The Royal Scam Must Be President Obama's Favorite Song!

The Royal Scam was a great song written and sung by one of the greatest bands ever—Steely Dan. We have currently taken to have this song realized and absorbed into our daily lives. And, not by choice! I believe many Internet pundits have caught on. I went into it in my last posting, “The Team Obama Rip-off”.

The story told in the last posting suggesting that the banks would be able to dump their toxic mortgage debt into a shell investment facility created by them is very likely. Now, as stated in the previous post, the FASB (Financial Accounting Standards Board) has re-written the rules allowing the mega-banks to decide what the toxic mortgage debt is worth (a self-determined value) when they decide to make a deal with Treasury. It appears that Geithner is ready to offer inflated values two to three times the actual mark-to-market street value.

This would be like if you paid $200,000 for your house but now, it has dropped to $100,000, but you were allowed to reassess it yourself placing the value at $250,000, and then proceeding to be able to borrow off of that new value. That stuff just does not work for those living in the Real Economy.

Treasury has $2T available to them to make these deals, which will eventually get laid upon the taxpayers to pay it off. But here is the rub, it is estimated that what the 5 mega-bank’s want for their mortgage debt is likely to be around $4T or more!!! What is Geithner going to do? Will he let one or more of these banks hit the wall and fall into receivership, or will he tell the Wall Street Crime Syndicate, “hey boys, I only got a stinkin’ $2T for ya. I will have to offer you the stress-tested price.” OOHH. These guys aren’t going to like that because they might not end up with a positive balance sheet. There might be significant write-downs, and a big fall in their stock values. There will be blood. Here are the opinions of other experts.

Karl Denninger, the trader and entrepreur, as well the sole contributor to market-ticker.denninger.net wrote in his 4-9-09 informative piece called “Tired Of Getting ROBBED America?” the following:

“You are seeing near-zero (or actual zero) interest earned on money you loan to the bank (when you make a deposit or buy a CD you are loaning money to the bank) and yet when you go to borrow money you're being screwed with record-high spreads that the bank is pocketing [200 basis points, he claims- broker (and direct bank) mortgage pricing vs. Fannie and Freddie bond pricing] - in mortgage and credit card interest rates charged. How much does this add up to? About $4,000 in extra profits per mortgage on top of the "usual" $1,000 profit. That's right - the banks are making five times the "usual and customary" profit per loan, and it is coming right out of your hide. I've been hollering about this for months (as has Mish Shedlock) but it appears that both our intrepid lawmakers and the mainstream media simply refuses to talk about it.

When does this stop? When you, America, are tired of being ripped off and demand that it stop. Remember, the mantra of both government and The Banks is "never waste a crisis”."

This is what another verse of that great song The Royal Scam sounds like.

Mr. Denninger went on to say in his daily entry, “Jamjob-Wells Fargo and more”, “So Wells comes out this morning and says they're going to make a "record" profit, claiming an expected 55 cents (vs. mid 30s expectation). It must be nice to be able to keep loans on the books at whatever price you feel like, receive billions of taxpayer money including "assistance" in rolling up Wachovia, and then turn out to not need it, right?

That is, if these numbers are accurate. Wells pre-market is ramping from $14.89 at the close yesterday and now trading pre-market at $18.10, up over $3 or some 30%.

This leads one inescapably to the following:

Either, Wells [Fargo] is lying (obfuscating losses through unrealistic marks, etc), OR

these "bailouts" were no such thing - they were a simple and transparent

looting operation by the banks that is now showing up directly in "earnings"

(and will shortly show up in the bonuses of executives too!) 

So which is it folks?

Are the banks really that healthy?  Because if they are, you've been robbed to the tune of tens of thousands of dollars per person in this country, and it is long past the time that you act to stop it.”

We will have a chance on April 24 to see what their first-quarter reports will reveal.

Professor Simon Johnson, former IMF chief economist, and currently Professor of Entrepreneurship at MIT's Sloan School of Management, wrote on his baselinescenario.com site “What Is Next For The Banks” (4-9-09) “The latest credit default spreads data for the largest banks show a speculative run underway. As the system stabilizes, it becomes more plausible that a single bank will fail or be rescued in a way that involves large losses for creditors. This would like[ly] trigger further speculative attacks on the other banks...The government’s own policies are facilitating these attacks because as the Fed and Treasury make progress towards easing credit conditions, this makes it easier and cheaper for the large hedge funds and others to take larger short positions. And keep in mind, the underlying loss of confidence is self-fulfilling: as you lose confidence, you want to go short, and selling the credit causes further loss of confidence- and banks are forced out of business.”

And now, Larry Summers, President Obama’s economic advisor, came out and said that the economy has now ceased to be in free-fall. “The economic free-fall could end in the next couple of months.” I guess he had not looked at the figures defining unemployment, under-employment and those no longer able to find any work(15%). Or, he missed the number of foreclosures now over 4M, with 2M waiting in the wings. Or, he has missed how consumers continue to feel their incomes are extremely unstable, but we are no longer in free-fall according to Larry Summers. I think someone credible needs to advise him!

If you have not read the post below, I encourage you to do. This is an extension of the last one.

As I write this on Good Friday, I realized that Abraham Lincoln had been assassinated 144 years ago. President Lincoln said this on the economy, "What has once happened, will invariably happen again, when the same circumstances which combined to produce it, shall again combine in the same way."

President Obama needs to read this over and over again.

Thanks for reading, jerry. Also, don’t forget to check out the video collection.

The Team Obama Rip-off-The Financial Stability Plan

The rip-off seems to be continuing. The only real decision that occurred at the G-20 summit was that the top 5 representatives formed a new Doo-wop singing group—

The Great Dee-Fleck-Tors. All kidding aside, the big news was the passing of the G-20 economic hat that filled up with a modest $1 trillion that will go to crumbling, struggling and barely developing countries. No doubt, that money will go to make sure that those countries don’t default on their debt payment loans that the IMF is hungrily waiting for. That was not what we heard from President Obama. He framed it so we are to believe that the money is for more economic purposes, but I doubt it very much.

Back here at home, Professor Michael Hudson (How the Scam Works, Counterpunch.org) made it perfectly clear how the new Financial Stability Plan to subsidize the sale of “legacy assets”, ie, toxic mortgage debt, will be ripping us off. He explained that if a bank says that their package of collateralized debt obligations (CDO) is worth to them $10 million, it is likely they have overstated that fact. In late 2007, a recent Fitch rating agency study discovered that most of these junk mortgage debts are riddled with financial fraud, and the bank’s $10M package is likely only worth $2M. Isn’t this reassuring since the taxpayers are hoofing up 85% of the costs. Now, if another bank, hedge fund or equity fund decides to pony up $3M, then the scam becomes enhanced. The more money offered for the debt, the more TimmyG puts in, so why not make it a cool $5M. What we got now is the Treasury, with its 85% contribution, laying down $4,250,000. All the “investor” has to fork up is an easy $750,000—its 15% share. The legacy asset seller, B of A, or Goldman Sachs, or JPM, for example, which might even be hiding behind their own sacrificial equity fund they set up to buy the toxic debt which they might later fold up into bankruptcy disposing of the debt altogether, now gets $4,250,000 for its junk mortgage bond that was really only worth $2M! What a way to recapitalize an insolvent and bankrupt banking system! The $2T used for this Ponzi scheme is debt created into bond securities, none of which the private sector wants to touch, from credit cards, commercial loans, student loans, auto loans, and such through the Public-Private Partnership Investment Program (PIPP).

This is like taking the dead body (toxic mortgage debt), stuffing it into a sack (transferring this debt onto the bankster's shell company's balance sheet), allowing the bankster to steal the contents inside the wallet and then deposit the amount into their re-capitalized bank account (taking Geithner's 85% taxpayer contribution for over inflated toxic mortgage debt). Now they dump the body (the transferred toxic mortgage debt) encased in cement booties into the Hudson River allowing the shell company with the toxic mortgage debt as its only holding, to go bankrupt erasing the debt, while the bankster ends up making out like the bandit he has been allowed to be. All done with the White House's golden seal of approval given by Geithner, Summers,  Bernanke and Obama. If this isn't the Royal Scam of century, I don't know what is! The banking emperors get their toxic debt incinerated through bankruptcy, and they end up with a big reward, ie, Geithner paying them two to three times what that toxic mortgage debt was worth at taxpayer's expense. Walla! Now the zombie banks have nothing to write down on their balance sheets. They have been magically re-capitalized by the Treasury and Fed. And no one is the wiser, but you and me. PIPP, PIPP Hurray!

A missing piece for the banks to get the Accounts-keeping Seal of Approval for jacking up the market value of the toxic debt that is really barely worth anything is to get the Financial Accounting Standards Board (FASB) to rewrite the financial accounting rules allowing the mega-empire-banks, 5 in total, to decide for themselves what the value of the toxic mortgage debt is worth to them. These new rules and guidelines give the bankstas a veil of fabricated legitimacy of which they needed to drape upon the value of their toxic mortgage debt. This would allow Geithner to go forward with his inflated and subsidized offers to the banks with the cover needed from the quasi-governmental agency--FASB. We don't need no stinkin' mark-to-market rules! We are the crime bosses of Wall Street! Step aside. WE make the rules around here, mista! Mista Obama, we are comin' through. Geithner, get your checkbook out and ready! These magical rules were back dated to cover the last few weeks to make sure all bases are covered.

Now, what is worth-less, is now worth-more. A lot more! You have to admit it is a beautifully designed Royal Scam. All bases covered. The banks can now get their worthless debt valued at gleefully inflated amounts thanks to new FASB rule changes. The banks can set up their own shell equity funds to sell, ie. transfer, the toxic mortgage debt onto a new balance sheet, at a 15% cost. The banks, in return, get to receive from Treasury a subsidized purchase price (at 85%)  for the toxic mortgage debt, now valued 2 to 3 times its actual mark-to-market value. Now the banks have no toxic paper on their balance sheets thanks to all of us, China, and the Fairy God Mother. This is what is referred to as a "Clusterf**k"! The plot against Caesar Americus by Brutus Geithnerslut and Da' Boys has finally arrived. 

Here is another kicker. F. William Engdahl wrote in Geithner’s Dirty Little Secret, that there are only 5 mega-banks that hold “96% of all US bank derivatives positions in terms of nominal values, and an eye-popping 81% of the total net credit risk exposure in event of default”, as was reported by the Federal Office of Comptroller of the Currency, in its Quarterly Report on Bank Trading and Derivatives Activity. JPMorgan holds $88 trillion in derivatives. Bank of America holds $38 trillion; Citi holds $32 trillion; Goldman-Sachs holds $30 trillion; Wells Fargo-Wachovia Bank holds $5 trillion. And, out of Britain, HSBC USA holds $3.7 trillion.

Mr. Engdahl called this a banker’s coup d’etat. The $180B bailout to AIG went to rescuing the 5 mega-banks, since they were AIG’s biggest counterparty clients.

Tim Geithner says, “We need better, smarter, tougher regulations”, so TimmyG, why hasn’t the Glass-Steagall Act been reactivated? Why hasn’t the Commodity Futures Modernization Act 2000 been trashed? Yet, TimmyG is still blowing his rusty horn and wanting to bring in better, smarter and tougher regulations. Let’s hear ya play another tune for us because this one is down right bad. What is amazing is that Timmy, when he was chairman of the New York Federal Reserve, reporting to Bada Bing Ben Bernanke, was supposed to enact regulatory rules, but he says that was not his role. Yet, according to his job description, he was to act as a banking regulator. Watch William K. Black, a former regulator and economist say so to Bill Moyers.

Dr. Dean Baker, economist, wrote in “Geithner’s Plan Will Tax Main Street to Make Wall Street Richer”, “Oh, by the way, some people will get very rich off the Geithner plan. Some hedge and equity fund managers could make hundreds of millions or even billions off the Geithner plan. And, under current law, they will pay a lower tax rate on this money than a schoolteacher or firefighter. Are you sold yet?”

Michael Whitney quoted the economist Jeffrey Sachs in “Geithner Hog Wild”, “Geithner and Summers have now announced their plan to raid the Federal Deposit Insurance Corporation (FDIC) and Federal Reserve to subsidize investors to buy toxic assets from the banks at inflated prices. If carried out, the result will be a massive transfer of wealth—of perhaps hundreds of billions of dollars—to bank shareholders from the taxpayers (who will absorb losses at the FDIC and FED)…”

It sure seems to me that the Geithner plan is like allowing gangstas who have terrorized the village store owners by breaking windows and knocking down doors, as well as looting the cash registers while stuffing their pockets with merchandise as they run out the door, to then be given government neighborhood block grants to open up their shops in the places where the former businesses had been established. And then, tell the villagers they will be spending their money in the gangsta’s new shops. This is the kind of nation we seem to be living in from my perspective.

TimmyG now wants Congress to grant him full regulatory power so he can decide which institutions need to be shut down because they maybe dangerously too large of a risk to go own without HIS form of regulation. So now, we have place Brutus (Tim Geithner) as Caesar’s (Obama and US) bodyguard. Or, you might say that now that the three little pigs have hired on the wolf to do their housecleaning.

Dr. Baker went on to say, “The core problem is that many of the largest banks are bankrupt. They are currently concealing this bankruptcy by listing assets on their books at prices that are far above their market value. In principle, they can do this for a long time, unless the government forces them to write-down the value of these assets. As long as the banks are bankrupt, they will not make new loans, limiting the ability of many businesses to get capitalized.”

So, what would be the incentive for these government subsidized mega-banks to risk the “gifts” Geithner has given them through Treasury and Federal Reserve hand-outs in the form of TARP, TALF, and Federal Fund Window exchanges during a time when the economy is shrinking, unemployment figures show we may see 700-800,000 unemployed per month as the year progresses (1 in 4 or nearly 14 million unemployed: a 25 year high now at 8.5%; average full-time work week hours are down to 33.2 per week- a record low, over 5 million jobs lost; 2.4% jobs lost over the last 4 months; 1 in 4 people have been looking for work over the last 6 months).

What appears clearer and clearer is that the Obama presidency’s prime players are not willing to upset or disrupt the function, structure, or process within the financial sector, but they are very willing to increase the lines outside the nation’s unemployment offices and continue to hurt the American working people as they sacrifice in order to stay solvent without one penny of a bonus, or an increase in their expense accounts, or when finding themselves on the street not having the opportunity to land upon a cushy Golden Parachute.

Once the stimulus begins to circulate through the paychecks of working America, we will be able to assess if there will be a noticeable impact in spending. I believe out of the $900B stimulus there will only be around $200B filtering through the hands of workers spreading out throughout the entire country. This is so small in comparison to the $12 trillion (pledged, promised, and portioned) that has been leveraged on behalf of only a handful of mega-banks through this Trickle Down economic policy in hopes that this economy will begin borrowing in the face of a shrinking and unstable consumer market. Does any of this make a speck of sense?

There has been no tough talk to the bankstas. The Obama Team has not said that if you don’t write down your mortgage debt at the mark-to-market price, and raise private capital within a 30-day time, then you will otherwise have to go into receivership. If taken over, then the government would handle the write-downs of the toxic assets (debt) and own the assets.

Had they done what Dr. Dean Baker suggested, which was for the bondholders to be guaranteed full protection if their bankstas unwound in 30-days, but if the process were to take longer, dragging it out, then the bondholders would be less protected. How brilliant!! So, why isn’t Dr. Baker our Treasury Secretary? Oh, I forgot, he is not a Trojan Horse for Wall Street. That appears to be a requirement for joining Team Obama.

The contrast between the breakneck speed that was used to bailout Bear Stearns, in March 2008, that took only a weekend, or the sale of Merrill Lynch to Bank of America, or the initial bailout of AIG, or the impressive speed that was engineered when Washington Mutual was placed into the hands of JPMorgan-Chase, or the 5 insolvent mega-banks that Washington found new capital to bathe them with, or the overnight firing of Mr. Goodwrench Wagoner over at GM, so demonstrates that Team Obama has put finance before labor, as they diminish, lessen, reduce the interests of labor, and the nation’s need for labor and manufacturing in order to rescue the country from further collapse and give favor to what is called the “real” economy over the “monopoly-financial-capitalist” economy.

thanks for reading, jerry

The Expansion of Eye on Washington

This blogspot has been expanded. Over the past few months, additional blogspots have been added to the "parent" blog. The additional blogspots can be found highlighted in red, along the right side of this blog page. There are 4 additional blogs all created and written by Carl and me (Jerry).

At the top of the list is A New American Paradigm. Next is Consumer Thrift Reform Movement. Third is Handmade Manufacturing. And fourth is The Nitwit Awards.

In A New American Paradigm, we will write about our views on how we might all approach finding our way into the future. I see the future of America to be very different than the one that has been shedding its "chrysalis" which has existed for the last 80 years or so. "The times they are a changin" and it may not be a pretty sight for many.

The blogspot, Consumer Thrift Reform Movement will discuss what consumerism might look like in the New American Paradigm we are entering.

The blogspot Handmade Manufacturing will focus on the Real Economy and those who are building it with their hands. There will be pieces on businesses that make things. Let me know if you want to be featured.

The Nitwit Awards is just a place to point out the outrageousness of those who say the "darnest things"!

In addition, please check out our wide ranging collection of assorted videos found on the Web, which you can access above. Just click on "Eye on Washington Video". You can also watch us our weekly--done live--talk show!! Click on the screen that says Ustream in the upper right corner.

Thanks for coming around. Jerry and Carl.

The Great American Swindle Is Obama's Big Mistake!

There were 116,011,000 households in the United States, in 2006. Of this figure, 2% exceeded $250,000. 12.3% fell below the poverty line. 20% were living at the bottom of the income ladder with $19,178. Median income was $50,233. No doubt, these figures have worsened. The top 6.37% earned 1/3 of all income. Median income per household member was $26,036, in 2006.

The top 2 quintiles of income earners earned over $91,000, which was 77%, in 2006. The 2 mid-quintiles earned between $36,000 to $57,000. The lowest quintile earners earned $19,000 or lower. A quintile equals 20% of a given amount.

The Chinese middle class population has 100 million to 247 million people. There exports dropped 25.7% in February YoY, for the fourth straight month as the world demand began to shrink. The Chinese imported less, as well. They bought 24.1% less stuff. Professor Michael Pettis reported on his blog, an article printed in the Financial Times quoting the Commerce Minister Chen Deming that “China will reduce export taxes to zero and give more financial support to exporters as it tries to increase its share of global trade in the current crisis.” It went on to say that China would “use all possible measures to ensure the stable growth of our exports and prevent a large drop in external demand.” Chen Deming went on to say, “We should increase our share of the global market…We must transform ourselves from a big export nation to a strong export nation.” So, how come President Obama is not saying the same thing? Oh, I forgot, he is saying that about zombie banks.

Professor Pettis wrote the following, “It’s probably not a good idea to announce a drive to increase China’s share of the global market, especially since for the last several months, while the world has suffered a collapse in demand, China’s share of exports has risen dramatically, but this may have been said primarily for domestic consumption.” Mr. Chen realizes that China is facing tough times ahead with their foreign trade business. This will mean that China may likely find their trade surplus falling quickly to a reported amount of $4.8B. We haven’t seen a trade surplus for a very long time. Professor Pettis stated that there are many who feel that the days of massive monthly trade surpluses are over.

President Obama and you Knights of the Roundtable, if massive trade surpluses are likely to come to an end, then which countries will continue to fund our budget deficits? Professor Pettis sends out a warning. “There is a real need for an adjustment consumption in the U.S, and I don’t think it makes sense for the U.S. to attempt to replace excess household consumption with excess government consumption. One way or the other the U.S, along with China and most other countries that have contributed to one side or the other of the global imbalances, is going to have to accept a demand contraction….Trade friction is an issue that will not easily go away.” He concludes his intelligent and insightful writing with this, “…China would be able to keep its growth at about 8 percent this year, a growth rate long believed to be minimum to create enough jobs and maintain social stability….China’s economy accounted for only five percent of the world’s total.” China alone cannot revive the world.”

U.S. manufacturing has declined over the last 12 consecutive months. And, these top ten red state hypocrites received the most per dollar spent in federal spending:

New Mexico=$2.03, Mississippi=$2.02; Alaska=$1.84; Louisiana=$1.78, West Virginia=$1.76, North Dakota=$1.68, Alabama=$1.53; South Dakota=$1.53, Kentucky=$1.51, Virginia=$1.51. So much for rejecting socialism!

President Obama and Team, what amount of growth does the U.S. need to create enough jobs and maintain social stability? It seems you are more concerned in stabilizing the balance sheets of the uber-richest people, and banksta thieves. Is the People’s Republic of China on to something we are missing in the home of the brave and land of the free?

One in five homeowners are underwater, which means that the value of the home is more than what the home actually is. This means that the home is not as valuable as the mortgage and the house is not worth what the owner is paying for the mortgage. This is when the owner might actually consider walking away from what might be considered a lost cause. Such homeowners are typically those who are able to pay on their overpriced mortgage, but instead, might think of packing up and walking away from it. If an unfortunate life situation occurs that would cause economic pressures to bear down on their expenses creating undue financial stresses, the owner might just give the keys over to the bank.

If your house is worth more than your mortgage, you can often refinance, but it won’t work the other way around. When the mortgage is worth more than the current value and the payments, the payments are not paying the house off. This is called negative equity. Often the homeowner is paying on a mortgage in excess of the value of the house and is not paying anything on the house and not getting closer to any ownership of the house.

When the mortgage is bigger than the house value no bank will refinance. It locks the owners into their own home without ever getting a chance to sell at a break-even or profit price.

1 in 10 homeowners are in default or in foreclosure. 10,000 Americans enter foreclosure everyday. 2.3 million homeowners were in foreclosure in 2008.

42,000 companies closed in 2008, up 45% from 2007. It is predicted that 62,000 companies will close in 2009. So what happens? Workers lose their jobs. Then they realize they can no longer keep paying on their mortgages, credit cards, cars, or whatever else, and walk away from those specific debt burdens, since the government is not helping them, but only the mega-banks with $11T in commitments. For example, Citi, which is only worth $5.4B has been given $75B in taxpayer bailouts. AIG, which has a total market value of only $1B, has been given $180B in taxpayer bailout funds. Yet the taxpayer is left hanging to blow in the wind!

The FDIC placed 20 banks into receivership in 2009.

When one looks at unemployment, underemployment, those no longer looking for work, no longer in the data bases, and working a part-time job instead of a full-time job, or a part-time job that pays less than the last one they lost, the figure is 15-19% un/underemployed. This number rises to over 22 million people. During the Great Depression, at its peak we had 20-25% unemployment.

50 million jobs have been lost worldwide just in 2009. We are shedding jobs at a rate of 23,000 jobs everyday! 4.4 million jobs have been lost since the crisis began last year, and 6.8 million underemployed. The recession began in 2007, and already has stolen over 4.4 million jobs away from the real economy and sent 12.5 million in search of work. The economy contracted at 6.2% in the final three months of 2008, and the worst we have seen in the last 25 years. The economy will see further contraction throughout this year, possibly at the same rate.

In the world of banking, and found in the article by Bill Dedman, 3-17-09, MSNBC.com, U.S. Banks Suffer 149% Rise In Bad Loans, “Out of 8,198 banks for which we have two years of data, 5,784—or 71%--had a higher troubled asset ratio at the end of 2008 than a year earlier”. “The picture was worse for the largest 100 banks: 90 showed declining strength. Only seven improved, and one maintained the same ratio.” Data taken by the American University group that had created the website, Bank Tracker.

On March 23, 2009, the DOW climbed back up to its January 2009 level—7775, which was the lowest it had ever been prior to that same all-time 5-year low back in October-November 2008. Prior to that it was 2002-03, then prior to that was 1997-98, which was the all-time high up to that point in time.

U.S. bank’s toxic assets, the ugly stuff that needed to be removed from the bank balance sheets before the economy can recover, amounts to between 5 and 30 cents on the dollar. To remain solvent, however, the banks say they need a valuation of 50-60 cents on the dollar. Translation: as much as another $2T taxpayer bailout, was written by Mike Whitney, Counterpunch.org, “Time for Geithner and Bernanke to Go”. Mr. Whitney also quoted from the Financial Times, “The U.S. firms include investment giants Goldman Sachs and Merrill Lynch, with each receiving 100 cents on the dollar for their collateral debt obligations, although market value was only 47 cents on the dollar.” He went on to report that around March 3, 2009, “Within days after Obama announced plans to slightly reduce tax rates on deductions for the wealthiest 1.2% of taxpayers (from $35 to $28 for every $100 of deductions), Geithner quickly suggested that the Obama administration would be willing to drop or reduce the tax hike.” So much for helping the struggling working American.

$314 billion has been handed out to foreign central banks, while $600 billion was transferred to those same banks in December 2008. Bernanke and Geithner are printing up $2T for the latest scam called TALF, or Term Asset-Backed Loan Facility, in order to create more loans from auto, student, credit card loans, and business and corporate loans.

Since Reagan, US growth has only been 3% or less per year! Once the Commodity Futures Trading Corporation was put into play, in 2000, $62T in derivative trading grew by 2008.

It is said, with all the government obligations and debts, it is $60T in debt. Zbignew Brzezinski, former national security advisor under President Carter, told Joe Scarborough (Economic Crisis=USA Riots, 3-10-09, Ampedstatus.com) that there is the possibility of class warfare in the United States. “I was worrying about it because we’re going to have millions and millions of unemployed people in dire straits. And at the same time there is public awareness of this extraordinary wealth that was transferred to a few individuals at levels without historical precedent in America…”

One in 50 children are homeless! California, the 10th largest population in the United States had nearly 300,000 two years before the last stock market high in 2007. Sacramento leadership is now talking about government controlled and legal tent cities where the homeless can be taken and held. It is estimated that there are 1.5 million homeless children across the country. California ranked 40 out of 50 states with Texas being number 50, The State That Breeds Presidents. They don’t call it Lone Star for nothin’!!!!!! Is this the type of nation we want to pass on to future generations?

Yet we continue to spend $500B in the Middle East wars, and more billions in maintaining military domination with our 1000 worldwide bases in 200 countries. This military budget is more than the world’s entire military budgets put together! Yet, we have watched 23,000 jobs disappear everyday, and homelessness gather momentum. Is this the kind of nation YOU want? Is the type of country YOU want to pass on to others? Are YOU proud of this?

U.S. air cargo declined 21.3% in January 2009. In the March 6, 2009 online version of The Journal of Commerce, it was written that cargo traffic for U.S. airlines fell at the steepest rate since 9-01, in January. Carriers saw their worst month for cargo in nearly seven years. Domestic business tumbled 16.6% in January 2009 compared to a year ago. “The 838.3 million cargo ton miles the airlines reported was the lightest monthly domestic traffic measure since September 2001, and before that since February 1995.”

The Journal of Commerce-online continued to indicate that KLM air cargo business fell 18% from a year ago. British Air’s air cargo fell 20.7%. Asia/Pacific shipments dropped 17.7%. U.S. air traffic dropped 13.9% in February 2009.

Asian air cargo slumped 23.6% in January, and passenger numbers fell 7.8% as was reported in the Association of Asia Pacific Airlines, said on 3-6-09.

Container port traffic for February, found on bomlat.blogspot.com, stated that the traffic was down for another month. The February Chinese trade surplus was only $4.84B, which was 25% lower than the same period in 2008, and even lower than January, 2009 surplus. “The containerized exports in February were down 27.6% in Los Angeles, and 37% in Long Beach. The decline in imports was even greater, 35.3% in L.A. and 43.3% in Long Beach.” “The First Container Terminal in St. Petersburg, Russia’s biggest box terminal, reported traffic in February plunged 27.3 percent from a year ago as imports collapsed.” “Dutch foreign trade was hit hard in the global economic crisis with exports tumbling 21 percent in January from a year earlier, the biggest drop since the records were kept in 1990, the Dutch central statistics bureau (CBS) said on Friday. The value of goods exports fell to 24.4 billion euros (31.5 billion U.S. dollars), the CBS said. The volume of exports fell 14percent, according to figures corrected for working days. Imports also plummeted 22 percent to 21.6 billion euros, while the volume of imports decreased 14 percent.”

From what I have read the Truck Mileage Index of the U.S., in January 2009, has declined by more than 10%, as well as the truck inventory by 50%, which means that the investment in trucks has dropped.

73,000 retail enterprises have closed in 2009. 237,000 are projected to fail.

These numbers indicate that there is a worldwide consumer slowdown, so why are stock market numbers going up? It is all a head-fake!!!

Professor Joseph Stiglitz, Nobel Laureate in Economics, wrote in the Nation magazine, in his piece titled “A Bank Bailout That Works”, said that the banks are $2-3 trillion or more undercapitalized!

The IMF stated in a BBC report “there is now $2.2 trillion of toxic bank debt worldwide, and $500 billion more than it was estimated a few months ago.”

When workers lose their jobs, they cannot repay their debts, or afford to borrow, and when underemployed, their debts may exceed their income and/or assets. Also, the debt interest rates or borrowing costs on the debts could be too high making the payment process non-payable.

The vicious downward spiral begins. When workers lose jobs, businesses downsize and might have trouble paying their own debts. When workers lose jobs, they stop being consumers, then more businesses close and Pink Slip workers. Strip malls lose tenants, and close up. Developers seek bankruptcy protection. The economy slips further into its black hole toward depression. It ends up that all the money thrown at the mega-monopoly financial institutions, which are already insolvent, cannot issue credit. Credit becomes a moot point because there are fewer borrowers, yet these banks are filled with taxpayer dollars jacking up their “liquided-up” balance sheets. Yet these insolvent institutions continue to look the other way at their toxic debt-assets burning up all that we taxpayers have given them. Yet Citi claimed a profit, while not factoring in all their toxic debt into the supposed profit, as well as the fact that the taxpayer owns 80% of their stock. It is all a bad joke played on Americans!!! And, the administration is not calling them out.

Matt Taibbi, wrote in Rollingstone.com, in “The Big Takeover”, “In the final three months of last year, the company [AIG] lost more than $27 million every hour. That's $465,000 a minute, a yearly income for a median American household every six seconds, roughly $7,750 a second. And all this happened at the end of eight straight years that America devoted to frantically chasing the shadow of a terrorist threat to no avail, eight years spent stopping every citizen at every airport to search every purse, bag, crotch and briefcase for juice boxes and explosive tubes of toothpaste. Yet in the end, our government had no mechanism for searching the balance sheets of companies that held life-or-death power over our society and was unable to spot holes in the national economy the size of Libya (whose entire GDP last year was smaller than AIG's 2008 losses).
So it's time to admit it: We're fools, protagonists in a kind of gruesome comedy about the marriage of greed and stupidity. And the worst part about it is that we're still in denial — we still think this is some kind of unfortunate accident, not something that was created by the group of psychopaths on Wall Street…” (This article will explain the financial Ponzi scheme.)

The “Big Mistake” ends up glaring in the face of President Obama and the angry Americans that the bailout went to the wrong places, and the wrong people. Instead of rescuing mortgages, retirement funds, and jobs stabilizing the economy and easing troubled minds, we got a failed top down bailout plan. Does this look to you a little bit like Reagan’s failed trickle down economics theory, which delivered us into this economic tsunami?

thanks for reading, jerry

Postscript: This article can also be read at Economicrot, as well, thanks to Randy posting there!

Bill Moyers speaks with William Black, economist and former regulator about the banking fraud beginning back to Reagan. Mr. Black speaks about the current fraud, the cover-up, and that Geithner and Summers are deep within the fraud and cover-up. Watch it.

Is The Resurrection of Barack Roosevelt Obama Coming?

Has Timmy Geithner been listening to the title song’s chorus on the great new Van Morrison recording, Astral Weeks-Live at Hollywood Bowl? The chorus is, “I believe I have transcended.” Has the Man-From-Uncle-Goldman Sachs been transcended from the financial crime syndicate’s Trojan Horse into a higher plane where he now wears a big flowing red, white and blue cape as he does battle to rescue the US economy from eminent danger? Oohh Baby, I’m getting chills already!

University of Missouri and economics Professor Michael Hudson, Ph.D, wrote in How The Scam Works, brings up this example that if a “bank now offers $3 million to buy back mortgages [from another bank that believes they are sitting on a $10 million package of collateralized debt obligations that had been put together out of junk mortgages that] what the hell, the more they bid [up], the more they [can] get from the government. So why not bid $5 million. [If] the government-that is, the hapless FDIC-puts up 85% of the $5 million to buy this-namely, $4,250,000 [package, then] the bank only needs to put up 15%-namely, $750,000.”

“Here is the rip-off as I see it. For an outlay of $750,000, the bank rids its books of a mortgage worth $2 million, for which it receives $4,250,000. It gets twice as much as the junk is worth.”

“The more [money] the banks holding junk mortgages pay for this toxic waste, the more the government will pay as part of its 85%. So the strategy is to overpay, overpay, and overpay. Paying 15% is a small price to pay for getting the government to put in 85% to take the most toxic waste off your books.” What an incredible scam upon the taxpayer!!!

Mr. Karl Denninger of market-ticker.denninger.net wrote in his 3-19-09 piece called Bernanke Inserts Gun in Mouth, he said that “ The error in the hyperinflationist scenario is that without being able to couple price increases back into wages they are unsustainable-price increases instead of collapse demand [collapse of demand and falling prices]. If gasoline goes to $20/gallon you will buy less of it-a lot less-not because you want to, but because you simply don’t have the money. This in turn destroys the gasoline retailer and oil company’s operating cash flow, which in turn causes them to lay off more people. In a debt-laden economy the debt percentage (of GDP) continues to rise even as spending drops and a mad dash to try and redeem what debt can be repaid soaks up all available money.”

“The nightmare scenario that is staring us in the face, right here, right now isn’t hyperinflation. It is in fact a collapse of monetary systems driving demand for dollars through the roof in a crescendo of attempted redemption into collapsed (“no-bid”) asset prices-a demand that Ben [Bernanke] will not be able to meet, as the collateral backing those dollars will have been exchanged for toilet paper. Whether Bernanke holds all this trash on his balance sheet or manages to scam Treasury into exchanging it for T-bills, the result is the same-there is no collateral behind the Bucky [dollar] and as employment collapses no production to replace it will [be there] either.” This might be really hard to get your head around such an economic picture!

Columbia Business School’s Professor Joseph Stiglitz, Ph.D. and 2001 Nobel Prize winner in economics, wrote (Fiscal Plan Fails Both Markets and Taxpayers, 3-24-09, Project Syndicate) “Trickle-down economics almost never works. Throwing money at the banks hasn’t helped homeowners: foreclosures continue to increase. Letting AIG fail might have hurt some systemically important institutions, but dealing with that would have been better than to gamble upwards of $150 billion and hope that some of it might stick where it is important.”

I have said this all along--this is nothing but a trickle-down scam. Professor Stiglitz went on to say that the lack of transparency was the problem and will not offer a solution. By bribing hedge funds and private investors to buy up the bank’s bad mortgage assets will not result in the establishment of a true “market price” for these toxic bombs. Bank losses are already a fact, and now the taxpayers are being told this will be a win-win for just the banks and the government; but how is this a win for the taxpayers who will get stuck subsidizing an over-valued price? The taxpayer will see a loss: privatize the gains; socialize the losses.

University of Texas, LBJ School Professor of economics James K. Galbraith, Ph.D. wrote (This Crisis Is Way Bigger Than Dead Banks and Wall Street Bailouts, 3-25-09, Alternet.org) "In late 2007, the ratings agency Fitch conducted this exercise on a small sample of loan files, and found indications of misrepresentation or fraud present in practically every one. The reasonable inference would be that many more of the loans will default. Geithner's plan to guarantee these so-called assets, therefore, is almost sure to overstate their value; it is only a way of delaying the ultimate public recognition of loss. while keeping the perpetrators afloat. When a bank's insolvency is ignored, the incentives for normal prudent banking collapse. [Management] may take big new risks, in volatile markets like commodities, in the hope of salvation before the regulators close in. Or it may loot the institution--nomenklatura privatization, as the Russians would say--through unjustified bonuses, dividends, and options. It will never fully disclose the extent of insolvency on its own. [Management will likely engage in a] combination of looting, fraud, and a renewed speculation in volatile commodity markets such as oil. There is no chance that the banks will simply resume normal long-term lending. To whom would they lend? For what? Against what collateral? And if banks are recapitalized without changing their management, why should we expect them to change the behavior that caused the insolvency in the first place? The odd thing about Geithner's program is its failure to act as though the financial crisis is a true crisis--an integrated, long term economic threat--rather than merely a couple of related but temporary problems, one in banking and the other in jobs." One cannot help but believe that President Obama and Timmy Geithner are not afraid of the less powerful manufacturing CEOs, since they will force them to resign in exchange of government economic support, but are very afraid of the big time thieves deep within the financial industry's syndicate allowing them to keep their seats intact on the deck of the sinking ship.

Professor Paul Krugman, Ph.D. and 2008 Nobel Prize winner in economics said in an interview with Amy Goodman (Have Geithner’s Zombie Ideas Won?, Democracy Now!) that Geithner is “basically saying that, you know, there’s nothing really fundamentally wrong with our banking system; there’s just this stuff that’s ultimately backed by home mortgages, and if only we could get people to see that these things are really pretty decent assets, then the banks will be in fine shape. And that’s [troubling to me during this economic time]. You know, there’s an argument that says maybe they were somewhat underpriced, but to make that the centerpiece of your [Geithner’s] financial rescue plan is just—well…, it leaves me with a feeling of despair.”

So, what is wrong with President Obama? Why does he ignore Nobel Laureates and their opinions? Is he asking to be destroyed? Is he asking for the GOP to cannibalize him if this recovery plan calling for the financial crime syndicate to buy up over-valued toxic debt that they may use against the American people if they decided to throw back their catches?

You know the deal? The buyers of what are now being called “legacy assets” have a money back guarantee. They come up with 15% and if they only want to pay 25 cents on the dollar, Geithner’s taxpayers will subsidize the remainder of the seller’s offer price, which will likely be between 40-60 cents on the dollar.

If Obama falters and stumbles, or, at worst, falls flat-out he will be trampled by the GOP and many who changed their party affiliations to vote for him will retreat back to the Republicans. This will destroy the Democratic Party, which is already devouring their own. The trust will be significantly damaged and the circle (of Hope) will be broken!

Obama is risking his entire reputation on a weak and historically failed policy of trickle-down economics. One cannot help but believe that we are on the verge of actually losing our democracy. A Mussolini-like Republican is waiting in the wings. One has to believe that President Obama is being controlled by the very powerful forces within the financial banking crime syndicate to reuse Dr. Frankenstein’s horror machine to make sure the Ponzi monster lives on to trickle-down the fatal gruel in the form of Monster Mash.

J.P. Morgan manipulated the financial markets just before the stock market crash and the bank runs that led up to the Depression. He was responsible for the hundreds of bank failures, therefore it is not conspiratorial to believe that this bank syndicate dragon had been kept alive all this time and not slain generations ago.

I have a prediction that was seen in Madame Joy’s crystal ball. After she put herself under a hypnotic trace, the crystal ball lit up brightly spinning the gold and silver and cobalt blue colors which told this story. The banking industry is in a dilemma right now. They have backed their spankin’ cheeks too close to the hot and raging fireplace because they are now either going to have to put up or shut up. If they put up, then they will have to buy up the toxic “legacy assets” at the inflated and over-valued prices amounting to two to three times their actual market values. They may never be able to unload them unless they back out and dump them back on the taxpayer. This action may enrage the taxpayers for being dooped by the scam and call for nationalization, or force the banks to handle their own toxic debt bombs. The citizens will rally behind President Obama when he says that he bent over backwards to make a deal with the bankstas.

Now, if they shut up and don’t bite, then President Obama will look like the Emperor With No Clothes and the GOP will hammer him as they unleash the vulgar and despicable racist dogs on him. If the banking cartel decides to “shut up” then Obama will realize that the biggest crime syndicate set him up to look ineffectual and unable to bring the banks to the banquet table and gather up platefuls of toxic mortgage debt bonds after weeks of public reassurances and pitches; and, we’ll all see that a scam had taken place. We will see that the set up was to move the Trojan Horses: Geithner, Bernanke and Summers right up to his free throw line. This is all becoming transparently clear to more and more people.

This is a face-off. President Obama will see that maybe even his closest confidantes, Raum Emanuel is in on the coup. With the cowards- Pelosi, and Reed pissing in their woolens, they’ll switch sides for enough campaign cash if it will fill the gunnysacks under their desks.

Hillary knows that she will go down, too, unless she joins with Barack. She knows her career will be over, as well, if she abandons him, since she has few fans in the Republican camp.

The set up is that if the banking cartel shuts up, then the Mussolini exhumation will begin ushering in what Carl Rove dreamed of—the 100 years of Neo-Fascism-oligarchy-style.

But Obama will not take this lying down!! He will transform himself into Luke Skywalker to take control, and it must be done in a New York Minute. He will nationalize the failed banks—all of them. They will be consolidated overnight, stripped of their assets, and the zombie executives thrown out on the streets only to be shut out of the dark hovels that would protect them from the daylight and citizen vigilante groups look for revenge-European style. He will then take all the cash that had not been stolen and siphoned off by the crime syndicate kleptocrats and put into an Obama Industrial Marshall Plan—New Deal Initiative—relying on the Democratic governors throughout the country to give him cover as they throw him lifelines ASAP. This will be Roosevelt Obama resurrected!

The unemployed will be hired to work the program. Obama will command the FBI to bust open the banking crime syndicate and prosecute the thieves and robber barons.

This will astonish our world allies, and begin to revitalize our trade alliances. Rush Limbaugh and the other Neo-Con Freaks may actually have to go into hiding doing only Internet shows from undisclosed secret locations.

WOW! Madame Joy is something else, isn’t she? I think it is now time for me to wake up, and shake it off. Although, it is always good to dream.

thanks for reading, jerry