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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

"I don't anticipate stagflation," Ben Bernanke told the Senate Banking Committee today. "I don't think we're anywhere near the situation that prevailed in the 1970s."

Now, let's see here.... in the news today:

The Commerce Department reported that the 4th quarter GDP came in at a brilliant 0.6%. The previous quarter’s reading was 4.6%. The dollar is at $1.52 against the Euro. US jobless claims data continued to show a very sharp rise. Crude oil prices surged to over $102 barrel. The CCI index made another all-time high as commodity prices continue to go through the stratosphere. Gold closed at a record-breaking $971/oz, silver is almost a mind-blowing $20/oz.

So, to recap - jobs, money and production are dropping like a rock (growth down) and commodity prices are going through the roof (inflation up). That would be the textbook definition of stagflation, regardless of what that lying, corrupt tool Bernanke says.

Bullshit Benny's testimony on February 14th:

"A critical task for the Federal Reserve over the course of this year will be to assess whether the stance of monetary policy is properly calibrated to foster our mandated objectives of maximum employment and price stability and, in particular, whether the policy actions taken thus far are having their intended effects."

Bullshit Benny's testimony today:

"A critical task for the Federal Reserve over the course of this year will be to assess whether the stance of monetary policy is properly calibrated to foster our mandated objectives of maximum employment and price stability in an environment of downside risks to growth, stressed financial conditions, and inflation pressures."

*blink*

..."an environment of downside risks to growth, stressed financial conditions, and inflation pressures" perfectly describes stagflation.

The lying little gnome is right about one thing - this is not the same situation that prevailed in the 70's. Oh, no - it's much MUCH worse than the 70's... Oh yes, and I suppose that technically, you can't 'anticipate' something that is already happening...

Ben Bernanke is trying to reassure markets and lawmakers by stressing he is concentrating on something he calls "inflation targeting", keeping inflation at 2% annually.

Suspending disbelief long enough to, for the sake of argument, assume he can actually hit such a target (remember, actual inflation is currently running at around 11.8%), here's what 2% inflation over time actually looks like:

That's right folks - like warp drive on Star Trek, "inflation targeting" is EXPONENTIAL, not linear. Since when are ever-increasing prices a good thing? In light of the falling, yes falling value of wages and jobs, and the overall sinking of the dollar, how is deflation a bad thing here?

Ben's "inflation targeting" is one more example of the oligarchy's attempt to manage the avalanche just long enough for the wealth to finish transferring upward, a process that began when Nixon took us off the gold standard:

We're totally screwed, regardless of Ben, Hank and George's economic propaganda bullshit.

"We'll make it through this period just like we made it through other periods of uncertainty during my presidency," Bush said. Who you gonna believe, me or your lying eyes?

If by "make it through" he means survive despite his best efforts to totally fuck things up and bleed the country dry, well, then, technically, he's right. If making it through is not actually dying of starvation as we turn into a third-world country thanks to his administrations corrupt enabling of the oligarchy to perpetrate the largest transfer of wealth from the bottom up in history and the gutting of the US Treasury, yeah, we'll make it through.

Everything this man says is a lie, everything he does is corrupt and/or incompetent. Whe he opens his mouth the IQ score in the room drops by 5%.

Bush: US is not headed into recession

WASHINGTON, Associated Press - President Bush said Thursday the country is not recession-bound and, despite expressing concern about slowing economic growth, rejected for now any additional stimulus efforts. "We acted robustly," he said.

"We'll see the effects of this pro-growth package," Bush told reporters at a White House news conference, acknowledging that some lawmakers already are talking about a second stimulus package. "Why don't we let stimulus package 1, which seemed like a good idea at the time, have a chance to kick in?"

Bush's view of the economy was decidedly rosier than that of many economists, who say the country is nearing recession territory or may already be there. "I'm concerned about the economy," he said. "I don't think we're headed to recession. But no question, we're in a slowdown."

The centerpiece of government efforts to brace the wobbly economy is a package Congress passed and Bush signed last month. It will rush rebates ranging from $300 to $1,200 to millions of people and give tax incentives to businesses.

On one issue particularly worrisome to American consumers, there are indications that paying $4 for a gallon of gasoline is not out of the question once the summer driving season arrives. Asked about that, Bush said "That's interesting. I hadn't heard that. ... I know it's high now."

Bush also telegraphed optimism about the U.S. dollar, which has been declining in value.

[yeah... dollar's fine. That's why it's at record lows against all other fiat currency, and why despite the best efforts of Daddy Bush over at Barricks, gold is currently at $966/oz and steamrolling up... for more complete lies and corrupt bullshit propaganda about things like warrantless eavesdropping, terrorism, that new Russian guy Medvedev, that new Cuban guy Raul, Turkey and Afghanistan, read on.]

We clearly have nothing better to waste our time on:

Ohio school suspends boy over Mohawk

PARMA, Ohio, Associated Press - A kindergarten student with a freshly spiked Mohawk has been suspended from school. Michelle Barile, the mother of 6-year-old Bryan Ruda, said nothing in the Parma Community School handbook prohibits the haircut, characterized by closely shaved sides with a strip of prominent hair on top. The school said the hair was a distraction for other students.

"I understand they have a dress code. I understand he has a uniform. But this is total discrimination," she said. "They can't tell me how I can cut his hair."

An administrator at the suburban Cleveland charter school first warned Barile last fall that the haircut wasn't acceptable. The school later sent another warning to her reiterating the ban.

Mohawks violate the school's policy on being properly groomed, school Principal Linda Geyer said. Also, the school district's dress code allows school officials to forbid anything that interferes with the conduct of education.

Ruda's hair became a disruption last week when Ruda arrived freshly shorn, Geyer said. Administrators called Barile on Friday telling her to pick Ruda up from school.

"This was his third infraction," Geyer said Tuesday. "We felt that we were being extremely patient."

Rather than request a hearing to appeal the suspension, Barile said she'll enroll him at another school. Changing the hairstyle is not an option, she said.

"It's something that he really likes," Barile said. "When people hear Mohawk, they think it's long, it's spiked, it's crazy looking, and it's really not."

----

Okay, people, using small words in 'merican so's you ijits kin unnerstand, m'kay?

This here is Bryan Ruda. Bryan does NOT have a kindergarten-disrupting mohawk. Also, his "Harley Davidson" t-shirt does not indicate his membership in a ruthless biker gang:

This is a real mohawk. It will definitely be disruptive to anyone with a self-righteous two-by-four wedged up their ass:

Now grow the fuck up, Parma Community School Principal Linda Geyer and the board of Constellation Community Schools in Parma, Ohio. Grow the fuck up and start doing your jobs of teaching children things they need to know, like math and science and good sportsmanship and washing your hands after using the boy's room.

Bill Bonner at Daily Reckoning has some excellent thoughts on our obsessive military keynesianism:

"But opening up yesterday's International Herald Tribune we found a editorial by James Carroll of the Boston Globe. It is worth reading. Carroll describes America's curious obsession with "national security." We have wondered about it too. America's national security is the least endangered of any national security in the entire world. The United States has the world's biggest military, by far…and has forward bases all over the world. It is protected by two immense oceans and the tightest border checks outside of North Korea. The security of individual Americans may be in danger…not much from foreign governments or freelance terrorists, but certainly from home-grown criminals…but the nation is as secure as any nation ever has been. It has no enemies capable of launching a substantial attack. The pentagon is clearly the goliath of modern armies; even if the whole world ganged up against it, it would only be an even fight.

While America's own national security is safe, it regularly puts other nations' security in danger, in the name of its own 'national security.' Why?

"Military power… functions in America the way state religion has functioned in other societies," writes Carroll. "The Pentagon is the temple of this religion. It has dogmas, rituals, high priesthood, saints, cults of sacrifice, sacred language and a justifying narrative…what theologians call "salvation history."

When John McCain warns of "taking a holiday from history" he is speaking the language of the pentagon and cultivating America's delusion of danger, says Carroll, who finds the whole thing remarkable and depressing.

But here at The Daily Reckoning, we see it as just another sideshow in the Big Picture. America operates a huge empire. And an empire is essentially a military enterprise. It depends on the support of the masses, of course, who need to feel under constant threat of barbarian invasion to justify the huge expense of it.

Americans, as we pointed out in our book, Empire of Debt, never got the hang of empire. They send their centurions all over the world to provide stability and order, but they forget to charge for it. They do it at their own expense…which quickly becomes a losing proposition. Today, the pentagon's imperial agenda is bankrupting America…but no candidate for the White House - save our invisible friend, Dr. Ron Paul - has bothered to even mention it.

Americans have great respect for their military power…and count on it to keep them on top of the world. The people feel proud, and believe their success - even their survival -- depends on their military power, not their economic power.

"Yet 'national security is bogus," writes Carroll, " - part ghost story with which the nation scares itself at bedtime, part nightly prayer with which it then goes to sleep."

Just sit in your easychair and rail at the teevee, Ralph...

Consumer advocate Ralph Nader announces third-party campaign for president

WASHINGTON (AP) -- Ralph Nader on Sunday announced a fresh bid for the White House, criticizing the top contenders as too close to big business and dismissing the possibility that his third-party candidacy could tip the election to Republicans.

The longtime consumer advocate is still loathed by many Democrats who accuse him of costing Al Gore the 2000 election.

Nader said most people are disenchanted with the Democratic and Republican parties due to a prolonged Iraq war and a shaky economy. He also blamed tax and other corporate-friendly policies under the Bush administration that he said have left many lower- and middle-class people in debt.

"You take that framework of people feeling locked out, shut out, marginalized, disrespected," he said. "You go from Iraq, to Palestine/Israel, from Enron to Wall Street, from Katrina to the bungling of the Bush administration, to the complicity of the Democrats in not stopping him on the war, stopping him on the tax cuts."

Diebold Accidentally Leaks Results Of 2008 Election Early

Killer robots pose latest militant threat: expert

LONDON (Reuters) - Killer robots could become the weapon of choice for militants, a British expert said on Wednesday.

Noel Sharkey, professor of artificial intelligence and robotics at the University of Sheffield said he believed falling costs would soon make robots a realistic option for extremist groups.

Several countries and companies are developing the technology for robot weapons, with the U.S. Department of Defense leading the way. More than 4,000 robots are deployed in Iraq.

"The trouble is that we can't really put the genie back in the bottle. Once the new weapons are out there, they will be fairly easy to copy," Sharkey will tell a one-day conference organized by Britain's Royal United Services Institute on Wednesday.

"How long is it going to be before the terrorists get in on the act? With the current prices of robot construction falling dramatically and the availability of ready-made components for the amateur market, it wouldn't require a lot of skill to make autonomous robot weapons."

Sharkey said a small GPS-guided drone with autopilot could be made for about 250 pounds ($490).

The incomparable Mogambo Guru:

"The interesting thing is that Treasury Gross Public Debt is now $9.244 trillion, up from $5.65 trillion in the middle of 2001, when the current government-borrowing binge started going bananas, suddenly rising at a steady $50 billion per month or so.

And for a little perspective, that $3.594 trillion in additional debt means that, at even 5% interest, the government is now paying out $180 billion a year, just in the additional interest payments on just this additional debt, which is more than the entire total of the "economic stimulus" checks that are going to be mailed out! This is insane! And scary as hell!

"We're in a slowdown,' sez WhiteHouse spokeschick Dana Perino. No shit, spritzhead. Mighty white of y'all to finally acknowledge it, not that you have much choice anymore.

Worries grow for worse 'stagflation'

WASHINGTON, Associated Press - It's a toxic economic mix the nation hasn't seen in three decades: Prices are speeding upward at the fastest pace in a quarter century, even as the economy loses steam.

Economists call the disease "stagflation," and they're worried it might be coming back.

Already, paychecks aren't stretching as far, and jobs are harder to find, threatening to set off a vicious cycle that could make things even worse.

The economy nearly stalled in the final three months of last year and probably is barely growing or even shrinking now. That's the "stagnation" part of the ailment. Typically, that slowdown should slow inflation as well — the second part of the diagnosis — but prices are still marching higher.

The latest worrisome news came Tuesday: a government report showing wholesale prices climbed 7.4 percent in the past year. That was the biggest annual leap since 1981.

"We're in a slowdown," Press Secretary Dana Perino said at the White House, where the economics talk was still upbeat until recently.

Once the twin evils of stagflation take hold, it can be hard to break the grip. People cut back on their spending as they are stung by rising prices and shriveling wages. Businesses, also socked by rising costs and declining demand from customers, clamp down on their hiring and capital investment.

We all know the numbers coming out of the goobermint are bullshit. Monty Guild breaks it down:

THE UNITED STATES ANNOUNCED A 2.1% INFLATION RATE.
IN REALITY IT WAS MUCH HIGHER.

As measured by the Consumer Price Index or CPI, the Bureau of Labor Statistics places the rate of inflation at 4.3% and the core CPI at 2.1%. This is simply inaccurate. The fact that this figure is so out of touch with the reality on the ground begs several questions.

First, why do government statisticians and economists still refer the core CPI? Effectively stripping out the food and energy components? Core CPI, no longer reverts back to the basic CPI range as it once did. This is due to the fact that rises in food and energy prices are no longer the one-time cyclical events that they may have been decades ago. Today, they are long-term secular events and even the Federal Reserve officials have pointed this out. This alone makes the use of the core CPI outmoded and possibly devious.

Further, anyone familiar with the statistics behind CPI construction knows that since the 1980’s statistical techniques have been used to understate the CPI and other government inflation statistics.

The manipulation of the basket of goods within the CPI over the past two decades has generally had the effect of reducing inflation. For example, a number of years ago the cost of a home was removed from the basket and rents were substituted. The effect of this was to grossly understate the CPI for the last several years as housing prices have been booming. Further, even with the current decline in housing prices, rents remain much cheaper than house payments.

Another technique to mask inflationary pressures was the discontinuation of the publication of the M3 measure of the money supply in March 2006. It was discontinued after many economists began to believe that it gave a clearer insight into the rate of growth of money in circulation. This was important because many economists believe that the rate of growth of the money supply influences the inflation rate.

THE SEARCH FOR ACCURATE CPI DATA

Fortunately, some economists make a living by monitoring the discontinued statistics and making them available to others for a fee.

One such organization is shadowstats.com. The proprietor John Williams and his team monitor much of the important data that is “adjusted” or discontinued. According to them, CPI growth for the last 12 months would have been 7.6%, if the gimmicks introduced since 1990 were removed from the calculations. And according to Williams, if the gimmicks introduced since 1980 were removed, the CPI number would have been 11.8% for the last 12 months. This is versus the published 4.3% CPI.

From Wikipedia:

"Military Keynesianism is a government economic policy in which the government devotes large amounts of spending to the military in an effort to increase economic growth. This is a specific variation on Keynesian economics, developed by English economist John Maynard Keynes. Instances commonly supplied as examples of such policies are Germany in the 1930s and the United States in the 1980s.

--snip--

Examples of Military Keynesianism

There have been no clear cut historical examples of military Keynesianism in action. The reason for this is that the theory of military Keynesianism requires that the increased military spending is intended to fulfill an economic goal (i.e. to enhance growth, or increase employment), however the goal of the military spending has in all cases been to achieve some military, or political goal.

1930s Germany, which rebuilt a crippled economy with enormous military production under a National Socialist government has been cited as an example of military Keynesianism, however the purpose of increased military spending in Germany was not to increase economic growth, but to prepare for the war of conquest that Hitler always intended to launch. This example illustrates both the potential positives of such policies in generating rapid growth, and also the negative social effects presented by critics, however the aim of heightened German military production in the 1930s was preparation for the Second World War.

In today’s discourse, the term is most frequently discussed in relation to the United States, particularly the administration of President Ronald Reagan in the 1980s. Reagan’s administration pushed for significant tax cuts, while increasing military spending to combat the Soviet Union. While this was in practice a policy suggestive of military Keynesianism, Reagan’s reasoning for the policy was not that it would spur economic growth, but that military spending was necessary to combat Communism by outspending the Soviet Union.

For many in the United States worried about the adoption of these economic policies, fears of this were somewhat averted by reduced military spending in the 1990s in what was commonly described as a peace dividend for the end of the Cold War. However, the ongoing "War on Terrorism" and current Iraq War have brought such concerns to prominence once more.

See also

* Permanent war economy

* Military-industrial complex

* Iron triangle

* War theory

* Countercyclical

* Keynesian economics

At the pace we are destroying the planet, we may have to make a withdrawal from this bank in my lifetime...

Biodiversity 'doomsday vault' comes to life in Arctic

LONGYEARBYEN, Norway (AFP) - Aimed at providing mankind with a Noah's Ark of food in the event of a global catastrophe, an Arctic "doomsday vault" filled with samples of the world's most important seeds will be inaugurated here Tuesday.

European Commission President Jose Manuel Barroso and Nobel Peace Prize winning environmentalist Wangari Matai will be among the personalities present at the inauguration of the vault, which has been carved into the permafrost of a remote Arctic mountain, just some 1,000 kilometres (620 miles) from the North Pole.

The vault, made up of three spacious cold chambers each measuring 27 x 10 metres (89 x 33 feet), create a long trident-shaped tunnel bored into the sandstone and limestone.

It has the capacity to hold up to 4.5 million batches of seeds from all known varieties of the planet's main food crops, making it possible to re-establish plants if they disappear from their natural environment or are obliterated by major disasters.

We have become completely disconnected from our food. And most of this company's madcow meat goes to schools and cheap burger joints like Jack-in-the-Box and In-and-Out...

USDA Orders Largest Meat Recall in U.S. History

Washington Post - The Agriculture Department has ordered the largest meat recall in its history -- 143 million pounds of beef, a California meatpacker's entire production for the past two years -- because the company did not prevent ailing animals from entering the U.S. food supply, officials said yesterday.

Despite the breadth of the sanction, USDA officials underscored their belief that the meat, distributed by Westland Meat, poses little or no hazard to consumers, and that most of it was eaten long ago.

The recall comes less than three weeks after the release of a videotape showing what the USDA later called "egregious violations" of federal animal care regulations by employees of a Westland partner, Hallmark Meat Packing in Chino.

Hallmark did not consistently bring in federal veterinarians to examine cattle headed for slaughter that were too sick or weak to stand on their own, Agriculture Secretary Ed Schafer said. "Because the cattle did not receive complete and proper inspection, [the USDA] has determined them to be unfit for human food, and the company is conducting a recall," he said in a statement.

About 37 million pounds of the meat -- cuts, ground beef and prepared products such as meatballs and burrito filling -- went to school lunch and other public nutrition programs, and "almost all of this product is likely to have been consumed," said Ron Vogel, a USDA administrator.

Some larger purchasers, though, may keep meat for as long as a year. Company and government officials will try to trace the meat to notify the purchasers not to use it.

None of these three morons, Obama, Clinton or McCain understands just how much trouble we are really in or has any idea how to fix it, so it's back to the same old same old, giving tomorrow's money away today.

Costly campaign vows face reality check

WASHINGTON, Associated Press - Barack Obama promises $4,000 credits to help pay college tuition. Hillary Rodham Clinton backs $25 billion for home heating subsidies. And John McCain wants to not only extend President Bush's tax cuts, but eliminate the alternative minimum tax at a cost of about $2 trillion over 10 years.

Then there's reality.

These campaign pledges — and dozens more in the manifestos of the leading presidential candidates — face a collision with the real world come January.

That's when the new president will start putting together a real budget and economic plan, one drafted against the backdrop of record federal deficits exceeding $400 billion. Even more challenging is the growth of the Medicare and Social Security retirement programs, which budget experts say could require wrenching benefit cuts, politically difficult tax hikes or both to handle the retirement of the baby boom generation.

In that environment, promises to effectively rebate the first $500 of Social Security payroll taxes (Obama), provide $1,000 tax credits for retirement savings (Clinton) or cut the corporate income tax by 10 percentage points (McCain) may turn out to be campaign fantasies.

"They're operating in Never Never Land.... None of them are honestly addressing the real challenges that they're going to be facing if they're elected," said Leon Panetta, former budget director and chief of staff for President Clinton. "We're facing a deficit bubble that is getting increasingly worse and at some point is going to explode on us."

[Ed. note: I've always loved plain-talking Leon. Back when he was our local guy running for Congress, he was the only person I ever actually voted *for*. He still tells the truth.]

Today is Sunday afternoon, and most Americans are watching the Oscars. The news item below was quietly released on a Canadian news site, something most Americans don't ever visit. Way to effectively bury truth on page 41, fellas.

North American Union, here we come. Can't get American soldiers to open fire on their own disaffected countrymen? Get Canadian soldiers to do it:

Canada, U.S. agree to use each other's troops in civil emergencies

Canwest News Service - Canada and the U.S. have signed an agreement that paves the way for the militaries from either nation to send troops across each other's borders during an emergency, but some are questioning why the Harper government has kept silent on the deal.

Neither the Canadian government nor the Canadian Forces announced the new agreement, which was signed Feb. 14 in Texas.

The U.S. military's Northern Command, however, publicized the agreement with a statement outlining how its top officer, Gen. Gene Renuart, and Canadian Lt.-Gen. Marc Dumais, head of Canada Command, signed the plan, which allows the military from one nation to support the armed forces of the other nation during a civil emergency.

The new agreement has been greeted with suspicion by the left wing in Canada and the right wing in the U.S.

The left-leaning Council of Canadians, which is campaigning against what it calls the increasing integration of the U.S. and Canadian militaries, is raising concerns about the deal.

"It's kind of a trend when it comes to issues of Canada-U.S. relations and contentious issues like military integration. We see that this government is reluctant to disclose information to Canadians that is readily available on American and Mexican websites," said Stuart Trew, a researcher with the Council of Canadians.

Trew said there is potential for the agreement to militarize civilian responses to emergency incidents. He noted that work is also underway for the two nations to put in place a joint plan to protect common infrastructure such as roadways and oil pipelines. (TGH ed. note: would that be the four-football-field wide highway planned from Mexico to Canada?)

"Are we going to see (U.S.) troops on our soil for minor potential threats to a pipeline or a road?" he asked.

Trew also noted the U.S. military does not allow its soldiers to operate under foreign command so there are questions about who controls American forces if they are requested for service in Canada. "We don't know the answers because the government doesn't want to even announce the plan," he said.

But Canada Command spokesman Commander David Scanlon said it will be up to civilian authorities in both countries on whether military assistance is requested or even used.

He said the agreement is "benign" and simply sets the stage for military-to-military co-operation if the governments approve.

"But there's no agreement to allow troops to come in," he said. "It facilitates planning and co-ordination between the two militaries. The 'allow' piece is entirely up to the two governments."

If U.S. forces were to come into Canada they would be under tactical control of the Canadian Forces but still under the command of the U.S. military, Scanlon added.

News of the deal, and the allegation it was kept secret in Canada, is already making the rounds on left-wing blogs and Internet sites as an example of the dangers of the growing integration between the two militaries.

On right-wing blogs in the U.S. it is being used as evidence of a plan for a "North American union" where foreign troops, not bound by U.S. laws, could be used by the American federal government to override local authorities.

"Co-operative militaries on Home Soil!" notes one website. "The next time your town has a 'national emergency,' don't be surprised if Canadian soldiers respond. And remember - Canadian military aren't bound by posse comitatus."

Posse comitatus is a U.S. law that prohibits the use of federal troops from conducting law enforcement duties on domestic soil unless approved by Congress.

Scanlon said there was no intent to keep the agreement secret on the Canadian side of the border. He noted it will be reported on in the Canadian Forces newspaper next week and that publication will be put on the Internet.

Scanlon said the actual agreement hasn't been released to the public as that requires approval from both nations. That decision has not yet been taken, he added.

...or, "The Sushi Slump, American Style".

From Eric Janszen at iTulip:

"Should Insolvent Banks be Saved?

The lesson U.S. policy makers learned in the banking crisis of the 1930s and the S&L crisis of the 1980s was that the more quickly insolvent lenders are allowed to fail, bad loans written off, and solvent lenders take up good assets from them the more rapidly certainty and confidence returns and banking and credit system function is restored. What causes crises to escalate is extended uncertainty. It feeds on itself when market participants are not sure which banks are which are not solvent. Under those circumstances, banks tend to not want to lend to each other. They hoard capital in anticipation of rising loan losses and defaults. They restrict lending, which feeds back into the slowdown. This process is occurring today.

To solve the uncertainty problem in the extreme case as in the early 1930s the government declared a bank holiday March 5, 1933. Bank balance sheets were assessed to decide which banks were solvent and which were not. When the holiday ended one week later, one sixth of all U.S. banks were closed. That gave the market confidence that the remaining banks were solvent, thus ending the uncertainty. The banking system and lending started to recover. Similarly in the late 1980s and early 1990s literally thousands of small banks were allowed to fail. After institution of sweep accounts in 1994 which lowered reserve requirements, the banking system started to recover. That laid the foundation for the current crisis; such is the nature of credit based money system.

This time the banks in the most trouble are very large; the smaller banks that did not participate in careless mortgage and other creative lending based on securitization and financial engineering are in decent shape. This is more or less what occurred in Japan; the troubled banks were "too big to fail" from a macro-economic standpoint. As the crisis dragged on uncertainty of solvency spread leading to the kind of self-reinforcing crisis we see today in the U.S., the UK and some European countries. Instead, banks are being nationalized (passed into state ownership) either explicitly as in the case of Northern Rock in the UK, supported by government as in the case of the state-owned bank IKB in Germany, or implicitly in the U.S. via a commitment of continuous cash injections by the Fed and other institutions.

... snip ...

...two key questions. One, can the banking system escape the 100 year flood without a massive spike in the number of bank failures as occurred in the late 1980s and early 1990s? Two, banks survived the last recession due to monetary policy – low interest rates – and support from the endogenous credit system, that is, the invention and sale of securitized loan products. How can monetary policy and the endogenous credit system work to support the banking system this time?

I expect state based credit creation will continue to expand to compensate for dysfunction that is spreading across the credit market. More and more real estate and other loans and assets will move from the private sector's to the federal government's and Fed's balance sheet. The distinction between this development and the nationalization of the U.S. banking system will be largely semantic."

---

Nationalizing the US banking system? We are sooooo screwed...

---

An article which appeared on the front page of the Financial Times last week, illustrates how hard-pressed the banks really are:

"US banks have been quietly borrowing massive amounts of money from the Federal Reserve...$50 billion in one month."

The Fed's new Term Auction Facility "allows the banks to borrow money against all sort of dodgy collateral," says Christopher Wood, analyst at CLSA. "The banks are increasingly giving the Fed the garbage collateral nobody else wants to take ... [this] suggests a perilous condition for America's banking system."

---

From Kevin Depew at Minyanville:

Things Are Beginning to Look Grim

"Apparently, things are looking grim these days as the debt crisis that was initially contained to subprime mortgages, and then contained to investors in assets collateralized by subprime mortgages, and then to all residential-backed mortgage securities, and then to structured investment vehicles filled with collateralized debt obligations, and then to the money center banks that sponsored these structured investment vehicles, and then to short-term enhanced money market funds, and then to the bond insurers that may have underestimated the risk of the bonds they were insuring, and then to short-term auction rate securities, and then to corporations, institutions, schools and municipalities that may have assets in short-term auction rate securities that no one wants to buy or sell, and then to the corporate bond market, and then to the municipal bond market, spreads to Main Street.

Meanwhile, as the Debt Crisis becomes more apparent to Main Street, government officials, including most notably President George W. Bush and Treasury Secretary Henry Paulson, who insist "no government bailout" is in the works, are busy working diligently to maintain the ongoing government bailout using public institutions such as the Federal Housing Administration and Federal Home Loan Bank system while simultaneously shaking the bushes to draw out even more exotic bailout proposals."

Some thoughts on the matter from Greg Ip:

"Stagflation, a term coined in the United Kingdom in 1965, defined the years from 1970 to 1981 in the U.S. Inflation rose to almost 15%. The economy went through three recessions. Unemployment reached 9%. Fed Chairman Paul Volcker finally conquered inflation, but only by dramatically boosting interest rates, causing a severe recession in 1981-82.

Today's circumstances are far from that. Inflation is lower. Unemployment has risen, but only to 4.9%.

Yet there are similarities. As in the 1970s, surging commodity prices are leading the way. Crude oil rose to $100.74 a barrel yesterday, a new nominal high and close to its 1980 inflation-adjusted high. Wheat prices have hit a record. And, as in the 1970s, the rate at which the U.S. economy can grow without generating inflation has fallen, because of slower growth in both the labor force and in productivity, or output per hour of work.

The biggest difference is that in the 1970s, the Fed was unwilling, or thought itself unable, to bring inflation down. The Fed today sees achieving low inflation as its primary mission.

“The reason we’re so unlikely to see a repeat is we're not adding irresponsible policy,” says Christina Romer, an economist at the University of California at Berkeley and a historian of Fed policy. That means if the Fed is wrong in thinking inflation's recent rise is temporary, it will tolerate economic weakness in order to get inflation down again. “They’d have to let us suffer for a while.” "

---

This is from last year, but beautifully illustrates the madness of the housing/credit bubble.

First off, I don't care what language they speak, these stupid, greedy yokels should have known that they couldn't afford a one-bedroom roachmotel apartment, let alone a McMansion.

Secondly, the stupid, greedy mortgage brokers should have known that these stupid, greedy yokels couldn't afford a one-bedroom roachmotel apartment, let alone a McMansion.

Thirdly, the stupid, greedy lending bank should have known that these stupid, greedy yokels couldn't afford a one-bedroom roachmotel apartment, let alone a McMansion, and that the stupid, greedy mortgage brokers were most likely scamming the stupid, greedy yokels for the loan commission.

But I'm guessing the stupid, greedy bank didn't care because they were all set to pass the toxic waste down the line to stupid greedy SIV investors.

What the fuck, okay? Seriously, at what point in this transaction was the WTF alarm not blaring?

[$14,000 per year berry pickers Rosa and Alberto Ramirez stand in front of their
$720,000 home, which they purchased with a subprime loan]

Minorities Hit Hard by Foreclosure Crunch

Hollister Freelance, May 3, 2007, Hollister, CA - Despite making only $14,000 a year, strawberry picker Alberto Ramirez managed to buy his own slice of the American Dream. But his Hollister home came with a hefty price tag - $720,000.

This all sounds great on paper, but...

The power of healing: damaged rubber repairs itself

PARIS, Feb 20, 2008 (AFP) - French chemists on Wednesday announced they had created rubber that heals itself after it has been cut, a breakthrough that could lead to clothes that self-mend if torn and toys that repair themselves if damaged by a tot.

The molecular concoction -- described by other scientists as having "a touch of magic about it" -- can self-heal at room temperature in around 15 minutes by simply pressing the damaged pieces together, they report in the British weekly science journal Nature.

This is a good move, except for the part where they sell the toxic fish as sushi to the local peasants. But then again, just like the fish, we can always make more, right? I suppose it makes sense on a lot of levels - it cleans up the lake, it helps keep the locals fed, and at the same time it helps trim the population by speeding up the cancer death rates. Brilliant!

Algae-munching fish clean up Chinese lake: official media

BEIJING (AFP) - Chinese authorities are using algae-munching fish to clean up one of the country's most polluted lakes -- and after their diet of toxins they will be sold on to consumers, state media said Thursday.

More than 50,000 silver carp fry have been introduced into Chaohu lake and another 1.55 million will be added in the next 20 days, said Wu Changjun, from the Chaohu Fishery Administration, according to the Xinhua news agency.

Each carp is expected to have gobbled between 40 and 50 kilogrammes (88 to 100 pounds) of blue algae when it reaches its adult weight, with each chomp of the sludge helping to clean up the toxic lake, the report added.

Once the carp have matured, fishermen will be able to catch them and sell them in markets, at a price 15 times their original cost, giving a boost to the local fishing industry, according to Xinhua.

The top gadget catalog and the bottom gadget catalog companies have both admitted to insolvency and filed for bankruptcy. It is a very telling sign that providers of hideously overpriced and mostly useless high-end "woo-factor" gizmos (digital water sportsbottle for people too stupid to drink when thirsty) and providers of amazingly cheap and ludicrously useless chinese crapola (nothing says classy like a peeing dog door stop!) have both gone belly-up at the same time, proving that the US consumer is shopped out for real.

Sharper Image, Lillian Vernon File for Bankruptcy as Sales Slow

(Bloomberg) -- Sharper Image Corp., the seller of $300 electric shavers and $1,999 massage chairs, and catalog retailer Lillian Vernon Corp. filed for bankruptcy protection after struggling with declining sales.

Sharper Image, which will shed 90 of its 184 stores and is seeking a $60 million loan from Wells Fargo & Co., plunged as much as 80 percent in Nasdaq trading today. Closely held Lillian Vernon said it plans to sell assets after revenue trailed its forecasts and costs rose.

Sharper Image has ``tired'' stores and products, said retail consultant Emanuel Weintraub. Consumers are also buying fewer gadgets as the economy slows, he said. Lillian Vernon's products include $14.98 personalized Easter baskets, $34.98 quilted tote bags and $2.98 shamrock key chains.

``In the world of providing products that consumers don't have to replenish, you have to keep your merchandise fresh,'' said Weintraub, chief executive officer of Emanuel Weintraub Associates Inc. in Fort Lee, New Jersey. ``With everything going on in the world right now, consumers are less frivolous than they would be at a different time.''

Sharper Image targets wealthier customers with fewer, more- expensive products, while Lillian Vernon specializes in gifts at lower prices, said Weintraub.

Banks "quietly" borrow $50 billion from Fed: report

NEW YORK (Reuters) - Banks in the United States have been quietly borrowing "massive amounts" from the U.S. Federal Reserve in recent weeks, using a new measure the Fed introduced two months ago to help ease the credit crunch, according to a report on the web site of The Financial Times.

The newspaper said the use of the Fed's Term Auction Facility (TAF), which allows banks to borrow at relatively attractive rates against a wide range of their assets, saw borrowing of nearly $50 billion of one-month funds from the Fed by mid-February.

The Financial Times said the move has sparked unease among some analysts about the stress developing in opaque corners of the U.S. banking system and the banks' growing reliance on indirect forms of government support.

God, I'm so sick of the goobermint spin, getting endlessly repeated in the media echochamber. Face it, people - we're seriously fucked here and y'all gonna have to get used to being poor, probably third-world poor in some areas. Here's some anti-spin from Bill Bonner, of The Daily Reckoning:

"Stagflation is a devilish mixture. One part slump… one part inflation… and one part who-knows-what. Of course, the feds are eager to put more inflation into the brew. If they had their druthers, the concoction would have more of a kick - with more exciting price increases and less depressing slump. And to that end, they've come up with a number of rotgut proposals. For example, there is the "stimulus package' signed into law Wednesday. You've heard about it on the news, so we won't give the details. President Bush, signing the new law, applauded the U.S. economy with such gusto - it was as if he didn't realize he had just signed a rescue measure.

"The genius of our system is that it can absorb such shocks and emerge even stronger," said the president. But if the system were so robust, why was the doctor injecting $170 billion of adrenaline? He didn't explain."

...

"The U.S. enjoyed an extraordinary run of good luck. It had rich farmland…with huge oil deposits under it. It had energetic labor and low taxes. It had innovators, risk takers…and a government that left them alone. It had thrifty, hard-working people who asked for nothing but the chance to work. This combination of hard work and good luck put America on top of the world. But that's the trouble with being on top of the world; there's no where to go but down. Now, the U.S. is a net importer of food…and fuel. Its government seeks to control not only the lives of its citizens, but the fates of other peoples half way around the globe. Its citizens work harder than ever…but they are now competing with people who work even harder than they do…people who are willing to work for one tenth the compensation and then save half of what they earn. These same U.S. citizens are bending under the heaviest burden of private and public debt the world has ever seen, while their government encourages them to spend more.

After two generations of Fed-manufactured 'tailwinds', America is about to experience a for-real 'headwind' all the stronger for having been artificially held back for so long...

Hard times heighten long-felt unease

Associated Press - Even when experts were declaring the economy healthy, many Americans voiced a vague, but persistent dissatisfaction.

True, jobs were relatively plentiful over the last few years. It was easy to borrow and very cheap. The sharp rise in the value of homes and plentiful credit cards encouraged a nation of consumers to get out and buy. But to many people, something didn't feel right, even if they couldn't quite explain why.

Now the economic tide is receding, and the undertow that was there all along is getting stronger.

Take away the easy credit and consumers are left with paychecks that, for most, haven't nearly kept pace with their need and propensity to spend.

The frustration of $3 gas and $4 milk, the worries about health care costs that have risen four times the rate of pay, become much more real. The retirement security that is only as good as the increasingly volatile stock market seems much less certain.

Americans' declining confidence in their economy is triggered by a storm of very recent pressures, including plunging home prices, tightening credit, and heavy debt. But it is compounded by anxiety that was there all along, the result of a long, slow drip of worries and vulnerabilities.

David Walker, who signed on as the country's top money manager as head of the GAO (Government Accountability Office) for what was to be a 15-year term of office, has called it quits because we're going down in flames.

This is fucking serious. This is someone at the highest levels of goobermint saying "nu-uh, I'm not gonna be the one holding the bag for this meltdown!". This is a very smart man who now understands exactly how much trouble we are in, and wants no part of it.

Top US accountability officer quits over job constraints

WASHINGTON (AFP) - The head of the audit and investigative arm of the US Congress announced his resignation Friday, citing "real limitations" on what he could do.

David Walker, 51, a respected voice on fiscal matters, said he was making an early departure from the US Government Accountability Office (GAO) to head a new public interest foundation.

"As Comptroller General of the United States and head of the GAO, there are real limitations on what I can do and say in connection with key public policy issues, especially issues that directly relate to GAO's client -- the Congress," Walker said in a statement.

He did not elaborate but Walker last year issued an unusually downbeat assessment of his country's future in a report that drew parallels with the end of the Roman empire.

He had warned that the US government was on a "burning platform" of unsustainable policies and practices with fiscal deficits, chronic healthcare underfunding, immigration and overseas military commitments threatening a crisis if action was not taken soon.

There were "striking similarities" between America's current situation and the factors that brought down Rome, he had said.

These included "declining moral values and political civility at home, an over-confident and over-extended military in foreign lands and fiscal irresponsibility by the central government."

"This was a very difficult decision for me," Walker said Friday of his decision to leave the GAO, which he joined in November for what was to be a 15-year term of office. His resignation would be effective March 12.

He said he would become president and chief executive officer of the newly established Peter G. Peterson Foundation, which would "educate and activate" Americans while supporting "sensible policy solutions" on various issues.

"My new position will provide me with the ability and resources to more aggressively address a range of current and emerging challenges facing our country," he said.

Great Depression was caused by:

Stock market crash

- Buying on margin (credit)

- Overspeculation

International Economic Problems

- High tariffs and protectionist attitudes hurt trade

Banking problems

- Federal Reserve totally fucks up management of the banking system

- People lose faith in banking system (bank runs)

Maldistribution of wealth over long period of time

- consistent impoverishment of middle and working classes

- disproportionate enrichment of the very wealthy

- economic overeliance on luxury spending and wealth investment

Reduction of purchasing across the board

- people tightened their belts

- loss of jobs

Severe drought across the heartland

- climate conditions forced huge numbers of the poor to migrate

Any of this ring a bell? History tends to repeat itself...

"bearish analyst" or not, the media has increasingly been reporting on the possibility/probability that things are waaaay more FUBAR'd than the goobermint would like you to believe...

Depression risk might force U.S. to buy assets

NEW YORK (Reuters) - Fear that a hobbled banking sector may set off another Great Depression could force the U.S. government and Federal Reserve to take the unprecedented step of buying a broad range of assets, including stocks, according to one of the most bearish market analysts.

..and getting worse by the minute...

Military Keynesianism is defined as "devotion to militarism, weapons, and warfare as fiscal stimulus."

Mogambo Guru on the subject: "To grasp the horror of military Keynesianism, consider this statistic: By 1990, production for the Department of Defense amounted to 83 percent of the value of all manufacturing plants and equipment in the US. Only 17 percent of the US manufacturing base actually made products not meant to kill." Yikes! And that was 18 years ago, during which time it has gotten worse!"

Holy shit.

Let me get this straight - as of 18 years ago, 83% of all US manufacturing was military related, and of that figure, 83% was devoted exclusively to armaments? And that was BEFORE we got bogged down in Iraq etc, before we became a full-on credit-for-consumption economy?

FOR REAL?? HOLY SHIT!!

No wonder everything in our homes is Made in China. No wonder we're circling the bowl. No wonder armed conflict around the world is escalating. Guns is all we have to sell. Well, that and toxic derivative funny money, but nobody is buying that anymore.

By now, even Joe Sixpack sitting in front of his teevee in Bumfuck, Nebraska has figured out that anything Dubya says or does is the exact opposite of truth. Like the crap about a sound economy, or WMDs, or McCain being a "true consevative". He meddles in EVERYTHING everywhere and lies lies, LIES.

So when he talks up Pakistan, listen closely, because those guys have live nukes, they house al-Queda, and they are spiraling out of control again, especially since they offed Bhutto last month.

Lake Mead = Hoover Dam. So it's not just water, it's power as well. Are we scared yet?

Lake Mead Could Dry Up by 2021

LiveScience.com - Lake Mead, a key source of water for millions of people in the southwestern United States, could go dry by 2021, a new study finds.

The study concludes that natural forces such as evaporation, changes wrought by global warming and the increasing demand from the booming Southwest population are creating a deficit from this part of the Colorado River system.

Along with Lake Powell, which is on the border between Arizona and Utah, Lake Mead supplies roughly 8 million people in the cities of Las Vegas, Los Angeles, and San Diego, among others, with critical water supplies.

The system is currently only at half capacity thanks to a recent string of dry years, researchers say.

The study’s findings indicated that there is a 10 percent chance that Lake Mead could be dry by 2014 and a 50 percent chance that reservoir levels will drop too low to allow hydroelectric power generation by 2017. There is a 50 percent chance the lake will go dry by 2021, the study says.

Repuglicans are always bleating about 'tax-and-spend'. What the fuck is with this insane 'borrow-and-spend' shit??

Budget deficit running at faster pace

WASHINGTON, Associated Press - The federal budget deficit is running at a pace that is more than double last year's imbalance through the first four months of the budget year.

In its monthly review of the government's finances, the Treasury Department said Tuesday that the budget was in surplus in January, but totals $87.7 billion so far this budget year, double the $42.2 billion imbalance recorded during the same period in 2007. The new budget year started last Oct. 1.

The Bush administration sent its final budget request to Congress last week, projecting that the deficit for all of 2008 will total $410 billion, very close to the all-time high in dollar terms of $413 billion in 2004.

So far this year, federal spending is 8.3 percent ahead of last year's pace, at $949.1 billion. That is far ahead of the 3.2 percent increase in revenues, which have totaled $861.4 billion in the current budget year.

For 2007, the budget deficit totaled $162 billion, a five-year low. However, the slowing economy is expected to stunt the growth of tax revenues while the $168 billion economic stimulus plan passed by Congress last week will swell the deficit.

To learn more about the Uncle Dick and the other criminally insane assholes at the Project for the New American Century (the neocons who put Dumbya in the Whitehouse and have been pulling his strings ever since), and see exactly what their plan for world domination really is, just go get it straight from the jackasses' mouths. It's not hard to connect the dots when they do it for you!

----------

Part 4 of this excellent analysis (click here for parts 1& 2 and part 3):

THE FINANCIAL TSUNAMI PART IV:

Asset Securitization -- The Last Tango

by F. William Engdahl

February 8, 2008

Endgame: Unregulated Private Money Creation

What had emerged going into the new millennium after the 1999 repeal of Glass-Steagall was an awesome transformation of American credit markets into what was soon to become the world’s greatest unregulated private money creation machine.

The New Finance was built on an incestuous, interlocking, if informal, cartel of players, all reading from the script written by Alan Greenspan and his friends at J.P. Morgan, Citigroup, Goldman Sachs, and the other major financial houses of New York. Securitization was going to secure a “new” American Century and its financial domination, as its creators clearly believed on the eve of the millennium.

Key to the revolution in finance in addition to the unabashed backing of the Greenspan Fed, was the complicity of the Executive, Legislative and Judicial branches of the US Government right to the Supreme Court. In addition, to make the game work seamlessly, it required the active complicity of the two leading credit agencies in the world—Moody’s and Standard & Poors.

It required a Congress and Executive branch that would repeatedly reject rational appeals to regulate over-the-counter financial derivatives, bank-owned or financed hedge funds or any of the myriad steps to remove supervision, control, transparency that had been painstakingly built up over the previous century or more. It required that the major government-certified rating agencies give their credit AAA imprimatur to a tiny handful of poorly regulated insurance companies called Monolines, all based in New York. The monolines were another essential part of the New Finance.

Jim Sinclair's economic formula, which so far has been 100% on the money:

1. First interest rates rise affecting the drivers of the US economy, housing, but before that auto production goes from bull to a bear markets.

2. This impacts many other industries and the jobs report. An economy is either rising at a rising rate or business activity is falling at an increasing rate. That is economic law 101. There is no such thing in any market as a Plateau of Prosperity or Cinderella - Goldilocks situations.

3. We have witnessed the Dow rise on economic news indicating deceleration of activity. This continues until major corporations announced poor earnings, making the Dow fall faster than it rose, moving it deeply into the red.

4. The formula economically is inherent in #2 which is lower economic activity equals lower profits.

5. Lower profits leads to lower Federal Tax revenues.

6. Lower Federal tax revenues in the face of increased Federal spending causes geometric, not arithmetic, rises in the US Federal Budget deficit. This is also true for cities & States as it is for the Federal government.

7. The increased US Federal Budget deficit in the face of a US Trade Deficit increases the US Current Account Deficit.

8. The US Current Account Balance is the speedometer of the money exiting the US into world markets (deficit).

9. It is this deficit that must be met by incoming investment in the US in any form. It could be anything from businesses, equities to Treasury instruments. We are already seeing a fall off in the situation of developing nations carrying the spending habits of industrial nations; a contradiction in terms.

10. If the investment by non US entities fails to meet the exiting dollars by all means, then the US must turn within to finance the shortfall.

11. Assuming the US turns inside to finance all maturities, interest rates will rise with the long term rates moving fastest regardless of prevailing business conditions.

12. This will further contract business activity and start a downward spiral of unparalleled dimension because the size of US debt already issued is of unparalleled dimension.

..especially if the neocons succeed in creating the North American Union, which will generate a tsunami of amigos taking legal advantage of better conditions in el norte. Not that it will matter to our chinese masters, who will hire whoever is cheaper and least vocal - they like suitably subservient gong rén...

So. Learn both español and zhong guó if you wanna be able to communicate with both your bosses and co-workers, mon. Yes-aye.

Whites to be minority in US by 2050: study

WASHINGTON (AFP) - Immigration will drive the population of the United States sharply upward between now and 2050, and will push whites into a minority, projections by the Pew Research Center showed Monday.

"If current trends continue, the population of the United States will rise to 438 million in 2050, from 296 million in 2005," an increase of nearly 50 percent, the study by the Washington-based think-tank said.

More than 80 percent of the increase will be due to immigrants arriving in the country and their US-born children, who will make up nearly one in five Americans by 2050 compared with one in eight in 2005, it said.

Whites, who currently make up around two-thirds of the US population, will become a minority (47 percent) by 2050, the report said.

The Hispanic population, currently the largest minority group, will triple in size and double in percentage terms from 14 percent in 2005 to 29 percent in 2050, the report said.

The Asian population will roughly double in percentage terms, from five percent to nine percent, while the black population will remain static at around 13 percent.

The projections are based on trends over the past 50 years, during which legal and illegal immigration have played an increasing role in US population growth, the report said.

From 1960 to 2005, new immigrants and their US-born descendants accounted for 51 percent of population increase, and for 58 percent from 1980 to 2005, the report said.

But, the report warned, "possible future changes in immigration policy" could impact the projections.

No, it wasn't your imagination. Fast and dirty comparison of Clinton vs Bush, as of 2006 (use your brain and think about where we are here in 2008):

President:	Bill Clinton	George W. Bush
Immigration	doubled the Border Patrol early in his first term	severely cut Border Patrol funds
Subject of lying	his personal life	significant matters of state
Severity of lying	charged with perjury (lying under oath)	aforesaid lies were merely official statements and not under oath
Consequences of lying	charged with obstruction of justice	informally accused of attempted destruction of Democracy
Economy	"It's The Economy, Stupid"	"I believe the economy is fundamentally strong" (as the Fed pumps historical amounts of paper into crashing markets)
Average annual GDP growth	3.6%	2.6%
Non-farm employment	added 22.7 million jobs	added 3 million jobs (worst record of any US president in 70 years)
Unemployment	7.3% -> 4.2%	4.2% -> 4.7%
Real median household income	grew by $5,825	fell by $1,273
poverty rate	fell 3.5% (6.4 million fewer people)	rose 1.3% (5.4 million more people)
S&P 500	+ 308% (435.49 -> 1342.54)	- 2.1% (1342.54 -> 1314.78 as of 9/22/06)
NASDAQ	+ 395% (700.77 -> 2770.38)	- 20% (2770.38 -> 2218.93 as of 9/22/06).
Federal Spending as % of GDP	22.1% (fiscal 1992) to 18.4% in 2000	back up to 20.8% (fiscal 2006)
total executive branch employment does not include classified numbers for CIA, DIA, NSA, & other intelligence agencies; does not include outsourced jobs	down by almost 450,000 (2.225 million -> 1.778 million)	up by almost 100,000 (to 1.872 million).
Federal Debt	deficit of $290 billion —> surplus of $236 billion (fiscal 2000)	increased by almost $3 trillion (as of 2006 - over $9 trillion as of 2008
Public Debt as % of GDP	-16.4%	+4.4% in 2006 (+36.8% as of 2007)

Clearly, George W. Bush and his corrupt administration have bankrupted the United States of America, and continue to lie, cheat and steal with impunity. You still think we're not in a recession? You're right - we're sliding into a Depression, with a capital D, and this one will make your grampa's "Great" one look like a Sunday picnic.

Understanding how and why the US economy will continue to decline by comparing the US to a publicly traded company.

Think of this country as a company you are considering investing your money in, and you will understand how the rest of the world views us, why they won't be in a big hurry to bail us out but will gladly buy our assets cheap, and why we have to prepare ourselves for the uncomfortable economic reality of the widespread national impoverishment ahead:

- The US dollar is the common share of "USA Inc."

(the dollar has lost over 30% of its real value since 2000. Since 1913, the year the Federal Reserve was established, the dollar has consistently lost value. $1 in 1913 money is equal to $21.78 now. That is over 2100% inflation, most of it appearing in the last 30 years. And that's using the cooked-up goobermint price index figures, the ones that tell you there's no inflation even when you can see it rising daily at the pump and the supermarket.)

- The value of the US dollar versus other currencies will be determined exactly as one would analyze the share of an operating public company.

(that explains why other currencies gain in strength against the dollar, especially those of emerging markets whose economies, unlike our own, are based on production rather than consumption. A company that makes a profit sees its share price rise, while a company that operates at a loss sees it fall.)

- Interest rates determined by Federal Reserve actions are looked upon as the dividend paid by the public company "USA Inc."

(the Fed is lowering rates at an alarming rate, and threatens to go to zero, meaning no dividends at all. Currently, the Fed rate is less than the inflation rate, meaning anyone who buys Treasury bills now is actually LOSING money on the deal. Treasury bills is how the US government gets money coming in from other countries. Why invest again? Stock price [currency value] falling, no dividends, negative values over time even if stock wasn't falling, what's in it for me, exactly?)

- Earnings are defined as the Balance of Trade for the operating company, "USA Inc."

(the current Balance of Trade is running at a deficit of over $75 billion for 2008 alone, and it's barely February! Add to that the full deficit amount we've accumulated year after year and you'll understand why we pay more in interest yearly than we do on the actual debt, which then increases as the interest grows. Exactly like one of those nasty "negative amortization" homeloan works.)

- One of the characteristics investors use to valuate a company is the reputation of its management and operations.

(what kind of reputation does BushCo have? How does the world view America? Oh yeah, fat greedy lying smug bullies with nukes. Yikes!)

- The release of US Federal Budget figures is akin to the release of corporate estimates of performance in the coming fiscal year. The US Federal Budget also speaks to the reputation of management's ability to manage the business of "USA Inc" effectively.

(the Bush budget that came out last week is the first $3 TRILLION dollar budget in history. That means the federal government plans to spend over $31,000 per non-government worker in America, or about $10,000 for every man, woman and child in the country. Personally, I'd rather just have a check thanks! Coincidentally, Bush also came out with the first $2 trillion budget in history. Now get this - the projected revenue for 2008 is only $2.6 trillion - that means Bush flat-out brazenly plans to run the country at a loss *this year alone* of $400 billion dollars! And that's not counting the cost of the Iraq and Afghanistan wars, which are not included in his budget! Yikes!)

- The Treasury International Capital Flow Report represents the inflow of buying or selling by international hedge funds, money that foreign banks and other official institutions flow to the US - its their investments in US bonds and stocks, and is measured in billions of dollars every month.

(it's been falling steadily, with a serious dropoff recently, and who can blame them? Our IOUs are worthless, and every time the Fed drops rates, the return on Treasuries is reduced - why would you tie up your money in something that not only doesn't make a profit, but that loses value as the underlying currency [dollars] drops?)

- The Current Account Balance is considered the breakdown of the long term volume of "USA Inc.", the difference between a country's savings and its investment. It is the sum of the balance of trade (exports minus imports of goods and services), net factor incomes (such as interest and dividends) and net transfer payments (such as foreign aid). In a nutshell, how much of our savings are invested in other countries versus how much of their savings are invested in ours. Right now, as it has for the entire decade, the Current Account Balance sucks - foreigners own us, and how.

(while exports have gone up slightly, it is only because the dollar has fallen so much, making those goods cheaper for other countries to buy with their stronger currencies. The underlying infrastructure for manufacturing in this country is bupkus - we've moved most of our factories overseas, where cheap labor forces make them profitable. Gosh - american companies are making more on exports, but their workers are all in factories in other countries, so how does Joe Sixpack, regular american worker get paid again? Do you want fries with that?)

So let's recap:

- Stock price plummeting

- No dividends, valuation negative

- Company bleeding gushers of red ink

- Management is a bunch of dangerous clowns nobody can trust

- Budget specifically planned to continue running company at huge losses

- Institutional investors bailing out as fast as they can

- No production infrastructure to create revenue

Lack of production infrastructure means fewer real jobs for American citizens which means they spend less and pay fewer taxes which means the goobermint runs at a higher and higher deficits with fewer and fewer social safety nets which means less people able to start businesses which means fewer jobs and round and round *flush* we go...

Exactly why should ANYONE invest in "USA Inc"? It's a Ponzi scheme moneypit where "production" is defined by how much cheap imported crap each one of us can buy. More importantly, it is defined by how much each and every one of us can borrow in order to spend on that cheap imported crap.

We have succeeded in "growing" our economy in the last two decades only because we have "increased our production" by using various pyramid methods. First we:

- worked more hours per week (even more than the Japanese!). When that stopped being effective we

- became two-income households and women pulled double-duty as wage earners and homemakers. When that stopped being effective we

- borrowed on our homes and cranked up our creditcards. When that stopped being effective...

...well, here we are.

Do you see? As a country, as a people, as individuals we have borrowed far more than we can ever repay, and the bill is due NOW, period. What made the bill come due (housing bubble burst, credit crunch, funny money banking derivatives scams etc) is irrelevant. There is no putting our heads in the sand and happily waving plastic anymore. Back to the old-fashioned values of "if ya ain't got the money to pay for it, ya can't buy it!".

Only one way out of this mess: tighten our belts hard, default on our loans (national bankruptcy), retool the country for manufacture, and get used to the idea that we're not top geopolitical dawgs anymore.

Deflation Starts Out As An Attitude Change

"Remember, social mood drives social action; social action does not drive social mood. This is counterintuitive, but a negative social mood de-motivates people to produce more, purchase more and behave generally in an upbeat manner. A positive social mood, on the other hand, motivates people to produce more, spend more, take on more credit and expand businesses." -- Kevin Depew

Folks are starting to do the only reasonable thing when they smell a storm brewing - they are tightening their belts and battening down the hatches. They are going to hoard their money, no two ways about it.

We can track down pot smokers and throw them in jail for 30 years, but we're no longer hunting the ratfuck who killed 3000 people on American soil, countless thousands around the world, and brought us Rudy "9/11" Guiliani. Not like we can't find Bin Laden, we're just not looking. To quote Dumbya, we're "no longer interested".

He's not "in a cave somewhere", he's blending in just fine in some low-key suburb in Pakistan...

The corn used to make enough ethanol for a single SUV tank fillup can feed a human being for an entire YEAR.

16,000 children die of malnutrition EVERY DAY.

Think about that next time you smugly drive your Lexus SUV up to the ethanol pump.

Bill Bonner, editor of the Daily Reckoning, is a shrewd and perceptive man. In this excellent essay, he walks us through exactly how we got into this sorry mess. Alas, there is no quick fix - we must take our nasty medicine, and we will not be leaders of the world after we recover.

How did such a lucky, rich, productive people come to this?…to get rich was glorious…

by Bill Bonner

The Dow fell more than a hundred points. The euro/dollar exchange remained about where it was. Gold dropped back $4.10.

The news from the housing market is still grim. Home sales are falling. Inventories are building. Prices are coming down.

Consumers had been 'taking out' hundreds of billions in cash from their rising house values. Now, house values are falling and they're having trouble putting it back in.

Yes, Fortune magazine reports, "Home Equity Loans Soar."

Foreclosures are rising too, of course. And now they're in the 'good neighborhoods,' as well as the slums. "Big houses; Big problems," says an article in Newsweek.

Even the wealthy are said to be feeling pinched. The Orange County paper says the rich are 'belt tightening' along with the people who cut their hedges and fix their roofs.

But let's not get caught up in the worms this fruit has produced…let us look at the capitalist orchard itself.

When we left you yesterday, we promised an explanation. How could it be, was the question on the table, that capitalism's leading race should be left behind in the biggest burst of wealth-producing growth the planet has ever seen? And now, those people face a slump…maybe a recession…with no savings and no margin for error. Their government, too, is in no shape to help. President Bush will propose a budget this week - one with the biggest hole ever, a deficit of $410 billion. And if federal finances follow the pattern of the most recent recessionary period…this hole will deepen into the world's first $1 trillion government deficit.

"I believe you mean $3.1 trillion," corrects The DR Australia's Dan Denning.

"How can the dollar not fall when people get a load of that budget? It's astonishing really."

"Yeah, what's a few tril these days," chimes in Chris Mayer. "The budget is, well, shocking - even though it shouldn't be. I mean, we all knew what was going on. In fact, as Shadow Statistics John Williams often points out, the deficit is much worse than what they are saying, because they exclude social security payments and other things. I'm sure Williams will be writing about this soon. He always does.

"At some point, the dollar gets cheap enough that foreigners feel pretty good about picking up U.S. assets. We're already seeing this actually. Last year, foreign investors' purchases of U.S. assets increased 93% over 2006. I think you'll see more of that. Of course, it's painful when you're early. China's purchase of Blackstone has already lost a third of its value. But, I know I've read about how the Chinese are eyeing U.S. timberland, for example."

How did such a lucky, rich, productive people come to this?

The background for this question is as follows:

Stop asking me what the asian characters on the background graphic mean. I don't know what they mean, I don't read kanji handwriting or whatever the fuck the squiggles are. They just look cool..

“People aren’t scared yet – but once all this unwinds, they will be.” -- Professor Robert Shiller, Economist Yale University.

“I see the risk of a credit crunch leading to a generalized meltdown of the financial system.” -- Nouriel Roubini, Economics Professor, New York University.

The American Consumer.

“Consumers are on the edge, but they haven’t packed it in yet. They are worried about the up and down stock-market, falling house values and high gasoline prices. But they still have their jobs.” -- Mark Zandi, chief economist Moody’s.

The “Trickle-Down Effect”.

“A firehose has been showered on me, and nothing has trickled beneath. In the last seven-eight years what has happened is that the super-rich have gotten a huge break...the American worker went nowhere while the super-rich flourished, aided by the tax code. It has been a marvellous time for these super-rich...but if you believe in a trickle-down theory, nothing has trickled since 1987.” -- Warren Buffett, billionaire investor & CEO Berkshire Hathaway.

Falling Property Prices.

“We are in a historic housing bust right now, comparable to that of the Great Depression. The unravelling of that has unpredictable consequences.” -- Prof. Robert Shiller, co-founder Home Price Index.

“What’s going on in the (U.S.) mortgage market is not a crisis of confidence that we can talk ourselves out of. It’s a problem of structural insolvency, where many borrowers literally don’t have the means to service their debt over the long term, because many of them were counting on rising home prices over the short term.” -- John Hussman, president Hussman Funds.

Overall Outlook

"The $3 trillion Bush's proposes spending in 2009 would be the first time that milestone has been reached. Bush also presided over the first budget to hit $2 trillion, in 2002. It took the government nearly 200 years to reach the first $1 trillion budget, which occurred in 1987 during the Reagan administration."

Sonofabitch. Motherfucker. That bastard and his corrupt fatcat cronies are looting the American Treasury as fast as they fucking can, and selling the whole blinking lot us down the river! Is it still illegal to advocate the forceful overthrow of the goobermint and openly call for the death of a sitting pResident? Fuck. Let me know when that changes, so I can get in line.

Bush's $3 trillion budget is US first

WASHINGTON - In the nation's first-ever $3 trillion budget, President Bush seeks to seal his legacy of promoting a strong defense to fight terrorism and tax cuts to spur the economy. Democrats, who control Congress, are pledging fierce opposition to Bush's final spending plan — perhaps even until the next president takes office.

The 2009 spending plan sent to Congress on Monday will project huge budget deficits, around $400 billion for this year and next and more than double the 2007 deficit of $163 billion. But even those estimates could prove too low given the rapidly weakening economy and the total costs of the wars in Iraq and Afghanistan, which Bush does not include in his request for the budget year beginning Oct. 1.

Fuck.

Today I just want to go down into my Burt Gummer Apocalypse Bunker of Doom (BGABD) and count my supplies. This world is just so fucked. People are just so shortsighted, so self-absorbed, so amazingly amazingly STUPID.

There will most likely be a takeover of Pakistan by rogue elements, who will then control the 50+ nuclear warheads that country currently has. The odds of them lobbing them into India, Afghanistan, and any other "stan" that is pissing them off is pretty high. We've already taught the world that "preemptive action" is okay if you tell everyone your cause is righteous (see: Iraq, WMDs, and other lies-for-oil). Yikes.

The climate is changing so radically and so quickly, that in the next ten years there will be no polar ice and half of all animal and plant species will be extinct. Cripes.

The USA has entered into the beginning of the worst economic depression the nation has ever seen. It is the effective end of the American Empire, and will last for over a decade. Wealth and power will transfer to Asia. Crap.

My parents were both self-absorbed assholes and should never have had children. The foster system would have provided more structure and nurturing than those narcissistic idiots did. To this day, they could not give an actual damn about anything other than themselves. In the event of apocalypse, they are not invited to the Bunker. Fuck 'em. (I just threw this one in 'coz I'm really pissed at them today. But they are emblematic of an entire "me-first" generation).

Everyone who is not actually aware of and prepared for the powerful downsizing (impoverishment) of America is well and truly fucked. There will be soup lines. There will be food riots, there will be civil unrest, there will be a sharp increase in crime, there will be homelessness and beggars on the streets and little old ladies starving. Damn.

I could look on the bright side, but the bright side is that if you're treading water, you win. Otherwise, you're drowning with the rest of the populace.

The truly rich will be fine, just like they've always been. The faux rich will land hard on their asses. They will be the ones jumping out of windows and going postal. Get out of their way.

I'm gonna go count my sacks of rice & beans and boxes of ammo.

Fuck.

Greed knows no bounds, and the toxic holdings are everywhere. Few companies have even started disclosing their exposure/damage, and then only when absolutely forced to. In the coming year, you will see all kinds of companies in all kinds of industries sheepishly admitting to having bought into the derivatives mania. More than a few will be bankrupt by their greedy decisions.

Bristol-Myers stung by sub-prime losses

Los Angeles Times

Question: What does Bristol-Myers Squibb Co. make besides drugs?

Answer: Bad investment decisions.

The pharmaceutical company said Thursday that it was taking a $275-million write-off to reflect a sharp drop in the value of debt-related investments, including residential and commercial loans linked to sub-prime mortgages.

"Investors can now add to the list of questions to ask a pharmaceutical company in addition to asking about the studies and pipelines and patent expirations: What is your sub-prime exposure?" Carol Levenson, director of research at Gimme Credit, wrote in a note to clients.

The write-down "speaks poorly for the company's stewardship of its cash," Levenson said, predicting more to come.

Look.

I can understand being so pissed off at the system that you buy into the whole "72 virgins heavenly reward" crap and blow yourself up. I think it's amazingly stupid and cowardly, but I can comprehend the twisted reasoning (don't even get me started on the whole Islamic misogyny thing. What do the girl suicide bombers get? 72 hot poolboys?).

But to take mentally retarded women and children, strap bombs to their bodies, send them out into a crowd and then detonate them by remote control is just plain fucking EVIL.

Chickenshits. I got your heavenly reward right here, motherfuckers.

---

Female bombers strike markets in Baghdad

BAGHDAD, Associated Press - Remote-controlled explosives strapped to two mentally retarded women detonated in a coordinated attack on Baghdad pet bazaars Friday, Iraqi officials said, killing at least 73 people in the deadliest day since the U.S. sent 30,000 extra troops to the capital last spring.

The chief Iraqi military spokesman in Baghdad, Brig. Gen. Qassim al-Moussawi, said the female bombers had Down syndrome and that the explosives were detonated by remote control — indicating they may not having been willing attackers in what could be a new method by suspected Sunni insurgents to subvert stepped up security measures.