Thursday, July 31, 2008

The people have spoken

You would expect Americans, in a period of falling home prices, a wobbly stock market and an ongoing war, to be less than satisfied with the direction of the country. It's natural. But Americans are not simply dissatisfied. They are very unhappy. O.K., deeply, pessimistically unhappy. Un–American Dreamy unhappy: 85% of respondents in an exclusive TIME/Rockefeller Foundation poll believe that the country is on the wrong track.
They never considered who would pay for this...
Most intriguing, a majority of those surveyed believe in the power of Big Government to solve the biggest problems of our time. They support major government investments that create jobs — 82% favor public works projects — and they remain sympathetic to the economy's victims: 70% say more government programs should help those now struggling.
Instead here is what their God, government will create.

They'll get what they want and more...good and hard.


Red or blue?

Wednesday, July 30, 2008

Who will pay for it?

A grotesque grandiose nationalization initiative is gradually being forced upon the USEconomy, US financial system, US political system, and the hapless US citizenry. Its crucible for construction comes from the desperate situation unfolding for the banks, the mortgage holders, and homeowners. Rising costs, falling incomes, failing banks, declining home values, eroding mortgage bonds, interfered financial markets, corruption in Congress, endless war, destructive economic counsel, an unconstitutional USDollar without gold backing, these factors all contribute toward a crisis without remedy. The only possible response will be an implosion with greater state assumption of losses, responsibility for operations, and extended power. Systemic failure, credit seizures, profound job loss, severe supply disruptions, and violence in public places will force a more urgent solution. The irony is that the agents and mechanisms that produced systemic failure will next be granted almost total power as reward for their ineptitude, corruption, and connection to the power centers.[My emphasis] Reaction to systemic failure, orders for nationalization, and other desperate measures ensure the USDollar will fall significantly, leading to gold rising toward 1500 and silver rising toward 40.
Who will pay? (The numbers before all the bailouts)

Full article.

Tuesday, July 29, 2008

Americans can't see what is staring them in the face...

...and that alone will make it all the more painful.
Citizen groups around the country are mobilizing to save their Starbucks after the company announced it will shut down 600 stores. These people don't realize that Starbucks will have to double or triple their prices as the dollar continues to crash and the reason Starbucks has to close is because Americans are too broke to buy quality stuff now that their currency has become the laughing stock of Forex.

Incredibly, and Forex traders can't help but chuckle at this, these citizens are not mobilizing to restore habeas corpus, or to restore the rule of law as it applies to America's spying telephone companies, or restore the checks and balances of the Republic that would prevent the president from declaring himself sole judge and jury in any case against any American who can then be detained for any length of time for any reason -- as is now the case with the recent ruling of the US Court of Appeals for the 4th Circuit.
All of that is a self-flagellating waste of time
when time would be better spent hunkering
down or battening the hatches.


Monday, July 28, 2008

Coming Attractions: Bankruptcy for every level of government in the U.S.A.

Just when you thought you heard all the worst news possible...but that depends which side of the fence you're on.
There is no way to gracefully cut off entitlements, and politically it is impossible. That's why it's easy to predict bankruptcy is the only outcome: a point will have to be reached when the government simply can't tax or borrow enough money to meet its obligations.
Full article.

ABC News: FBI Spy System Performs Instant Wiretaps - Foiled by Skype

“The released documents suggest that the FBI’s wiretapping engineers are struggling with peer-to-peer telephony provider Skype, which offers no central location to wiretap.”

Skype must have them very worried. Help yourself.
Free download and free calls here.

Over 11 million folks talking or instant messaging
privately at this moment on Skype.

Must drive the Peeping Toms ballistic. Such frustration.

I feel your pain, boyz 'n girlz.


Sunday, July 27, 2008

On The Planet of Liars, The Lone Ranger: National Australia Bank

National Australia Bank's senior management has been castigated by banking analysts after the bank released a fresh $830 million writedown of its investments in US housing mortgages.

Friday, July 25, 2008

Enter Wachovia

CHARLOTTE, N.C. (AP) -- Wachovia Corp. reported a surprisingly large second-quarter loss Tuesday, deflating Wall Street's hopes that the nation's big banks are weathering the credit crisis well. The bank said it lost $8.86 billion, is slashing its dividend and eliminating 10,750 positions after losses tied to mortgages soared.

Even excluding one-time items, the results substantially missed analysts' estimates.
Wachovia may survive but now there are over 10,000 new folks on the street, joining the growing unemployment lines.


On statesmen & criminals

"A statesman is the criminal who works with phrases instead of with the burglar’s jimmy." --Joseph Schumpeter

Thursday, July 24, 2008

Good Money

And what of Gresham's Law, the tendency of "bad money" to drive out good money? Selgin's account demonstrates something striking: it only holds under a government system of money which overvalue bad money. In a private system, good money – like good products and services in a free market – outcompetes the low-quality money. In a market-based money system, there is an inexorable tendency for good money to win out.
Now think of gold or silver in Zimbabwe.

At some hyper-inflationary point, who in their right mind would trade it for that paper garbage?

Do you have some of that real money in small denominations?

Think about it.

Full review.

Economic Depressions: Their Cause and Cure

We live in a world of euphemism. Undertakers have become "morticians," press agents are now "public relations counsellors" and janitors have all been transformed into "superintendents." In every walk of life, plain facts have been wrapped in cloudy camouflage.

No less has this been true of economics. In the old days, we used to suffer nearly periodic economic crises, the sudden onset of which was called a "panic," and the lingering trough period after the panic was called "depression."

The most famous depression in modern times, of course, was the one that began in a typical financial panic in 1929 and lasted until the advent of World War II. After the disaster of 1929, economists and politicians resolved that this must never happen again. The easiest way of succeeding at this resolve was, simply to define "depressions" out of existence. From that point on, America was to suffer no further depressions. For when the next sharp depression came along, in 1937-38, the economists simply refused to use the dread name, and came up with a new, much softer-sounding word: "recession." From that point on, we have been through quite a few recessions, but not a single depression.
...what few want to hear.

This link going on the side panel here.

A classic.

Wednesday, July 23, 2008

Flat-ass broke

25. Of the $6.84 Trillion in bank deposits, the total cash on hand at banks is a mere $273.7 Billion. Where is the rest of the loot? The answer is in off balance sheet SIVs, imploding commercial real estate deals, Alt-A liar loans, Fannie Mae and Freddie Mac bonds, toggle bonds where debt is amazingly paid back with more debt, and all sorts of other silly (and arguably fraudulent) financial wizardry schemes that have bank and brokerage firms leveraged at 30-1 or more. Those loans cannot be paid back.

What cannot be paid back will be defaulted on. If you did not know it before, you do now. The entire US banking system is insolvent.
See the other 24 points he lists.

California foreclosures rocket

Monday, July 21, 2008

Good advice but this time there's a kicker

"The people who survived the Great Depression were the ones who had money to buy when everybody else was selling." -- Glenn Beck's grandfather
This time it's different...
The last time the entire world economy had this kind of economic paralysis was in the 1930s during the Great Depression. At that time, the USD was not on the verge of a collapse. This time the USD is on the verge of a collapse, or at least a major devaluation. That means that the US has far less latitude to do fiscal stimulus and bailouts to combat the present economic emergency spreading over the world.
Link.(Highly recommended)

What will you use for 'money' when all the world's monopoly money is crap? Who would want the stuff in trade for anything of value?

Gold (and silver) will have no 'value' against those worthless pieces of paper, which will destroy them. Then gold will literally be "priceless" against them.

Will gold and silver be The Last Currencies?

Anything less will be far worse.

Far out, ain't it...the thought.

You decide.

US faces global funding crisis, warns Merrill Lynch

Merrill Lynch has warned that the United States could face a foreign "financing crisis" within months as the full consequences of the Fannie Mae and Freddie Mac mortgage debacle spread through the world.

Dollar bills
Draining away: The US may struggle to plug its capital gap

The country depends on Asian, Russian and Middle Eastern investors to fund much of its $700bn (£350bn) current account deficit, leaving it far more vulnerable to a collapse of confidence than Japan in the early 1990s after the Nikkei bubble burst. Britain and other Anglo-Saxon deficit states could face a similar retreat by foreign investors.

"Japan was able to cut its interest rates to zero," said Alex Patelis, Merrill's head of international economics.

"It would be very difficult for the US to do this. Foreigners will not be willing to supply the capital. Nobody knows where the limit lies."
The Death of the Nation State is nigh.

May you not be underneath when she goes.


Saturday, July 19, 2008

The Law of Eristic Escalation

...coming soon to a planet near you.

The Law of Eristic Escalation

This Law (originally found in the Honest Book of the Truth, Gospel According to Fred, 1:6) pertains to any arbitrary or coercive imposition of order. It is:

Imposition of Order = Escalation of Chaos

Fenderson's Amendment adds that the tighter the order in question is maintained, the longer the consequent chaos takes to escalate, BUT the more it does when it does! [The Thudthwacker Addendum to Fenderson's Amendment goes on to prove that the presence of a nonlinear term which crops up in Fenderson's calculations serves to cause the escalation of chaos to be completely unpredictable in terms of the original imposition of order -- Ed.]
Armed with the Law of Eristic Escalation and Fenderson's Amendment [And Thudthwacker's Addendum -- Ed.] any imbecile -- not just a sociologist -- can understand politics.
So I will translate them into the lingua franca of the Western world: An imposition of order creates a chaos deficit, which compounds until it is paid off (by enduring all the outstanding chaos).
Of course, Eris thinks all chaos is outstanding. But we mortals find too much of a good thing a little overwhelming. Thus we cringe when we encounter an anerism -- a pronouncement, that is, which is innocent of the Law of Eristic Escalation.
If you hear that outlawing prostitution will eradicate rape, you are listening to an anerism -- a manifestation of the Aneristic Delusion. (If you read The Sacred Chao -- instead of skipping over it in the recommended way -- you will comprehend the anamysticmetaphysics of aneristics.)
An anerism nearly always enters the world through the mouth of a politician -- but it can come by way of any authority figure such as a minister or a teacher or a parent or a boss or Ronald McDonald.

Note: Aneristic Delusion defined.

There. I hadda go spoil the fun.

Friday, July 18, 2008

Unemployment is poised to soar. Few are prepared for it.

None of the financial engineering jobs that fueled this credit boom will ever be needed again. SIVs, Conduits, Toggle Bonds, Covenant Lite loans are all dead for years, more likely decades to come. Add to that liar loans, Pay Option Arms, insane leverage, and numerous other ridiculous lending arrangements. And if those things are not coming back, we do not need Wall Street shills to securitize that garbage and pitch it to unsuspecting suckers.
There's a lot more to the story.

We all know where this went

See any parallels to today's world?
The end result for the Romans was that they managed to create their own world and they called it the Roman Empire. And their world view became embodied in a pagan cult. This cult was nothing less than the patriotic worship of Rome itself. And throughout the Empire we find the expression Genius Populi Romani celebrated by all Romans. If anything sustained the Empire, it was the conception of the "Genius of the Roman People." The Romans were taught to believe that the destiny of Rome was the destiny of the world and this became embodied in a civil religion which embraced the genius of the Roman people. This civil religion was a secular, pagan religion, in which all men devoted their energies toward public service to state. It was their duty to serve the state. It was virtuous. These duties consisted of service and responsibility because only through responsible service would one come to know virtue.

Despite the obvious fact that the majority of Roman emperors were scheming, devious, opportunistic, or plainly insane, the world view dominated the social life of the Roman citizen of the Empire. The history of the Empire is dotted with political assassinations, strangulations, emperors playing fiddles while Rome burned, court intrigue and rivalry not to mention a widespread incidence of downright insanity or paranoid schizophrenia. In the end, it is extraordinary that the Roman Empire existed for as long as it did. For Edward Gibbon, author of the Decline and Fall of the Roman Empire (3 vols, 1770s), the decline of Rome was natural and required little explanation: "The decline of Rome was the natural and inevitable effect of immoderate greatness."
Note: To be precise, it is always the natural and inevitable effect of The Gun in the Room and almost no one 'sees' it.

It's so simple it's missed.

Little by little, people just start walking off, unable or unwilling to support the 'greatness'... the history of all Empires.

Full article.

Thursday, July 17, 2008

The Cage

Each and every one of us lives inside of a Cage. The Dalai Lama has a Cage. You have a Cage, and I have a Cage. George W. Bush has a Cage that is very small and does not admit light.
The Cage is not permanent, but it is certainly there. The Cage is there for all humans because the Oligarchy and its external agent, the Culture-Structure, wants it to be there, and has installed your False Mind to keep it there.

You have Power over your Personal Cage, though the Oligarchy teaches that you do not. The Cage exists to the extent that you believe the superstition that the Cage is Who You Are, and likewise, you are free of the Cage when you can acknow- ledge the reality of the Cage’s existence.
Permanent link coming soon on the side panel.


21 days we all die?

...or not?

Earthmonkey playing with The Last Match?

Will someone please blow it out?

A crowding of fools

"Politics is proof that you can indeed fool some of the people all of the time." --jomama

Wednesday, July 16, 2008

We are a Wile E. Coyote Nation

Wile gonna go through this safety net like it
wasn't even there.
Is there anyone in the known universe who thinks that the US financial system is not fifty feet beyond the edge of the mesa of credibility?

With the death of the IndyMac Bank last week, and the GSEs Fannie Mae and Freddie Mac laying side-by-side in the EMT van on IV drips, headed for the Federal Reserve's ever more crowded intensive care unit, there was a sense of the American Dream having passed through the event horizon that denotes the opening of a black hole.

This process is really out of control now. The bottom line is the comprehensive bankruptcy of the United States. The Republican Party under George Bush will be known as the party that wrecked America (release 2.0). Painful as it is, Americans had better get a new "Dream" and fast. It better be a dream based on the way the universe actually works, which is to say an operating procedure run on earnest effort and truthfulness rather than merely trying to get something for nothing and wishing on stars. We might begin symbolically by evacuating Las Vegas and calling in an air strike on the loathsome place -- to register our new reality-based attitude adjustment.
Dumb shit.

Wrong target.

Full rant.

Note: Posts here going to be coming hot and heavy now.

On statesmen & criminals

"A statesman is the criminal who works with phrases instead of with the burglar’s jimmy." --Joseph Schumpeter

Tuesday, July 15, 2008

It's time

Another bank run

Gonna be coming hot & hotter...
I was out and noticed a line out of my local WAMU branch this morning. I then drove a few miles away and saw another branch with many people in line. I talked to someone there and they said the lines started before the bank opened and many people are sweeping their accounts. They did not say ‘everyone’ but they did say ‘many people are sweeping their accounts’.
Full report.

Monday, July 14, 2008

"Default swap spreads on GOVERNMENT debt doubled Friday. That has never happened before."

There will be reams of economic news 'that's never happened
before' coming up. Ready?
Let's start with Fannie and Freddie.

As anyone who has been reading The Ticker knows, I have been saying for quite some time that Fannie and Freddie are in fact "short to zero" candidates for the common stock. This is simply due to the mathematics of their financial situation - they are levered up anywhere from 60 to more than 200:1, depending on what you include and exclude from "capital" and "credit book."

I use the worst-case set of numbers, because in a bad market, that's what you wind up with - therefore, I include all of their credit guarantees, and exclude all intangibles such as "good will" and "tax loss carryforwards", with the latter being particularly important in this case because Fannie, for example, has some $13 billion in deferred tax assets.

That's not money, its an offset against future taxes. But to pay taxes you must first make a profit, and in a bad market, those are worth a big fat zero.

So here we sit with two firms that are running with leverage ratios that make a Hedge Fund look like a convocation of the Girl Scouts.

The Federal Government continues to claim that they are "well-capitalized." Uh huh. And I'm the Easter Bunny. Nobody running with a leverage ratio of 60:1 is "well-capitalized", say much less someone running with a leverage ratio of 200:1.

How did this happen? Quite simple - our government allowed it and in fact prodded these firms into doing it.
Oh, my.

Educate yourself.

There's plenty more...

Housing bubble and unemployment analysis state by state

Excellent and thorough.

Many charts.

Go there.

Sunday, July 13, 2008

Douglas Adams

"There is a theory which states that if ever anybody discovers exactly what the Universe is for and why it is here, it will instantly disappear and be replaced by something even more bizarre and inexplicable. There is another theory which states that this has already happened." -- Douglas Adams
The next question is:


You gonna duck, hide, what?

Saturday, July 12, 2008


For the last few days Pingoat has returned the following when
I try to use it:

We're currently doing system maintenance. Come back later.

Looks more like 'tits up' to me.

Do you like a chain gang?

"Children who know how to think for themselves spoil the harmony of the collective society which is coming where everyone is interdependent." --John Dewey, The Pope of the 'muricun ejicashun sistum.
My Ma taught me different.

Worked for me these many years.

"[That's] complete informational bullshit! Everyone thinks for self, tries out ideas, others see results, copy the good ones, drop the bad and we progress." --Rick White.

Now think carefully about this:

Everybody on a chain gang is 'interdependent' too.

Your choice, as always, chained or not.

Friday, July 11, 2008

Stupid is the word of the day

Casey sees “eight or nine Black Swans circling,” in reference to the rare and cataclysmic financial events that are the focus of 2007 FreedomFest speaker Nassim Nicholas Taleb’s financial bestseller, The Black Swan.

And while many hope the residential real estate market is bottoming, Casey believes “buy a house today and you are catching a falling safe.” He believes the entire real estate market, including commercial will get “real, real ugly” and that owners will abandon properties because they won’t be able to pay the taxes and utilities.

So with this widespread outbreak of stupidity, a coming tsunami of bankruptcies public and private, governments that will get bigger and meaner, and a continued meltdown in the stupid majority’s favorite investment vehicle – real estate – what’s the rational person supposed to panic and do?
Full essay.

Thursday, July 10, 2008

The People’s Republic of Capitalism

A true People's Republic would be free market "capitalism".

See how our language has been fucked.

Not there yet but a Great Leap forward...
Often the new values have fueled a kind of lust for acquisition that Part 2 of the series calls “MAOism to MEism.” Viewers see young Chinese students intently learning English in order to take their place in the global economy, and a woman who has made millions from owning a restaurant and hotel complex says: “I am proud of being rich. I made my money through hard work.” No one in China talked that way in past decades, Mr. Koppel said.
Full Review.

Saturday, July 05, 2008

America's Underground

These were sharp businessmen, the four guys who pointed out that there were three dead trees in my backyard that needed to be cut down lest they attract horrible bugs that would infest my entire property. They would cut them down and remove them for $475.

In cash.

We dickered back and forth and finally settled on $350. In cash.

They attacked the trees like ants on ice cream. In 45 minutes, the trees were gone without a trace.

I paid them. In cash.

And yet we all intuit that there is some reason why cash payments are more valuable in the American service sector than checks or credit cards, nudge nudge, know what I mean? With cash, you enjoy the highest likelihood of staying out of harm's way. If you don't want to formalize your business model and get embroiled in the entire public-sector apparatus of withholding tax, social security, mandated health care, minimum wages, and the rest of the mind-boggling apparatus of central planning, doing a cash-only business is the wisest choice.
Full essay.

Thursday, July 03, 2008

The World to Come

Excerpt from The World Made by Hand, by James Howard Kunstler

Folks used to country living will appreciate it.

Don't forget to take this with you.

See the excerpt here.

Tuesday, July 01, 2008

Peak debt, the case for deflation

No more borrowing on the future to finance today's party.
Peak credit has been reached. That final wave of consumer recklessness created the exact conditions required for its own destruction. The housing bubble orgy was the last hurrah. It is not coming back and there will be no bigger bubble to replace it. Consumers and banks have both been burnt, and attitudes have changed.

It took nearly 80 years for people to get as reckless as they did in 1929. 80 years! Few are still alive that went through the great depression. No one listened to them. That is the nature of the game. The odds of a significant bout of inflation now are about the same as they were in 1929. Next to none.

Children whose parents are being destroyed by debt now, will keep those memories for a long time.
Full article.