June 23 (Bloomberg) -- President Barack Obama said that he expects the U.S. unemployment rate will exceed 10 percent this year, though a second stimulus package isn’t needed yet. (!!!!!!!!!!!!!!!!!)
It's unlikely the press will remind people that Obama previously claimed that his stimulous package would prevent unemployment from reaching 9% He now, less than five months later is admiting it will reach 10% even though we passed his bill.
I found this long and interesting report on the housing crisis which recaps a lot of info we know and also suggests it's likely far from over. Check out the rising default rates in prime and jumbo loans as well as the mega disaster-- called Alt-A which will create huge losses and powerful downward pressure on housing in places like California.
A big unknown is how long the recent surge in mortgage rates will last and what effect this might have on a market that seems to need these absurdly low rates.
For the most part, the Fed's role in causing the bubble is not discussed.
Here in the good old USSA, where all the children have drinken deeply from the state's endless Kool aid supply, we all know that critics of Obama are driven solely by "white male rage." But what's going on overseas? First, Pravda the former voice of the Soviet Union say's we are Commies and now this...
Tim Gethner, one of a parade of officials panning the globe for spare change; while at the same time assuring everyone what a good credit risk we are; is now in China. Kool Aid seems scarce there.
"Chinese assets are very safe," Geithner said in response to a question after a speech at Peking University, where he studied Chinese as a student in the 1980s. (refering to their holdings of U.S. Treasury and agency debt)
His answer drew loud laughter from his student audience, reflecting scepticism in China about the wisdom of a developing country accumulating a vast stockpile of foreign reserves instead of spending the money to raise living standards at home."
Comments from a former Central bank advisor, Yu Yongding were even more blunt and filled with disparaging references to American officials and their policies.
In response to Obama's current promise to cut federal deficits from close to 13% of GDP to 3, Yu said:
"It may be helpful if “Geithner can show us some arithmetic,” said Yu. “We need to know how the U.S. government can achieve this objective.”
Fed Chairman Ben Bernanke gets it worse.
"Referring to the Federal Reserve “as the world’s biggest junk investor,” and to Chairman Ben S. Bernanke as “helicopter Ben,” Yu said the Fed has dropped “tons of money from the sky since the subprime crisis.”
“The balance sheet of the Federal Reserve not only has expanded like mad but is also ridden with ‘rubbish’ assets,” he said".
Are these "people of color" crazed with racist rage or just stating simple questions we all should be asking. Thankfuly the rest of the world is looking fairly and squarely at Barak Obama and judging him and his administration by the content of the character they have shown.
I'll start this out with a warning. This is a long post, the bulk of which I wrote late last year, in the hopes that some of it might be avoided.
Contrary, to the story told in the popular media, there were in fact a large number of trained economists and investors who predicted and warned about the situation we are now in. Of course, they were called kooks and rarely got much air time in the media or in college campuses. Ron Paul, is likely the one most of us would know.
Anyway, when the "Schiff started hitting the fan", Glenn Beck was one of the few major media figures to point bring up the Weimar Republic.
Sorry, they pulled that one since they want you to see the full film.
I've put a lot of videos and links about America's debt and financial condition in this post. I think that only by understanding this condition fully can one see the connection between America today and that of Weimar Germany.
Most people, to the extent they know anything about the Weimar Republic know only a few things-- it was a period of interesting art, Mann, Kandinsky, Klee, Grosz; -- something about carts of money to buy loaves of bread-- and finally, that it was shortly followed by the Third Reich.
Here is an extended quote from the book, The Age Of Inflation. The roots of Germany's problems began with the promises of Bismark's welfare state and the way Germany financed the costs of WWI.
"Like all the other banks, it offered assistance to the central government in financing the war effort. Since taxes are always unpopular, the German government preferred to borrow the needed amounts of money rather than raise its taxes substantially. To this end it was readily assisted by the Reichsbank, which discounted most treasury obligations.
A growing percentage of government debt thus found its way into the vaults of the central bank and an equivalent amount of printing press money into people's cash holdings. In short, the central bank was monetizing the growing government debt.
By the end of the war the amount of money in circulation had risen fourfold and prices some 140 percent. Yet the German mark had suffered no more than the British pound, was somewhat weaker than the American dollar but stronger than the French franc. Five years later, in December 1923, the Reichsbank had issued 496.5 quintillion marks, each of which had fallen to one-trillionth of its 1914 gold value.[1]
How stupendous! Practically every economic good and service was costing trillions of marks. The American dollar was quoted at 4.2 trillion marks, the American penny at 42 billion marks. How could a European nation that prided itself on its high levels of education and scholarly knowledge suffer such a thorough destruction of its money? Who would inflict on a great nation such evil which had ominous economic, social, and political ramifications not only for Germany but for the whole world? Was it the victors of World War I who, in diabolical revenge, devastated the vanquished country through ruinous financial manipulation and plunder? Every mark was printed by Germans and issued by a central bank that was governed by Germans under a government that was purely German. It was German political parties, such as the Socialists, the Catholic Centre Party, and the Democrats, forming various coalition governments, that were solely responsible for the policies they conducted. Of course, admission of responsibility for any calamity cannot be expected from any political party."
This was just the start of the problem. Germany was already deep in debt but it didn't feel like it could handle the sharp recession all the industrial countries had as they demobilized. To put off this pain and potential instability, they began to spend more and more. Many, many people, soldiers, farmers, workers and businesses needed help.
"Immediately after the war the German government, under the leadership of the Socialist Party, embarked upon heavy expenditures for health, education, and welfare. The demands on the treasury were extremely heavy anyway because of demobilization expenses, the demands of the Armistice, the disorders of the revolution, and the staggering deficits of the nationalized industries, especially the railroads, postal services, telephone, and telegraph. Public administration by the new men raised to power by the revolution, nevertheless, was extravagant, as the resources made available by the creation of new money were apparently unlimited. A number of measures for the nationalization of certain industries (e.g., the coal, electrical, and potash industries) were introduced, but failed to become law. The eight-hour day was enacted, and labor unions were given many legal immunities and privileges. In fact, a system of labor councils was set up which authorized the workers in each enterprise to elect representatives who shared in the management of the company! While government expenditures rose by leaps and bounds, the revenue suffered a gradual decline until, in October 1923, only 0.8 percent of government expenses were covered by tax revenues. For the period from 1914 to 1923 scarcely fifteen percent of the expenses were covered by means of taxes. In the final phase of the inflation the German government experienced a complete atrophy of the fiscal system."
The immediate effects of their actions weren't clear to most and the monetary authorities went to great lengths to tell people that the inflation people saw in their daily lives wasn't really there.
The other thing that reminds one of this time was not just that Germany was up to it's eyeballs in debt but that this debt was largely owed to foreigners who had once considered it a good credit. They continued to lend and only slowly realized their mistake. When they did, the Mark dropped like a stone and the real pain began.
The situation since only a reinforced and confirmed my worst fears. The receding tide exposed the pyramid of lies and false promises behind not just the Federal, but almost every local and state budget. It's a very grim situation, I talked about here. We have been living far beyond our means and have to make serious cuts on a personal and national level. A new confrontation with reality is slowly taking shape, which we saw at the Tea Parties, and was carried forward by the votors in California.
But, But, But, This is the rub. We all know that the government run by people like Barak Obama, Joe Biden, Nancy Pelosi, or for that matter Arlen Specter, Colin Powell or Arnold Schwarzenegger will never allow itself to shrink and can in fact never live within it's means.And, as long as they a have the Fed, they don't have to. We know almost every state can count on a bail out.
Even more scary than all of this is the bold honesty of the looters who now run the Fed and their fellow travelers. through most of it's history, the Fed made the pretense of "protecting" the value of the dollar-- even as it destroyed it. In fact, this is supposed to be it's primary job. How's it doin?
This exposes the real and only reason governments need fiat paper money -- to use inflation to paper over bills they cannot or do not want to pay. Be very afraid, because they can no longer hiding this.
"In advocating that the Fed commit itself to generating some inflation, Mankiw, 51, likens such a step to the U.S. decision to abandon the gold standard in 1933, which freed policy makers to fight the Depression.(the FED caused the depression)
Faster inflation might be preferable to increased unemployment, or to further budget stimulus packages that push up the national debt, says Mankiw, who was chairman of the Council of Economic Advisors under President George W. Bush.
The White House has forecast that the budget deficit will hit $1.84 trillion this fiscal year, or 12.9 percent of gross domestic product. Rogoff doubts that politicians will be willing to reduce that shortfall by raising taxes as much as needed. Instead, he sees them pressing the Fed to accept faster inflation as a way of easing the burden of reducing the deficit.
Easier Debt Repayment
Inflationary increases in wages -- and the higher income taxes they generate -- would make it easier to pay off debt at all levels."
This is the kind of sick morality that's at work here. Here is a major economist who doesn't see any difference between paying off debts normally through savings, work and hard choices like normal people do-- and just printing fake money. We have to understand that the FED is no longer an impartial actor here. It's backing up major banks, companies and most especially itself by conducting a massive theft from any responsible person.
Also, please, please remember the cold cruely of these actions which put the lie to the sham of government concern for the poor. Inflation is a sharply regressive tax on all the basic necessities of life.
This shouldn't really be a surprise to anyone, but just released comments from fed meetings show the degree to which Ben Bernake recklessly cheer led for rate cuts which pumped up the housing bubble. Of course this earned him a promotion.
2003
"I would like to caution against the situation where we are continually waiting for uncertainty to be resolved before taking action," Bernanke said in a March meeting, just before the Iraq war started. "If the economy is still struggling and if there is no significant improvement or evidence of increasing strength by our next meeting, I hope we will at least consider the case for easing policy at that time."
Skipping ahead.
Part of the low-interest rate policy during that period included a statement from the Fed that it would leave rates low "for a considerable period." There was a spirited debate over whether to use that language in the August 2003 meeting, and Bernanke made a vigorous argument to do so.
Bernake was already mentioning the idea of a zero or sub zero fed funds rate which would make it profitable to make almost any bad investment. (and that's what happened)
His alleged calls for clarity and transparency now ring as hollow as Obama's
This might be a short post-- with a lot of typos and scant references. I work a lot online and it seems like four or five major government crimes or proposed crimes pop up each day.
I consider the word Fascism, to best describe the current flavor of our government.
"Other than nationalization of certain industries, private property was allowed, but property rights and private initiative were contingent upon service to the state.[154] For example, "an owner of agricultural land may be compelled to raise wheat instead of sheep and employ more labor than he would find profitable."[155] According to historian Tibor Ivan Berend, dirigisme was an inherent aspect of fascist economies.[156] The Labour Charter of 1927, promulgated by the Grand Council of Fascism, stated in article 7: "The corporative State considers private initiative, in the field of production, as the most efficient and useful instrument of the Nation", then goes on to say in article 9: "State intervention in economic production may take place only where private initiative is lacking or is insufficient, or when are at stakes the political interest of the State. This intervention may take the form of control, encouragement or direct management."[citation needed]
Fascists thought that private property should be regulated to ensure that "benefit to the community precedes benefit to the individual."[157] They also introduced price controls and other types of economic planning measures.[153]"
In order to understand this one needs to think about the nature of government power. The state, as we know has no money assets apart from the property and lives of it's citizens. What it does have is the ability to use force.
Our founders knew and feared this power and aimed it to be used to defend the lives and property of it's people against state or criminal aggression and to act as an impartial arbiter in legal disputes. The whole purpose and design of the Constitution was to do this.
Fascist's, like all collectivist's see the state as an end in itself that should not be restrained by law or any kind of absolute truth. Anything the leader or gang in charge want to do at any given moment is the law. They always know best. In a state in like this, it matters very little who technically owns anything since everyone does what they are told. Property becomes an illusion.
Here is an example of Fascism in action. And yes it happened during the Bush Administration.
"NEW YORK -- Federal Reserve Chairman Ben S. Bernanke and former Treasury Secretary Henry M. Paulson Jr. threatened to remove the management and board of Bank of America unless it acquired ailing investment house Merrill Lynch late last year, according documents released today by New York State Attorney General Andrew Cuomo."
Bank America had foolishly jumped at the chance to buy what it thought was cheap company, but was still in a period when it could back out of the deal, legally, if Merrill's numbers were much worse than expected--- which they were.
In steps Paulson to say, in effect-- it's an emergency and we are in charge -- the law and your shareholder's rights don't matter anymore.
"On Dec. 21, after Lewis told Paulson the bank still wanted to exit the merger, Paulson told Lewis its management and board would be replaced if the bank were to invoke the material event clause.
Secretary Paulson's threat swayed Lewis, Cuomo said in the letter.
According to Secretary Paulson, after he stated that the management and the Board could be removed, Lewis replied, 'that makes it simple. Let's deescalate,' " the letter states. "Lewis admits that Secretary Paulson's threat changed his mind about . . . terminating the deal."
Cuomo said Paulson has told him he made the threat at the request of Bernanke."
![[Most Recent Quotes from www.kitco.com]](https://lh3.googleusercontent.com/blogger_img_proxy/AEn0k_vbFZIMaZw_9nPaj_-kqsugpH4Yi-gWzKxIxqYHgv3DXlJ1-x8TDV578UsKqTR8ZP4EgHS-VQGwJ1-fmKbA9GfiRKjGzdxNIDyokdlhwM272IT_PuJAVNuG4noArRS2r74BXQ=s0-d)
![[Most Recent USD from www.kitco.com]](https://lh3.googleusercontent.com/blogger_img_proxy/AEn0k_s77qiAt_XHA27b1POX-WYi9VkXqOXFatJq7B1vx3xoGskUBawc70Iz5anUioTNga4mjOlcDCuB2lzCNSWT0De4q2Imjgq2nUu6qg6E7wkcRCfKaVhUKHwg=s0-d)
