Should Auld Aquaintance Be Forgot…

January 8, 2010 at 12:38 am (Banking Crisis, National Debt)

Well, it’s 2010.  I didn’t post much in 2009 because this blog is about doom only.  It’s not my personal life blog.  It’s not a blog about inventions or neat stories.  It’s solely about doom, and 2009 was the greatest year of doom-hiding fakery I’ve ever seen and plan to ever see in my life.

In short, 2009 was one big sham, and it was boring to write about.  I think 2010 will be more interesting.

While the Dow is at 15 month highs and everywhere you turn there are green shoots sprouting and growing and multiplying like a chia pet on time-elapsed camera, I still remain a pessimist about the whole thing, and here are some reasons why.

1) AIG.  Remember the big news that all the major banks had paid back their bailout loans (with interest)?  What if I said they paid it back because in addition to the original loan, the government simply gave them cash in secret to pay it off?  That’s essentially what happened.  Banks that should have lost money on their speculative investments were paid in full by AIG, which means paid in full by the taxpayer, who assumed AIG’s debt obligations.  Oh yeah, and our treasury secretary, purposely didn’t want us to know this fact.  Check it out.

2) Fanny Mae and Freddy Mac.  In addition to the backdoor bailout mentioned above, the government has been covering banks’ losses on crappy real estate bets by buying up “toxic mortgages” through Fanny Mae and Freddy Mac.  And apparently $400 billion is not enough.  Over Christmas, Obama apparently quietly lifted the limit from $400 billion to infinity going forward as the government once again lets banks make trillions during boom times and then sticks taxpayers with losses during the other times.  It’s called privitizing gains and socializing losses, folks.  The banks win and you lose.

3) Public pensions.  They are trillions in debt.  People in the public sector have been promised money and there is no money left.  Unions fight cuts, and taxpayers fight taxes.  Politicians sit with their thumbs in their asses.  And the problem spreads.  Case in point: Illinios.  Apparently those politicians never heard the schoolyard song that that went “…sitting on a fence, trying to make a dollar out of fifteen cents.  You miss.  You miss…” 

4) California, and states in general.  California’s much publicized “budget balancing” last summer was, in the vein of 2009, a charade.  Now it wants $8 billion from the Federal Government because politicians there also won’t cut and won’t tax.  And it’s not just California.  New York is bankrupt too.  Eventually, all states are going to go hat in hand to the Federal Government with the magical money-making machine that can print prosperity.  Amazing, that prosperity machine.  Why don’t we just print quadrillions of dollars?  We’ll be so rich!

5) Emergency Benefits.  The government likes to talk about how the unemployment rate is dropping.  What they mean is the number of new people signing up for unemployment benefits is dropping, and the amount of people receiving state unemployment benefits is dropping, the latter almost exclusively due to peoples’ benefit time limit running out and them still not having a job.  This is easily provable because of a humongous jump in so-called “emergency unemployment benefits” which, conveniently, fall into a different category and aren’t reflected in the official unemployment numbers.  For details, read here.

All of these stories individually are bad enough, but cumulatively, paint a completely different picture than the silly news networks spin.  But then, what can you expect from media, who instead of reporting on the Health Care Debate as a government debt obligation issue (the government has $80 trillion in MediCare and Social Security benefits that are not reflected in the National Debt and knows it can’t afford and is therefore looking at ways to renege on their debts) reports it as a ridiculous philosophical argument between Demublicans.

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Actual US Debt Obligations Near 100 Trillion

November 4, 2009 at 6:40 pm (National Debt)

The amount of unfunded US obligations grows exponentially each year and, unmentioned by any “objective” media economy reporting services, is about ten times the reported National Debt. The majority of the obligations are Medicare and Social Security, neither of which are actually guaranteed to pay out. This is why they aren’t listed in the National Debt — the US government isn’t actually contractually obligated to pay out, regardless of the money a person has paid in, unlike the various forms of contractual debt the “National Debt” comprises. Here, take a look at the growth of our obligations over the past few years (source):

Unfunded US Obligations Approach 100 Trillion

It’s so massive, and gaining such momentum, that we can’t even halt it, much less reverse it.  For example, this article mentions, “According to recent estimates, tax revenue from all sources would have to increase by 61% in order to balance the 2010 fiscal budget. Given that State government income tax revenues were down  27.5% in the second quarter, the US government will be lucky just to maintain its currentlevel of tax revenue, let alone increase it.”  But don’t worry.  When all this is over, it’ll sort itself out, right? 

Yes, in the default of:
a) Medicare payments
b) Social Security payments
c) The Dollar
d) The US Government itself
e) All of the above

Today’s article of doom: The prosperous USA.

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The Federal Express, Er, Reserve

July 9, 2009 at 11:53 pm (National Debt, Political Correctness)

If you are still fuzzy on just what exactly the Federal Reserve does and who exactly it is, please read this article.  It’s ironic this information, which will never be printed in the major US media, has to be explained to us by our former communist adversary.  Now this Russian newspaper is schooling us on our own Constitution:

It usually comes as a shock to people – especially diehard Americans who place infinite trust in their sacred Constitution – when they discover that the US dollar is not a product of the American government. That’s right, fellow consumers, that crumpled wad of dollars in your pocket is the product of the U.S. Federal Reserve, and despite the very official title, is about as “federal” as Federal Express. The reality is that the U.S. Federal Reserve is a profit-making venture just like Wal-Mart, General Motors or McDonald’s.

It’s really too bad the American people didn’t recognize that nothing, not health care, not carbon emissions, not tax rates, not race relations, not gay rights — not any of the above — is fundamentally important as having a stable economy.  Because without that, everything is chaotic, unfunded, unenforceable, irrelevant.  And it’s too bad that almost no voters realized the great cancer in our economy; the tumor from which all other tumors arise, is the Federal Reserve.  Had they realized this, they would have voted for the one Presidential candidate who ever bothered to talk about the Federal Reserve: Ron Paul.

But they didn’t.  Some voted for a continuation of a military empire.  Some voted for the hopeychange.  Hopeychange and military empires both rest on the soundness of economy for implementation, and therefore both are doomed.

Fortunately, or unfortunately, depending upon your stance, the fall — at least in this country — may be mercifully sudden.  It seems Congress is doing everything possible to throw all the money we don’t even have at all the things that will do nothing to help us.  Case in point: billions in foreign aid, billions in loans to the corrupt IMF, and more.  Once again the voice of reason is drowned out by the voices of special interest, the voices of goodwill, the voices of the ambitious, the voices of denial.  You’ve failed three times in a row, Freddy Mac?  Hell, here’s some more billions.  To the American citizens: screw you.  Get back to work.

Long ago, we’ve traded what works for what “sounds nice.”  Imagine if a colony of ants.  There are fundamental injustices in the ant colony: the workers (all female) are overburdened.  The drones (all male) are parasites who offer almost nothing, but eat great amounts of food.  The queen is an unelected dictator.  However, if you try to correct all those imbalances by forsaking the daily drive to collect food, come winter, every single ant in that colony will be dead. 

Hope and goodwill are not enough.  Perhaps this winter will be enough to convince us.

Today’s article of doom: Well, it’s a chart really.  When Obama says 10% unemployment, he really means 20%.  Why?  Because you’re only unemployed if you receive unemployment benefits.  If your benefits run out and you still don’t have a job, you’re not unemployed.  You’re a “discouraged worker,” a.k.a. deadbeat.  If you’re fresh out of school and you can’t find a job, you’re not unemployed, because you were never employed before.  If you work only 10 hours a week, you’re also not unemployed.  Hell, if you work on commission, and make 10% of what you used to, you’re still not unemployed.  Nor are  you unemployed if you don’t make money but are in prison, are disabled, etc.  Not to mention the figure is adjusted for birth and death rates artificially in the favor of lower unemployment figures.

So again, the real rate of people who can’t support themselves is 20%:

sgs-emp

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Promote the Greatest Failures (Or Is It Criminals?)

June 18, 2009 at 11:08 pm (Banking Crisis, National Debt, Political Correctness)

A post from the very informative Zero Hedge blog summed up some of the more noteworthy comments from the Federal Reserve and the Treasury during this economic debacle:

April 20th, 2007 – Paulson: “I don’t see (subprime mortgage market troubles) imposing a serious problem. I think it’s going to be largely contained.  All the signs I look at show the housing market is at or near the bottom.”

June 20th, 2007 – Bernanke: “(the subprime fallout) will not affect the economy overall.”

October 15th, 2007 – Bernanke: “It is not the responsibility of the Federal Reserve — nor would it be appropriate — to protect lenders and investors from the consequences of their financial decisions.”

May 16th, 2008 – Paulson: “In my judgment, we are closer to the end of the market turmoil than the beginning.”

June 9th, 2008 – Bernanke: “Despite a recent spike in the nation’s unemployment rate, the danger that the economy has fallen into a substantial downturn appears to have waned.”

July 20th, 2008 – Paulson: “It’s a safe banking system, a sound banking system. Our regulators are on top of it. This is a very manageable situation.”

August 10th, 2008 – Paulson: “We have no plans to insert money into either of those two institutions.” (Fannie Mae and Freddie Mac)

February 29th, 2008 – Bernanke: “I expect there will be some failures.  I don’t anticipate any serious problems of that sort among the large internationally active banks that make up a very substantial part of our banking system.”

September 19th, 2008 – Paulson: “We’re talking hundreds of billions of dollars – this needs to be big enough to make a real difference and get at the heart of the problem,” he said. “This is the way we stabilize the system.”

September 19th, 2008 – Bernanke: “most severe financial crisis” in the post-World War II era. Investment banks are seeing “tremendous runs on their cash,” Bernanke said. “Without action, they will fail soon.”

And now, the Obama team’s brilliant idea is to give the Federal Reserve sweeping new powers, in tandem with the Treasury, to regulate the banking system.  The very ones who were purportedly clueless about what was unfolding, as well as being the ones who caused it (by artificially lowering interest rates to encourage mortgage lending, thereby bypassing the effects of the dot com bubble bursting), are now going to be in charge.  After, of course, they engineered the transfer of wealth of the entire future generation to the bottom line of the richest banks.  Bravo.

It’s like taking the executives from General Motors and then creating a regulatory agency for all motor vehicles and putting them at the helm.  In short, it’s absolutely ridiculous.  Let’s not forget also, that the Federal Reserve, the organization that controls our money supply, and will soon control the entire regulatory system, is a private corporation.  Like “Federal” Express.  If you aren’t aware of these factors, I suggest checking out this week’s episode of Freedom Watch, which is one of the very view shows on mainstream TV that talk about these issues.

Or, read this book:

But, since we all know the Federal Reserve has more cumulative power than the US president and his staff, dating back several decades from the point in which the US was arguably effectively bankrupt (though this fact was disguised) and real wealth — gold — was outlawed from public ownership and transferred to pay off international debts and the income tax was established to pay interest on our remaining debts… well, we all know this legislation will pass and the central banks won’t have to rule from the shadows any more.  No one wants to be seen as undermining our magical new President’s will, therefore, it will pass.

In the words of Kurt Vonnegut: so it goes.

Today’s article of doom: political correctness is way out of hand when people are arrested to make up a “fair” quota of racial balance completely at odds with established crime statistics.

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California: DOA

June 12, 2009 at 8:53 pm (Banking Crisis, National Debt)

Soaring deficits, reduced income, over-burdened infrastructure, over-burdened health-care system, mountains of unfunded pension liabilities, a politically-correct atmosphere of entitlement (even among non-citizens), and a populace that wants no new taxes.  All of these things define both the Federal Government of the United States and the State of California.  There is one crucial difference, however, which assigns the image of green shoots to the former and tumbleweeds to the other.  California doesn’t print its own money.  Therefore, the state can only spend money it either has or borrows, and no one is stupid enough to lend them anything anymore.  Absent this crucial difference, California is a microcosm of the USA.  Unfortunately, this difference is unimportant in the long run for the Federal Government, because inflating the currency is not a solution; it’s a delay tactic.

So, what can be done for California?  Well, cuts need to happen, taxes need to be raised, money needs to be borrowed (courtesy of the Federal Government guaranteeing the debt, like a parent co-signing on their delinquent teenager’s car loan), or the State needs a Federal bailout.  In my opinion, each of the four options is equally likely, and probably a combination of all four will be the solution.

The cuts needed are mind-boggling, such as eliminating welfare, college funding, and state-funded medical insurance entirely.  And closing state parks.  And letting people out of prison early.  And even eliminating textbooks.  Some people are very, very upset.  But hey, the populace just shot down an emergency increase in taxes, so what’s the state to do?

Obviously, politically pander and beg for handouts from the Federal Government, of course.  With all the chains and conditions such funding will inevitably come with.  In the meantime, as an angry citizen as you most surely are, you can play with the budget yourself and see how you’d plug the gap with this interactive tool.  It’s educational at the very least.  Who’d have thought money didn’t just fall out of the sky over Sacramento?

Almost certainly, some amount of money will get passed down from the Obama administration.  But keep in mind this fact: the Federal Government is in far worse shape than California.  In fact, if California’s debt to GDP ratio was the same as the Federal Government’s, its debt would be 230 billion instead of 25 billion!

Today’s article of doom: Idiotic mainstream media tries to link Nazi shooter with people who oppose the Federal Reserve, fiat money (rather than the Gold Standard), and unconstitutional Income Taxes by claiming the United States never existed without them.

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Audacity of Numbers

May 7, 2009 at 6:02 pm (National Debt)

Let’s say you are the puppet, er, leader of the world’s most powerful nation.  And let’s say that nation will pull in, if everything goes well, close to $2 trillion over the next year.  And let’s say, for whatever reason, you decide to spend $3.4 trillion over that same time period.  Then, on top of that, just because you’re a nice guy, you decide to spend another $63 billion over the next few years on people that aren’t even part of your nation.

Then, for the sake of argument, you somehow absurdly claim with a straight face that you are making the hard choices and saving $17 billion in the midst of this.  Do the supposed independent newspapers, who are now in need of a government bailout (which, by the way, is supported by politicians who are concerned about the loss of “independent reporting”) call you on your ridiculous hypocrisy and mock you endlessly like truly independent media should?

No.  Instead, they give you a platform to say:

“We can no longer afford to spend as if deficits don’t matter and waste is not our problem.  We can no longer afford to leave the hard choices for the next budget, the next administration — or the next generation.” Obama 5/7/09

I guess all that talk about audacity wasn’t mere imagery.  The truly independent oversight, commentary, and investigation nowadays comes from blogs, not the mainstream media.  Of course, media moguls like Rupert Murdoch don’t like that much, and are hinting that the days of uncontrolled, unfiltered, free internet are numbered.  And they might be right.

Today’s article of doom: thanks a lot, Congress, for supporting the fascist Bush-era Patriot Act.  It helped imprison this 16 year old boy with no due process whose IP number was likely spoofed.  Way to make the country safer.

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$75 Billion Out Of $9.4 Trillion To Actually Attack The Problem

February 24, 2009 at 7:25 pm (Banking Crisis, National Debt)

Remember AIG, the insurance giant the US government bailed out several times last year?  First it was $37 billion, then $85 billion, then ultimately $150 billion.  After all that, they need another… $60 billion.  It appears they have more “financial challenges.”

Oh and remember when GM and Chrysler needed billions in emergency aid just two months ago to stave off collapse?  Turns out they need $21.6 billion more.  Maybe that will last another two months. 

Remember Citi?  They received $45 billion in cash last year, along with hundreds of billions more in guarantees on their assets.  They are now worth approximately $13 billion.  But not to worry, the government can always give them more money!  Bank of America is in similar straights, having recieved $50 billion in cash and along with Citibank, $400 billion in guarantees on potential losses, and is now worth less than the last injection of cash. 

Seriously, when does it stop?  When do we realize these companies are bust, and they cannot be fixed?  How much money needs to be flushed down the toilet to feed our addiction to denial?  Well, apparently we’re all mistaken and everything is going to be fine, because the head of the Federal Reserve thinks the recession could end in a few months.  If that isn’t proof the people in charge are either stupid or liars, I don’t know what is.

Meanwhile, it’s business as usual in Washington.  Just weeks after approving a $787 billion spending bill, Congress has a new $410 billion spending bill ready to go. 

The government’s official story is that overpriced mortgages caused this meltdown.  Now, I personally think the problem can be blamed on the irresponsible practices of the Federal Reserve, with regards to its monopolistic ability to change interest rates and thereby directly inflate the money supply.  But, if you believe the government’s story, it’s all due to bad mortgages.  Mortgages people bought but couldn’t afford.  The banks assumed these assets were worth more than they were, and the realization they were worth less caused a domino affect throughout the world and here we are at the bottom of the cliff.  $9.7 trillion in bailouts later, they’ve actually decided to throw some money directly at the problem.  According to bloomberg, if the government had spent that $9.7 trillion on bad mortgages, it could have paid off in full 90% of the nation’s mortages.  No matter how bad those other 10% were, there would be no mortgage problem anymore.  But instead, we threw the  money away on everything but the mortgages.

Now Obama seems to want to change that, and redirect some money to the problem.  But only $75 billion.  Peanuts.  $75 billion to help struggling homeowners is half of what we gave to the bankrupt insurance company AIG.  It won’t make a dent.  Housing prices are almost 20% lower across the board then they were last year, and last year they were almost 20% lower than the year before.  One in three homeowners owes more on his or her house than it’s worth.  How many of those people will keep paying their mortgage?  This pathetic “rescue,” target of anger, villification, and self-righteousness all over the country, is nothing; an empty pathetic gesture at addressing the official problem. 

It’s funny how people are suddenly so upset at having to “pay for their neighbor’s mortgage” but not at all that upset for having to pay for their neighborhood banks, pay for the car companies, pay for the insurance companies, not to mention allow their children and grandchildren to pay for all the government’s warmongering and pet projects, which dwarf the proposed mortgage bailout by 100 times.  Nope, none of that is too upsetting, but damn all those people getting subsidized mortgages!  Damn them straight to hell!

Today’s article of doom: Dow at 1997 levels.  And don’t even try to factor in inflation.

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$7.4 Trillion

November 24, 2008 at 11:18 pm (Banking Crisis, National Debt)

$7.4 trillion is the new number for the money the Fed has spent to solve the financial crisis.  Naturally, I’m using the world “spent” creatively, since of course they didn’t have the money to begin with.  I suppose “written $7.4 trillion IOUs” would be a more accurate description.  And those funding the IOUs won’t do so for much longer.  Asia is waking up to the fact they’ve been had.  This is a lot of money, considering it took us 225 years to bring our national debt to $5 trillion (the number at the dawn of Bush Jr’s presidency).

Then again, it’s only dollars, whose value is established entirely by the Federal Reserve — in this case, not even the ink and paper it’s printed on, since most of those dollars won’t actually be printed.  Right now, the value of the dollar is flying high.  That’s due, however, mostly to the fact investors and nations around the world have had to sell things of value (oil, grains, metals) to get dollars in order to settle their bad debts, which everyone now has hordes of.  This artificial value won’t last for much longer because ultimately, a currency is only as strong as the workforce and industry behind it, and, well… our industries are about 70% service-oriented (which means useless).  In fact, the largest moneymaking sector of our economy was just that — making money by helping others make money, which is proving to be a very shaky profession when “money” is discovered to have questionable (or no) value by itself.

Ever think you’d see the day when the US went begging to the Middle East for money?  How the mighty have fallen.  Not that this is any surprise to the tireless bell-ringers who have been warning about our unraveling monetary system for the last couple of decades.  In the midst of all this talk of bailing out the car companies, I thought this address before Congress from the last time we had to bail out an automaker was particularly relevant, though it’s from 1979.  Ironically, the same person is still in Congress speaking out against the bailouts, and the company in question (Chrysler) is again in need of a bailout.  Sigh.

A video of Peter Schiff, who was Ron Paul’s financial advisor, has been making the internet rounds.  It’s great fun to see all the supposed experts puffed up on themselves and their secure system, mocking him for his dire predictions from a few years ago.  I’ve come to realize the more arrogant and egotistical someone acts when deriding an unpopular opinion, especially on the news, the more likely they are to be completely wrong.  Enjoy:

Today’s article of doom: Mayor of New Orleans illegally confiscated firearms from private citizens during Katrina (arguably, the one time people needed them the most).  Foreshadowing of events in the future, as our economic “Katrina” hits?

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Here We Go: No Stopping it Now

July 14, 2008 at 4:19 pm (Food, Housing, Inflation, National Debt)

Well, this one’s even bigger than Bear Stearns.  We’re going to bail out Fanny Mae and Freddie Mac, both technically insolvent (their liabilities are greater than their assets) and it’ll only be to the tune of TRILLIONS.  “…a complete bailout of these huge mortgage finance players could double the fiscal deficit.”  Double the national debt.  Double.  Words fail me.  Most of the foreign owners of the 6 trillion dollars worth of owned or secured mortgage debt are China, Russia, and Saudi Arabia.  However, from what we hear on the news, buying stock in the worthless companies with taxpayer money so the shareholders on Wall Street and the debt holders in foreign countries get bailed out is somehow good for the American homeowner.  Go figure.  The Federal Reserve says no more bailouts are expected.  Right.  I’m sure they’ll have to bail out a few of the 150 banks that are expected to soon go belly up.

In other news, not only are food prices going up, but I’ll bet few people notice the size of the food products are stealthily shrinking.  Most people don’t know the weight of the food they buy, so it’s a great marketing trick.  Oh, and here’s an ex-government employee in the UK affirming that the official inflation rate there (and here too) is rubbish.  I mostly agree, but I think it’s more like 18%, not 10%, here in the US.  I like this article too.  “This recession could easily tip into a depression.”  Hahaha, really?  Another interesting read was this person’s take on why the bailouts must occur — to prevent lawsuits forcing the banks to buy back their fraudulent mortgages.  I don’t know much about the legal world, but I wouldn’t be the least bit surprised.

You may have heard that the Federal Reserve, over the weekend, took over the second-biggest bankrupt bank since the FDIC came into play, IndyMac.  You may have heard how many billions this would cost.  What you probably didn’t hear about, however — and the lack of coverage was no coincidence — was that there was a run on the bank leading up to and culminating in its doors closing on Friday.  Fear spreads fast, and the talking heads want it contained.

Today’s article of doom: might as well keep harping on the oil price.  Up to $147 now.

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The U.S. Account Balance?

March 25, 2008 at 1:01 pm (Housing, National Debt)

I thought this was pretty funny.  It’s taken from the official CIA government website.  It’s a snapshot of each country’s current “account balance.”  Of course, this is just one puzzle piece of the picture, but imagine each country as a person, and each person having a bank account.  This is how much each country has in the bank.  Anyone want to guess where the U.S. is on that list?  Probably above Rwanda and Zimbabwe, but below Switzerland, right?

Wrong.  We’re dead last with the largest negative balance.  (“We may be losing money on our product, but we’ll make it up in volume.”)  China is on top, of course.  Now, how that account is divided up according to currencies, commodities, etc, makes a huge difference on its actual value, so this snapshot is just something funny to look at.  Also, all the things not captured on this, such as natural resources, account balances of citizens, etc, paint a different picture.  But, ultimately, it’s pretty hilarious.

In other news, there will likely end up being a housing bailout for homeowners here.  As far as I’m concerned, the government shouldn’t be bailing anyone out, but if they’re going to do it for big business, the government might as well bail out individuals too.

Heck, they’ll have to, seeing as they’re taking the burden of the worthless mortgages Bear Stearns and other banks had as “assets,” and guaranteeing the banks full price for them.  Pretty soon, the government will be holding millions of mortgages and doing whatever they can to prevent widespread default.  Pretty slick how the big banks got to reap profits and then hand off the risk. 

A lot of people are calling this the bottom of the bear market, but that’s just being silly.

Today’s article of doom: Peaceful Tibetan Protesters Beat and Threatened with Death — In America

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