Shakespeare on “Spin”

For the lighter side…

I say,
Confusion now hath made his masterpiece!
And many think with brain as dry as the remainder biscuit after a voyage.
Dull and muddy-mettled rascals,
They speak unskilfully: or, if their knowledge be more,
It is much darkened in their malice.

Remember,
Their sin’s not accidental, but a trade.
If you take their advice,
Truly thou art damned, like an ill-roasted egg, all on one side.

People,
Thou hath not so much brain as ear wax.
Hast thou never an eye in thy head?
Did they teach you how you should forget to think?
There’s no more faith in thee than in a stewed prune.
I took thee for thy better.

Spin Doctors,
Out of my sight! Thou dost infect my eyes.
Your means are very slender, and your waste is great.
There’s no room for faith, truth, nor honesty in this bosom of yours. Sense sure you have, else could you not have motion; but sure that sense is apoplex’d.
Thou art pigeon-liver’d and lack gall.
Draw your necks out of your collars. And stop speaking an infinite deal of nothing.

Your bait of falsehoods take this carp of truth:
Thou art so leaky that we must leave thee to thy sinking. No word to save thee. Canst thou believe your living is a life, so stinkingly depending? Go mend, go mend.
Assume a virtue if you have it not.

Peace, ye fat guts!
Peace, good pintpot, peace, good tickle-brain.
I will most humbly take my leave of you.

Spin Meisters

Last weekend GM got a $50 billion US Treasury loan for the development of electric cars and next-gen fuel efficient vehicles.  No one really buys that as we know it is to fend off bankruptcy by GM.  GM credit default swaps (fancy financial instruments that gauge a company’s solvency) were showing a 95% chance of bankruptcy.

 

Automakers Seek $50B In Loans From U.S.

 

(AP) Automakers plan to urge Congress to support funding up to $50 billion in low-interest loans over three years to help them modernize their assembly plants and develop next-generation fuel-efficient vehicles.

 
Industry officials said the loans, which are twice the amount authorized in last year’s energy bill, are a top priority when Congress returns next month because of the declining fortunes of Detroit’s automakers and tightening credit markets.  

 

 “The amount of concern and urgency from the Detroit companies has increased in the last month and significantly ratcheted up what they’re communicating what their funding needs are,” said Alan Reuther, legislative director for the United Auto Workers union. More…

CPI 101

Every now and then you might hear someone in the media refer to something called the CPI.  Rather than disregarding it as some strange financial jargon that doesn’t apply to you, pay close attention to it as this little informative factoid affects your life more than you realize.

 

CPI stands for Consumer Price Index and measures the price change of the things purchased by you.  The percent change in CPI is a measure of inflation.  For example, if a gallon of gas cost $3.00 last year and now costs $4.00, the annual rate of inflation for gasoline would be 33%.  CPI is one of the most closely watched national economic statistics.

 

Why should you care about CPI?

1. Your paycheck is tied to CPI as employers use it when determining payroll adjustments.
2. Social Security and other retirement pension payments are tied to CPI.

 

CPI Quick Facts

1. CPI is calculated by the Bureau of Labor Statistics (BLS).  The BLS is a unit of the Department of Labor, which is a cabinet of the government and appointed by the president (this means it is exposed to political pressures).
2. Federal spending is tied to movements in CPI.
3. Interest rates on US government debt are tied to CPI.
4. CPI is used in calculating the country’s “real” GDP (a.k.a. the country’s output).

 

So, it is easy to see that payments made to you and others by the government are tied to CPI.  So just like anybody paying for a car, house, etc… the government’s goal is understandably “how to get the lowest payment?”  It is in their best interest to keep the CPI measure as low as possible.  Unfortunately, if it is in the government’s best interest, it is probably not in yours, because at what cost to you will they go to alter it?  For example, if CPI was calculated to be 10%, the government would have to adjust their payments upward by 10%.  However, if calculation adjustments could be made to lower the CPI to 5%, when in fact the “real” number is still 10%, the government wouldn’t have to pay as much.  Try to stay with this… So, in this case the government expense is reduced to 5% while yours is still at the “real” higher rate of 10%. 

 

Is this happening?  Well, ask yourself, how far do people go to reduce their payments?  Do they embellish their incomes?  Do they try to bend their expenses?  Would the government, filled with politicians, be any different?  You can answer those.

 

Any questions?

 

In our next class we’ll learn about the methods employed to suppress CPI.

Quote of the Day

No cred Fed…

 

“It is not the responsibility of the Federal Reserve – nor would it be appropriate – to protect lenders and investors from the consequences of their financial decisions,”- Ben Bernanke last August

 

 

 

Liberation not Stimulation

Dr. Yaron Brook, President, The Ayn Rand Institute

  

I Reiterate…

Have you protected yourself?  If not, why?

“The markets are painting a picture of calm, but they never tell you what’s lurking behind in the murky waters of reality.”

America Half Off

Nice article below sent from our Comrade in Arms Sean. 

 

As our economic ship continues to spring leaks, the sanguine crowd still clings to the false belief that the Fed/Treasury tag team can easily step in and keep us afloat.  This comfort has sustained many bubbly forecasts despite overwhelming evidence of an unfolding economic and monetary catastrophe of historic proportions.  Ironically, it is this same tag team who got us into this condition in the first place.  By expanding the money supply, they have “tagged in” inflation, which has debased the dollar relative to other currencies, thereby allowing foreigners to come and buy our companies half off. 

 

A more appropriate title for the article might be “The Great American Fire-Sale.”  Besides being bought out involuntarily (as with Budweiser), most companies are forced to pass around the hat, hoping to woo the Asian and Arab governments for badly needed funds (as with every U.S. investment house; i.e. Citigroup, Morgan Stanley and Merrill Lynch).  These developments should be alarming on many levels, yet most seem unperturbed. 

 

The fact that troubled firms need to look abroad for cash provides startling evidence of the extent of the deterioration of America’s economic might.  The reason we need to seek capital from abroad is that we have squandered our own on consumption.  Certainly, these “foreign investments” come at a great cost.  Contrary to the media’s positive spin of foreigners “investing in America,” such acquisitions really amount to foreigners buying up America, as our creditors take our assets in exchange for our debts. 

 

Are these thoughts too xenophobic?  Is this “investing in America” by foreigners really a good thing after all?  Your comments are appreciated.

 

The Great American Yard Sale

 

When Belgian-based, Brazilian-controlled InBev launched a hostile offer for American beer king Anheuser-Busch last month, xenophobia quickly foamed to the top. Beer drinkers in St. Louis, Mo.–A-B’s home–vowed to swear off Bud if those foreigners bought “our” beer.

 

They’ll get over it. A-B’s shareholders sure did, considering the $52 billion price tag, which at $70 a share was a 27% premium for a stock that had gone flat. The ruling Busch family ultimately faced up to the fact that the U.S. is for sale, and foreigners are buying. It’s everything from the St.-Tropez crowd buying up condos in Palm Beach, Fla., to Asian and Middle Eastern governments sinking billions into U.S. banks to Europeans taking over U.S. pharmaceutical and infrastructure companies. Even tourists are busy using their euros and pounds to snap up iPhones, jeans, shoes and everything else they can stuff into the empty suitcases they carry along for just that purpose, damn them.  More,,,

Lehman’s Layman Loans

More toxic loans from the banks.  On and on it goes with no end in sight.  Conversely, what one can see is that whenever and however it ends is definitely not dollar positive.

Lehman May Report $4 Billion Writedown, JPMorgan Says

Aug. 19 (Bloomberg) — Lehman Brothers Holdings Inc. may write down about $4 billion in credit-related investments and other assets when it reports fiscal third-quarter earnings, JPMorgan Chase & Co. analysts said.

“The credit environment continues to be difficult,” New York-based analysts led by Kenneth Worthington wrote in a report yesterday. “It will be another difficult quarter for Lehman.”

Lehman may mark down some of its $61 billion of mortgage and other asset-backed securities after benchmark residential and commercial mortgage-related indexes declined by as much as 20 percent, the analysts wrote. The company may have already been selling some commercial mortgage assets, they added.

Lehman, the largest underwriter of mortgage bonds before the subprime market collapsed, has slumped 77 percent in New York trading as it struggles to pare its debt holdings. The bank has reported writedowns and credit losses of $8.2 billion in the past 12 months, according to data compiled by Bloomberg.

The analysts cut their per-share estimate for the third quarter to a loss of $3.30 from a 35-cent profit. They expect Lehman to report a loss of $6.77 a share for the full year, compared with their earlier forecast of a $2.35 loss. They maintained a “neutral” recommendation on the stock.  More…

Folding Financials

Do you read headlines like the following concerning similar serious bank failures in America and the Eurozone?

Do you think the Fed has room to raise rates?  Such an event would drop the Dow like a hot potato, killing whatever is left of the ailing US economy.

A retired IMF economist expects a major US bank to fail.  Is this your bank?  None of us can know.  Does your bank or financial agent have a relationship with this supposed institution that will cause your financial agent damage?

You need to recognize that all the media tricks being played to influence a bully market populated by the Hedgies at the Hedge Funds have but brief influence.  You must understand that there is no synthetic short in the dollar position because who on earth is rushing for dollars to pay off debts?  It is a failure to meet debt obligations which today means non-functioning OTC derivatives that is the definition of deflation.  This is gold positive in a big way.

Ex-IMF economist sees large U.S. bank collapsing

LONDON (MarketWatch) — Kenneth Rogoff, the former chief economist of the International Monetary Fund, reportedly said Tuesday that a large U.S. bank will collapse in the next few months. “We’re not just going to see mid-sized banks go under in the next few months, we’re going to see a whopper, we’re going to see a big one, one of the big investment banks or big banks,” Rogoff told a conference in Singapore, according to a Reuters report.  More…

An Oil Premium

Right now some would say the geopolitical risk premium in crude oil is minus zero dollars.  Such mass abandon usually occurs just at the WRONG time.

Iran Threatens to Close Strait of Hormuz If Attacked

Following recent threats by Iranian government elites, [1] in the past several days senior Iranian officials have emphasized that if it is attacked, Iran intends to close the Strait of Hormuz, thereby impeding the export of oil from the Gulf to the rest of the world.

The following are statements on this matter by several senior Islamic Revolutionary Guards Corps (IRGC) officials:

IRGC Political Bureau ChiefJavani: Closing the Strait of Hormuz is Part of Iran’s Defense Policy

In an editorial titled “When Will the Hormuz Strait Be Closed?” in the Iranian weekly Sobh-e Sadeq, which is the mouthpiece of Iranian Supreme Leader ‘Ali Khamenei circulated among the IRGC, IRGC political bureau chief Yadollah Javani wrote:

“The Strait of Hormuz is one of 14 locations in the world with unique strategic importance. Over 60 percent of the world’s energy reserves are located in the Persian Gulf, and 17 million barrels of oil are transported daily from the strait by oil tankers. In today’s global economy, oil plays the same role as blood in the human body, and under present circumstances, it is impossible to conceive of an active and dynamic economy without oil. Industry is completely dependent on [Persian] Gulf oil for survival.  More…

Frontpage Worthy

As Pakistan weakens and NATO loses its stomach for a war on terror, attacks are intensifying in Afghanistan.  Don’t take it lightly, these militants are not half-hearted extremists; they play for keeps and are now attacking bases in more sophisticated fashions.  Why aren’t we hearing about this?

Taliban Escalate Fighting With Assault on U.S. Base

BAMIYAN, Afghanistan — Taliban insurgents mounted their most serious attacks in six years of fighting in Afghanistan over the last two days, including a coordinated assault by at least 10 suicide bombers against one of the largest American military bases in the country, and another by about 100 insurgents who killed 10 elite French paratroopers.

The attack on the French, in a district near Kabul, added to the sense of siege around the capital and was the deadliest single loss for foreign troops in a ground battle since the United States-led invasion chased the Taliban from power in 2001.

Taken together, the attacks were part of a sharp escalation in fighting as insurgents have seized a window of opportunity to press their campaign this summer — taking advantage of a wavering NATO commitment, an outgoing American administration, a flailing Afghan government and a Pakistani government in deep disarray that has given the militants freer rein across the border.  More…

The Fuse has been Lit

The Fuse has been ignited, but the question is how long will it burn?  When, not if, Pakistan goes off its boom will rival our theorized “Big Bang.”  Ramifications will pulsate throughout causing incalculable geopolitical dislocations.

Musharraf Ouster Fails to End Deadlock, Distraction Over Judges

Aug. 20 (Bloomberg) — Pakistan’s ruling coalition, fresh from ending a six-month standoff by forcing President Pervez Musharraf to resign, failed to resolve a festering dispute over reinstating judges he fired.

The government’s inability to reach a compromise will continue to distract the four-party alliance as Pakistan suffers from faster inflation, a slowing economy and rising Islamic militancy on its border with Afghanistan. That may cause problems for U.S. President George W. Bush, who considered Musharraf an ally in fighting al-Qaeda and the Taliban and is pressing the new government to step up its efforts.

“If I were the Bush administration, I’d kiss goodbye the chance of having a workable Pakistani government” this year, said Daniel Markey, a senior fellow at the Council on Foreign Relations in Washington. “For the next weeks and probably months, the focus will remain on the rules of the game, and who holds power.”

After two days of meetings on what to do about the judges, the coalition said yesterday it hoped to find a solution in the next 72 hours, according to Fazl-ur-Rahman, chief of the Jamiat- e-Ulema Islam, a coalition partner. Asif Ali Zardari’s Pakistan Peoples Party, and former Prime Minister Nawaz Sharif’s Pakistan Muslim League faction are the biggest parties in the alliance.  More…

Quote of the Day

Cicero Denounces Catiline, fresco by Cesare Maccari, 1882-1888.

 “The national budget must be balanced. The public debt must be reduced; the arrogance of the authorities must be moderated and controlled. Payments to foreign governments must be reduced, if the nation doesn’t want to go bankrupt. People must again learn to work, instead of living on public assistance.” –Cicero, 55 BC

3-2-1 Blast Off

The next time somebody tries to compare the current housing crash to the slump of the 90’s please show them this little chart.  By the way, the majority of the adjustable rate mortgages haven’t even reset yet.

  

Great or Greater Depression?

A fun read sent by our local dissident Paul.

 

Seven reasons a ‘good’ depression beats a new Great Depression

Yes, a depression. Spelled: D-e-p-r-e-s-s-i-o-n. Wake up America, recessions don’t work any more. Why?

Get serious folks. We had a 30-month recession not long ago. Eight years later the market’s still barely at its 2000 peak, a loser. Worse, we’re back in a new recession. But Washington politicians are keeping it a secret, feeding us doctored feel-good statistics as legendary political historian Kevin Phillips wrote in “Numbers Racket: Why the Economy is Worse Than We Know.”

So we blindly refuse to bite the bullet and stop our out-of-control spiral into collapse. America needs a big wake-up call … and it’s coming soon, whether you like it or not!  More…