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Going To Hell In A Very Stylish Handbasket.

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

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Achtung! Das machine ist nicht für gerfingerpoken und mittengraben. Ist too easen für schnappen der pringenwerk, blowenfusen, und poppencorken mit spitzensparken. Ist nicht für gewerken by dast dumkopfen - das rubbernecken sightseeren ban keepen das hands in der pocketsen, relaxen und vatchen das blinkenlights.

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

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Former Labor Secretary Robert Reich writes, "America's middle classes are no longer coping." He notes that the fixes proposed by Bernanke and Bush will not help much, because the middle classes have run out of "coping mechanisms." The short version of the story is that the typical man earns less, in real terms, than he did 37 years ago. "The income of a young man in his 30s is now 12 per cent below that of a man his age three decades ago." Families have struggled to increase their standards of living, first by putting women to work…second, by working longer hours…third, by turning to credit. The workplace is now dominated by over-indebted women who work night and day.

"The typical American now works two weeks more each year than 30 years ago," says Reich. "Compared with any other advanced nation we are veritable workaholics, putting in 350 more hours a year than the average European, more even than the notoriously industrious Japanese." And when Americans ran out of time and out of money, they began to borrow with the same vigor that they worked.

"We began to borrow, big time," says Reich. "With housing prices rising briskly through the 1990s and even faster between 2002 and 2006, we turned our homes into piggy banks through home equity loans. Americans got nearly $250bn worth of home equity every quarter in second mortgages and refinancings. That is nearly 10 per cent of disposable income. With credit cards raining down like manna, we bought plasma television sets, new appliances, vacations.

"With dollars artificially high because foreigners continued to hold them even as the nation sank deeper into debt, we summoned inexpensive goods and services from the rest of the world."

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We get all misty-eyed when we talk about the 4,000 american (volunteer) troops that have been killed in the six years we've wasted in Iraq. No one ever talks about the 4000x250 civilians that didn't volunteer for a damned thing...

Iraq conflict has killed a million Iraqis: survey

LONDON (Reuters) - More than one million Iraqis have died as a result of the conflict in their country since the U.S.-led invasion in 2003, according to research conducted by one of Britain's leading polling groups.

The survey, conducted by Opinion Research Business (ORB) with 2,414 adults in face-to-face interviews, found that 20 percent of people had had at least one death in their household as a result of the conflict, rather than natural causes.

The last complete census in Iraq conducted in 1997 found 4.05 million households in the country, a figure ORB used to calculate that approximately 1.03 million people had died as a result of the war, the researchers found.

The margin of error in the survey, conducted in August and September 2007, was 1.7 percent, giving a range of deaths of 946,258 to 1.12 million.

What is wrong with this world, what the fuck is wrong with nations filled with greedy shortsighted selfish people? The "Modern" world's overconsumption is beyond wrong, it is murderous, and the governments of the countries where people are starving are just as equally at fault for their idiotic policies...

In hungry Haiti, dirt is food

PORT-AU-PRINCE, Haiti, Associated Press - It was lunchtime in one of Haiti's worst slums, and Charlene Dumas was eating mud.

With food prices rising, Haiti's poorest can't afford even a daily plate of rice, and some take desperate measures to fill their bellies.

Charlene, 16 with a 1-month-old son, has come to rely on a traditional Haitian remedy for hunger pangs: cookies made of dried yellow dirt from the country's central plateau.

"Jingle Mail" - when a homeowner simply mails the keys to the house back to the lender and walks away from the property.

"Taking the inside of the house with you" - when disgruntled homeowners strip everything of value and trash the inside before leaving.

Middle-age is truly depressing, study finds

LONDON (Reuters) - Middle age is truly miserable, according to a study using data from 80 countries showing that depression is most common among men and women in their forties.

The British and U.S. researchers found that happiness for people ranging from Albania to Zimbabwe follows a U-shaped curve where life begins cheerful before turning tough during middle age and then returning to the joys of youth in the golden years.

What a fuckin' joke tonight's SOTU address was. It would be an actual joke if it weren't real and happening to us.

Damn, we sure can shit where we sleep!

Humans Force Earth into New Geologic Epoch

LiveScience - Humans have altered Earth so much that scientists say a new epoch in the planet's geologic history has begun.

Say goodbye to the 10,000-year-old Holocene Epoch and hello to the Anthropocene.

Among the major changes heralding this two-century-old man-made epoch:

* Vastly altered sediment erosion and deposition patterns.

* Major disturbances to the carbon cycle and global temperature.

* Wholesale changes in biology, from altered flowering times to new migration patterns.

* Acidification of the ocean, which threatens tiny marine life that forms the bottom of the food chain.

Can't create the North American Union and roll out the shiny new Ameros without first bringing the USA to its knees economically. BushCo is doing a great job of that, yessir!

Looks like CONgress (opposite of PROgress) is rolling out the free money in double-quick time. Why, a check for $600 could be in your hot little hands in two months! But don't be saving it now - spend, spend, SPEND like a good little patriot! Never mind your lying eyes, get yourself a new teevee!

The Mogambo Guru 'splains it for you:

"In case you were wondering, $150 billion is actually chump change. Hell, the federal deficit alone is over $600 a year! So $150 billion merely matches 3-month's worth of federal borrowing due to their overspending! Hahaha!

And the federal budget is about $3.4 trillion a year, resulting in federal spending (when actual deficits from "supplemental appropriations" are included) of more than $4 trillion a year! For crying out loud, total GDP, which is the total of all the goods and services created (and consumed) by the United States in an entire year, is only about $14 trillion!

And if that is not enough to make you gag up blood, when unfunded liabilities are accrued and added, the federal deficit alone, according to the GAO, was $4.5 trillion last year! The actual deficit was bigger than the budget itself! Yow!

Then we come to the startling realization that federal government spending is about $8 trillion, more than half of GDP! And when you add in the states and local governments also borrowing and spending, borrowing and spending, borrowing and spending, too, you are suddenly talking about 75% of GDP being government spending!

And now some piddly $150 billion is going to make a big difference in preventing the overdue bust at the end of the biggest boom the world has ever seen? Hahahaha! Stop! I'm laughing so hard my stomach hurts! Hahahaha! Stop! Stop! Hahahaha!"

Yikes.

THE ROAD TO HYPERINFLATION

Fed helpless in its own crisis

By Henry C K Liu, Asia Times Online

After months of denial to soothe a nervous market, the Federal Reserve, the US central bank, finally started to take increasingly desperate steps to try to inject more liquidity into distressed financial institutions to revive and stabilize credit markets that have been roiled by turmoil since August 2007 and to prevent the home mortgage credit crisis from infesting the whole economy.

Yet more liquidity appears to be a counterproductive response to a credit crisis that has been caused by years of excess liquidity. A liquidity crisis is merely a symptom of the current financial malaise. The real disease is mounting insolvency resulting from excessive debt for which adding liquidity can only postpone the day of reckoning towards a bigger problem but cannot cure. Further, the market is stalled by a liquidity crunch, but the economy is plagued with excess liquidity. What the Fed appears to be doing is to try to save the market at the expense of the economy by adding more liquidity.

"In 2006, IBM received patent approval for an invention it called, "Identification and tracking of persons using RFID-tagged items." One stated purpose: To collect information about people that could be "used to monitor the movement of the person through the store or other areas."

Once somebody enters a store, a sniffer "scans all identifiable RFID tags carried on the person," and correlates the tag information with sales records to determine the individual's "exact identity." A device known as a "person tracking unit" then assigns a tracking number to the shopper "to monitor the movement of the person through the store or other areas."

But as the patent makes clear, IBM's invention could work in other public places, "such as shopping malls, airports, train stations, bus stations, elevators, trains, airplanes, restrooms, sports arenas, libraries, theaters, museums, etc." (RFID could even help "follow a particular crime suspect through public areas.") "

Microchips everywhere: A future vision

Associated Press - Here's a vision of the not-so-distant future:

_Microchips with antennas will be embedded in virtually everything you buy, wear, drive and read, allowing retailers and law enforcement to track consumer items — and, by extension, consumers — wherever they go, from a distance.

_A seamless, global network of electronic "sniffers" will scan radio tags in myriad public settings, identifying people and their tastes instantly so that customized ads, "live spam," may be beamed at them.

_In "Smart Homes," sensors built into walls, floors and appliances will inventory possessions, record eating habits, monitor medicine cabinets — all the while, silently reporting data to marketers eager for a peek into the occupants' private lives.

Science fiction?

In truth, much of the radio frequency identification technology that enables objects and people to be tagged and tracked wirelessly already exists — and new and potentially intrusive uses of it are being patented, perfected and deployed.

Against the Gods

by Bill Bonner, Daily Reckoning

What makes the blow up so astonishing is that it is astonishing at all…

An emergency meeting of the U.S. President's "Plunge Protection Team" must have been called Monday night. Any other group of chief executives, colluding to rig prices, would have drawn, say, 5 to 10 with time off for good behavior. But the fix was in. And the Fed announced the new price of credit and waited to see how the rubes would react. In the event…reactions were mixed. Asian stocks rebounded. The Dow ended the day down. Then, the following day…it looked like the fixers might have rearranged the whole deck; rumors of a deal to save Wall Street further losses sent the Dow up more than 300 points.

Thus the long-running spectacle continues. Today, for the benefit of those who haven't been paying attention, we clarify the plot.

The dramatis personae are many. But they fit into two camps. In one is a whole line of Promethean protagonists -- prominent economists and politicians, beginning with Fed chairman Arthur Burns …followed by the epic hero Alan Greenspan. Currently, the lead is being played by Ben Bernanke, supported by George W. Bush in the White house and colleagues Mervyn King in England and Jean-Claude Trichet at the European Central Bank. In the other camp are, well, the gods.

It's an antique story but the current action began in 1971, when Richard Milhous Nixon snuck in and stole the gods' golden fire. Not surprisingly, the gods were cheesed off. They had put the metal in the ground themselves. And gold's record for maintaining steady prices was second to none. An ounce of gold would buy about as much in 1950 as it would have in 1800…or 1700, when Isaac Newton was Master of the Mint. But modern political economists turned their backs on number 79 on the periodic table. They wanted a different kind of price stability…a stability they could mess with. Henceforth, the Nixon team announced, the world financial system would dispense with gold entirely. They would control the value of money themselves. They no longer needed gold backing them up.

As to this proposition, David Ricardo spoke for the gods:

"Experience shows that neither a State nor a Bank ever had the unrestricted power of issuing paper money, without abusing that power: in all States, therefore, the issue of paper money ought to be under some check and control, none seems so proper for that purpose, as that of subjecting the issues of paper money to the obligation of paying their notes, either in gold coin or bullion."

What 'investors' believe:

How the 'stimulus' will actually work:

What we need to beware of:

From the Dad Talk blog:

If Americans immediately walked away from negatively amortized mortgages, the crisis would end much faster. Here’s why:

1. Stressed homeowners who walk away from their properties can move into a rental and cut their monthly expenses, easing financial stress. Yes, their credit would be wrecked for a few years, but not as severely as if they foreclose or declare bankruptcy.

2. Financial institutions could unload properties more quickly because they would gain control faster than in foreclosure proceedings. By the way, this is already happening to some degree. The less time a home spends in limbo, the less likely it is to be damaged.

3. Here’s the really painful part: home prices would plummet, forcing additional homeowners to consider unloading properties. This was going to happen anyway, but bailouts and lower interest rates will just prolong the whole mess.

4. Financial institutions would be forced to come clean much faster than to date. Trust would be restored in surviving institutions once the carnage ended.

5. The economy will go into a full recession too fast for the Fed to lower rates and for politicians to enact wasteful bailouts.

6. Once home prices reach a low enough level, investors will snatch properties up and offer them as rentals.

7. This will stabilize the home market and offer a steady income source for property investors. (Currently, home prices are too high for leasing purposes.)

8. After the initial pain, the economy should begin its rebound.

Of course, few economists will ever make a suggestion such as this. Why? It sounds defeatist. It’s cruel to homeowners. It’s anti-American. Financial institutions would howl in protest.

"The danger is that the resulting political tensions, including US protectionism, may disrupt the global economy and plunge the world into recession or worse."

When a wise old fatcat like George Soros, who has personally made billions upon billions using the very system that is now in the process of imploding, says that we're fucked, people should listen up. The smart ones do.

The worst market crisis in 60 years

By George Soros

Financial Times, published: January 22 2008

The current financial crisis was precipitated by a bubble in the US housing market. In some ways it resembles other crises that have occurred since the end of the second world war at intervals ranging from four to 10 years.

However, there is a profound difference: the current crisis marks the end of an era of credit expansion based on the dollar as the international reserve currency. The periodic crises were part of a larger boom-bust process. The current crisis is the culmination of a super-boom that has lasted for more than 60 years.

Boom-bust processes usually revolve around credit and always involve a bias or misconception. This is usually a failure to recognise a reflexive, circular connection between the willingness to lend and the value of the collateral. Ease of credit generates demand that pushes up the value of property, which in turn increases the amount of credit available. A bubble starts when people buy houses in the expectation that they can refinance their mortgages at a profit. The recent US housing boom is a case in point. The 60-year super-boom is a more complicated case.

[Parts 1 & 2 of this excellent analysis can be found here

[Alan Greenspan and Silly Monkey: separated at birth?]

THE FINANCIAL TSUNAMI PART III:

Greenspan's Grand Design

by F. William Engdahl

January 23, 2008

The Long-Term Greenspan Agenda

Seven years of Volcker monetary “shock therapy” had ignited a payments crisis across the Third World. Billions of dollars in recycled petrodollar debts loaned by major New York and London banks to finance oil imports after the oil price rises of the 1970’s, suddenly became non-payable.

The stage was now set for the next phase in the Rockefeller financial deregulation agenda. It was to come in the form of a revolution in the very nature of what would be considered money—the Greenspan “New Finance” Revolution.

Many analysts of the Greenspan era focus on the wrong facet of his role, and assume he was primarily a public servant who made mistakes, but in the end always saved the day and the nation’s economy and banks, through extraordinary feats of financial crisis management, winning the appellation, Maestro.[1]

Maestro serves the Money Trust

Alan Greenspan, as every Chairman of the Board of Governors of the Federal Reserve System was a carefully-picked institutionally loyal servant of the actual owners of the Federal Reserve: the network of private banks, insurance companies, investment banks which created the Fed and rushed in through an almost empty Congress the day before Christmas recess in December 1913. In Lewis v. United States, the United States Court of Appeals for the Ninth Circuit stated that "the Reserve Banks are not federal instrumentalities…but are independent, privately owned and locally controlled corporations." [2]

Greenspan’s entire tenure as Fed chairman was dedicated to advancing the interests of American world financial domination in a nation whose national economic base was largely destroyed in the years following 1971.

Greenspan knew who buttered his bread and loyally served what the US Congress in 1913 termed “the Money Trust,” a cabal of financial leaders abusing their public trust to consolidate control over many industries.

Guest post below by the Mogambo Guru, the angriest man in economics.

Seriously, the Fed needs to be taken out and shot, the whole bunch of them. Including Poole, I've seen him on Bloomberg TV spouting his drivel. His sniveling is the exact same kind of "not my fault" @$^#*! that allowed WorldCom and Enron to happen, only now it's on an unimaginably large global scale, and will affect every single human on the face of the earth...

TILII (Tell It Like It Is), Mogambo:

"Mr. Poole is obviously implying that everyone should know by now that the Federal Reserve and its banking system is a stupid, lying pit of vipers who cannot be trusted, and that the ratings agencies are even worse, and that only an idiot would trust either of these despicable organizations to tell you the correct time of day, much less rely on them to know what they are doing in establishing risk or telling you the truth about it when they are all raking in the big bucks by being incompetent."

Avoiding Responsibility

by The Mogambo Guru

If you want to know the reason why America is freaking doomed, it is because of lowlife halfwit losers like St. Louis Federal Reserve President William Poole [at right], who is being quoted at MarketWatch.com as saying that nothing is his fault, as, "Investment professionals' 'shortsightedness' led them to make fundamental errors that led to the mortgage crisis and credit meltdown." Hahaha!

MarketWatch.com reports that, "In a speech to financial planners, Poole detailed five key mistakes that borrowers and lenders made that have pushed the economy to the brink of recession." These "mistakes" were, according to the Poole jerk, that "Borrowers took on mortgages they could not afford", which sidestep the issue that nobody would have taken out a mortgage if the damnable Federal Reserve, of which he was a part, had not created all the money. Which created inflation, as it always does, in housing.

The second "mistake" was supposed to be that, "Mortgage brokers put too many people in unsuitable mortgages. They knew, for instance, that adjustable-rate mortgages probably wouldn't be right for many borrowers if interest rates rose as the market expected." Hahaha! Again this Poole halfwit does not mention that the banks, with his approval, provided so much money and credit that they drove interest rates down to abnormally low levels! Of course they had to rise!

We all knew it, we still know it, but now eggheads prove it scientifically:

Study: False statements preceded war

WASHINGTON, Associated Press - A study by two nonprofit journalism organizations found that President Bush and top administration officials issued hundreds of false statements about the national security threat from Iraq in the two years following the 2001 terrorist attacks.

The study concluded that the statements "were part of an orchestrated campaign that effectively galvanized public opinion and, in the process, led the nation to war under decidedly false pretenses."

The study was posted Tuesday on the Web site of the Center for Public Integrity, which worked with the Fund for Independence in Journalism. White House spokesman Scott Stanzel said he could not comment on the study because he had not seen it.

The study counted 935 false statements in the two-year period. It found that in speeches, briefings, interviews and other venues, Bush and administration officials stated unequivocally on at least 532 occasions that Iraq had weapons of mass destruction or was trying to produce or obtain them or had links to al-Qaida or both.

"It is now beyond dispute that Iraq did not possess any weapons of mass destruction or have meaningful ties to al-Qaida," according to Charles Lewis and Mark Reading-Smith of the Fund for Independence in Journalism staff members, writing an overview of the study. "In short, the Bush administration led the nation to war on the basis of erroneous information that it methodically propagated and that culminated in military action against Iraq on March 19, 2003."

Named in the study along with Bush were top officials of the administration during the period studied: Vice President Dick Cheney, national security adviser Condoleezza Rice, Defense Secretary Donald H. Rumsfeld, Secretary of State Colin Powell, Deputy Defense Secretary Paul Wolfowitz and White House press secretaries Ari Fleischer and Scott McClellan.

Bush led with 259 false statements, 231 about weapons of mass destruction in Iraq and 28 about Iraq's links to al-Qaida, the study found. That was second only to Powell's 244 false statements about weapons of mass destruction in Iraq and 10 about Iraq and al-Qaida.

The center said the study was based on a database created with public statements over the two years beginning on Sept. 11, 2001, and information from more than 25 government reports, books, articles, speeches and interviews.

"The cumulative effect of these false statements — amplified by thousands of news stories and broadcasts — was massive, with the media coverage creating an almost impenetrable din for several critical months in the run-up to war," the study concluded.

"Some journalists — indeed, even some entire news organizations — have since acknowledged that their coverage during those prewar months was far too deferential and uncritical. These mea culpas notwithstanding, much of the wall-to-wall media coverage provided additional, 'independent' validation of the Bush administration's false statements about Iraq," it said.

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On the Net:

Center For Public Integrity: http://www.publicintegrity.org/default.aspx

DISARRAY

by James Howard Kunstler

The dark tunnel that the U.S. economy has entered began to look more and more like a black hole recently, sucking in lives, fortunes, and prospects behind a Potemkin facade of orderly retreat put up by anyone in authority with a story to tell or an interest to protect - Fed chairman Bernanke, CNBC, The New York Times, the Bank of America… Events are now moving ahead of anything that personalities can do to control them.

The "housing bubble" implosion is broadly misunderstood. It's not just the collapse of a market for a particular kind of commodity, it's the end of the suburban pattern itself, the way of life it represents, and the entire economy connected with it. It's the crack up of the system that America has invested most of its wealth in since 1950. It's perhaps most tragic that the mis-investments only accelerated as the system reached its end, but it seems to be nature's way that waves crest just before they break.

This wave is breaking into a sea-wall of disbelief. Nobody gets it. The psychological investment in what we think of as American reality is too great. The mainstream media doesn't get it, and they can't report it coherently. None of the candidates for president has begun to articulate an understanding of what we face: the suburban living arrangement is an experiment that has entered failure mode.

I maintain that all the "players" - from the bankers to the politicians to the editors to the ordinary citizens - will continue to not get it as the disarray accelerates and families and communities are blown apart by economic loss. Instead of beginning the tough process of making new arrangements for everyday life, we'll take up a campaign to sustain the unsustainable old way of life at all costs.

A reader sent me a passel of recent clippings last week from the Atlanta Journal-Constitution. It contained one story after another about the perceived need to build more highways in order to maintain "economic growth" (and incidentally about the "foolishness" of public transit). I understood that to mean the need to keep the suburban development system going, since that has been the real main source of the Sunbelt's prosperity the past 60-odd years. They cannot imagine an economy that is based on anything besides new subdivisions, freeway extensions, new car sales, and NASCAR spectacles. The Sunbelt, therefore, will be ground-zero for all the disappointment emanating from this cultural disaster, and probably also ground-zero for the political mischief that will ensue from lost fortunes and crushed hopes.

From time-to-time, I feel it's necessary to remind readers what we can actually do in the face of this long emergency. Voters and candidates in the primary season have been hollering about "change" but I'm afraid the dirty secret of this campaign is that the American public doesn't want to change its behavior at all. What it really wants is someone to promise them they can keep on doing what they're used to doing: buying more stuff they can't afford, eating more bad food that will kill them, and driving more miles than circumstances will allow.

Here's what we better start doing.

Overnight action was bloody.

Governments urge calm in face of market turmoil

PARIS (AFP) - Leaders in Asia and Europe appealed for calm Tuesday and called for international cooperation in the face of a galloping global meltdown on world stock markets sparked by fears of a US recession.

Wow! Markets around the world were in total freefall (Asia was FREAKING out, amazing losses!), and it looked like the US markets would follow suit right off the cliff. Doomed - doomed, I tell you!

But fear not, citizens! The Ninja Superfriends are, as previously reported, in total panic mode and cannot allow the obvious (and necessary) corrections to occur! Oh, no, we can't let the market fix itself - we have to give a credit-addicted system more heroin, stat!

So Hank, Ben, Chris and Walt put their fevered brows together and decided to fire half their remaining avalanche-management ammo all at once. In an historic move, they declared an 'emergency' action and dropped rates .75 points! That's right, campers, the Fed is now giving away free money!

Too bad you don't get any of it, just the bankers!

Now kids, this does nothing for the underlying problems. They are all still there. But who cares about tomorrow? Today, ah, today - TODAY the market is okay, and you can still sell off your junk stocks at an okay price. Take advantage of the gift, and bail out while you have one last chance,

It's the only real gift you'll get from the PPT Ninjas.

Stocks plunge on recession fears

NEW YORK, Associated Press - An unusual emergency interest rate cut by the Federal Reserve gave Wall Street a partial rebound Tuesday from a precipitious early decline — and perhaps the first steps toward a long-term recovery. The rest of the comeback, for the economy as well as the stock market, may depend on a turnaround in the battered housing market and renewed confidence among U.S. consumers.

The Dow Jones industrial average, down 465 points shortly after trading began, fluctuated throughout the session before closing with a milder drop of 128.11, or 1.06 percent, at 11,971.19, according to preliminary calculations.

U.S. stocks began the day by following the lead of markets abroad that had plummeted for two straight days, and also extended their own steep losses from last week. Fears of a U.S. recession — one that would spread to other economies — had investors fleeing stocks worldwide.

The Fed, in a move anticipated by many traders, moved before the opening of U.S. trading, cutting its benchmark federal funds rate by 0.75 percentage point. The Dow and other major indexes then spent the day fluctuating violently, at times approaching the break-even point before heading down again.

in horror as the DJII opens down 1000 points, then goes into freefall as a panicked populace joins the selling frenzy!

what sleight-of-hand bullshit geopolitical "crisis" the goobermint will pull out of the hat to distract the citizenry - Iran? North Korea? Lower Moldavia? (damned commies!)

as you watch your investments, savings, and pensions disappear into thin air!

as clueless politicians tout their respective snakeoil economic cures!

as it suddenly dawns on you that the rotted world financial system is rapidly collapsing, plunging the USA into a depression that will make the 'Great' one look like a sunday stroll, and which will facilitate the long-simmering moneyboys' plan to create a North American Union, demolish the Constitution, knock down the borders and crap out the dollar, thereby impoverishing the middle class and transfering all their wealth and power into the hands of the Central Banks and their Ruling Elite via the "Amero"!

as it dawns on your tiny brain that you're seriously FUCKED...

w00t!

No one is buying the current round of Bushit...

Stock markets plunge worldwide

LONDON, Associated Press - Stocks fell sharply worldwide Monday following declines on Wall Street last week amid investor pessimism over the U.S. government's stimulus plan to prevent a recession.

U.S. markets were closed for Martin Luther King Jr. Day, but the downbeat mood from last week's market declines there circled through Europe, Asia and Canada. The U.K. benchmark FTSE-100 dropped 4.7 percent to 5,625.20; France's CAC-40 Index plunged 5.9 percent to 4,793.39, while Germany's blue-chip DAX 30 slumped 6.74 percent to 6,821.42.

In Asia, India's benchmark stock index tumbled 7.4 percent, while Hong Kong's blue-chip Hang Seng index plummeted 5.5 percent to 23,818.86, its biggest percentage drop since the Sept. 11, 2001, terror attacks.

Canadian stocks fell as well, with the S&P/TSX composite index on the Toronto Stock Exchange down 4.8 percent. In Brazil, stocks plunged 6.9 percent on the main index of Sao Paulo's Bovespa exchange.

Investors dumped shares because they were skeptical that an economic stimulus plan President Bush announced Friday would shore up the economy that has been battered by problems in its housing and credit markets. The plan, which requires approval by Congress, calls for about $145 billion worth of tax relief to encourage consumer spending.

"We've taken our lead from the Asian markets who have not been impressed by the U.S. There's debate if there's going to be a recession in the U.S. I don't think there's much chance of that though," said Richard Hunter an analyst at Hargreaves Lansdown Stockbrokers Ltd. in London.

Meet the Ninja Superfriends, otherwise known as the Working Group on Financial Markets, or more commonly, the Plunge Protection Team:

Treasury Secretary Henry Paulson (Chairman of the PPT)

Ben Bernanke (Chairman of the Board, Federal Reserve System)

Christopher Cox (Chairman of the Securities and Exchange Commission)

Walter Lukken (Chairman of the Commodity Futures Trading Commission)

These fine gents are currently working in overtime panic mode to effectively stall the collapse of the financial system long enough for all their fatcat buddies (who created the mess to begin with) to bail out. After that, the US, Mexico and Canada will form the North American Union, and the toxic dollar will go nite-nite, replaced by the Amero, which will coincidentally be already in every said fatcat's pocket.

You and I, on the other hand, are effectively screwed, since our wealth is in rapidly devaluing dollars, but hey. Plenty more serfs where we came from, right?

Suzanne Pleshette dies in Los Angeles

LOS ANGELES, Associated Press - Suzanne Pleshette, the husky-voiced star best known for her role as Bob Newhart's sardonic wife on television's long-running "The Bob Newhart Show," has died at age 70.

Pleshette, whose career included roles in such films as Hitchcock's "The Birds" and in Broadway plays including "The Miracle Worker," died of respiratory failure Saturday evening at her Los Angeles home, said her attorney Robert Finkelstein, also a family friend.

Pleshette underwent chemotherapy for lung cancer in 2006.

"The Bob Newhart Show, a hit throughout its six-year run, starred comedian Newhart as a Chicago psychiatrist surrounded by eccentric patients. Pleshette provided the voice of reason.

Four years after the show ended in 1978, Newhart went on to the equally successful "Newhart" series in which he was the proprietor of a New England inn populated by more eccentrics. When that show ended in 1990, Pleshette reprised her role — from the first show — in one of the most clever final episodes in TV history.

See that dippity-dip down on the far left, below the $800 mark? That's where I jumped into gold for serious. So far, that money has made more in one month than it did in two years sitting in a money market account.

Heh. Bite me, BushCo. Keep your fucking "Ameros".

George of Arabia:

Better Kiss Your Abe ‘Goodbye’

by Greg Palast

Bend over, pull out your wallet and kiss your Abe ‘goodbye.’ The Lincolns have got to go - and so do the Hamiltons and Jacksons.

Those bills in your billfold aren’t yours anymore. The landlords of our currency - Citibank, theBush & The King national treasury of China and the House of Saud - are foreclosing and evicting all Americans from the US economy.

"Government cannot increase wealth except when it reduces its involvement in the economy through measures like lower taxation, or eliminating bureaucracy. Government has no independent capacity to generate wealth. All government is parasitic; it's just a question of how much blood can be sucked before the host stops co-operating."

- Tim Wood

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Tim goes on to explain exactly what the fuck the current problem we are facing is:

1. The Federal Reserve has adopted a de facto policy of bubble observation with a bias toward alleviating the consequences. It has completely abandoned its charter which is to maintain price stability by sustaining the value of the dollar. There is no willingness to curb malinvestment when it is obvious, dangerous and a consequence of loose monetary policy and weak credit controls.

2. Collateralized Debt Obligations worth over $100 billion have been written down so far. The world’s leading financial institutions – supposed repositories of the universe’s trading and valuation brilliance – head the list of firms who overpaid for securities that were improperly valued by conflicted interests.

3. The regulators have allowed financial institutions to bleed out their write-downs when it was and is obvious that much more money has been lost than is being reported.

4. The Fed allowed itself to be brow-beaten into lowering interest rates in order to camouflage the crisis, and allow the banks to borrow cheap money even as they pay double digit rates to the foreign sovereign wealth funds that are bailing them out in sweetheart deals.

5. The government has literally declared war on the business cycle, claiming that the only thing Americans should look forward to, and prepare for, is the “forever expansion”.

6. The other shoe in the CDO drama has yet to drop. The underlying assets have not yet been impaired, only the overlying securities supposed to represent their value are being marked to a barely functioning market. Foreclosures are going to accelerate, and we can expect all those condos, cars, boats, plasma TVs and i-Pods financed with debt to revert to bank ownership, at which time they will be priced at pennies-on-the-dollar. Another area bound to end in tears is private equity financing. Private equity went on a binge buying companies at multiples inflated by easy money, and a herd mentality confidence about being smart enough to turn assets repeatedly at ever higher multiples. Of course, you may think private equity is much smarter than the bankers who loaned them the money, some which was a byproduct of CDO trading.

7. The government is proposing to unilaterally abrogate a pillar of the American financial system – enforceable contracts. The White House has gone so far as to demand that foreclosure be avoided by allowing delinquent home buyers to skate out of trouble without penalty; including exempting them from paying taxes on any resulting “forgiveness” windfalls.

8. The credit default insurance that was supposed to hedge all that exotic risk has turned out to be the highest risk of all. A loss of confidence in bond insurance is probably the worst form of financial contagion imaginable. Imagine the implication if a firm that has underwritten billions of dollars fails because of just its exposure to CDOs? What happens to things like gold derivative insurance and all the other exotic hedging options that have proliferated?

9. There is an additional lobbying effort underway to freeze mortgage rates. And it’s not trivial – one of the leading Democrat Presidential candidates wants all rates frozen for many years. This would wreak havoc in all credit markets since it would amount to a price cap. The lesson about price caps comes from the response of Oklahoma oilmen to Nixon-Carter era attempts to manage energy prices – they stopped producing oil and gas altogether. The markets will stop producing mortgage credit in a heart-beat if rates are frozen. And if the government attempts to force them to do it anyway, like Mississippi has tried to force insurers to provide wind and water coverage post Hurricane Katrina, the companies will just decline to operate in that space.

10. All the wise men pontificating on the mystical power of “consumer spending” is truly baffling. If food stamps and unemployment insurance are boosted as proposed, the net effect is neutral since it’s merely a redistribution of activity. Food stamps and unemployment insurance are funded by taking money from other taxpayers. Similarly, even though tax rebates are a great idea because it reduces government’s share of the economy, the premise for awarding them is absurd – that everyone will go and buy something, which will supposedly boost overall economic activity. No, friends, all this does is provide temporary camouflage for retail statistics that are a sacred cow for analyzing the health of the US economy.

However, consider the unintended consequences: shopkeepers will be grateful for the temporary windfall, but they will not increase capital spending, and nor will they sustain or increase inventories precisely because they know the influx of money is not sustainable. Yet all levels of government will continue to assume that the next revenue take will be at least the same as the last one, and the spending will continue unchecked. Within months there will be a horrifying realization that tax revenues are declining with deficit spending growing rapidly. That will trigger demand for an even larger "stimulus". The difference between now and post-9/11 is that the banks are now unable to lend money as recklessly as they used to because their balance sheets cannot be leveraged more than they already are.

11. If $100-$150 billion constitutes a stimulus in a $13 trillion a year economy, then pigs can fly.

12. Isn’t everyone supposed to save money rather than spend it? If spending is such a tonic, then why not legislate that 1% of all 401k payments be diverted to retail expenditure or new housing starts for one year? After all, doesn’t everyone deserve a cheap house? Indeed, if the poor are such a potent means of stimulus, why not garnish all their earnings and redistribute them to discount retailers and fast food outlets?

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Who will have the courage to stand up to the rabble and say, "ENOUGH, YOU STUPID GREEDY MOTHERFUCKERS" ?

Bush is on teevee, telling Joe Sixpack that Congress needs to act quickly to pass his 'fiscal stimulus plan' in order to avert economic disaster. As if giving everyone $500 of their taxes back will make everything hunkydory, end the housing crisis, wipe out the debt crisis, erase the deficit crisis, kill inflation and eliminate the going-on-ten trillion dollar national debt...

No time to waste, he bleats. Wait a minute - wasn't he just saying last week how the economy is sound and we should all keep spending? The only thing this 'plan' will do is stall another couple of weeks so his cronies can finish yanking their money out of the burning building...

"Panics do not destroy capital; they merely reveal the extent to which it has been previously destroyed by its betrayal into hopelessly unproductive works."

- John Stuart Mill, 1867

This is Bush on his last day in office:

Bush wants fast tax aid to boost economy

WASHINGTON Associated Press - With recession fears rising and the stock market tumbling, President Bush on Friday called for up to $150 billion in tax relief for consumers and business — and said there was no time to waste.

The global grain bubble

Christian Science Monitor - Record prices for grain from corn to rice have ignited food riots from Jakarta to Rome. In Pakistan, troops now guard wheat stocks. China and Russia have imposed price controls. Connect the dots and there's a need for a fix to a crisis that, strangely, isn't caused by smaller harvests.

No, the main reasons for a long-term bubble in grain prices lie largely in a number of dubious human actions, related to heightened competition for grain as either fuel or feed.

One reason is an ill-conceived dash by both the United States and Europe to use grain and valuable farmland for biofuels, motivated more by powerful farm lobbies than concerns about global warming. (Telling factoid: To fill up the tank of one SUV with ethanol would require enough grain to feed one person for a year.)

Layoffs and fat-trimming soon to follow...

Survey of corporate Chief Financial Officer's outlook.

Source: Duke University/CFO Magazine Global Business Outlook survey

Seriously, the moneyboys whose job it is to understand what is going on and how it will all play out are not happy at all:

SURVEY: CFO OPTIMISM HITS ANOTHER RECORD LOW; CAPITAL SPENDING AND HIRING TO STAGNATE; CREDIT MARKETS, CONSUMERS, PRICE OF FUEL ARE BIG CONCERNS

SUMMARY OF FINDINGS:

-- Optimism reached its lowest point since the optimism index was launched six years ago. Pessimists outnumber optimists by an eight-to-one margin, with 72 percent of CFOs more pessimistic and only 9 percent more optimistic about the U.S. economy than they were last quarter.

-- Weak consumer demand, high labor and fuel costs, and credit market turmoil are the top concerns of CFOs.

-- Credit conditions have directly hurt one-third of companies, most through decreased availability of credit.

-- At nearly one in five companies, employees have increased hardship withdrawals from their 401(k) accounts, in many cases to make mortgage payments or ward off personal bankruptcy.

-- Year-end bonuses will fall by 10 percent relative to last year.

-- Among firms with greater than one-fourth of sales in foreign locations, more than 60 percent have taken actions in response to the depreciated dollar by increasing hedging (expanding the range of investments to reduce risk) or changing the location of investments and outsourced employment.

(Part 3 will be posted after it's published)

F. William Engdahl is the author of A Century of War: Anglo-American Oil Politics and the New World Order. He is a Research Associate of the Centre for Research on Globalization (CRG). His most recent book, which has just been released by Global Research is Seeds of Destruction, The Hidden Agenda of Genetic Manipulation.

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The Financial Tsunami: Sub-Prime Mortgage Debt is but the Tip of the Iceberg

by F. William Engdahl

Global Research, November 23, 2007

Part 1: Deutsche Bank’s painful lesson

Even experienced banker friends tell me that they think the worst of the US banking troubles are over and that things are slowly getting back to normal. What is lacking in their rosy optimism is the realization of the scale of the ongoing deterioration in credit markets globally, centered in the American asset-backed securities market, and especially in the market for CDO’s—Collateralized Debt Obligations and CMO’s—Collateralized Mortgage Obligations. By now every serious reader has heard the term “It’s a crisis in Sub-Prime US home mortgage debt.” What almost no one I know understands is that the Sub-Prime problem is but the tip of a colossal iceberg that is in a slow meltdown. I offer one recent example to illustrate my point that the “Financial Tsunami” is only beginning.

These figures are SOOOOO manipulated (for the real deal, see Shadow Stats), and even with all that primping and fluffing and outright fudging, this is still the headline:

INFLATION RATE IS WORST IN 17 YEARS

WASHINGTON, Associated Press - Higher costs for energy and food last year pushed inflation up by the largest amount in 17 years, even though prices generally remained tame outside of those two areas. Meanwhile, industrial output was flat in December, more evidence of a significant slowdown in the economy.

Consumer prices rose by 4.1 percent for all of 2007, up sharply from a 2.5 percent increase in 2006, the Labor Department said Wednesday. Consumers felt the pain when they filled up their gas tanks or shopped for groceries. Prices for both energy and food shot up by the largest amount since 1990.

In a second report, the Federal Reserve said that output at the nation's factories, mines and utilities showed no growth in December, adding to a string of weak economic reports showing that the economy was slowing at the end of last year.

That weakness has shown up in the biggest one-month jump in unemployment since the 2001 terrorist attacks and billions of dollars in losses at many of the country's biggest financial institutions. Citigroup Inc. reported Tuesday it had suffered a $10 billion loss for the last three months of 2007, reflecting bad bets on investments backed by subprime mortgages.

The Dow Jones industrial average plunged by 277 points on Tuesday and fell even further on Wednesday as Intel reported weak earnings for the fourth quarter. The Dow was down by 26 points in late morning trading.

The unchanged industrial output in December was the poorest showing since industrial output actually fell by 0.5 percent in October. Output had been up by 0.3 percent in November.

The December weakness reflected flat output at U.S. factories, a tiny 0.1 percent rise in the mining industry and a 0.2 percent drop at the nation's utilities.

The Consumer Price Index rose by 0.3 percent in December, slower than the 0.8 percent in November, as food costs were flat for the month and energy prices rose by 0.9 percent after an even bigger 5.7 percent jump in November.

"If you love wealth more than liberty, the tranquility of servitude better than the animating contest of freedom, depart from us in peace. We ask not your counsel nor your arms. Crouch down and lick the hand that feeds you. May your chains rest lightly upon you and may posterity forget that you were our countrymen."

Samuel Adams, (1722-1803)

The innovative, entrepenurial "can do!" spirit is alive and well in America.

Will foreclosures spark an arson boom?

As homeowners get more desperate, the insurance industry is bracing for an increase in arson.

NEW YORK (Fortune) -- Faced with foreclosure on her Russellville, Indiana home, Christina Snyder allegedly concocted the kind of plan that now has insurance executives on edge.

According to the county prosecutor, the 31-year-old Snyder allegedly offered to pay a neighbor $5,000 to help her burn down her house and make it look like a botched rape attempt - all in order to claim $80,000 in insurance money. Snyder wanted the neighbor to bind her hands in duct tape, write "whore" on her shirt, and then help her escape once the blaze was set, the prosecutor says. The neighbor demurred, instead reporting Snyder to police.

With the national foreclosure rate zooming and the real estate market in a two-year funk, the insurance industry fears more homeowners will see arson as a way out of their financial woes. A recent report by the industry-funded Coalition Against Insurance Fraud notes that with "untold thousands of homeowners struggling with ballooning subprime mortgage payments, fraud fighters are watching closely for a spike in arsons by desperate homeowners who can no longer afford their home payments."

History indicates such a spike is coming. "When the economy is down, we see an increase in fraud," says Dennis Schulkins, a claim consultant in State Farm's Special Investigative Unit.

It may already be happening. Allstate (ALL, Fortune 500) spokesman Mike Siemienas says his company has seen an increase nationally in arsons among homes in foreclosure. In California, the state¹s insurance division reports that the number of questionable residential fires in 2007 increased 76 percent over 2006.

NEW RECORD MONEY GROWTH

THREATENS MONETARY INFLATION

by John Williams, Executive Editor

SHADOW GOVERNMENT STATISTICS

www.shadowstats.com

Broad money supply growth is a strong indicator of pending inflation. The current 15%-plus level of annual growth in an ongoing estimate of M3 -- the broadest measure of the U.S. money supply -- has not been seen since August 1971, when President Richard Nixon closed the gold window. Such foreshadows increasing monetary inflation pressure in the U.S. economy, on top of existing pressures from oil and food prices and a weakening U.S. dollar. In contrast, recent slow growth in the monetary base is not uncommon under current circumstances and does not foreshadow consumer goods deflation.

In 25-plus years of econometric modeling and economic forecasting, I found the broadest measure of liquidity in the system tended to be the most meaningful in predicting future inflation, and, under certain circumstances, economic activity. In an earlier day, when M2 was the broadest money supply measure, it was established as a component in the government's once index of leading economic indicators (now published by the Conference Board), because of M2's recognized strong leading relationship to economic activity. The broadest measure tends to work, given its scope, and because is relatively free of distortions that can affect narrower measures (i.e., cash shifting between different types of accounts).

Traditional money supply measures of recent years have included three levels of aggregation: M1, which generally includes cash and demand deposits (checking accounts); M2, which generally includes M1 plus savings accounts, small time deposits (certificates of deposit less than $100,000) and retail money funds; M3, which generally includes M2 plus large time deposits (jumbo CDs of $100,000 or more), institutional money funds, repos and euro-dollar deposits.

A relatively new measure, Money Zero Maturity (MZM), which is calculated by the St. Louis Federal Reserve, includes only cash accounts that have no maturity considerations, specifically M2 less small time deposits plus institutional money funds. At the narrow end of the spectrum is the monetary base, which generally is bank reserves plus currency (an M1 component).

Back in March 2006, the Federal Reserve ceased reporting of M3, claiming lack of relevance and bemoaning the excessive cost in producing the series. The reasons given for killing the series appeared to be nonsensical. How could small time deposits in M2 be relevant, but not the large time deposits in M3? How could retail money funds in M2 be relevant but not institutional money funds in M3? Those two M3 components alone total roughly $4 trillion at present. Separately, the Fed has continued to incur the cost of tracking much of the information used to calculate M3.

Personally, I believe the Fed did not want the markets to see a pending surge in broad money growth that would add to already mounting inflationary concerns and expectations. Where cash would shift out of M2 into large time deposits and institutional money funds, such would depress M2 growth artificially, while M3 would show the full picture. That partially is what has happened, and therein is part of the benefit of looking at the broadest money measure, as can be seen in the accompanying graph of M3, MZM and M2. At the request of subscribers, Shadow Government Statistics began estimating ongoing annual growth in M3, which has generated the non-official data shown in the accompanying table and graphs.

As the recent banking solvency crisis broke, the Federal Reserve lent money to banks, as needed, and pumped and continues to pump liquidity into the system. Annual growth in the seasonally adjusted the monetary base (Federal Reserve series), which includes bank reserves and the M1 currency component, however, did not surge, showing growth in excess of 2.0% in recent months, slowing to 1.5% in December, with the bulk of that growth coming from an unreliable currency number. The currency measure is unreliable because the Fed has no accurate tally of how much currency (perhaps up to two-thirds) is outside the United States .Bank reserves were little changed over the year.

So, how can annual M3 growth be at 15.2% with the monetary base showing annual growth of just 1.5%? The answer lies in a number of factors, including liquidity flowing into the United States from outside the system, the impact of which is within the Fed's control. The Fed has opted for systemic liquefaction.

First for clarification of some relationships, historically, there is a negligible correlation between monthly annual growth of the monetary base and M3 (-14% for 1970 to 2007). A relatively high M3 growth versus low-growth monetary base, though, has been common to most recessions seen since 1970 (1990/1991excepted). The monetary base does have a fairly strong correlation with M1 (68% for 1970 to 2007), but M1 has been in year-to-year contraction since mid-2006, as shown in the accompanying graph of M1 and the monetary base, and also has little predictive value related to inflation.

Again, where the broadest measure available always has been the best predictor of inflation, the relative size and annual growth rates of the various money measures are indicated in the following table, as of December 2007.

Some Comparative Money Numbers

December 2007 (Monthly Average, Seasonally Adjusted)

(Sources: Shadow Government Statistics, St. Louis Fed, Federal Reserve Board)

Measure, $Billion,Yr/Yr Change

SGS-Alternate M3 12,927 +15.2%

MZM 8,111 +12.5%

M2 7,458 +6.1%

M1 1,363 -0.2%

Monetary Base 825 +1.5%

Currency (M1) 760 +1.4%

The strong growth in M3 partly reflects still-growing foreign investment in U.S. Treasury securities. The Federal Reserve has control over the nation's money supply. In terms of spiking broad money growth, the U.S. central bank can take action to inject funds directly into the system, or it can do so on the behalf of others, or sit passively by as others act. By not sterilizing or offsetting the impact of foreign held dollars going into U.S. Treasuries or Agencies, the Fed is setting a policy of inflating money growth just as much as if it were injecting the funds itself. The Fed also has the option of changing reserve requirements, which, at present, enable a deposit of $1,000 to translate into $10,000 after successive relending of the funds that do not have to be held in reserve.

As noted in off-balance sheet items in the Fed's Factors Affecting Reserve Balances of Depository Institutions (H.4.1 of January 10, 2008), Treasuries and Agencies held by the Fed for other central banks stood at $2.057 trillion for the week ended January 9, 2008, up by $287.0 billion, or 16.2%, from January 10, 2007. That represents a significant influx of liquidity into the U.S. monetary system.

As mentioned earlier, also at work in the broader money measures has been cash flowing out of M2 accounts to M3 accounts, such as large time deposits and institutional money funds. In the absence of official M3 reporting, the increasingly popular MZM measure also has shown a rapid pick-up in annual growth, thanks particularly to growth in institutional money funds.

Having used broad money growth in economic forecasting, I have found that solid M3 growth signals strong economic growth some of the time, but often times it does not. Adjusted for inflation, however, M3 growth slowing sharply to the downside, as did happen in the last two years, is a reliable leading indicator of an economic contraction.

On the inflation front, double-digit broad money growth usually is followed within a year or two by double-digit increases in consumer costs. Inflation, as used here, means price increases as seen in consumer goods and services. Of course, the prior events in the 1970s and early 1980s were before many of the methodological changes to the CPI that have resulted in current, regular understatement of CPI inflation.

The inflation currently signaled by M3 is not for financial asset inflation, such as in the equity markets. From the standpoint of financial assets, a very short-term leading indicator has tended to be M1, which currently is in annual contraction.

The present money supply growth levels are consistent with a deteriorating inflationary recession, which only recently has started to gain broad public recognition. One of my best bets is that inflation will continue to get worse, not better, despite an accelerating downturn in economic activity and widening solvency issues for major financial services firms.

Regardless of how much pressure is placed on the financial and banking systems, the Fed will do everything in its power to prevent a 1930s-style collapse in the system and money supply. Federal Reserve Chairman Bernanke is a student of that period and has indicated he would liquefy the system as much as needed. While the Fed has the power to that -- and it appears already to be doing so -- the ultimate cost will be in higher U.S. inflation and a debased U.S. dollar.

© 2008 William J. "John " Williams

Editorial Archive

[Gold soared over $910 on the London Market last night]

Energy & Scarcity Investor's Byron King:

"Gold is selling for over $890 per ounce this past weekend. Kevin Kerr and I expect gold to go to $900 any day now, and to break $1,000 per ounce this year - sooner, rather than later.

"Silver is selling at over $16 per ounce, with $20 not that far away. So silver and gold are moving quite a bit in tandem. Up. Up. Up. Why? Because - not to put too fine a point on it - the U.S. Federal Reserve is signaling that its long-term goal is to put the dollar into the tank. Politically, the Fed needs to satisfy a bunch of spendaholic politicians who cannot prioritize spending or say no to special interests. And the Fed wants to bail out some big banks and a few hundred thousand 'favored' members of a politicized class - people with economic and political clout. So the Fed is pursuing policies that will directly wreck the savings and work of hundreds of millions of people, both U.S. citizens and foreign dollar holders.

"For decades, people have put their trust in the dollar as a store of wealth. In effect, people put those dollars in trust. Remember when a local merchant would put the first dollar he ever earned in a frame above the counter? People admired the dollar. People trusted the dollar for the long run. The work you performed today - for which you were paid - would come back to you years down the line when you pulled those dollars out of savings. People were going to save those dollars and invest them later or use them to pay tuition so the kids could go to college - if not retire on those dollars.

"Not any more. Now investors everywhere are watching the Fed and bailing out of dollars into precious metals. Just the other day, the Financial Times referred to gold as the new global currency."

And although the 'pundits' are still firmly jamming their heads in the sand and other places where the sun don't shine, regular folks are cinching up their belts. Fortunately, they so fat that they can do lots and lots o' cinching. A good thing, too - the lean times a-comin'.

Americans Cut Back Sharply on Spending

New York Times - Strong evidence is emerging that consumer spending, a bulwark against recession over the last year even as energy prices surged and the housing market sputtered, has begun to slow sharply at every level of the American economy, from the working class to the wealthy.

The abrupt pullback raises the possibility that the country may be experiencing a rare decline in personal consumption, not just a slower rate of growth. Such a decline would be the first since 1991, and it would almost certainly push the entire economy into a recession in the middle of an election year.

There are mounting anecdotal signs that beginning in December Americans cut back significantly on personal consumption, which accounts for 70 percent of the economy.

A raft of consumer companies — high-end stores like Nordstrom and Tiffany, and middle-of-the-road ones like Target and J. C. Penney — reported a pronounced slowdown in growth last month, and in several cases an outright drop in business.

American Express said that starting in early December the growth in the rate of spending by its 52 million cardholders, a generally affluent group of consumers, fell 3 percentage points, from 13 percent to 10 percent, the first slowdown since the 2001 recession.

And consumer confidence, an important barometer of economic health, has plunged. Andrew Kohut, president of the Pew Research Center, says consumer satisfaction with the economy has reached a 15-year low, according to the firm’s polling.

Even wealthier consumers, who were seen as invulnerable to rising gasoline prices and falling home values, are feeling the squeeze.

“People are clearly concerned that we are headed into a recession,” said Stephen I. Sadove, the chief executive of Saks Fifth Avenue, the upscale department store whose runaway growth throughout much of the year slowed markedly in December.

Gia Trumpler, 37, a travel consultant who lives in Manhattan, shops at luxury chains like Saks. But she is trimming costs where she can by bringing lunch to work from home, rather than eating out. “Everything just feels more expensive to me now,” she said, including the cost of heating her apartment this winter.

There are plenty of recession naysayers. Average hourly wages and salaries have not fallen, and some economists argue that unless — or until — that happens, consumer spending will hold up despite widespread economic unease. According to these economists, what happened in December was a temporary blip.

I'm so sick of watching all these moron bleating talking heads on teevee, all trying to find the 'real reasons' why our economy is going down the toilet faster than a high-flow flush.

Yo, listen up, you overpaid, pampered puddingheads, it's not because of 'shocks to the market', it's not because of 'herd psychology', it's not because of trade deficits or Fed cuts or liquidity.

Here's your clue-by-four upside the head: it's because our economic model is fundamentally flawed and unsustainable.

The simple bottom line:

Our economy is based on credit, consumption, and the endless expansion of both.

That's it, brainiacs, that simple: we borrow to consume and call it production.

Intrinsically flawed and unsustainable business model.

No business in the world has ever or would ever succeed with such a stupid premise. Let's borrow food (monetary credit) and eat it (consumer consumption)! And borrow more to pay off the loan! And then do it all again and again and again forever!

Until we retool our economy from credit and consumption to production and export, we are fucked.

The government has been denying the existence of the PPT for decades. Woops, they're real after all!

Bush convenes Plunge Protection Team

by Ambrose Evans-Pritchard, International Business Editor, UK Telegraph

Bears beware. The New Deal of 2008 is in the works. The US Treasury is about to shower households with rebate cheques to head off a full-blown slump, and save the Bush presidency.

On Friday, Mr Bush convened the so-called Plunge Protection Team for its first known meeting in the Oval Office. The black arts unit - officially the President's Working Group on Financial Markets - was created after the 1987 crash.

It appears to have powers to support the markets in a crisis with a host of instruments, mostly by through buying futures contracts on the stock indexes (DOW, S&P 500, NASDAQ and Russell) and key credit levers. And it has the means to fry "short" traders in the hottest of oils.

Hank Paulson has faced an economic slowdown since leaving Wall Street

The team is led by Treasury chief Hank Paulson, ex-Goldman Sachs, a man with a nose for market psychology, and includes Fed chairman Ben Bernanke and the key exchange regulators.

Judging by a well-briefed report in the Washington Post, a mood of deep alarm has taken hold in the upper echelons of the administration. "What everyone's looking at is what is the fastest way to get money out there," said a Bush aide.

Emergency measures are now clearly on the agenda, apparently consisting of a mix of tax cuts for businesses and bungs for consumers. Fiscal action all too appropriate, regrettably.

We face a version of Keynes's "extreme liquidity preference" in the 1930s - banks are hoarding money, and the main credit arteries of the financial system remain blocked after five months.

"In terms of any stimulus package, we're considering all options," said Mr Bush. This should be interesting to watch. The president is not one for half measures. He has already shown in Iraq and on biofuels that he will pursue policies a l'outrance once he gets the bit between his teeth.

The only question is what the president can manage to push through a Democrat Congress.

The Plunge Protection Team - long kept secret - was last mobilised to calm the markets after 9/11. It then went into hibernation during the long boom.

Mr Paulson reactivated it last year, asking the staff to examine "systemic risk posed by hedge funds and derivatives, and the government's ability to respond to a financial crisis", he said.

If only!

Hillary fights off the tears

Herald Sun - AN exhausted Hillary Clinton fought back tears as the pace of US presidential campaigning took its toll on the former First Lady.

Senator Clinton, who rarely shows emotion in public, is battling to remain in the high-stakes race for the White House as her campaign struggles for momentum.

She faces a likely defeat in today's New Hampshire primary, part of the state-by-state presidential nominations process.

On the eve of the vote, tears welled in Senator Clinton's eyes and her voice trembled when asked how she kept going.

"It's not easy and I could not do it if I just didn't passionately believe it was the right thing to do," she said inside a small coffee shop in Portsmouth, New Hampshire.

"I have had so many opportunities from this country, I just don't want us to fall backwards," she added, her voice hardly audible.

"You know, this is very personal for me.

"It's not just political. It's not just public. I see what's happening and we have to reverse it.

"And some people think elections are a game - they think it's like who's up or who's down.

"It's about our country . . . our kids' futures."

Senator Clinton's Democratic rival, Barack Obama, is on track for victory in the eastern US state after trouncing her in the Iowa caucus last week.

Back-to-back losses by would seriously damage her presidential ambitions and make it difficult for her to win her party's nomination.

At a later Clinton rally yesterday in Salem, New Hampshire, two men stood up and heckled Senator Clinton, shouting out "iron my shirt".

In the ultimate "nannystate gimme" whine, some dumbfuck is asking Uncle Sugar to give him 3 quadrillion dollars because he was stupid enough to live in an area lower than sealevel.

Let me re-iterate: This dumbfuck chose to live next to a worn-out piece of shit levee in an area that is below sea level.

When the inevitable happened and the water came, he thinks he's entitled to many more times money than our entire Gross Domestic Product. Money that people like you and me have to pay out of our taxes. The only thing this jackass is entitled to is my steel-toe boot up his stupid whiny entitlement ass. Dipshit.

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Katrina's victims ask for huge checks

NEW ORLEANS, Associated Press - Hurricane Katrina's victims have put a price tag on their suffering and it is staggering — including one plaintiff seeking the unlikely sum of $3 quadrillion.

A whopping $3,014,170,389,176,410 is the dollar figure so far sought from some of the largest claims filed against the federal government over damage from the failure of levees and flood walls following the Aug. 29, 2005, hurricane.

Of roughly 489,000 total claims, the U.S. Army Corps of Engineers said it has received 247 for at least $1 billion apiece, including the one for $3 quadrillion.

"That's the mother of all high numbers," said Loren Scott, a Baton Rouge-based economist.

For the sake of perspective: A mere $1 quadrillion would dwarf the U.S. gross domestic product, which Scott said was $13.2 trillion in 2007. A stack of one quadrillion pennies would reach Saturn.

For one of the best primers ever, go read Michael Hodge's Grandfather Economic Report. No less a notable than uberfamous economics yoda Dr. Milton Friedman (who got hisself one of them thar fancy Nobel Prizes fer being such a good money n' stuff egghead), thinks the force is totally with this guy. I think you'll agree.

These "prosperity gospel" fuckers should be burned at the stake.

The gospel of money

USA Today - "The love of money," the New Testament teaches in I Timothy 6:10, "is the root of all evil." But what about some televangelists' fondness for major bling — such as multiple, multimillion dollar estates, luxury cars, vacation homes, exotic trips and private jets? Does that make them, in the words of one author, "pimps in the pulpit?"

Many outside the evangelical movement are puzzled by the apparent lack of outrage following reports of high-living, tax-exempt religious broadcasters. Sen. Chuck Grassley, R-Iowa, has been looking into six megachurch pastors and broadcast ministries, requesting financial records. Richard Roberts has stepped down as president of Oral Roberts University following charges that he used the school's resources for family perks, such as a trip to the Bahamas for his daughter.

These charges come as no surprise to those within the evangelical world. Such tales of excess and profligacy have been an open secret for years.

Notice how everything he says is a boldfaced outright lie, misrepresentation, or truth-twist:

That marvelous contrarian indicator, that master of disaster, that 100% weapons-grade balonium vendor, George Dubya Bush, sez everything is hunky dory, so keep on rackin' up that debt, folks!

Never mind that behind me as I write this, Bloomberg Financial News Network is whining about how crappy the market is, how it's in serious trouble and needs serious help, how bad all the indicators are for the future, etc. Never mind that gold, the ultimate hedge against financial turmoil, is holding steady at $860 per ounce, a world record. Never mind that the Fed is bailing out banks at taxpayer expense all over the place and pumping "liquidity" like Niagara Falls... just keep spending, folks!

Bush says markets 'strong and solid'

WASHINGTON, Associated Press - President Bush said Friday that while there is some uncertainty about slowing economic growth, the nation's "financial markets are strong and solid."

Bush spoke after getting an update from his top economic advisers, who are helping him decide whether to offer a package to stimulate the U.S. economy as it weathers the housing slump, rising oil prices and an uptick in unemployment.

"This economy of ours is on a solid foundation, but we can't take economic growth for granted," Bush said. "And there are signs that will cause us to be ever more diligent and make sure that good policies come out of Washington."

Sitting around a table with his economic advisers in the Roosevelt Room, the president warned Congress against taking steps that would increase taxes. "If the foundation is strong yet indicators are mixed, the worst thing that Congress can do is raise taxes on the American people and on American businesses," Bush said.

Bush met with the advisers — his first with them as a group [Ed.: what the FUCK?!!] — the same day that the Labor Department reported that hiring practically stalled in December, driving the nation's jobless rate up to a two-year high of 5 percent. The report, which fanned fears of a recession, indicated that employment conditions are deteriorating, strained by the housing crisis and credit crunch that are sapping economic strength. On Wall Street, stocks tumbled.

"While there is some uncertainty, the report is that the financial markets are strong and solid," Bush said.

... and for Christ's sake, shut the fuck up already.

Importance of teaching evolution noted

WASHINGTON, Associated Press - Scientific advisers to the government emphasize in a report the importance of teaching evolution in public schools.

The report by the National Academy of Sciences and its Institute of Medicine follows up on similar past publications, the last of which came out in 1999. The new document includes recently discovered evidence supporting evolution, including an important fossil find.

The report released Thursday also takes swipes at creationism and other anti-evolution views.

"Despite the lack of scientific evidence for creationist positions, some advocates continue to demand that various forms of creationism be taught together with or in place of evolution in science classes," the report says.

"The device's possibilities can, however, be extended and the team envisage a time when it will be used to conduct infallible lie detector tests, while the accurate interpretation of a person's intentions could allow police to arrest criminals before they break the law, as seen in the film Minority Report."

Fortunately, most people's brains look like this:

Scientists create machine that knows what you are thinking

Scientist have created a machine that can tell how the brain lights up when thinking about different things

Daily Mail, UK - Scientists have developed a machine which is capable of reading our mind and revealing our most private thoughts.

American researchers from Carnegie Mellon University in Pittsburgh, found that, with the aid of a sophisticated scanner and computer programme, they were able to determine how the brain lights up when thinking about different subjects.

Gold is currently at $867/oz and rising. Gold goes up when people think their paper money is crapping out. The more you make money easy to borrow (lower rates), the less it's worth. The more you create moeny (liquidity), the more dollars there are chasing the same amount of stuff the less the dollars are worth versus the stuff.

If the Fed were serious about protecting the economy, they would tighten rates and remove cash from circulation. But we all know that what they really want to do is devalue the fuck out of the greenback so we can welsh on our national and corporate debts. But not too fast, otherwise the richpigge banks, brokerages and other 'investment' groups won't be able to stuff their pockets at the expense of the middle and poor classes before the collapse.

---

Bernanke, King Risk Inflation to Extend Growth Party

Jan. 3 (Bloomberg) -- Ben S. Bernanke, Mervyn King and fellow central bankers may go on filling up the world economy's punch bowl in 2008, even at the risk of an inflationary hangover.

Signs that the party is ending for global growth are keeping monetary policy leaning in the same direction at major central banks, with those in the U.K. and Canada likely to join Bernanke's Federal Reserve in cutting interest rates again. The same conditions may lead the European Central Bank and the Bank of Japan, which shelved plans for raising rates, to remain on hold for months.

``I expect 2008 to mark the beginning of another global liquidity cycle,'' says Joachim Fels, Morgan Stanley's London- based co-chief economist. ``More signs of slowdown or even recession are likely to swing the balance towards more aggressive monetary easing in the advanced economies.''

Fed Officials' Forecasts Are a `Waste,' Study Says

Jan. 2 (Bloomberg) -- Federal Reserve policy makers' economic projections are useless and possibly misleading when given greater weight than more accurate forecasts by central bank staff, according to two scholars.

``Policy makers certainly talk as if they believe they have useful information to add to the staff's forecasts,'' University of California, Berkeley, economists Christina and David Romer wrote in a paper to be presented at a conference Jan. 4. ``For the most part, they do not.''

The Romers are on the seven-member business-cycle dating committee of the National Bureau of Economic Research, the Cambridge, Massachusetts, group that charts U.S. expansions and recessions. The couple's paper calls into question the usefulness of the Fed's November decision to boost disclosure of central bankers' views on inflation, unemployment and growth to four times a year.

The study also raises concern about the relationship between Federal Open Market Committee members' views and the staff outlook, which may be in conflict.

``FOMC members fail to add information,'' the Romers wrote. ``Their efforts to do so are actively counterproductive.''

The problem is that we are actually poorer than we were in 1970, but have been spending like we're richer. Nixon took us off the gold standard in 1971, and that's when all the funny money schemes took off like a rocket. We're flat fucking broke now, and we can't even fake it. The bill is overdue, and we can't pay it.

The era of easy money is over

Financial Times - According to new polls, the economy is the number one issue for American voters. A million homeowners may lose their homes because of the subprime mortgage crisis and millions more face difficulties getting credit. Energy costs are up, consumer confidence is down. We are poised for recession.

Washington is abuzz with plans to prevent the economy falling into recession. All the main presidential candidates are offering ideas for keeping the economy afloat. President George W. Bush wants to freeze mortgage rates while helping giant banks to unfreeze their credit by means of a giant bankruptcy process requiring so much government intervention as to make even a Democrat blush. Democrats are toying with middle-class tax cuts and increased spending on infrastructure to stimulate the economy. Pressure is mounting on the Federal Reserve to cut interest rates further. But none of these fixes will help much, because they do not deal with the underlying anxieties gripping American voters. The problem lies deeper than the current slowdown. It is only tangentially related to the business cycle.

The fact is, middle-class families have exhausted the coping mechanisms they have used for more than three decades to get by on median wages that are barely higher than they were in 1970, adjusted for inflation. Male wages today are in fact lower than they were then; the income of a young man in his 30s is now 12 per cent below that of a man his age three decades ago. Yet for years America's middle class has lived beyond its pay cheque. Middle-class lifestyles have flourished even though median wages have barely budged. That is ending and Americans are beginning to feel the consequences.

[Gold prices Dec 28, 2007 through Jan 2, 2008, showing $860/oz record high]

...and it's clear that the Fed has lost control of inflationary forces. A great summation from Mogambo Guru:

"My heart is pounding at this barrage of bad news, and I turn the radio off. But in my mind, I can hear the words, "the Federal Reserve had lost control of inflationary forces" echoing around and around, and I am holding my head in my hands in total anguish, crying out, "No! No! Noooooooo!"

And they can't stop because the government needs so damned much money. In fact, it is so much money that nobody actually knows how much, or why, or even where it goes! Don Grove recently wrote a synopsis of the review of the consolidated fiscal 2007 financial statement of the United States which was recently released, and notes that, "For the 11th year in a row, Comptroller General David Walker, the Nation's Chief Auditor, stated that the GAO could not give an opinion on the government's financial statement."

Mr. Walker's actual statement was, "Because of the federal government's inability to demonstrate the reliability of significant portions of the U.S. government's accompanying accrual basis consolidated financial statements for fiscal years 2007 and 2006, principally resulting from certain material weaknesses, and other limitations on the scope of our work, described in this report, we are unable to, and we do not, express an opinion on such financial statements." What?"

Whaaaaat? Indeed!

It's like a heroin junkie only worse - instead of chasing the original high, the Fed is chasing an increasingly bigger high, which means they have to print up increasing amounts of cash and make it super cheap to borrow, because DEBT is what fuels our "growth"!

AAAAAARGH!! Mogambo is right - we're freaking doomed!

JUST FOR TODAY: I will live through this day only. I will not brood about yesterday or obsess about tomorrow. I will not set far-reaching goals or try to overcome all of my problems at once.

I know that I can do something for 24 hours that would overwhelm me if I had to keep it up for a lifetime.

JUST FOR TODAY: I will be happy. I will not dwell on thoughts that depress me. If my mind fills with clouds, I will chase them away and fill it with sunshine.

JUST FOR TODAY: I will accept what is. I will face reality. I will correct those things I can correct and accept those I cannot.

JUST FOR TODAY: I will improve my mind. I will read something that requires effort, thought and concentration. I will not be a mental loafer.

JUST FOR TODAY: I will make a conscious effort to be agreeable. I will be kind and courteous to those who cross my path, and I'll not speak ill of others. I will improve my appearance, speak softly, and not interrupt when someone else is talking.

Just for today, I will refrain from improving anybody but myself.

JUST FOR TODAY: I will do something positive to improve my health. If I'm a smoker, I'll quit. If I am overweight, I will eat healthfully -- if only just for today. And not only that, I will get off the couch and take a brisk walk, even if it's only around the block.

This chart shows how fast and how high the toxic waste "asset backed securities" (bundled packages made up of exponentially leveraged bad loans, the biggest monetary sleight-of-hand scam in history):

"Can Fed and global central bank actions act to repair non-bank financial sector balance sheets and spark credit cycle acceleration anew? Yes or no? In very simple terms, THIS is the issue of the moment, the issue over which global credit markets seem quite concerned. The asset backed security markets have been the primary vehicle by which non-banking sector credit creation has mushroomed, and now that at least a meaningful portion of this mushroom cloud has turned toxic, where to from here? From maybe $250 billion in outstanding asset backed securities in 1990, we're now looking at a $4.3 trillion market. Quite interesting, and as you'll see in the chart, current cycle annual rate of change in ABS growth peaked in late 2005. At the exact time the now clear in hindsight US residential real estate cycle of a lifetime topped out. Oh well, it's not called the asset backed securities market just for laughs, right?

Very quickly before pushing onward, the following chart will give you a sense for relative magnitude or importance of the asset backed markets. The chart below delineates the fact that over the last eighteen years, the girth of the asset backed markets, propelling non-banking system credit creation, has grown from roughly 4% of GDP to over 30% today. Likewise, the asset backed markets made up roughly 9% of total US financial sector leverage in 1990 that has grown to a 27% level today. Asset backed markets important to the US economy vis-à-vis the greater expansion of the credit cycle over the last decade and one half? No, not important, simply crucial." [Safe Haven]

IN ENGLISH: We've floated out 4.5 TRILLION in toxic crap that is blowing up right this minute. Most of it is being held by people and institutions that had no idea this shit was radioactive, which means they've essentially lost their money and given it to the originators of the toxic waste. Also, we've been counting this mutant goop as part of our Gross Domestic Product, using these squirrelly GDP figures to show how healthy and vibrant our economy is so we can keep cranking out more goop.