Ya Lookin’ For A Trade War, Partner?

We had the cold war, and then Reagan’s War on Drugs, and his joint venture war in the Falklands with his girlfriend, Margaret Thatcher, which brought us the War against Saddam, by Pappy Bush, for drinking the oil milkshake located in Kuwait; next, we moved on to LittleBoyBush’s War on Terror, which brought us to the Iraqi Freedom War, and the War in Afghanistan. President Obama continues the presidential legacy of finding something to call “War”.

Now, President Obama has found his own voice of war by calling out the Chinese for keeping their Reminbi (RMB) undervalued as a currency, and pegged to the dollar. We are now hearing calls by those in Congress for a Trade War. Oh, how we love the sound of war, and its sweet destructive affects upon the lives of millions of people here at home and elsewhere.

Recently, we have heard from five of our dear Congresspersons looking for a fight with China. Senator Charles Schumer, of New York, and Senator Lindsey Graham, of South Carolina, and three others showed their fangs after taking their cues from Mr. Obama. It looks like there is a cram of 130 Congressional pack hounds standing behind the five snarling government dogs that have introduced legislation that would label China as a currency manipulator and are pressing the Chinese currency to float more freely. They are pressuring Tim Geithner to call out a statement that China is a currency manipulator. The Treasury department will decide if China should be labeled as such. It hasn’t been since 1994 that such a designation had been authorized.

China’s prime minister did not waste anytime unleashing his own growls upon the five Viagra induced Congressional pitbulls. Bloomberg reported, by Randow and Salamat (“Roubini Sees Trade War…”), that Mr. Fan Gang, a Chinese central bank advisor, said “China “may resume a managed float of its exchange rate” if the global economy stabilizes and uncertainty around the economic outlook diminishes.” What is he thinking? That the only way that China will rebalance their currency is when the global economy stabilizes? 

Nouriel Roubini, economics professor at NYU, said, “As long as the U.S. won’t take immediate action against China there will be negotiations. But the Chinese clearly stated that if the U.S. were to brand China a manipulator and took action right away, the Chinese wouldn’t stay idle, they would take retaliation.” Now, that sounds like war! The U.S. likes a good war, and the groundwork is being laid out for it to possible happen.

Chinese commerce minister, Chen Deming, warned that there could be trouble in River City if the U.S. levies a punitive tariff on Chinese imports into their most favored trading partner. U.S. consumers will be suffering more than anyone. He went on to say, “If the United States uses the exchange rate to start a new trade war, China will be hurt. But the American people and U.S. companies will be hurt even more.”

Chen knows how life is in the U.S., since he spent time at Harvard University. He doesn’t understand why the Obama administration believes that threats will accomplish his goals. “You’re not going to get 1.3 billion Chinese to change by insulting them….economically it makes no sense.” He doesn’t believe that the U.S. trade deficit will decrease by limiting imports. What will the U.S. do? Will it put tariffs on all foreign imports? Is it only targeted at China? Will China get around it by producing consumer goods in Taiwan, Vietnam, Mexico, or South Korea? The only way to effect the trade deficit would be for Americans to save more of their incomes and reduce their overall consumer spending practices; or to push the dollar lower and increase U.S. exports.

Mr. Chen made reference that the U.S. will probably not be producing their own telephones or televisions anytime soon in order to cover the loss of those same products being imported from China. “That production isn’t going to return to America, that’s just not practical. Globalization has changed all that.”

It is my belief that Mr. Chen is mistaken. The U.S. could start producing such products again if the Obama administration stimulated, i.e. subsidized, the manufacturing sectors as the Chinese have done over the past years.

China’s Premier Wen denied that the RMB was undervalued when he said, “I understand that some countries want to increase their share of exports. What I don’t understand is the practice of depreciating one’s own currency and attempting to press other countries to appreciate their own currencies solely for the purpose of increasing one’s own exports. This kind of practice I think is a kind of trade protectionism.” (Found on MPettis.com, 3-17-10). Professor Michael Pettis (Michael Pettis is a professor at Peking University’s Guanghua School of Management, where he specializes in Chinese financial markets, and a Senior Associate at the Carnegie Endowment for International Peace) wrote, “Wen is absolutely right! Undervaluing or depreciating a currency certainly is a form of trade protectionism, but that, I think, is exactly the point. In a world of sluggish growth and rising unemployment, everyone’s currency policies are legitimately going to be scrutinized over whether they constitute trade protection.”

Here is more of the arrogance oozing out of the Chinese government, (as written in MPettis.com “How Will an RMB Revaluation Affect China, US and the World”), by Professor Michael Pettis) and spoken by Zhao Qingming, a researcher with China Construction Bank as he stressed that imbalance’s of an economy’s deposit and investment were the fundamental reasons for a nation’s trade surpluses or deficits. “Exchange rates have only minor influence. In fact, yuan appreciation brings more adverse effects to western countries than positive ones. In the past tens of years, because of the yuan devaluation and export rebate policies, western countries, to a large extent, were able to enjoy low inflation, low living cost, and current standard of living, and western governments were able to reduce financial deficits and allow their people to consume excessively.”

This is Professor Pettis’ response. He wrote that the first part of Zhao’s statement is basically correct, but he is way off with the second part of his distorted view of a devalued currency. “The second part is certainly wrong and probably meaningless. More interestingly, it seems a little weird to argue that one of the benefits that China has provided the world with its undervalued exchange rate is low consumer prices that allow countries like the US “to consume excessively”. Aside from the fact that this pretty explicitly acknowledges that the currency is undervalued, since excess consumption is exactly the problem in the US, and since Chinese per capita consumption is much less than 10% of that of the US, it seems that China should be more approving of US attempts to return the favor and allow Chinese consumers the benefit of subsidizing US prices.”

Mr. Michael Whitney, (“The Looming Trade War With China”), brings up the following impressive viewpoint. He quotes Mr. Chen, (extracted from Washington Post, China’s commerce minister: U.S. has the most to lose in a trade war”) “If the United States does decide to impose tariffs on China, American companies operating in China, which account for more than 60 percent of China’s exports to the United States, would surely be hurt the most. ‘In the end, America is the one that needs to adjust’”. Chen continued, “One reason why a revaluation would be dangerous for China, is that profit margins for Chinese exporters are tiny—ranging from 1.7 to two percentage points.”

Mr. Whitney asked, “does anyone seriously believe that the corporations would slit their own throat by starting a trade war? Consider this: Maybe China’s “currency manipulation” policy was just one of the many preconditions demanded by foreign corporations before they relocated to China. Naturally they would want to ensure that they’d have an advantage over the competition regardless of the costs to China or workers in America. In other words, the multinationals are probably the driving force behind the exchange rate.”

Ms. Carolyn Bartholomew wrote in The American Prospect (“The Great Industrial Wall of China”), “China policy has, over the past two decades, been driven by the interests of the multinational corporations, and those global firms have benefited from many of China’s policies. Starting several decades ago, it was a handful of exporting elite—Boeing, Motorola, and GE among them—who argued persuasively to the Bush, Clinton, and Bush administrations that the U.S. economic interests would be served if only these companies had access to the Chinese consumers…As more and more companies signed on, and the investment banks got involved, production shifted to China…”.

“Instead of adjusting our trade and economic policy, U.S. policy-makers adjusted the rationale for the continuation of a status quo that was failing the American worker. Of the estimated 1.94 million U.S. jobs lost to China since China’s economic reforms started 30 years ago. 1.05 million of them—over half—were lost since China acceded to the WTO in 2001….Today, of course, we see the result of that sort of thinking. With the global economic crisis, American workers have ended up without jobs and without pension funds.” “At the behest of the U.S. based multinationals, Washington has championed the causes of corporate interests masquerading as free trade.”

This viewpoint is the crux of what globalization has done to the American worker. It sounds like we are being distracted, and redirected from the real cause of our trade deficit by our Congress and President Obama. Mr. Whitney pointed it out to us, which is that U.S. corporations walked away from the American worker in order to find the cheapest labor force with a stable government; and that was China. Outsourcing was the result, yet we were conned into believing that outsourcing would be good for us. We would have more leisure time as we invested our savings with the “financial experts”, and in return, we would have more dividend and capital gain income. WOW! Wasn’t that a crock of nothin’stuff!

What appears to be a solution to the trade deficit might not be to force China into revaluing their currency, but to tell American corporations that if they continue to produce outside the country and import goods that were once made in America back to us we should tariff those products and tax those corporations. That could be the framework for a rebalancing effort.

Professor Pettis wrote, “Although Premier Wen noted again in his speech…that China is “worried” about the value of its US dollar reserves, perhaps as a warning that China would counteract any US trade move by selling off USG bonds, [Paul] Krugman doesn’t seem especially worried about this threat.” “[Krugman] said that if China were to sell all of its US investments, it would help the economy by acting as a form of quantative easing and fighting a “liquidity trap” that has recently been affecting the US economy.” “China was the top foreign investor [of] US government debt, with holdings of $898.4 billion in Treasury securities.”

Professor Pettis added that the main long-term impact of dumping USG bonds might be no more than to cause a liquidation of Chinese assets at very low prices, and an equivalent transfer of wealth from China to the US (or to others likely at some point to buy cheap dollar assets).

“An RMB rebalancing would impact with a decline in exports and shrinkage in their manufacturing. Foreign currency investors and those investing and stockpiling of commodities and other goods would also be negatively affected. The winners would be households. There would be an increase in personal wealth, growth in future assets and incomes, as well as an increase in consumer spending on imports boosting GDP.”

Professor Pettis begins to summarize, “Remember that each domestic imbalance requires the other, so that if China adjusts, the US must adjust, too, and if the US adjusts, China must adjust, too….Either way, the rebalancing in China will force an equivalent rebalancing in the US. As the price of Chinese goods rise, the net impact will be to transfer resources from US consumers, who have to pay more for their imports, to US producers (US producers become more globally competitive.) This rise in Chinese consumption relative to Chinese production would be necessarily matched by a rise in US production relative to US consumption.” (Investment is a factor in economic growth, as well.)

“Remember that trade surplus exists because of the imbalance between Chinese domestic production and Chinese domestic consumption (technically the surplus is the difference between savings and investment), and so anything that affects the subsidies to manufacturers, or that affects household income, will also affect the trade surplus.”

“Rebalancing just means that in China economic growth will be less than consumption growth, and in the US consumption growth will be less than economic growth….If the RMB revalues, this is the same as if all the currencies of the rest of the world depreciate….This is why policy coordination and gradualism is so important…China will rebalance, but it cannot do so quickly….Chinese producers have become so addicted to a wide variety of implicit subsidies, besides the currency, that they cannot possibly adjust very quickly. It will take years [8-10] of continuous adjustment to wean them away from an undervalued currency, too-low interest rates, excessive credit aimed at SOEs (State Owned Enterprises), and sluggish wage growth.”

So, do we have the time? Do the other trade deficit nations have time? Do other countries that want to revalue their own currencies have the time? Do 130 members of Congress and this administration have the time? Or, is a trade war on the horizon?

Thanks for reading, jerry

For Professor Pettis’ piece click here.

Daniel Kahnemann and Nassim Taleb's Incredible Discussion

Daniel Kahnemann and Nassim Taleb Speaking at the DLD Conference on Forecasting Error, Market Fragility, Black Swans, and the Incompetent Investment Banking system and the Government That Allowed It.  This event occurred on 3-13-09. Dr. Kahnemann is considered the most intelligent psychologist in the world, and Dr. Taleb an expert in risk projection.  59 minutes long.

Michael Lewis Interview On Fresh Air With Terri Gross

Listen to Michael Lewis, author of Liar's Poker, and now his new book The Big Short: Inside the Doomsday Machine. Fantastic interview. 

For more, go to the link.


Interesting links to read.
the market, commodities, oil, Greece, Euro
A beautiful Storycorp story
Peter Schiff Youtube
Market Oracle Report
Karl Denninger piece on ZIRP Trap


The Great American Bank Robbery-MUST READ!
The Great Inflation Cover-Up
How Taxes and the Consumer Price Index Weights Hide Inflation
A Mortgage On-Line Calculator
Interest Scams and How to Avoid Them: Mortgages


Wall Street's Power Grab. This article has to be one of the best every written on this subject!
book review: 'Shadow Elite': Do You Know Whose Agenda You're Being Sold?
2010 is going to get tough
Robert Solow on the Global Economic Crisis--video and text

The Financial Smoking Gun--Indict Geithner and Bernanke!

Since the mortgage meltdown occurred, many bloggers and reporters have known that the financial system was rigged to allow the fabricated fraud to go forward without any serious scrutiny, supervision, accountability, regulation, or transparency over what has been called “financial innovations”, in other words, fraudulent derivatives and securities, as well as credit default swaps, which established the marketplace as a revolving Wall Street casino establishment betting on something, but then, without notifying the “something”, betting that the “something” will fail.

What has come forward by such first rate reporters-bloggers-analysts, such as Michael Whitney, Karl Denninger, and the people at ZeroHedge, and explained in the television media by such personalities as Dylan Ratigan and Eliot Spitzer, Lehman Brothers appears to have engaged in fraud when it was still an investment banking institution.

Simon Johnson wrote in his piece “Senator Kaufman: Fraud Still at the Heart of Wall Street”, “He [Senator Kaufman-D.DE, a member of the Senate Judiciary Committee] goes after Lehman -- with its infamous Repo 105 -- as well as the other entities potentially implicated in those transactions, including Ernst and Young (Lehman's auditors). This is the low hanging fruit -- but have you heard even a squeak from the White House or anyone else in the country's putative leadership on this issue?” Where is President Obama? Where is your outrage, sir? Where is the Change We Can Believe In? Is it in a Goldman Sachs bank account? Is it in your reelection campaign fundraising account over at Bank of America located at 3401 Connecticut Avenue NW?

I believe Michael Whitney coined the term “a planned demolition” when describing what the Too-Big-To-Fail financial banking investment institutions were doing to the economy as they performed their mortgage magic mirages upon the American people as they duped them into buying homes they couldn’t afford, with no money down, and no analysis of the buyer’s financial ability to pay. And, what went along with that was a bet that they couldn’t pay at some point down the line. From there, home prices grew in their asset values and formed a massive bubble that eventually exploded.

Michael Whitney wrote in his piece, 3-15-10, “Lehman Brothers Scandal Rocks the Fed”, “After a year-long investigation, court-appointed bank examiner Anton Valukas has produced a deadly 2,200 page report which details the activities that led to the Lehman Brothers bankruptcy. The report is a keg of dynamite.”

We might say that this just could be the smoking gun, the mushroom cloud that erupted out of the volcanic rubble left by the toxic mortgage’s magma meltdown brought to all us by capitalism gone bad as designed by Alan Greenspan, Hank Paulson, Ben Bernanke, and Timmy Geithner—the Four Financial Fustian Fiends, or the Four-Squared Fleecing Fools.

I have been calling the TBTF syndicate a financial crime syndicate with Bernanke and Geithner as the mobster’s governmentally appointed financial operating field generals doing what is necessary to make sure that the Federal Reserve cranks out cash to them through its Quantative Easing operation keeping the failed mega-investment banks saturated with liquidity.

This appears to be a full-blown conspiracy to dupe the Congress, American people and the world to believe that QE was designed to infuse the investment banks with taxpayer cash in order to loosen up the credit markets and bring the economy back on-line after being shut down. April Fools!!!

Written in Naked Capitalism, by Professor L. Randall Wray, “Timmy-Gate: Did Geithner Help Hide Lehman Fraud”, “Now we find that Geithner’s NYFed supported Lehman’s efforts to conceal the extent of its problems. Not only did the NYFed fail to blow the whistle on flagrant accounting tricks, it also helped to hide Lehman’s illiquid assets on the Fed’s balance sheet to make its position look better…it continued to take trash off the books of Lehman right up to the bitter end, helping perpetuate the fraud that was designed to maintain the pretense that Lehman was not massively insolvent.” “In terms of dollar costs to the government, this is surely the biggest scandal in US history.”

Professor Wray continued: The abuse was so flagrant that no US law firm would sign off on the practice, fearing that creditors and stockholders would have grounds for lawsuits on the basis that this caused a “material misrepresentation” of Lehman’s financial statements.”

As I have said before, why isn’t the RICO statute being dusted off and charges slapped down into the hands of former Lehman Brothers CEO Dick Fuld, Fed Chairman Bernanke, and Tim Geithner, who was president of the New York Federal Reserve at the time when he should have been regulating LB. It appears that these three were engaged in the cover-up of Lehman Brothers worthless capital, which Fuld was using to borrow from other banks through what is called Repo-105. This is like a pawnbroker operation between investment banks. You give up some collateral that has market value, and in return, you get and equal value of cash to use for a very short term period of time, with the guarantee that you will pay it back soon, and reclaim your collateral.

But what was happening was Lehman was using worthless collateral and no one at the central bank, or the NYFed made Fuld and his underlings accountable for this shell game, yet it appears the NYFed knew about it and kept it from the investing public!!

Even though a New York Fed spokesman said the collateral accepted from Lehman was up-to-snuff, Lehman ended up failing two stress tests performed by the NYFed in order to determine if the collateral had real market value.

You might say that the New York Fed Outlet Store was pumping up the Lehman Brothers brand of tires, only to find they wouldn’t hold air, yet sold them to unsuspecting buyers without letting them know that in just about 10 miles, the tires would go flat.

Michael Whitney wrote that “[t]his is the huge scandal: [there were] collusive government officials who operate[d] as de facto agents for an industry saturated with corruption and conflicts of interest. [There was a conniving cover-up] of Lehman’s true position because he [Fuld] doesn’t work for the 10 million people who are now standing in unemployment lines, or the 35 million people who are now on food stamps, or the 6 million people who have lost their homes to foreclosure, or the hundreds of millions of people who have seen the home equity evaporate, their retirement funds plunge and their hopes for the future dashed so that a handful of insatiable landsharks could fatten their bank accounts in the Cayman Islands.”

“Today, there is only one market for junk: the Federal Reserve, which has lent $1.3 trillion in cash for trash, no questions asked. This amount exceeds the forecast[ed] Obama medical [health] care plan for the decade. No money for health insurance, but all for the junk-mortgage lenders.” (Yves Smith, Naked Capitalism, Whitney article)

Rave-on Michael Whitney! Beautifully said!!!

Mr. Whitney continues: “Is there really any doubt that Tim Geithner at the New York Fed, or Bernanke knew that Lehman was trading its junk assets to finance its ongoing operations? Doesn’t that in-itself constitute a cover up or [an “intentional” mislead[ing of] investors? And, if Lehman was exchanging garbage to feign solvency, then it seems likely that the other investment giants were engaged in the same type of charade. (Which implies that the rating agencies were culpable, as well.)”

Mr. Whitney had an email exchange with the brilliant, and former Wall Street economist, Professor Michael Hudson, who put this all into perspective. “If investigators can prove that the Fed exchanged US treasuries for MBS [Mortgage-Backed Securities] and other toxic assets that they knew were worth-less than the amount they provided via short-term loans (repos), then it is reasonable to assume that Bernanke’s quantative easing (QE) program operated under the same guidelines. That means, that the $1.25T QE program-which was supposed to extend credit to consumers and businesses—was actually a scam designed to transfer a gigantic load of capital to the very people who gamed the system and precipitated the biggest financial meltdown since the Great Depression. [Therefore, w]ithout question, that misallocation of capital has deepened the recession and sent unemployment skyrocketing.”

So, the big question now is what is President Obama going to do about this smoking gun, this mushroom cloud of information? Will he pull the curtain from behind the stage revealing the fraudsters that have engaged in a possible conspiracy against the United States in order “to transfer a gigantic load of capital to the very people who gamed the system”?

The Time Magazine’s Man Of The Year, and his side-kick dummy may actually be traitors, at the most, and, at the least, small fish mobster field generals who engaged in a conspiracy to perform criminal negligence. What would Joe McCarthy say about this one?

Thanks for reading, jerry

http://eye-on-washington.blogspot.com

The Washington Stage Performance Starring Barack Obama

I am not sure how much the American people understand exactly what is happening in this nation in regards to the de-evolution of our standard-of-living, and overall way of life. There is a massive paradigm shift coming our way, which will affect around 80% of the country, and most dramatically, 70% of the population. It is not a matter of if, but more likely when.

Once you realize that what is being said in Washington is really a script to a massive David Mamet-like stage performance, you will see that there are more players than those on the stage. It all resembles the film, The Spanish Prisoner. It is basically a giant con game played upon an individual in possession of a corporate secret. There is more to the story, so I won’t spoil it, since it is very cool to watch!

But what is happening is a giant con game being played upon the average American, which will affect them for years and years to come. What is amazing is just how many people are watching something different unfolding. They are more engaged in what is happening on the periphery instead of what is happening at the core. They are upset with Obama’s determination with health care reform, and believe it is a government take-over of their health care insurance, when in reality their health care insurance has already been taken over by an industry that has caused millions of personal bankruptcies. Out of the 1.4 million personal bankruptcies, over 60% are because of medical bankruptcies. And out of those people, 75% had health care insurance.

Just this week we learned that the hypocrite Sarah Palin, after quitting her seat as governor, all the while condemning universal health care, was going to Canada for medical treatment. So much for using her own private health insurance when needed for her own care. When really desperate, use the Canadian’s socialized health care system instead, right Sarah?

These same people are seeing their roads filled with potholes the size of Baltimore, bridges decaying all over the place, empty shopping malls, and local community storefronts with for-rent signs propped in the glass windows. In small town America, we will see many more become ghost towns. These same people are victims and don’t really get it just yet.

This Washington stage performance is starring Barack Obama, and his cast members, which include his cabinet, Ben Bernanke, and others, such as Robert Rubin. But those people standing behind the curtain are the key to the script. This is an interactive stage performance because Congress is in the audience. We are watching it from afar, and really do not have a strong influence over the action, since we are thinly scattered all around the country. But nevertheless, our voices enmasse, are being heard through protests.

But what many of us know is that this entire political theater performance is filled with a fear, a silent fear, of actually fixing the problems that are destroying the very core of what this nation has achieved. There is a fear of fixing a very broken economy because to fix it properly would require a profound declaration that there has been collusion by those behind the curtain to keep it broken. And those who are standing out of sight, as I have said in previous posts, are the most powerful people in the country. They were able to control Lil’BoyBush, and now, they are controlling Barack Obama. The Shadow Cast members behind the curtain are directing the stage performance. The show should be called The Federalized Crime Syndicate Operations of the U.S. Government (FCSO).

What is occurring is the continuation of the transfer of wealth from the working classes to the top 1% of the income earners. Because of the shift of Treasury money to the Federal Reserve, and the process of off-handing toxic financial syndicate debt to the Federal Reserve for the taxpayers to cover, as well as for the Fed to increase the FCSOs liquidity as a result of the toxic debt exchanges in order to illegitimately prop up asset value prices; the public will ultimately be responsible for this subside to the rich asset classes’ return to full wealth values.

This blogspot has been posting many pieces on the fact that what exists in this county is financial crime syndicate operation. Much of it clearly performed in the open for all Americans to watch, but those in Washington continue to endorse it.

Washington’s infrastructure stimulus spending has gone into full body scanning machines (Chertoff Group) sold by former Homeland Security boss, under Lil’Boy,  Michael Chertoff. Let’s keep those former government insiders in the cash flow money loop provided by the US Treasury. Feeding from the public trough in and out of government. The other “infrastructure stimulus” appears to be the rebuilding of Iraq and Afghanistan, yet our streets, schools, bridges, mass transit systems, and rail systems can go to rot.

The US, being a sovereign nation, has allowed itself to be hijacked by the ‘FCSO’. For 30 plus years, this banking slim mobster take-over of our government and monetary system has been sanctioned with the phony legitimacy of those in power. The US is no longer a sovereign country, since the mega-investment banking crime syndicate has been allowed to manipulate currencies, the amount of money placed in circulation, interest rates at the consumer credit lending level, the level of debt and chicanery used to make us believing that such unauditable debt can be magically turned into capital, when inadequate or non-existent, as a result of this illusionary act. These financial crime syndicate operators have significantly controlled the political process and outcomes in the US, and around the world. The fact is that they have become the masters-of-ceremonies when buying and selling our government.

The Shadow Cast members has been pressing Senate Banking Committee Chairman, Chris Dodd-D-Conn. to fall into lock step. They have been pressing him to prevent a Consumer Financial Protection Agency from having any independence or political power. They have been forcing Dodd to make sure that any chief financial regulator duties would be performed by the Federal Reserve chairman, or stationed inside the Treasury so that the chief regulator would have all his/her teeth removed before taking the position.

David DeGraw, the author of The Economic Elite Vs. The People Of The United States, has written extensively how those behind the curtain, the Shadow Cast, are engaged in economic terrorism against working Americans. He begins his article, “Economic Terrorism": The Consequences are Poverty and Mass Unemployment, with this quote written by Michael Lind, ““The American oligarchy spares no pains in promoting the belief that it does not exist, but the success of its disappearing act depends on equally strenuous efforts on the part of an American public anxious to believe in egalitarian fictions and unwilling to see what is hidden in plain sight.” Lind is the Policy Director of the New America’s Economic Growth Program.

Mr. DeGraw wrote, “In total, Americans have lost $5 trillion from their pensions and savings since the economic crisis began and $13 trillion in the value of their homes. During the first full year of the crisis, workers between the age of 55 - 60, who have worked for 20 - 29 years, have lost an average of 25% off their 401k. Personal debt has risen from 65% of income in 1980 to 125% today. Over five million US families have already lost their homes, in total 13 million US families are expected to lose their home by 2014, with 25% of current mortgages underwater. Deutsche Bank has an even grimmer prediction: “The percentage of ‘underwater’ loans may rise to 48 percent, or 25 million homes.” Every day 10,000 US homes enter foreclosure. Statistics show that an increasing number of these people are not finding shelter elsewhere, there are now over 3 million homeless Americans, the fastest growing segment of the homeless population is single parents with children.”

And here is more: “The millions struggling to find work are just part of the story. Due to the fact that we now have a record high [when there are] six people for every one-job opening; companies have been able to further increase the workload on their remaining employees. They have been able to increase the amount of hours Americans are working, reduce wages and drastically cut back on benefits. Even though Americans were already the most productive workers in the world before the economic crisis, in the third quarter of 2009, average worker productivity increased by an annualized rate of 9.5%, at the same time unit labor cost decreased by 5.2%. This has led to record profits for many companies. Of the 220 companies in the S&P 500 who have reported fourth-quarter results thus far, 78% of them had “better-than-expected profits” with earnings 17% above expectations, “the highest for any quarter since Thomson Reuters began tracking data.

According to the Bureau of Labor Statistics, the national median wage was only $32,390 per year in 2008, and median household income fell by 3.6% while the unemployment rate was 5.8%. With the unemployment rate now at 10%, median income has been falling at a 5% rate and is expected to continue its decline. Not surprisingly, Americans’ job satisfaction level is now at an all time low.

There are also a growing number of employed people who, despite having a job, are still living in poverty. There are at least 15 million workers who now fall into this rapidly growing category. $32,390 a year is not going to get you far in today’s economy, and half of the country is making less than that. This is why many Americans are now forced to work two jobs to provide for their family to hopefully make ends meet.” (End)

Phillip Davis wrote in Seekingalpha.com, in his piece, “America’s Commodity Crisis”, “Commodities are a TAX. They are the worst kind of tax because they flatly (not progressively) charge every man, woman and child in this country more money for the same food, fuel, shelter and clothing that they had to have last week in order to live. It doesn’t matter if those people are trying to save or trying to tighten their belts or trying to get out of debt - high commodity prices are a shake-down that rips money out of the pockets of the middle class and funnels it to the very, very small class of commodity producers, commodity speculators and the people who finance them and collect the fees.

Over 99% of the people in this country do not own mines or oil wells (and I’m not counting small farmers because they are literally raped by speculators and bankers, often leaving them worse-off than the consumers) or huge plantations and they do not buy futures contracts on margin with cash they borrow at prime plus 0.5% nor do they own tankers filled with 2M barrels of crude that they arbitrage along the crack spread, looking for an opportune moment to deliver their goods (hopefully during a crisis) at a maximum profit.

So 99% of the people in this country don’t even own a commodity ETF - they have no way to profit from high commodity prices and they need to eat, and they need to buy clothing and have shelter and they need fuel to heat or cool their homes and go from place to place. There is a word for people like that, at the bottom end of a transaction they have no control over - VICTIMS!” (End)

Who is Mr. Davis? He is a stocks and option trader, among other things. His clients are wealthy, but he understands exactly what is happening to the rest of us. He gets it!

In Michael Whitney’s brilliant piece, “Why They Should Be Indicted: The Case Against Bernanke and Greenspan”, Counterpunch.org, he clearly states that there is a clear-cut case to indict them for being the human vehicles who have allowed the financial crime syndicate, ie. economic terrorists, to take over the monetary system of this country. He writes that there appears to be enough proof that Ben Bernanke and Alan Greenspan aided and abetted the banks and other financial institutions in the sale of fraudulent loans to investors. He goes on to say that on one hand “Bernanke denies culpability in the meltdown, but--at the same time—[he] eagerly points out that the Federal Reserve is the chief regulator responsible for overseeing the “large complex financial firms that pose a threat to the stability of the financial system.” So, which is it? Does he accept responsibility or not? Here is a statement Bernanke made earlier in the week during an appearance before the Senate Banking Committee which may help to clarify the point.”

Bernanke said, “I think that stripping the Federal Reserve of supervisory authorities in the light of the recent crisis would be a grave mistake…we’ve learned from the crisis large complex financial firms that pose a threat to the stability of the financial system need strong consolidated supervision…”

Mr. Whitney responds to say that by saying that “Bernanke admits that the Fed is the ‘primary regulator’ that is responsible for “strong consolidated supervision” over “large complex financial firms that pose a threat to the stability.” If we accept his definition, than we must also accept that the Fed should be held accountable when it abuses its authority and puts the system at risk…at the very least, the Fed it guilty of criminal negligence.” (End)

Throughout the piece, Mr. Whitney quotes competent and brilliant economists who support the claim that the Fed purposefully executed a plan to transfer the nation’s wealth to the ‘FCSO’.

Georgewashington2.blogspot.com posted: Nobel Prize-Winning Economist: Federal Reserve System is Corrupt and Undermines Democracy,

“Joseph Stiglitz - former head economist at the World Bank and a Nobel-prize winner - said yesterday that the very structure of the Federal Reserve system is so fraught with conflicts that it is "corrupt" and undermines democracy.

[Furthermore], Stiglitz said: If we [i.e. the World Bank] had seen a governance structure that corresponds to our Federal Reserve system, we would have been yelling and screaming and saying that country does not deserve any assistance, this is a corrupt governing structure. Stiglitz pointed out that - if another country had presented a plan to reform its financial system, and included a regulatory regime that copied the makeup of the Federal Reserve system - "it would have been a big signal that something is wrong."

The Fed, and Treasury have done everything they can to put our economic system at risk in order to make sure that the top 1%, or top 400 people, remain in financial and political power. They have done this by making sure that this economy is debt based. They took mortgages and created investment vehicles, ie. capital assets, using that debt. They insured that debt using AIG as they were betting that the mortgage debt would go bust, since so much of it was bogus. They created debt-based, and over-leveraged instruments off of previously debt-based derivatives and securities. This was done over and over again. They colluded with the Federal Reserve to take on their toxic mortgage debt, and create money from that debt. They claimed that toxic debt was collateral capital, therefore, the Fed could go forward and print money using its Quantitative Easing policy.

The Federal Reserve prints money allowing the FCSO to borrow it at a zero percent interest rate, and hands over toxic, worthless mortgage based debt securities as collateral. Then the FCSO buys Treasury bonds and receives a 3+percent interest rate return. Then, when the government needs money, they borrow it from the FCSO, and pay interest to them for the use of the money that was originally at zero percent interest, and sitting in the Federal Reserve vaults. In those vaults, or depository, were the Treasury revenues, which were later lent to the financial crime syndicate, and then borrowed back from them for a price! Does any of this make a bit of sense? Is this not a type of Ponzi scheme? Is this not a way to further enrich the richest people in the country without them every really having to lift a finger to earn it? It is basically a planned Treasury theft.

Dr. Ellen Brown, in her piece, “What Goes Around Comes Around IMF-Style Austerity Comes To America”, masterfully explains what is going on behind the curtain. She points out that one of the Shadow Cast members is the Blackstone Group, and is currently chaired by hedge fund magnate Peter G. Peterson, former chair of the Council on Foreign Relations and one-time-head of the New York Federal Reserve. He is also founder of the Peter Peterson Foundation, which is engaged in imposing itself on Congress. The Blackstone Group has been hired by Congress to dispense government bailout funds to AIG. His foundation is spearheading a massive effort to remake Social Security and Medicare benefit allocations as a way to bring about fiscal governmental responsibility Peterson Foundation style. In other words, punish working Americans for what the corporate elite has created through their government take over.

In addition, Peter Peterson’s Blackstone Group is pushing for a mandatory government savings plan for all Americans to be administered by the Social Security Administration. This makes Wall Street salivate, since a good portion would be invested in Wall Street stocks. As Peterson’s group has embedded itself inside the government policy machine, as it feeds from the public trough, as well, he has been contracted to manage around $100B, that is one-half of the total pot of the federal employee’s savings plan, through his Blackrock Financial. I would say there appears a conflict of interest: working for the government, profiting off the government, and influencing government fiscal policy all at the same time. This appears perfectly OK by those performing on the Washington stage.

So much of what is going on upon the Washington stage is to convince working Americans that to issue any more money for stimulus is bad, that the creation of debt is bad, and that the only way to fix the problem is to squeeze on the middle class, and to make them further indebted to the corporate elite through increased fees, higher gas prices, higher food prices, current taxing levels, and higher commodity prices, as well as lower wages, while staying shackled to their employer’s health care plan and the banker’s mortgage contract. No health care mobility for YOU!

If you were to have a single-payer health care system, more than likely your wages would increase because you would have job mobility as you carried your health care elsewhere. Your employer might actually negotiate a wage increase in order to keep you working instead of leaving. Also, the opportunity for starting up your own business would open up. Ultimately, employers would not have to use profits or operating expenses for health care. The FSCO is against this.

What many fail to understand is that when workers have less money to spend, the tax base shrinks, less federal, state and local taxes flow through the system, taxes are likely to increase to cover shortfalls and losses, unemployment increases forcing government to support out-of-work citizens to survive, underemployment squeezes personal budgets, less personal savings, higher debt burdens occur as households use credit cards to pay weekly bills, their assistance in college tuition, and pay medical costs.

One way or another, the government will have to spend money on people and jobs. Either through stimulus, or personal disaster relief payments.

President Obama is planting the fear in Americans that he must look at ways to cut the budget because our rising debt is extremely harmful to our recovery. The fact is that we are paying less than 4% of GDP on the debt’s interest payments.

Dr. Brown writes that we are lucky that the US is able to pay its debts in dollars, which is not always the case with other countries suffering from debt burdens. “We have been deluded into thinking that “fiscal responsibility” (read “austerity”) is something for our benefit, something we actually need in order to save the country from bankruptcy. In the massive campaign to educate us to the perils of the federal debt, we have been repeatedly warned that the debt is disastrously large; that when foreign lenders decide to pull the plug on it, the U.S. will have to declare bankruptcy; and that all this is the fault of the citizenry for borrowing and spending too much. We are admonished to tighten our belts and save more; and since we can’t seem to impose that discipline on ourselves, the government will have to do it for us with a “mandatory savings” plan. The American people, who are already suffering massive unemployment and cutbacks in government services, will have to sacrifice more and pay the piper more, just as in those debt-strapped countries forced into austerity measures by the IMF.

Fortunately for us, however, there is a major difference between our debt and the debts of Greece, Latvia and Iceland. Our debt is owed in our own currency – U.S. dollars. Our government has the power to fix its solvency problems itself, by simply issuing the money it needs to pay off or refinance its debt. That time-tested solution goes back to the colonial scrip of the American colonists and the “Greenbacks” issued by Abraham Lincoln to avoid paying 24-36% interest rates.”

She writes, “But there is a solution to that too. The government can just mandate that the Federal Reserve buy the government’s debt, and that the Fed not sell the bonds to private lenders. The Federal Reserve states on its website that it rebates its profits to the government after deducting its costs, making the money nearly interest-free.

All the fear-mongering about the economy collapsing when the Chinese and other investors stop buying our debt is yet another red herring. The Fed can buy the debt itself – as it has been stealthily doing. That is actually a better alternative than selling the debt to foreigners, since it means we really will owe the debt only to ourselves, as Roosevelt was assured by his advisors when he agreed to the deficit approach in the 1930s; and this debt-turned-into-dollars will be nearly interest-free.

Better yet would be to either nationalize or abolish the Fed and fund the government directly with Greenbacks as President Lincoln did. What the Fed does the Treasury Department can do, for the cost of administration. There would be no shareholders or bondholders to siphon earnings, which could be recycled into public accounts to fund national, state and local budgets at zero or near-zero interest rates. Eliminating debt service payments would allow state and federal income taxes to be slashed; and the public managers of this money, rather than hiding behind a veil of secrecy, would be opening their books for all to see.” (End)

As has been written here, we are all but pawns of this Washington stage performance. It does not have to be this way. There are some obvious solutions, but President Obama and Congress are failing to strip away the curtain and unveil to the people the reasons that motivate the actions of the Shadow Cast members, when they could, at last, finally be declared as well deserving Shadow Cast-Aways.

Thanks for reading, jerry

http://eye-on-washington.blogspot.com