Title Goes Here(tm)

Going To Hell In A Very Stylish Handbasket.

"El diablo sabes mas por viejo que por diablo" - old Mexican proverb

archives:

01 Jan 2008

01 Dec 2007

01 Nov 2007

01 Oct 2007

01 Sep 2007

01 Aug 2007

01 Jul 2007

01 Jun 2007

01 May 2007

01 May 2007
01 Apr 2007
01 Mar 2007
01 Feb 2007
01 Jan 2007
01 Dec 2006
01 Nov 2006
01 Oct 2006
01 Sep 2006
01 Aug 2006
01 Jul 2006
01 Jun 2006
01 May 2006
Older Archives 2003-2006

Achtung! Das machine ist nicht fur gerfingerpoken und mittengraben. Ist easy schnappen der pringenwerk, blowenfusen, und poppencorken mit spitzensparken. Ist nicht fur gewerken by das dumkopfen, das rubbernecken sightseeren keepen hands in der pockets, relaxen und watchen der blinkenlights.

links:
Tom Paine
The Nation
RGE Monitor
The Economist
Landover Baptist Church
The Onion
Ernie's House of Whoop Ass

I am the Great and Powerful Ruling Elite! Tremble before my Bureaucratic Might(tm)! Pay no attention to the greedy, stunted mofos behind the curtain!!! STOP YANKING THE CURTAIN, DAMMIT!!!

Decade of Deception

The Bear's Lair, by Martin Hutchinson

December 31, 2007

[Martin Hutchinson is the author of "Great Conservatives" (Academica Press, 2005)]

The Japanese public has dubbed 2007 the “Year of Deception.” Expected Japanese GDP growth for the year has been revised down from 2.1% to 1.3% and the stock market has fallen by 10%. I’ll return to whether the Japanese are right later, but the concept itself appears more generally applicable. There has in recent years been an excessively snake-oil-salesman quality to the policies and promises of politicians, monetary authorities and financial intermediaries.

In the United States for example, the country’s economic policymaking since 1995 has involved not just a “Year of Deception” but a decade of it. In examining the record, one is tempted to quote Mary McCarthy’s verdict on Lillian Hellman’s autobiography: “Every word she writes is a lie, including “and” and “the.” Some examples:

In 1996, the Bureau of Labor Statistics adopted “hedonic pricing” by which price statistics were “corrected” for improvements in quality. There were two problems with this. First, it counted quality improvement in the tech sector by raw processing power, which experience has shown to be wrong: functionality of tech equipment rises at best logarithmically with processing power. Second, it did not include the additional costs imposed on consumers by companies as a result of such innovations as automated telephone answering systems, which hugely increase the time and effort expended in conducting necessary consumer transactions. The result of hedonic pricing was to reduce consumer price increases by close to 1% per annum, producing an entirely spurious decline in reported inflation and a corresponding increase in “real” Gross Domestic Product growth.

The second deception chronologically, though in many respects the most important, was Fed Chairman Alan Greenspan’s “recognition” in 1997 that a new era of faster productivity growth had dawned, so higher stock prices and lower interest rates were justified. Part of this “acceleration” was just random fluctuation (much of which was eliminated in later statistical revisions), part was the result of increasing capital intensiveness in the US economy, caused by lower real interest rates and part was the effect of hedonic pricing, which artificially inflated GDP growth, and hence productivity. The reality, when you look at the series over a long term, was that well over 100% of any rise in productivity in the late 1990s can be explained by these factors. The “miracle” was a mirage and lower interest rates and higher stock prices were wholly unjustified, inevitably leading to huge misallocations of capital.

Rupert Murdoch, who now owns the New York Times, has hired William Kristol, one of the founding fathers of the neo-conservative thinktank that brought you the Iraq mess (newamericancentury.org), and off the scale of stupid/evil. He has been thoroughly discredited and broadly reviled, and yet Rupert gives him a mic.

Kristol's first column:

"I quote from Ecclesiastes: ‘The wise man’s understanding turns him to the right; the fool’s understanding turns him to the left.’ And what does it mean to be on the right as a columnist for a liberal newspaper? It means that I can speak truth to power by virtue of the largesse of power, teaching its readers that ‘right makes might.’ It makes it, not figuratively, but literally, so that once the standard Republican version of the right, and by that I definitely don’t mean Ron Paul, is in power, it will make might by adopting a defense budget so large that it will be the envy of Dick Cheney.

"I will teach them to look to Iran as the source of all the world’s problems by explaining how it supports Al Queda, just as I taught America when I wrote for the Weekly Standard, which I also founded and sold to Rupert Murdoch for a bundle, that Saddam Hussein supported Al Queda. Before long, Bill Keller will be agreeing with me the way he agreed with Judith Miller and we will be safely and assuredly on our way to the next war. And because the Times will be for it, Hillary Clinton will be for it, with the understanding that she will deny she was ever for it after it turns into another disaster. And as for Pakistan, we must support Musharraf until the end because we have no other choice, even though he is universally hated for being a puppet of both America and Britain.

"By virtue of my new position with the Times, I am now an official pundit of the system, replacing the unctuous William Safire, "Spiro Agnew’s brain." You have to hand it to the GOP. If nothing else, they sure know how to pick vice presidents.

"I’ll be writing my column three times a week, giving me ample space to communicate with you on a regular basis. You can expect me to challenge your most deeply held beliefs and provoke you into thinking things from a different perspective, which is another way of saying, ‘Keep buying the Times.’ Because if you don’t, I might have to make an honest living as the headwaiter at Elaine’s."

December 31, 2007

----------

These are the actual covers from the book by David Lereah, chief cheerleader (until a few months ago) of the National Association of Realtors. By 2006, the bubble had already burst, and he knew it.

This is a sign of the times still - "it can't happen to us". We are SO fucked, y'know?

From Michael (Mish) Shedlock:

"There is enormous and unwarranted belief in the Fed's ability to "inflate out of this mess". It's all an illusion. Greenspan presided over an economy that added enormous numbers of internet jobs followed by enormous numbers of housing related jobs and enormous numbers of jobs related to the buildout of commercial real estate.

This was not "success"; This was forestalling the day of reckoning by repetitively blowing bigger bubbles. Greenspan appeared successful only because the ability and willingness of consumers and businesses to take on more debt was not yet exhausted.

Bernanke, on the other hand has no dotcom boom to bail out the economy. Nor does Bernanke have a housing bubble to look forward to that will bail out bad bank lending practices and provide jobs to the economy.

Problems Bernanke Faces

* Falling real estate prices

* Subprime housing mess

* Alt-A mortgage mess

* Pay Option ARM mess

* Sharply rising unemployment

* Rising credit card defaults

* Commercial Real Estate implosion

* Global wage arbitrage

* Falling US dollar

* Overheating China

* Slowing global economy

* Tapped out consumers

* Implosion of $500 trillion in derivatives

* Solvency issues at banks

* Forced unwind of massive Yen carry trade

* Boomer retirement

* Pension plan assumptions in an economy starving for yield

* Rising corporate defaults

Greenspan never had to deal with anything remotely close to that set of problems. It's a lethal combination of things given that solvency issues at banks that will restrict lending. It is also a lethal combination in the face of consumers and businesses that are unwilling to expand because consumers are tapped out. In addition, rising unemployment sure is not going to do anything about consumer's willingness or ability to take on more credit."

Holy shit. Holy freaking mother-of-god shit. Orwell was, if anything, an optimist.

FBI Prepares Vast Database Of Biometrics

$1 Billion Project to Include Images of Irises and Faces

By Ellen Nakashima

Washington Post Staff Writer

Saturday, December 22, 2007; Page A01

CLARKSBURG, W. Va. -- The FBI is embarking on a $1 billion effort to build the world's largest computer database of peoples' physical characteristics, a project that would give the government unprecedented abilities to identify individuals in the United States and abroad.

Digital images of faces, fingerprints and palm patterns are already flowing into FBI systems in a climate-controlled, secure basement here. Next month, the FBI intends to award a 10-year contract that would significantly expand the amount and kinds of biometric information it receives. And in the coming years, law enforcement authorities around the world will be able to rely on iris patterns, face-shape data, scars and perhaps even the unique ways people walk and talk, to solve crimes and identify criminals and terrorists. The FBI will also retain, upon request by employers, the fingerprints of employees who have undergone criminal background checks so the employers can be notified if employees have brushes with the law.

"Bigger. Faster. Better. That's the bottom line," said Thomas E. Bush III, assistant director of the FBI's Criminal Justice Information Services Division, which operates the database from its headquarters in the Appalachian foothills.

...all the really IMPORTANT stuff: Anna Nicole Smith!... Britney Spears!! PARIS HILTON!!!

The U.S. credit crunch timeline

Toronto Star

Year-end 2006: The value of all U.S. homes, excluding rentals, peaks at 153 per cent of GDP, the highest level in at least six decades.

June 22, 2007: New York brokerage Bear Stearns Cos. spooks Wall Street in saying it will bail out one of its hedge funds due to subprime-mortgage losses.

On July 18, the firm reports that its two hedge funds that invested heavily in subprimes are essentially worthless, having lost more than 90 per cent of their value, or $1.4 billion (U.S.)

Aug. 9: French bank BNP Paribas SA suspends three of its funds with U.S. subprime exposure.

Aug. 16: Troubled Countrywide Financial Corp., the U.S. No. 1 mortgage lender, draws down $11.5 billion from its credit lines to stave off insolvency.

Aug. 22: Reports show U.S. home foreclosures were up 93 per cent in July 2007 over July 2006. There were 179,599 foreclosure filings in July, up from 92,845 the previous year.

September: The Bank of England injects $55 billion into Northern Rock PLC to rescue Britain's No. 5 mortgage lender. A run on the firm by depositors is the first in memory.

Sept. 30: U.S. house prices begin to drop, a trend certain to continue as unsold homes proliferate and foreclosure rates rise.

Oct. 25: Merrill Lynch & Co. Inc. records an $8.5 billion writedown, mostly on consumer loans including subprime mortgages. CEO Stanley O'Neal is fired days later.

Nov. 5: Citigroup Inc. says subprime mortgages and related securities lost as much as $11 billion of their value in the previous month. CEO Charles Prince is forced out.

Dec. 7: CIBC discloses a whopping $9.8 billion exposure to the U.S. subprime market.

Hooverville - 1937

Hooverville - 2007

Tent city in suburbs is cost of home crisis

ONTARIO, California (Reuters) - Between railroad tracks and beneath the roar of departing planes sits "tent city," a terminus for homeless people. It is not, as might be expected, in a blighted city center, but in the once-booming suburbia of Southern California.

The noisy, dusty camp sprang up in July with 20 residents and now numbers 200 people, including several children, growing as this region east of Los Angeles has been hit by the U.S. housing crisis.

The unraveling of the region known as the Inland Empire reads like a 21st century version of "The Grapes of Wrath," John Steinbeck's novel about families driven from their lands by the Great Depression.

As more families throw in the towel and head to foreclosure here and across the nation, the social costs of collapse are adding up in the form of higher rates of homelessness, crime and even disease.

While no current residents claim to be victims of foreclosure, all agree that tent city is a symptom of the wider economic downturn. And it's just a matter of time before foreclosed families end up at tent city, local housing experts say.

"They don't hit the streets immediately," said activist Jane Mercer. Most families can find transitional housing in a motel or with friends before turning to charity or the streets. "They only hit tent city when they really bottom out."

Steve, 50, who declined to give his last name, moved to tent city four months ago. He gets social security payments, but cannot work and said rents are too high.

"House prices are going down, but the rentals are sky-high," said Steve. "If it wasn't for here, I wouldn't have a place to go."

'SQUATTING IN VACANT HOUSES'

Damned straight. Track the rabid ratfuckers down and throw their asses in jail where they belong. Better yet, give 'em what they want - death (newsflash, psychos: the whole 72 virgins bit was just marketing).

London drops 'War on Terror' label

Britain's chief prosecutor says the words 'war on terror' will no longer be used by the government to describe attacks on the public.

Sir Ken Macdonald said terrorist fanatics were not soldiers fighting a war but simply members of an aimless 'death cult'.

“The people who were murdered on July 7 were not the victims of war,” he said referring to the London bombings.

"The men who killed them were not soldiers; they were fantasists, narcissists, murderers and criminals and need to be responded to in that way," said Macdonald.

The term 'Islamic terrorist' will also no longer be used. Officials believe it is unhelpful because it appears to directly link the religion to terrorist atrocities.

Long list of notables that kicked it this year: More yaddah...

...and it's being done on purpose by the goobermint, so we can welsh out on our astronomical debt. Take that, inscrutable chinese masters!

Rate cuts will hammer dollar: Chinese official

Flight of capital seeking higher returns in Asia could depress dollar on further rate cuts, China says.

BEIJING (AP) -- Further cuts in U.S. interest rates would have a "harmful effect" on the dollar and the international finance system, a Chinese finance official wrote in a commentary Thursday in an official newspaper.

The dollar's fall against many currencies has prompted investors to sell dollar-denominated assets, Hu Xiaolian, director of the State Administration of Foreign Exchange, wrote in the Financial News, a newspaper published by the central bank.

"If the (U.S.) federal funds rate continues to fall, this will certainly have a harmful effect on the U.S. dollar exchange rate and the international currency system," Hu wrote.

Financial markets closely watch official Chinese comments on the dollar because Beijing keeps a large portion of its $1.4 trillion in reserves in U.S. Treasury securities and any change in China's investment strategy could affect exchange rates.

Despite his warning, Hu wrote, "the U.S. dollar's dominant position in international currency markets is unlikely to change in the near term."

The U.S. Federal Reserve has lowered its federal funds rate, the interest that banks charge each other for overnight loans, to 4.25 percent, a full percentage point lower than it was in September, to ease a credit crunch in the U.S. financial system.

EXIT 2007: DENIALS & TONTARIA

by Jim Willie CB

Editor, Hat Trick Letter

December 26, 2007

Wall Street is in deep sneakers. They are busy putting a positive spin on 2007, which in mid-year unleashed the beginning of an unstoppable nightmare. The first cracks were revealed in gory fashion in the form of subprime mortgages blasting fissures through the entire bank and bond system. The next cracks will blossom into a mindboggling series of shocks next year. The US Federal Reserve planted millions of seeds, led by Alan Appleseed Greenspan, during almost two years of ridiculously irresponsible low interest rates so as to assure a doomed outcome. One should never entrust US-based lending institutions to create mortgage products, to approve of loans, to work (collude) with appraisers, the end result of which is massive creation of new debt destined to implode. Recall that the Good Crazed Maestro, who resembles Mr Magoo even more since his retirement, endorsed the housing bubble, begged for it even, urging down long-term interest rates in 2001 & 2002. He desperately needed for housing inflated so-called wealth to save his bacon from the stock bust a year earlier. Both the stock bubble and housing/mortgage bubbles had his fingerprints on them. GREENSPAN MORTGAGED THE ENTIRE BANKING SYSTEM AND ECONOMY WITH BAD LOANS, WHICH ARE IN SYSTEMIC DEFAULT. He actually blessed the housing bubble as a legitimate foundation for an entire USEconomy, a fact that should never be forgotten. One must knock down a fifth martini or whiskey to buy such heretical garbage, but the entire nation lapped it up like hopeless drunkards grasping at overturned bottles. The past several weeks have included a boatload of denials and a large dose of tontaria (Spanish: nonsense). This article is a brief attempt to address the denials and tontaria, a reflection upon the completed year. In no way is any claim made of being a comprehensive listing of blatant deceptions. That requires a 200-page book.

The Robert Rubin mentality has prevailed for well over a decade, wherein US banking policy is designed to recklessly put off problems until tomorrow in order to buy some time today. And yes, during the many todays, the Manhattan Made Men crowd have profited handsomely. Well, Bob, tomorrow is 2008. You are busy covering your hind parts with a fresh Abu Dhabi infusion at Citigroup, a guarantee of some bought time but not any reprieve of eventual bankruptcy. Rubin ushered in, with zero fanfare or broad recognition, the age of the Mussolini Fascist Business Model. The merger of state of big business started in the mid-1990 years with the financial sector, and has extended to energy and military defense in the 2000 years. Get nervous if and when it extends to the pharmaceutical industry in coming years and forced innoculations. Their motives are almost uniformly self-serving, not for the public sector service and benefit. This is about profit and control. In fact, a syndicate has had control of the White House since the Ole Gipper took one in the ribcage in a close call with the Grim Reaper in 1981. This group crosses political party lines with excellent disguise. Nationalism and security are their calling cards these days. The tragedy of this business model is the spread of corruption throughout an entire system, hidden at first, boasted in midstream, enforced at the point of a gun later on. My claim of US institutionalized dishonesty made in 2005 in public manner, even at conferences, has been verified with bold examples for all to see. It extends far and wide, to charity organizations, even to sports.

Next year, a reign of financial and economic terror will befall the world banking system, with the United States as its origin. The shock waves will have California as its epicenter, the creative laboratory of nutty mortgage design. The US banking system will finally be recognized as destroyed, insolvent, and entirely dysfunctional. The repair process in reaction will be interesting to behold, as money will be printed, created, and dispensed at a clip never seen before in a multi-national fashion in the history of mankind. So far, no level of desperation can be detected. That will surely change in 2008. The Wall Street criminal fraud artisans, at the focal point of responsibility for dissemination of trillion$ of mortgage bonds, could not resist temptation. In fact, the US Federal Reserve seems still unaware of crisis. Wall Street did what they do best, package and sell, with regard only for their fees, paychecks, and bonuses, as they organized collusion toward fraud and misrepresentation never seen before in modern history. Well, this time, they got stuck with a huge amount of inventory. Big domestic institutions followed by foreign institutions wised up, but not quickly enough. The private equity movement was in full swing also, leading to more accumulated inventory. Then it slammed shut. Unfortunately for them, the assembly line was halted abruptly. IMAGINE SALMONELLA in a meat packing business with huge volume in shipping products. As the production line halted, much of the toxic output ended up in the meat packer balance sheet, even dinner table. Some CEO executives took sick and fell by the wayside. Their customers are all sick, very sick, and will get even sicker.

BOLDFACED DENIAL WITH YET MORE SPIN

The 2007 year started out reasonably calm, and ended with constant damaging storms in an utter barrage. Wall Street denials of the housing crisis and mortgage debacle were as consistent as they were a departure from reality. The next big facade of deception to be smashed will be that the mortgage loan and bond problem is a subprime issue. By summertime, a gigantic crisis in mortgages will be recognized far beyond the boundaries of subprime. It is instead an adjustable mortgage issue, whose emphasis is firmly on recently written loans. By late next year, the climax to the mortgage debacle will be the horribly painful writedowns to prime mortgage bonds, from basic falling national housing collateral value. If the Untied States suffers another 5% to 7% decline in home values, the entire mortgage bond structure will be downgraded, lowered in value, sufficient to threaten the entire banking system. Below is a quick list of specific denials with ample spin, hard to swallow but heard frequently. Let this be a record of 2007, a litany recitation of corrupted information. Wall Street and their attendant media outlets and advertiser accomplices must paint a decent face on a turning point year coming to a close in 2007. It ended in truly deadly fashion. In just a few days recently, the following claims were made in the financial networks, from anchors to guests alike. They looked like liars because they are liars.

TOTALLY WORTH READING ALL THE WAY THROUGH, EDJUMACATE YO'SELF:

Nouriel Roubini's Global EconoMonitor

The Latest Macro and Financial News Strongly Signal Recession Ahead

The latest macro and financial news confirm that the US is headed towards a hard landing – specifically a serious recession - as a vicious circle of worsening real fundamentals is perversely interacting with severely worsening financial fundamentals and a severe liquidity and credit crunch:

- Initial claims for unemployment benefits now at their recession level (i.e. level they had during the 2001 recession) and continued claims for unemployment benefits sharply up (signaling that workers losing jobs have a harder time finding new ones and are thus unemployed longer). This is now persistent trends for weeks signaling the beginning of a serious slack in the labor market.

- Durable goods order falling – excluding transportation – for four months in a row; and non-defense capital goods orders and shipment falling too signaling that non-residential capex spending will show negative growth in Q4. No wonder as a slowing economy, economic/financial uncertainties and much higher corporate yield spreads (junk bond yields spreads now above 500bps compared to 200bps before the summer crisis) are taking a toll on capex spending by the corporate sector.

- Consumer confidence still plunging (ABC/WaPo index) or sharply depressed even in December (Conference Board measure) in spite of a minor pick up in last survey. Consumer confidence close to recession levels. Polls showing that a majority of Americans expect a recession in the next 12 months.

- Oil prices in the $90 to 100 range and now closer to the upper part of this range; significant negative real income effect of this increase in oil and energy prices. And overall headline and core inflation increasing.

- Retail sales falling in real terms during the holiday seasons (as mediocre nominal growth was lower than inflation) and all the other indicators of holiday sales – including retailers’ earnings and equity valuations showing serious gloom ahead. With consumption spending being over 70% of GDP a saving-less and debt burdened consumer that is buffeted by several shocks - falling home values, falling home equity withdrawal, rising debt servicing ratios with ARM resets, rising debt ratios, oil above $96, plunging consumer confidence, slack in the labor market - decided to throw in the towel in December and cut spending in real terms, for the first time since 2002.

- The worst housing recession since the Great Depression getting worse and uglier with starts, permits, sales, prices, mortgage applications all sharply down and falling more; the only thing going up in housing is defaults, foreclosures and delinquencies.

- Non-residential commercial real estate in serious trouble as a series of press reports and data suggest; CMBX index now at recession spreads.

Shot by assassin who then blew himself up. Sadly, this makes it easier for Islamic militants to get control of Pakistan, which will give them the nukes they crave.

US braces for baby boom retirement wave

WASHINGTON (AFP) - The first of the vast US baby boom generation goes into retirement in January, setting off a demographic tidal wave with wide-ranging economic, political and social implications.

Kathleen Casey-Kirschling, born on January 1, 1946, is acknowledged as the nation's first baby boomer and the first to apply for social security benefits, for which she will be eligible in 2008.

The New Jersey grandmother is the first of an estimated 80 million Americans born between 1946 and 1964, a generation that led a social revolution in the 1960s and changed the fabric of most facets of society.

The cost for government-funded social security and medical care for the boomers leaves a funding gap of between 40 and 76 trillion dollars for next 75 years, according to various estimates.

"America is facing a demographic juggernaut," says Brent Green, a marketing consultant and author, in his "Boomers" blog.

"An unprecedented number will soon be entering the retirement stage of life. One-third of the population will be over 50 by 2010. One in five will be over 65 by 2010."

Leonard Steinhorn, an American University professor and author of "The Greater Generation: In Defense of the Baby Boom Legacy," says the generation often wrongly maligned as latte-sipping Yuppies has transformed most of American society.

He wrote that boomers have led or sustained most of "the great citizen movements that have advanced American values and freedoms -- the environmental movement, the consumer movement, the women's movement, the civil rights movement, the diversity movement, the human rights movement, the openness in government movement."

He told AFP he expects this transformation to continue as boomers age. "It's not going to be a generation that's going to go off to the golf courses and do nothing."

He said boomers will push politics to a more progressive bent even though that has not yet happened because the more conservative over-60 generation still carries much weight in the electorate.

"Once younger voters begin to replace them, the socially conservative vote will dwindle," he said.

The generation is a ripe target for marketing of everything from travel to real estate to computer games for keeping minds fit.

"In the whole way we think about aging and the way companies develop products, we have traditionally been a country of the young," said David Baxter, senior vice president at Age Wave, a California-based research and consulting company focused on the over-50 population.

"If you look at the hottest products, companies think the youth market is the most important."

Baxter said marketers are still using "the myth that older consumers are stuck in their brands and not very interesting consumers. But it's the mature consumer who has all the money."

Americans aged 50 and over have a collective one trillion dollars in disposable income and control 67 percent of the US wealth, according to the over-50 social networking website Eons.

Members of the baby boom generation are big users of technology and the Internet. A Pew Internet Life Project report showed two-thirds of those between 50 and 58 had Internet access as of 2004, similar to the number of 28- to 39-year-olds.

Many are gravitating to social networking sites, especially those geared to their generation with names like TeeBeeDee and BoomerCafe.

About half of Americans will buy new homes after retirement, and many will continue to work in some capacity or become involved in social activism.

Michael Falcon, head of the retirement group at Merrill Lynch, says the nation must prepare for a "new model" for retirement.

"Multiple generations report cycling in and out of work and pursuing a new career in later life as the retirement ideal," he said in a 2006 report. "Companies need to be aware of this new concept of retirement."

A Merrill Lynch survey found 71 percent of adults surveyed plan to work in some capacity after their formal "retirement."

Carol Orsborn, a public relations executive who writes a "Boomer Blog," said the generation appears to be pursuing its dreams rather than dropping out to a quiet retirement.

"If we were hippies in the 1960s and 1970s and yuppies in the 1980s and 1990s, what are we now?" she wrote.

"At an age where expectations that our generation pull back, instead of 're-tiring' we are 're-upping' for another tour of duty in life. We are changing careers, finally getting around to taking risks with our dreams, advancing into new psychological and spiritual terrain, not only new to us as individuals, but for society as a whole. We are, in fact, Re-uppies."

On the economic side, some fear the "silver tsunami" will drain the country of its wealth, but Baxter says the United States has some advantages.

"It's true that everything in our society is built on the idea of continued growth, it's kind of a giant Ponzi scheme with every generation prior to this one having given birth to a larger generation," he said.

Good day, gentle jerkwads! Another year, another Xmas. In more of the words of Tinny Tim, god bless us, everyone! We're definitely gonna need it the way things are shaping up...

"Ho ho HO! I'm gonna shove coal so far up your stocking you'll be coughing up diamonds!"

That sleazeball Dubya is so untrustworthy that there has to be a 24/7 guard over Xmas just so he doesn't sneak some new slimeball crony in? Seriously, this is the fucking Leader Of The Free World? The posterboy for Freedom, Democracy and Honesty? Asshole! 100% undiluted assholio!! *PTOOEY*

US Senate stays in session to block Bush

WASHINGTON (AFP) - The US Senate is holding special one man sessions throughout Christmas and the New Year to prevent President George W. Bush from making appointments without the approval of the Democratic majority.

With the bang of a gavel, Democratic Senator Jim Webb declared the first session open on Sunday morning before closing it seconds later, without any of his colleagues present in the hall.

The brief ceremony will be repeated every two to three days until January 18, when lawmakers resume their work after the Christmas and New Year's holidays.

The Democratic majority is staging the move to avoid any formal recess for Congress extending over several days. A recess would allow Bush to appoint ambassadors, judges and other top posts without seeking a Senate confirmation for his nominations.

Bush has previously used his authority to avoid drawn-out political battles with Democratic foes over controversial nominations, including that of foreign policy hawk John Bolton who was named in 2005 as Washington's UN ambassador during a congressional recess.

Bolton stepped down last December, just before the Democrats assumed control of Congress. The "recess appointments" can last up to a year.

Webb, who is expected to convene four of the 11 scheduled pro forma sessions, said it was crucial that nominations be vetted by the senate.

Unpaid Credit Cards Bedevil Americans

AP Impact: Americans' See Their Debt Woes Expand As Unpaid Credit Card Bills Are on Rise

SAN FRANCISCO, Associated Press (AP) -- Americans are falling behind on their credit card payments at an alarming rate, sending delinquencies and defaults surging by double-digit percentages in the last year and prompting warnings of worse to come.

An Associated Press analysis of financial data from the country's largest card issuers also found that the greatest rise was among accounts more than 90 days in arrears.

Experts say these signs of the deterioration of finances of many households are partly a byproduct of the subprime mortgage crisis and could spell more trouble ahead for an already sputtering economy.

"Debt eventually leaks into other areas, whether it starts with the mortgage and goes to the credit card or vice versa," said Cliff Tan, a visiting scholar at Stanford University and an expert on credit risk. "We're starting to see leaks now."

The value of credit card accounts at least 30 days late jumped 26 percent to $17.3 billion in October from a year earlier at 17 large credit card trusts examined by the AP. That represented more than 4 percent of the total outstanding principal balances owed to the trusts on credit cards that were issued by banks such as Bank of America and Capital One and for retailers like Home Depot and Wal-Mart.

At the same time, defaults -- when lenders essentially give up hope of ever being repaid and write off the debt -- rose 18 percent to almost $961 million in October, according to filings made by the trusts with the Securities and Exchange Commission.

Serious delinquencies also are up sharply: Some of the nation's biggest lenders -- including Advanta, GE Money Bank and HSBC -- reported increases of 50 percent or more in the value of accounts that were at least 90 days delinquent when compared with the same period a year ago.

The AP analyzed data representing about 325 million individual accounts held in trusts that were created by credit card issuers in order to sell the debt to investors -- similar to how many banks packaged and sold subprime mortgage loans. Together, they represent about 45 percent of the $920 billion the Federal Reserve counts as credit card debt owed by Americans.

The bottom line is these fuckers are mugging the people, completely against the Constitution and all moral law, and nobody whose job it is to prevent this garbage is doing a goddamned thing to stop them.

THE FOREST HIDING BEHIND THE TREES

by Richard K. Brawn

December 20, 2007

If the simplest solution is probably the most likely, then the simplest definition of the problem also best defines the problem. The first step is to state the situation. So here it is. The men operating the Federal Reserve Bank are operating in secret, conducting ex post facto public policy, governance without due process, without regard to the public right to petition government, doing financial operations without restraint of civil liability, and virtually no oversight by Congress. The Federal Reserve Bank is conducting foreign policy and by what right we shall never know. Despite the Constitutional provision that all appropriations will be started in the House of Representatives, the Federal Reserve Bank has handed out colossal sums of money. Money is power in politics. These actions by this Federal Reserve Bank are completely outside the bounds of the United States Constitution. This is just part of the situation.

Many, many media articles are floating around about what the Federal Reserve Banks representing the fiat money countries are up to. Not a single one of those writings is completely factual. More to the truth is that there are insiders and there are outsiders. The media and media writers have absolutely no capability to obtain a total picture from inside corporations, government, or Reserve Bank decision centers. These decision centers are totally fragmented. Their number far exceeds all the bits and pieces represented by all the financial markets that we have come to know by their acronyms (CDO, etc). The decisions are correspondingly fragmented by opacity that always exists between insiders and outsiders. The decision centers are microcosmic compared to the big picture. Each decision center is island within an opaque ocean. Adding to this morass are new devices being established by the Reserve Banks, and other participants in the markets. Whatever is new has to be integrated into an opaque morass. Nobody sees more than the microcosm to which they are exposed and nobody knows more than that which they perceive within their microcosm. All the rest is imagination.

Imagination is running rampant in the media. It is creating its own obscuration of the situation. Searching for truth within a well written essay that was really constructed to provide financial benefit to the writer, is like searching for a pin in a haystack representing human self-interest. At this point, everything is mere guess work and supposition. Reserve Bank deliberations are closed to the outsiders. That is not to say that all non-reserve bank personages are outsiders. Some will have insider privileges to key information and some will receive immunity for their private party actions through creation of after-the-fact ‘public’ policy. But, all who are not actually ‘insiders’ must consider themselves to be outsiders and forego elevated ego-trips. The ethical complications of this morass are becoming apparent. Police of self-interest and self-dealing is an identifiable victim. Investigations initiated today will be subject to political judgment tomorrow. The extent of fraud may be so pervasive that prosecutors will simply cherry pick and delay. Civil claims of wrong doing will suffer from the special legal privileges provided by the corporate cloak.

I have tried to create a hairball smoke, mirrors, illegality, and complexity so you can truly be ready for simplicity.

Here is the problem: Those with capital do not wish to add further good capital into such a system.

Crisis may make 1929 look like walk in the park

By Ambrose Evans-Pritchard

The Telegraph, London

Saturday, December 22, 2007

http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2007/12/23/cccris...

Twenty billion dollars here, $20 billion there, and a lush half-trillion from the European Central Bank at giveaway rates for Christmas. Buckets of liquidity are being splashed over the North Atlantic banking system, so far with meagre or fleeting effects.

As the credit paralysis stretches through its fifth month, a chorus of economists has begun to warn that the world's central banks are fighting the wrong war, and perhaps risking a policy error of epochal proportions.

"Liquidity doesn't do anything in this situation," says Anna Schwartz, the doyenne of US monetarism and life-time student (with Milton Friedman) of the Great Depression.

"It cannot deal with the underlying fear that lots of firms are going bankrupt. The banks and the hedge funds have not fully acknowledged who is in trouble. That is the critical issue," she adds.

Lenders are hoarding the cash, shunning peers as if all were sub-prime lepers. Spreads on three-month Euribor and Libor -- the interbank rates used to price contracts and Club Med mortgages -- are stuck at 80 basis points even after the latest blitz. The monetary screw has tightened by default.

York professor Peter Spencer, chief economist for the ITEM Club, says the global authorities have just weeks to get this right, or trigger disaster.

"The central banks are rapidly losing control. By not cutting interest rates nearly far enough or fast enough, they are allowing the money markets to dictate policy. We are long past worrying about moral hazard," he says.

"They still have another couple of months before this starts imploding. Things are very unstable and can move incredibly fast. I don't think the central banks are going to make a major policy error, but if they do, this could make 1929 look like a walk in the park," he adds.

Map of the world, with countries' sizes depicted relative to their Oil Reserves (which explains the geopolitical bullshit we can't make heads or tails of):

The SIZE of each country on this map reflects the relative size of its OIL RESERVES.

The COLORS reflect different levels of OIL CONSUMPTION (per country, not per capita -the key is on the left).

The map's sources are identified as the BP Statistical Review Year-End 2004 and the Energy Information Administration.

The world financial system is in huge deep kimchee, and folks are just hoping it will all automagically go away. The magnitude of the problem is barely understood by the relatively small handful of macroeconomic geeks who are madly sounding alarms, and the population at large is far more interested in Britney Spears' underage sister's pregnancy (the gossip topic dujour). The news barely contains a nervous ripple or two, with a few talking heads giggling vapidly, like Morbo's spritzhead co-anchor Linda on Futurama.

MARKETS IN DENIAL

by Christopher Laird

PrudentSquirrel.com

December 21, 2007

The ECB just lent out an astounding half $Trillion worth of money to 390 banks in only one day this week. It was to combat the lending freeze in Europe where banks are refusing to lend to each other over concerns about the mortgage losses this year. The demand was so high it caused alarm.

The question that comes to mind is, ‘Hey, we have a first class financial emergency here, when are the stock markets going to react accordingly?’

Consider this comment:

“Commentators joke about banks and financial institutions "going to the confessional," meaning that they admit that a percentage of their assets are mortgage-backed securities that are now near-worthless.

The fact is that very few institutions have gone to the confessional. Probably 99.9% of even the world's financial institutions are hiding vast amounts of near-worthless securities, and that doesn't even touch upon investments by non-financial companies (such as investment pools in state and local governments like those in Florida and Montana.”… Link

"What has become evident is that banks are concerned about the capital position of other banks. They do not know where the losses resulting from the array of derivative financial instruments will finally come to rest, and I think in the last four weeks we've also seen a more disturbing development, which is that the banks themselves are worried that the impact of their reluctance to lend collectively will lead to a sharper downturn in the United States, and perhaps elsewhere, thus generating further losses outside the housing and financial sectors, which will feed back onto balance sheets and reinforce their reluctance to lend, because of the need to generate more capital." Mervyn King, Governor Bank of England

It is hoped that the EU banks will bring to light the extent of their losses by first quarter 08. If not, the crisis continues unabated. The main problem is that they don’t know who is hiding losses.

Talk about a disconnect between the people and their food:

From Kevind Depew's Minyanville column:

"ConAgra (CAG) yesterday morning reported earnings, but there were a couple of problems. The headlines all focused on high food inflation; the company said it was seeing inflation running north of 8%, far higher than it had anticipated.

To combat this food inflation, the company intends to be far more aggressive on pricing in 2009. The question is one of elasticity, however. How can the company be sure it can successfully pass through price increases? After all, its consumer foods unit was its weakest segment.

CEO Gary Rodkin said, "given the continued high level of inflation and so much news and noise about the escalating input costs across almost all the food commodities and materials and energy, it's a very very different environment when we present our pricing actions. Everybody, all competitors are under pressure, including private label. So this makes us less nervous -- much less nervous about passing on some significant pricing. It's just hard to argue with that logic."

But there's more to this story than inflation. The company in the quarter booked strong gains in its commodities trading unit. Makes sense, commodities have been on fire. But the company gave its traders more capital to work with. The company was adamant in the call that it "planned very conservatively" and "we are not rolling the dice shooting for the moon." But more capital equals more risk taking. Period.

CFO Andre Hawaux deflected this notion, saying, "I would just end by saying we expect attractive returns, but the capital will vary up and down based on the opportunities. So, it really isn't about a desire to take on more risk, it's a desire to earn more money for the company."

Oh, Ok. Just like that; magic. I was discussing this with Minyanville Professor Scott Reamer who noted, "By that logic ConAgra should totally shut down it's consumer foods unit and become a commodities trading firm." Yes, then they can really focus on earning more money for the company. The reality is that no matter how one verbally spins it, this is increased risk taking. "

"In general, an ascendant society is one with high levels of integration, organization and cohesion (accepting that they cannot all be equally strong). This means that it will be ordered and peaceful (integration). It will be innovative and wealthy (organization). And its citizens will be loyal while its institutions will be widely recognized as legitimate. Conversely, a declining society or a failed society is one where integration, organization and cohesion are disappearing or have disappeared.

A dark age is an extended period of significantly reduced integration, organization and cohesion. "

(excerpt from Dark Age Watch)

One in Five Expect to Borrow to Heat Homes This Winter

by Connie Prater, CreditCards.com

Tuesday, December 18, 2007

For perhaps as many as 27 million American adults, keeping warm this winter will mean borrowing money and 20 million will use credit cards to be able to afford their heating bills, according to a CreditCards.com poll.

Nearly 12 percent of Americans say they will need to borrow money to pay winter heating bills; 9 percent will need to use credit cards to be able to afford their heating bills. The poll, commissioned by CreditCards.com and conducted by GfK Roper Public Affairs & Media, surveyed 1,004 randomly selected American adults by telephone Dec. 7-9, 2007 to gauge their attitudes about energy costs in 2008. A majority say they expect oil and gasoline prices to get worse in 2008.

Heating bills are rising at a time when utility companies across the country are broadening electronic payment options for customers, including allowing credit card payments for utility bills. Personal finance experts say paying for basic living expenses with credit cards makes sense only if you pay off the entire balance each month. They also warn that carrying a revolving balance encourages people to live beyond their means while racking up interest charges that can plunge families deeper into debt.

Here's an excellent summary of the ways wholesale fraud was perpetrated by a greedy, amoral lending industry and greedy, amoral borrowers:

Let Me Count The Ways

June 8th, 2007 by reality

I’ve mentioned before that in addition to the hazards of subprime credit, over-valuation, over-supply, resets, rising interest rates and so forth, the property market has been the scene of an immense amount of mortgage fraud. I think the extent of this fraud is not yet widely appreciated. Anyway, I have tried here to catalog the major types of mortgage fraud that I have seen reported. Since this is credit fraud, I have grouped the various forms under the three C’s of credit.

Collateral Fraud. The objective of collateral fraud is to deceive prospective lender(s) as to the market value of the property being used as collateral for a mortgage loan. Note that a particular transaction may include multiple forms of fraud, there is no implication that these are mutually exclusive.

Appraisal Fraud: Improperly or illegally influencing appraisals. The mildest and most widespread form of this fraud is to ask appraisers to submit a preliminary estimate of value before awarding them the job - and then giving the work to the appraiser who “hits the number”. More severe forms of course include explicit collusion and under-the-table payments. This fraud is easiest in a down market, because the appraiser can use older, out-of-date comparisons from closer to the market peak to disguise the real value of a property.

Undisclosed Cash Back: In this widespread fraud, the property is sold at at an inflated price. Most or all of the premium over the market price is then covertly passed back to the buyer. The seller agrees to the scheme in order to get a prompt sale. (And it would not be illegal if the cash-back payment were disclosed to the mortgage lender). The buyer then generally walks away with the cash, making no mortgage payments. This gives rise to a so-called early payment default. A milder version, although still felonious, is the use of the premium or cash-back as the “down payment”.

Phantom Builder Loans: A variation on loaned down payments, usually done by builders in order to qualify buyers who would not otherwise be able to obtain mortgage financing. The builder inflates the purchase price of the house and then extends the buyer a loan for the difference between the actual and the inflated purchase price. The buyer is not expected to ever make any payments on the loan, which is then quietly written off by the builder. But the effect is to reduce the apparent loan-to-value (LTV) ratio on the first mortgage, for example making a 100% loan appear to be only 80%. This makes the loan appear safer than it really is, inducing the mortgage lender to extend credit under false pretenses.

Down Payment Passthroughs: This fraud is very common and may also be classified as a capacity fraud. Typically for this fraud, buyers who lack sufficient down payments or assets to qualify for mortgage financing, especially government-guaranteed loans where down payments are still required, are directed by builders to an apparently unrelated non-profit organization. This organization presents itself as a community-supported program to boost home-ownership, amongst minorites, low-income folks, etc., etc., but in truth is simply a front for the builder. The builder contributes money to the non-profit, which then turns around and grants a portion of the money to prospective buyers for use as a down payment. This is a disguised discount intended to deceive the mortgage lender as to the actual loan-to-value (LTV) ratio.

Multiple Financing: Obtaining multiple mortgages on the same property at the same time, borrowing many times the property’s value. This can be tricky but apparently is more common than one might think. Delays in recording can mean that title companies don’t know about one another’s activity on the same property. Or creating a fake title company works, too. Generally this will be fairly quickly discovered, so fast feet and stolen identities are needed.

Character Fraud: The objective of character fraud is to deceive the mortgage lender as to the likelihood that the prospective borrower can be relied upon to honor the terms of the credit extension being contemplated. This deception is achieved by falsification of the borrower’s identity or credit score and payment history.

Straw Buyers and Identity Theft: In some sense, the easiest way to get a loan if you have some impediment to your own access to credit (such as being a known criminal) is to hire someone with the necessary credentials to act as the buyer. Or deceive them into acting as the buyer. Commonly known as a “straw buyer”. They usually believe that they’re going to receive a fee, a share of big profits, or both. Failing that, then use someone’s identity without their knowledge or permission, otherwise known as identity theft. Then you either sell them your property at an inflated price, or do a “cash-back” and then abscond with the cash. Either way leaving the straw buyer holding the bag.

Rented FICOs: This one has just been shut down by Fair, Isaac (the vendor of FICO scoring). The borrower would arrange, usually through an agency specializing in this fraud, to pay a fee to be added as an additional authorized user on credit cards issued to an individual with flawless credit. Due to a quirk in the FICO scoring system, now eliminated, the prospective borrower’s score would be increased based on the high-score individual’s payment record.

Flip Fraud: It takes several (typically 6 to 9) months after default for foreclosure to actually occur. This period offers, in effect, free use of the property for speculation. So flippers can, and do, obtain mortgage credit without any intention of ever making any payments. The property is immediately listed for sale at a profit; if it sells, then the profit is taken, if not, the flipper takes a hike leaving the mortgage company to dispose of the mess. Most prevalent in states (such as California) where foreclosure rules make it difficult or impossible for the lender to go after the borrower’s other assets.

Capacity Fraud: The objective of capacity fraud is to deceive the prospective lender as to the borrower’s ability to make the payments to be agreed on. This deception is achieved by falsification of the borrower’s identity (covered above), employment, income, assets and other obligations.

Rented Down Payments and Reserves: Don’t have any money for a down payment or for the assets to cover the three months or so of payments required by many lenders? Then there are folks out there who will rent you the appearance of money - an account in your name to show the lender. The account is real enough, just that the borrower has no access to it although it appears to be in the borrower’s name.

Over-stated incomes and assets: The willingness of lenders to accept the unverified claims of borrowers as to their incomes and/or assets is well-publicized, as is the widespread fraud that ensued. Liars’ loans, as they have become known.

Forged Documentation: Mostly done by mortgage brokers rather than the borrowers themselves, documents such as W-2s, income tax returns, 1099’s, bank statements and so forth are altered to misrepresent the borrower’s income and/or assets. Classic and straightforward. Often amateur work, but at least one large mortgage lender is claimed to have had an “Art Department” whose sole job was professional forgery of documentation.

Simultaneous Purchases: Frequently used by speculators and flippers, this fraud relies on the time delays in the credit information reporting system. This fraud strategy involves buying several properties at the same time and neglecting to inform the multiple prospective lenders about the true scale of the borrower’s commitments. The much-discussed Casey Serin shows an example of this fraud.

Residency Fraud: Perhaps the simplest fraud of all, lying to the lender about the intended use of the property - saying that it will be owner-occupied when, in fact, it is being purchased for investment or speculation. In all fairness, there are also many properties when the use change was forced rather than intentional, and therefore not fraudulent - the buyer bought a new property and intended to live in it, but couldn’t sell his previous residence and so was forced to hold one or the other for rental or speculation.

Ludwig Von Mises, genius libertarian economist of the last century (whose works were stupidly banned by Herr Hitler) and Father of the Austrian School of Economics, speaks to us from the great beyond about our current FUBAR:

There is no means of avoiding the final collapse of a boom brought about by credit (debt) expansion. The alternative is only whether the crisis should come sooner as the result of a voluntary abandonment of further credit (debt) expansion, or later as a final and total catastrophe of the currency system involved.

The Credit Crisis Could Be Just Beginning

By Jon D. Markman

Special to TheStreet.com

9/21/2007 6:40 AM EDT

Satyajit Das is laughing. It appears I have said something very funny, but I have no idea what it was. My only clue is that the laugh sounds somewhat pitying.

One of the world's leading experts on credit derivatives (financial instruments that transfer credit risk from one party to another), Das is the author of a 4,200-page reference work on the subject, among a half-dozen other tomes. As a developer and marketer of the exotic instruments himself over the past 30 years, he seemed like the ideal industry insider to help us get to the bottom of the recent debt crunch -- and I expected him to defend and explain the practice.

I started by asking the Calcutta-born Australian whether the credit crisis was in what Americans would call the "third inning." This was pretty amusing, it seemed, judging from the laughter. So I tried again. "Second inning?" More laughter. "First?" Still too optimistic.

Das, who knows as much about global money flows as anyone in the world, stopped chuckling long enough to suggest that we're actually still in the middle of the national anthem before a game destined to go into extra innings. And it won't end well for the global economy.

The all-time best contrarian indicator is George W. Bush himself. Whatever that man says, the opposite is always the truth. Every single thing he has ever touched has turned into total shit. Everything.

So here's the truth:

- the economy is seriously seriously fucked

- stagflation is already here

- jobs are totally fucked

- taxes on the people are rising in the form of inflation

- there isn't jack the government or banks can do except try to manage the avalanche

- they don't have a plan are are dancing as fast as they can

- the budget is totally fucked, stick a fork in it

Bush says US economy is safe and sound

FREDERICKSBURG, Va. Associated Press - President Bush worked to reassure Americans on Monday about the economy but said "there's definitely some storm clouds and concern" because of the nation's credit crunch and mortgage problems.

"But the underpinning is good," Bush told business and community leaders at a gathering of Rotary Club members.

"We've had a pretty good economic run," the president said in a speech intended to show he is aware of the public's edgy mood these days. Consumer confidence has eroded as turmoil in the housing and credit market have battered the economy.

Bush tried to position himself as an advocate for working families by taking aim at his favorite target: the Democratic Congress.

"The Congress cannot take economic vitality for granted," Bush said.

"The most negative thing Congress can do in the face of economic uncertainty is to raise taxes on the American people," Bush said.

The audience of roughly 80 people listened to Bush with respectful silence. Yet a line that normally gets him applause — "I'll veto any tax increase" — drew no reaction at all.

Bush chose to highlight positive economic news, such as job growth. "People are working; productivity is high," Bush said.

He acknowledged the nation's major economic woes — mainly the housing and credit crunch — in the context of explaining what his administration is doing to help.

"We can mitigate some of the issues," Bush said.

"I just want to let you know we've got a strategy. And Congress can help," the president said, citing a list of bills he's proposed to lawmakers.

Bush spoke at the Yak-A-Doo's restaurant inside a Holiday Inn.

The White House wanted to keep the flavor of the local Rotary meeting, so there was no banner or backdrop. Bush was not even introduced; he just showed up, drawing a round of applause. The Christmas music being piped was not cut off until someone pointed that out.

The president watched silently as club members offered a truncated version of their normal business routine, offering the Pledge of Allegiance and a prayer.

After months of bickering with Congress, Bush pronounced himself pleased with the shape of spending levels that Congress is expected to approve this week. He said any measure must include money for troops in Iraq and Afghanistan.

Minyanville is an excellent finance site with a wealth of info and analysis. Cool econerds hang there, of which Mr. Practical is one of the better ones.

Current Global Economy Like Nothing Before

Mr Practical, Minyanville.com

U.S. investment abroad has all but collapsed, nose-diving from $42 bln to $4 bln.

The world's largest economies have really never been in this situation before. Last week I alluded to the fact that investors need to change their mindset. All the old "tells" don't work in a bear market. What you are witnessing is the most massive credit bubble in history first having trouble and next unwinding. We are seeing the beginning of the unwinding only.

Bulls are breathing a sigh of relief as the new TIC data shows foreign inflows into the U.S. picking up. What they fail to realize is that this is what is to be expected as the credit bubble starts to fizzle.

First, the real alarm should be sounding as U.S. investment abroad has all but collapsed, nose-diving from $42 bln to $4 bln. This illustrates the slowing economic activity as the result of credit unwinding. It is just starting.

Second, the increase in foreign inflows is mostly from the UK increasing its purchases of U.S. treasuries. Why? It is what we told Minyans to expect: as credit unwinds there will be demand for dollars. This is why the UK bought treasuries. Everyone wants treasuries. Debt is unwinding.

Don't mistake the old bull tells for positive news. Keep your eye on the ball. What is happening is the market is unwinding all these imbalances that central banks have fostered over the years.

Dear CIGAs,

THIS IS IT!

There is NO PRACTICAL SOLUTION to this problem outside of an immediate recovery in real estate conditions representing the average prices that existed in 2006. The chance of that is zero.

THIS IS IT! My vision for 2011 is ugly beyond your wildest imagination. Are your prepared?

1. Do you have paper certificates for your shares?

2. Are you still significantly in involved with Internet financial entities?

3. Are you in debt beyond your fully paid physical gold?

4. Are you in an ETF in precious metals where you cannot take delivery of paper certificates?

5. Do you have significant funds in time deposits at your local bank?

6. Do you have Federal T Bills in the non- dollar Cando and Swissy?

7. Have you seen to it that your family is in a strong position?

8. Have you protected your company treasury?

9. Have you, to the best of yours practical ability, eliminated agents between you and your assets?

10. Have you taken delivery of your coins from your coin dealer?

11. Have you withdrawn your cash balance from all banks and brokers? Do not forget Citi restrictions on the amounts of outgoing bank wire money transfers.

12. Are you charting your liquid net worth on a weekly basis?

13. Have you studied the simple TA I have offered you? When the world wallows in complexity the only defense you have is to return to simplicity.

14. Have you seen the DVD, "The Secret"? The greatest wealth you can have is self confidence, which is confidence in the SELF.

Last and most important, do you have insurance against the failure of the system to function? Gold is that insurance policy you pray you won’t have to collect on, but you will. Gold is going to $1050 and onward to $1650.

Regards,

Jim

------------------------------

Here's what Forbes Magazine was saying about Master Jimbo back in 2001:

Golden oldie

Forbes Magazine, 12.10.01

Having called the top of the gold market 22 years ago, a goldbug now thinks that he has found the bottom.

In 1977 James Sinclair boldly predicted that gold would rise from $150 per troy ounce to $900. Gold never reached that mark, but it came close on Jan. 21, 1980, peaking at $887.50. The next day, says Sinclair, he unloaded his entire gold position, personally netting $15 million. Pointing to the U.S. Federal Reserve's efforts to fight inflation, Sinclair then predicted at an annual gold conference that the metal would languish for the next 15 years. It did. On Friday, Jan. 20, 1995, it closed at $383.85.

So this is a guy to listen to. He's bullish again. Why? Because he believes, despite the whiff of deflation in the October producer price index, that the U.S. is headed for mild inflation. He thinks that the dollar is due for a fall. He is also impressed that mining companies, which routinely sell unmined metal forward at fixed prices to protect themselves against further price drops, have recently pulled back from placing these hedges, a move that should prompt gold prices to rise. If they do, Sinclair expects a squeeze on gold speculators, who have $36 billion in short positions. Sinclair figures that the shorts will cover their positions soon after gold hits $305, a move that could force the price to $350, even $430.

Take a look at this projected federal spending chart. Note the part about it not showing the national debt payments (yes, THAT currently 9 trillion dollar debt). Yikes.

Federal Spending (Percentage of gross domestic product):

Mish (Michael Shedlock) explains what is going on. We are at the top of the credit inflationary cycle, going into a credit deflation. This is different than a price inflation (which happened under the radar over the last 7 years), something that is already reflected in the high price of gas and ludicrous price of housing etc.

This is a really really good take:

----

Rear View Mirror Hyperinflation

The Wall Street Journal is talking about a Citi That Gets No Sleep.

"Citigroup Inc. seems like it is caught in a never-ending game of whack-a-mole: The second the bank knocks down one problem, another pops up.

On Friday, Moody's Investors Service downgraded Citigroup's long-term ratings, saying it expects continued losses related to mortgages and other complex securities. The action came a day after Citigroup resolved longstanding questions about troubled off-balance-sheet vehicles it sponsors.

The downgrade shows that Chief Executive Vikram Pandit, who started his new position Tuesday, has little room to maneuver ... [Rest By Subscription]"

Super-SIV DOA

With Paulson's Super-SIV bailout plan all but dead, Citigroup Moves to Consolidate Seven SIVs on Balance Sheet.

Citigroup Inc. will bail out its seven structured investment vehicles, bringing $49 billion of assets onto its balance sheet in the biggest move yet by a bank to rescue the failing funds.

"After considering a full range of funding options, this commitment is the best outcome for Citi and the SIVs" Pandit [Citi's new CEO] said in an e-mailed statement.

I happen to agree with Pandit. Postponing problems is not a solution. However, I think Citi reacted because it was forced to by the market, not because it wanted to.

Is this Capitulation?

The question at hand is whether or not this is capitulation. I think not and neither does Mr. Practical who says: Citigroup's Move A Sign of Deflation.

This is Jim Sinclair, one of the best known and most loved metals analyst, trader and advisor. He's made a HUGE pile of money buying and selling precious metals and mining stocks over the years, and now he's a rich cranky old fart that answers to nobody. He charges nothing for his advice, and tells it like it is. He's seldom wrong, and never about fundamental movements in gold. He tends to be over the top, but why not, he's earned it.

Today's post from Master Sinclair:

Dear CIGAs,

All levels of debt impact all other levels of debt in a downward spiral. The American consumer lacks personal control, is debt ridden, greed governed and as a group lost in a mental deficiency called total abandonment of responsibility. They cannot and will not support the largest economy in the world which is losing its leading position fast. Skewed statistics representing extra selling days and improper accounting for inflation make statistics look much better than they in fact are. The masters of lies, the spinners, will not be above to spin away the worst credit crisis of your lifetime boiling underneath and weakening the foundation of the entire financial world.

THIS IS IT! ARE YOU PREPARED?

-----

(CIGA stands for "Comrades In Golden Arms". Jim is a little goofy.) When Jimbo sez financial armaggedon is upon us in bold caps, you better believe it's gonna be a bad storm.

Okay kiddies, this is pretty much the start of the FUBAR years.

I predict that things will get very scary for a short while, and then will settle into a slow, slogging, exceedingly painful downward spiral of impoverishment of the vast majority of Americans. The New Depression is headed right for us and will last many many years, possibly a full generation.

Not blood-in-the-streets scary, no. But definitely the kind of scary brought on by cities, states and 'solid' banking institutions going bankrupt, markets collapsing, rampant inflation, massive job losses, increased crime born of desperation, disruption of services, economic turmoil on a global scale never before seen in history, and a very panicked herd mentality.

I myself have now moved all my savings OUT of the US dollar and the US market. I have it sitting in physical gold at the Perth Mint in Australia (where the feds can't get their paws on it), gold share ETFs, a basket of currencies designed to weather against the dollar's fall, and some solid foreign stocks (mostly energy, mining, transportation and telecom) that pay fat dividends in currencies far more solid than greenbacks.

I own two handguns and a rifle. I know that sounds like survivalist lunacy, but I've been in places and times where the thin veneer of 'civilization' has been swiftly and shockingly torn apart. Believe me when I tell you I would rather have weapons and never use them than need them and not have them. I have been in both situations, and the former is always the better bet.

Along that same line of thought, I have my 'hurricane kit' prepped. Basically, everything I need to take care of my family for a month without going to the store or having power, gas, or water. Again, I've been in situations where it took far more than a month for anything resembling civilization to assert itself. Self-sufficiency is not a skill to be ridiculed.

Think of Burt Gummer in the movie "Tremors": when the shit hits the fan, you'll be happy crazy fuckers like me know what to do.

Black Swans and Endogenous Uncertainty

by John Mauldin

December 7, 2007

How does the risk of default in California or Thailand get spread throughout the world, causing problem in money market funds in Europe and Florida? Yes, we can trace the linkages now, but was it possible to predict the crisis beforehand? And can we use what we learn to predict and hopefully hedge ourselves from the next crisis? Why do these things seem to be happening with more frequency? This week we are going to look at some economic theories which will give us some insight into the above questions. As it turns out, the more that individuals hedge their risk in economic markets - the larger the network - the more the entire system is put at risk. There is a lot of ground to cover, so we will jump right in.

Before we get to the economic theory, let's review part of a letter I wrote in April of 2006 discussing chaos theory, as it will give us a useful mind picture to understand the latter part of the letter. This was part of a letter where I laid out my thoughts that we would indeed experience a crisis in the future along the lines we are now seeing.

Ubiquity, Complexity Theory and Sandpiles

We are going to start our explorations with excerpts from a very important book by Mark Buchanan call "Ubiquity, Why Catastrophes Happen." I HIGHLY recommend it to those of you who like me are trying to understand the complexity of the markets. Not directly about investing, although he touches on it, it is about chaos theory, complexity theory and critical states. It is written in a manner any layman can understand. There are no equations, just easy to grasp well-written stories and analogies.

We have all had the fun as a kid of going to the beach and playing in the sand. Remember taking your plastic buckets and making sand piles? Slowly pouring the sand into ever bigger piles, until one side of the pile started an avalanche?

Imagine, Buchanan says, dropping one grain of sand after another onto a table. A pile soon develops. Eventually, just one grain starts an avalanche. Most of the time it is a small one, but sometimes it builds up and it seems like one whole side of the pile slides down to the bottom.

Well, in 1987, three physicists named Per Bak, Chao Tang and Kurt Weisenfeld began to play the sandpile game in their lab at Brookhaven National Laboratory in New York. Now, actually piling up one grain of sand at a time is a slow process, so they wrote a computer program to do it. Not as much fun, but a whole lot faster. Not that they really cared about sandpiles. They were more interested in what is called nonequilibrium systems.

They learned some interesting things. What is the typical size of an avalanche? After a huge number of tests with millions of grains of sounds, they found out that there is no typical number. "Some involved a single grain; others, ten, a hundred or a thousand. Still others were pile -wide cataclysms involving millions that brought nearly the whole mountain down. At any time, literally anything, it seemed, might be just about to occur."

It was indeed completely chaotic in its unpredictability. Now, let's read this next paragraph slowly. It is important, as it creates a mental image that helps me understand the organization of the financial markets and the world economy. [emphasis mine]

To find out why [such unpredictability] should show up in their sandpile game, Bak and colleagues next played a trick with their computer. Imagine peering down on the pile from above, and coloring it in according to its steepness. Where it is relatively flat and stable, color it green; where steep and, in avalanche terms, 'ready to go,' color it red. What do you see? They found that at the outset the pile looked mostly green, but that, as the pile grew, the green became infiltrated with ever more red. With more grains, the scattering of red danger spots grew until a dense skeleton of instability ran through the pile. Here then was a clue to its peculiar behavior: a grain falling on a red spot can, by domino-like action, cause sliding at other nearby red spots. If the red network was sparse, and all trouble spots were well isolated one from the other, then a single grain could have only limited repercussions. But when the red spots come t riddle the pile, the consequences of the next grain become fiendishly unpredictable. It might trigger only a few tumblings, or it might instead set off a cataclysmic chain reaction involving millions. The sandpile seemed to have configured itself into a hypersensitive and peculiarly unstable condition in which the next falling grain could trigger a response of any size whatsoever."

Monetary policy is out of synch with reality

By George Magnus, Financial Times UK

December 14 2007

Occasionally, there is an unreal moment on television when the movement of the speaker's lips bears no relation to what you hear. Something very similar is happening as regards the conduct of monetary policy in the downswing of the global credit cycle.

What you can hear is a legitimate expression of concerns by central bankers and some economists about easing monetary policy too fast or at all. But it is out of "synch" with the script, so to speak, which is about something quite different, namely the banking crisis. The early cost estimates approximate those of the Japanese banking crisis in the early 1990s and overshadow any of the other 112 banking crises since 1970, according to a study by the World Bank.

The first argument advanced for caution is that after the exceptional housing boom, prices should be allowed to fall back towards more reasonable levels. But there is little risk that lower interest rates would arrest the adjustment of prices. Up to 60 per cent of the variation in house prices is thought to arise from supply, regulations and inventory, rather than from macroeconomic factors. Rising repossessions are occurring before the economy has slowed down significantly. The US proposal to freeze mortgage rates for subprime borrowers misses the point that most repossessions happen because of unemployment or income constraint, not interest payment adjustment.

The helicopters start to drop money

by Martin Wolf, Financial Times

December 12 2007

The central bank helicopters are planning a co-ordinated drop of liquidity on troubled market waters. The money to be dropped now is not that large. But if this does not work, more will surely follow. The helicopters will fly again and again and again.

One point is clear: central banks must be pretty worried to take such a joint action. For what is remarkable about Wednesday’s statement is that five central banks – the Bank of Canada, the Bank of England, the European Central Bank, the Federal Reserve and the Swiss National Bank – are co-ordinating their (different) interventions. Their hope must be that this action will trigger not panic (”what do the central banks know that I do not?”) but confidence (”now that the central banks are prepared to intervene in this way, I can at last stop worrying”).

It is easy to understand why central banks should have decided to take heroic action. Confidence has fled the markets in a four-month long episode of “revulsion”. As a result, monetary policy is not being transmitted to the ultimate borrowers as central banks wish. Particularly worrying has been the widening of gaps between three-month inter-bank lending rates and policy rates in the dollar, euro and sterling markets. Spreads in the last of these have recently become enormous (at more than 100 basis points).

Yet this is not the only indication of distress: in the US, for example, the spread between the rate of interest on 3-month treasury bills and AA-rated asset-backed commercial paper has widened to 270 basis points from a mere 30 basis points earlier in the year. This is revulsion, indeed.

So why might Wednesday’s co-ordinated interventions succeed where previous actions have not? In a word, the answer is: stigma.

Why monetary policy easing is warranted even in the current insolvency crisis

by Nouriel Roubini | Dec 15, 2007

Recently I have been repeatedly asked – by commentators on this blog and others - the following questions: If you rightly believe that the current global financial crisis is one of insolvency and not just of illiquidity and is also due to fundamental incentive problems of financial agents in a world of asymmetric information why do you now recommend that central banks aggressively cut interest rates? Since you argue that monetary easing will not prevent the unavoidable hard landing why to support a reduction in policy rates? Wouldn’t this monetary easing imply a bailout of reckless lenders, borrowers and investors, cause another asset bubbles and prevent the necessary – if painful – loss of asset values and restructuring of distressed claims? And wouldn’t this monetary easing risk causing high inflation at a time when such inflationary pressures are already rising? And since – as you correctly argued – the recently announced coordinated monetary policy injection by central banks has so far failed to affect liquidity spread in a significant way – why should easing policy rates make any difference?

The arguments against policy rate easing by central banks are thus threefold:

a) such monetary easing will not prevent a hard landing and will only postpone the necessary restructuring after a reckless credit-boom driven asset bubble;

b) it will cause moral hazard and possibly create future bubbles;

c) it may lead to higher inflation.

Let me argue why monetary policy easing – not just palliatives such as the liquidity injections announced by central banks this week but rather significant cuts in policy rates – are now necessary and warranted.

After the Money’s Gone

By PAUL KRUGMAN, New York Times

Published: December 14, 2007

On Wednesday, the Federal Reserve announced plans to lend $40 billion to banks. By my count, it’s the fourth high-profile attempt to rescue the financial system since things started falling apart about five months ago. Maybe this one will do the trick, but I wouldn’t count on it.

In past financial crises — the stock market crash of 1987, the aftermath of Russia’s default in 1998 — the Fed has been able to wave its magic wand and make market turmoil disappear. But this time the magic isn’t working.

Why not? Because the problem with the markets isn’t just a lack of liquidity — there’s also a fundamental problem of solvency.

Let me explain the difference with a hypothetical example.

Suppose that there’s a nasty rumor about the First Bank of Pottersville: people say that the bank made a huge loan to the president’s brother-in-law, who squandered the money on a failed business venture.

Even if the rumor is false, it can break the bank. If everyone, believing that the bank is about to go bust, demands their money out at the same time, the bank would have to raise cash by selling off assets at fire-sale prices — and it may indeed go bust even though it didn’t really make that bum loan.

And because loss of confidence can be a self-fulfilling prophecy, even depositors who don’t believe the rumor would join in the bank run, trying to get their money out while they can.

But the Fed can come to the rescue. If the rumor is false, the bank has enough assets to cover its debts; all it lacks is liquidity — the ability to raise cash on short notice. And the Fed can solve that problem by giving the bank a temporary loan, tiding it over until things calm down.

Matters are very different, however, if the rumor is true: the bank really did make a big bad loan. Then the problem isn’t how to restore confidence; it’s how to deal with the fact that the bank is really, truly insolvent, that is, busted.

Listen to this guy, he'll keep your from getting your assets kicked...

More Gasoline on the Fire

by Peter Schiff, December 14, 2007

Euro Pacific Capital

This week’s announcement by the Fed that it will create a new mechanism to provide funding for credit challenged banks has been lauded by Wall Street as an innovative approach to solving the credit crisis. In truth, it is really just the same response the Fed has had for all problems great and small: crank up the printing presses, shower money on the problem, and hope that financial pain can be obscured by the balm of inflation. Both the Fed and Washington politicians are completely clueless regarding the ill effects of the plan, and are simply acting in desperation to keep a ticking time bomb from exploding before the next election.

The Fed and other foreign central banks will provide this liquidity by auctioning low interest rate loans to holders of U.S. mortgaged-backed securities. The loans will be made under the same terms currently in use at the Fed’s “discount window”, with the added benefits of even lower interest rates and anonymity (borrowers wish to avoid the public stigma that comes from utilizing the discount window). Since the loans can be collateralized by mortgage-backed securities, the Fed will be on the hook should these loans not be repaid. In other words, the losses will simply be monetized, or more precisely socialized, as they are passed to the public in the form of inflation.

To get a sense of the losses that potentially await the public, in a recent transaction, E-Trade Financial liquidated its entire portfolio of subprime mortgaged-backed securities for a mere 27 cents on the dollar!

The hope that this additional credit will somehow alleviate the problems in the U.S. housing market is extremely naïve. Virtually none of this newly created credit will find its way back into the domestic mortgage market. With our real estate prices still too high, the gathering potential for lenders to be forced to assume liability for “unsophisticated” borrowers, the added uncertainty regarding mortgage terms, and the persistent weakness in the U.S. dollar, such loans will be far too risky for most foreign lenders to consider. Instead, these banks will take this cheap Fed money and invest it in higher yielding assets overseas. Off-loading risky U.S. mortgages to the Fed in exchange for cheap loans that can be used to finance better yielding foreign investments could well develop into the next carry-trade of choice.

The real losers will be ordinary Americans, who do not get the benefit of the newly created money, but merely suffer the consequences of rising domestic prices and a falling standard of living. With this new plan, the Fed is laying its cards on the table and its hand is a loser. If mortgage losses are socialized through inflation, this new cure will be even worse for the economy than the “housing bubble disease” the Fed infected us with in the first place.

Now that the Fed has upped the inflation ante it’s time to press our bets on gold. About two weeks ago Goldman Sachs predicted that shorting gold will be the best trade of 2008. Call me cynical, but knowing Goldman Sachs, my hunch is this shrewd investment bank, recently criticized for shorting the very subprime loans it was touting to its customers, may be perusing a similar strategy with gold. Perhaps Goldman has a current short position it needs to cover or wants to buy a lot more gold, but needs to convince others to sell it to them.

Maybe Goldman will be right after all. Shorting gold could turn out to be the best trade of 2008, but not for those who short it, but for Goldman Sachs as it takes the other side of the trades. Recent moves by Paulson and Bernanke virtually guarantee that gold will rise. It’s good to be the king.

This is a chart just released by Merrill Lynch. It shows their indicators hitting at 100% for a recession. Notice the last two times the indicator hits 100% coinciding neatly with the recessions starting in 1990 and 2001. Ding ding ding ding! Hope you've got your hurricane kit ready...

Constitution of The United States of America, Article One, Section Ten:

States prohibited from the exercise of certain powers.

1. No state shall enter into any treaty, alliance, or confederation; grant letters of marque and reprisal; coin money; emit bills of credit; make any thing but gold and silver coin a tender in payment of debts; pass any bill of attainder, ex post facto law, or law impairing the obligation of contracts, or grant any title of nobility.

Feds Raid 'Liberty Dollar' HQ in Ind.

By RYAN LENZ, Associated Press – Nov 16, 2007

EVANSVILLE, Ind. (AP) — Federal agents raided the headquarters of a group that produces illegal currency and puts it in circulation, seizing gold, silver and two tons of copper coins featuring Republican presidential candidate Ron Paul.

Agents also took records, computers and froze the bank accounts at the "Liberty Dollar" headquarters during the Thursday raid, Bernard von NotHaus, founder of the National Organization for the Repeal of the Federal Reserve Act & Internal Revenue Code, said in an interview.

The organization, which is critical of the Federal Reserve, has repeatedly clashed with the federal government, which contends that the gold, silver and copper coins it produces are illegal. NORFED claims its Liberty Dollars are inflation free and can restore stability to financial markets by allowing commerce based on a currency that does not fluctuate in value like the U.S. dollar.

"They're running scared right now and they had to do something," von NotHaus told The Associated Press Friday. "I'm volunteering to meet the agents and get arrested so we can thrash this out in court."

According to the company, NORFED has produced an estimated $20 million of its own paper currency in the past two decades, claiming its $1, $5 and $10 denominations were backed by silver stored in Coeur d'Alene, Idaho.

Federal agents also raided the group's storage facilities in Idaho, von NotHaus said.

Wendy Osborne, a spokeswoman for the FBI's Indianapolis office, declined to comment and referred all questions to the U.S. attorney's office for the Western District of North Carolina. Suellen Pierce, a spokeswoman for that office, also declined to comment.

In a federal seizure warrant given to the AP by von NotHaus, federal agents allege the money and other properties seized in the raid were linked to money laundering, mail fraud and wire fraud.

The raid comes eight months after von NotHaus filed a lawsuit in federal court in Evansville seeking a permanent injunction to stop the federal government from labeling the Liberty Dollar an illegal currency.

The U.S. Mint issued a warning this year that the Liberty Dollar violated the Constitution and warned consumers against using them unsuspectingly.

Paul's campaign said it had not authorized production of the Ron Paul dollars.

"We have no connection with that," said Jesse Benton, a campaign spokesman for Paul. "He was using Ron as a marketing technique. We didn't have anything to do with that or sanction it or give permission in any way."

On the Net:

* http://www.libertydollar.org/

I totally agree with this guy. Time to suck it up and stop being profligate spenders and self-absorbed entitlement monsters.

17 reasons America needs a recession

Think positive, this 'slow motion train wreck' is good for the U.S.

By Paul B. Farrell, MarketWatch

ARROYO GRANDE, Calif. (MarketWatch) -- Yes, America needs a recession. Bernanke and Paulson won't admit it. And investors hate them. We're all trapped in outdated 1990s wishful thinking about a "new economy" and "perpetual growth."

But the truth is, not only is a recession coming, America needs a recession. So think positive: Let's focus on 17 benefits from this recession.

To begin with, recession may be an understatement. Jeremy Grantham's GMO firm manages $150 billion. In his midyear report before the credit crisis hit he predicted: "In 5 years I expect that at least one major 'bank' (broadly defined) will have failed and that up to half the hedge funds and a substantial percentage of the private-equity firms in existence today will have simply ceased to exist."

He was "watching a very slow motion train wreck." By October, it was accelerating: "Train hits end of track at full speed."

Also back in August, The Economist took a hard look at the then emerging subprime/credit crisis: "The policy dilemma facing the Fed may not be a choice of recession or no recession. It may be between a mild recession now, and a nastier one later."

However, the publication did admit that "even if a recession were in America's long-term economic interest, it would be political suicide" for Fed Chairman Ben Bernanke and Treasury Secretary Henry Paulson to suggest it.

Then The Economist posed the big question: Yes, "central banks must stop recessions from turning into deep depressions. But it may be wrong to prevent them altogether."

Wrong to prevent a recession? Why? Because recessions are a natural and necessary part of the business cycle. Remember legendary economist Joseph Schumpeter, champion of innovation and entrepreneurship?

Economists love Schumpeter's "creative destruction:" Obsolete firms get destroyed and capital released, making way for new technologies, new businesses, like Google. And yet, nobody's willing to apply Schumpeter's theory to the entire economy ... and admit recessions are a natural part of the business cycle.

Instead, everyone persists in the childlike fairy tale that "all growth is good" and "all recessions are bad," a bad hangover of the '90s "new economy" ideology. So for the folks at the Fed, Treasury and Wall Street, "eternal growth" is still America's mantra.

Unfortunately, the American investors' brain has also developed this blind obsession with "growth-at-all-costs," coupled with a deadly fear of all recessions, as if recessions are a lethal super-bug more powerful than Iran with a bomb.

Our values are distorted: It's OK to be greedy and overshoot the market on the upside -- grab too many assets, take on too much debt, make consumer spending a religion, live beyond our means, ignite hyperinflation along the way. Growth is good, even in excess.

And yet, recessions are a no-no that drives politicians, economists and investors ballistic.

Well, folks, you can block all this from your mind, you can argue that recessions are not a part of Schumpeter's thinking, that they are inconsistent with your political ideology. But the fact is, we let the housing/credit boom become a massive bubble, it popped and a recession is coming. So think positive, consider some of the benefits of a recession:

1. Purge the excesses of the housing boom

No, it's not heartless. Not like wartime calculations of "acceptable collateral damage." Yes, The Economist admits "the economic and social costs of recession are painful: unemployment, lower wages and profits, and bankruptcy." But we can't reverse Greenspan's excessive rate cuts that created the housing/credit crisis. It'll be painful for everyone, especially millions of unlucky, mislead homeowners who must bear the brunt of Wall Street's greed and Washington's policy failures.

2. U.S. dollar wake-up call

Reverse the dollar's free fall and revive our global credibility. Warnings from China, France, Iran, Venezuela and supermodel Gisele haven't fazed Washington. Recession will.

3. Write-offs

Expose Wall Street's shadow-banking system. They're playing with $300 trillion in derivatives and still hiding over $100 billion of toxic off-balance sheet asset-backed securities, plus another $300 billion hidden worldwide. A lack of transparency is killing our international credibility. Write it all off, now!

4. Budgeting

Force fiscal restraint back into government. America has been living way beyond its means for years: A recession will cut back revenues at all levels of government and cutbacks will encourage balanced budgeting.

5. Overconfidence

A recession will wake up short-term investors playing the market. In bull markets traders ride the rising tide, gaining false confidence that they're financial geniuses. Downturns bruise egos but encourage rational long-term strategies.

6. Ratings

Rating agencies have massive conflicts of interest; they aren't doing their job. They're supposed to represent the investors, but favor Corporate America, which pays for the reports. Shake them up.

7. China

Trigger an internal recession in China. Make it realize America's not going into debt forever to finance China's domestic growth and military war machine. A recession will also slow recycling their reserves through sovereign funds to our equities.

8. Oil

Force the energy and auto industries to get serious about emission standards and reducing oil dependency.

9. Inflation

Expose the "core inflation" farce Washington uses to sugarcoat reality.

10. Moral hazard

Slow the Fed from cutting interest rates to bail out speculators.

11. War costs

Force Washington to get honest about how it's going to pay for our wars, other than supplemental bills that are worse than Enron-style debt financing.

12. CEO pay

Further expose CEO compensation that's now about five hundred times the salaries of workers, compared with about 40 times a generation ago.

13. Privatization

Stop the privatization of our federal government to no-bid contractors and high-priced mercenary armies fighting our wars.

14. Entitlements

Force Congress to get serious about the coming Social Security/Medicare disaster. With boomers now retiring, this problem can only get worse: A recession now could avoid a depression later.

15. Consumers

Yes, we're all living way beyond our means, piling up excessive credit-card debt, encouraged by government leaders who tell us "deficits don't matter." Recessions will pressure individuals to reduce spending and increase savings.

16. Regulation

Lobbyists have replaced regulation. Extreme theories of unrestrained free trade plus zero regulation just don't work; proven by our credit crisis, hedge funds' nondisclosures, private-equity taxation, rating agencies failures, junk home mortgages, and more. Get real, folks.

17. Sacrifice

"We have not seen a nationwide decline in housing like this since the Great Depression, says Wells Fargo CEO John Stumpf. As individuals and as a nation Americans have always performed best in crises, like the Depression or WWII, times when we're all asked to make sacrifices. Pampering us with interest-rate cuts and tax cuts during the Iraq and Afghan wars may have stimulated the economy temporarily, but they delayed the real damage of the '90s stock bubble while setting the stage for this new subprime/credit crisis.

Wake up, the train wrecked. Time to think positive, find solutions, demand sacrifices.

Notice gold's movement up even though the market is having its sucker rally and oil is going down.

Here's a good chart from Brooke Thackray on seasonal investing rythms:

And she's about to blow, from all the signs.

One of my fave investing and macroeconomics Yodas, John Mauldin, is reprinted below. His newsletters are always a thought-provoking read, and along with guys like Nouriel Roubini, Michael Shedlock, Robert Schiller, Jim Sinclair and Peter Schiff, he's been right on the money (as it were) frighteningly often.

Dude, my money is already sitting in bullion at the Perth Mint, a nice currency basket weighted against the falling dollar, and a moderately aggressive portfolio of foreign stocks with fat dividend payouts. Screw Wall Street and the Beltway both.

Thoughts from the Frontline Weekly Newsletter

Black Swans and Endogenous Uncertainty

by John Mauldin, December 7, 2007

How does the risk of default in California or Thailand get spread throughout the world, causing problem in money market funds in Europe and Florida? Yes, we can trace the linkages now, but was it possible to predict the crisis beforehand? And can we use what we learn to predict and hopefully hedge ourselves from the next crisis? Why do these things seem to be happening with more frequency? This week we are going to look at some economic theories which will give us some insight into the above questions. As it turns out, the more that individuals hedge their risk in economic markets - the larger the network - the more the entire system is put at risk. There is a lot of ground to cover, so we will jump right in.

Before we get to the economic theory, let's review part of a letter I wrote in April of 2006 discussing chaos theory, as it will give us a useful mind picture to understand the latter part of the letter. This was part of a letter where I laid out my thoughts that we would indeed experience a crisis in the future along the lines we are now seeing.

Ubiquity, Complexity Theory and Sandpiles

We are going to start our explorations with excerpts from a very important book by Mark Buchanan call "Ubiquity, Why Catastrophes Happen." I HIGHLY recommend it to those of you who like me are trying to understand the complexity of the markets. Not directly about investing, although he touches on it, it is about chaos theory, complexity theory and critical states. It is written in a manner any layman can understand. There are no equations, just easy to grasp well-written stories and analogies. www.amazon.com

We have all had the fun as a kid of going to the beach and playing in the sand. Remember taking your plastic buckets and making sand piles? Slowly pouring the sand into ever bigger piles, until one side of the pile started an avalanche?

Imagine, Buchanan says, dropping one grain of sand after another onto a table. A pile soon develops. Eventually, just one grain starts an avalanche. Most of the time it is a small one, but sometimes it builds up and it seems like one whole side of the pile slides down to the bottom.

Well, in 1987, three physicists named Per Bak, Chao Tang and Kurt Weisenfeld began to play the sandpile game in their lab at Brookhaven National Laboratory in New York. Now, actually piling up one grain of sand at a time is a slow process, so they wrote a computer program to do it. Not as much fun, but a whole lot faster. Not that they really cared about sandpiles. They were more interested in what is called nonequilibrium systems.

They learned some interesting things. What is the typical size of an avalanche? After a huge number of tests with millions of grains of sounds, they found out that there is no typical number. "Some involved a single grain; others, ten, a hundred or a thousand. Still others were pile -wide cataclysms involving millions that brought nearly the whole mountain down. At any time, literally anything, it seemed, might be just about to occur."

It was indeed completely chaotic in its unpredictability. Now, let's read this next paragraph slowly. It is important, as it creates a mental image that helps me understand the organization of the financial markets and the world economy. [emphasis mine]

To find out why [such unpredictability] should show up in their sandpile game, Bak and colleagues next played a trick with their computer. Imagine peering down on the pile from above, and coloring it in according to its steepness. Where it is relatively flat and stable, color it green; where steep and, in avalanche terms, 'ready to go,' color it red. What do you see? They found that at the outset the pile looked mostly green, but that, as the pile grew, the green became infiltrated with ever more red. With more grains, the scattering of red danger spots grew until a dense skeleton of instability ran through the pile. Here then was a clue to its peculiar behavior: a grain falling on a red spot can, by domino-like action, cause sliding at other nearby red spots. If the red network was sparse, and all trouble spots were well isolated one from the other, then a single grain could have only limited repercussions. But when the red spots come t riddle the pile, the consequences of the next grain become fiendishly unpredictable. It might trigger only a few tumblings, or it might instead set off a cataclysmic chain reaction involving millions. The sandpile seemed to have configured itself into a hypersensitive and peculiarly unstable condition in which the next falling grain could trigger a response of any size whatsoever."

Something only a math nerd could love? Scientists refer to this as a critical state. The term critical state can mean the point at which water would go to ice or steam, or the moment that critical mass induces a nuclear reaction, etc.. It is the point at which something triggers a change in the basic nature or character of the object or group. Thus, (and very casually for all you physicists) we refer to something being in a critical state (or the term critical mass) when there is the opportunity for significant change.

This was THE band, baby. I was at Knebworth, dude, the very last concert before Bonham kicked it, me and some Air Force buddies and a bottle of Southern Comfort and some of Europe's finest blond hash... by the end of the concert front fucking row getting our eardrums demolished by the four-story stack of speakers... aaaarrooooooo!

Led Zeppelin's time has come again

LONDON, Associated Press - Led Zeppelin's time is coming again.

When the diviners of rock 'n' roll classics "Stairway to Heaven," "Whole Lotta Love" and "Your Time is Gonna Come" reunite for their first full concert in almost three decades, the question on everyone's mind is sure to be: How many more times?

Monday's reunion in London has quickly become one of the most anticipated concerts of all time. Whether a larger tour will follow could depend on how well Zeppelin's members — singer Robert Plant, guitarist Jimmy Page, bassist-keyboardist John Paul Jones and the late drummer John Bonham's son Jason — perform in front of a frenzied audience.

"I've got to go through it, see how I feel," Jones told Rolling Stone magazine in its December issue.

If the result of the band's early rehearsals is any indication, Zeppelin fans have reason to be hopeful. Bonham told Rolling Stone that the band clicked immediately, right from the opening notes of the first song they tried: the haunting dirge "No Quarter."

"When the riff came in, there was this look that went around. It was brilliant." After blasting through "Kashmir" next, Bonham told the magazine that the band stopped and Page said, "'Can you give me a hug?' And Robert (Plant) shouted, 'Yeah, sons of thunder!'"

The 63-year-old Page echoed those sentiments to Q music magazine, saying the initial get-together was "so exhilarating and fun that I did feel I would like to do more."

Despite rumors that the 59-year-old Plant can no longer hit the high notes, the singer's latest album, with bluegrass star Alison Krauss, seems to show that he's still in good voice. On "Raising Sand," one of this year's surprise hits, Plant still has that otherworldly feel.

Besides, he rarely was able to conjure the same piercing vocals from Zeppelin's studio albums when onstage in the band's heyday.

Led Zeppelin formed in 1968, but disbanded in late 1980 when Bonham choked to death on his own vomit after a drinking binge. In their 12 years, the group evolved from a rhythm and blues band first known as "The New Yardbirds" to become the standard for guitar-driven hard rock and the precursors of heavy metal.

Plant's caterwauling vocals and curly blond locks combined with Page's ragged riffs to give the band an identity that became instantly recognizable, but Bonham's death robbed the group of its heart-pounding pulse. Led Zeppelin disbanded on Dec. 4 of that year after a career of hard-living success that saw it fly around the world on a private jumbo jet to play sold-out concerts just about everywhere.

In the years since their breakup, Led Zeppelin's eight studio albums are still in heavy rotation on classic rock radio, with millions of fans still listening to classics like "Kashmir," "Black Dog," "Rock and Roll" and "Hey Hey What Can I Do." And the opening notes of "Stairway to Heaven" have commonly become the first thing just about any aspiring rock star learns to play when first picking up a guitar.

The sold-out crowd at the O2 Arena in east London will surely hear Page picking away at his double-necked guitar on the band's staple song — and maybe even get a glimpse of his cello bow for the solo in "Dazed and Confused."

Zep's surviving members have all stayed involved in music since they broke up, with Plant and Page even working together in the mid-1980s and '90s. With The Honeydrippers, they produced a hit with a cover of the '50s classic "Sea of Love."

Jones, however, was mostly left out, which he wryly noted at their induction into the Rock and Roll Hall of Fame in 1995: "Thank you, my friends," he said, "for finally remembering my phone number."

Monday's concert won't be the first Led Zeppelin reunion, but it will be the biggest. The band played together in 1985 at Live Aid, and joined forces again three years later — with Jason Bonham on drums — to play at the 40th anniversary concert for Atlantic Records.

At their Rock and Roll Hall of Fame induction ceremony, they teamed with other musicians for another short set. This time, they have promised to play a two-hour concert, and not even that will be enough for the thousands of fans making their way to London from countries around the world.

The latest show is dedicated to Atlantic Records founder Ahmet Ertegun, who died last year. Proceeds from the show are to go to the Ahmet Ertegun Education Fund, which provides scholarships to universities in the United States, Britain and Turkey.

The Who guitarist Pete Townsend, former Rolling Stones bassist Bill Wyman and one-time Bad Company singer Paul Rodgers are also scheduled to perform.

Besides the concert, Led Zeppelin also released a greatest hits double-CD called "Mothership" and an updated version of "The Song Remains the Same" DVD in November. The DVD, which features scenes from three concerts in New York in 1973, includes 40 minutes of extra footage.

When the reunion show was announced Sept. 12, tickets were made available by ballot only "due to the anticipated overwhelming demand for this concert," according to the Web site.

Priced at about $250, tickets have been selling on the internet for $2,000 or more. The show was originally scheduled for Nov. 26, but was postponed until Monday because Page injured the little finger on his left hand.

Hey hey, what can you do?

___

On the Net:

As fucking bad as the crusaders or the inquisition...

From Herb Greenberg's MarketBlog. This is worth reading all the way to the bottom:

Mark Hanson, a 20-year veteran of the mortgage industry, who has spent most of his career in the wholesale and correspondent residential arena — primarily on the West Coast. He lives in the Bay Area.

------

"The Government and the market are trying to boil this down to a ’sub-prime’ thing, especially with all constant talk of ‘resets’. But sub-prime loans were only a small piece of the mortgage mess. And sub-prime loans are not the only ones with resets. What we are experiencing should be called ‘The Mortgage Meltdown’ because many different exotic loan types are imploding currently belonging to what lenders considered ‘qualified’ or ‘prime’ borrowers. This will continue to worsen over the next few of years. When ‘prime’ loans begin to explode to a degree large enough to catch national attention, the ratings agencies will jump on board and we will have ‘Round 2?. It is not that far away.

Since 2003, when lending first started becoming extremely lax, a small percentage of the loans were true sub-prime fixed or arms. But sub-prime is what is being focused upon to draw attention away from the fact the lenders and Wall Street banks made all loans too easy to attain for everyone. They can explain away the reason sub-prime loans are imploding due to the weakness of the borrower.

How will they explain foreclosures in wealthy cities across the nation involving borrowers with 750 scores when their loan adjusts higher or terms change overnight because they reached their maximum negative potential on a neg-am Pay Option ARM for instance?

Sub-prime aren’t the only kind of loans imploding. Second mortgages, hybrid intermediate-term ARMS, and the soon-to-be infamous Pay Option ARM are also feeling substantial pressure. The latter three loan types mostly were considered ‘prime’ so they are being overlooked, but will haunt the financial markets for years to come. Versions of these loans were made available to sub-prime borrowers of course, but the vast majority were considered ‘prime’ or Alt-A. The caveat is that the differentiation between Prime and ALT-A got smaller and smaller over the years until finally in late 2005/2006 there was virtually no difference in program type or rate.

The bailout we are hearing about for sub-prime borrowers will be the first of many. Sub-prime only represents about 25% of the problem loans out there. What about the second mortgages sitting behind the sub-prime first, for instance? Most have seconds. Why aren’t they bailing those out too? Those rates have risen dramatically over the past few years as the Prime jumped from 4% to 8.25% recently. seconds are primarily based upon the prime rate. One can argue that many sub-prime first mortgages on their own were not a problem for the borrowers but the added burden of the second put on the property many times after-the-fact was too much for the borrower.

Eco-friendly kangaroo farts could help global warming: scientists

SYDNEY (AFP) - Australian scientists are trying to give kangaroo-style stomachs to cattle and sheep in a bid to cut the emission of greenhouse gases blamed for global warming, researchers say.

Thanks to special bacteria in their stomachs, kangaroo flatulence contains no methane and scientists want to transfer that bacteria to cattle and sheep who emit large quantities of the harmful gas.

While the usual image of greenhouse gas pollution is a billowing smokestack pushing out carbon dioxide, livestock passing wind contribute a surprisingly high percentage of total emissions in some countries.

"Fourteen percent of emissions from all sources in Australia is from enteric methane from cattle and sheep," said Athol Klieve, a senior research scientist with the Queensland state government.

"And if you look at another country such as New Zealand, which has got a much higher agricultural base, they're actually up around 50 percent," he told AFP.

Researchers say the bacteria also makes the digestive process much more efficient and could potentially save millions of dollars in feed costs for farmers.

"Not only would they not produce the methane, they would actually get something like 10 to 15 percent more energy out of the feed they are eating," said Klieve.

Even farmers who laugh at the idea of environmentally friendly kangaroo farts say that's nothing to joke about, particularly given the devastating drought Australia is suffering.

"In a tight year like a drought situation, 15 percent would be a considerable sum," said farmer Michael Mitton.

But it will take researchers at least three years to isolate the bacteria, before they can even start to develop a way of transferring it to cattle and sheep.

Another group of scientists, meanwhile, has suggested Australians should farm fewer cattle and sheep and just eat more kangaroos.

The idea is controversial, but about 20 percent of health conscious Australians are believed to eat the national symbol already.

"It's low in fat, it's got high protein levels it's very clean in the sense that basically it's the ultimate free range animal," said Peter Ampt of the University of New South Wales's institute of environmental studies.

"It doesn't get drenched, it doesn't get vaccinated, it utilizes food right across the landscape, it moves around to where the food is good, so yes, it's a good food."

It might take a while for kangaroos to become popular barbecue fare, but with concern over global warming growing in the world's driest inhabited continent, Australians could soon be ready to try almost anything to cut emissions.

If I could find the "chortle" emoticon, I'd have a whole row of them here.

House prices seen falling 30 pct

NEW YORK (Reuters) - Housing markets from Punta Gorda, Florida, to Stockton, California, will crash and suffer price drops of more than 30 percent before the housing crisis is over, a report from Moody's Economy.com said on Thursday.

On a national level, the housing market recession will continue through early 2009, said the report, co-authored by Mark Zandi, chief economist, and Celia Chen, director of housing economics.

The report paints a worsening picture of the hard-hit housing sector, which is in the midst of its worst downturn since World War II.

While activity will stabilize in 2009, it will not be until 2010 before a measurable improvement in sales, construction and pricing will emerge, the report said.

Don't ask don't tell, dammit! Git yer nose outta the pastor's wallet, errr, collection plate! J ESUS WANTS ME TO HAVE A HUMMER, YOU GODLESS FUCKERS!

Preacher rebuffs Senate spending inquiry

Associated Press - One of six Christian ministries under investigation by a Senate committee is rebuffing inquiries into its spending, challenging the panel's watchdog role over religious groups, The Associated Press has learned.

A lawyer for preacher Creflo Dollar of World Changers Church International in suburban Atlanta has asked Sen. Charles Grassley to either refer the matter to the IRS or get a subpoena, according to a letter from Dollar's attorney obtained Wednesday by the AP.

Grassley, the ranking member of the Senate Finance Committee, sent pointed questionnaires in early November to a half-dozen ministries asking about salaries, perks, travel and oversight. The Iowa Republican set Thursday as the deadline for a response.

All six organizations preach a form of the "prosperity gospel," the belief that God wants his faithful followers to reap material rewards.

Besides Dollar, several other televangelists have signaled concerns about invasions of privacy and violations of religious freedom. Only Joyce Meyer Ministries of Fenton, Mo., has provided the detailed financial and board oversight information sought by Grassley.

I swear to god, every time this jackass opens his mouth, my IQ drops five points...

Bush: Iran still a danger despite report

WASHINGTON, Associated Press - Defending his credibility, President Bush said Tuesday that Iran is dangerous and must be squeezed by international pressure despite a blockbuster intelligence finding that Tehran halted its nuclear weapons program four years ago.

Bush said the new conclusion — contradicting earlier U.S. assessments — would not prompt him to take off the table the possibility of pre-emptive military action against Iran. Nor will the United States change its policy of trying to isolate Iran diplomatically and punish it with sanctions, he said.

Amid drought, South faces a water crisis

ATLANTA, Associated Press - Townspeople stood in the sweltering heat at grocery stores and community centers, waiting to fill plastic jugs with water. Tanker trucks rumbled down the highways, bringing relief to a thirsty town suddenly gone dry.

That was the scene 13 years ago when the Georgia city of Macon ran out of water. But it could also be a glimpse of the very near future in Atlanta and some other cities in the drought-stricken Southeast.

They may be down to just a few months of easily accessible water, and the faucets could run dry if reservoirs aren't replenished soon.

The state of Georgia said it has lined up contracts with vendors to bring in bottled water and tanker trucks that could dispense water into jugs, jars and buckets.

This one flew right under the radar last May. Basically, it says that in the event of a "National Emergency" (a wholly subjective condition), the president can do whatever he wants and the Constitution is basically suspended ("Presidential Decision Directive 67 of October 21, 1998 ("Enduring Constitutional Government and Continuity of Government Operations"), including all Annexes thereto, is hereby revoked.").

Unbelievable. We are SO fucked.

-------------------------------------------------------------------------------

From the White House website:

http://www.whitehouse.gov/news/releases/2007/05/20070509-12.html

May 9, 2007

National Security and Homeland Security Presidential Directive

NATIONAL SECURITY PRESIDENTIAL DIRECTIVE/NSPD 51

HOMELAND SECURITY PRESIDENTIAL DIRECTIVE/HSPD-20

Subject: National Continuity Policy

Purpose

(1) This directive establishes a comprehensive national policy on the continuity of Federal Government structures and operations and a single National Continuity Coordinator responsible for coordinating the development and implementation of Federal continuity policies. This policy establishes "National Essential Functions," prescribes continuity requirements for all executive departments and agencies, and provides guidance for State, local, territorial, and tribal governments, and private sector organizations in order to ensure a comprehensive and integrated national continuity program that will enhance the credibility of our national security posture and enable a more rapid and effective response to and recovery from a national emergency.

Definitions

(2) In this directive:

(a) "Category" refers to the categories of executive departments and agencies listed in Annex A to this directive;

(b) "Catastrophic Emergency" means any incident, regardless of location, that results in extraordinary levels of mass casualties, damage, or disruption severely affecting the U.S. population, infrastructure, environment, economy, or government functions;

(c) "Continuity of Government," or "COG," means a coordinated effort within the Federal Government's executive branch to ensure that National Essential Functions continue to be performed during a Catastrophic Emergency;

(d) "Continuity of Operations," or "COOP," means an effort within individual executive departments and agencies to ensure that Primary Mission-Essential Functions continue to be performed during a wide range of emergencies, including localized acts of nature, accidents, and technological or attack-related emergencies;

(e) "Enduring Constitutional Government," or "ECG," means a cooperative effort among the executive, legislative, and judicial branches of the Federal Government, coordinated by the President, as a matter of comity with respect to the legislative and judicial branches and with proper respect for the constitutional separation of powers among the branches, to preserve the constitutional framework under which the Nation is governed and the capability of all three branches of government to execute constitutional responsibilities and provide for orderly succession, appropriate transition of leadership, and interoperability and support of the National Essential Functions during a catastrophic emergency;

(f) "Executive Departments and Agencies" means the executive departments enumerated in 5 U.S.C. 101, independent establishments as defined by 5 U.S.C. 104(1), Government corporations as defined by 5 U.S.C. 103(1), and the United States Postal Service;

(g) "Government Functions" means the collective functions of the heads of executive departments and agencies as defined by statute, regulation, presidential direction, or other legal authority, and the functions of the legislative and judicial branches;

(h) "National Essential Functions," or "NEFs," means that subset of Government Functions that are necessary to lead and sustain the Nation during a catastrophic emergency and that, therefore, must be supported through COOP and COG capabilities; and

(i) "Primary Mission Essential Functions," or "PMEFs," means those Government Functions that must be performed in order to support or implement the performance of NEFs before, during, and in the aftermath of an emergency.

Policy

(3) It is the policy of the United States to maintain a comprehensive and effective continuity capability composed of Continuity of Operations and Continuity of Government programs in order to ensure the preservation of our form of government under the Constitution and the continuing performance of National Essential Functions under all conditions.

Implementation Actions

(4) Continuity requirements shall be incorporated into daily operations of all executive departments and agencies. As a result of the asymmetric threat environment, adequate warning of potential emergencies that could pose a significant risk to the homeland might not be available, and therefore all continuity planning shall be based on the assumption that no such warning will be received. Emphasis will be placed upon geographic dispersion of leadership, staff, and infrastructure in order to increase survivability and maintain uninterrupted Government Functions. Risk management principles shall be applied to ensure that appropriate operational readiness decisions are based on the probability of an attack or other incident and its consequences.

(5) The following NEFs are the foundation for all continuity programs and capabilities and represent the overarching responsibilities of the Federal Government to lead and sustain the Nation during a crisis, and therefore sustaining the following NEFs shall be the primary focus of the Federal Government leadership during and in the aftermath of an emergency that adversely affects the performance of Government Functions:

(a) Ensuring the continued functioning of our form of government under the Constitution, including the functioning of the three separate branches of government;

(b) Providing leadership visible to the Nation and the world and maintaining the trust and confidence of the American people;

(c) Defending the Constitution of the United States against all enemies, foreign and domestic, and preventing or interdicting attacks against the United States or its people, property, or interests;

(d) Maintaining and fostering effective relationships with foreign nations;

(e) Protecting against threats to the homeland and bringing to justice perpetrators of crimes or attacks against the United States or its people, property, or interests;

(f) Providing rapid and effective response to and recovery from the domestic consequences of an attack or other incident;

(g) Protecting and stabilizing the Nation's economy and ensuring public confidence in its financial systems; and

(h) Providing for critical Federal Government services that address the national health, safety, and welfare needs of the United States.

(6) The President shall lead the activities of the Federal Government for ensuring constitutional government. In order to advise and assist the President in that function, the Assistant to the President for Homeland Security and Counterterrorism (APHS/CT) is hereby designated as the National Continuity Coordinator. The National Continuity Coordinator, in coordination with the Assistant to the President for National Security Affairs (APNSA), without exercising directive authority, shall coordinate the development and implementation of continuity policy for executive departments and agencies. The Continuity Policy Coordination Committee (CPCC), chaired by a Senior Director from the Homeland Security Council staff, designated by the National Continuity Coordinator, shall be the main day-to-day forum for such policy coordination.

(7) For continuity purposes, each executive department and agency is assigned to a category in accordance with the nature and characteristics of its national security roles and responsibilities in support of the Federal Government's ability to sustain the NEFs. The Secretary of Homeland Security shall serve as the President's lead agent for coordinating overall continuity operations and activities of executive departments and agencies, and in such role shall perform the responsibilities set forth for the Secretary in sections 10 and 16 of this directive.

(8) The National Continuity Coordinator, in consultation with the heads of appropriate executive departments and agencies, will lead the development of a National Continuity Implementation Plan (Plan), which shall include prioritized goals and objectives, a concept of operations, performance metrics by which to measure continuity readiness, procedures for continuity and incident management activities, and clear direction to executive department and agency continuity coordinators, as well as guidance to promote interoperability of Federal Government continuity programs and procedures with State, local, territorial, and tribal governments, and private sector owners and operators of critical infrastructure, as appropriate. The Plan shall be submitted to the President for approval not later than 90 days after the date of this directive.

(9) Recognizing that each branch of the Federal Government is responsible for its own continuity programs, an official designated by the Chief of Staff to the President shall ensure that the executive branch's COOP and COG policies in support of ECG efforts are appropriately coordinated with those of the legislative and judicial branches in order to ensure interoperability and allocate national assets efficiently to maintain a functioning Federal Government.

(10) Federal Government COOP, COG, and ECG plans and operations shall be appropriately integrated with the emergency plans and capabilities of State, local, territorial, and tribal governments, and private sector owners and operators of critical infrastructure, as appropriate, in order to promote interoperability and to prevent redundancies and conflicting lines of authority. The Secretary of Homeland Security shall coordinate the integration of Federal continuity plans and operations with State, local, territorial, and tribal governments, and private sector owners and operators of critical infrastructure, as appropriate, in order to provide for the delivery of essential services during an emergency.

(11) Continuity requirements for the Executive Office of the President (EOP) and executive departments and agencies shall include the following:

(a) The continuation of the performance of PMEFs during any emergency must be for a period up to 30 days or until normal operations can be resumed, and the capability to be fully operational at alternate sites as soon as possible after the occurrence of an emergency, but not later than 12 hours after COOP activation;

(b) Succession orders and pre-planned devolution of authorities that ensure the emergency delegation of authority must be planned and documented in advance in accordance with applicable law;

(c) Vital resources, facilities, and records must be safeguarded, and official access to them must be provided;

(d) Provision must be made for the acquisition of the resources necessary for continuity operations on an emergency basis;

(e) Provision must be made for the availability and redundancy of critical communications capabilities at alternate sites in order to support connectivity between and among key government leadership, internal elements, other executive departments and agencies, critical partners, and the public;

(f) Provision must be made for reconstitution capabilities that allow for recovery from a catastrophic emergency and resumption of normal operations; and

(g) Provision must be made for the identification, training, and preparedness of personnel capable of relocating to alternate facilities to support the continuation of the performance of PMEFs.

(12) In order to provide a coordinated response to escalating threat levels or actual emergencies, the Continuity of Government Readiness Conditions (COGCON) system establishes executive branch continuity program readiness levels, focusing on possible threats to the National Capital Region. The President will determine and issue the COGCON Level. Executive departments and agencies shall comply with the requirements and assigned responsibilities under the COGCON program. During COOP activation, executive departments and agencies shall report their readiness status to the Secretary of Homeland Security or the Secretary's designee.

(13) The Director of the Office of Management and Budget shall:

(a) Conduct an annual assessment of executive department and agency continuity funding requests and performance data that are submitted by executive departments and agencies as part of the annual budget request process, in order to monitor progress in the implementation of the Plan and the execution of continuity budgets;

(b) In coordination with the National Continuity Coordinator, issue annual continuity planning guidance for the development of continuity budget requests; and

(c) Ensure that heads of executive departments and agencies prioritize budget resources for continuity capabilities, consistent with this directive.

(14) The Director of the Office of Science and Technology Policy shall:

(a) Define and issue minimum requirements for continuity communications for executive departments and agencies, in consultation with the APHS/CT, the APNSA, the Director of the Office of Management and Budget, and the Chief of Staff to the President;

(b) Establish requirements for, and monitor the development, implementation, and maintenance of, a comprehensive communications architecture to integrate continuity components, in consultation with the APHS/CT, the APNSA, the Director of the Office of Management and Budget, and the Chief of Staff to the President; and

(c) Review quarterly and annual assessments of continuity communications capabilities, as prepared pursuant to section 16(d) of this directive or otherwise, and report the results and recommended remedial actions to the National Continuity Coordinator.

(15) An official designated by the Chief of Staff to the President shall:

(a) Advise the President, the Chief of Staff to the President, the APHS/CT, and the APNSA on COGCON operational execution options; and

(b) Consult with the Secretary of Homeland Security in order to ensure synchronization and integration of continuity activities among the four categories of executive departments and agencies.

(16) The Secretary of Homeland Security shall:

(a) Coordinate the implementation, execution, and assessment of continuity operations and activities;

(b) Develop and promulgate Federal Continuity Directives in order to establish continuity planning requirements for executive departments and agencies;

(c) Conduct biennial assessments of individual department and agency continuity capabilities as prescribed by the Plan and report the results to the President through the APHS/CT;

(d) Conduct quarterly and annual assessments of continuity communications capabilities in consultation with an official designated by the Chief of Staff to the President;

(e) Develop, lead, and conduct a Federal continuity training and exercise program, which shall be incorporated into the National Exercise Program developed pursuant to Homeland Security Presidential Directive-8 of December 17, 2003 ("National Preparedness"), in consultation with an official designated by the Chief of Staff to the President;

(f) Develop and promulgate continuity planning guidance to State, local, territorial, and tribal governments, and private sector critical infrastructure owners and operators;

(g) Make available continuity planning and exercise funding, in the form of grants as provided by law, to State, local, territorial, and tribal governments, and private sector critical infrastructure owners and operators; and

(h) As Executive Agent of the National Communications System, develop, implement, and maintain a comprehensive continuity communications architecture.

(17) The Director of National Intelligence, in coordination with the Attorney General and the Secretary of Homeland Security, shall produce a biennial assessment of the foreign and domestic threats to the Nation's continuity of government.

(18) The Secretary of Defense, in coordination with the Secretary of Homeland Security, shall provide secure, integrated, Continuity of Government communications to the President, the Vice President, and, at a minimum, Category I executive departments and agencies.

(19) Heads of executive departments and agencies shall execute their respective department or agency COOP plans in response to a localized emergency and shall:

(a) Appoint a senior accountable official, at the Assistant Secretary level, as the Continuity Coordinator for the department or agency;

(b) Identify and submit to the National Continuity Coordinator the list of PMEFs for the department or agency and develop continuity plans in support of the NEFs and the continuation of essential functions under all conditions;

(c) Plan, program, and budget for continuity capabilities consistent with this directive;

(d) Plan, conduct, and support annual tests and training, in consultation with the Secretary of Homeland Security, in order to evaluate program readiness and ensure adequacy and viability of continuity plans and communications systems; and

(e) Support other continuity requirements, as assigned by category, in accordance with the nature and characteristics of its national security roles and responsibilities

General Provisions

(20) This directive shall be implemented in a manner that is consistent with, and facilitates effective implementation of, provisions of the Constitution concerning succession to the Presidency or the exercise of its powers, and the Presidential Succession Act of 1947 (3 U.S.C. 19), with consultation of the Vice President and, as appropriate, others involved. Heads of executive departments and agencies shall ensure that appropriate support is available to the Vice President and others involved as necessary to be prepared at all times to implement those provisions.

(21) This directive:

(a) Shall be implemented consistent with applicable law and the authorities of agencies, or heads of agencies, vested by law, and subject to the availability of appropriations;

(b) Shall not be construed to impair or otherwise affect (i) the functions of the Director of the Office of Management and Budget relating to budget, administrative, and legislative proposals, or (ii) the authority of the Secretary of Defense over the Department of Defense, including the chain of command for military forces from the President, to the Secretary of Defense, to the commander of military forces, or military command and control procedures; and

(c) Is not intended to, and does not, create any rights or benefits, substantive or procedural, enforceable at law or in equity by a party against the United States, its agencies, instrumentalities, or entities, its officers, employees, or agents, or any other person.

(22) Revocation. Presidential Decision Directive 67 of October 21, 1998 ("Enduring Constitutional Government and Continuity of Government Operations"), including all Annexes thereto, is hereby revoked.

(23) Annex A and the classified Continuity Annexes, attached hereto, are hereby incorporated into and made a part of this directive.

(24) Security. This directive and the information contained herein shall be protected from unauthorized disclosure, provided that, except for Annex A, the Annexes attached to this directive are classified and shall be accorded appropriate handling, consistent with applicable Executive Orders.

GEORGE W. BUSH

Same bushit, different day...

U.S. report contradicts Bush on Iran nuclear program

WASHINGTON (Reuters) - A new U.S. intelligence report says Iran halted its nuclear weapons program in 2003 and it remains on hold, contradicting the Bush administration's earlier assertion that Tehran was intent on developing a bomb.

The new National Intelligence Estimate (NIE) released on Monday could hamper U.S. efforts to convince other world powers to agree on a third package of U.N. sanctions against Iran for defying demands to halt uranium enrichment activities.

Iran says it wants nuclear technology only for civilian purposes, such as electricity generation.

Tensions have escalated in recent months as Washington has ratcheted up the rhetoric against Tehran, with U.S. President George W. Bush insisting in October that a nuclear-armed Iran could lead to World War Three.

But in a finding likely to surprise U.S. friends and foes alike, the latest NIE concluded: "We do not know whether (Iran) currently intends to develop nuclear weapons."

That marked a sharp contrast to an intelligence report two years ago that stated Iran was "determined to develop nuclear weapons."

The perfect storm of economic conditions is here, and most folks are still thinking that Uncle Sammy will make everything okay. Watch the economic slo-mo trainwreck as it grinds and crunches into a horrible mess right before your slack jaw and astonished eyes.

Watch as the credit bubble bursts, first taking out the residential real estate bubble, then the commercial real estate, the credit cards, the auto loans, and all the toxic-waste 'derivative' garbage paper that is still trying to pass itself off as "assets".

Watch as the dollar continues its devaluation against the other world fiat currencies, as more and more countries and corporations effectively disengage themselves from the dollar as their reserve currency, and gravitate towards more stable fiats, always underpinned by the people's currency of choice for the last 3,000 years, gold.

Speaking of gold, watch as the country that goes back on to the gold standard first instantly becomes the reserve currency of choice. Little noticed fact: there has been no real money in the world for over 30 years, since Nixon took the dollar off the gold standard back in 1971. Not a single currency is pegged to gold, they pegged to the dollar instead. In effect, all the "money" in the world today is just bits of paper (or more often, electrons) that are backed by the value of... absolutely nothing.

That's how we got in this mess. We write IOUs instead of trading in something real. We borrow for consumption, not production, we borrow to pay the debt, and we write IOUs on our IOUs. There is currently orders of magnitude greater debt than there are assets. In other words, even if we sold off the entire USA, there is not enough in actual assets to pay off everything we owe as individuals and as a nation.

The world growth and prosperity will slow along with the USA, but they will weather it far better than we will. What we are entering is a big, wide, muddy swamp which we must slog through for years before we step on solid ground again. We will be forced to default on a vast portion of our debt, sell off many of our assets at firesale prices, and tourists will love doing the "USA on a Euro a Day".

When we emerge, we will no longer be the economic and political leaders of the world, but just one trading partner among many.

Thanks, BushCo. Your rotten fiscal and monetary policies have finally come home to roost. Thanks for royally fucking us all over for generations to come. We elect administrators to keep our country solid and healthy, not to rape the treasury and make all their friends unbelievavly rich and powerful. Fuck you, BushCo & Friends, fuck you very much.

Dickheads.