Stamped

How big will this piece get?  Who will fill the next box?

 

Gov’t Owns Citibank

The government announced today, as part of its bailout of Citibank, it is converting $25 billion of its preferred stock into common stock.  This raises the common capital of the bank and apparently under regulatory previsions gives the bank additional regulatory capital and hence able to borrow and lend more money.  It is considered to be a sounder bank with the government owing 36% of Citibank.  This process is somewhat confusing and at this point analysts are trying to figure out exactly what it means.  The stock market has reacted poorly to it and has reacted poorly to the proposals for a budget next year that will have a deficit of $1.75 trillion.  Add that to the Bush budget for the current year of about $1.2 trillion and we will be adding $3 trillion to the national debt in two years.  It took George Bush eight years to add $4 trillion to the national debt.  At this rate, this country will be pushing itself into a bankrupt position more rapidly than anyone would have previously imagined.

 

When one looks at the Citibank deal, by virtue of the dilution, the common stock holders have seen ¾ of their existing equity stake wiped out.  One has to wonder how many other banks will experience the same kind of dilution.  The government reported that GDP shrank 6.2% in the fourth quarter compared to an initially reported decline of 3.8%.  More and more people are talking about the current event as a “depression”. 

News Anchors Mortified Over Dr. Paul’s Airtime

CNBC anchors were left dumbfounded and acted visibly irritated Wednesday after Congressman Ron Paul’s opening statement at the House Financial Services Committee was broadcast live to an audience of millions.

 

After the Congressman spent two and a half minutes lecturing Bernanke on sound money principles, warning that the financial crisis cannot be solved by merely creating money out of thin air, CNBC cut back to the studio.

 

Anchors Erin Burnett and Mark Haines were so perturbed by what they had just heard that they immediately cut to a commercial break.

Hard Right Turn

Most people ask,” When is the economy going to get better?”  If you saw Bernanke’s testimony in the Senate the other day, the answer is 2010.  Of course that answer came with big caveats such as the $887 billion de-stimulus package in works to revive the economy.  The answer to,” When is the economy going to get better?” is “It’s not going to get better; it is going to get different.”  Meaning that the economy will not return to what we have grown to consider “normal.”  There is going to be a new “normal.”  This is not a recession, a dip or a temporary economic condition.  We are witnessing a “hard right turn” in a new direction on a global scale.  Many of the jobs lost in this downturn will be gone forever.  A couple of changing industries will be in financial services and the automotive sector.  The good news is that people are going to be forced to live within their means.  Almost everybody rich and poor will consume less and save more.  There is going to be a new age of frugality and that, as Martha Stewart says, “Is a good thing.”

 

Most people don’t understand what is unfolding right in front of them.  You can’t really fault them because, after all, look at the recent conflicting message President Obama sent out.  He just signed the biggest spending bill in history, mind you with no budget cuts/tax increases, and is now calling for the return to a ‘Pay as you go Policy.’  On top of that, the Treasury has a trillion dollar plan to “fix” the banking sector.  Where are we getting the money for all of this spending?  We are borrowing and printing it at the moment.  In Senate testimony, Bernanke was asked a simple question, “How much money will it take to “fix” the banks?” He said that the Senator should ask, “The Treasury or the FDIC.”  This was the answer from the man who is in charge of monetary policy for the United States.  He either does not know or is afraid to give a number.  The amount of money it will take to “fix” the banks will be many trillions of dollars and that is a down right scary repair.

 

Many others are concerned aw well.  George Soros, renowned billionaire investor, recently said, “We witnessed the collapse of the financial system…It was placed on life support, and it’s still on life support. There’s no sign that we are anywhere near a bottom.”  No one has a crystal ball, but given the circumstances surrounding the biggest economic mess in history, one thing is for sure.  Forget about the economy you saw in the past, we are not going back there.  Everything in the future is going to change.

CIA Adds Economy to Threat List

CIA Adds Economy To Threat Updates

 

The daily White House intelligence report that catalogs the top security threats to the nation has a grim new addition, reflecting the realities of the age: a daily update on the global financial crisis and its cascading effects on the stability of countries through the world.

 

The first Economic Intelligence Briefing report was presented to the White House yesterday by the CIA, the agency’s new director, Leon Panetta, revealed at a news conference. The addition of economic news to the daily roundup of terrorist attacks and surveillance reports appears to reflect a growing belief among intelligence officials that the economic meltdown is now preeminent among security threats facing the United States.  More…

UN: Regulate Free Speech

Orthodoxy…Or Something Near Enough

Spartacus the monk, where are you?

 

Our current crisis is your calling to promulgate a serious return to Orthodoxy… or Something Near Enough.  Now I’m not talking about a cheating George Costanza Latvian style or our government’s capitalistic heterodoxy.  We need serious conformity to morality and to the once practiced free market philosophies.

 

Hear the cry of the financial problems around our world.  Finance doesn’t work without some sense of trust and confidence and people meaning what they say, but most importantly, morality is needed for its guidance.

 

The lack thereof encouraged excessively low interest rates provided by the Fed, the lax lending standards and moral hazards supplied by Congress courtesy of Freddie, Fannie, and the FHA, and the many real estate subsidies built into the never ending tax code.  It also encouraged borrowers to lie for and demand the credit to fuel their selfish dreams of instant real estate riches.

 

Given the mess in which we now find ourselves, you’d think this lesson should have been well learned.  Unfortunately it hasn’t, as this same dynamic is now playing out on a much grander scale.

Spartacus!  Where’s your outrage over the U.S. government’s borrowing of trillions of dollars to artificially inflate our deflating economy.  You well know the money is being used to both expand the size of government and finance additional destructive consumer spending.  Given our financial position, this is the exact opposite of what we should be doing.  Right?  Is it not placing a horrific debt burden on its people, committing them to either a lifetime of crippling interest payments or run-away inflation?

 

Oh Spartacus, when will they learn?  Hear our cry and grace us with your love for wisdom and morality.  Oh Spartacus, where art thou?

Nothing has Changed

Nothing has changed in the last 12 hours.  The chairman of the Fed spoke.  Tonight, President Obama gives a major address; that is if major means to be concluded by the time it takes to deliver it.

 

The stock market is in a deep oversold condition so a rally is not hard to produce.

 

Gold buyers are so scared of $1000.  “Oh No!  $1000 did not hold!” is the war cry of the gold guy selling.  Thankfully this is not an army – so many of their tanks only have a reverse gear.

Simply Orwellian (2)

Truth Squad?!?!  I can’t believe my eyes!

 

The Ministry of Truth (or Minitrue,) is one of the four ministries that govern Oceania in George Orwell’s novel Nineteen Eighty-Four.  As with the other Ministries in the novel, the Ministry of Truth is a misnomer and in reality serves an opposing purpose to that which its name would imply, being responsible for the falsification of historical events; and yet is aptly named in a deeper sense, in that it creates/manufactures “truth” in the newspeak sense of the word.  The three slogans of the Party: “War is Peace,” “Freedom is Slavery,” and “Ignorance is Strength.”

The De-Stimulus Bill

Tymothyson wrote:

Won’t the stimulus bill fool people into thinking that the economy will get back onto its own two feet?

 

Tymothyson,

I think most level headed people do not trust the de-stimulus bill. That is at least what Wall Street is telling us with its record plunges.

Urban Warfare Drills Linked to Coming Economic Rage

Expectancy of riots leads authorities to prepare for mass civil unrest.

Urban warfare training drills are taking place across the country as top analysts as well as officials predict a potential “summer of rage” across Europe and America as civil unrest from the economic fallout builds.

 

Earlier this month, 150 U.S. troops from the U.S. Special Operations Command whizzed around the streets of New Orleans in military helicopters and even dropped bombs in what officials described as a “training event”.

 

An Iowa National Guard training exercise in Arcadia, Iowa, scheduled for April was originally billed as an “invasion” before public opposition caused the drill to be scaled back. The exercise included Guard troops patrolling streets, searching houses and confiscating firearms.  More…

20% in L.A. County Receive Public Aid

20% in Los Angeles County receive public aid

 

One in five Los Angeles County residents — nearly 2.2 million people — are receiving public assistance payments or benefits, a level county officials say will rise significantly over the coming months as the fallout from the recession continues. More…

Quote of the Day

Just because you do not take an interest in politics doesn’t mean politics won’t take an interest in you!  – Pericles (430 B.C.)

From Wall Street to All Streets

United States Northern Command (USNORTHCOM, or informally just NORTHCOM) is a Unified Combatant Command of the U.S. military.  Created on October 1, 2002 in the aftermath of September 11^th, its mission is to protect the United States homeland and support local, state, and federal authorities.

 

Oh really?  I wonder what the real reason is for its existence??

 

This financial crisis is now truly global

 

In Florida, a state devastated by tumbling house prices and repossessions, the inhabitants are arming themselves against recession, with requests for concealed weapon permits up 42 per cent in the past 45 days. In Moscow, the murder rate has climbed by 16 per cent. At Tetsuya’s – the most exclusive and expensive restaurant in Sydney – the waiting list has shrunk from three months to 24 hours.

 

Over the past few months, we were told that we were caught in the worst economic crisis for 20 years, then 30, then 80, then 100. It can’t be long before someone points out that really, all things considered, the Black Death was comparatively pleasant. But beyond the hyperbole, one thing is clear: what began as a financial problem in certain debt-soaked nations is battering the economies of dozens of others, as well as millions of people working in almost every trade. It will change behaviour and alter the pecking order of the world’s economies. There will be social unrest and changes of regime. Received wisdom, whether about the benefits of free trade, globalisation or European integration, may be cast on to a bonfire of recrimination. Estimates of how long the pain will last range from a year to a decade. Bring out your dead.  More…

Congress Has Lost Control