Friday, March 26, 2010

Peter Schiff calls Alan Greenspan a traitor

I declared Greenspan a traitor several years ago.   I meant it in the most literal sense and I still believe it is true: he sold us out.  He knew what it would lead to and he did it anyway.  I hope Greenspan has a good hiding place because history shows that he is the type of person that ends up with a noose around his neck if the economic failure leads to significant civil unrest.

Societe General: "It's too late to prevent the collapse of the G7"

For the record, Albert Edwards is the co-head of global strategy at Societe General (big European bank), a position he took in 2007.    Here is a 2.5 minute video in which he is quoted.

Sometimes these videos contain so much information that it is hard to absorb.  Let me recap using quotes from Mr. Edwards:
  • “it is too late to prevent the collapse of the G7”
  • “we are all now insolvent”
  • “there is no other way out but to default”
  • economic prosperity over the past decade has been a sham, a totally unsustainable Ponzi scheme built on a mountain of private sector debt”  (this should sound familiar by now…)

While the commentators of the video are laughing and joking this is really not funny and the world is starting to wake up to it.  I don’t believe that Societe General would allow one of its officers to make these statements lightly.  Keep in mind that Societe General was one of the very few banks that cautioned about the 1st wave of the collapse 2 quarters before it happened.

If you want to read more, this link is a good starting point:

The timing is the only thing that is unknown IMO but if anyone big fails there will be a chain reaction that takes everyone down pretty quickly.  Remember, the damage has already been done and the reveal really doesn’t take long to occur.  What we have to do is stop the government from making new laws at a record pace (AKA “reforms” which are really just power grabs).  IMO the main purpose of these is to allow them to stay in power after the crash.

Monday, March 22, 2010

What does the IRS have to say about the bill of rights?

Some interesting info is revealed by the new IRS HQ building located in Carrolton, MD.  In front of the building is a black pyramid with a white capstone which contains the Constitution minus the Bill of Rights:

Note to government from The Captain: OK guys, enough of the illuminati pyramids and other secret society symbolism on public buildings, please. It’s just getting old and tiring and, quite honestly, increasingly pathetic.  These age old trappings of elitism give you no more claim to this country than gangland “tagging” gives “the crips” or “the bloods” special ownership over “their” territory.  Just stop already with the pyramids, crossed square and compass, etc.  All it does is make people suspect that government has forgotten that it is the servant of the people and in fact it makes people worry that government believes it is actually in charge of the people as a rancher would own livestock or other property.  I assure you nothing could be further from the truth.

On a column next to this pyramid there is a plaque to explain the exclusion of the bill of rights from the constitution:
In case you having trouble reading it, the inscription says “"The Bill of Rights was not ordained by nature or God. It's very human, very fragile."

Please consider that none of these things happen by accident.  Someone thought long and deep about quoting Congressman Barbara Jordan (deceased but we still have to see her ungainly statue on the main floor of Austin Airport…).  It’s difficult to know if this was meant as a benevolent reminder to the people or as a malicious threat.  Perhaps a little of both.

First let’s give the benefit of doubt to whoever commissioned this inscription and explore the possibility that it was meant as a benevolent reminder along the lines of "freedom isn't free".  We all know that the Declaration Of Independence defines inalienable (the actual word used was "unalienable") rights to include (but not limited to) the right to “life, liberty, and pursuit of happiness”.  But what does “inalienable”/”unalienable” actually mean in our legal system?  This is important to understand because while they are called “inalienable” rights they certainly are alienable.  For example, if the right to liberty were absolutely inalienable, if it could not be separated from you no matter what, then there would be no prisons.  Instead, 3.2% of the American population was in prison or on parole at the end of 2008.

A closer look at the term “inalienable/unalienable” shows that our founders declared that so called unalienable rights were given to us by The Creator and can thus only be given up willingly by the people.  One way to give up your inalienable rights is to violate the rights of others.  Thus, if you commit a crime you have willingly waived your inalienable right to liberty.  In death penalty states, you can also waive your inalienable right to life by murdering someone or committing some other capital offense. 

Having said all of that, nowhere in the bill of rights or anywhere else in the constitution do the words “inalienable” or “unalienable” exist.  Thus, it would seem, the Bill of Rights might not hold “inalienable” status in some people’s minds.  Online sources tend to dance around the subject a bit which is more evidence that people aren’t 100% sure on the matter (or they have a strong opinion which they don’t care to share…).  For example, the online Law Dictionary defines the Bill of Rights as “The first ten amendments to the U.S. Constitution, that part of any constitution that sets forth the fundamental rights of citizenship. It is a declaration of rights that are substantially immune from government interference.”  As you can see, this definition does not hold the US Bill of Rights to be anything terribly unique or sacred because “any constitution” will obviously have such a section (of course they don’t, but say it 3 times and people will believe it).  Also, I don’t know what exactly “substantially immune” means but I do know that it doesn’t mean “inalienable”.  These are the weasel words of the elite which they will argue, with the backing of police and military, give them free reign to do whatever they want to with our rights should the need to protect their jobs and high positions arise.

Keep in mind that the declaration of independence, which does discuss inalienable rights, is not really a legal document according to many scholars and it has no legal power to imbue any rights or to define any obligations.  Its main purpose was to declare to the outgoing British government why it was fired and to warn/remind future governments under what conditions they can also reasonably expect to be fired.  So while it is a nice piece of wording and clearly inspirational there is nothing binding in it, just suggestions.  Perhaps in the future I will take the time to go through each of the grievances listed in that document to see how many of the government actions which can “reasonably” result in an overthrow have already occurred (at least in the minds of the founding fathers)…

Although it is an amendment to the constitution, the very name “BILL of rights” does not imply unalienablity but rather that it exists as a result of due process of the creation of laws which start off as bills. Even the name was taken from the English Bill of Rights of 1689 which was a British bill later enacted into law in Brittan.  Remember, inalienable rights come from The Creator and thus are supposed to be above changes in the law.  Just because something is law today doesn’t mean it will be law tomorrow.  Laws change all the time.  The ‘Lectric Law Library” says that the bill of rights was “included in the constitution as part of deal made so that the libertarian elements of the founding fathers, lead by Jefferson and others, would vote for ratification of the constitution.”   According to this account it was a negotiated process with the oligarchy who wanted to give up as little as possible to the people while the champions of the people (Madison, et al) wanted as many protections for the people as possible from government gone wild.  They could EASILY have created a section in the body of the constitution with a title such as “citizen’s unalienable rights” but instead the weaker title “Bill of Rights” was chosen, likely because a stronger set of people’s rights would have defeated the purpose of those who sought to become the new slave owners upon departure of the British.  Again, none of this was accidental, it was a negotiated settlement.

To net out the first argument, the IRS may simply be giving us a benevolent, up front reminder that breaking the law (which to them, of course, mainly encompasses failing to pay tribute to Caesar in the form of taxes which are spent in every manner except by the will of the people) is grounds for eliminating the bill of rights, and they can do it regardless of whether or not you think they are inalienable because even inalienable rights are waived by the commission of crimes.  Taken in a broader sense beyond the payment of taxes, the benevolent warning may be telling us that as long as we do as we are told then we will be treated as if we have these rights but if we complain too loudly or cause too much trouble then our masters reserve the right to suspend the freedoms that they have, in the past, so generously bestowed upon us.

Come to think of it, this does seem to be the type of “friendly reminder” you might expect to have appear in front of the IRS after significant, vocal factions of the people start calling themselves “The Tea Party” and suggesting the federal income tax is an illegal scam or that we are enduring taxation without representation.

The exploration of the other side of the coin -that of it being a blatant malevolent threat- builds upon the above and is thus simpler.  In essence, it could be warning us that the Bill of Rights never was inalienable.  In other words, there is no requirement that government wait for you to voluntarily waive your rights by committing a crime.  It could be taken to mean that the bill of rights exists purely at the convenience of the government and that we are within a few short years of having it yanked from us if it is in the interest of the government to do so.  Again, it is the sort of thing that a bankrupt government might need to resort to when the debt fueled vote-buying entitlements run out. When there is no more carrot to herd the flock, the stick is all that remains.

Unfortunately, both the benevolent and malevolent versions of this really amount to the same thing since government can just continue creating more laws until breathing incorrectly is an offense.  The one thing that speeds up the whole process, however, is consent of the rules by the public and the best way to get the public to acquiesce is to threaten the people (first in subtle ways but later on overtly).  Again, it is no coincidence that Madison wrote:, If Tyranny and Oppression come to this land, it will be in the guise of fighting a foreign enemy“.  

In other words, even if the bill of rights are at some point ruled inalienable, people waive those rights when they consent to laws that violate those rights.  Of course, that is a huge overstep by government because majority rule cannot waive my inalienable rights and I cried loud and long about the Patriot act and the formation of the Department of the Fatherland (AKA Department of Homeland Security).  But if people see others buckling under to things defined in laws like the Patriot Act (overt violations of several elements of the Bill of Rights) then they begin to believe these things are law by precedent and each time they fail to stand up for their rights it constitutes consent.

Bottom line: our bill of rights is under daily attack.  Government lives in many cases by rule of precedent otherwise know as the law of “say it 3 times and if nobody objects then it must be true”.  By failing to understand our rights and by failing to demand that they be afforded us we are consenting to slavery which thus makes it legal.

Bloodless solution: AUDIT THE FED and then DISMANTLE IT.  Return, over time, to a system of honest money and get rid of fractional reserve banking.  Without the ability to create money from thin air, without the ability to pay for things with ever increasing debt, the power of the government to control us falls apart and is shown to be the sham that it always was.  People that know Ron Paul understand that his main concern is to protect the rights of the people and that all of this banter about fiat currency and fractional reserve banking and ending the Fed that he started in this country are simply the means to his end.  As convoluted as this strategy may initially appear, the ability to accrue massive debt is the Achilles heel of government gone wild.  Control the purse strings by controlling the creation of money from thin air and you control the whole shooting match, period.

Thursday, March 18, 2010

US taking lumps now, others will follow later

I have reported on the credit bubbles in Canada and Australia several times in the past.  These countries are widely reported to be in good shape because they are huge commodity exporters but if you actually review the data you will see that both of these countries have HUGE credit bubbles (much of it in the housing sector of course).  Australia’s housing bubble is 20% greater per capita than ours was!  It has not popped yet and neither has Canada’s massive credit bubble, but I assure you that the bust is coming and when it arrives they will get hurt even more than the US has been hurt by our credit bubble.  The world has literally years of de-leveraging ahead of it IMO.

Bank auditors got big bonuses for looking the other way...

Right straight out of a tin foil hat conspiracy novel IMO:

I love the wording about how regulators could have had “a stronger supervisory response”.  Talk about your understatement of the century to go along with the biggest bubble in a century which is nothing but the scam of the century.  We need to set aside this ridiculous banter and just call it like it is: massive bribes and corruption at all levels of the system.  People who were willing to let 10s or 100s of billions of crap slip by so that they might collect their few thousand of hush money.  Nobody willing to stand up and do their job and blow the whistle on the scam.  It’s like calling Charles Mansion and Jeffrey Dahmer “moody, responsible and lacking in self control”.  We had gotten to the point where everything is sugar coated and made politically correct but I think the days of political correctness obscuring the hard truth are numbered.

Tuesday, March 16, 2010

Greek Crisis Is Over, Rest of Region Safe, Prodi Says

According to one talking head, the Eurozone is no longer in any danger…

Notice that the guy that they trotted out to pump up confidence is not a current official.  The people seem to think that all of their problems are due to short sellers and others making speculative bets against the region (which includes pulling so called “hot money” out).  Of course it couldn’t have anything to do with the fact that they have spent themselves into oblivion with government “programs”.

I have to laugh at the quote they used:
“For Greece, the problem is completely over,” said Prodi, who was also Italian prime minister, in an interview in Shanghai today. “I don’t see any other case now in Europe. I don’t think there is any reason to think the euro system will collapse or will suffer greatly because of Greece.”  

I wonder if he could be any more sure of his assessment.

LOL at the scammers squirming.

Sunday, March 14, 2010

"Something for nothing" is the American way according to some...

This article states many of the things I have written about for years.  Unfortunately, while I have been pointing out that these things are the basis of a massive scam, the quoted “expert” from the Levy Economic Institute claims they are just part of the normal system.  He claims:
  • Economic growth is a function of bank lending and government spending, period.  That means that hard work has nothing to do with it.  That makes government and banks indispensable and everyone else is just along for the ride.
  • The power of banks and government come from their legal ability to create something from nothing.
  • Public debt a NOT burden on future generations. It does NOT have to be repaid, and in practice it will never be repaid.
  • These debts are the foundation of economic growth.

Read the article, it really does say these things:

So there you have it.  The time for hiding the truth is past us.  Now the powers that be are using their economic scam marketing team (AKA economic PhDs from academia) to try to mind wash us into believing that something so preposterous is true.  Scams generally appear to work for awhile but they always collapse at some point.  It is difficult to predict how long a scam can last but, like the Madoff ponzi, when the scam finally collapses it generally does so suddenly and those that didn’t think there was any risk are wiped out.

Wednesday, March 10, 2010

China housing gone wild

This has “big bubble” written all over it:

These are the types of economic imbalances that happen when you have fiat currency and fractional reserve lending which leads to way too much money running around in the economy,generally in the hands of too few, which chases the prices of speculative assets up.  After all, when you have provided food, clothing, shelter, transportation, health care and entertainment to your family, what is left to do with all that excess money but to speculate?

I wish I could say this was just China being stupid but if you look at the facts, they got locked into this by US inflation.  You see, we doubled our monetary base last year in order to come up with new money that would kick the can on great depression 2.0 down the road.  What this should have done was tank the dollar relative to the Chinese Yuan but the Chinese leaders knew that a stronger Yuan would put the smack down on the Chinese export economy so they greatly increased the Yuan in circulation so that they could maintain their ridiculously low currency peg.  In other words, the US exported its inflation.  Again.  How many more times this scam will work is unknown but now you can see how $hit rolls down the side of the pyramid and the US is at the top of it.  No wonder the enlightened ones worship the pyramid.  They understand that, just like in ancient Egypt’s massive use of slaves, the pyramid is the key to stealing a person’s labor.

Tuesday, March 9, 2010

A depression by any other name

“…for the first time since the Great Depression, Americans took more aid from the government than they paid in taxes.”

That’s pretty sobering IMO.  As you can see, our taxes are far too low to support the spending our government is doing.  Government knows that if taxes were increased to where they need to be in order to support these levels of ridiculous spending that people would not have money to pay the rent and to shop at wal-mart.  Major corporations would take a major plunge as sales fell off a cliff.  A better way (they think) is to borrow money and then spend it so that banks and corporations can show profits for a bit longer.

So what we basically did was take on trillion dollar deficits in order to keep the economic Ponzi from collapsing.  We kicked the can down the road a bit further but the end of this is fairly predictable.  We will take on as much debt as suckers will lend us and then we will, either by massive inflation or by direct means, default on the debt.  Others will default before us but default is the only way that the long running, debt based, something for nothing Keynesian con game can end.  It will not be anything new and in fact we already defaulted once when Nixon closed the gold window in ‘71.  But that was sort of a stealth default because people still had green dollars in their hands which they had been brainwashed into thinking were as good as gold.  When the next default occurs it will be a lot more obvious and it will result in shortages of a lot more things than just gasoline like it did back then.  The only thing that is not known is the timing.

FDIC now trying to push failed bank "assets" into retirement funds

“March 8 (Bloomberg) -- The Federal Deposit Insurance Corp. is trying to encourage public retirement funds that control more than $2 trillion to buy all or part of failed lenders, taking a more direct role in propping up the banking system, said people briefed on the matter.”
Time to face facts: The FDIC is broke and they are looking for a place to dump the crappy assets that they know will be coming in the door as they take over hundreds if not thousands of failed banks over the next 2 years.  So what better place to dump them than in pension funds which are managed by minions of the financial system?  That’s right, take the cash out of the pension funds and replace it with bad debt.  If this debt were any good and if it were being offered at fire sale prices then there would be a bidding war for it but there isn’t so its not.  People who have these pensions will wake up some day in the future only to find that the scammers have bled them dry.  The Wimpy Economy is showing its true face.  Anyone promised something in the future has less and less chance of receiving it every day.  Wimpy never intended to repay all those fronted hamburgers either.  If there is a way to cash out of any of these programs, the sooner the better IMO.

Monday, March 8, 2010

More evidence that China is a Wimpy Economy bubble just like the rest of the world

“Many of the stimulus projects undertaken this past year have been financed, not by the central government directly, but by local governments, including cities, counties, and provinces….local governments have already accumulated RMB 11 trillion (US$ 1.7 trillion) in outstanding debt, with RMB $13 trillion (US$ 1.9 trillion) in available credit lines, belying China’s low reported levels of public debt. …these debts are supposedly guaranteed by the local governments [so] banks and other lenders tend to treat the loans as essentially risk-free.”  Top regulators in Beijing now report that “China plans to nullify all guarantees local governments have provided…”  “…their credit was worthless without the guarantee”

Bottom line: China is simply playing the same game of “let’s find the greatest fool” that western banks have been playing.  They just tell people whatever they want to hear no matter how fantastical it really is because people want to believe, need to believe.  Why do these con games continue to work even after Bear Sterns and Bernie Madoff?  2 main reasons IMO: First, there is so much funny money running around that it needs to go somewhere.  Unlike real money like gold and silver, funny money is no use locked in a vault.  It needs to be out there being invested (gambled with) because unlike real money it loses value each year in aggregate and there is always the risk of a sudden and catastrophic drop in value such as happened to Iceland last year (50% devaluation literally overnight).  Their equivalent 401ks turned into 201ks with the snap of a finger and there was nothing they could do about it because their money was locked up out of their reach in a government controlled retirement system.  Sound familiar?  Money managers know that holding fiat money is like holding a hot potato.  If you hang on too long you might get burned.  

Second, too many people rely on returns from their investments in order to live.  They are either retired (think boomers) or are simply rich and count on the interest payments to provide perpetual income without the need for them or anyone in their family to work again, ever.  That may sound normal to a lot of people but it is the recipe for an unworkable economy IMO.  Nobody should be allowed to live a massive life without work – it is simply not what nature intended for us and it means that everyone else has to work harder in order to support the consumption of those who are not working.  It might be hard for most people to fathom this simple concept but in reality there is no free lunch so if someone appears to be getting free lunch then rest assured that someone else is paying for it with their work even if they don’t understand the fact.

Perhaps the most interesting aspect of this story is the fact that China appears to be telegraphing the pull out of their government guarantees at a time when most other governments are scrambling to provide additional guarantees.  IMO this probably means that China is overheating.  There is too much malinvestment happening in the country and it is creating too many bubbles.  Such bubbles raise prices on assets which makes them too expensive for the locals to purchase leading to the creation of empty mega cities and empty mega malls.  If the Chinese government does indeed nullify these guarantees it will result in a sudden stop of capital coming into that country and it might even trigger a mass exodus. 

Sunday, March 7, 2010

90+% of Icelanders say "no way" to debt slavery...

It’s absolutely sickening that the bad debt of high rolling bankers/gamblers could somehow be placed at the feet of hard working people who had nothing to do with the scam and who would have won nothing had the banks won.  In other words, no chance to win, only the opportunity to lose.  This is the face of modern debt slavery:

“The deal would require each person to pay around $135 a month for eight years -- the equivalent of a quarter of an average four-member family's salary.”

So for the next 8 years this “deal” would consume 25% of all the wages in Iceland.  Such a deal!!  No wonder the Icelandic people are voting against this and are willing to brave the consequences.  IMO they are doing exactly the right thing.  They need to repudiate this debt and just buckle down and work hard to create products and services that people want.  In a couple years this will all be water under the bridge whereas if they agreed to pay this ridiculous debt off it would be nearly a decade in clearing up best case.  Remember, if Icelanders are stupid enough to pay this off then they will lose 25% of their buying power.  That means their economy will fall into a seriously big ditch.  Deflation will set in and salaries will plummet.  Thus, what should have been an 8 year payoff period will end up taking much longer.  Again, it amazes me that those who took the risk and invested in Landsbanki and Icebank and Kaupthing think they should be made whole for their bad investment choices.  It’s insane.

Unfortunately, Iceland is not alone here.  The Iceland story is just a miniature version of the same scam that was replayed all over the world to various degrees including the US.  If it were not for the fact that we have the world’s reserve currency which we can inflate while others are trying their best to divest themselves of it without collapsing the whole fiat currency Ponzi then I can assure you we would already be feeling major pain.  But our creditors have to treat us with more care than Iceland’s creditors are treating them because our debt is so big.  To paraphrase the old saying, if you owe the bank $100k and lose your job then you have a problem but if you owe the bank $100 million and you lose your income source then the bank has a problem.

What happens in Iceland could serve as a roadmap for many countries over the next several years.

Saturday, March 6, 2010

Watch Iceland

Quick recap: Greedy “too big to fail” Icelandic banks (Landsbanki, Icebank, Kaupthing) leveraged up on risky investments and then went bust.  Faced with financial collapse of the country’s banking system, the Icelandic parliament stepped in and guaranteed foreigners repayment of the risky debt taken on by the banks.  The reason that such a ridiculous thing was credible at all was that Iceland is a debt based economy like the USA.  Nobody bought anything with cash.  Stores didn’t buy food to resell using cash, they used/use credit.  No banks=no credit=no food on the shelves even for those who have money in hand.  Such are the wages of the Wimpy Economy.

Of course, governments have no money of their own, they spend other people’s money.  Icelandic people figured out that government was going to make debt slaves of the entire population of 300,000 people in order to make their banker masters happy.  Someone else had the fun, and the common man was going to be in debt for a lifetime as a result.  The people called B.S. on this crap as they should.  As a result, the president of Iceland used his veto power on the parliamentary mandate and demanded a popular vote on the matter.  Apparently he was more afraid of the wrath of the people than of the wrath of the bankers.

As a result of the popular pushback, creditors have been offering better and better terms.  But the people didn’t rack this debt up so they don’t appear to be in any mood to pay anything no matter how good the terms are. So now the vote is imminent and Icelanders are bracing for the blowback they know will happen when they vote to default on the debt.

My take on this is that the threat of not being able to get credit going forward is far worse than the reality will be.  Why?  Because as much as the creditors posture and pose, they are screwed unless they can convince people to go into debt – that’s how they make their living.  If all credit were cut off to Iceland the people would adapt and they would show the world that you really don’t need credit to live.  Worst case they would start paying for things with gold and silver coins.  The fiat currency crowd does not want this and even more to the point, cannot have working examples in the world of economies that are free from the burden of credit and fiat money.  After all, if Iceland shows that it can work then who next?  I predict that Icelandic people will vote against paying the debt back and before 2010 is finished their credit lines will be reinstated despite all the posturing and threats if they don’t agree to become lifelong debt slaves.

Monday, March 1, 2010

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