Tuesday, July 28, 2009

S&P Price to Earnings Ratio

Isn't this an exciting visual?!!!!

From Chart Of The Day

Friday, July 24, 2009

China Is Selling Off Foreign Reserves

The following should be a bombshell hitting all of the news channels. But it's not.

This is the event everyone believed would never happen, because if it did, the consequences would be too horrible to contemplate.

China is cashing out and using the money to buy up what parts of the planet, they don't already own. And they are doing this just as the US embarks on a giant treasury auction to raise ungodly quantities of money, to give away to the billionaire friends of our beloved politicians.

Good luck with that China. I'm not so sure that most of that is going to be worth owning.

China to deploy foreign reserves
By Jamil Anderlini in Beijing

Published: July 21 2009 19:09 | Last updated: July 21 2009 19:09

Beijing will use its foreign exchange reserves, the largest in the world, to support and accelerate overseas expansion and acquisitions by Chinese companies, Wen Jiabao, the country’s premier, said in comments published on Tuesday.

“We should hasten the implementation of our ‘going out’ strategy and combine the utilisation of foreign exchange reserves with the ‘going out’ of our enterprises,” he told Chinese diplomats late on Monday.


Monday, July 20, 2009

You Have To Be A Crazy Nutcase To Keep Up

h/t The Market Ticker

IG: Treasury 'failed' to adopt bailout safeguards

By Silla Brush
Posted: 07/20/09 10:47 AM [ET]
The government’s top watchdog over the $700 billion financial rescue package said the Treasury Department has "repeatedly failed" to adopt his recommendations that would make the program more transparent and accountable to taxpayers.

Neil Barofsky, the special inspector general over the Troubled Asset Relief Program (TARP), will tell lawmakers on Tuesday that taxpayers are being left in the dark about what banks are doing with bailout money, don't know the value of the government's investments and will not know the full extent of how the money is invested.

Barofsky said that while the TARP program that Congress passed amounts to $700 billion, the total federal government support since 2007 for the economy and the financial sector could reach a far higher figure of $23.7 trillion. The government has committed significantly more money through a variety of other federal agencies and programs.



I have been guessing in the $trillions with a single digit. But obviously, I live in a fantasy land. All the while folks here and there, have been calling me a nutcase for arguing that the bailouts are far larger than is reported on television. I was still living in an a fairy tale, unicorn pooping skittles world, thinking that the bailouts were still under $10 trillion.

I honestly thought that this would take a few more years to get this big.

It just goes to show that you can't be too nutty if you want to try to keep up with reality.

Then again, I'm not really surprised. I've been wrong before. This isn't the first time that I'm not crazy tin foil hat looney toons enough to keep up with reality... I mean sane enough...


Ok, it's now on the Wall Street Journal...
Government Tab for Crisis Could Hit $23.7 Trillion, Official Says

Friday, July 17, 2009

A Kindler Gentler IMF

It's been a while since I perused the IMF website. I think it's been nine years. :)

An boy has the look changed! It used to be a highly technical website with in depth reports linked to the front page and very difficult to read set of bylaws accessible with a single mouse click.

Now I find page after page of articles and facts explaining that the IMF is not actually evil.

I also found this report - Structural Conditionality in IMF-Supported Programs

The report attempts to address the problem that most of the world's nations are afraid to borrow from the IMF, because it's track record is horrible.

"The IMF’s intention is to do away with procedures that have hampered dialogue with some countries, and prevented other countries from seeking financial assistance because of the perceived stigma in some regions of the world of being involved with the Fund."

When we look at a passage like this...
"This evaluation examined whether SC was effective in bringing about follow-up structural reforms as well as whether reforms were sustained over time. This is a particularly difficult question because there was no agreed-upon framework to assess results and accountability, and consequently data had not been collected specifically for this purpose."

We can see the core of the problem. The IMF never bothered to measure their results.

Then there is the following,
"The sectoral analysis showed only a weak link between compliance with SC and effectiveness at bringing about reform and ensuring its durability."

Which tells us that the IMF was largely a failure at reaching it's intended goals. In fact if you read the report, you see that there has been a pattern in the damage done to nation's that the IMF has helped by meddling. Mostly the private sector in various nations has suffered great hardships. The report describes to what degree the IMF takes control of a nation's operations, in areas that it has no expertise in.

And it's not a pretty picture.

The report is of course intended to be very neutral and businesslike. It was commissioned by the IMF, so you won't find anything overtly critical in it. Still it paints a picture, that at best demonstrates incompetence at multiple levels. Incompetence that meant huge profits for the banks involved.

And remember the IMF is run by the major banks. The same banks that we're involved with now in the endless bailout plan.

The report was posted in April 2009. The timing makes sense. Nations just like people, are afraid to go deeper in debt. they see the crisis unfolding and are saying no thanks, selling off more of their nation in return for high interest loans. So the IMF is being forced to paint itself and a kindler gentler organization.

But check this out!
"As part of its lending reform package, the IMF also announced the creation of a flexible credit line (FCL), a type of insurance policy for strong performers, mainly emerging market countries. Access to the FCL is restricted to countries that meet strict qualification criteria. But once a credit line has been approved, a country can draw on it without having to meet specified policy goals, as is normally the case for IMF loans. Mexico has applied for a $47 billion precautionary credit line under the FCL."

Mexico is about to get fracked!

Their oil revenue is in decline, their general economy is in decline, and now they are taking on additional debt with lot's of strings attached. They'll be forced to privatize much of their infrastructure, including their oil fields. There will be rioting and demonstrations, on top of the drug war that is heating up.

This is gonna get exciting!

Thursday, July 16, 2009

One Day Past Hump Day

I shouldn't read the headlines...

Didn't Paulson testify in a recent hearing that he did not pressure Ken Lewis? And now he says he did? I guess lying in testimony is still A-OK with our two houses of congress.
Paulson says he pressured Bank of America CEO

And from this next one, it appears that the next massive wave of layoffs is coming sooner, not later. This fits in with my pet 'THEORY' (I said it, 'theory'), that in a downturn the US Government will favor the largest institutions over the small. We are headed to a monopoly business environment, with smaller entities moving to gray and black markets.
CIT won't get bailout, raising bankruptcy prospect

More Green Shoots
Foreclosures rise 15 percent in first half of 2009

Uh oh... Will the Chinese being writing our textbooks in a few years? Could this mean lower tuition rates in the future? Probably not.
McGraw-Hill cuts 550 jobs

But there is good news. Some of the USA's favorite charities are posting record profits in a year where charitable giving by the taxpayers has broken all records.
Here's an example of one, that has done exceptionally well, in it's ability to absorb free monies, funneled through various charity bailout programs.

Hey Obama, I can do better than them! Give me a hundred billion dollars and I'll post a nearly 100% profit! I promise I'll make you look good! You can even tax half of it and use that payment to show how your stimulus plan is working! I'll tell you what, I'll even promise to use some of it for risky gambling, like the banks do!

I Still Like Karl

But I think if I continue to participate on his forum, we're going to butt heads until my account is completely locked.

I tried to delete my account on the Market Ticker, but there doesn't seem to be a way to do it.

In my final email exchange with Karl, he made it clear that forums are his soapbox and I wasn't allowed to discuss any of my theories there. He went on to argue that I was polluting the forum by talking about monetary policy. At least that's what I think he meant. He was terse, I could think of multiple interpretations in what he wrote.

The theory he really doesn't like, is really just an observation.

And that's is that the course we're taking economically looks eerily similar to what the bankers did to Africa and South America. and it's many of the same bankers and the same banks.

It's my belief that if we wish to understand Goldman Sachs, Bank of America, Morgan Chase, CitiBank, etc..., it helps to understand the history of these financial institutions and their dealings with other governments.

Each nation is of course unique and the circumstances of their looting is unique. but some common ground is laid out, and specified by IMF policy.

Below are the essential steps we see. You can read about them on the IMF web site in information about the Austerity Programs and the IMF charter. I don't consider this to be a theory as you can find many examples of this pattern. Further the IMF says they do this. How can you argue that there's no evidence, when the IMF has been self reporting this stuff for decades?

#1 Loan a nation money with a standard IMF contract.
The contract stipulates that if the IMF determines at any time that the nation could maybe sort of have a cash flow problem, then the IMF can take over and run all of the nation's finances. Now the USA has obviously skipped this step.

#2 The IMF provides financial advisers that help with setting a nation's economic policy, tax policies, and laws. These people work from the inside to 'help' the nation along and to gain contacts, influence the political process and expand their power. The USA already had a tradition of bankers setting policies. This is why step #1 isn't needed.

#3 Wait for a crisis to occur and step in. As the IMF writes a nation's laws and runs their economy, a 'crisis' should never occur. That's why they are there, to prevent that. But they happen anyway, and the people who let it happen, turn out to be the best people to stay and manage the crisis. These crisis tend to happen, as oil or other resource production peaks. When the revenue growth tops out and begins to decline, the IMF completely takes over the nations' economic policy and officially appoints banking members into government offices to control the nation's finances. Assuming that they don't already play this role.

The USA has effectively taken this route. once the mortgage crisis had been manufactured and allowed to explode, the bankers who pushed for the policy that led to the meltdown, were given complete control of the USA's purse strings and given the authority to write all of the checks they want without oversight or fear of incarceration, litigation or execution, should it turn out they are committing crimes while spending who knows how much money on whoever. Congress even signed off on the provision that they are not even allowed to know who gets what or how much.

#4 Under 'IMF Austerity Measures', a nation must give the bankers 30% of it's revenue. Further, they must eliminate all taxes on foreign corporations operating in their country, while jacking up taxes on citizens and local businesses.

The USA has implemented something like the 30% tax, by giving Geithner an unlimited stack of blank checks to write out, payable to the banks. We are about to give the banks another round of gargantuan sums of money in another bailout. Argentina was bailing out Goldman Sachs and Bank of America before that nation cratered.

Anyone care to chime in on how the Carbon Tax resembles the IMF tax policies?

#5 Privatization of public infrastructure. To help improve efficiency, the IMF demands that nations give away much of their public infrastructure to corporations friendly to the banks. In some countries, all of the water and sewage systems were privatized. Use of those increased dramatically in cost, while maintenance ended. In a few nations it became illegal to collect rain water or provide public water fountains. In Argentina, one of the most destructive aspect of the privatization policy came from selling the state owned railway services to a Spanish corporation. that corporation never had any attention of maintaining the services. They simply shipped all of the locomotives that they bought for pennies on the dollar, back to Spain. As most of the factories in Argentina relied on the railways for transportation, this shut most of them down and led to millions of layoffs.

The USA hasn't gone this far yet, to my knowledge. So watch for this step.

#6. Well, there is no #6... At least no policy. But after the rest has had a number of years to work, a nation is effectively conquered and destroyed.


Now I didn't have to refer to a single theory, or supposition to lay out this argument. It can't be a 'Tin Foil Hat Nutcase Conspiracy Theory', because I haven't proposed a theory.

I have simply shown how the situation in the USA resembles what the Bankers under the umbrella of the IMF has done, as a matter of their public and documented policies. This is all independently verifiable. you can simply read up on it on the IMF website, and the many articles on the web and in print, detailing it's polices and it's practices.

You will find differences and more similarities if you look. Overall though, the differences in my view are relatively small and meaningless, compared to the big and glaring similarities. It's hard for instance to see how the massive funneling of the nation's funds for 'bailouts' differs significantly from the 30% tax imposed by the IMF on other nations. In fact in many of those nations, it's been shown that the under the table looting exceeded the 30%. After all, when the Treasury Secretary of your nation also works for a major bank, and the whole government is on the take, you can can get away with a lot of looting. Most of the even die hard realists that can't believe that people can plan and commit crimes, will insist that these nations are crooked to the core, then explain that's how we're different.

But now, it doesn't seem like we are all that different, does it? Does anything seem crooked these days in DC?

Now I think this does indicate a pattern. It looks an awful lot like the plan that was drafted and published by the IMF. Remember they wrote it down, it's hardly a theory. We might be safe to assume that this pattern will continue.

If so, then one or two banks will take complete control of every aspect our nation's finances and markets. With the expressed purpose of helping us, by taking away all of our wealth. As this continues, the banks can be expected to loot all of our pension funds, IRA's, 401ks, etc... in various forms and fashions. Already the banks are denying people the right to access their 401ks. they are doing this they say, because they don't want people to take a loss on them. But we know there is also a fear that a run on 401ks will damage the markets and the banks. When you can't get money that is legally yours, then it's not yours anymore. As the banks don't have to let you take money out of your 401k, they actually own it, not you. You have no rights.

These considerations in my view, have a huge impact on the markets, and the future of our nation's economy.

Now, this could all be a happy accident. We might change course at any time. But if we continue to follow the 'Austerity Measures' script as documented by the IMF, either intentionally or accidentally, then we are going to end up where the other nations that did this, ended up.

And that is not a happy place.

We as a nation I believe, ignore this at our peril.

Wednesday, July 15, 2009

Got Myself Banned On The Market Ticker

I was wondering how long it would take. Karl doesn't like it when you can demonstrate that he's wrong about something. The post he made that I was responding to was, 'When All You Have Is A Hammer (Market Efficiency)'

Karl made the argument in the forum that anyone who thinks the Fed or the Gov will keep printing money and giving it to the banks, is engaging in fantasy and he wouldn't tolerate anymore talk on that.

I pointed out that Karl didn't predict the bailouts, then didn't believe they would happen when they were proposed. I argued that in fact, this was fantastical thinking, because it turns out that the way he views the world, doesn't reflect reality.

Karl got pretty pissed at me from the tone.

He argued that the plan didn't work. He said,


What has been fixed? Lehman is gone, the market is down 40% from the top, it is unstable as hell, the attempt to force mortgage rates to 4% FAILED, the attempts to restart securitization have ALL FAILED, and on and on and on! The only people who have kept their money safe or made any are TRADERS - all the retirees in stocks or people with 401ks who were in the market got fucking DESTROYED! Unemployment is STILL ramping, mortgage defaults are going parabolic, 2 of the 3 major automakers went under and we've got a state that has effectively gone bankrupt.

WHAT flew? Blowing money out of one's asshole? Well shit, anyone can do that! The question isn't whether you can do stupid shit (anyone can) its whether ANY OF IT will do ANYTHING positive in the greater economy!

Obama came out with his "stimulus" and said it would stop unemployment from ratcheting higher. IT DID NOTHING!

Who's living in the fantasy land here? I said none of this shit would work and that they'd be CRAZY to do it - well, it appears they're crazy!

This makes me wrong? Like hell! Show me one of these things that has worked!"

To which I responded,
"Yes, and it worked. The bonuses for the pirates keep flowing. The Bankers that engineered this continue to see record salaries.

The whole point was to funnel the wealth of the nation into the hands of a few bankers. It's working fine. What you see is what they wanted.

The bubble, the bailouts, the massive debt overhang was all intentional. It's a pattern that the banks have used for hundreds of years. It really started taking shape in Africa in the 1970s, then South America in the 1980s and 90s.

Now it's North America's turn.

We're in the middle of a hostile takeover. Next they sell the USA off for parts."

And finally he responded,
"You're done Weasel. I warned people about this shit in my Ticker threads.

Do it in another one and you're gone from this part of the forum entirely.

I'm tired of this crap."

And I'm fine with that. I do enjoy a the analysis I read on his blog and forums. But far too often, Karl assumes that the world works the way he wants it to, and as a result, we keep seeing things that he labels 'Tin Foil Hat Conspiracies', coming true. The last ten years has shown us event after event that would be labeled 'Tin Foil Hat' material.

In fact, any well grounded in reality as we might interpret it, would've been completely incapable of predicting most of the major events of the last decade. All that proves is that folks that believe that they are well grounded in reality, don't understand reality at all. The reality in their heads is fantastical.

Karl doesn't believe that the Fed and the White House, Congress and the top banks are acting in their self interest. He believes that they won't do things detrimental to the country, because..., well I think he believes this because he assumes that they are acting in the nation's best interest. He believes (as I understand his position), that they wish to save the economy, but are just accidentally profiting handsomely, by screwing up.

Now in 1999, I first started writing about how financial bailouts would be the norm as the world's oil production peaks and declines. Industry would become a losing investment and the money would move to finance. Finance would rule politics and the politicians would do everything in their power to keep the most powerful banks solvent. As I see it, everything will be sacrificed to keep the wealthy empowered.

So two years ago, with the housing bubble in full swing, I started arguing that it would end in massive bailouts. I was laughed at, ridiculed and called a 'Tin Foil Hat Conspiracy Theorist'.

But I was right. I saw that the logical outcome of the bubble, predicted it, and my predictions reflected reality.

I think it's about time that folks began to recognize that the way we've been taught to view our society, our government, our economy, and our legal system, is nearly completely wrong. We have been sold a fantasy, and for much of our lives, the fantasy and the reality haven't diverged enough to be dangerous.

But that time is over. The fantasy view that we as a society cling to, no longer has any semblance to the reality in the top levels of government and high finance. It's time to discard that view and see the world as it really is. And it's ugly.

The actors on the stage now are just greedy pirates. They are looting our nation and destroying it. There is every reason to believe that they will keep doing this, until they are stopped. I think this should be plain for all to see. But we still cling to the illusion were trained to believe in, all of our lives.

Karl does not believe in this view at all. And because of this, I believe he's going to be wrong again and again. He's looking at this from the perspective of what is good for the economy and what is good for the nation. He assumes that the people in charge, have good intentions, but are making boneheaded mistakes. He thinks in my view, that they will come around.

I believe that this is a dangerous way to view the situation. I believe that we have overwhelming evidence that what has been happening is intentional. I believe that the evidence is overwhelming that the criminal activity is also intentional. i believe that the White Houses Dream Team, is doing all of this, and causing the damage that they are causing because this is their intent. They've used this script in other countries and gotten fatter and richer. They keep doing it again and again and profiting. In fact, this scripted cycle of impoverishment goes all the way back the practices of the East India Company, and their use of debt to gain political control of nations.

I predict that there will be more bailouts and there will be fire sales of public assets. Karl predicts that this will not happen, because that would be bad for us.

I don't think we'll have to wait too long to see which of us is engaged magical thinking.

Friday, July 10, 2009

Open Letter To The Irving City Council

To my honorable Council Persons...

I want to express my grave concerns with the direction our city is taking in regards to it's budgeting. Especially the very fat pay raises approved for Tommy Gonzales as we enter a dramatic economic slowdown.

I know that as the city brags that it's economic conditions is great and revenue is great and all is well, the city continues to find new innovative ways to increase fines, fees, and other income. Like someone giving blood to earn extra income to cover increasing debts, there will soon come a time when this will not work to increase revenue. There's only so much that you can bleed the public, before you'll start seeing increasing costs that come from the citizens inability to pay. After all, incarceration and community service programs to pay off fines and fees, cost the city and county additional funds for housing inmates and hiring people to watch and track these people.

Now I know the bubbleheads on TV are wagging their tongues about green shoots. But these are people who are completely incapable of predicting a downturn. They only get it a little right, when the economy is improving. For a year, they've been wrong 100% of the time. Regardless of what they may tell you, not every lotto ticket is a winner. No bubble goes on forever and ever to infinity.

I have seen no sign that the City of Irving, recognizes that the US is in a serious economic decline. The city continues to place bets in payroll and expenses assuming that the economy is improving, despite the reality that unemployment continues to rise, further crippling the economy.

President Obama recently told us that we can't expect the unemployment problem to ease until the economy is on the rebound again. This in my view is a serious defect in his thinking, as without jobs, we have no real economy. An economy isn't just computers on Wall Street, sending streams of binary digits back and forth. An economy is made up of people doing productive work, while buying, selling and trading services. If you don't have that, you can transmit number between computers all day long and our residents, and our city will continue to see a decline.

As we are lacking fundamental leadership and expertise from the highest levels on the issue of economics, we should expect that the economy at large will continue to decline. The current Federal programs to stimulate the economy through bailouts, do nothing more than cover gambling debts of international banks. The money either disappears through the magic of fiat accounting, or goes offshore into foreign bank accounts to protect it from taxation. Even the Presidents vaulted efforts at saving people from foreclosure has only resulted in a total of 51 mortgage refinances and a stalling of foreclosures in most states. The administration is simply kicking the can down the road, in hopes of stalling until after the election.

The only solution to the problem of excessive debt that is plaguing our nation is to write it down, and take the entities through bankruptcy. This is a painful and difficult process and the current administration will not do it. This is akin to having a gangrenous limb, and refusing to allow it to be amputated. It won't get better, and the longer you wait, the worse it gets. the administration intends to continue to let the infection spread.

Though Irving has not been hit as hard as many cities have, it connected to the global community and the problems plaguing the rest of the nation will spread and worsen the economic and employment situation in our city.

An economic depression is defined as a sustained, long downturn in one or more economies. It is more severe than a recession, which is seen as a normal downturn in the business cycle. (Wikipedia)

As unemployment continues to rise, and no recovery is actually in sight, I think it is accurate to say that we are in a depression. As recovery in jobs according to President Obama, is years away, this depression will last years. And for now it will only worsen.

I know that the Mayor and City Manager both are big believers in eternal growth. but eternal growth in a confined space is the dream of a cancer cell. Healthy organisms grow to an optimum size or population and stabilize in harmony with their environment. Cancer cells never stop growing, even if though the continued growth is detrimental to the organism and eventually the cancer cells themselves.

Now human beings are not cancer cells. We have the capacity to see and understand the limits of our growth, of our spending. We can look to the future, and understand how that future is shaped by our actions today. We have the capacity within us to say no to growth, when we do not have the resources to fuel it.

And when it is clear that we are nearing those limits, we must say no. and when those limits are contracting then we must find a way to make do with less.

We all know in our personal lives the dangers of spending beyond our means, or writing checks when there's no money left in our accounts. Most of us to some degree have learned to budget our spending, and when our salaries are reduced or we know hard times are coming, we can cut back and adapt to changing circumstances. This is how we are better than a mindless cancer cell. We know that maturity is not measured by infinite growth, but by learning to live within our means.

As the economy continues to contract, the City Of Irving is going to be facing serious budget shortfalls. As council members, it is your duty to anticipate the ramifications of these shortfalls and respond in an intelligent and responsible manner. You'll be faced with some serious decisions soon enough. Votes for further raises for upper echelon employees will need to be balanced, against the jobs of city workers, and balancing the budgets of various departments. I feel confident that recent raises given to the City Manager, will lead to the city firing some hard working people. Further the Mayor and City Manager's quest for infinite growth during an economic contraction will force you to fire more employees and cancel more contracts.

Over the coming years, you're going to see the city's revenue decline as costs rise.

I hope that as you make these decisions in the future, that you will do so with the best interest of the community in mind. You have some tough years ahead of you. I pray that you make the best decisions you can, during this long term economic crisis. I sincerely hope that the course you take will not involve endless layoffs for city workers, and a steady stream of bonuses and salary increases for the Mayor's friends. What you decide now, will affect Irving for years to come.

Wednesday, July 08, 2009

Palin Is Quitting, Because She's Not A Quitter

h/t Moody Blue

Life is too short to compromise time and resources... it may be tempting and more comfortable to just keep your head down, plod along, and appease those who demand: "Sit down and shut up", but that's the worthless, easy path; that's a quitter's way out. And a problem in our country today is apathy. It would be apathetic to just hunker down and "go with the flow".

Sarah Palin