Wall Of Worry Wednesday: Insurmountable Or Time To Climb?

4-18-12 From Seeking Alpha by Phil Davis  Read the comments on this article by going directly to the linked source.

This is an excellent piece about the theft of our economy by the top 10% as of now. The price we 90% are paying now and in the future is dangerous. Romney is all about making sure that the top 10% are kept comfy at the expense of everyone else. It is a major nanny state for the rich. The Fed continues to dole out free cash to the Bankstas even though they are failing to stimulate the real economy--only the financial economy for those playing at the financial market's crap tables.

Read an weep:

Isn't this fun?

On Monday we drew our 50% retracement lines for the Dow (13,000), S&P (1,395), Nasdaq (3,075) NYSE (8,050) and Russell (815) as well as the other global indices that we expected to be tested this week but I cautioned:

"How many times will the bulls be sucked in by the same empty promises? How many times will they reach into their pockets and BUYBUYBUY the snake oil valuations sold by the Reverend James Cramer?"

Now I don't mean to pick on Cramer but it is truly incredible how many times people begin a conversations with me by saying "Cramer says.."Yesterday Cramer said to ignore the experts and their annoying FACTS and just BUYBUYBUY: "No one from the Fed said anything today, yet the market roared, so I imagine these people are stumped beyond belief," Cramer said. "It must be so troubling for them to rationalize this rally."

See, Cramer is just a great summary of everything that is wrong with investing these days. What a ridiculous over-simplification to act as if the Fed has to say something every day to move the markets - the complete and utter ignorance/disregard of world events is truly stunning on Cramer's show, CNBC and pretty much all of the MSM who won't tell you anything that can't be reduced to a Twitable sound-byte.

On the right, we have the anti-Cramer - a thoughtful presentation by Morningstar's Fixed Asset Manager of the Decade, Jeff Gundlach, who is the only bond fund manager to win the Standard & Poor's/BusinessWeek Excellence in Fund Management five years in a row. I urge you to run through Jeff's presentation as it contains a fantastic series of charts that gives a well-balanced view of the global macros. One very notable chart was this one, showing the divergence between stocks and commodities as Operation Twist has had no stimulative effect on demand:

(Click to enlarge)

That's not a healthy-looking divergence, is it? While the bulls are betting that commodities will catch up to the hyper-inflated stock prices, we've been betting the hyper-inflated stock prices will eventually run into the demand reality that is already tanking the commodity markets.

As we noted in member chat this morning, the central banks are pumping free money into the banks (that will eventually become a burden on the bottom 99% taxpayers and their children and their children's children...), who are not lending it to boost the economies but are turning around (or "twisting") to buy Sovereign Bonds that the top 1% have been stuck with.

Aside from the feeding frenzy by our local Banksters at the expense of the Fed, Spanish and Italian banks have used LTRO and EFSF funds to load up on over $600Bn worth of government debt - debt that may well be defaulted on in the same way Greece just did. It's nothing more than a stealth bailout of the top 1% who are cashing in their bonds at top dollar and moving back to cash ahead of the next market collapse.

Even the bankers to Europe's top 1% in Germany and France are CUTTING their holdings in the same bonds by 50% as the bad-debt burden is transferred to the debtor nations, who will later be blamed for making these bad investments as the situation that is clearly visible now will, in the future, be used to justify even harsher austerity measures for their poor neighbors.

"The more banks stop cross-border lending, the more the ECB steps in to do the financing," said Guntram Wolff, deputy director of Bruegel, a Brussels-based research institute. "So the exposure of the core countries to the periphery is shifting from the private to the public sector."

What a scam! A great example of the Dooh Nibor Economy, where the Global Kleptocracycontinues to run policies in their puppet governments that rob from the poor and give to the rich. While French and German banks lost money on Greece's restructuring last month, a delay of more than a year allowed a similar shift of risk to the public sector. When the exchange took place, the debt relief was capped at 59 billion euros because fewer bonds were held by the private sector, including banks outside the country. If Greece had defaulted in 2010, the reduction could have been as much as 232 billion euros.

This amazing global Ponzi scheme is bound to end badly - the only question is when? The bull case (see Cramer) is that the Fed and other Central Baniksters are placing a floor under the market so you "can't lose" - no matter what idiotic valuation you pay for stocks (Gundlach believes 8-10 is the proper P/E for the S&P 500 - now 15). Essentially, people buying the market under this premise are no different than people who invested with Bernie Madoff, knowing it was a scam but not caring as long as they got their 20% returns - it works until it doesn't.

This is a discussion I have with our conservative friends all the time - it DOES matter where you get your money from. We (the top 1%) are currently extracting our wealth and income from the bottom 99% at a record pace.

The gap between the rich and the poor in America has never been wider and AMERICA can't, CANNOT, recover if our survival plan is to get what we can and put it into our 3M lifeboats while letting the other 297M people go down with the ship. The austerity actions being taken now are essentially a justification of theft along the logical lines of "well, those 297M people are going to die anyway so robbing them isn't REALLY a crime, is it?"

According to Romney and the rest of the GOP, it is MUCH more important that we preserve his comfort and his lifestyle than to waste our time helping those who are unable to help themselves. This is the same attitude the Germans are developing regarding their poor European cousins - why should we save you from collapse if it might cause us discomfort?

The more the corporate media manages to convince the top 10% (no one else matters) that the bottom 90% are unsaveable or "not worth" saving - the more they are able to justify greater and greater abuses heaped upon those down below. Dehumanization of the enemy is an essential part of a propaganda war and make no mistake about it - class warfare is a war and it's not a war that the poor are waging against the rich (despite what their PR machine would have you believe) - it's a war that the rich have been waging against the poor for 40 years now.

This is the way things work people - I apologize for the Michael Moore clip, I know that he is considered to be the great Satan and most of you have been brain-washed to feel sick at the mere mention of his name or the sound of his voice because he ... er ... well, because he did whatever horrible things that you think you know have maybe been insinuated about him by the MSM, right? That's good enough for us because WE'RE REAL AMERICANS, right?

Real Americans don't put up with agitators, unless those agitators are from the Tea Party or unless they are anti-tax agitators or unless they want to reduce (not COMPLETELY destroy) our government because, as we all know, government is the problem and private enterprise is the solution!

Of course, in this upcoming election we have 242 House Republicans that should be re-elected - it's the 190 Democratic bums that need to be thrown out and THEN you'll see some real action. The Republicans have been hamstrung so far by their 32% advantage in Congressional seats and now we have an historic opportunity to extend the reign of a Congress that only managed to pass 80 laws out of 945 votes taken (with 5,970 resolutions killed on the floor) in 2011 - a record that may only be broken by the same team in 2012 as they are 0 for 89 votes with 627 bills killed in committee in the first quarter of this year - go team!

These people are destroying our country folks. Do you really believe the world's largest economy can afford to do NOTHING for two years? Is this going to be the winning strategy we reward - hamstring a sitting president, let the country run straight downhill and then run for re-election on the premise that, as long as you approve of the guy the people elect to be in charge - you might be willing to play ball. This is not politics - it's extortion!

(Click to enlarge)

Let's contemplate that while we wait PATIENTLY for the markets to correct. The point in going over these global and political macros is to get you to step back from the day to day BS that the MSM likes to keep you focused on and contemplate the bigger picture. We discussed many of our recent short plays in yesterday's post and there was no change in yesterday's member chat as we took advantage of that very silly move up to add back some short positions after Monday's profit taking.

Now that we've completed our 50% retrace of the month's drop, we'll be happy to take quick bear losses and go longer if we can accomplish three of five of our 50% lines (see above) but clearly we'll be exercising a HEALTHY degree of skepticism against any short-term market moves.

Early this morning, we took advantage of the morning pop to short the oil futures (/CL) at $104.50 and we're just testing $104 now at 9 a.m. - so the Egg McMuffins are paid for and we're ready to start our trading day!

Kleptocracy by WilliamBanzi7.

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

PA Senator Pat Toomey's Agenda is to Cut Social Security Payments

Watch PA Senator Pat Toomey state to Fed Chairman Bernanke that withholding payments to vendors, ie, Social Security recipents and others, is more prudent than failing to make payments to foreign creditors holding US securities.

This statement can be seen if you advance the time scroller on the video to 2 hours and 11 minutes!!

Senator Pat Toomey's agenda is to negative affect Social Security payments to retirees who worked their entire lives to build this nation.


Listen to this audio program, which was broadcasted on Fresh Air, by Terri Gross.

The Long-Term Effect Of Wisconsin's Union Battles

"New York Times labor and workplace reporter Steve Greenhouse explains why other states with large budget deficits are now also considering taking on public unions — and how the standoff between organized labor and Republican governors is likely to play out."

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




PS:


HERE IS A LINK WORTH READING.


Irrational Fed Intervention

Keith Olbermann Calls Out Obama

President Obama has been the GOP's president in abstention. Since John McCann lost, Obama sat in for him.

Visit msnbc.com for breaking news, world news, and news about the economy

John Stewart Calls Out Bernanke

The Daily Show With Jon Stewart	Mon - Thurs 11p / 10c
The Big Bank Theory
www.thedailyshow.com
Daily Show Full Episodes Political Humor The Daily Show on Facebook

No Change Is Gonna Come

President Barack Obama has let down those that supported him during his run for the presidency. Now, he has let down a great many more Americans, not only those who casted their vote for him, but also, those who did not.

He entered the White House during an economic crisis promising transparency, open government, and the use of science to analyze the problems that face the country, but it appears that he has used corrupted data his analytic process.

The Senate just passed a financial reform bill ("Restoring American Financial Stability Act of 2010") that continues to allow for naked short selling, synthetic derivative trading, and the corrupted Too Big To Fail mega-financial banks without separating their investment from banking deal making. The Shadow Banking industry continues to do their securities investment alchemy in the dark shadows away from public view, accountability and regulation.

Here is what Michael Hirsh of Newsweek wrote:

“[T]he new bill might be better termed "the Accountants' and Lawyers' Welfare Act of 2010." The bottom line is that despite the blizzard of amendments and provisions added—including some very smart changes at the 11th hour, like imposing greater control of ratings agencies—what's likely to emerge on the other side of this in the years to come is a Wall Street that's largely unchanged if marginally more regulated. Indeed, if any structural changes to Wall Street follow from this law, it is likely to be that the biggest banks get even more powerful than they already are, despite the size limits being placed on them.”

“Now there is no threat of a finding of illegality and no penalty promised if swaps deals don't go through a clearinghouse.” “the banks fought hard—and won a partial victory—in an effort to water down the definition of open and competitive derivatives trading.” “When the bill passed out of Sen. Blanche Lincoln's agriculture committee—which shared oversight of derivatives with the banking committee—it had language defining a so-called swap execution facility as a "trading facility," clearly meaning that swaps could only be traded in pits or on electronic platforms with multiple buyers and bidders. That sounds like an obscure point, but it's actually central to Wall Street's profits, and it explains how the multi-trillion-dollar derivatives market got away from regulators in the 2000s. For the banks, the more swaps and other derivatives they can trade off exchanges in "custom-made" deals with customers, the harder it is for those customers to figure out the trade's fair value and real risk—and the easier for the banks to increase their profit margin.”

“Gary Gensler, chairman of the Commodity Futures Trading Commission (CFTC), says they're not worried by these nuances because the bill gives them broad discretion to write rules requiring open trading and clearing of swaps and other derivatives.”

In the bill, new clearinghouses will be able to have full and unfettered access to the Federal Reserve’s cash discount access windows (you want fries with ‘dat pile of cash?). “The big banks, which will be able to create a whole new futures market of their own, perhaps even displacing the Chicago Mercantile Exchange.”

Right!! Go-To-Gensler feels all will be well, and not to worry your pretty little heads, with the financial predatory game plan because their plays will not be interrupted as they rush against America as they further funnel America’s wealth up the vacuum tube to the upper 10% of the earnings echelon.

The system continues to favor the financial mobsters instead of hard working average-type Americans who have become victims of the To Big To Fail corporate predators, as they receive big bonuses and lucrative perks, while proceeding with Business-As-Usual. Congress has handed them the “move to the finish line game card”. This card was handed en masse by the Republicans in the Senate Finance Committee. The Democrats would have likely created a bill with real reform teeth had they not been obstructed throughout the process by the Republican members who are extremely indebted to the oligarchs. But, the majority of Democrats serving on the committee decided to back off and capitulate instead of making a strong stand demanding a meaningful and long lasting reform bill for the Congress vote on. There was no line-drawn-in-the-sand stand made here! More of the same garbage has been served up to the financially wounded American public.

Barack Obama has kept himself hidden behind the “ Manchurian Curtain”, while charading to be serious about financial reform. His Treasury Security Timmie daG Geithner did not want to see synthetic derivative trades, or over-the-counter derivative trades, such as credit default swaps, by banks done away with, the position Senator Blanche Lincoln had taken, because he said that the financial industry was the only sector contributing to the GDP. I guess it is acceptable that the revenues received are from dirty monies gotten through corrupt trading techniques. High Frequency Trading is what was responsible for the near 1000 point drop, before a partial recovery, on the DOW back in mid-May. It was OK that Mom and Pop America’s stop-losses on their trades failed and their retirement investment dollars went up in smoke as the financial mobsters made a ton of cash by messing with Proctor and Gamble, as well as other big named stocks.

It is OK with Mr. OK-Obama that HFT is acceptable even though computers have now taken over high speed Wall Street gambling by jumping ahead of trades forcing Mom and Pop America to pay a higher price for the stock they wish to purchase as the HFT Algorithmic Robots make a few more cents a trade for their human masterminds, amounting to millions of dollars, over big volumes in a day’s virtual work. This is predatory trading, yet the White House and Congress allows it happen. The country of Germany got “religion” this past week as they banned naked and short selling, and damaging derivative trading. They acted overnight, faster than a New York Minute, and did not need lots of discussion, debating or rangling about these dangerous Wall Street investment instruments before killing them.

Was this the change Obama promised the American people? No change for Wall Street HFTraders. Give them all a Smiley Cookie!

Now we have a month long disaster in the Gulf of Mexico. More change to believe in. We are now engaged in a bailout for BP as the government gets involved in the attempted clean up fiasco. The taxpayers are now paying for the Navy’s involvement.

We have watched the Federal Minerals Management Service win the Most Incompetent Federal Agency award as they take the blame for being in bed with the oil companies. ‘No rules-no regulation-no kidding’ was the theme of Dick Cheney’s Energy Corporate Collusion Conference he held in the early days of his role as Preferred President by Proxy of the United States of American. Mr. GameBoy Bush was too busy cuttin’ brush to pay much attention.

Currently, we are finding the Gulf filling up with 50,000 barrels of oil per day, and 37 MILLION barrels of methane gas per day as BP continues their plundering and bungling of the blowhole-fixit-up-ur job. There is nothing like believing that sticking a shop vac hose a mile down in the Gulf waters to suck up the billowing oil and gas out of a ruptured volcano to be a sensible solution to a monumental catastrophe. Only a cheap oligarch would put cost savings before preserving life, environment, and livelihoods.

There is something wrong if the nation’s Attorney General Eric Holder believes that no laws have been broken when every American believes that Mr. Hayward is criminally negligent. But, the LilBoyBush administration removed the most effective technical safeguards that would have prevented the pipe from exploding and killing 11, while injuring others and destroying the ecosystem living in the Gulf of Mexico.

And, there has to be something seriously wrong if Eric Holder cannot find a single crime to pin on AIG executives for destroying the company, robbing the Treasury, handing over billions of dollars of bailout cash to Goldman Sachs to fatten the pile they had already received from the taxpayers, believing that the credit default swaps were issued without fraudulent intent, and demonstrating criminal negligence to all the investors who believed that their retirement funds were secure with the company.

This appears to be the change we were promised---the freedom for corporate mobsters to prevail.

Regarding the Gulf of Mexico, it is a semi-enclosed sea with two ports.

The major inflow port is the Yucatan Channel, which brings Atlantic Ocean currents into the Gulf interior because of the Loop Channel, which is deep and oxygen-rich drawing in the Atlantic Ocean waters from the Caribbean Sea; and, the major outflow port is at the Florida Straits outflow channel that mixes deep oxygen-rich water with less oxygen-rich shallow waters that flow back into the Gulf instead of outflowing with the Loop Channel back into the Atlantic. This means that the toxic Gulf seawater ends up flowing back around the Gulf of Mexico seaports, cities and beaches, estuaries and wetlands again and again killing more and more of the ecosystem smothering it of its precious oxygen with heavy hydrocarbon-rich waters.

Now whatever outflows from the Gulf into the Loop Channel waters of the Atlantic push the toxic seawater up along the Atlantic, and eventually, to Great Britain killing life that finds itself in its flow. As one can see, this BP catastrophe is the nightmare that keeps on giving.

So, Mr. BobbieBo Jindal, do you still like to sing the duet with Sarah Palin-Pinhead, “Drill Bayou Baby Drill?” I bet not!! This is what your Party delivered to your great state of Louisiana---A Bush/Cheney Energy Drilling Plan that required no functioning shut off valve system or effective clean up plan. BobbieBo Jindal, this is called Laissez Faire Capitalism. This is the Reagan legacy! Can we blame Obama? Well yes!!! He appeared to have done nothing upon taking office to safeguard the offshore drilling platforms covering our waters. Where was the Obama Science Plan? Oh, it has not been finished yet!!

Socialize the losses, and privatize the profits!!!!

I haven’t heard Barack Obama tell us why keeping the mega-banks alive and those just too big enough to fail one more time are important for the well-being of the country, the financially injured taxpayers, or the business community teetering on default? What have they contributed since 2007? Commercial credit to small business continues to be frozen up pretty tightly. What is going to happen when commercial real estate mortgage’s fail in the coming near future? What is going to happen when more residential mortgages go into foreclosure and default? Another 8 million is the estimation. What is going to happen when more US businesses begin closing their doors, over the next couple of years, many as a result of predatory private equity group takeovers, throwing another 2 million workers under the bus because of their predatory corporate investment practices?

This is what Palin-da-Pinhead’s “gottcha” means. Gottcha by the throat brought to you by Wall Street.

Has Barack Obama answered to the American public why the Federal Reserve has printed $400 Billion in order to help rescue the Eurozone without the approval of Congress? No!! Is this the transparency he promised us? Can our president tell us all exactly what junk collateral Bennie daBeard Bernanke received from the Eurozone in exchange for his newly printed and Quantitatively Eased up cash bailout?

As Nobel Prize winner Professor Paul Krugman says, the US is becoming the lost generation of deflationary 1980’s Japan. When you have decades of deflation whatever cash you have earns no interest, and whatever wages you earn is kept very low with little chance for wage growth. And, when you have a corrupt Wall Street engaged in a casino-like gambling approach to wealth acquisition by siphoning the wealth from the lower 80% of workers up to the upper 10%, you get workers having to pick up the tab for an economy in deflation. It becomes the workers and manufacturing that get taxed heavily, instead of finance, capital gains, and dividends.

This must be the change Barack Obama promised us during his campaign! He conned us!

As the Barack Obama stimulus package folds in on itself, we will see that it did not create sustainable jobs, but only provided for temporary employment. It was a leaky life preserver instead of a lifeboat. Our joblessness rate and those underemployed are rising in numbers. The job gains Mr. President boasted about last month---500,000---are going up in smoke. We are in the worst job environment since the Great Depression and it appears to not be going away anytime soon.

I have to agree with Professor Nouriel Roubini that we will experience a double-dip recession. Also, there are those also speaking about the DOW falling back down to 8000, which some feel is where it belongs.

A barrel of oil has dropped below $70 even though much of it is drowning in the Gulf of Mexico. As we all recall, whenever there is an oil tanker explosion, or a fire at a refinery oil prices spike. But not now. Why? Because the economy is so bad, and expendable incomes are so fragile, the oil companies know that if they raise prices, Americans will cut back their driving habits. They get that part of personal spending.

It is time to get vocal. It looks like there is public protesting, 30-35,000 in Trenton, New Jersey against state budget cuts, which are directly related to the rigged elite corporate capitalistic oligarchy who want to pass the pain onto the working person instead of having the oligarchs feel the pain.

Professor Simon Johnson, of Baseline Scenaro dot com, wrote in his piece, The Road To Serfdom:

“Unregulated finance, the ideology of unfettered free markets, and state capture by corporate interests are what ended up undermining democracy both in North America and in Europe.  All industrialized countries are at risk, but it’s the eurozone – with its vulnerable structures – that points most clearly to our potentially unpleasant collective futures.”

“Debt peonage looms for a wide range of countries that were recently thought immune to serious fiscal crisis, including the United States and UK.”

“The UK and US need to prepare themselves for more storms.  The United States will be in the more pleasant position as the world’s safe haven, but this will only encourage America’s profligate politicians to spend more and build more debt.”

“Hayek’s [Friedrich von Hayek, (1899-1992) economist and author of The Road To Serfdom] predicted demise of western society will prove correct, but welfare systems will prove the victim, rather than the mechanism, erased by a political and financial elite gone awry.”

The giant elite financial and corporate predatory oligarchs are no longer capable of managing and dictating an orderly and productive society. We must not permit them to remain in control. They have been proven horrendous failures and their greedy power grabs have been executed at a monumental cost to every one of the 90% who lives under their filthy and toxic thumbs, as well as becoming a significant national security risk---CODE RED.

Will this be the summer of protest? I hope so!! If not, nothing will change, and more government debt will be funneled to the top 10% through Market Making Manipulative Maneuvering.

Thanks for reading, jerry

"When plunder has become a way of life for a group of men living together in society, they create for themselves in the course of time a legal system that authorizes it and a moral code that glorifies it."

Claude Frédéric Bastiat

(Thanks Justin!)

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.

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