to a crowd comparable best to the Red State parochial faithful, where in the end and down the line G-d does it all. [Consider yourself duly ‘slapped’]

However, I still think that once you start to comprehend what the derivatives markets, and I’m singling out CDS for the purpose, have unleashed into our daily lives, aided and abetted by our very own governments and representatives (think about that one last time!), who find much easier "value" in any sort of program that makes them look better today instead of tomorrow, you can leave that whole peak oil notion behind and focus on Wall Street. [Um, logically, CDS and the failure to regulate them contains zero ‘political capital’ beyond the ‘gratitude’ of Wall Street, which manifests itself in ‘campaign contributions’.]

Unless, of course you think Wall Street bases all of its decisions on peak oil. It doesn't. It’s the fact, instead, that it’s become one giant casino that is responsible for foreclosures, lay-offs, bankruptcies and the even graver consequences we have yet to witness. Our so-called leaders society has gambled itself away, literally, and that is so hard to understand I can't blame anyone for not catching on within the first five minutes. Perhaps once speculators force entire countries to their knees, it will become clearer.

Credit Default Swaps, as they are and stand, have the potential to bring down entire civilizations, and they will too, just to prove their point (and mine). It’s unbelievable to the innocent eye that after the collapse of AIG, the CDS market wasn't ostracized and burned at the stake. Unbelievable, that is, until you realize who's really in power in our societies. If you allow bets, wagers, in your society whose total monetary value adds up to many times the entire world’s GDP, you assure two certain outcomes: First, that these bets will bring down your society at some point and in some way, and: Second, that the people in charge of the bets will take over power until the house comes crashing down. What power does Washington have, with annual US GDP at $14 trillion, while JPMorgan’s derivatives desk has 6 times as much outstanding? When the total derivatives market has numbers like $1 quadrillion attached to it? And then we, the people, hail the winning bets, and bail the losing ones? There’s no way we can win this one. [Nor will it ‘end’ this way, like I say above, you aren’t meant to pay, you are meant to die! They just can be that ‘open’ about their motives…]

It’s like we’re all in the hands of the acid hippie who climbs up to the rooftop convinced she can fly. Feeling good, feeling great and then ..... well, not so much.

Yes, banks can bring down societies, simply because they can control them. And that’s what we’ve let them do. [It’s what our fucktard ‘elected representatives’ have failed to do!] And we’ve let them make us think we were far richer than we are, which got them into making us spend much more than we ever had. All this has perverted our economies, and our lives, to a far greater extent than we presently realize. But the bill is coming due, and you're not going to like it. [This is an extremely inaccurate picture of how it actually went down…although it is an honest interpretation of the ‘official’ media version…]

Here are three views of credit default swaps, by Gretchen Morgenson at the New York Times, Wolfgang Münchau at the Financial Times, and Ann Pettifor at the New Economics Foundation, from which I extracted bullet points. I hope they will give you a better understanding of what’s involved, beyond what I personally have to say. [The ‘bullet point presentations’ are very good, you should ‘click through’ and give them peek.]

There’s going to be lot more to talk about on this topic going forward. A good friend of mine suggested that CDS were created for the specific purpose of avoiding regulatory reserve requirements, both for financial institutions and for countries (Greece!). That’s certainly an interesting point, which I’ll get back to.

Basically, the bullet point presentations leave you wondering just how corrupt the political system is. (Since it is a personal ‘pet peeve’, I endeavor not to ‘blame society’ for the acts of a few reckless individuals…this is why I avoid phrases like ‘our’ political system, it is no more ‘ours’ than it is the Martians!)

Speaking of ‘political systems’ I stumbled across this succinct epilogue to today’s post over at ‘cynical tendency’…

We do not simply need a new government, we need a new constitution, a new electoral system, effective means of exercising choice, reliable access to sound information, breaking up the London Cronygarchies and the will not to change Hardy for Laurel but to radically reorder our chances to control our own futures.

It is observations such as the ones made here by these two writers that make you wonder why we aren’t deep in earnest discussion regarding the ‘disposal’ of the current regime and what to replace it with.

While it is not ‘Ideal’, I suspect we’ll have to tackle these two related problems…individually. First the overthrow and then the replacement. The trick will be keeping the new system ‘clean’.

This is why I designed ‘A Simple Plan’ to be self-reinforcing, it needs all of its parts to operate properly.

Thanks for letting me inside your head,

Gegner

No longer a 'viable entity'

Greetings good citizen!

I have many times pointed to 'currency manipulation' as the principal cause of the destruction of our economy.

Do you know why I make such an outrageous claim? I make it partially because the people living in the 'cheaper there' should be dead, but that's only the half of it.

Letting the bankers play both ends against the middle is how the economy crashed and burned...note I use the present tense...the economy IS gone, it's 'cooked' and there is no 'bringing it back (although that's not what dopey thinks. Who is 'dopey'...you'll see.)

On the other hand, I learned something from this piece. I learned the importance of the gold standard and why the global economy 'turned to shit' once the 'gold standard' was, er, 'abandoned'.

Without the gold standard (everybody's money tied to an 'agreed upon' standard) Bankers were free to 'assign' different values to different nation's currency, where they proceeded to use those 'non-existent' differences to make themselves a ton of money!

The 'screw-job' here is a pig is a pig and a duck is a duck and a buck is a buck no matter where you find it, and they're all priced by the pound for the consumer's convenience. A pound of chicken in Beijing is identical to a pound of chicken in Berlin, which is a carbon copy of a pound of chicken in Bayonne (N.J.,USA)

To an extent, food is better than a 'gold standard' because we all need to eat but we don't all need gold. In fact, nobody would die if they never in their entire life so much as laid eyes on gold...that's how 'unnecessary' gold is. You can't say the same thing for food, and the fucktard bankers know this.

YET, I spend on food each week what the average Chinese worker earns in a month! How do you suppose THAT works? One of us is getting 'ripped off' and guess who it is?

Do the math, it's me! (and by extension, you!) Not only are we paying many times what the Chinese worker pays for food but we are losing our jobs to them in the bargain.

How do you like your 'Wall Street Banker' now?

Anyway, onward with tonight's offering

“The US is not a viable concern anymore” – Duncan
Posted by Izabella Kaminska on Feb 17 13:45.


FT Alphaville spoke with Richard Duncan, partner at Blackhorse Asset Management and author of The Dollar Crisis on Tuesday, regarding his new book The Corruption of Capitalism. And while he is pretty pessimistic on the US, Duncan says there is a way out if policymakers make bold decisions. [I completely agree, however, you’d be hard pressed to call what comes out on the other end ‘capitalism’.]

But first some background. In the Dollar Crisis, published in 2003, Duncan explained how the collapse of the Bretton Woods system in 1973 was always going to lead to a global financial crisis due to the trade imbalances it encouraged and created. Based on the premise, Duncan successfully predicted the subprime problem, the downfall of government sponsored agencies as well as the banking crisis (and related bailouts) we’ve all — seven years on — come to know and love. [Most of us who have been predicting crisis are being ‘exonerated’ although most of us had the timing way off.]

Simply put, according to Duncan, the breakdown of the gold standard allowed too much paper-money to be created in the US. This de facto funded the US deficit, which respectively fuelled a savings glut in Asia. That inevitably drove dollar inflows back into the US — which themselves, over the course of a four-decade period, fueled a global credit bubble of simply gargantuan proportion.

In Duncan’s words, the collapse of Bretton Woods represented the moment “capitalism became corrupted by government debt”. From that point on “US policymakers abandoned the core principles of economic orthodoxy: balanced government budgets and sound money”. [Open for debate here is who the government acted on the behalf of, it sure as hell wasn’t in the best interests of the ‘non-investor, working class!’]

One chart reflecting the situation well according to the author is this one: [click link to view chart.]

In Duncan’s eyes it clearly shows the breaking of the global financial system’s imbalanced back.

To his frustration, though, it’s not a point that’s been grasped by policymakers yet. Policy response if anything has been ill-fitting, meaning the world’s economy is on life support — at best. As he explained to FT Alphaville:

Last year the US economy shrank by 2.4 per cent. But the budget deficit was 10 per cent of GDP. Without that deficit spending, the economy would have shrunk by at least 12 per cent, i.e. -2 per cent plus -10 per cent. Even after that deficit spending, the unemployment rate is 10 per cent, interest rates are zero, and central banks around the world are printing enormous amounts of paper money to prevent economic collapse. This policy response is supporting the global economy but it has not even targeted the structural flaws responsible for the crisis.

The point being: the world’s largest economy and engine of global economic growth — the United States — is simply not a viable concern any more. As Duncan explained it:

The country is de-industrializing because wages in the US are up to 40 times higher than those in developing countries like China. [This is due to currency manipulation, which starts where? With BANKS of course!] Therefore, the United States makes very little that the rest of the world cannot buy somewhere else much more cheaply. [Understand, we didn’t price ourselves out of the market, the sleaze-ball bankers did it for us! How, by abandoning the ‘universal standard’ that gold provided.]

And so, like any troubled company, the US too must restructure itself if it is to remain operational, says Duncan. How it goes about it, though, will be crucial to its success. The best policy according to the author would be heavy government investment in so-called ‘future’ industries — everything from solar, biotech, nano-technology and so on. Trouble is, a move like that would take more government spending not less. [It would also be extremely ‘moronic’ if we fail to ‘re-anchor’ our/the world’s currency to a universal standard. This has become an exercise where the lesson is ‘not everyone who agrees with you has a fucking clue!’]

Duncan estimates some $3,000bn or so on top of the $10,000bn already estimated in deficit spending over the next 10 years would be needed to put the US back on top of the global industrial game in this way.

Full stop! I have mentioned before that I usually select the day’s offering by the ‘headline’ more so than the content, which I read in detail as I ‘highlight’ the writer’s main points.

Sometimes, and this happens to be one of them, you agree with the headline but hardly any of the rest of what THE CLUELESS BASTARD has to say!

What do you suppose adding three trillion to an already ‘towering inferno’ is going to accomplish? Perhaps more amazing is how these clueless bastards ignore the present crisis in Zimbabwe!

Ilargi enlightens us to this ‘more better’ syndrome (albeit not very clearly.) So I’ll ‘recap’ here in a nutshell, when you’re drowning, more water doesn’t help anything!

That sailed right over roughly 50% of your heads, let’s try again.

A quarter buys you a chocolate bar…so two quarters would buy you two chocolate bars…except when there aren’t two chocolate bars to be had, there is still only the one.

This is the heart of the crisis, adding money doesn’t increase the amount of available resources, no matter how much money you add! (Governments around the world have been pumping trillions of ‘dollars’ into their economies without adding any corresponding ‘real wealth’, which merely ‘dilutes’ the value of ‘existing money’ and makes us all ‘net’ poorer.)

Are you working for nothing yet? Pretty much.

Back to the article…

The worst-case scenario, meanwhile, would be America turning into Japan while it attempted to do just that. On the flip side, it’s from Japan’s experience that valuable lessons could also be drawn. As Duncan explained (our emphasis):

When Japan’s bubble popped in 1990, the Japanese government’s debt to GDP was 60 per cent. The Japanese economy has been on government life support since then and government debt to GDP is now more than 200 per cent.

During the bubble years of the 1980s, a great deal of profit was made in Japan. That money was available to finance the expansion of government debt after the bubble popped. If it had not invested in government bonds it would have been destroyed, because there are no viable investment opportunities in a post-bubble economy. So the private sector has financed the expansion of government debt in Japan, and it has done so on concessionary terms.

The 10-year Japanese government bond yield is only 1.3 per cent. Now that the US bubble has popped, the US government will also be able to greatly expand its debt. But the lesson the US must learn from Japan is not to waste that money building bridges to nowhere, but instead to use the money wisely to restructure the economy to restore its viability. This global crisis will not end until the United States restructures its economy and restores its long-term viability. [What do you suppose the odds are of that happening quickly enough to save the doomed Boomers? What do you suppose the odds are that the Boomers will burn this clam shack to the ground?]

The consequences of a scenario where the US failed to respond effectively, meanwhile, would be grave indeed. Not only would the US slip into irreparable decline, according to the author, globalization would break down and export-oriented Asian economies could collapse. [Change ‘could’ to ‘would’, albeit the commies have a better chance of surviving a collapse than the predatory capitalists do...]

—

End of an era for Asia?

But if Duncan’s view here is bleak, it’s even bleaker on the China situation. As he stated:

…regardless of what happens in the US, China is facing a much more difficult future than is generally believed. Every boom busts. Every bubble pops. China will be no exception.

It is a serious mistake to believe China’s economy will continue to grow at 8 per cent or more for the next decade. That’s what people believed about Japan in 1989. Today, Japan’s economy is no larger than it was in 1993, if you don’t adjust for deflation. 2 per cent to 4 per cent annual GDP growth would be an excellent outcome for China over the decade, in light of the enormous capital misallocation that has occurred there over the past 10 years.

The economic crisis in the United States means Asia’s era of export-led growth is over. A protectionist backlash in the West will force China to substantially revalue the Yuan to avoid trade tariffs in the United States and Europe. Other Asian currencies will follow the Yuan higher. Finally, the direction of asset prices in Asia, and around the world, will be determined by the size and timing of successive rounds of government stimulus packages in the United States and within Asia. The global economy will remain on government life support for years to come. [When energy becomes scarce the ‘global economy’ (as it currently exists) will collapse, this is not a question of ‘if’ but ‘when’. (We will, as we have for centuries, trade worldwide. Most commodities will be sourced ‘locally’ as the return of wind driven ocean travel makes cargo hold space ‘pricey’ once more.)]

So that’s pretty much bad news for Asia under every conceivable scenario.

And if gold bugs were hoping for a call back to the gold standard, we would have to disappoint.

Duncan’s view is that we’re now beyond a return to a gold-pegged system. The best we can hope for in terms of restricting future imbalances is regulatory reform focused on keeping credit creation at banks in check. As he summed up:

…we’re simply not in the garden of Eden scenario anymore.

While I might be inclined to agree that we won’t see the ‘gold standard’ re-instated, there is no ‘cure’ for the badly unbalanced global economy if the currency situation remains…’open to banker’s interpretation’.

If they keep on ‘fudging’ the value of the dollar the way they have been, we will all walk off the job in disgust. There won’t be any point in ‘working for the man’.

It’s difficult to image something more terrifying than finding out your money is no good. If you don’t have something to trade, you are well and truly.

Thanks for letting me inside your head,

Gegner

In case you’re interested, here’s the official version of today’s market ‘bellyflop’.

Bark at the Moon...

Greetings good citizen,

A mad weekend on top of a madcap week! The markets are repeating last year’s ‘swan dive’, this time wiping out trillions of dollars of taxpayer bailout funds…so what did Mr. Bernanke ‘save’, exactly?

I guess it depends on your political leaning as to whether you interpret Frank Rich’s Open letter to the President as a guide to alter the course of this administration or a trip to the political woodshed…

Me, I think it’s too late to ‘save’ anything, the quicker we accept that life as we have come to know it is gone for good, the quicker we can adjust to the, er, ‘new normal’.

Left to our imagination is just whose ‘version’ of ‘the new normal’ will be inflicted upon us?

Which brings us to tonight’s offering for a rather grim look at one possible outcome…the Big D of dictatorship.

[Hat tip: Cryptogon ]

(Note: this is merely an excerpt from the full article, for the whole thing, click on the ‘tonight’s offering’ link.)

The people no longer have elected representatives; they have elected traitors.

The enslavement of the American people has been orchestrated by a pernicious Master Class that has taken the United States by the throat. This Master Class is now choking the nation to death as it accelerates its master plan to plunder the people’s dwindling remaining assets. The Master Class comprises politicians, the Wall Street money elite, the Federal Reserve, high-end government (including military) officials, government lobbyists and their paymasters, military suppliers and media oligarchs. The interests and mindset of the Master Class are so totally divorced from those of the average American citizen that it is utterly tone deaf and blind to the justifiable rage sweeping the nation. Its guiding ethics of greed, plunder, power, control and violence are so alien to mainstream American culture and thought that the Master Class might as well be an enemy invader from Mars. But the Master Class here, it is real and it is laying waste to America. To the members of the Master Class, the people are not fellow-citizens; they are instruments of labor, servitude and profit. At first, the Master Class viewed the citizens as serfs; now that they have raped and destroyed the national economy, while in the process amassing unprecedented wealth and power for themselves, they see the people as nothing more than slaves.

America’s public finances are now so completely dysfunctional and chaotic that something far worse than debt enslavement and monetary implosion, terrible curses unto themselves, looms on the horizon: namely, a Master Class-sponsored American dictatorship. [There’s a mighty HUGE assumption at work here; that a sufficient number of men with guns can be ‘bought off’ with empty promises of payment once the ‘chain of command’ breaks down…something that is ‘co-incident’ with paychecks that either go ‘boing’ or won’t buy you a single cup of coffee.]

Throughout history, the type of situation in which America now finds itself has been a fertility factory for tyranny. The odds of an outright overthrow of the people by the Washington and Wall Street Axis, or more broadly, the Master Class are increasing dramatically. The fact that so few people believe an American dictatorship is possible is exactly why it is becoming likely. [I have repeatedly stressed the ‘helplessness’ of our situation now that the ballot box, and by extension, the media can no longer be trusted.]

Dictatorships have blighted history and ruined lives since the beginning of civilization. In recent times alone, tyrants such as Hitler, Stalin, Lenin, Ceausescu, Amin, Hussein, Mussolini, Tojo, Kim, Pinochet, Milosevic, Tito, Batista, Peron, Pol Pot, Mugabe, Marcos, Somoza, Mengistu, Bokassa, Sese Seko, Franco, Ho Chi Minh, Mao, and Castro have power-sprayed blood onto the screen of time and ravaged mankind with murder, torture and human oppression. A full catalog of history’s tyrants would require a book of hundreds of pages. [That depends on who is pointing the finger…] In the past 100 years alone, over 200 million human beings have been annihilated by wars, ethnic cleansings and government assassinations. [Not only sad but true, and it is still going on today!] Just when we think that civilization has been able to rise above tyranny’s inhumanity and disgrace, a new dictator appears on the scene to start the process all over again. Every time this happens, fear and submission paralyze the vast majority of the affected masses, leading them to “follow orders” and lick autocracy’s blood-stained boots. [All it takes for evil to succeed is for honest men to do nothing; that’s where this gem of wisdom is most useful. If we fail to recognize tyranny, what else have we missed?]

History has proven to tyrants that oppression works. In fact, it is easy to control a populace, once you control the money, markets, military (including police), media and minions (the recipients of welfare, social security, free health care, government jobs and the like, who are dependent upon the state and likely to be compliant). This is exactly where the United States is today.

Recent American events paint an ominous picture of a Master Class that is now in total control.

When 90% of the American people vehemently rejected the $700,000,000,000.00 ($700 billion) TARP bailout plan, the Master Class put it on a fast track and approved it anyway. [As I have pointed out repeatedly, what were YOU going to do about it? You, who can’t even get your rep on the phone, never mind get him or her to read (much less answer) a letter/e-mail!]

When a clear majority of the American people said no to a government takeover of Chrysler and GM, the Master Class poured billions of taxpayer dollars into those corporate sinkholes and took them over anyway. [Again, what were you going to do about it? Work yourself up into a frenzy? Why? Why waste your time, it changes nothing…you have been ‘eliminated’ from the decision-making process…completely.]

When the people said no to multi-trillion dollar crony bailouts for the bankers and insurers whose corruption had caused global financial mayhem, the government pledged to those elite insiders more than $13,000,000,000,000.00 ($13 trillion) of the people’s money anyway. [Perhaps we should be asking, ‘What CAN you do?’…no irony should be lost on the fact that ‘legally’ your hands are tied, ‘voting’ gives your representative ‘carte blanche’ and there’s no way for you to revoke it! It may suck but that’s the way it was ‘designed’…and it wasn’t designed by ‘riff-raff’ like us, nor was it ‘approved’ by the ‘paycheck peasants’.]

When the people expressed astonishment and anger that Wall Street planned to pay itself record 2009 bonuses, in the midst of America’s worst-ever fiscal and financial crisis caused by them, Wall Street stuffed its pockets with taxpayer-supported bonus money anyway. [Seriously, what were you supposed to do about that? Go and burn their house down?]

When the people said no to a proposed $40,000,000,000.00 ($40 billion) bailout of AIG and its elite trading partners such as Goldman Sachs (an amount that subsequently exploded to $180,000,000,000.00+ ($180+ billion)), the Master Class went underground, covertly misappropriated taxpayer money and made the payoffs anyway. [This stank beyond belief…and Geithner was STILL appointed Treasury secretary! WTF!]

When Fannie Mae and Freddie Mac were nationalized at enormous taxpayer expense, the government approved $6,000,000.00 individual pay packages in 2009 (150 times the average American wage) for the CEOs of both failed companies anyway. [And once again we see ‘household income’ being passed off as ‘average wage’, which is really $30k FOR MEN, women make considerably less (and there are more of them in the workforce!)]

When a clear majority of the people said no to nationalized health care, even after being bombarded by a multi-million dollar, lie-drenched propaganda campaign designed to bamboozle them, the House and Senate passed nationalized health care bills anyway. [Um, once again we become aware of ‘factually challenged’ conservatism at work…a ‘clear majority of US citizens FAVOR universal, single payer healthcare…but ‘goldbugs’ are ‘cuckoo’ anyway.]

When more than seven million American workers lost their jobs and were subsisting on unemployment benefits and food stamps, federal government employees, who now earn DOUBLE what private sector workers earn, were given another round of pay and benefits increases anyway. [This last is perhaps the most dangerous sign that our civilization is out of control. Civil order will collapse if these people are not ‘appeased’. (When the cops walk off the job it’s ‘goodnight Irene!’)]

When private sector workers’ 401Ks and IRA retirement plans plummeted in value due to economic collapse and endemic Wall Street-orchestrated market corruption (including systemic front running, flash trading, naked short selling and other manipulations), government “defined benefit,” lifetime-cost-of-living-adjusted pension plans, despite already being underfunded by $2,000,000,000,000.00 ($2 trillion), were made richer than ever anyway. [???]

The long, shameful litany of events signaling the total divorce between the Master Class and the people of the United States doesn’t stop there. It goes on and on. [Much of this ‘angst’ comes from the fear goldbugs have that their ‘money of choice’ will remain ‘forsaken’ by those damn ‘tax and spend’ liberals…]

The message from the American Master Class to the American people is simple and clear: We Defy You. [Which is somewhat of an overstatement, what you’re really being told is ‘What are you going to do about it?’ because they already know the answer…nothing. They got away with it once (nobody was ‘punished for the first Great Depression) and they fully expect to get away with it again…the question is ‘will they?’ We have all of the ingredients in play for a repeat of ‘The Horror’ that swept the Monarchies of the world during the French Revolution.]

Governments that openly defy the people are either already totalitarian or in the process of becoming so. Monetarily, the United States clearly functions as a totalitarian dictatorship already, with a Federal Reserve that operates in secrecy, creates limitless amounts of debt and currency at will, and showers trillions of dollars upon favored Master Class insiders with zero transparency or accountability whatsoever. The Federal Reserve is so shameless about its dictatorial powers that it flatly refuses to provide details about multi-trillion dollar bailouts and rescues of privileged elites, in open defiance of Congress and the people. The fact that they get away with these blatant acts of defiance demonstrates the true extent of the Master Class chokehold on America. [And once again we are ‘powerless’ to do a single thing about this repeated failure of what passes for our ‘justice system’.]

If the Master Class were a benign despot and if its policies and programs actually worked, that would be one thing. But that is not the case. Rather, its programs are in a complete shambles.

Perhaps the most disturbing part about this ‘rant’ is the writer, like most ‘goldbugs’ is a, er, conservative (who genuinely loathes liberals.) This comes shining through if you read the whole article, although some of it is apparent in this excerpt.

Um just a little ‘historical note’ to give you an idea how the people of this nation were ‘taken for a ride’ from the get go. The fact that the Constitution was only ‘ratified’ by the legislatures of each state, back in a time when many key political positions were appointed rather than elected.

Sort of like the UN, you know? Can you say ‘stacking the deck? Because this is the same reason why we find ourselves powerless to stop our so-called ‘elected representatives’ from selling us down the river every chance they get!

Um, if any good is to come out of our current situation it is the fact that the ‘golden trough’ is finally, if only temporarily, going to ‘dry up’.

The trick, if we’re up to it, lies in insuring that the ‘pigs’ are prevented from claiming the trough as their own once again…even if that means we have to live without pigs.

Thanks for letting me inside your head,

Gegner

It's Magic...

Greetings good citizen,

If you recall, the markets dropped 100 points last Friday, mostly due to the sheer lack of evidence that the economy is recovering.

Today, the market tacked on 115 points…for no reason whatsoever.

How many of you believe that investors (other than the trading desks of the large Investment banks, who use their own money, even though they actually borrow for zero interest from the government, and the money is really yours…) are actively taking part in this seriously overbought market?

We all know if these bastards were required to comply with ‘honest’ accounting standards, they’d all declare bankruptcy tomorrow.

The only reason our banking system continues to tread water is due to the ‘fiction’ we call ‘money’. Which is to say we are currently engaged in an extremely dangerous game of ‘let’s pretend’.

Why is this dangerous? Because most of you don’t are unaware that your ‘debts’ only exist ‘on paper’. You’re being held out of the 40th floor window, which is actually only 2 inches off the ground.

You don’t really owe anybody anything…but they can’t afford to admit that. If they admit you don’t owe, they can’t justify helping themselves to the best while denying you your share.

They also can’t justify their lavish pay scale, which they use to justify their lavish lifestyle.

This brings us full circle to how banks can pay out more in bonuses than they earn in profits…how the fuck does that work?

Short answer, it doesn’t…but notice how nobody calls them on this?

Naturally, this is another ‘accounting problem’ that doesn’t have a simple answer…because mere mortals don’t comprehend ‘criminal math’.

It should tell you something when Mother Nature doesn’t understand it either, if you hear what I’m saying…

Understand good citizen we live I a world totally devoid of magic, this is proven to us over and over in many different ways…and it isn’t even such a bad thing, but.

When those who hold power over the rest of us start to insist that magic exists, that there are things they know which we are not intelligent enough to comprehend…er, that’s where the trouble begins, because there’s no such thing as magic.

More importantly, denying the incredible is what lays the foundation for a ‘just’ world. It forces us to stop accepting the ‘exceptional/miraculous’ when the true answer lies with the criminal.

Case in point, the ‘Goldilocks Economy’ wasn’t a miracle, it was in fact, criminal.

Uh, let’s give this subject a rest and move on with tonight’s offering which, like many of the stories I choose, went ‘unclaimed’ by a NY Times reporter and ultimately disappeared from the list of today’s news offerings.

Wary of Earnings Reports Wall Street Opens Softly

THE ASSOCIATED PRESS
Published: January 19, 2010

Shares opened quietly Tuesday after Citigroup’s fourth-quarter earnings report kept investors uneasy during this first big week of corporate earnings reports.

Many are wary about bank earnings after a disappointing report from JPMorgan Chase on Friday helped send stocks sharply lower. [Bizarrely, stocks recovered all that and more today, will this be credited to the sudden turnaround in the Cadbury-Kraft merger? Why would the market celebrate the consolidation of market share which can only result in higher prices?]

Citigroup’s earnings came in as expected. The bank reported a fourth-quarter loss of $7.6 billion, or 33 cents a share, with the bulk of that shortfall the result of expenses related to its repayment of $20 billion in government bailout money.

But the report, like JPMorgan Chase’s, reflected consumers’ struggle to repay their loans. Citigroup set aside $8.18 billion to cover bad loans during the quarter.

In early trading, the Dow Jones industrial average was about 46.8 points, or 0.12 percent higher, while the Standard & Poor’s 500-stock index was 5.1 points higher. The Nasdaq was up 17.15 points, or 0.39 percent. [All of the indexes went up but there isn’t a plausible explanation as to why, the few people who are doing well in this shitty economy aren’t generating enough business to ‘move the markets’, there are far too few of them. So is the explanation, dare I say it…magic?]

In Europe, the FTSE 100 was down 15 points, or 0.27 percent, while Germany’s DAX fell 13.11 points, or 0.37 percent. The CAC-40 was 0.37 percent lower.

News that Kraft Foods and Cadbury agreed to a $18.9 billion deal appeared to push Cadbury to the list of risers on the FTSE 100, gaining just under 4 percent to 837 pence a share, more or less in line with the offer price of 840 pence a share.

In Asia, Japan’s Nikkei stock average fell 0.8 percent to close at 10,764.90. However, Hong Kong’s Hang Seng was up 1 percent, to 21,677.98, while Shanghai index rose 0.3 percent, to 3,246.87. JAL shares, which have lost more than 90 percent of their value over the last week, tumbled 20 percent Tuesday to 4 yen before finishing flat at 5 yen. [This paragraph reads like a horror show but it wouldn’t be the first time the markets rose on absolutely hellacious news. You know, it’s magic! Perhaps the only thing you need to know is when the markets close higher, the shareowners finish the day richer, it’s really that simple.]

Wall Street was poised for a subdued start to the week after being closed Monday for the Martin Luther King public holiday.

In the run-up to Wall Street’s open, investors will be turning their attention to the next batch of fourth-quarter corporate earnings. Besides Citigroup, other big banks reporting earnings this week include Wells Fargo, Morgan Stanley and Goldman Sachs.

Over the week, 65 companies in the S.&P. 500 will post their results. As well as the banks, earnings from Google, I.B.M.. and McDonald’s will be closely monitored. [What do you suppose the ‘trend for the week’ will be, given the one thing you need to know?]

Over all, earnings have been fairly mixed, with upside surprises from the likes of Intel offset by disappointments elsewhere, most notably the aluminum maker, Alcoa. [Um, more than those two (besides the banks) reported? Who knew?]

Meanwhile, bond prices were mixed. The yield on the benchmark 10-year Treasury note, which moves opposite its price, was unchanged from 3.68 percent late Friday. The yield on the three-month T-bill, considered one of the safest investments, rose to 0.07 percent from 0.05 percent.

The dollar mostly rose against other major currencies, while gold prices also rose.

Odd observation to end the piece with, that the dollar-stock link is broken again. It’s a bit more ominous that the dollar-gold link is also ‘broken’, it is extremely ‘counterintuitive’ for gold to rise in tandem with the dollar.

The only logical explanation isn’t even remotely good. If gold gains while the dollar also goes up it means really means the dollar is falling against the price of gold…it’s hardly ‘good news’ that other major currencies are falling faster, our ‘purchasing power’ is still getting a haircut regardless.

It’s like asking which you’d prefer to get clobbered with, 250 pounds of feathers or 250 pounds of nails? The point isn’t feathers or nails, the point is it’s still 250 pounds!

Perhaps more worrisome is the price of equities are also rising, albeit, for no good reason.

Understand good citizen, there is no such thing as magic…so if something isn’t acting like it should, the most likely explanation isn’t a miracle, chances are you’re being screwed!

Think about the stock market and what its behavior means for the rest of the ‘non-financial’ world.

You work to get money so you can obtain what you need to survive. If the value of money is ‘questionable’ at best, where does that leave you?

Thanks for letting me inside your head,

Gegner

Mythical Money

Greetings good citizen,

Today’s markets closed ‘mixed’, The Dow and the S&P were ‘up but the darned Nasdaq was down…unlike last Monday, no exchange was up (or down) very much.

For a while there good citizen, if it was Monday that meant it was time for another installment of the Credit Bubble Bulletin But there was a while there that Mr. Noland stopped providing commentary to accompany his weekly reports…and the reports themselves were a bit dense to comment upon independently.

While it is always an interesting read, this week’s installment raises some important points about the global monetary regime that I think you all need to be aware of.

So without further adieu:

CREDIT BUBBLE BULLETIN
Issues 2010
Commentary and weekly watch by Doug Noland

Let's start by setting the backdrop. The world is operating without a stable monetary regime. There is no gold standard. There is no functioning Bretton Woods currency stability regime. There is no longer even an ad hoc dollar reserve "system" that tended - at least on occasion - to discipline foreign credit systems and restrain excesses.

Like never before, credit systems around the world operate unrestrained. It is my long-held view that pricing mechanisms - and capitalism generally - function poorly in a backdrop of unrestrained (inherently mis-priced) credit. [Can you say, ‘Stick ‘em up’?]

Most importantly, there is today no common understanding that stable international finance is wholly dependent upon individual credit systems being operated with discipline and restraint. Quite the contrary, as the universal policymaking view these days is that aggressive stimulus and monetary looseness are essential for supporting financial and economic recoveries. The world is devoid of a monetary anchor and operating in a unique monetary environment that foments speculation, financial excess, imbalances, economic maladjustment, and potent bubble dynamics. As we begin 2010, inflationism is still seen as the solution instead of the problem.

The year 2008 marked the collapse of the Wall Street/mortgage finance bubble. It specifically did not mark the end of the Chinese bubble, the global credit bubble, or even the greater US credit bubble. Last year saw the emergence of the global government finance bubble - quite possibly a monumental development. Accordingly, 2010 should be viewed as a bubble year. This implies a bipolar perspective when contemplating probable outcomes: on one end, the bubble expands and makes it through the year, or, on the other, the bubble bursts and financial systems and economies sink right back into crisis. As a long-time analyst of bubbles, I caution against predicting the timing of their demise.

Last year saw intense speculation reemerge in US and global financial markets. It is the nature of speculation to intensify as long as it is accommodated by loose financial conditions. Similarly, it is the nature of bubbles to expand and become more robust unless inflation dynamics are quashed through some type of monetary tightening. Excess begets excess ... and the more protracted - hence powerful - the bubble the greater the degree of tightening necessary to eventually rein it in. The more heated and expansive the bubble, the greater the dislocation associated with its bursting. I see no appetite anywhere in the world this year to aggressively suppress bubbles.

The unfolding bubble in China is historic, and their policymakers appear poised to tinker. Tinkering doesn't quell bubbles - certainly not seasoned ones. I have espoused the view that the Chinese credit bubble has entered the dangerous "terminal phase" of excess. How this dynamic and the course of policymaking play out is a major issue (in) 2010. I expect Chinese authorities to work diligently in an effort to ration the amount of credit available for real estate speculation. At the same time, the stated goal of stimulating domestic consumption implies huge growth in Chinese household debt.

I am generally skeptical in the efficacy of credit rationing. This was a focal point of a great debate in the US back in the late-1920s. One (dovish) camp believed that the focus should be on limiting the flow of credit financing stock market speculation, while at the same time working to maintain ample credit to fuel the booming economy. The problem is generally that years of expanding credit create a (financial and economic) system with both a huge credit appetite and a potent propensity for inflating the quantity of new credit. [Um, for some pretty smart people it doesn’t cease to amaze me that no one points to the ‘interest avalanche’ an unrestrained credit market produces. They have to keep lending to ‘cover’ the interest the principal keeps demanding.]

Attempts to limit speculative credit - or even lending to certain sectors - is generally ineffective in itself and fails to address the major issue of runaway total system credit growth. Indeed, after bubble dynamics have taken firm hold, attempts to restrict credit by the nature of its use will tend to distract policymakers and delay efforts to contain systemic excesses. From my point of view, determined, decisive and independent monetary management provides the only hope for reining in "terminal phase" credit bubble excess. Such an approach seems in very short supply these days, and I'll be surprised if much of it emerges in China in 2010. [He’s right, it won’t.]

Here at home, Federal Reserve chairman Ben Bernanke apparently doesn't discern bubble risk. Incredibly, in his Sunday morning speech he even argued that Fed rate policy was about right during the 2002-2006 period - and that a low Fed funds rate wasn't the cause of the US housing bubble. We can also assume the he believes his speeches (including his November 2002 - "Helicopter Ben" - "Deflation: Making Sure 'It' Doesn't Happen Here") did not create a major moral hazard issue. [I hope nobody misses what Mr. Noland means, that Mr. Bernanke’s actions did indeed create a HUGE moral hazard problem, we’re talking trillions here!]

The markets have no fear that the Fed will tighten in response to financial speculation. I believe the Fed examines today's real estate markets and fears "deflation". I would imagine they see a stock market still 25% below all-time highs and worry of "disinflation". They see stagnant (at best) household debt growth, declining bank credit, and still impaired securitization markets and see no credible inflation threat. [That’s because the jack asses aren’t looking in the right place, the place we’re most vulnerable…energy! If energy goes through the roof, life as we have come to know it, ‘vanishes’.] Looking in the rear-view mirror, they just don't see problematic financial leveraging and lending excesses. They would surely view the reemergence of asset inflation as confirmation of their adept policymaking. [Instead of what it really is, ‘wealth preservation’, where the rest of us get ‘stiffed’.]

The Fed's overriding focus is stimulating sustainable recovery. [Bullshit! The focus is on sustaining the ‘unsustainable!’] They will err on the side of caution when it comes to removing crisis-period liquidity measures. I will assume that they will not be raising rates meaningfully until they are confident that the markets and economy have first adjusted well to ending quantitative easing operations. [Which will be ‘never’] Meaningful financial tightening is nowhere in sight. The Bernanke Fed still believes that monetary policy is a "blunt tool" and, as such, is inappropriate for dealing with bubbles. They prefer stronger "regulation". So, who is responsible for regulating Washington credit excesses? [You can believe it when pundits like Elliot Spitzer say we already have all of the laws needed to end the crisis, it is the failure of our elected officials to prosecute that keeps the theft underway!]

The Fed's analytical framework and rear-view approach will not serve them well. Today's domestic credit excesses are concentrated in the Treasury and agency markets. In a replay of mortgage finance bubble dynamics, Federal Reserve policies today accommodate the government finance bubble. Bernanke's talk of helicopter money and the government printing press was fundamental to creating an environment where the markets operated confidently knowing the Fed was there to provide a market liquidity backstop. The Fed's fingerprints were all over the historic mispricing and over-extension of mortgage credit. Today, "quantitative ease" and the perception of potentially unlimited Federal Reserve monetization (balance sheet growth) have greatly distorted the pricing mechanisms for government borrowings and debt instruments generally.

Because of the Fed's words and deeds, the marketplace is dysfunctional when it comes to pricing risk. These days the price of government credit has no relationship to the interaction of its supply and demand. If Washington seeks to borrow a couple hundred billion - or a few trillion - it really has little impact on yields. In an ominous replay of the mortgage finance bubble, government intervention has severely distorted the capacity of the marketplace to properly price risk, allocate resources, and discipline market participants (borrowers and speculators). [Which sort of proves another point I’ve been trying to make, that money and the rules governing it’s use/value are largely ‘meaningless’.]

The Fed should have "leaned in the wind" in response to double-digit mortgage credit growth in years 2002 to 2006. Instead, the Fed did the exact opposite, believing at least for awhile that the expansion of mortgage credit was a mechanism to ameliorate deflationary pressures. Furthermore, it had convinced the marketplace that it was there to protect against any potential credit bust. And then, once the housing/mortgage bubble really gained a foothold, the Fed was unwilling to rein in the monster it had unleashed. The marketplace had become so dysfunctional that the best "trade" to profit from the inevitable bust was to load up (and further feed the mortgage bubble) on government-sponsored enterprise (GSE) obligations.

Similar dynamics now promote the government finance bubble. In a more orthodox financial world, our central bank would be expected to "lean against the wind" as our federal government sets course on destroying its (our) creditworthiness. Not these days, as the Fed holds short-term rates steadfastly at near zero, balloons its balance sheet with GSE mortgage-backed securities (MBS), and again convinces the marketplace that its balance sheet will always be there as a liquidity backstop. [Ironically, they always ‘will’ have the ‘liquidity’ to backstop the mortgage market…the problem is IF THEY ACTUALLY DO IT, they will turn our currency into ‘confetti’…then the only ‘way out’ will be to ‘devalue’ the currency…we’re talking ‘scam-a-rama’ trade-in time where you gotta give them a thousand old dollars for one new one sort of shit…and it’s still a ‘mind fuck’!]

Despite the prospect of the Fed ending its MBS purchase program in March, GSE MBS spreads to Treasuries ended last week near 17-year lows. The marketplace must expect that Fannie and Freddie are to resume their balance sheet growth (and market liquidity-backstop function!); that the Fed will state its intention to provide future support for the MBS market; or a combination of both. There is no end in sight when it comes to the nationalization of mortgage finance. Clearly, the MBS marketplace is rife with government intervention and price distortions. It has, once again, succumbed to dangerous bubble dynamics and how it functions through the year is a major issue for 2010.

As I mentioned again last week, combined Treasury and GSE MBS debt expanded US$2.8 trillion in the 15 months ended September 30, 2009. The emergence of the global government finance bubble was crucial for the stabilization of the US and global economy. US recovery is dependent upon the continuation of this bubble, and this bubble is dependent upon massive government fiscal and monetary stimulus. [It CAN’T work; not without bankrupting 80% of the population!] Optimism is now running high. Such a dynamic can be self-fulfilling for awhile, and the US economy could make the bulls look smart in 2010. But this is very unlikely to change the very bearish secular thesis. [We all know the stock markets didn’t return to 10,000 based on ‘fundamentals’. What we have observed, so far, is pure ‘Ponzi Dynamics’ pulled off with ‘free’ money that doesn’t really exist!]

The nature of the unfolding economic recovery is another issue for 2010. Will private-sector credit creation begin to expand sufficiently and, in the process, allocate ample credit for sound investment and meaningful non-government job growth? Will a self-reinforcing credit cycle commence, or is the system now trapped in government debt bubble dynamics?

A respectable December for the retailers has optimism for consumer rejuvenation running high. The S&P Homebuilding Index was up 14.6% last week, as the marketplace positions for a traditional economic rebound. But major questions for 2010 remain: how vulnerable is the housing market to higher mortgage yields? How long will the marketplace finance massive deficit spending and GSE debt issuance before demanding significantly higher yields? [Understand that this past December’s ‘respectable performance’ is due to under measurement of inflation coupled with an expanding consumer base…they may have thrown a ton of people out of work but they haven’t started killing them yet!]

My thesis that the unfolding reflation will be altogether different than past reflations may be tested in 2010. So far, massive government stimulus has stabilized both asset markets and national incomes, and some pent up demand throughout the economy is expected. At the same time, savers are receiving about nothing on their savings, while energy and many other [commodity] prices continue their ascent. Surging financial asset prices have boosted household confidence and net worth.[?] Yet a meaningful rise in market yields could easily pressure bond, stock and home prices. To what extent mortgage credit growth can recover and foster a self-reinforcing housing recovery is a key financial and economic issue for the year ahead. [Um, with a badly depleted ‘customer base’ for real estate and other ‘big ticket’ consumer goods, it is difficult to imagine how these markets will ever ‘come back’ without some major changes in economic policy/methodology. You can’t have 80% of your customer base ‘priced out of the market’ it simply doesn’t work.]

Unprecedented market interventions by the government played a decisive role in stabilizing mortgage finance, housing markets, and household spending. It played a similar role in stabilizing the municipal debt market. That cash-strapped state and local government regained access to inexpensive borrowings was instrumental to financial and economic stabilization. If a traditional recovery ensues, perhaps state and local governments can grow out of their debt problems. A more reasonable bet is that municipal finance faces serious and festering structural debt issues. California is an absolute fiscal mess. Do loose financial conditions continue to accommodate what will be enormous 2010 state and local borrowing requirements?

Today, the markets are infatuated with risk assets. From the perspective of bubble analysis, this is not all too difficult to explain. The first week of the year saw about $45 billion of corporate debt issues. Despite enormous new supply, investment grade debt spreads are at pre-Lehman crisis levels. The same can be said for junk bond and emerging debt spreads. Credit conditions are loose for most creditworthy borrowers, which feeds market demand for these debt instruments - which translates into even greater credit availability. In such an environment, even commercial real estate doesn't look so bad. But is such an accommodating financial landscape sustainable? [Because we come full circle once again to a ‘too small’ customer base…]

It is always impossible to know what developments will surface to upset the applecart: there are any number of festering financial, economic, political, and geopolitical issues that might impede the unfolding bubble. At the same time, it is not unreasonable to suspect that policymakers might tend to delay dealing with tough issues. The federal deficit is out of control, and monetary policy is outrageously loose. There is an "exit strategy" with assorted doors. There is the looming issue of Fannie Mae and Freddie Mac. The Federal Housing Administration and Ginnie Mae need to be reigned in.

Looking back, policymakers of all stripes missed their opportunities to make tough but necessary decisions in 2009. And now 2010 just doesn't have the feel of a year that will witness a lot of decisive policymaking. In Washington, the focus will turn to the 2010 elections. The Fed will worry about its reputation and independence. Fearing for their jobs and fearful of mistakes, timid will win over bold. Bubbles treasure timid.

Until proven otherwise, I'll project 2010 as a year of escalating monetary disorder - disorder globally across a broad spectrum of markets. A global bubble would seem to ensure unsettled currency markets. Dollar optimism runs surprisingly high to begin the New Year. Yet the scenario of a dollar problem leading to a jump in US borrowing costs still doesn't seem all that nutty to me. Another spike in energy and commodities wouldn't surprise me, but the best bet is numbing volatility. The emerging markets are poised for a wild year. And, of course, all eyes on interest rates.

As I mentioned above, a bubble year suggests the likelihood of bipolar outcomes. I'll conclude by admitting that I get that uneasy feeling that our central bank is quite determined to avoid learning lessons.

The principal reason I stopped using Mr. Noland’s commentary is because his ‘conservatism’ stated shining through his otherwise detached and impartial commentary. You can see traces in this article as well but it is otherwise a ‘solid’ piece of work.

Were I to be distressed by anything in this article it would be that Mr. Noland is, in my humble opinion, ‘too optimistic’.

We are far from ‘out’ of energy but the urge to start ‘charging through the nose’ for what’s left puts society itself at a very dangerous crossroads.

This is a crisis that threatens the very survival of our species. The coming ‘energy wars’ will not be fought by the white skinned peoples against the brown skinned peoples, but between the ‘haves’ and the ‘have nots’.

For all of the rhetoric to the contrary, ‘class ties’ are far stronger than racial or national loyalties.

Ironically, one’s ‘wealth’ makes them useful…regardless of where they stole it.

Thanks for letting me inside your head,

Gegner