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September 29, 2008

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Links to:  ALMANAC  |   |  EARTH MONITOR

(9-22-08]  The BARFF PLAN FOR SOLVING THE BANKING CRISIS

People are waking up.....and rejecting the idea of a massive power grab which confers dictatorial powers to Paulson and Goldman-Sachs which are patentably unconstitutional (not that anybody seems to give a damn about constitutional law anymore).

Okay, wise guy, so what are we going to do?

Whadda ya mean WE, crazy white New York Bubble-head Man?

Here is how WE THE PEOPLE can simply solve the financial crisis for YOU banksters:

1. WE stand pat while YOU develop much greater humility.

2. YOU have zero credibility. NOBODY is going to trust YOU with anything.  Anybody who suggests WE do is a conspirator to a massive fraud (the so-called Paulson Plan for Economic Dictatorship).

3. WE form a Banker's Rescue From Fraud (BARFF) corporation. WE completely own it. WE loan it $3 trillion in U.S. Treasury Notes. Using genuine constitutional law, the U.S. Treasury prints the notes and deposits them in the BARFF account.

4. BARFF is staffed and managed by people who have never been employed in New York or Washington DC and have never worked for companies which own the Federal Reserve System, or their subsidiaries. There are a great many professionals in
universities, venture capital companies, mutual investment associations, local banks, and others which could competently with great objectivity manage BARFF without "credibility compromise".

5. BARFF buys any questionable mortgage securities from any Pension Funds, Mutual Funds, Banks, Brokerages, or other investment institutions at a price mutually agreed upon, on the proviso that (1) the owners and principal officers of such organizations forego salaries and other forms of profit distribution for the next 18 months, and (2) the organization provides a relative equity stake, in the form of guaranteed preferred stock, in the organization equal to 50% of
the total value conveyed to the corporation by BARFF, and (3) that the
organizations agree to engage in openly-stated, traditional lending and brokerage practices such as were common during the era of the 1950's-1970's..

6. BARFF spends the next ten years sorting out the mortgages and properties and liquidating all, hopefully recovering the values, eventually returning to WE THE PEOPLE the equivalent of the Treasury Notes which was loaned to BARFF in the first place. Any excess funds will be distributed in equal amounts to all U.S.
citizens with U.S. Passports, State Driver's licenses or equivalent State ID cards.

7. The percentages described above can be adjusted upon the near-consensus recommendation of banking experts who are not employed  by companies which own the Federal Reserve System, or their subsidiaries, nor any of the Fortune 100 companies.

8. With a name like BARFF, no one will attempt to continue it into perpetuity.

That will do it. The problem of course is that this systematically excludes the vampires and eliminates all shysterism, making the shell games of the Great Swindle mostly impossible. They will howl and scream if anyone dares to suggests these ideas. They will curse it as socialism, but actually it is free market capitalism applied in a consistent, equitable, logical manner between willing partners. This one happens to cut WE into the deal and excludes the crooks who created the problem.

May I recommend you pass these ideas on to Congress as your own recommendations along with a suitable level of outrage at Paulson's grab it and run program?
 

(9-15-08]  The Great Goldman-Sachs Swindle

This Morning....

London Bridge Is Falling Down, Falling Down,

New York Bankers Falling Down, Falling Down

So I Drove My Chevy To The Levy And The Chevy Was Dry,

Bye Bye, Miss American Pie.

I say, Drove My Chevy To The Levy And The Levy Was Dry.

For the first time since the convention speeches, I turned on the TV to find out how Ike had done on the Texan Coast....

Oh what an act of desperation, but that kind of thing the Warcast Media actually does fairly well.

Other than that I have admit that I am weary of watching them and try not to...

the Levy is also nearly dry there most of the time...

Oh well who cares,  I am so much better informed now in the Desert far far away from their lunatic buzz. 

What a Full Moon!  Events and things are flowing in vast billowing confusions, flapping hourly in the stream of time. As I watched TV, I was greatly impressed about how poorly people have built during the past 40 years.  Very little of the devastation on buildings was necessary.  It would not exist had people built with the foresight for the perfectly obvious inevitability which elementary science could easily predict with 100% certainty even 40 years ago. 

IKE certainly will be quickly forgotten, even as Katrina has been forgotten. Oh, they will give lip service for decades as they wring their hands.  But they still build the same kinda crap in the same stupid places which the major hurricanes of the past ten years have taught over and over and over and over and over and over again...are...stupid...and in the wrong places.

There is no problem here, only a clear and consistent message from Gaia.  The Gulf shores are not a place for dense urban concentrations of people, not now, not never.  They are especially doomed during the duration of the Global Warming Trend.  All of them.  Yes, all of them.

You certainly have to admire the tenacity of the Americans in ignoring the perfectly obvious.  Such admirable traits of persistence and will power.  Such a pity intelligence is not equal to the other traits.

This leads them to do the same stupid things with wars and invasions.  Over and over and over again.  Calamitous devastation the inevitable, predictable, unavoidable consequence.  Just as you cannot maintain a city on shifting sand, you cannot maintain a nation on shitty shifting wars.

I could not avoid also watching a major piece of the financial system undergoing slow-motion collapse.  As Lehman dissolves and the Bull of Bulls, the 20th Century King of the Market, Merill Lynch inc, the veritable Wall Street On Steroids, The Coke Bar of America, discretely disappears into the folds of  the Bank of America, I am getting the feeling of watching a long drawn-out slow motion version of the demolitions of the Twin Towers. 

You know which ones, don't you now? The ones which fell down on 9-11. Look smartly now.  Stop 9-11...Stop 9-15.... Maybe your stop is coming up soon, several more to fall, they all are rumoring loudly.

As you know... much else fell down today as well.  Gold UP, which means dollar down and  most other equities are falling, not just stock.  Deflation = Depression.  Jobs gone.  All debt squeezed out.  Nobody has a real dime.  Buddy, can you spare a dime? (Depression Era slogan).  Get the picture?

Maybe your Stop was Hewlett Packard.  It announced today it was closing out 35,000 employees.

Get the picture?

THIRTY FIVE THOUSAND PEOPLE BEING CLOSED OUT OF JOBS.

HOLY SMOKOLA!

That is the closing out of half an industry.  That company is  an exhausted shell. And you know, don't you, that those jobs are never coming back, not to that company in this country.

The punditry class will have great and serious conversations about why. I can save you a lot of time.  It was totally raped and sucked dry by Globalist vampires.  It paid enormous salaries to grifters no more astute nor capable than Palin. Oh, those Harvard educated Masters of Business can serve up great piles of it. But it all stinks the same in the end.

All this slow motion falling moved Fortune Magazine and Larry King to have panel discussions tonight on CNN about the state of the economy.  Two panels of pundits knew not much more than that the Housing Credit Bubble has broken, lots of blame to go around, gotta find a fix, fix, who's got the fix?  Andy Serwer, editor of Fortune Magazine was not much better, could not even hint at the Imperialism which masquerades under the Globalist charade while bankrupting the entire nation for completely lunatic fantasies of endless militarism, but at least he got the scale right....he claimed that this Falling Down today is the beginning of a phenomenon which will overwhelm all else, especially American politics.

Indeed.

Larry King's brief reviews of the messages of the McCain and Obama campaigns were usefully disastrous.  It was clear they have not a clue.   They neither understand the collapse nor comprehend a solution.  Most of the punditry wrung their hands and suggested that the candidates need to find substance.  They suggested they needed to pull together the top economic advisors and managers of Christmas Past and roll them for answers. I groaned a great groan and was getting hostile about watching TV again.

But I also listened in amazement to CNN's pundits and assorted announcers about the State Of Truth.  For the first time ever, they are stuttering, coughing, even choking over the lies of the McCain campaign. They are also nervously hemming and hawing about how the Obama campaign twists goofy little points to absurdity.  I believe Anderson is fixing to twitch into a major vomit.  Shouldn't be long now.

Wonderful, puking greatly is the best way to feel better again. It beats all medicine.  Won't they be surprised when they find bits and pieces of the New World Order in their puke?

May God speed their puking.  As all this flaps in the stream of time around me this Full Moon, another historical first was made, surely it is a sign from the heavens. Karl Rove, damn him to hell, was spotted standing in public admitting to all comers that McCain's campaign is over the top and it needs to stop lying.

Yep, THAT Karl Rove. Yep, that's what he was saying.

Yep, witnessing lying.

I laughed and laughed and laughed and laughed.

It must be Mercury | Jupiter, the alignment of benevolence with the messenger. I don't think that will happen again, but who knows, maybe Karl met somebody on the road to Damascus.

All this leaves analysts like me in a total tizzy.  Obama's campaign has been ruined by a mentality of professional mendacity and  manipulation to duck, dodge, and weave away from real (controversial) stuff.  And now, almost supremely hilarious, McCain's campaign is being ruined by the same mentality which has become so loosy-goosey it cannot keep track of its lies and what it is saying from one day to the next.  Is the question before us now, will Obama's avoidance lose the election, or will McCain's incompetence in remembering how to lie cost him a victory.

Hard to call at this point.  How weird it really all is. Sanity dangling on the end of a thin thread.

I also reviewed with half an eye some of the dozens of economy websites which offer punditry, forecasts, and predictions galore in a variety of web newsletters.  My, what a dour group of sour faces and cheesy shit-eating opportunists.

They are singing, Bye Bye Miss American Pie.  You can barely drive your chevy to the levy, but why bother, its gonna be dry.

So belly up to the Gold Bar and buy a bullion or two.

Bears rule every where now.  What was a nascent growth industry four years ago with few offerings is now the dominant form of belief.  Get your pencil out and a note pad.  You have a couple of numbers to write down.  Get this one, more or less a top flight pick:  housing will ALL FALL DOWN ANOTHER WHOPPING 30% in most areas.  Stocks, down probably at least another 10%, that's another Dow 1000 points during the next few weeks. Beyond that, who knows how to whistle Dixie?

Going tits up, Washington Mutual,  AIG during the next  few days.  Deep rumors indicate these are just the next wave...that really,

GET THIS,

nobody knows where the bottom is in the financial market nor how many companies will have to dissolve.  All the numbers at this point are airy fairy huffnpuff.

The dour faces mostly agree, you can kiss the "change" kewpy dolls good bye, we are talking major catastropic transformation.   We are watching rows of dominos at the end of a long period of Empire building.  The clown prince of this age, George Himself, fumbled a great fubar, knocked a couple over, now they are all going down.  A vast slow motion rumble into oblivion.

As I write here in the Desert Night far removed from the hurricanes of humanity, the stock markets are noisily collapsing in Asia responding to all these tidings and much much more. Amidst the din of lies and tall tales, greed and over reach,  fear for fear's sake, has the last straw fallen to finally break the back of confidence in the Globalist world?

Maybe. And maybe not quite yet.  Stay tuned. The veil is dissolving away in front us hourly.  We are sure to know more soon. In the meanwhile let me quote from the Web-Bots.  (Half Past Human)

PREDICTION:

 
"The Web Bots see September 22-27, 2008 as precursor dates to the main turning point date of October 7, 2008.

Closely watch events during September 29-27, 2008 for hints as to what to expect on October 7, 2008. Cliff said whenever "it" happens, and whatever "it" turns out to be, "it" will be a date in history you remember like 9/11, we will remember 10/7."

MWM:  During this time the Moon is betwixt orbital points, loosing energy while coming off an Extreme Northern Declination in a middling Perigee.  This will be most potent Sept. 22.  The cosmic frame provides Mercury | Jupiter alignment moving towards Mercury | Earth alignment on October 7. Major solar flares are a possibility but not especially probable. The start of Solar Cycle 24 in a spectacular way is also possible but not especially.  Most likely from the cosmic frame is a round of quakes and tectonic movements around about September 21 and 22 (The equinox) during the Lunar Perigee as the Earth begins to pivot the orientation of the North Spin Axis back away from the Sun.  The Moon in the North suggests the Northern Arc of the Pacific Rim would be the most likely zone of a major event.  Perhaps other forecasters on the Iway are discussing these things, materially or intuitively, thus giving rise to detection by the Web Bots.

"The Web Bots foresee that October 7, 2008 to February 19, 2008 will be filled with emotional intensity, and the length of the release period will be extraordinary. The Web Bots have never picked up any event lasting this long. In comparison, 9/11 length lasted about 10 days. This event will be four months of high emotion."

MWM: Three months of strong syzygies will commence in November, the strongest at the Full Moon on December 12, with January also very strong.  There will be major surges of both seismic and volcanic activity during these windows, as is usually the case.  These Lunar syzygies are well integrated with the Earth's closest approach to the Sun, Perihelion, which also usually induces an upsurge in both quakes and volcanic eruptions, thus we can predict from the combo of Lunar and Solar influences with considerable confidence that November - January will be full of news about natural disasters and events.   These may provide the basis of the Web Bot predictions. Some people may think this is another rumor of war.  Who can say, but I will emphatically tell you, this is not within the typical timing of the Cosmic Frame.  This is not a time when humans create wars.  They are too depressed and nervous from the previous cycles of fear, violence, and failure. But this could connect with the economy.

"The Web Bots foresee consumer society collapsing by mid November 2008."

MWM: Ummm, I hate to say anything but this is already pretty obviously happening in slow motion and already now in greater tempo. As the Great Banks go, so go the credit cards.  Can you imagine your  bank sending you a letter saying, sorry, but we no longer have any credit we can provide you on your credit card.  It's not you. It's us.  We are broke.  Best you tear up your card because it is now worthless. ???  What an ultimate turn around in fortunes. Now wouldn't that break the consumer economy? Yep, that will do it handily.

"The Web Bots foresee a West Coast/Vancouver area large scale earthquake around December 12, 2008."

MWM:  That has got to be a reflection of people discussing the Full Moon on December 12 in connection with the oscillations in the crust off the coast of Vancouver during previous months.  This happens to be a Quadruple Whammy Full Moon, the strongest of the year.  It is at near Perihelion (closest approach of the Earth to the Sun) in Lunar Perigee (closer to the Earth than most of the year's Perigees) in the Extreme Northern Declination (maximum position of the Moon in its tilted orbit over the Northern Hemisphere).  This area of Vancouver and the Puget Sound is probably primed for major stress release on an East-West axis which cuts through the Straights of Juan De Fuca, the San Juan Islands, and through the Fraser River system and through faults which criss-cross the Puget Sound, Seattle, and close-by areas. Even Portland is conceivably in this tectonic matrix.  These east-west faults are considered to be easily capable of rare but powerful Class 9 quakes.  The Full Moon gravity vector will be in maximal opposition to the Sun.  The Moon and the Sun will be as far apart as they can get over the surface of the Earth, the Sun in the Southern Hemisphere, the Moon in the Northern Hemisphere.  They will act to pull the Earth apart and occasionally this produces big results, such as the Indonesian ruptures several years ago and the Chinese ruptures early this year.

"The Web Bots foresee that the Winter in the Northeast will be very cold this Winter, causing some schools to close, and then later to reopen as shelters for people who can't heat their homes. Language suggests that the shortage will either be caused by supply, cost of fuel, or both." (Taken from the Rense Show interview with Cliff by Di.)
 

MWM: (Chuckling) This is probably the influence of Farmer's Almanac, which made this prediction several months ago.

War & Peace:

Links to:  ALMANAC  |   |  EARTH MONITOR

[8-4-2008]  The danger continues to decline.  The time window has essentially closed down the Zionazis.  The only possibility of an attack on Iran would be from Israel with support from rogue elements in the Black Arts Nation  At this point in time, it is doubtful the R&R Caballeros will condone an attack nor bring the U.S. into such an attack by Israel except to stop it.  Thus Israel has drawn the correct conclusion, they stand alone.  This forces them to draw back from the brink to lick the wounds of their enormous loss of credibility, influence and popularity during the past four years. 

Meanwhile Obama mouths mostly empty slogans written by Zbigniew Brzezinski about "fighting" the "war on terror" in Afghanistan, Pakistan, and Whereverthefukistan.  It is doubtful these slogans will mean much during 2009.  Just as everyone is folding on Iraq, the same is already beginning to occur in Afghanistan/Pakistan. Obama, out of ignorance, may continue the muddling through for awhile, but eventually he will see what Kennedy saw about Vietnam, that it is unwinnable. 

Many Quisling Democrats remain willing to serve as Imperial Agents for the R&R Caballeros.  They are ready to continue constituting  the Democratic Party as a national patron of the "War On Terror" in Central Asia. But it is not likely these Democons can prevail. The contradictions and imperatives of international power and economics will force the U.S. out of these activities. At most they have two or three years left before the War On Terror and the current drive of Imperial Expansion dissolves completely into a black hole of bad memories.

[7-21-2008]  WAR RISK WITH IRAN IS DECLINING. 

We have come  a long way during the past 24 months out of the crazed war psychosis induced by the Cheney-Bush Junta. 

BUT

[7-21-2008]  WAR RISK IN AFGHANISTAN AND PAKISTAN IS INCREASING RAPIDLY.  The National Quisling Democon Party has successfully been reconstituted as a patron of the War Of Terror crusades begun by Bush/Cheney, this despite being mandated by a landslide of votes in the 2006 congressional elections to stop the advance of imperial adventurism in the Middle East.

for more discussion see,

Geo-Politics Almanac

As with the Tragedy In Iraq, imperial meddling in these far, distant, Eurasian countries will produce only tragedy and loss for all concerned.  As Obama traverses these countries, we even now are descending from idiocy to imbecility.

The next political struggle in North America will be to destroy the Cabal's stranglehold on the National Democratic Party.

Economy:

Links to:  ALMANAC  |   |  EARTH MONITOR

[4-7-08] Bernanke joins G-7 to Stem Global Financial Meltdown

By Mike Whitney

06/04/08 "ICH" -- - In a recent interview with the New York Times, former Secretary of the Treasury Paul O' Neill, was asked how the problems with subprime mortgages could lead to a financial crisis of global proportions. O' Neill said,

“If you have 10 bottles of water, and one bottle has poison in it, and you don't know which one, you probably won’t drink out of any of the 10 bottles; that’s basically what we’ve got here.”

Bulls-eye. O' Neill's answer is the best yet for explaining a complex situation in simple terms. The term “subprime” is a red herring; it is used by the media to minimize what is really going on. The meltdown in financing extends across the entire range of mortgage-security products. No loan-type has been spared. The wholesale market for anything connected to mortgages is frozen and the details are being intentionally withheld from the public. Two years ago, more than 65 percent of all mortgages were converted into securities and sold off to Wall Street. No more. That scam unraveled in July when two Bear Stearns hedge funds blew up and their were no takers for billions of dollars of mortgage-backed junk. Since then, bankers and hedge fund managers have been scrambling to conceal the facts about what mortgage-backed securities (MBS) are really worth; nothing. The fear is that when the public finds out what is really going on, they'll draw the logical conclusion that the banking system is bankrupt, which it probably is. Just look at these eye-popping losses which appeared in Bloomberg News on April 1 The financial ship is listing, and the mainstream media is doing its best to keep the public in the dark.

So for the last eight months, a simple matter of “price discovery” on publicly traded securities has been a nonstop game of hide-n-seek. That's no way to run a free market. The recent collapses of Bear Stearns and Carlye Capital are just the latest additions to this ongoing farce. Carlyle was a $22 billion hedge fund that couldn't scrape together a measly $400 billion to meet a margin call. Why? Every analyst who wrote on the topic noted that the fund was loaded up with high-quality Triple-A and GSE (Fannie Mae) bonds. So what were they offered for their MBS? That question was never answered because Fed chief Ben Bernanke rode to the rescue and created a new $200 billion auction facility and �Whoosh---Carlyle's mortgage-backed junk disappeared down a black hoole. How convenient; another Fed bailout to hide the damning evidence that trillions of dollars of MBSs are utterly worthless and devouring the financial system from the inside.

Bernanke's myriad auction facilities (four, so far) are ostensibly designed to remove these mortgage-backed stinkers from the banks' balance sheets so they can start lending again. But there's another reason, too. The Fed thinks they can simply put these MBSs in cold-storage for a while and then re-thaw them when the market bounces back. But the market for MBSs won't bounce back. This is biggest housing bust in US history and prices have a long way to go. Who is going to invest in mortgage-backed bonds when the underlying asset is losing value every day? Besides, as Paul O' Neill points out; one of the bottles contains poison and investors don't like poison. So, Bernanke is stuck trying to treat with the symptoms rather than the disease. As a scholar of the Great Depression, he's been rifling through his bag o' tricks to mitigate the damage, but without success. The rate-cuts and auction facilities have been a complete flop. The situation is worse now than it was in July; much worse. In fact, the develeraging of financial institutions is accelerating at a pace that no one expected threatening some of Wall Streets' biggest players and putting $500 trillion in counterparty agreements at risk. And it all began with eliminating the basic standards for issuing loans to credit-worthy applicants; the straw that broke the camel's back. Now the whole system is crumbling and an ominous sense of doom pervades trading floors across the planet. Everyone is just waiting for the next shoe drop.

Pimco's Bill Gross said, “What we are seeing is the collapse of the modern day banking system”. American-style capitalism is in crisis-mode and the outcome is far from certain. The Fed's interventions show that the long held belief that markets are self-correcting has vanished. Laissez-faire is out; regulation is in.




Bloomberg News summed it up like this:

“It is no coincidence that the crisis of 2007 and 2008 had its origin in unregulated financial products traded in unregulated markets. Ever since the Great Depression, the government has tried to limit the leverage available to the public in the American stock market. But regulators, led by Alan Greenspan, the former chairman of the Federal Reserve, thought it would hamper innovation, and drive financial activity overseas, if there were any attempts to impose limits on leverage in the unregulated markets.
To avoid a super-bubble in the future, (the) banks must control their own borrowing. They must also curtail lending to clients such as hedge funds by demanding greater collateral and margin requirements on loans.” (Bloomberg News)

In Henry Liu's latest article in Asia Times, “A Panic-stricken Federal Reserve”, Liu makes this observation on the Fed's auction facilities which provide hundreds of billions of dollars in 28 day loans in exchange for dubious mortgage-backed collateral:

"Since the Fed cannot retire loans made via TAF and its repo program without adding to those 'elevated pressures', the loans should be considered an equity infusion, because they’ll be repaid at the convenience of the borrower rather than on a schedule agreed with the lender." What Waldman did not say was that the Fed had ventured into a broad nationalization of the prime dealers on Wall Street by being an equity investor. (Quote,Steve Randy Waldman of Interfluidity; Henry Liu, “A Panic-stricken Federal Reserve”)

Does the Fed realize that it is effectively monetizing the debt by issuing loans that may not be repaid or is this just a clever way to trick foreign investors into believing that the Fed won't print its way out of a crisis? The bottom line is, whether the nation is headed into a deflationary spiral or not; all of the Fed's tools are inflationary. Rate cuts, auction facilities or covert monetization all weaken the currency and levee an unfair tax on savers and people on fixed incomes. Unfortunately, these people have no voice in government, so we can't expect their interests to be fairly represented.


Since housing peaked in 2005, 240 independently-owned mortgage lenders have filed for bankruptcy. Wholesale funding sources have dried up and foreclosures are on the rise. Now, more than 75 percent of mortgages are funded by Fannie Mae or Freddie Mac while another 10 percent are underwritten by FHA. The real estate industry has been nationalized; another knock-on effect of Greenspan's low interest monetary policy. Presently, the Fed and the Secretary of the Treasury, Henry Paulson, are pushing to expand Fannie's and Freddie's balance sheets so they can absorb bigger and riskier mortgages. This is lunacy. Fannie Mae is already perilously under-capitalized and, if it defaults, taxpayers will be on the hook for $2.2 trillion. That doesn't seem to bother Paulson who is determined to reflate the equity bubble so the profits keep rolling in to Wall Street's coffers. Still, even if the plan goes forward, it's unlikely that Paulson and Bernanke will be able to re-energize the real estate market or ignite another housing boom. Public attitudes have changed dramatically in the last few months. The myth that “housing prices never going down” has been dispelled and high levels of personal debt have forced many to reassess their spending priorities. The American consumer has never been so over-extended.

According to Bloomberg:


Consumers fell behind on car, credit-card and home-equity loans at the highest level in 15 years, another sign the U.S. economy is slowing, according to the American Bankers Association's quarterly survey. Payments at least 30 days past due increased across all eight categories of loans tracked during the fourth quarter, the Washington-based group said today in a statement. Late loans in the quarter climbed 21 basis points to 2.65 percent of all accounts in a consumer-loan index created by the group.


The American consumer is tapped-out. What he needs is a raise, not another loan. Bush's $500 per person Stimulus Package will do nothing to reverse the effects of 30 years of anti-labor legislation and class-oriented monetary policy.

Another indication that attitudes towards spending have changed, showed up in a survey conducted two weeks ago by USA Today/Gallup. The poll released showed that 76 percent of Americans believe that the country is now in recession and 59 percent think the US will slide into a depression that will last for several years. Despite the media's attempts to convince us that these are “the best of times”; the public knows otherwise. Their pessimism is expressing itself through curtailed spending. There's nothing the Fed can do to change the prevailing mood of the country. Working people are hurting. The spending spree is over.

The housing market will be dead for a generation. That means the MBS market will falter and the multi-trillion dollar derivatives monolith will continue to unwind. It will take emergency measures to address the credit avalanche which is just now hitting the broader economy.

The Bear Stearns bailout is a prime example of the extent to which the Fed is willing to go to stop a meltdown. By approving the $30 billion dollar deal with JP Morgan, the Fed arbitrarily went beyond its mandate of providing liquidity to the markets and usurped Congress' authority to appropriate funds. It was a power-grab engineered under shaky pretenses. The Fed isn't authorized to prevent privately-owned businesses that are recklessly leveraged at 30 to 1 from defaulting. More importantly, the Federal Reserve is not Congress, although they have now assumed those constitutional duties. Speaker of the House Pelosi has said nothing so far.

Paulson has used the Bear fiasco as a platform for his blueprint for “broad market reforms”; a 200-plus page document that removes Congress from its role of overseeing the financial markets. According to the New York Times:

“President Bush was preparing to issue an executive order soon to expand the membership and reach of an interagency committee called the President’s Working Group on Financial Markets. (aka; The Plunge Protection Team) The group was created after the stock market plummeted in 1987. The group is also expected to consider ways to broaden the authority of the Federal Reserve to lend money to nonbanks as needs arise. (Ed. note: To authorize more Bear Stearns type bailouts with consulting Congress).....Elements of the plan are clearly deregulatory. The plan proposes, for instance, to reduce the enforcement authority of the S.E.C. in a variety of ways and hand that authority instead to industry groups. The plan recommends that investment advisers no longer be directly regulated by the commission, but instead be supervised by an industry regulatory organization.

The Treasury Department’s blueprint is designed to boost Wall Street’s competitiveness, not Main Street investor protection,” said Karen Tyler, president of the North American Securities Administrators Association and the securities commissioner of North Dakota.” (New York Times)

Congress is being muscled out of financial market supervision by a troop of venal banksters and corporate picaroons who are threatening to finish-off the already-defanged SEC. That will put the Fed in the driver's seat for good. Paulson wants to police the world's most complex markets on the “honor system”. It's crazy. His blueprint is an obvious attempt to consolidate market-related functions under a central authority that is accountable to private industry alone. That way, the Fed can bailout whomever it chooses without congressional approval. Paulson's press conference was just a polite way of informing the American people that the seat of power has shifted from Washington to Wall Street. It's a banker's coup.

So, where do we go from here? Pimco's Bill Gross gives us some indication in this recent quote:

"In my opinion, the private credit markets have forfeited their privileged right to operate relatively autonomously because of incompetence, excessive greed, and in minor instances, fraudulent activities. As a result, the deflating private market’s balance sheet is being re-nationalized in some cases with increased regulation, in others with outright guarantees and agency lending. Ultimately government programs which support private credit market assets may be required in order to prevent an asset deflation of significant proportions. Authorities must act quickly, with a shot of adrenalin straight to the heart of the problem: home prices. Since homes are the most highly levered and monetarily significant asset that American consumers own, if they decline much further they will drag the rest of the economy with them."

“Re-nationalized”; is that what it is? No one authorized the Fed or Paulson to re-nationalize anything. These over-leveraged banking behemoths need to fail. Let the market work. 28 million Americans are on food stamps, tent cities are sprouting up across the country, discretionary spending is down, food and energy prices are skyrocketing, and wages have been frozen for a generation. Where's the bailout for the working man? Instead, the government's largess is showered on a throng of unctuous fat-cat banksters so they can keep the larder on Martha's Vineyard topped off with Godiva truffles and Cuban cigars. Paulson has to go. Bernanke too.

An article in last week's New York Times, “Leveraged Planet”, provides a great description of the Fed's activities during the weekend of the Bear Stearns fiasco. Journalist Andrew Sorkin recreates the frantic phone calls and panicky deal-making that went on behind the scenes while the stock market was preparing for a Monday morning blow-out:

“JUST before JP Morgan-Chase announced its initial $2-a-share deal to buy Bear Stearns, Ben Bernanke, the chairman of the Federal Reserve, held an extraordinary impromptu conference call. The participants on the Sunday night call, who got a preview of the deal, were Wall Street’s biggest power brokers: Lloyd Blankfein of Goldman Sachs dialed in from home. John Mack of Morgan Stanley rushed to the office to listen on speakerphone. Richard Fuld of Lehmann Brothers, who had been directed to return home from a business trip in New Delhi by none other than Henry Paulson, the Treasury secretary, was patched in, too, among others.

The half-hour call was a rallying cry for support of Bear Stearns � and more broadly, the financial markets, which, as it was described on the call, were on the verge of a major meltdown if not for the pre-emptive steps that the Fed and JPMorgan took. “It was much worse than anyone realized; the markets were on the precipice of a real crisis,” said one participant. Given that Bear held trading contracts with an outstanding value of $2.5 trillion with firms around the world, “we were talking about the possibility of a global run on the bank.” ( Andrew Sorkin, “Leveraged Planet” New York Times)

Typical of the Times, the reader is left feeling that the wild and destabilizing activities of one unregulated market participant, like Bear, is as natural as a spring rain. There's not the slightest hint that Bears' transgressions may have emerged from years of kicking down regulatory doors and feeding campaign contributions into a corrupt political system. That's way beyond the Times' range of analysis. Instead, the heroes of this financial kabuki are none other than the ashen-faced palatines at Fed and the Treasury who deftly donned their Haz-mat suits long enough to battle the flames of the banking inferno with a stream of taxpayer money. So much for moral hazard.

If Bear had been properly policed; it would have been better capitalized with considerably less leverage. Its $2.5 trillion of derivatives contracts would have been regulated by government officials to make sure that they posed no threat to the broader system. Sorkin's recap just proves that the present stewards of the system are bunglers who are out of their depth. After years of serial bubble-making, they are finally begin to realize that their neoliberal Golden Calf was built on a foundation of pure quicksand. In fact, the sirens are already wailing as the yields on 3 month Treasuries continue to plummet, which is the bond market's way of perching itself atop the highest building in downtown Manhattan and screaming, “FIRE!” There's no telling when the stock market will get the message, but it shouldn't be too long.

CODE RED; Emergency planning now underway

So, what is to be done? New York Fed chief Timothy Geithner says that capital markets are still “substantially impaired” and policy makers and financial industry leaders must “act forcefully” to stem the crisis.

“What we were observing in U.S. and global financial markets was similar to the classic pattern in financial crises,'' Geithner said in his prepared testimony to the Senate Banking Committee. He cited ``a self-reinforcing downward spiral'' of asset sales, ``higher volatility, and still lower prices.” (Bloomberg News)

If Geithner's predictions of “a self-reinforcing downward spiral'' sound scary; so do the remedies. The Financial Times outlined the radical strategies that are now under consideration by the G-7 powers for dealing with challenges of the rapidly-expanding credit crisis. These include “the temporary suspension of capital requirements, taxpayer-funded recapitalisation of banks and outright public purchase of mortgage-backed securities.” Everything is on the table.

Representatives from the main western central banks are also discussing whether to force a number of the larger banks to disclose their financial positions so they can objectively determine the weaknesses on their balance sheets.

Other recommendations include boosting capital requirements, “conserving financial resources”, and utilizing public funds. The group is also deciding whether to “suspend capital and reporting rules that tie prudential requirements to market values of securities.” That way the banks can avoid letting shareholders know the true downgraded value of their assets. This is clearly an attempt to deceive the public about the real financial condition of the banks.

“Emergency liquidity support”, reductions in capital requirements, concealing the true value of collateral, relaxing regulations, suspending accounting rules for assets; it sounds a lot like panic. These are the signs of a system so dilapidated that the pilings shake and the scaffolding wobbles with the slightest breeze. A system that's held together with the frayed strands of collective fear; bankers angst. Strike a match and the whole thing will go up like a Roman candle.


“In order to change an existing paradigm you do not struggle to try and change the problematic model. You create a new model and make the old one obsolete.” Buckminster Fuller
 

Politics:

Links to:  ALMANAC  |   |  EARTH MONITOR

Obama has been swooped up into the Globalist camp and apparently has set his sights on serving the agenda of the War On Terror and various other Globalist fascist nostrums.  As was widely feared, his "change" agenda now appears to be nothing more than another Clintonesque con, very much in parallel with the Clinton campaign slogans of 1992.  I strongly doubt that the American people will be well served by his Presidency, but perhaps his main contribution will be what we already see:  the retirement of the Republicons and the sidelining of the Clintons.

All else will have to come from a fierce struggle among Democrats..

IMPEACHMENT WATCH

I wish.  Now after two years, Nancy Pelosi is playing with us to allow "hearings" on whether to impeach the Bush/Cheney Junta.