Thursday, December 31, 2009

If You Thought Slavery Was Over, Think Again. The Average American is Living in Servitude of Their Corporate Overlords

Author: My Budget360
Many Americans are not buying the recent stock market rally. This is being reflected in multiple polls showing negative attitudes towards the economy and Wall Street. Wall Street is so disconnected from the average American that they fail to see the 27 million unemployed and underemployed Americans that now have a harder time believing the gospel of financial engineering prosperity. Americans have a reason to be dubious regarding the recovery because jobs are the main push for most Americans. A recent study shows that over 70 percent of Americans derive their monthly income from an actual W-2 job. In other words, working is the prime mover and source of their income. Yet the financial elite have very little understanding of this concept. Why? 42 percent of financial wealth is controlled by the top 1 percent. We would need to go back to the Great Depression to see such lopsided data.
Many Americans are still struggling at the depths of this recession. We have 37 million Americans on food stamps and many wait until midnight of the last day of the month so checks can clear to buy food at Wal-Mart. Do you think these people are starring at the stock market? The overall data is much worse:
Read more here

Bleak Retail Sales According to Howard Davidowitz

Wednesday, December 30, 2009

Max Keiser: Mortgage Defaults STIMULATING U.S. Economy More Than Obama's Plan

A slightly over the top, but very pertinent presentation by Max Keiser.
Must Watch!

UN: $352bn of Drug Money Used to Bailout Banks

Author: Rajeev Syal for The Observer
Drugs money worth billions of dollars kept the financial system afloat at the height of the global crisis, the United Nations' drugs and crime tsar has told the Observer.
Antonio Maria Costa, head of the UN Office on Drugs and Crime, said he has seen evidence that the proceeds of organised crime were "the only liquid investment capital" available to some banks on the brink of collapse last year. He said that a majority of the $352bn (£216bn) of drugs profits was absorbed into the economic system as a result.
This will raise questions about crime's influence on the economic system at times of crisis. It will also prompt further examination of the banking sector as world leaders, including Barack Obama and Gordon Brown, call for new International Monetary Fund regulations. Speaking from his office in Vienna, Costa said evidence that illegal money was being absorbed into the financial system was first drawn to his attention by intelligence agencies and prosecutors around 18 months ago. "In many instances, the money from drugs was the only liquid investment capital. In the second half of 2008, liquidity was the banking system's main problem and hence liquid capital became an important factor," he said.
Some of the evidence put before his office indicated that gang money was used to save some banks from collapse when lending seized up, he said.
Read more here

Murdoch Chain Being Used to Publish Fake Intelligence Reports - Iran Nuke Document Now Appears to be a Forgery

Author: Gareth Porter in Inter Press Service

U.S. intelligence has concluded that the document published recently by the Times of London [owned by Rupert Murdoch], which purportedly describes an Iranian plan to do experiments on what the newspaper described as a "neutron initiator" for an atomic weapon, is a fabrication, according to a former Central Intelligence Agency official.
Philip Giraldi, who was a CIA counterterrorism official from 1976 to 1992, told IPS that intelligence sources say that the United States had nothing to do with forging the document, and that Israel is the primary suspect. The sources do not rule out a British role in the fabrication, however.
The Times of London story published Dec. 14 did not identify the source of the document. But it quoted "an Asian intelligence source" - a term some news media have used for Israeli intelligence officials - as confirming that his government believes Iran was working on a neutron initiator as recently as 2007.
The story of the purported Iranian document prompted a new round of expressions of U.S. and European support for tougher sanctions against Iran and reminders of Israel's threats to attack Iranian nuclear programme targets if diplomacy fails.
U.S. news media reporting has left the impression that U.S. intelligence analysts have not made up their mind about the document's authenticity, although it has been widely reported that they have now had a full year to assess the issue.
Read more here

Tuesday, December 29, 2009

Terror and Tyranny: the TNT Approach for 2010

Author: Pyramids of Control in Infowars
Tyranny 2010 wouldn’t be complete without what Gerald Celente cited as an upcoming trend: Terror 2010. T&T — perfect together. We can be pretty sure that this new technology will be implemented, pronto, with its full capability, and with no choice to opt-out: mission accomplished.
The holiday season has greeted us with “Terr’ists” who prefer their underwear to their shoes (and they need well-dressed escorts when they forget their passport). It would all seem ridiculous if it hadn’t already caused a dramatic increase in airport security, as people are now being told to show up 4 hours in advance for international flights. This is a rather large problem. For those in the business of creating problems, though, this was a well-chosen stratagem for eliciting the all-important reaction; is there ever a more stressful time or event than Christmas travel? So, as dot connectors, we need to look at what solutions are being offered for this problem. Enter stage left (and right): Tyranny
Read more here

Was the Detriot Flight Bomber a Patsy?

Author: Aaron Dykes in Infowars
Evidence Clearly Indicates Staged Attack on Detroit Flight: CNN Airs Eyewitness Testimony that ‘Well-Dressed’ Indian accomplice helped Abdulmutallab board without passport and that man on plane filmed entire flight and bombing attempt.
Evidence is emerging that clearly indicates Abdulmutallab was more than just a Nigerian extremist carrying out his anger through an ill-conceived plot to ignite a powdery explosive substance on-board a flight to the United States. Eyewitness testimony pointing to a man helping the accused terrorist board without a passport, along with an unusual cameraman documenting the attempted attack on board the plane raise more than red flags– they point towards an intelligence operation, run as a drill, meant to conjure up public support for a number of fronts in the continuing ‘War on Terror.’
CNN interviewed key flight witnesses during their Dec. 28 program who raised these very points, making clear that the full story is still emerging and that wider-connections to intelligence handlers is evident.
Read more here

One Day We’ll All Be Terrorists

Author: Chris Hedges in Truthdig
Constitutionally protected statements, beliefs and associations can now become a crime. Dissidents, even those who break no laws, can be stripped of their rights and imprisoned without due process. It is the legal equivalent of preemptive war. The state can detain and prosecute people not for what they have done, or even for what they are planning to do, but for holding religious or political beliefs that the state deems seditious. The first of those targeted have been observant Muslims, but they will not be the last.
“Most of the evidence is classified,” Jeanne Theoharis, an associate professor of political science at Brooklyn College who taught Hashmi, told me, “but Hashmi is not allowed to see it. He is an American citizen. But in America you can now go to trial and all the evidence collected against you cannot be reviewed. You can spend 2½ years in solitary confinement before you are convicted of anything. There has been attention paid to extraordinary rendition, Guantánamo and Abu Ghraib with this false idea that if people are tried in the United States things will be fair. But what allowed Guantánamo to happen was the devolution of the rule of law here at home, and this is not only happening to Hashmi.”
Read more here

Market-Driven Hysteria and the Politics of Death

Author: Henry Giroux in Truthout
If we take seriously the ideology, arguments and values now emanating from the right-wing of the Republican Party, there is no room in the United States for a democracy in which the obligations of citizenship, compassion and collective security outweigh the demands of what might be called totalizing market-driven society; that is, a society that is utterly deregulated, privatized, commodified and largely controlled by the ultra-rich and a handful of mega corporations. In such a society, there is a shift in power from government to markets and the emergence of a more intensified political economy organized around three principal concerns: deregulated markets, commodification and disposability. In spite of the current failure of this system, right-wing Republicans and their allies are more than willing to embrace a system that erases all vestiges of the public good, turning citizens into consumers, while privatizing and commodifying every aspect of the social order - all the while threatening the lives, health, and livelihoods of millions of working class and middle class people.
Read more here

Monday, December 28, 2009

The Firecracker Report's Copyright Policy

This post is in response to a reader enquiry about posting The Firecracker Report's content on another website/blog. Our blog was initiated with the aim of educating ourselves and our readers, by sharing information and providing a different perspective on the challenges facing our times. We therefore encourage our readers to spread the word by sharing the Report's content with their friends, family and on other blogs/ YES U CAN!
Our only request is that our readers adequately credit the author (i.e. The Firecracker Report/another author whose work we have posted) by providing a link to the original post and website. That way new readers have the means to access our (or another author's) work and information. In addition, while posting our content on other blogs/websites we request that readers post partially and provide a link to the full content on our site.
Thank you for your support,
Kind regards,
The Firecracker Team

Inside the Military Media Industrial Complex

Authors: Peter Phillips and Mickey Huff in Media Freedom International
Among the most important corporate media censored news stories of the past decade, one must be that over one million people have died because of the United States military invasion and occupation of Iraq. This, of course, does not include the number of deaths from the first Gulf War nor the ensuing sanctions placed upon the country of Iraq that, combined, caused close to an additional one million Iraqi deaths. In the Iraq War, which began in March of 2003, over a million people have died violently primarily from US bombings and neighborhood patrols. These were deaths in excess of the normal civilian death rate under the prior government. Among US military leaders and policy elites, the issue of counting the dead was dismissed before the Iraqi invasion even began. In an interview with reporters in late March of 2002 US General Tommy Franks stated, “You know we don’t do body counts.”[i] Fortunately, for those concerned about humanitarian costs of war and empire, others do.
In a January 2008 report, the British polling group Opinion Research Business (ORB) reported that, “survey work confirms our earlier estimate that over 1,000,000 Iraqi citizens have died as a result of the conflict which started in 2003. We now estimate that the death toll between March 2003 and August 2007 is likely to have been of the order of 1,033,000. If one takes into account the margin of error associated with survey data of this nature then the estimated range is between 946,000 and 1,120,000.”[ii]
Read more here

Phase II of the Economic Crisis is Waiting for the "Creditanstalt Moment"

Thunder Road Report

How Much Gold Has Been Sold That Does Not Exist

Author: Adrian Douglas of Market Force Analysis
On October 9 I published an article that postulated that the gold market is a Ponzi scheme because it sells gold that doesn’t exist by implementation of the principles of fractional reserve banking. Since writing that article further information has come to light which supports this claim and allows an estimate of how much gold has been sold that doesn’t exist if the owners of the gold ask for it. In other words there are several owners for each ounce of physical gold.
By complete coincidence Paul Mylchreest of The Thunder Road Report has just written an in-depth study into the daily trading volumes of gold on the London OTC (over-the-counter) market which you can link to here. The London OTC market is where most of the physical gold in the world is traded. This market is a wholesale market where trades are only conducted between the bullion trading houses on behalf of their clients. About 95% of the trading is by way of gold that is held in unallocated bullion accounts. The unique characteristic of gold is that about 50% (80,000 t) of the world above ground gold stocks are held as a store
of wealth (investment). The other 50% exists as jewelry. When gold is bought as a store of wealth it can perform that function for you where ever it is in the world.
Given this unique characteristic many large investors in bullion prefer to leave their gold with the bullion dealer from whom they bought it so that it can be stored in their vault and easily re-sold. This is identical to the situation with stocks where most stock certificates are held by the brokerage house not by the individual.
Read more here

Sunday, December 27, 2009

John Hathaway: The Real Bubble is Not in Gold But in Government Debt

An article and interview (link below) by John Hathaway Portfolio Manager of Tocqueville Asset Management.
Is gold a “bubble” because it has now become popular or is there still worthwhile upside? As a contrarian, it is more difficult to reconcile the metal’s recent popularity with the prospect of future rewards. Is the investment consensus always wrong, or can it be right for extended periods? Does the perceived flood of new investment mean the jig is up? The ability to remember is sometimes the contrarian’s worst enemy. Recall that Tocqueville launched its gold effort in 1998 when the metal was friendless. Central banks were dumping the metal in favor of dollar-denominated assets. In a moment of charity to contrarian investors, the UK dumped most of its bullion reserves at prices below $300/ounce in 1999. Mining companies furiously and confidently hedged their future gold production at unheard of (and unexpected) prices well above $300/ounce. The Financial Times published the obituary December 13, 1997: “The Death of Gold” (see Appendix). The Dow Jones Industrial Average was valued at more than 40x an ounce of gold. Credit spreads, a proxy for risk tolerance, were the skinniest in 30 years. Risk—in those heady days, investors couldn’t get enough of it. Rodney Dangerfield got more respect than the metal.
Read more here
You can also listen to John Hathaway's complete interview on King World News here

David Tice on the Coming Funding Crisis and Capital Controls

Another must listen interview by David Tice Federated’s chief portfolio strategist, where he covers a whole new range of issues he has never talked about before including:
  1. The coming funding crisis and capital flight out of the United States. Are capital controls coming?
  2. Deflation first followed by massive inflation down the road.
  3. Competitive currency devaluation around the world that will greatly benefit gold.
  4. Many more shoes to drop in the banking sector.
Listen to David Tice's complete interview on King World News here

Jim Sinclair Explains Why Gold Hit $1,224 and Fell Back and Where it is Headed Next

An excellent interview by Jim Sinclair the legendary investor known as Mr. Gold for his remarkably accurate timing regarding the gold bull market of the 70’s. In this King World news interview Jim explains the reasons behind the recent gyrations in the gold and currency markets. Here are some of the main ideas he touches upon:
  1. The bogus "gold is in a bubble" claim and how the Chinese are playing the market.
  2. The coming mania in hard assets particularly gold, as the dollar loses reserve currency status.
  3. Going forward the volatility in the gold market will be even more violent.
  4. The dollar is like the common stock of the United States. Unless the country fixes its balance sheet the direction for the dollar is lower. You can create a temporary dollar rally but you cannot give it legs, without solid economic fundamentals.
  5. The control over U.S. spending will be enforced not by domestic pressures but externally by the lenders of the United States. 
  6. A one world currency and one world central bank is possibly on the cards.
Listen to the complete Jim Sinclair's interview on King World News here

Saturday, December 26, 2009

Part II: Revolution, World Wars and World Order

This is Part II of Andrew Gavin Marshall's essay that we had posted yesterday titled "Evolution and Revolution of the Central Banking System. Because that post was quite long and we had posted a link to Part II at the end of the article, some of our readers missed it. So here is a repost of Part II. In addition we discovered that the essay had a Part III, IV and V as well! So we are posting all of them today. So grab a cup of eggnog/hot cocoa and make yourself comfy...
Part II - Origins of the American Empire: Revolution, World Wars and World Order

Russia, Oil and Revolution
By the 1870s, John D. Rockefeller’s Standard Oil Empire had a virtual monopoly over the United States, and even many foreign countries. In 1890, the King of Holland gave his blessing for the creation of an international oil company called Royal Dutch Oil Company, which was mainly founded to refine and sell kerosene from Indonesia, a Dutch colony. Also in 1890, a British company was founded with the intended purpose of shipping oil, the Shell Transport and Trading Company, and it “began transporting Royal Dutch oil from Sumatra to destinations everywhere,” and eventually, “the two companies merged to become Royal Dutch Shell.”[1]
Russia entered into the Industrial Revolution later than any other large country and empire of its time. By the 1870s, “Russia’s oil fields, including those in Baku, were challenging Standard Oil’s supremacy in Europe. Russia’s ascendancy in natural resources disrupted the strategic balance of power in Europe and troubled Britain.” Britain thus attempted to begin oil explorations in the Middle East, specifically in Persia (Iran), first through Baron Julius de Reuter, the founder of Reuters News Service, who gained exploration rights from the Shah of Iran.[2] Reuter’s attempt at uncovering vast quantities of oil failed, and a man named William Knox D’Arcy took the lead in Persia.
By the middle of the 19th century, “the Rothschilds were the richest family in the world, perhaps in all of history. Their five international banking houses comprised one of the first multinational corporations.” Alfonse de Rothschild was “heavily invested in Russian oil at least forty years before William Knox D’Arcy began tying up Persian oil concessions for the British. Russian oil, which in the 1860s was already emerging as the European rival to the American monopoly Standard Oil, was the Baron [Rothschild]’s pet project.” In the early 1880s, “almost two hundred Rothschild refineries were at work in Baku,” Russia’s oil rich region.[3]
Read more here

Part III: Bilderberg, the Trilateral Commission and the Federal Reserve

Author: Andrew Gavin Marshall

The Bilderberg Group and the European Union Project
In 1954, the Bilderberg Group was founded in the Netherlands, which was a secretive meeting held once a year, drawing roughly 130 of the political-financial-military-academic-media elites from North America and Western Europe as “an informal network of influential people who could consult each other privately and confidentially.”[1] Regular participants include the CEOs or Chairman of some of the largest corporations in the world, oil companies such as Royal Dutch Shell, British Petroleum, and Total SA, as well as various European monarchs, international bankers such as David Rockefeller, major politicians, presidents, prime ministers, and central bankers of the world.[2]
Joseph Retinger, the founder of the Bilderberg Group, was also one of the original architects of the European Common Market and a leading intellectual champion of European integration. In 1946, he told the Royal Institute of International Affairs (the British counterpart and sister organization of the Council on Foreign Relations), that Europe needed to create a federal union and for European countries to “relinquish part of their sovereignty.” Retinger was a founder of the European Movement (EM), a lobbying organization dedicated to creating a federal Europe. Retinger secured financial support for the European Movement from powerful US financial interests such as the Council on Foreign Relations and the Rockefellers.[3] However, it is hard to distinguish between the CFR and the Rockefellers, as, especially following World War II, the CFR’s main finances came from the Carnegie Corporation, Ford Foundation and most especially, the Rockefeller Foundation.[4]
The Bilderberg Group acts as a “secretive global think-tank,” with an original intent to “to link governments and economies in Europe and North America amid the Cold War.”[5] One of the Bilderberg Group’s main goals was unifying Europe into a European Union. Apart from Retinger, the founder of the Bilderberg Group and the European Movement, another ideological founder of European integration was Jean Monnet, who founded the Action Committee for a United States of Europe, an organization dedicated to promoting European integration, and he was also the major promoter and first president of the European Coal and Steel Community (ECSC), the precursor to the European Common Market.[6]
Read more here

Part IV: Forging a “New World Order” Under a One World Government

Author: Andrew Gavin Marshall

Globalization and the New World Order
The 1990s saw the emergence of what was called the New World Order. This was a term that emerged in the early 1990s to describe a more unipolar world, addressing the collapse of the Soviet Union and the newfound role of the United States as the sole and unchallenged global power. The New World Order was meant to represent a new phase in the global political economy in which world authority rested in one place, and for the time, that place was to be the United States.
This era saw the continual expansion and formation of regional blocs, with the formation of the European Union, the signing of the North American Free Trade Agreement (NAFTA) and the creation of the WTO. The World Trade Organization was officially formed in 1995, as the successor to the General Agreements on Tariffs and Trade (GATT), which was formed in 1944 at the Bretton-Woods Conference. The WTO manages the international liberal trading order.
The first Director-General of the WTO was Peter D. Sutherland, who was previously the director general of GATT, former Attorney General of Ireland, and currently is Chairman of British Petroleum and Goldman Sachs International, as well as being special representative of the United Nations secretary-general for migrations. He is also a member of the board of the Royal Bank of Scotland Group, the Foundation Board of the World Economic Forum, goodwill ambassador to the United Nations Industrial Development Organisation, is a member of the Bilderberg Group, and is European Chairman of the Trilateral Commission, and he was presented with the Robert Schuman Medal for his work on European Integration and the David Rockefeller Award of the Trilateral Commission.[1] Clearly, the WTO was an organ of the western banking elite to be used as a tool in expanding and institutionalizing their control over world trade.
Read more here

Part V: Global War and Dying Democracy: The Revolution of the Elites

Author: Andrew Gavin Marshall

Transnational Totalitarianism
Global trends in political economy suggest that “democracy” as we know it, is a fading concept, where even Western industrialized nations are retreating from the system. Arguably, through party politics and financial-corporate interests, democracy is something of a façade as it is. However, we are entering into an era in which even the institutions and image of democracy are in retreat, and the slide into totalitarianism seems inevitable.
The National Intelligence Council report, Global Trends 2025, stated that many governments will be “expanding domestic security forces, surveillance capabilities, and the employment of special operations-type forces.” Counterterrorism measures will increasingly “involve urban operations as a result of greater urbanization,” and governments “may increasingly erect barricades and fences around their territories to inhibit access. Gated communities will continue to spring up within many societies as elites seek to insulate themselves from domestic threats.”[1] Essentially, expect a continued move towards and internationalization of domestic police state measures to control populations.
The nature of totalitarianism is such that it is, “by nature (or rather by definition), a global project that cannot be fully accomplished in just one community or one country. Being fuelled by the need to suppress any alternative orders and ideas, it has no natural limits and is bound to aim at totally dominating everything and everyone.” David Lyon explained in Theorizing Surveillance, that, “The ultimate feature of the totalitarian domination is the absence of exit, which can be achieved temporarily by closing borders, but permanently only by a truly global reach that would render the very notion of exit meaningless. This in itself justifies questions about the totalitarian potential of globalization.” The author raises the important question, “Is abolition of borders intrinsically (morally) good, because they symbolize barriers that needlessly separate and exclude people, or are they potential lines of resistance, refuge and difference that may save us from the totalitarian abyss?” Further, “if globalization undermines the tested, state-based models of democracy, the world may be vulnerable to a global totalitarian etatization.”[2]
Read more here

Friday, December 25, 2009

Happy Holidays!

Wish You a Very Warm & Joyful Holiday Season!

Is it all Just A Ponzi Scheme?

Author: Eric Sprott and David Franklin of Sprott Asset Management
In our May/June Markets at a Glance, "The Solution…is the Problem", we discussed how much debt the US government would need to issue in order to balance the budget for fiscal 2009. We calculated they would need to sell $2.041 trillion in new debt - or almost three times the new debt that was issued in fiscal 2008. As a thought experiment, we separated all the various US Treasury owners and asked our readers whether each group could afford to increase their 2009 treasury purchases by 200%. In the end, we surmised that most groups couldn’t, and prepared our readers for the worst.
Almost seven months later, however, nothing particularly bad has happened on the US debt front. There have been no failed auctions, no sovereign defaults, no downgrades of debt and no significant increase in rates…not so much as a hiccup in the treasury market. Knowing what we discussed this past June, we have to ask how it all went so smoothly. After all – it was pretty obvious there wasn’t enough buying power to satisfy the auctions under ‘normal’ circumstances.
In the latest Treasury Bulletin published in December 2009, ownership data reveals that the United States increased the public debt by $1.885 trillion dollars in fiscal 2009.1 So who bought all the new Treasury securities to finance the massive increase in expenditures? According to the same report, there were three distinct groups that bought more than they did in 2008. The first was "Foreign and International Buyers", who purchased $697.5 billion worth of Treasury securities in fiscal 2009 – representing about 23% more than their respective purchases in fiscal 2008. The second group was the Federal Reserve itself. According to its published balance sheet, it increased its treasury holdings by $286 billion in 2009, representing a 60% increase year-over-year.2 This increase appears to be a direct result of the Federal Reserve’s Quantitative Easing program announced this past March. Most of the other identified buyers in the Treasury Bulletin were either net sellers or small buyers in 2009. While the Q4 data is not yet available, the Q1, Q2 and Q3 data suggests that the State and Local governments and US Savings Bonds groups will be net sellers of US Treasury securities in 2009, while pension funds, insurance companies and depository institutions only increased their purchases by a negligible amount.
Read more here

Evolution and Revolution of the Central Banking System

For some cosy Christmas weekend reading we enclose another well-researched piece by Andrew Gavin Marshall who is a scholar with the Center for Research on Globalization. His essay is in two parts, we have enclosed Part I here, for Part II please click on the link at the end of this post.
Part I - Introduction
Humanity is on the verge of entering into the most tumultuous period in our history. The prospects of a global depression, the likes of which have never been seen before; a truly global war, on a scale never before imagined; and societal collapse, for which nations of the world are building totalitarian police states to control populations; are increasing by the day. The major global trend forecasters are sounding the alarms on economic depression, war, a return to fascism and a total reorganization of society. Through crisis, we are seeing the reorganization of the global political economy, and the transformation of capitalism into a totalitarian capitalist world government. Capitalism has never stayed the same through its history; it has always changed and will continue to do so. Its changes are explained and analyzed through political-economic theory, both mainstream theory and critical. The changes are undertaken over years, decades and centuries. The next phase of capitalism is one in which the world moves to a state-controlled economic system, much like China, of totalitarian capitalism.
The global political economy itself is being reorganized into a world government body, consisting of one center of global power where the socio-political-economic power of the world is centralized in one institution. This is not a conspiracy theory; it is a reality. Nor is this a subject confined to the realm of “internet conspiracy theorists,” but in fact, the concept of world government originates and evolves throughout the history of capitalism and the global political economy. Mainstream and critical political-economic theory has addressed the concept of world government for centuries.
The notion of a world government has such a long history, as the forces driving the world into such a structure intertwine with the history of the modern global political economy itself. The purpose of this report is to examine the history of the global political economy in taking steps toward forming a world government, in both theory and practice. How did we get here and where are we going?

Why Study Theory?
Within the academic realm of Political Science, specifically the field of Global Political Economy (GPE), it is essential to understand the various theoretical perspectives of political economy so as to understand the actions and directions taken within the global political economy,

Thursday, December 24, 2009

Desperation is Setting In...

Author: The Golden Truth Blog
While you're reading this, think about all of the billions in taxpayer funding that Obama/Geithner/Bernanke have handed over to the banks to keep them from collapsing and to make sure the employees get paid record bonuses this year.
Serious poverty is spilling into the middle class.
My significant other - who teaches high school in a lower-middle income area - and her sister - who teaches 1st grade at an upper-middle income elementary school - are both seeing the severe strains of poverty in the faces and body language of many of their students. Last Friday, a mother of three elementary school students showed up at the school begging for help, as she had just fed her kids the last can of green beans in the cupboard. The mother had finally capitulated after losing her job and had been too proud with the false-hope of finding a new job to apply for welfare. The man she had voted for to be President had failed her. And now she was desperate for any kind of help to keep her family alive, while she watched Obama hand out multi-billion dollar Christmas gifts to the big bankers who purportedly were doing "God's work," yet who in reality provide no value to our system and who function as giant leeches sucking the last of the life-blood from the economy before the final collapse.
Read more here

Wall Street's 10 Biggest Lies of 2009

Author: Les Leopold in The Huffington Post
Say goodbye to 2009, the worst economic year since the Great Depression. Say hello to the billionaire bailout society in which the super-rich gamble, lose and get bailed out by the rest of us. To save the system from total collapse we poured trillions of dollars into the financial sector. The result? Banks still are refusing to lend. Thirty million Americans are looking for full-time jobs and 49 million are skipping meals including one out of four children. But Wall Street again is reaping record profits and bonuses.
Not only are we richly rewarding those who wrecked our economy, but also, we have to put up with hundreds of fabrications about how the big banks got us here. Here is my biggest, fattest lies list for 2009:
  1. "Government programs for low-income home buyers caused the financial crash." Wall Street defenders were quick to blame the Community Reinvestment Act, which urges banks to loan money in minority communities. In fact, almost none of the CRA loans are sub-prime and the vast majority are doing well, thank you. Blaming government programs deflects us from the real cause: Wall Street's incredibly reckless creation, marketing, selling and trading of "innovative" new securities that supposedly removed the risk from pools of risky debt. It didn't work. Wall Street, not the poor, crashed our economy.
Read more here

Gold has Thousands of Dollars to Go, As Central Bank Manipulation of Its Price Ultimately Fails

Author: John Embry of Sprott Asset Management
The gold market powered its way to a succession of new all-time highs in the wake of India's stunning purchase of 200 tonnes of IMF gold and mounting concern about the fate of the U.S. dollar. There is little doubt that India's actions drew widespread attention to a historic shift in attitude of central banks towards gold. For at least the past 15 years, Western central banks have been flooding the market with massive quantities of gold, primarily by leasing it surreptitiously to their bullion-bank cronies. Ostensibly that portion of their activities, which was transparent (i.e. direct sales), was for reserve diversification. However, the real motive for their behavior was to depress the price of the yellow metal, thereby reducing critical scrutiny of their increasingly reckless monetary policy, ensuring that interest rates remain at low levels and allowing the U.S. dollar to retain its supremacy.
Read more here

Wednesday, December 23, 2009

Ron Paul: Neocons Hoping for an “Incident” to Justify Attacking Iran

Is Ahmadinejad the "Nuke Toting Loony" the Media Portrays Him to Be?

Reading the Washington Post or the New York Times one would automatically draw the conclusion that Iranian President is a nuke toting Israel hating loony, waiting to blow up the world. Reality could not be further from the truth. We encourage our readers to view Dr. Ron Paul's video (enclosed in the post above)where he exposes the neocon strategy to once again manufacture a fake "threat", this time of nuclear armageddon, and take the country down the path of war with Iran. Just as a fake "WMD" threat was manufactured and blindly supported by the U.S. and U.K. media, in the lead up to the Iraq invasion, this time is no different.
History is once again poised to repeat itself but with much more disastrous, if not catastrophic consequences. A war with Iran will be a dangerous escalation that may draw in China, Russia and even India as all these countries have deep entrenched oil and gas interests in Iran, and will not view a western takeover of their economic interests lightly. Not only that, the war may set in the final act for democracy to vanish in America. As we have seen with 9/11 and the Iraq invasion, during times of war a fearful people easily give up their democratic privileges and civil liberties (think the Patriot Act). Coupled with a rapidly vanishing middle class (greatly impoverished due to the massive economic crisis), American society will soon be divided into only two classes: the poor masses governed by a small class of privileged ultra rich elite. Moreover the poor will be so worried about putting food on their table that they will have no strength to fight for "quaint ideas" like democracy and civil liberties. To uphold those you need a vibrant and thriving middle class.
Now we do not make this last point lightly. Off late there have been increasing media reports about "democracy being a "quaint" concept no longer applicable in present times, where our problems are global in nature and require almost a Chinese style dictatorship a.k.a, a world government, to implement the new laws and changes. e.g. the global warming debate which needs a global consensus. (We will address this point in greater detail in another post).
We begin our analysis of Ahmadinejad first by dispelling some often cited Iranian hate rhetoric. Consider the first one: Most Americans have seen on their televisions, Iranian people demonstrating in the streets chanting "Death to Israel", "Death to America".

Understanding the Real History of Iran and Its Culture

Iran's History With the West
Would Iran be in the West's cross-hairs if it did not possess its rich oil resources?

Rick Steves PBS Documentary on Iranian Society and Culture
Given the widespread myths propagated by western media about the Iranian people's hatred of the west, enclosed is a very well done and revealing documentary by Rick Steves that originally aired on PBS. Rick does a brilliant job documenting Iranian society and the country's rich and varied history. After watching the documentary one wonders if the West would have felt the same level of friendliness towards Iran, if Iran had overthrown the democratically elected governments in the U.K. and the U.S.?

Tuesday, December 22, 2009

25 States Have Run Out of Money to Pay Unemployment Benefits

Author: Peter Whoriskey in the Washington Post
The recession's jobless toll is draining unemployment-compensation funds so fast that according to federal projections, 40 state programs will go broke within two years and need $90 billion in loans to keep issuing the benefit checks. The shortfalls are putting pressure on governments to either raise taxes or shrink the aid payments.
Debates over the state benefit programs have erupted in South Carolina, Nevada, Kansas, Vermont and Indiana. And the budget gaps are expected to spread and become more acute in the coming year, compelling legislators in many states to reconsider their operations.
Currently, 25 states have run out of unemployment money and have borrowed $24 billion from the federal government to cover the gaps. By 2011, according to Department of Labor estimates, 40 state funds will have been emptied by the jobless tsunami. "There's immense pressure, and it's got to be faced," said Indiana state Rep. David Niezgodski (D), a sponsor of a bill that addressed the gaps in Indiana's unemployment program. "Our system was absolutely broke."
Read more here

Global Paradigm Shift Underway - The Three Bangs of Global Currency Collapse

Enclosed is Jim Willie's December Hat Trick Newsletter, where he discusses the geopolitics around the timing of the Dubai default, the present dollar rally, the impending collapse of the European Union and more! In his slightly provocative language he puts across some very interesting points.
Jim Willie on the Full Circle of Government Debt Default
The continuation of the bank dominoes took 14 months, but it occurred. The initial destructive impact craters were carved in the United States and England. To be sure, major damage was done to assets in Spain and Greece and other smaller nations in the last year, but their banks had remained insulated. The discredit and death of the central bank franchise system showed first clear evidence in September 2008 on Wall Street. The unique mysterious aspect of banking systems is how they cannot be rebuilt once they turn insolvent. They rot in place, a process accelerated by rotten ethical values, euphemistically called moral hazard. To be sure, much so-called money flows through the dead rotten parts, but nothing becomes resuscitated except balance sheets. And besides, those balance sheets only look better due to accounting rules changes that deviate from mark to market (reality). The distortions magnify and turn cancerous. See the outsized mortgage bonds with no value at all. See the foreclosed homes withheld from the market for sale in bloated bank inventory. See the big bank balance sheets with large entries of idle money sitting in the US Federal Reserve.
Focus on the bank impact craters, not the assets within those bank portfolios tied to bonds and properties. The US housing market turned down, and the mortgage finance bubble burst. The primary victims were Lehman Brothers, Fannie Mae, and AIG, which all died. Fannie and AIG remain in the Intensive Care located south of the Black Hole down yonder under the USGovt tent. To say they have not died is an exercise of pure denial, since they continue to generate grandiose losses, as most rotting dead bodies do. The process is called advanced cadaver decomposition, accelerated by the wondrous financial engineering acid reflux. The tales of destruction in dead banks from the initial bang extended to the AngloSphere as Northern Rock, Royal Bank of Scotland, and HBOS effectively died. It remains to be seen if the venerable Lloyds is an empty shell prone and a cave-in also. Nevermind the details of the many death spirals. Focus on the dominoes and their sequential steps in magnificent wreckage. Marvel at the total lack of recognition by the official spokesmen for financial reality at the USDept Treasury, Wall Street analysts, London analysts, and European analysts. They never comment on sovereign debt insurance or default. Both are covered in the December Hat Trick Letter.
Read more here

Why China Will Not Let the Yuan Appreciate

In one of our earlier posts we had presented the argument, why a rapid appreciation in the Chinese yuan is actually detrimental for the United States. While a rising yuan would no doubt hurt China by making its exports more expensive, it would hurt the U.S. more by curtailing China's current account surplus of U.S. dollars (as exports decline). With less dollars to reinvest in U.S. Treasuries, it will complicate Bernanke's job tremendously as the U.S. tries to raise ~$2 trillion in new debt in 2010. Coupled with a looming supply of short term debt to rollover, Bernanke will be forced to raise rates sooner than he had planned jeopardising the nascent economic recovery underway. Not to mention the huge additional cost to the nation in the form of higher interest payments on the $12 (soon to be $14) trillion of treasuries.
Today Andy Xie who was previously the chief economist for Asia-Pacific at Morgan Stanley, presented some more reasons why China will not, and should not revalue the yuan upwards.

Author: Andy Xie in China International Business Magazine
US President Barack Obama's visit to China has inspired another round of pressuring China to revalue the yuan. Those in the west have learned to play the Chinese game: shouldn't China give Obama face by revaluing its currency higher? When that ploy doesn't work, they can accuse China of stealing jobs from other poor, developing countries.
The stick and carrot approach will build momentum long after Obama finishes his visit. In anticipation, speculators have put up their positions in the non-deliverable forwards market. The gap between the forward and spot price of the yuan has inspired arbitrage: dollars have been converted into yuan in the underground money market. The resulting rise in China's foreign exchange reserves adds to the case for revaluation. Rhetorical pressure becomes market pressure. It looks like a self-fulfilling prophecy.
Read more here.

Monday, December 21, 2009

U.S. Government Policies Setting Up Grounds for Widespread Social Unrest

Not only is reckless spending of the U.S. Government careening out of control, their policy choices are setting up fertile grounds for an eventual citizens revolt. Consider this, on Saturday the U.S. Congress passed a $636 billion defense spending bill for 2010. Unlike the badly needed healthcare bill which has got mired in political bickering over the need to maintain "fiscal discipline" the defense spending bill passed with overwhelming support from both parties. Moreover the $626 billion cover only 60% of the ~$1 trillion in projected defense spending for 2010. According to a report by Joe Kishore:
[While] the bill includes some $128 billion for the wars in Iraq and Afghanistan, it does not fully fund the Obama administration’s escalation in Afghanistan, making likely further appropriations for war spending next year. The deployment of 30,000 additional US troops is expected to cost $35 to $40 billion a year. All told, US military spending in 2010 will be close to $700 billion. If one adds the hundreds of billions of dollars in military-related spending included in the budgets of other departments, the total is as much as $1 trillion.
So rather than cut discretionary defense spending (which the U.S. can afford since it is the world's sole military superpower) our Congressional brethren have begun identifying essential public programs to make the necessary spending cuts. As Joe Kishore points out in the same article:
Meanwhile, states, cities and school districts throughout the country are imposing cuts to balance budget deficits that add up to a small fraction of the military spending bill. School districts, in particular, are planning crippling cuts in preparation for the second half of the school year, beginning in January. Below are some examples of measures recently pushed through or planned:
• $550 million in K-12 education cuts in Michigan, leading school districts to lay off staff, close schools and eliminate programs.
• $300 million in cuts to K-12 education in Indiana. This amounts to an across-the-board 3-percent cut in the state’s education budget.
• $101.5 million less for public schools in South Carolina, adding to cuts of $85 million in September, along with $38.3 million in Medicaid cuts.
• $110 million in cuts to the 127,000-student Prince George County School District in Maryland, including 490 layoffs, an increase in class sizes, and teacher furloughs.
• $750 million withheld from local governments by New York Governor David Paterson, including funding cuts of between 10 percent and 30 percent for school districts.
• Plans for up to $470 million in cuts to public education in Los Angeles, California, including up to 8,000 layoffs.
The combined budget deficits for all 50 states this year was about $180 billion, less than one third of the military appropriation passed by the House.
Congress can find $1 Trillion to spend on defense for just 1 YEAR, but has no money for essential services like education? What sense does this make? And according to Joe Kishore, it does not end there, Congress is targeting ever larger spending cuts:
After authorizing the military spending by a wide margin, both the Democrats and Republicans made clear that they are planning for a year of fiscal austerity, in which non-military spending programs will be targeted. Obama is set to launch his campaign for cost-cutting in his State of the Union speech in January. One measure being considered to force through cost cuts is the establishment of an independent commission, which, according to the Times, would have “the power to recommend spending cuts and tax increases for congressional approval.”
What this "non defense" spending cuts really translates into is that, by the end of next year the panel will recommend cuts to Medicare and Social Security. Both Bernanke and Greenspan have begun to lay the groundwork for the panel by beginning to voice their "concerns" over rising Medicare and Social Security liabilities (for the first time). The rhetoric will only gain momentum going forward. Additionally by setting up an "independent" panel Democrats hope to distance themselves from a political hot potato.
Now admittedly the Medicare and Social Security liabilities are truly gargantuan (total unfunded liabilities add up to ~$91 trillion), and will most definitely need to be cut. But the timing for this could not be more inopportune. To top it off Congress has pushed our fiscal situation over the cliff, by allowing uncontrollable trillions to be spent on defense and bank bailouts. Fiscal austerity for the general public while bankers, healthcare companies and defense contractors make out like bandits. For a citizenry facing a extreme joblessness, poverty and hunger, this could very well prove to be the last salvo that could unleash widespread social unrest in the United States. No wonder lawmakers have temporarily reauthorized portions of the anti democratic Patriot Act.

Marc Faber: Forget the Economy Bernanke Will Drive Anything Off a Cliff

Enclosed is a great interview by Marc Faber where he highlights several new trends that will unfold in the future. Here are some points he touches on:
  1. American printing press to steam roll ahead. Longer term the dollar will continue to go down and interest rates will go up.
  2. Widening divide between corporate elite and working class in America that will eventually lead to war.
  3. Trend in America is to move towards a police state.
  4. Bernanke will take anything off a cliff - a taxi, a Mcdonald's stand, the Federal Reserve, anything.
  5. Bernanke remains completely ignorant of the causes of the Great Depression.
  6. Hyper inflation looms as the U.S. government tries to print out of mounting liabilities including social security and medicare.
  7. For Americans with sizeable assets it is advisable to move them abroad.
Listen to his full interview on King World News here

Military Stretched so Thin that a General is Court Martialing Pregnant Soldiers

BBC News
A US Army general in northern Iraq has defended his decision to add pregnancy to the list of reasons a soldier under his command could face court martial. It is current army policy to send pregnant soldiers home, but Maj Gen Anthony Cucolo told the BBC he was losing people with critical skills. That was why the added deterrent of a possible court martial was needed, he said. The new policy applies both to female and male soldiers, even if married. It is the first time the US Army has made pregnancy a punishable offence.
Read more here

Sunday, December 20, 2009

China: The World Does Not Have Money to Buy US Treasuries

China is sounding the alarm over its growing inability and unwillingness to finance the rapidly expanding U.S. deficits. A report in the Shanghai Daily quoted remarks by a top Chinese official:
It is getting harder for governments to buy United States Treasuries because the US's shrinking current-account gap is reducing supply of dollars overseas, a Chinese central bank official said yesterday. The comments by Zhu Min, deputy governor of the People's Bank of China, referred to the overall situation globally, not specifically to China, the biggest foreign holder of US government bonds. Chinese officials generally are very careful about commenting on the dollar and Treasuries, given that so much of its US$2.3 trillion reserves are tied to their value, and markets always watch any such comments closely for signs of any shift in how it manages its assets.
China's State Administration of Foreign Exchange reaffirmed this month that the dollar stands secure as the anchor of the currency reserves it manages, even as the country seeks to diversify its investments. In a discussion on the global role of the dollar, Zhu told an academic audience that it was inevitable that the dollar would continue to fall in value because Washington continued to issue more Treasuries to finance its deficit spending. He then addressed where demand for that debt would come from. "The United States cannot force foreign governments to increase their holdings of Treasuries," Zhu said, according to an audio recording of his remarks. "Double the holdings? It is definitely impossible."
"The US current account deficit is falling as residents' savings increase, so its trade turnover is falling, which means the US is supplying fewer dollars to the rest of the world," he added. "The world does not have so much money to buy more US Treasuries."

Spitzer Demands Government Release AIG Emails and Key Internal Documents

Author: Eliot Spitzer, Frank Partnoy and William Black in the New York Times
We end this extraordinary financial year with news that the Treasury is in discussions with American International Group about selling the taxpayers’ 80 percent ownership stake in that company. The government recently permitted several banks to break free of its potential oversight by repaying loans made during the rescue. But with respect to A.I.G., the Treasury should not move so fast. There is one job left to do.
A.I.G. was at the center of the web of bad business judgments, opaque financial derivatives, failed economics and questionable political relationships that set off the economic cataclysm of the past two years. When A.I.G.’s financial products division collapsed — ultimately requiring a federal bailout of $180 billion — those who had been prospering from A.I.G.’s schemes scurried for taxpayer cover. Yet, more than a year after the rescue began, crucial questions remain unanswered. Who knew what, and when? Who benefited, and by exactly how much? Would A.I.G.’s counterparties have failed without taxpayer support?
Read more here

Mercenaries and Assassins: The Real Face of Obama’s “Good War”

Author: Bill Van Auken
Reports that mercenaries employed by the notorious Blackwater-Xe military contracting firm participated in CIA assassinations in Iraq and Afghanistan have further exposed the real character of so-called “good war” that is being escalated by the Obama administration.
Citing former employees of the firm and US intelligence agents, the New York Times reported Friday that Blackwater gunmen, ostensibly contracted as security guards, “participated in some of the CIA’s most sensitive activities—clandestine raids with agency officers against people suspected of being insurgents in Iraq and Afghanistan and the transporting of detainees.”
These “snatch and grab” operations—many of them involving killings of individuals suspected of participating in the resistance to US occupation—“occurred on an almost nightly basis during the height of the Iraqi insurgency from 2004 to 2006, with Blackwater employees playing central roles,” the Times reports.
Both the Times and the Washington Post quoted unnamed intelligence officials and ex-Blackwater operatives as asserting that the involvement of the company’s mercenaries in assassinations and abductions was not planned. Rather, they claimed, it was a matter of the division of labor between CIA operatives and private guards supposedly hired for the purpose of protecting them becoming “blurred.”
Read more here

Saturday, December 19, 2009

The Origins Of World War III: An Imperial Strategy for a New World Order

We present below a three part essay by Andrew Gavin Marshall, a research associate with the Center For Research on Globalization. The essay although long, makes for some intriguing and thoughtful weekend reading and reiterates some of the points that we have made in our earlier reports, mainly that the global wars being fought by America have their roots in garnering assets and markets for American corporations. Our brave young men and women in the military are not dying to protect the homeland or our freedom and liberties, but are being used as pawns to ensure the global dominance of America's corporate elite at ANY cost.
If one were to examine the world through the eyes of America's corporate overlords, then the "REAL" threat to America arises not from some puny terrorists holed up in Afghanistan or Pakistan, but 1) from the loss of unlimited cheap funding, as the dollar loses reserve status and 2) increased competition for resources from China, Russia and India.
All this corporate adventurism comes at a huge cost to both Americans and the rest of the world. Americans lose out as the costly wars divert precious resources away from domestic needs such as jobs, healthcare and education. More recently Bernanke fired the first arrow (in his confirmation hearings) at cutting social security and medicare entitlements  - this at a time when Americans need these safety nets the most. In addition the eventual loss of the dollar's reserve status coupled with Bernanke's printing press, will ultimately unleash the horrendous forces of rampant inflation and higher taxes, which will push down the standard of living in America. The rest of the world suffers horribly as well, as millions of people lose their lives and livelihood, countless children are orphaned and generations of people pushed into a lifetime of poverty as their countries struggle to stay afloat. 
So is this corporate military adventurism that serves to enrich only the top 1% elite of this country really worth it? 

PART I  (For Parts II & III follow the links at the end of this post)

In the face of total global economic collapse, the prospects of a massive international war are increasing. Historically, periods of imperial decline and economic crisis are marked by increased international violence and war. The decline of the great European empires was marked by World War I and World War II, with the Great Depression taking place in the intermediary period.
Currently, the world is witnessing the decline of the American empire, itself a product born out of World War II. As the post-war imperial hegemon, America ran the international monetary system and reigned as champion and arbitrator of the global political economy.
To manage the global political economy, the US has created the single largest and most powerful military force in world history. Constant control over the global economy requires constant military presence and action.
Now that both the American empire and global political economy are in decline and collapse, the prospect of a violent end to the American imperial age is drastically increasing.
This essay is broken into three separate parts. The first part covers US-NATO geopolitical strategy since the end of the Cold War, at the beginning of the New World Order, outlining the western imperial strategy that led to the war in Yugoslavia and the “War on Terror.” Part 2 analyzes the nature of “soft revolutions” or “colour revolutions” in US imperial strategy, focusing on establishing hegemony over Eastern Europe and Central Asia. Part 3 analyzes the nature of the imperial strategy to construct a New World Order, focusing on the increasing conflicts in Afghanistan, Pakistan, Iran, Latin America, Eastern Europe and Africa; and the potential these conflicts have for starting a new world war with China and Russia.

Friday, December 18, 2009

Gold, Commodity & Equity Markets in a Consolidation Phase

Today Gold broke its 50-day moving average (blue line in Chart 1), that had been its strong unbreached support since September 2009. With the dollar rallying (Chart 2), most of the commodity complex (including gold) has traded down as the carry trade unwound and managers booked profits at year end. At the present time we are waiting to see how far down gold trades. We do expect it to find strong support around India's purchase price of ~$1045/oz. If it breaches this then it will go on to test its 200 day moving average of ~$995, although we feel that there is a smaller likelihood of that happening.
If we were to examine the behavior of gold earlier this year, from April to September gold more or less traded sideways (see highlighted area in Chart 1), oscillating around its 50-day moving average (blue line). Once gold finds its level, we expect a similar sideways trading pattern to emerge moving into the new year. Both the equity and commodity markets are entering this consolidation phase where the market moves sideways oscillating without any clear direction in a range bound manner - as they wait to discern how economic and money printing news will play out in 2010.   
As before, we would like to reiterate to our readers that in the long term, the trend for the USD is still pointing sharply down and gold to go up. In the short run deviances can and do happen. And in all honesty we have been waiting for sometime for gold to trade down, so that we could add to our physical gold position. With a purchase spread of $70-$100/oz a cheaper entry point is highly desirable.
We conclude with some words of wisdom from Jim Sinclair: "If you can stand the heat in the gold kitchen it will protect you from the madness of monetary mismanagement, rulership of the banksters and capitulation of FASB. The alternative is to buy the dollar and get a spiritual experience without the need for a guru in the not too distant future".
Chart 1: Gold Prices

Chart 2: U.S. Dollar

Olbermann: Insurance Companies are the Real Death Pannels in America

Excellent rant by Olbermann on everything that is wrong with our healthcare and political system today.

Rich Folks Hitting the Mortgage Default Iceberg at "Twice" the National Average

Bloomberg is reporting that homeowners with mortgages greater than $1 million are defaulting at almost twice the national average. With people's income having taken a huge hit, it is getting harder and harder for them to continue servicing a large mortgage. According to the report:
Payments on about 12% of mortgages exceeding $1 million were 90 days or more overdue in September, compared with 6.3% on loans less than $250,000 and 7.4% on all U.S. mortgages, according to data from First American CoreLogic Inc. The rate for mortgages above $1 million was 4.7% a year earlier. “The rich aren’t as rich as they used to be,” said Alex Rodriguez, a Miami real estate agent with JM Group USA Inc. People have reached the point where they can’t afford the carrying expenses of a $2 million home.”
There are 114,000 home loans of more than $1 million, according to First American. About a quarter of all mortgaged homes in the U.S. have loan balances bigger than their current value. The number of U.S. households with a net worth of more than $1 million, not counting primary residences, fell to a five-year low of 6.7 million last year from a record 9.2 million in 2007, according to Spectrem Group, a Chicago-based consulting firm.
[And while Wall Street banks are getting ready to pay out record bonuses], year-end bonuses for people at hedge funds, asset- management firms and insurance companies probably will drop an average 20 percent, the firm said. “There’s a lot of distress,” said Tracy McLaughlin, co- owner of Morgan Lane Real Estate in Ross, California. “You have hedge-fund guys whose funds evaporated and a year-and-a-half later they’re still not working.”
“The reason the low end stopped falling is because the government stepped in with affordable loans,” said Scott Simon, managing director at PIMCO., a firm that runs the world’s largest bond fund. “There is no political will to bail out a million-dollar house.”
[And although the Fed has lowered 30-year mortage rates to 4.71% by purchasing ~$1.25 trillion of Fannie and Freddie backed conforming mortgages], the Fed purchases haven’t affected the high end of the market because they exclude so-called jumbo loans. Mortgages above the $729,750 limit set by Congress for the nation’s highest-priced markets cost almost 1 percentage point more than conforming loans, according to Keith Gumbinger, vice president at HSH Associates, a mortgage-data company in Pompton Plains, New Jersey. “There is no refinance market for you if you are underwater and outside the Fannie and Freddie framework,” Gumbinger said. “High-end neighborhoods are all suffering from the same problems of diminished income at a time when there is little equity to work with.”
Luxury home prices probably will drop another 5 percent before reaching a bottom in September 2010, according to Sam Khater, senior economist at First American.
Those declines may lead to losses on jumbo mortgages that dwarf the “haircut,” or discount to full value, that banks take on short sales or foreclosures of moderately priced homes, said Rodriguez, the agent with JM Group in Miami. “When the bank takes a loss on a $3 million property it’s a lot bigger than the loss on a home with a $150,000 mortgage,” Rodriquez said.
The banking and housing crisis is far from over and no amount of accounting shenanigans will be able to cover it up. This view was loudly expressed by investors in their rejection of the Government's attempt at pulling out of Citigroup.

Commercial Real Estate Jingle Mail

Author: The Golden Truth Blog
'Tis that time of the season. As per the linked article from LINK, Morgan Stanley has sent an early Christmas present to lenders who financed five buildings owned by Morgan Stanley in San Francisco. Morgan Stanley has opted to hand the keys and building titles over to these lucky banks and investors (no doubt there's public and private pension money in the debt structure).
We've seen some bullish declarations about the housing and commercial real estate market lately. The most recent coming from Bill Ackman, who runs Pershing Square Capital, a hedge fund with a successful track record. Recently Ackman gave a presentation to investors which made some very bullish projections for commercial real estate. In that presentation he has some very questionable assumptions about the ongoing "strength" of the current economy and for economic growth in 2010. He characterizes the current economy as being "recovered from recession" and makes some incredulous assumptions for growth in the retail industry for next year.
Read more here

Kucinich: Class War is Over, Working People Lost

Author: Sahil Kapur in the raw story
Reflecting on the growing divide between Wall Street and Main Street, Rep. Dennis Kucinich (D-OH) on Wednesday offered a powerful critique on the state of the economy in an open committee hearing. "The class warfare is over -- we lost," Kucinich said before the Committee on Oversight and Government Reform. "I want to make that announcement today. Working people lost. The middle class lost."
The harrowing comments from Kucinich, who is Chairman of the Domestic Policy Subcommittee, come amidst a national unemployment rate of 10 percent, one year and several months after the economic collapse of 2008 has marred the livelihoods of many.
"Don't tell me about class warfare," he continued. "Come to my neighborhoods in Cleveland. I will show you class warfare. I’ll show you hollowed out areas. I’ll show you businesses that went down because they don’t have access to capital. And on Wall Street it is fat city. Don’t tell me about class warfare."
Read more here

Thursday, December 17, 2009

Gulf States Announce Launch of New Currency, with Phase I Beginning NEXT YEAR; Direct Threat to Dollar's Hegemony

The London Telegraph is reporting that the Gulf Petro States have agreed to launch a single currency which will be modelled after the Euro. Saudi Arabia, Kuwait and Quatar will launch the first phase next year by creating a Gulf Monetary Council that will evolve into an organization similar to the European Central Bank. According to the Telegraph:
The Gulf monetary union pact has come into effect,” said Kuwait’s finance minister, Mustafa al-Shamali, speaking at a Gulf Co-operation Council (GCC) summit in Kuwait. The move will give the hyper-rich club of oil exporters a petro-currency of their own, greatly increasing their influence in the global exchange and capital markets and potentially displacing the US dollar as the pricing currency for oil contracts. Between them they amount to regional superpower with a GDP of $1.2 trillion (£739bn), some 40pc of the world’s proven oil reserves, and financial clout equal to that of China.
The Gulf states remain divided over the wisdom of anchoring their economies to the US dollar. The Gulf currency – dubbed “Gulfo” – is likely to track a global exchange basket and may ultimately float as a regional reserve currency in its own right. “The US dollar has failed. We need to delink,” said Nahed Taher, chief executive of Bahrain’s Gulf One Investment Bank.
Our readers will recall that it was just a few months ago in October, that Robert Fisk of the Independent had first revealed that the Persian Gulf countries were planning to stop pricing oil in dollars by 2018 and start using a basket of currencies. At that time the news was vehemently denied by Saudi Arabia and Kuwait officials. Well so much for that, because just two months hence they have announced the very same plans to the world. The days of the U.S. world supremacy through the dollar are fast drawing to a close.

TIME Magazine Insults Our Intelligence by Naming Bernanke Person of The Year

In an amateurishly written prose, TIME magazine eulogized Bernanke's term as Fed Chairman, and named him Person of the Year. Their piece is so badly written that we wondered, if perhaps a bunch of drunken interns got together and decided on Bernanke. In any case, TIME magazine is no more relevant today that the Nobel Peace prize. Both have permanently relegated themselves to the dustbin, due to their poor choices and bad judgement.
We post below a well-written rebuttal to TIME magazine by the National Inflation Association titled " NIA Names Bernanke Villain of the Year 2009".
The National Inflation Association today named Federal Reserve Chairman Ben Bernanke 'Villain of the Year 2009'. Although the mainstream media is widely praising Bernanke for preventing the next Great Depression, all Bernanke has done is create unprecedented amounts of inflation in unprecedented ways. When it costs $20 for a gallon of milk in a few years, Americans will have nobody to thank more than Bernanke.
While Bernanke believes the artificial excesses of the past decade to be normality, NIA believes normality would be going through a much needed recession in order to correct the imbalances that Bernanke made worse in 2009. The U.S. economy is riding high on its last dose of stimulus before the entire financial system overdoses and collapses. Bernanke has pushed the inevitable recession down the road while setting up the upcoming currency crisis.
The Great Depression of the 1930s came as a direct result of the Federal Reserve's creation in 1913 and their rapid increase in the money supply during the 1920s that led to an unsustainable credit-driven boom known as the "roaring twenties". This artificial boom needed to be corrected with a recession, but by the government interfering in the free-market, they increased the duration of the recession and turned it into the Great Depression.
Read more here.