Full Meltdown Mode

October 23, 2008 at 7:12 pm (Banking Crisis)

Here are a few countries in full-scale meltdown mode:

Hungary: IMF to step in with rescue package
Ukraine: IMF to step in with rescue package also
Argentina: Nationalized pension funds
Brazil: Stock trading halted as market crashes
Iceland: bankrupt
Russia: Stock trading halted (again) as market crashes

Today’s article of doom: wealth gap creating a social time bomb


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This Is Only The Beginning

October 10, 2008 at 5:25 pm (Banking Crisis)

Things are bad in the financial world and everyone knows it.  Everyone is hoping, however, that things will get better tomorrow.  Some people ask me where I think we’re at in this downcycle.  Here is an easy way to know how much more we have to go: do you still use dollars as currency? 

Well, then this isn’t over yet.

Check out this bloomberg article foreshadowing global market closings.  Unimaginable.  The virus in the host is the fractional reserve lending method.  No amount of regulation or crackpot bailouts will ever change the fact we have a fiat money system based upon nothing but faith.  Nothing.  And not only that, but the credit allowed to be based upon the nothing is exponentially multiplied.  A more absurd system of currency I can’t imagine, other than perhaps letting people make their own currency by scribbling values on scraps of paper.

Fortunately, the article above talks about a new Bretton Woods, when at least our money was backed by something tangible and stable; gold.  If we return to a gold standard, that would be an excellent solution.  (And of course would show that the only politician in America who has any clue is Ron Paul.) 

In other news, here is a list of states that can’t pay their bills.  Should they reduce spending?  Of course not!  They’ll just borrow more paper from the Government!  Until we admit defeat and stop trying to regulate our way out of this mess caused by regulation (the worst example of regulation being the existence of the Federal Reserve), the best scenario we can hope for is hyperinflation.  The worst would be default of the dollar.  And forget about buying up stocks at the lows

Today’s article of doom: How many times can you use the word “severe” in a headline?

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Last Call for Gold and Silver

October 8, 2008 at 6:09 pm (Banking Crisis, Gold, Silver)

Gold Bars

The headlines are hilarious lately.  On one hand, you have titles like these: Iceland Teeters On The Brink Of Bankruptcy and Indonesia Halted Stock Trading and Russia Halted Stock Trading and Dow Posts Worst Retreat Since 1937 and California Needs Emergency Federal Loan and Is Florida Going Bankrupt? and Is Pakistan Bankrupt? and The Federal Reserve Will Lend Directly To Companies.

On the other hand, there are still headlines like: The US May Be In a Recession.  Or The IMF Slashes World Growth Forecast.  Wow.  Just… wow.  We’re rocketing off the edge of a cliff and people are still saying “we may have veered a little way off the path.” 

Let me go out on a limb here.  Get some gold and silver right this minute.  Despite the massive short-selling of the major financial institutions and world treasuries intent on keeping the entire system from blowing apart, the successive price manipulation (and retreat), and despite the disparity between the physical price and the paper price, gold and silver cannot be suppressed any longer.  If you don’t own any, and were waiting for the right time to buy, it’s right now.  This very week, right now.  The bomb went off a few minutes ago on the world stage, and in a few more minutes, the first of the fallout will hit.  And then we’ll see REAL panic.  See this and this and this.

Today’s article of doom: Coordinated cuts won’t solve crisis.

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Rum, Wool Research, and Wooden Arrows

October 3, 2008 at 6:16 pm (Banking Crisis)

As if the American people needed further evidence of what a complete sham our system of representation has become, the bailout bill passed.  In addition to the 700 billion authorization to spend tax dollars on worthless bank derivatives, the emergency bill that is so necessary to the health of the entire global financial system, that has all officials talking about the horrific doom which will occur in its absence — the magical wonder bill that is so key we’re willing to abandon free-market principles to pass — contains the following provisions (among hundreds of others):

– Manufacturers of kids’ wooden arrows – $6 million
– Puerto Rican and Virgin Islands rum producers – $192 million
– Wool research- $148 million
– Nation wide improvement in Auto-racing tracks – $128 million
– Corporations operating in American Samoa – $33 million
– Small-to medium-budget film and television productions – $10 million
– Transportation fringe benefit to bicycle riders – $10 million
– Transfer to abandoned mine reclamation fund – $9 million

Yep.  I’m not kidding.  That, folks, is how our system works.  They throw in a bunch of completely unrelated crap to buy off votes from congresspeople who support those certain issues.  Completely ridiculous.  McCain, who promised to “veto any and all bills that cross my desk with pork-barrel projects” when he is President fully supports the bailout, earmarks and all.  So, either we’re to believe he would veto the bill as President that he supports as a Senator, or… he’s a liar.  Obama is basically a marxist, so I would expect a yes vote from him.In other news, Europe is collapsing too.  The end of the Euro may be as close as the end of the dollar.  Due to the runs on banks in Greece, and a similar scenario in Ireland, these two countries have guaranteed all their peoples’ deposits.  This will either force the hand of all other EU countries to do the same, or possibly even cause a split from the euro.  Iceland is on its knees.

Here are some quotes from a century and a half ago, which ring so true today:

“These capitalists generally act harmoniously and in concert to fleece the people, and now that they have got into a quarrel with themselves, we are called upon to appropriate the people’s money to settle the quarrel.”
– Abraham Lincoln, speech to Illinois legislature, January 1837

“Every now and then the world is visited by one of these delusive seasons when “the credit system”, as it is called, expands to full luxuriance; everybody trusts everybody; a bad debt is a thing unheard of; the broad way to certain and sudden wealth lies plain and open; men are tempted to dash forward boldly from the facility of borrowing. 

Promissory notes, interchanged between scheming individuals, are liberally discounted at the banks, which become so many mints to coin words into cash; as the supply of words is inexhaustible, it may readily be supposed what a vast amount of promissory capital is soon in circulation. Everyone now talks in thousands; nothing is heard but gigantic operation in trade, great purchases and sales of real property, and immense sums made at every transfer. All, to be sure, as yet exists in promise, but the believer in promises calculates the aggregate as solid capital and falls back in amazement at the amount of public wealth, the ‘unexampled state of  public prosperity!’

Now is the time for speculative and dreaming or designing men. They relate their dreams and projects to the ignorant and credulous, dazzle them with golden visions, and set them maddening after shadows. The example of one stimulates another; speculation rises on speculation; bubble rises on bubble; everyone helps with his breath to swell the windy superstructure and admires and wonders at the magnitude of the inflation he has contributed to produce.

Speculation is the romance of trade and casts contempt upon all its sober realities. It renders the stock jobber a magician and the exchange a region of enchantment. It elevates the merchant into a kind of knight-errant, or rather a commercial Quixote. The slow but sure gains of snug percentage becomes despicable in his eyes: no ‘operation’ is thought worthy of attention that does not double or treble the investment. No business is worth following that does not promise an immediate fortune. As he sits musing over his ledger with pen behind his ear, he is like La Mancha’s hero in his study dreaming over his books of chivalry. His dusty counting-house fades before his eyes, or changes into a Spanish mine: he gropes after diamonds or dives after pearls. The subterranean garden of Aladdin is nothing to the realms of wealth that break upon his imagination.

Could this delusion always last, the life of a merchant would indeed be a golden dream; but it is as short as it is brilliant. Let but a doubt enter, and the ‘season of unexampled prosperity’ is at an end. The coinage of words is suddenly curtailed; the promissory capital begins to vanish into smoke; a panic succeeds, and the whole superstructure, built upon credit and reared by speculation, crumbles to the ground, leaving a scarce wreck behind.”
– Washington Irving during the Panic of 1837

Today’s article of doom: Senator says they were threatened privately with Martial Law in America if the bill didn’t pass today.

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The Public Fights Back

October 1, 2008 at 10:16 pm (Banking Crisis)

Yes, we’re going to have a “deep recession.”  Duh.  The average American knows it.  It’s okay, “leaders,” you can use the D word.  Depression.  Yep, we get it.  The average American is not afraid of it.  McCain, Obama, Bush, Reid, Pelosi, Paulson… none of them comprehend.  They think we don’t understand there will be difficulties ahead.  Job loss, bankruptcy, doom!  Doom!  They figure they haven’t done a good enough job getting us to understand it will be bad news if we don’t give them unfettered power to use limitless tax money to buy up worthless “assets,” saddling our grandchildren with the problem we are too cowardly to face.

Here’s the problem.  While all the “experts agree” we need to “do something (anything!)” to shore up the markets, Monday’s vote reflected the 90 – 1 ratio of people who aren’t buying the official story.  The American public does not support the bailout.  The politicians, naturally, think they know what’s ultimately better for the nation, and are scrambling to do the exact opposite of what the public wants, because that’s what politicians do best.  And of course, they’ve enlisted the media, who is only too glad to help.

What’s been going on the past week could be summed up as such:  Every millionaire in the United States agrees we must buy up crappy worthless mortgage derivatives to prevent financial collapse using the money of every non-millionaire.

As fate would have it, however, a majority of seats in Congress are up for re-election in a few weeks and not a whole lot of those millionaires wanted to lose their spot by upsetting a public that is more enraged and more opinionated than they ever were, even during 9/11.  And it’s no wonder they were enraged, when language in the bill was such: “Decisions by the Secretary pursuant to the authority of this Act are non-reviewable and committed to agency discretion, and may not be reviewed by any court of law or any administrative agency. “In the end, I suppose it doesn’t matter, since those who aspire to humbly lead us are busily trying to figure out ways to bypass Congress and bypass public opinion.  Good thing we have leaders like this to look out for us!  Even though Paulson, Bush, et al, didn’t see this coming, and went on and on about how secure our economy was up until the last moment, they’re still the “experts” and still the best equipped to pull us out of this mess, right?

Well, at least some of the members of Congress understand what’s going on:


Today’s article of doom: Bailout will only prolong crisis.

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