Sat, Jan 19 2008
WHERE I JUMPED IN
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".
Sat, Jan 19 2008
WHERE YOUR MONEY WENT
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.
It’s mornings like this, when I wake up hung-over to photos of the King of Saudi Arabia festooning our President with gold necklaces, that I reluctantly remember that I am an economist; and one with some responsibility to explain what the hell Bush is doing kissing Abdullah’s camel.
Let’s begin by stating why Bush is not in Saudi Arabia. Bush ain’t there to promote ‘Democracy’ nor peace in Palestine, nor even war in Iran. And, despite what some pinhead from CNN stated, he sure as hell didn’t go to Riyadh to tell the Saudis to cut the price of oil.
What’s really behind Bush’s hajj to Riyadh is that America is in hock up to our knickers. The sub-prime mortgage market implosion, hitting a dozen banks with over $100 billion in losses, is just the tip of the debt-berg.
Since taking office, Bush has doubled the federal debt to more than $5 trillion. And, according to US Treasury figures, on net, foreign investors have purchased close to 100% of that debt. That’s $3 trillion borrowed from the Saudis, the Chinese, the Japanese and others.
Now, Bush, our Debt Junkie-in-Chief, needs another fix. The US Treasury, Citibank, Merrill-Lynch and other financial desperados need another hand-out from Abdullah’s stash. Abdullah, in turn, gets this financial juice by pumping it out of our pockets at nearly $100 a barrel for his crude.
Bush needs the Saudis to charge us big bucks for oil. The Saudis can’t lend the US Treasury and Citibank hundreds of billions of US dollars unless they first get these US dollars from the US. The high price of oil is, in effect, a tax levied by Bush but collected by the oil industry and the Gulf kingdoms to fund our multi-trillion dollar governmental and private debt-load.
The US Treasury is not alone in its frightening dependency on Arabian loot. America’s private financial institutions are also begging for foreign treasure. Yesterday, King Abdullah’s nephew, Prince Alwaleed bin Talal, already the top individual owner of Citibank, joined the Kuwait government’s Investment Authority and others to mainline a $12.5 billion injection of capital into the New York bank. Also this week, the Abu Dhabi government and the Saudi Olayan Group are taking a $6.6 billion chunk of Merrill-Lynch. It’s no mere coincidence that Bush is in Abdullah’s tent when the money-changers made the deal just outside it.
Bush is there to assure Abdullah that, unlike Dubai’s ports purchase debacle, there will be no political impediment to the Saudi’s buying up Citibank nor the isle of Manhattan.
So what? I mean, for the average American about to lose their job and their bungalow it doesn’t matter a twit whether it’s Sheik bin Alwaleed who owns Citibank or Sheik Sanford Weill, Citi’s past Chairman.
It’s the price paid to buy back our money from abroad that’s killing us. Despite the Koranic prohibition on charging interest, the Gulf princes demand their pound of flesh, exacting a 7% payment from Citibank and 9% from Merrill. That hefty interest bill then pushes adjustable rate mortgages into the stratosphere and pushes manufacturing into China by making borrowing and energy costs impossible to overcome. Forget the cost of health care: General Motors’ interest burden quintupled in just two years.
As the great economist Paddy Chayefsky wrote in the film The Network:
“The Arabs have taken billions of dollars out of this country, and now they must put it back. … It is ebb and flow, tidal gravity…. There are no nations, there are no peoples. There is only one vast and immense, interwoven, multi-national dominion of petro-dollars. … There is no America. There is no ‘democracy.’ The world is a business, one vast and ecumenical holding company, for whom all men will work.”
The FlowIn 2005, the US consumer paid Arab and OPEC nations a quarter trillion dollars ($252 billion) for oil - and the USA received back 100% of it - and then some ($311 billion) via Gulf nations’ investment in US Treasury bills and purchases of US businesses and property. Bush’s trip to Abdullah’s tent is all about this vast business of keeping this petro-dollar treadmill spinning.
The Bush Administration, rather than tax Americans to cover our deficits or make the banks suffer the consequences of their predatory lending practices, is allowing the Saudis to charge us big time at the pump with the understanding they will lend it all back to us - so the party never has to stop.
It has been reported that the President’s Secret Service men traveling with him seemed embarrassed by the eye-popping loads of diamond and gold gifts which they have to carry back for President Bush. They need not feel they have taken too much from their hosts: Bush has assured Abdullah that the King can suck it back out through our gas tanks.
***********
Greg Palast is the author of The Network: The World as a Company Town, in the New York Times bestseller, Armed Madhouse. Hear Ed Asner read from the book and the film ‘The Network’ at www.gregpalast.comSat, Jan 19 2008
ALL GOVERNMENT IS PARASITIC
"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
-----------------------
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?
-----------------
Who will have the courage to stand up to the rabble and say, "ENOUGH, YOU STUPID GREEDY MOTHERFUCKERS" ?
All news articles and images provided under the Fair Use Notice.